DeFi by Design EP#10: L2 DEX Scaling w/ DeversiFi

Transcript

welcome to d5 by design where we talk all things blockchain and cryptocurrency while striving to educate empower and enrich what's up guys just want to take a quick break and tell you about our sponsors for defy slate so first we have acropolis acropolis is an all-in-one defy yield farming platform they actually offer dollar cost averaging into bitcoin and ethereum uncollateralized loans and their mainnet just launched it's called delphi and they actually just filled it up to a cap and they have governance launching soon check out acropolis.io for more and then we have mcdex mcdex is the first decentralized perpetual swap exchange they offer up to 10x on

ethereum perpetual swaps and 5x on link as well as lend and snx completely decentralized trading check them out on mcduck dot io both these platforms are extremely active in the d5 space and their protocols are growing and the users are as well so check those out and we'll get right back to the podcast now [Music] what's going on guys welcome to episode 10 of d5 by design podcast we're here today with ben and ross from the diversified team i'm also here with my co-host rob defy has been heating up lately but absolutely nuts it's honestly really tough to keep up with everything rob how you doing and how you've been

keeping up i'm good andy i'm good uh definitely excited to have ben and ross here on d5 by design today you're certainly right d5 has been heating up i think lots of things are coming full circle we're seeing sushi a lot of other mean coins kind of continue evolving down the d5 life cycle so it's going to be exciting i'm really interested to hear uh what our guests ben and ross have and what they're working on over at diversify ben how's it going today how are you doing good thank you yeah it's great to be here as well and ross you know how you doing this morning i guess it's it's morning where i'm at but uh our friends here are across the pond so how you doing today ross yep we're all good from across the pond

thank you um yeah just trying to try to keep up with all the stuff that's going on at d5 it's more than a full-time job yeah i mean how cool is it to be connected across the pond as we say through some decentralized assets and finance is just completely random that we're even on this podcast and i'm super grateful to be able to dive in so just a real quick primer for diversify and you guys can fill in the blanks of what i miss effectively what we're looking at is a decentralized exchange that has almost essentialized exchange capabilities with their ability to trade and liquidity and slippage and all sorts of mechanisms to effectively bring a extremely great ui and platform to the decentralized

exchange world so if you guys want to hit on real quick what diversify is kind of what what it does and what the unique value is sure i mean i can give a quick intro to that and if i miss anything ross can jump in um but i guess our goal at diversify is to create a self-custodial exchange that can appeal to serious traders and so we spent some time on the research and development phase kind of thinking about what what what professional traders need what they can't sacrifice and what they're interested in when it comes to d5 and we kind of found out that whilst many of them like the idea of custody control and the kind of freedom and and the speed and everything else and the privacy that comes with that they weren't able to really sacrifice what they currently get on centralized

exchanges so the only real way to increase adoption of defy in terms of exchange technology would be to create a an exchange that that can compete with centralized ones on on the key at a cornerstone so privacy speed liquidity low fees prior choice and and the rest of it so that is kind of what underpinned um our approach to diversify we we teamed up with starkware and to build one of the first layer two exchanges and that allows us to offer those cornerstones with the additional benefit of self-custody right so you know withdrawal time certainty we can never interfere with a withdrawal or deposit and traders have complete choice of their over their funds um but but on top of that d5 has all

these other cool things right so lots more features can come from stuff like token utilities so along with those core features of diversify we've also got the the nectar token which kind of sits on the side and it gives traders who hold nectar more say in the future of the ecosystem through the nectar dao which is one of the largest textiles in the space at the moment and it's got 17 000 eth pledged as well as things like fee discounts which are coming soon and some other really cool utility which i can't actually divulge on this call but i think they're supposed to be quite excited by awesome yeah that was a lot to unpack but i certainly am on board with first and foremost the capabilities of starkwear from what i understand of starkware it's effectively like an l2

solution if you will where you know it kind of it takes away ethereum's blockades of transactions per second and whatnot and basically there's that ability for like a plane to have all these transactions in it and then the plane takes off and flies back to the layer one blockchain is able to process those transactions but because it's done off-chain there's the ability for them to be done quicker as well as with less fees kind of reminds me of the zk roll up concept i know they're kind of similar and that's a super interesting idea to have created the exchange on that platform yeah that's exactly it it's similar to a zk roll up with a few subtle differences so all the trades that are done on diversify which is an order book

