DAPPCON 2018: Bringing Liquidity On Chain - Yaron Velner (Kyber Network)

Transcript

yeah okay so good morning everyone I'm your own from cable network and CTO and let me start the talk you know by mentioning every everyone not you are already very much familiar with so Eternian blockchain has huge ecosystem of tokens every new project almost as its own native token and all of these tokens today right they are mainly used to you know so you can buy your own token you can sell the tokens your own but not far from now you will also be able to use these tokens right and once you will want to use this token so you will reach this problem so let's say I

want to use the closest platform right so I have to get a hand of gnosis token so how do I get it so I will have to open some account go to my favorite exchange but by 9 so metrics and then open an account there it will take me a while I will have to deposit some funds there so it may be Bitcoin it will be even slower for deposit Bitcoin and then ok so actually so the exchange will also wait for a very long period of time before it actually confirmed my deposits because there are a lot of security risk when you go of Jane but even ok after I did all that so right now we are all used to this kind

of ugly charts and so ugly charts and other books but you know as wheat mass adoption so every day usually we not want to see this when I go at all so I arrive to Germany I wanted to buy some euro at the airport I don't know to you know to read these tables and try to figure out ok so how much will it cost me to actually buy these canosa's but ok so this is another healthy life to take so ok fine so I learn what is an older book how do I buy things what what exactly the rate means if it's an you know is it from ETL to talking or the other

way around but anyway some kind of UI issues and then okay everything is fine I I bought my agnostic now and now I want to withdraw it right so ok so it's not as so is it with law because turned out I need to do another step here and I need to register again because it will not let me withdraw without any kyc and okay so the unloading process is also very tedious but eventually I get also past dead right and then I again try to withdraw and then okay everything is fine and it tells me the talk eventually I supposed to get you know my fans now which will take up to 30 minutes and after 2 hours if I don't get it I you

know I'd like to go and complain and this is my overall process off ok so the overall process is even few days if I said ok YC but let's say ok most of us already did k YC ones right but still did deposit and withdrawal phase is very long so it is least like 1 1 to 2 hours right and all I want to do is use this closest token in right and future I have many tokens and now for we talked and I need to do this tedious process only to use the application okay so centralized exchange nobody here like central exchange so the centralized exchange

will solve everything right so so not exactly means decentralized exchanges are great but they are also oriented mainly for trade deals so we have the same order book right which is again not not easy very easy to read and this other book is not just a UX single item and it's not it's an integral part of the of being an exchange and I can because of the older ball can be because ok because usually all the books of changing all the existing exchanges the central exchanges so there is an onboarding process have typically have to deposit some money right and then after I do the trade I've to withdraw so in totally

it is say like so for trades and the wall think about decentralized exchanges these days is that the prices are very funny liquidity is really low so if you can see so this is a snapshot of Knossos four meter Delta like a week ago so you can see that you can sell gnosis at under one ETL but to bite you need to pay nine eight right so this is you spread liquidity celebrates not only to Delta is not only closest so okay so to sum up being an exchange seen doesn't make the interface easy and also liquidity of the centralized exchanges

is not barely exist right so in carbon we take the approach right others already offered so so so this one is or maybe Danish was the central exchange is to have quick quick conversion right like you go to a money changer on the street and you just trade the euro for dollars or something so all the existing decentralized exchange is really aimed for Wales that really want to do professional trading well we think the the advantage or the hill niche we can sell is that are the ones of instant exchange so in it instant exchanges are onboarding you just give the give you

detail and get your token back or give you a token and get a different talking back right and everything is done in a single transaction with under one minute so this gives rise okay so this is a you icing but okay you can say it a delta okay maybe you have some wrapping around it have a nice UI for example else for talking after missile so they have this similar UI right so you just do instance swap but but silly it's not perfect because once you have this order book usually when you introduce when you introduce all the book you put it on chain so you put it off chain which makes it very helpful smart contact and

