ETHMilan26 - The Missing Volatility Income Layer of DeFi

Transcript

Okay I well first of all thanks Milan for organizing this beautiful location like so proud of doing this right here. So I'm Dan and the co-ounder of risk. Risk is a D5 options protocol and what I'm going to tell today about is um I'm gonna tell the story on how we almost that by doing options and what we learn of doing that and where we are today. So it's going to be a story of like risk and the options overall. So we started in late 2022. Um DeFi was completely different from what it is

today. Back then we had the you know defy summer. We have like tons of liquidity and I remember we done our fund raise back then in basically not even having a deck. I were like I we have an idea. I think options are you know one of the most powerful instrument in threadfi. We want to build them for defi. And that was pretty much the wall pitch. We got into fund raise. We raised money like completely different industry. And our thesis was that simple. It was like you know there is options like one of the best instrument out there. And we going to bring it to the fight that you know that's pretty easy. And this was our first product ris. We launched this about like mid 2023 or something like that.

I post a screen of it because I think it's it's very important to try to understand how it was designed. And it was a purely option exchange. Uh we had a mechanism behind of you know a pool that it was always the counterpart in market making. So it was very similar to an automated market maker but for options as a user this was the interface. You get in you see strike prices you see expert you see implied volatility all the data out there. It was super fun to build like beautiful challenge and we launched it and that's what happened. Um we started you know March May this was the TVL we went up to one mil it went up to two three mil up

to four mil and then it was basically down only um obviously you know as a as a builder you are in that phase of like okay it's not working um people are not using it with no you know what we going to do next like it's it's weird people don't want options so why didn't work um we look back and it was like the reason why that product and you know I'm going to go back with the image this product didn't work it was fairly simple looking back obviously you know when we built it we didn't understand that but looking back it was pretty straightforward the reason didn't work it was because we were targeting option

traders which they are probably the most sophisticated actors out there and if you're an option trader there you care a lot about execution, pricing, spread, liquidity, all of that. And the fact that we were building the product for DeFi, just the fact that it was DeFi and that was kind of the value add that it was not enough for a trader. The trader was like, I don't care like I just want to make a good trade. I don't care if it's DeFi or centralized or an exchange, whatever. So, at the end of the game, the main issue was that traders didn't use the product. So reality it was a bad product. Um which is hard to accept you know when you build something and you spend long time into that.

But there is also one more reason for that. Back then options in dreadf were working a lot because most of the traders they wanted leverage. Um so if you remember like you know the GameStop or you know Wall Street bets type of people for them it was very easy to get this leverage by using options for example on Robbie not you buy a call option strike out of the money and you hope that it's going to go up. It's a lottery ticket. What happens in DeFi is that the same thing could be done basically with a per which was not existing in thread. So you go to, you know, now it's hyper liquid. Back then was GMX or whatever. It was like I have a thesis. Market is going to go up. I'm just going to go 25x leverage on the

asset. If it's going up, I'm going to make money. That simple. I don't have to think about volatility. I don't have to think about strike prices, calls, expertise, whatever that is. So the reason is again our product was not basically we didn't have the right user. um professional was not a good product for non-professional options didn't matter and one thing that we learned by talking to a lot of users it was that people had a negative bias when it come to options and probably if I ask you know some people here as well you you're going to be like I'm not going to touch that like options are risky they're complex I lost money today like I'm not going to touch the options anymore like I don't you

know I tried not for me and that was actually pretty big like Most of the people were thinking like that. So this is what happened. 2024 that's what I called the bottom. Basically we didn't have a product. We have no TVL. We have no users and like okay what we going to do next? Lucky enough we looked around and it was like let's see what this industry is doing around options. Let's study what others are doing. Let's let's see what the you know landscape is looking for.