exchange are cryptographically recorded we can do thousands of thousands of transactions per second i think it's being tested over 9000 transactions per second and then at some point all of those trades are grouped together and the proof of all those trades are submitted to the ethereum blockchain so that's when we call it it's settling and that means that we can do incredible transactions per second off-chain but still maintain the security benefits of the main ethereum blockchain so we're not using a sidechain or another form or variant so traders get high throughput and they get the security of the underlying chain the small subtle difference to a full zk roll-up is that when we were researching what serious traders need from an exchange one of the quoted

requirements was privacy serious traders quant firms don't want to have their trades reverse engineered they don't want people to be able to interrogate what they're doing so we chose to store that data off chain using something called a data availability committee which is a group of eight well-known ethereum companies um such as consensus nevermind starkware diversified bitfinex so all of these guys are trusted with with the data which means that the data is held off chain it's private but then if the nuclear scenario was to happen where diversify and stock were able to go offline traders can always get their funds back by making one of these data availability committee members publish the data on chain

so it's the best of all worlds in our opinion that's something that i guess i tend to see a lot and define crypto overall is the synergy between a lot of different protocols and it sounds like you're you know using some entity for data and then you know an on-chain component as well can you talk maybe about some of the uh synergetic relationships you've built in d5 it's pretty cool we've had a couple podcasts and the sentiment seems to be really preached each time is that crypto and d5 is not about competition it's much more about collaboration what what have you guys kind of seen in that regard yeah definitely i think we're still quite early stages of our journey and we definitely see depot space as one of the amazing things about d5

is that it's so collaborative so one of the points around layer 2 is that layer 2 isn't composable with on-chain applications yet so that's one of the sacrifices it means you can do very very high throughput lots of transactions per second off chain but it means it's quite difficult to link that to on-chain activities in you know the same transactions so you hear a lot about composability being one of the main tenants of d5 and that's something currently that we're missing but within four to six weeks we'll be able to enable that on diversify so traders will be able to have the best of all worlds they'll be able to use their layer two balances but also make conditional trades um so essentially composability on chain with

other various d5 protocols which will open up a whole world of new possibilities that we've never seen before so that's very very exciting and four to six weeks is that a result of ethereum scaling and uh improvements or is that diversify or diverse files so that's a diversifying stockwear feature so what what it will be it's starting life as instant withdrawals so one of the main issues at the moment with layer 2 exchanges is you get all this fantastic throughput off chain but then moving your assets back on to layer one takes a little bit of time um just while the system updates the state and at the moment on diversify that's done every few hours which for a serious trader if you're happy holding your balances on diversify that's great

but if you're an arbitrage trader and you want to move funds quite quickly around the ecosystem that's too long because it's not good enough so we've worked with starkware to build this feature which means that traders are going to be able to instantly withdraw their funds using a conditional trade essentially so they can take their funds that are on the later to make a conditional trade and then we will essentially give them a float which they then use to go off and do all their other trading and then at some point we settle behind the scenes all in a trustless manner and that's really really cool because really then diversify will be the best of all worlds you'll get fantastic liquidity high speed trading the security model of ethereum but you're not sacrificing the the speed that you're used to

withdrawing from from on chain decks is like a uni swap where you can instantly withdrawal or even centralized exchanges like ftx where you can get your funds out within a few minutes those capabilities are certainly going to make a difference and i think it's like it's it's a big race right now while it is collaboration over competition i believe we're in a race of who can get best scaling solution for a dex right now on layer two and get the most users because ultimately what people want right now is less gas fees traders every farmer they want the ability to operate with less gas fees and it's been a strong push to who can get that and who can do it right and well and then who can attract the most users to

their platform by offering you know that kind of ability yeah definitely and i think we've only just started to see people get interested in layer 2. layer 2 was always this kind of abstract concept and it really diversified and loop ring were the first products to really launch on rollups this year only a few short months ago and then we had this wave of default yield farming and people are just they do not want to pay the crazy gas prices it's prohibiting a lot of experimentation and pricing a lot of people out it's even driving people back to centralized exchanges so they don't have to pay these high gas fees so i think we'll start seeing more and more layer 2 solutions coming to market in the form of zk roll-ups or validium