other applications to integrate with it right I mean you you cannot read the Chane order book and even if you put every date right it's it's really hard to pass it right inside the smart contract so all the books make it makes it really hard for an integration so what we propose in cable network is instant instant web service right so so way so we formed liquidity network we didn't tell humidity or on chain already right so liquidity is not in the audio book is not in the in some user deposits account liquidity is already on a smart contract and then once a user another smartphone that want to convert using

solidity all it has to do is to make one function called state the token he wants to convert in some parameters right and then in immediately okay so in the in this case it will immediately swap eta ANC token and this gave rise to a set of applications right so the first firstly against the most use applications is a swap service sort of an exchange service right or you can actually so you can sync of it's sort of like shape-shift but on blockchain and more decentralized so so here we have a content of a web

site right it allows people to swap from one token a to token be and all user has to do is to say how much they want to swap and click the swap function so this is currently our main service but this is only one kind of application that the smart contacts enables ok so if I have a demo but I'm not sure how I can walk it out so if you guys can click on the demo maybe now yeah okay so maybe next time yeah

okay so let me also lose control over the slide hey can I have control over the slide again anyway so for now until I get control over the slides again so now so it's

only moves here not on the main screen sorry okay yeah okay yeah okay so you know they'd be able to show the demo but what we do allow so as I said before so you only have to put you know you have to login with Smita mask or your treasure or your private key you selected the token destination token and sauce token and then click the swap button and then in a single X single on chain transaction everything is being

done so the most obvious application and most currently used application is the swap service but going forward and if you know if you envision the clip the world is a world with a lot of applications in every application will have its own native token so you cannot expect you the user to hold you talk and write because there will be tons of applications and huge friction so you can expect them to hold you know several special token so maybe their favorite tokens plus some ETL or some stable point I or in the future with Bitcoin token or whatever and our application will allow them to actually use this it'll use this literally a new

application because in the middle we will convert it to your token and just send it to the decentralized application and the application the app will get it as a token right and the user only has to own several you know like it'll die or whatever in his wallet so so it will make decentralized applications much more easier to use and also we call that again everything is happened in a single transaction so it's not like a conversion okay you have to wait for the conversion to be completed now send it to the application no no so everything is in click in the okay so once again making application easier we have swap service

the other thing is to facilitate decentralized financial applications so in financial applications today you have huge problem you know getting price feeds from the block chains because all the books will not give you price feeds because they are off chain also now if you need to actually make trade you know buy some decentralized organization so again integrating we see the Delta and everything so it is possible you know if you give them you give you contact some hints etc but but it's much easier when everything is on chain so everything it's much easier so for example if you take application like melon ported e-forms ability it has to maintain some portfolio for the users right and now some decentralized I don't know

government system some doubt decided okay now we need to buy MOC gnosis to a portfolio so this thou can not only interact with 0 X and other protocols because they are off train right and it doesn't even know the price unless ok so you can solve it you can give him give it to Oracle's etc but in cable everything is built-in okay so our liquidity network structure is as follows so on the 1 then we have the descendants applications users the others that want to use us on the right hand side we have all the liquidity providers so we'll provide this liquidity eventually so initially we

provide most of the liquidity title itself operates operate swap service along with other smaller liquidity providers but in the future and even today so we see token holders and token teams also tapping in into a liquidity pool and providing their own liquidity also professional market makers were already doing market making on centralized exchange come and making market make on Qaeda platform we are already integrated so well we smite wallets for function also in I am token which the biggest Italian wallet in China and you already have some financial

applications like Olympus in total well integrated business and again so from the developer from the developer application from the story from the developer the message if she should take is that guide there is an exchange platform swap platform that is really easy to use from a smart contract because you only need to make one function call okay plus maybe some of language calls to get some data everything is done in a single transaction if you plug your token into the system so every application that is already using us for example financial applications or let up like platforms could can already use your platform you use your token so okay so this is the