So we have the option exchanges like order book exchange. So order book exchanges and they main focus is targeting professional traders and there is basically probably only a few if not probably just one that they're actually able to attract all the liquidity that those traders are looking for. And you know it it got bought by Coinbase for like a billion and so on. Um, and the the issue that we see about those product is like they're not accessible for the average user. So, if you're not an option trader, you open one of those exchanges like I don't know what's going on. You're not going to use it. On the other side, if you try to

target options traders, you need to focus a lot into attracting liquidity. And let me give you an example. Um, I'm pretty sure all of you know what is an order book, right? And when you think about an order book for an option, you have to think about that you need some market makers for every strike, every expert, every asset out there. It require a market maker to provide that liquidity, which is insane capital inefficient. You can do margining, you can do a lot of it, but at the end of the game, you have thousands of order books and each one is independent and needs liquidity, right? So at the end of the game, attracting the liquidity was very hard. So we thought about like should we build an option exchange with an order book model and you know we I look with G micound was like there's no

way that we can get that liquidity for making a good product. Um to do that we probably going to spend so much money that it's not going to be sustainable because we need to pay those market makers to provide liquidity and we're like okay let's not build an option exchange with an order book model because there is no way it's going to work with you know especially our resources back then. Another good pro like another you know good example of a product that was popular back then at least like 2022 2023 was the options vault. So the options vault what they were doing they were trying to package the options as a yield product. So the idea was like you put money into a vault the vault is running a strategy and you should get profit out of it which in reality didn't happen like most of the

product we're losing money and the main reason was like because it's very hard to believe that you know with with a very rigid execution and a very systematic uh without you know much risk management you you're going to ended up money is making you know profitable option strategies especially at scale. So you know we we've seen the and presentation before like yeah you can do a systematic strategy but at the end of the game scaling there and so on it might be it might be tricky. So what happened with those product like they got a lot of TVL like product like reborn for example they got 300 mil 400 mil TVL but at the end of the game they were losing money consistently for the user who deposited and the users they actually have no the education to know what what happened. It's like oh I put

money in I should get a yield out of it. that didn't happen. So that was like one of the opposite examples. So you had the option exchange targeting pro traders and then on the opposite side you have those options vault targeting you know just people depositing in a very passive way that don't understand what's going on and we were like there must be something in the middle right like it can be that extreme and what we realized is that we started to talk with a lot of option desk and most of the option desk out there they do OTC trades and they mostly do strategies like cover cash secure puts and I'll go into details later on what that is. So we talked to them and we realized that actually one of the

main business for most of the option desk out there it was actually running those strategies. So our thesis was why this is actually not available on chain in an accessible way. Why I need to do an OTC which and let me give you an example how an OTC works in this case that you have first of all you need to know those option desk you're probably going to get a telegram group with them you need to on board with them which means you know all the bureaucracy and and all of that usually it's extremely time consuming like it can take months out of it and then you do a bilateral agreement and when you decide to open for example a cover call position you send them the collateral so let's say you have you know one bitcoin and you want to do a cover call on that bitcoin.

You send the one bitcoin to the counterparty which is at the end of the game an option desk which is you know an hedge fund and market maker or whatever and basically you have the counterparty risk of those actors and we tend to believe that you know bad things don't happen but I started basically working into defy options since 2020 and I've seen probably five or six option desks blowing up so bad things happen so you know if they have your money because you send it to them and they blow up it's over. So that's something that we looked into it and was like can we make that accessible to anyone? why should I go on you know telegram group on boarding and you know I have to be an entity and so on to do

that and that's basically what we realized it's like can we actually make those strategies in an accessible way where everyone so we're not talking about options trader we're not talking you know about very specific use case but like literally people that are you know in crypto they have assets and they would like to earn on top of them can we make that accessible and the thesis that we had and probably looking back it was kind of you know ambitious somehow it's like I think everyone packaged those product wrong um we were you know probably crazy probably naive to think about like that but like that was our idea was like we believe that everyone package that in the wrong way and we made a bold thesis and this is something

that we always say internally as well it's like our product is not options we're not selling options to the user We don't want user to use option. This is not our product. Our product is the benefit. So the benefit is not the option. The benefit is like a very specific use case that you can do with options which is the income generation. So options as you saw the previous presentation they are so powerful instrument. You can do so many things with them that at the end of the game you don't do anything with them because they're too powerful. And so our thesis was as simple as can we focus only on one use case of option like why we need to do thousands of thing like let's just do one really good and that's all the product that we built around that. So we