which is which is what we are and in a form of optimistic roll-ups which some other products are exploring as well and then what i think's really can be really interesting is bridges between all these different layer two solutions so imagine a bridge between diversify and so dydx which is another decentralized exchange are also building on starkware so in theory it should be quite easy for traders to transfer between diversify and dydx without having to go back to main chain and then you know imagine if there was a bridge between diversifying loopering or diversifying an optimistic roll-up you know in theory your funds never need to touch layer one you can trade gaslessly for very low fees but still maintaining the security

benefits of the ethereum blockchain and i'm very excited to see that and i don't think it's too far away i think we'll start to see this within the next six months for sure that's awesome yeah because everyone is looking for cheaper gas fees and i think that concept is actually getting proven as we speak with finance smart chain it almost seems like they took d5 and they put on their own centralized twist to it which of course lowered gas views and everyone is really floppy dude but that burger swap ui is trash absolute garbage man i haven't you couldn't even even operate it on google chrome wouldn't even load like just garbage but like i don't know there's probably still opportunities for it

to me it kind of seems like it's the first wave of d5 on ethereum but d5 on binance so the first early adopters are gonna be rewarded because you know they're taking a risk they're taking a chance they're doing something new yeah but it was just trash i was like wow yeah i haven't used it but if it does limit fees that could see kind of a short-term spike before a lot of layer two solutions get out which just kind of even more speaks to how you mentioned it was a race it seems like you know everyone is racing to provide fearless trading in a decentralized way and you know there there are some that i guess are farther along than others yeah russian ben how do you guys feel about finance

and ftx now you don't have to tell me your exact opinions on sam and cz but kind of you guys are building what i would say is you know obviously right now they coexist the sex and the decks but at some point if this whole idea of being bankless and being decentralized is going to come to fruition the dex is going to be the only way of trading that also could be false but how do you guys feel about sam and cz and kind of like the sex world is it more of like a animosity there or is it a collaboration even still how does that work so i think for some there's perhaps a sense of animosity but um not so much with us uh i think i think the angle that i mean what binoculars are doing is obviously

interesting i think the angle of cd5 doesn't make too much sense i'm much more interested in myself and kind of what ftx are doing i think you know their their rapid success is obviously you know very interesting and i think there's kind of real space for d5 derivatives but uh i don't think there's much animosity that i'm picking up on i don't know about u.s well i think the really interesting thing here is everything's moving in the right direction six months ago there was probably only about 5 000 traders who were even using the apps or maybe 10 000 and all of this yield farming started with synthetics almost a year ago and the past couple of months has been huge obviously we've probably now got something like

300 000 traders that are now comfortable holding their own assets in things like metamask or ledgers they're comfortable holding custody of their own funds which is brilliant because this means that the market size for decentralized exchanges has just grown massively um so i think all the stuff is going in the right direction the different technological solutions are interesting there's definitely a spectrum with different trade-offs and it depends what you're willing to sacrifice um and some of these taxes that are popping up on other chains uh it actually can be quite quite to the average trader maybe they don't care about the underlying technological solution but there there are trade-offs so i do think we're going to see more and more

people building decentralized exchanges and i think the opportunities are going to be brilliant but yeah no animosity on our end we think the space is going in the right direction we're still pure ethereum builders and we still think that roll-ups are the way to go at least at the moment because you've got you've then got the underlying security of the ethereum blockchain you're not relying on another chain which you don't know what it might be in six months or a year's time you don't know how that's going to fare whereas i think we can all safely say that ethereum is going to be around for a long time it's one of the large chains and you've got a lot of people building on it the tooling's improving every day so i think we landed on zika and we can go into this later on but

it's really interesting to see other solutions pop up because for certain traders with certain pain points it might be a might be a better solution i think it also highlights the importance of layer two um projects kind of coming together and building you know as fast as possible but also responsibly on ethereum because the higher gas prices the congestion is maybe pushing some people to different chains um so if we can solve that then you know we might slow that down yeah and there there is certainly something to be said about kind of the sophistication of traders that could be operating a decentralized exchange or maybe some of these more nuanced farming protocols compared to kind of the audience of finance and how that audience might have just heard