marketing and selling point and now everything works so I have five more minutes to try to explain that so so okay everything is unchanged but nothing is magically right I mean if everything is unchanged and everything is done instantly someone has to bring all the inventory and all the tokens Dale if you want to buy a token in a single transaction it already had to be the right before you click the before you send the transaction so so we take liquidity either from centralized exchanges and put them on the blockchain we have OTC markets or we take the quiddity form some use the personal inventories other take inventory from

other exchanges and then every Reserve is responsible to put its own liquidity and inventory on the blockchain and then offer it to the public and now in every swap the network chooses the reserve is the best right for the user Costigan yeah yeah okay so it's Kosh but okay so let me you know so maybe explain what about

the status of cable network so cabinet talk is already live already in the main tonight we are live since February DC February sale and we already have 50 tokens that are listed we spread that much smaller than the spreads you you expect to find in the central exchanges so this is a service we already live projects are already integrating with us on May night okay now to get even more technical so so how do we okay so I said to reserve managers needs to bring the liquidity what reserve manager so everyone can be a reserved manager but what how do you do it how do you provide

the token liquidity to the contract okay now I don't see anything but a liquidity first of all you need to decide or do some price discovery on the token you want to list so to do that you can either base it on the inventory you hold or get some you know price feeds from external records like by Nance or other exchanges the dense ones okay once you decided on the price you also need to bring the actual token alright so again this you do ideally if you are

talking project alright so you have huge inventory a few tokens so it's not really an issue you just put it there if you doing it for profit so you will get from basically you have to buy and sell it you know from the market so you either go to other dissenters exchanges talk to see or finance or whatever but but then you bring it on the smart phone to the smart contact and and once it is there so you you can offer to users and it's part of the liquidity and finally once you do all that and you have to set your price feed so because everything is on the blockchain on the price feed on the blockchain so what you have to do is to keep keep making okay so price discovery okay since everything is on the blockchain

right so you need to make transactions to feed prices and this could be expensive because prices are relatively volatile in crypto but we did some very nice optimizations which really reduce the cost provided that you have a lot of tokens which you give price to so in a platform we have over 40 tokens and every time we want to make an update for all of them we pay only 50 thousand cars which is only like two and a half times more more expensive than the minimal cost of a nitiram transaction so this is an optimization we have any it really allows us to give a competitive price

because you can make frequent price updates and maintain log split yeah okay so as a developer the message if you take home for me is once you can integrate with skybell with the swap service you city in your application make allow people to use ETL maybe and convert it to your native token when they are using your application that's from the one inside on the other side someone should be able to provide liquidity to the network and it can even be you okay so we have projects that provide their own liquidity so so talk and political you can definitely offer the own liquidity talking holders if you have some spare tokens and you want to

get some free zone so you can also come and join and be a result manager and finally and okay so currently most of a liquidity is provided by professional market makers who know how to do profit I have to profit from this market makers market making and you know reducing the spreads and they come and do it on our platform so with that I will conclude also as a developer we should probably visit our developer portal we just launched a new comprehensive documentation of all our features and how you can integrate and provide your own liquidity another platform thank you Thank You owl thank you

so we have time for one question and the top question in the in the slider app is is about user experience and how so from your user experience perspective crystally exchanges like shape-shift and other sort of centralized exchanges provide the same type of service can you explain how decentralize exchange like khyber is is a better fit yeah no actually even from if you compare to shape-shift usual SPS is much better because in shape-shift you actually have to wait for numerous confirmations before we do this work so Kaiba if you converted to shape-shift experience is much better you know just as a swap service if you compare it to by

necessity all right so we do not provide full trading platform we don't have an older book you cannot place limit orders it is not in our existing version right but if you compare self to actually we have huge advantage comparing to centralized swap services because everything is really in a single transaction in one click well shape-shift can take much longer than that okay on the other hand shape-shift of course also of you know Bitcoin and other tokens which we still don't offer right so that's okay occasion thank you very much okay [Applause]