designed a primitive we call it ris v12. Um it's not the 12 version as many people think like some you know when we started some people were like you guys build 12 versions of your product. I was like no probably even more than that but 12 is inspired by the engine. Um different story I can talk about that later but the main idea was can we actually make a product that is lally as simple as I have an asset. I choose a price I'm willing to sell or buy and I'm earning. That's simple. I don't have to think about anything else. I don't have to think about, you know, all of the other complexity of the option. And in this way, what we were trying to do, we wanted to make the income generated from volatility. So, you know, we are all of

the presentation before about volatility, selling volatility and so on. It's like, can we actually make all of that into a very simple product? And that's what we built. So, to me, it's crazy. Every time I look at the previous product, the V1, and I look at the V12, the crazy thing is it's the same back end, it's the same product, it's the same smart contract behind it. It's the same concept. We package it in a completely different way. Like right now is you only have one button to click. You only basically the question that we ask the user is choose the price you are happy to sell BTC at at the specific date. So I don't know when I made this slide BTC was at 66. If you were willing to sell BTC uh BTC at 76

that's the premium you get and you do the trade. That simple. Um we can do the opposite side which is choose the price you're willing to buy BTC. And the crazy thing about that is uh you know when we were rebuilding the product we were like let's rethink all of the options from the you know from the ground up right I if if you ask anyone what is the definition of an option is as simple as it's is a right to buy or sell an asset that's what it is and we you know as options people and traders and quans and builders. We over complicated that which is totally fine like it's the the beauty

of it but at the end of the game that's what an option is and that's how we package this this product and we launched that almost a year ago and we launched with these two main product covers and cash secure puts. So risk is not a place that you go there to do any option trade. Like if you're looking for any specific options payoff, it's not the right place. Go somewhere else. But if you're looking to earn out of your asset, that's the right place. So the thing is, if you are, for example, you have BTC, you're willing to sell a certain price. So back to the original example again, you're willing to sell a 76, you can earn because you are long the BTC and you are short the

call option. So that's what a cover call is. It's very simple to understand. You're basically just saying, okay, if the price of BTC is below 76, I make money. I get my collateral back. I make the, you know, a premium up front. If it's above 76, I get USDT or like, you know, basically dollar for the 76. So I'm basically selling a higher price. That's that simple. And this strategy is again it's one of the most common strategy in crypto OTC but also in thread. There are like ETFs and so on and like no one was building this in DeFi. And that's basically what we made.

The opposite thing is the cash secure puts which is a very popular strategy. Funny story at the beginning we didn't even have them. We were like okay let's just focus on cover call. Let's see if that works. And then users been asking for that because most of the user was was like the opposite. I was like, hey, I actually don't want to sell my BTC. I actually want to buy if the price dump. I want to buy cheaper. So, I want to deposit cash, which is, you know, USD and I'm willing to buy uh cheaper. So, cash secure puts was communitydriven. People wanted to trade that. We released them. It's actually right now is the main instrument on on the product in terms of like utilization.

And there are two use cases for risk. Um again if you look at this you can see probably on your own like how people use it. It's mostly people that are like I am willing to sell and 76 is a good price. I I'll do the trade or on the other side there are the people that are like I don't think it's going to hit that. So it's more of speculation thing. It's like I don't think it's going to eat 76 so I'll do 76 and I'm earning you know this yield or like income over and over. So those are like very simple use cases very simple product. We oversimplified that and we made some very interesting decision I would say and one of them is that the our idea was that the protocol should be able to

create those structures on any asset and this is more also a thesis on like where this industry is going where DeFi is going. Um right now obviously you know we have crypto assets we you know we love them and everything but we do believe that DeFi is going to be a settlement layer where any asset any token should live and we should be able to basically create those structures on any token. So right now we have crypto asset but you can also use for example staking yield bearing. So you can do you know BTC or you can do IP but you can also do K I which is a staking IP that is yield betting you can use that as collateral we already have 15 plus assets live we are about to do gold as

well with uh XUT um tether so very excited about that it's going to go live in the next couple of weeks we will do tokenized stocks as well so you can see the potential of this in the long term it's like if you hold you know onchain Tesla um token stock you can should do you know the cover call very similar to BTC. So we designed the protocol in a way that should be you know composible to any asset and then we made what I believe is probably the most important facure like um for [clears throat] risk that we decided to go for which is theq system.