okay we can trade without fees that's all we were really looking for whereas you know that that trading audience might not even be aware that uh roll-ups exist and some of these decentralized exchanges are also providing that those same features with maybe some additional functionality something that just stuck out right as soon as i opened the diversify exchange was that it had an order book and that's something i hadn't really seen on a lot of other decentralized exchanges most prominently uh uniswap that was something that i i was excited to see because i hadn't seen it on a lot of other dexes what was kind of the reasoning behind going into an exchange with an order book rather than some of these other

dexes that don't have you know some of that info definitely i saw just a different market i think amms such as uni swap balancer are really really good at bootstrapping liquidity for smaller tokens and with some incentive models that we've seen as well can attract a lot of liquidity but you still have to have high fees so you need to swap 0.3 you know as the standard to incentivize those liquidity providers so a trader who wants to trade in significant size just paying quite a high fee paying gas but that's not a huge portion of it if you're a large trader and they can still get front run their their trade can fail

it's not very fast so this is maybe great say for example if you're an asset manager and you're willing to trade slower or you're building a position over a longer time period and you're you're not too worried about taking quick advantage of market opportunities as they arise or the volatility of the underlying asset is so high that you you don't mind giving up slippage and paying a high fee because well you know the token might do 100 overnight whereas we've gone down the order book route because it allows for a much more sophisticated kind of trader so we can offer very low fee trading and something that diversify does is we aggregate liquidity from

centralized exchange sources so we can provide traders with very low fee trading with very very good liquidity without you know without any sort of trade-offs so for example if you go on diversify now and look at our usdt order book we're aggregating bitfinex and diversify orders so you can trade with minimal slippage up to huge order sizes paying as little as zero percent make a fee and you're not being front run and it's tight it's totally private so if you're used to order book trading and perhaps you've even got an advanced algorithmic strategy or you're a serious trader you know diversifies a venue that might might appeal to you whereas yeah yeah i think there's like a

split between the d5 degen if you will and then the traders uh and i think the traders who are trying to actively day trade and swing trade they prefer order books obviously per the capabilities but i think the degens who are in and out providing liquidity and farming they just want a simple way to get in and out of assets to farm with or to hold or to flip and so i think that's where like the ama or the amm comes in and honestly the amm contributes to this house of cards with yield farming if you will the ability just to swap in and out to provide liquidity and then take it and take your lp tokens and farm is kind of absurd and i i've read a few medium posts about the d5 house of cards

coming to a crash at some point just because of the uh the adding up of all these collateralized debt positions so basically if you put in funds to say ave and then you borrow some say you borrow some stable coins and then you take those stable coins and you provide those stable coins with eth to liquidity into uniswap and then you take those lp tokens and then you provide that to a farm and then you take the farm tokens and you provide it you know there and so it's like this big circle of these collateralized debt positions as well as lp tokens all over the place how do you guys feel about that the house of cards if you will of d5 do you see that as being a problem with all this lending and borrowing

and farming you know is insurance is that going to help is liquidity mining okay i mean there's a lot of questions here but it comes down to the house of cards of defying and where this all goes yeah i think it's it's amazing to see first of all you can add any assets at uni swap you can you know all of these different d5 protocols you you've got your own control over what's going on so it's fantastic to see and obviously there's some bad stuff that goes with that like rug pulling and yeah people getting overextended you know we've all had the horror stories around people who went max leverage on compound to yield farm and then you know five seconds later there was a small interest rate differential or whatever and then they got

liquidated and you know people who are borrowing into smart contracts the uh dodgy and unfold properly etc um i think with the innovation always comes the the scammers but the innovation is just fantastic seeing itself in terms of the house of cards i think there's a lot of redundancy built into the system i think what we will probably will need to go through some shocks so i don't if you remember black thursday what was it february or march when the stock market crashed and crypto came with it on that day you couldn't get you couldn't settle an ethereum transaction uh without paying you know ridiculous gas prices and i think even since then we've seen higher gas prices so i'm really interested to see what happens when

there is a huge spike down and you know ethereum and bitcoin definitely you know 50 that spikes down or whatever how how all these protocols cope when people realize that they can't get their funds out or they're stuck in positions because they're now having to pay a thousand dollars gas to get a 500 position out which is why i think diversify is adding something really interesting to the d5 space because traders are always going to be able to trade on diversify no matter what happens to their gas price on main chain so they can hedge their positions they can they can carry on trading freely so i think that's really interesting and the arbitrage opportunities in itself are pretty amazing because we're seeing traders now actively trading against amms using the

fast high speed liquidity of diversify getting their funds into diversity pretty quickly and soon they'll be able to get their funds out pretty quickly so that whole that's an important piece for price discovery and and arbitrage in the in the space so yeah very excited to see everything develop over the next couple of months but probably need a few shocks to make sure there's enough resilience in the system the innovation has undoubtedly been amazing it's crazy how fast everything is moving too and i think there's a lot of of marketing and shilling going on of apys and uh this ability basically to get rich quick that idea i think is prominent right now in this space which is unfortunate but it is what you know a new market

goes through while it does feel like the ico hype it's obviously quite a bit different but how do you guys feel about the apy shilling has diversified done any of that is there any apis to be had with diversify or through nectar token and then you know what's the ethical boundaries of that is it okay to be flashing these super high apys to get a bunch of liquidity on your platform you know voice token distributions is it a negative thing i don't think we've had enough time yet to see how sustainable these liquidity mining exercises are because liquidity mining is essentially just giving away enterprise value or some value in the protocol and it's just being done very

aggressively at the moment so i think it's gonna be really interesting to see how many people stick around to some of these products once the rewards dry up um like you know you saw the sushi swap um a lot of the liquidity just moved on to moon swap and um was it sashimi or there's so many of them now it's difficult to keep track so i do i do wonder how loyal liquidity is going to be i think we're seeing it does move quite quickly to the next big apy play um we haven't done anything like that at diversify yet we are examining lots of different ways of incentivizing sustainable liquidity so we you know we will probably be

launching something at some point which incentivizes traders to use our platform but not expose them to dangerous pools where there's ridiculous apys where people can rug pull and you're a product that no one's ever heard of launching anonymously and before you know it then everyone's run off with the funds yeah i think as a concept liquidity mining is um pretty good and but good for long-term projects rather than kind of the fly-by-night ones um that we're maybe currently seeing um and for next in particular kind of that that concept harks back a bit to nexus origins back in 2017 when it was launched as one of the first it wasn't called liquidity mining then

it was just called you know the next reward token um that was distributed to market makers on the old ethernet exchange which is closed down now um and so that was for sustainability it was for long-term growth of the of the ethernet exchange it rewarded its most loyal traders um with you know nectar tokens which were governor's tokens and had all sorts of cool utilities that was a crypto winter um so the phenomenal spikes of growth that we see now weren't really there but over the longer term um it served a pretty useful function um amongst our nectar holders who gave us a lot of good feedback and feedback about it so i do think as a concept it's not going to go anywhere and it's

it serves best long-term projects if that makes sense yeah yeah that does make sense and it kind of gives me an idea of how diversified is positioning themselves and uh crypto as a whole where i i think ross mentioned the arbitrage opportunities and now that i'm i'm kind of thinking about how diversify aggregates liquidity it seems like there would be i mean a number of different arbitrage opportunities as diversified starts to integrate more and more sources is that true it kind of as you guys integrate more or aggregate more forms of liquidity from different places are traders going to have an

opportunity to see maybe cross spreads you know where they can arbitrage between one liquidity provider and another yeah i think that's one of the things that we're angling for with diversifiers you know our we're all about giving d5 traders kind of the edge so by aggregating centralized exchange liquidity but allowing them to take that liquidity or use that liquidity without taking any counterparty risk themselves is really powerful so we can be a bridge between on-chain and centralized exchange liquidity which is really interesting because then you've got a very fast-moving deep liquidity source for d5 traders to then use to arbitrage against slow moving

amms or unchanged x's so that's something we're really really excited about and i think we we're going to see that a lot more in four to six weeks when we uh announce the or when we have the instant withdrawal feature live because at the moment arbitrages have to wait to remove their funds from the exchange but when they don't have to do that when they can move funds in and out within a minute or so i think we'll start to see the use on diversify and the opportunities really explode yeah because right now the liquidity is fragmented well it is fragmented in one sense but it i what you said is actually i guess more accurate