So when we designed this product because we focus only on one use case every decision that we made was optimized for that use case. So when we were like okay we users going to do those strategies which is you know I deposit BTC I'm selling a call option on BTC who's going to buy those option um and we decided to use the RFQ system. So the RFQ is that simple I want to do a cover call example before selling a 76 on BTC we send to options desk and market makers that integrated with us and some of them are even in this room right now.

We send them a quote uh in a fully automated way. So basically what we sell them a request for quote. So they are like hey there is this user X that he wants to sell a cover call on BTC strike 76 expert end of the month. You have two seconds to price them. So in a fully automated way they say okay this is what I'm willing to buy this option for. So it's a two seconds auction and we show the user the best quote. So the user knows exactly what you know how market makers are pricing which one is the best one. If they like the price, they do the trade. If they don't like the price, they don't do the trade and they complain with us of like, hey, the price is not good. Are your market makers to do better? Um, the thing about this is

like why is the best execution for this? Well, first of all, market makers, they don't have to commit any capital. So, back to my example before of using an order book model. If market makers was supposed to provide liquidity for that, he has to fill all the books for every expert, every striker and so on. But in this case, you only provide a quote only if there is actually someone else that is willing to do the trade. Right? So you only provide on request. You don't have to provide the liquidity for, you know, any assets, short, long, and so on. But you're just saying, okay, I'm willing to buy this option from you at this price. I'm going I'm going to pay the premium. And by having an NFQ, we are actually able to price anything. So back to the, you know, point before of

having any asset with an NFQ, we can do optional leure on everything. Uh we even have option on poor which is a memecoin on hyperlquid and people wanted to do cover call on top of it that could do it to risk like market makers can price that it's not the biggest volume option out there but like it's interesting to see that in this model anything can be priced and then we also focus and I think this matters a lot especially in the last couple of months when you know we see a lot of ax we see a lot of like bad risk management ment around DeFi, not just terms of exploit but like in terms of like decisions that are made on coll collaterals and everything like that.

When we designed risk we were like we want the protocol to be a very simple settlement and safe layer. So the idea was we once you deposit the collateral so you open a position you deposit the BTC the BTC stays on the on the chain on the smart contract no one can touch it by the sign we don't send it to anyone um so different from an OTC trade where you know the market makers receive the collateral for us it's like we don't trade off if you market making a risk you're not going to get the collateral collateral is on chain the sellment that that's on chain so is the smart contract doing all the all of the job. We don't put the

collateral anyone else. So we don't you know people sometimes are like hey why don't you put the collateral into a lending product or whatever. We're like no we don't touch it. We want this to be you know it's a primitive it's a settlement layer. We don't want to add additional risk because as a user you should take the risk at the level of the financial risk. You should be able to pick the strike price you want. You should be able to sell the cover code you want. You should take any position you want there. Like it's up to you. But like once you put the money in it should be the safest thing. So again we don't do um any repoation there's no counterparty risk. Uh positions are isolated. So even if a collateral for example ended up the pegging or whatever only those specific positions are

affected but not the world protocol not the other users that not you know that don't never interacted or that don't care about that. So those are like decisions that we made because we believe that D5 should be like this. So we don't read off. Um sometimes those decisions means that our UX might not be the most ideal for certain use cases but for the ones that we focus on is the best and we believe that users use the product because of that. So what happened? We launched in 2025 a year ago, exactly a year ago actually on Hyperliquid and right now we are the number one option protocol on hyperlquid by TVL. We were the first one to you know offer

volatility product on liquid but even more important we were the first place that you could trade IP. So we you know we believed into that a year ago and now IP is doing ultimi and it's exciting to see you know a year ago we were like already building around that we you know we made that bet and you know very happy that we we were like very early on that ecosystem. Um this is the growth. So if if you remember the chart before which was down only this is actually the opposite. It's up only and this is basically the uh positions open. So obviously we started you know May June last year we were testing everything we were doing like you know something like a million per month in in notional deposited and now we do something like