it's moving faster in some places and it's moving slower in other places and i think that is leading to the fragmentation of a lot of liquidity which means that aggregating all of that and providing one interface is going to be powerful and you know some of these traders that might be priced out of d5 you know for gas fees or whatever reason uh could find solace in a more i guess a more actionable strategy one where they're not priced out of the market um i've done some arbitrage trading before and i mean it's not it's not difficult it's pretty simple to get you know you buy higher than or excuse me you buy lower than you sell and you sell higher than you buy and it happens all pretty quickly so i'm hoping you know diversify can

uh i guess add more liquidity partners i'm not sure what the plans are there but from my experience it seems like the more liquidity providers the more arbitrage opportunities is that a similar case that you guys have seen yeah definitely and yeah you understand how it works so um just having more pairs with different sources of liquidity will increase the charge opportunities but even um even if it's not arbitrage even if it's just people want to trade without paying the high fees that you get with on chain indexes because we're seeing more and more people now saying they'll never go back to centralized exchanges which i think

is really interesting but at the moment if you say you want to take advantage of the next yield farming opportunity you need to switch your usdt into eth or another d5 token at the moment you really can only do it using you know say 2c swap or uni swap or a centralized exchange to give you that that the deep enough pool of liquidity to actually make that trade but you're still paying either a high amount in terms of trading fees 0.3 plus gas per slippage or you're trusting your funds to a centralized exchange and uh you may have to wait for your deposit and withdrawal so if diversify can offer very fast deposits and withdrawals very low fee gasless trading whilst in whilst never taking custody of your

funds i think that's a really that would become really interesting for the traders for d5 traders right right and and now that we're on on the subject of the exchange and and the trading i'm curious as to where the nectar token comes in uh so in in other protocols and previous examples we've seen an aspect of governance on binance for example if you hold bnb you get a fee discount now there's actually even farming with these governance tokens and bnb so how does the nectar token accrue value why should people own it is there any ponzinomics if you will or is there any yield generation opportunities or what are the benefits whether it's in a

monetary or a governance or in in what sense of owning the nectar token aside from just a price appreciation what actually accrues real value for the nectar token yeah i can take this one ben so the next token is a as a fixed fixed supply so there's it's not an inflationary token it's a deflationary it's got three main forms of utility at the moment um but anybody can propose uh changes to the utility so the first is it gives you voting power in our dow so as ben mentioned before the neck dao has got some of the larger nectar holders sticking a nectar into it i think there's something like 30 million

dollars of nectar staked into that dow now and that's where all of the proposals that we discuss on discord and telegram uh are voted on uh the seventeen thousand eighth pledged to that dallas that's the largest dow um because fifty percent of our exchange fees from our old exchange uh were pledged to nectar holders that's not controlled by the dow so that's the first form of utility second is we use up to 50 of uh exchange fees to buy back and burn the net to token in weekly auctions so that's very exciting so over the long run next is a deflationary token um the more trading activity on the on the platform the more tokens are burned same whereas b and d

or leo and then the third form of utility which is just around the corner is it gives you trading fee discounts on the diversified platform so fees at the moment start at 15 basis points for maker 20 basis points per taker and they go down all the way to zero for maker and five taker but having nectar gives you a discount on those and then we're just starting to explore more forms of utility as well as we start to build more defy features and integrating with more d5 products so there'll be more opportunities for staking in the future and then as we as we spoke about briefly earlier um some longer term liquidity mining uh incentive programs also just around the corner

yeah i think i think the cool thing as well is um we've recently welcomed a number of um fairly well-known brands to the nectar dao and who we're working with feeding ideas back and forth with regarding you know the future scope of next utility um so yeah i think there's a long road of exciting stuff yeah awesome and i i have one more question and i think andy might too but you know we we are uh running kind of short on time so we can wrap up soon um i was curious because you mentioned that you know nectar holders can create proposals and uh vote you know with their coins one thing i'm always interested in uh with decentralized exchanges is the listing process

so uh is that something that's controlled by the dow um or maybe if there are some other functionalities if you could explain those as well that go into that come from nectar holders um and some of their either votes or proposals what what have you know they done in the past and what can they still do in the future to affect the exchange yeah definitely so at the moment um we um we add tokens based on you know various factors like liquidity in community and uh yeah and what we can source very good liquidity for in the past we've used um the cleros decentralized token registry to check tokens to make sure they're in

line with our requirements you know they're not security tokens etc and that was something that we would love to bring back so um once the tokens passed that registry process where the terrorist community did all the the um the fact checking and the the distributed court system um we then had a community vote where holders of the next token voted on which of their tokens they'd like to add to the exchange so that was that was really good and we ran i think about 12 rounds of that and added the tokens onto the old fnx exchange we'd love to start something like that up again at the moment we're prioritizing building the new features on the exchange and really adding utility and making diversify somewhere that traders really want to

trade but then i think over the next few months we'll start to see more of not just the listing process but other aspects of the platform becoming decentralized and community government that's great yeah the governance is certainly an important aspect but i've also read articles and ideas that are contrary to that point in a sense of governance and governance tokens are worthless which is really interesting point of view to have so i think it's you definitely need to have other utilities for tokens than just a simple governance because the fact of the matter is not a lot of people actually cooperate and participate in governance now you guys may see a bit of a different effect in the dow but for the most part the people who own the tokens they don't really do a whole lot with the token when it comes to governance

and so that idea of just oh yeah you can hold x y and z token for governance like it's not worth a whole lot until it has other utilities and in my opinion that is some sort of cash flow some sort of deflationary measure as you guys said as well as some sort of utility either to work in sort of yield farming or to be able to use for liquidity which kind of comes back to the cash flow idea so really solid that the nectar token has other use cases than governance i do believe that the governance will grow as a concept over the next few months and years but for some reason right now after being exposed to all these governance tokens and all these proposals i've seen a real lack of participation thus a lack of value just in a

governance token andy the way the way i see it i don't want to steal this question so i'll be quick but the way i see it is pretty much like equity and tokenizing equity and if a company doesn't have a revenue model then that equity you know really has no value proposition which i i think is kind of what you were speaking to yeah so yeah i was just gonna say yeah yeah a token needs like a cohort of utility to work you know together for it to have that value um but on the governance side i think the key is just finding the right stakeholders who do have interest in the future of the exchange or whatever the protocol is and are active enough so i think it's a matter of enfranchising the what the

right people um and also enfranchising perhaps smaller holders through things like coalitions and delegation and stuff like that um but in general dao's uh you know they've been around for a while there's there's a lot of incredible work being done by you know dalstack aragon some others and i think i think in time um we'll see a really interesting growth rate for dao's in general and people will become much more interested in participating they'll find their communities and uh yeah i think i think that will grow in time but i do hear what you're saying that you know many dao's kind of they haven't passed yet a threshold of of activity right it's a growth thing and i think it's so crazy how

the tokens have evolved from 2017 where you could raise money with a white paper for you know say uh what was that one coin for the dentists oh my goodness is it dentacoin i think it was dentacoin yeah the the only use case was to be used for transactions for dentists we can just why can't we just use ethereum right so it's like that token had literally that was the only only case i believe and now you've got tokens that are governance and utility and cash flowing and all sorts of things and now we're sitting here still just kind of like ah man these tokens need more it's just super cool to see that development from you know two three years ago and then

now and then what are tokens going to be used for in you know three four five years yeah yeah yeah i completely agree i mean 2017 team gave birth to so many questionable tokens um obviously many just cash out on the on the buzz words and the hype um but amongst those there are some legitimate tokens um who are working on some amazing things so i guess we've still got a consolidation phase to go through and d5 and crypto in general um but yeah i mean there are some amazing things going on out there dow stack at yarn aragon uh and various others awesome well guys it has been an absolute pleasure ross ben rob this has been solid i know the listeners have got a lot out of this we really appreciate

you guys coming on and speaking about defy and diversify really good stuff here today guys thanks guys okay yeah thank you appreciate it great andy thank you appreciate having us on yep and that about wraps us up guys thank you for listening you guys have a great day thanks for listening to the d5 by design podcast until next time d5 slate team you