40 45 per week. Um so the growth is there just now I think we have in the protocol something like 70 million uh TVL 71 whatever and the most exciting part is actually those those stats um not much about the notional or the premium because you know like it's to me as a builder it's like the fact that our users earned 13 million in premium like it's a lot when you think about you know from from this perspective for a protocol that a year ago wasn't even live. But the crazy thing and that was probably like the assumption that a year ago I will not bet on is that we have a 90% fund retention. So options have expiries. So

tomorrow for example, Friday uh we have expertise and we settle all the positions. So now we have 70 mil TVL probably 30 40 mil tomorrow they're going to be settled to all of our users. So users get that collateral back right or USD or whatever. And as a builder, I'm like, okay, we're all going to settle those positions. US got the money back. How, you know, how likely is that they're going to put money back into the system? Like when I a year ago when I was thinking about it, I was like, this is going to be a very big issue because people, you know, they're going to forget about it. They're not going to put money back in. In reality is the opposite. Like we have a 90% fund retention. What it means is like users every Friday, they got the money back and they keep opening those positions.

And this is also probably related to the point that Andri was making before about the trying to do this in a you know like kind of like roll over, you know, every week you're going to choose a new strike or a new experience and so on. But users they don't use risk as a standalone product. They use it as a strategy. So every week they basically keep putting money back in and earning over time out of it. So it is a strategy that they use and the main way for them is I have assets and I'm trying to earn out of those assets in a very consistent way and that's the kind of innovation that we brought into the space. So this is something that again I remember

I think a year ago I was here we were talking about like institutions in DeFi and I was like yeah you know there are institutions but I don't know if they're actually very active and so on and a year later we have the first one using risk which is insane like you know thinking about that so we have a it's called epon device and hyperlquid treasury their mandate is to accumulate more IP they're using the risk infrastructure and they have NASDAQ list identity So for them we designed a product which is called risk premium. Um it's it was meant to be you know open to anyone but we use as as a pilot to start with and it is a permissioned ecosystem. So as an institution they are able to um deploy

capital only on their own. So it's a vault they deploy their own capital they can open that up to only while listed users. So I don't know as an institution if they have any LP they can only you know the LP can provide into them and they can only trade with selected counterparty. So they're meeting all the compliance required for they you know um for for being a publicly set entity and it's basically they're using the benefit of onchain like they have no counterparty risk they have all the transparency of being on chain and they're still using you know the and they're still meeting the compliance requirements of you know wisting counterparties on boarding them and so on. So this is also a step forward. So we as I mentioned

earlier like we we knew that people were doing this OTC. Our goal was to target a new type of user that they were not able to do that OTC but now we're also seeing demand from actually institutions to run their own chain and they're using risk as an infrastructure. Now the last few points and by the way this is actually the Milan stock exchange. I don't know if you many of you probably don't know about it but like the Milan stock chain just the middle finger in front of us it's five minutes walking from here you should go visit but why I chose this slide is because one thing to keep in mind and like volatility is everywhere it's a very important part of our you know of finance of our life like volatility is

it is a big piece of it and our thesis is basically as I mentioned like we believe any asset should be able to earn on top of it. Markets have volatility portfolio benefit out of you know doing those strategies. We see our like some of our users to give a very simple example they can benefit from volatility by generating income that they use for like paying rents or whatever they do like it's basically like they can generate income by leveraging or you know benefit from volatility. So volatility is everywhere but the beauty of being on chain is like basically you change who can benefit from this volatility. In the past like those volatility product where mostly

like get it thready only few user can access to it. Now everyone can do it like most of our users are you know like our top user and this is probably one of the best example is I never talk to him like I don't even know who is it's just an address. is our top user. He loves is doing the risk every day and to me that's the beauty of the system and it should be like that and that's how we designed the product but this is what I like to always say also to the team is like it was never about options and that was the mistake that we made at the beginning like at the beginning we were obsessed with let's bring options let's design an option protocol let's offer options to our

users in reality It's way more than that. Um, options is volatility. We package volatility in a way that we use options, but like that's not the benefit for the final users. But even more important, it's like the fact that our users know exactly where the collateral is at any point of time. Anyone can access, anyone knows what's going on. It's all on chain. We don't make difference between different type of user. There is no privilege. There is no nothing like that. Anyone can just in one click do this trade.

It's basically the reason why we've been always building this. So we try to offer volatility product. I think we are on the right direction. There is still a lot to do. Again starting to see institutions into that but at the end of the game one thing that I would love that anyone get you know out of the room here thinking about is always focus on the benefit. Don't focus on the instrument behind like the the engine is not what matters in our case. You know the engine was the option but if you go to our website we don't even mention options anymore benefit on focus on the benefit and that's what we've done and again we I think the achievement of making volatility products and options

accessible to anyone is probably like the mission that a year ago I was you know on this stage talking about it and now I can say that we've done it. So that's the main thing and as our users say risk it all and that's it. So if you have any question or something happy to reply that [applause] [applause] >> so the thing is it's always above like

offering a good product right and a good product has to a liquid product in this case. So as we growing we see more demand from buyers desk and so on and that's as we are on boarding them and we are creating this you know FFQ system with all those actors we can offer more volatility product but it's just a fun like we like to send product out there that they are like they're good. So before offering new product we want to make sure that they're liquid. Um and that's the same for example with gold like we we can launch gold right now but we we want to make sure it's a good product. So we are you know making sure that there is liquidity and one thing that we haven't done a risk like we don't everything is organic we didn't

pay any market maker we we don't have special deals like we try to do this in a very neutral and transparent way. So if we take shortcuts probably and go to market maker and be like hey we're paying you money can you you know do this in in a faster way probably that could do it but that's not the way that we believe should be especially because again it's you know defi and everything so yeah they will come once we have more liquidity more desk and so on and the sides we have now is good enough for them to start integrating so yeah it's just a function on how fast they are to provide liquidity and it's a new market like the thing about a product like risk is if you do a pair product today is very easy for any market maker to provide liquidity. They're used to

basically thousands of them. Risk is very unique. So they need to get comfortable with you know the options the the FQ the sellment the physical settlement and and all of that. So it takes more time but it's also the good part of like building something new from scratch. >> Thanks. >> Any other question? Thank you Dan for the presentation. Just a quick question probably I missed the first part maybe uh in the put uh option uh product. So the one where you deposit dollars uh can you remind us what

happens in the background? You mentioned that when you do something you send an FFQ to another party and they need to match it but isn't there like another matching mechanism like a vault behind I'm missing that part sorry yeah so risk is not a vault and that was something that at the beginning when you know when we were launching was like people were asking like you know uh risk is a vault blah blah was like no risk is not a vault so the way you can think of risk is is an exchange Um, so when you click that button there, like you know 76, now obviously it's a screenshot, so I cannot show you the process, but when you click the 76 button there, we send um a request to

all of our market makers that I integrated. And the request is as simple as, you know, the a user is willing to sell strike price 76, export 36 days, blah blah blah. They price the option. Um so the in this case the 993.42 42 is the best quote from from the market makers. When you click the you know that button earn a front you deposit the in this case BTC for the cover call you ask for the put is the same you just deposit stable coin. So you deposit the stable coin the protocol itself get this stable coin put it on the settlement contract and mean an option. So in this case will

be a put for example it means the put option is send the put option to the buyer in exchange of the premium. So the buyer will send the $900. This is atomic in the same transaction. So buyer send $900 you deposit the you know let's say 100k USD the options mean the pro the the opt the sorry the protocol means the option the option is sent to the buyer. So that's what happened behind the scenes. >> Okay but also if you're selling the option uh You are the seller. So you collateralize the option with your like 100k let's say. So you are the option seller. Options are fully collateralized. So there is no liquidation or nothing and the collateral goes into the settlement contract and stays there. And at the

expiry what happening is the options are physically settled. So the buyer has the the put in this case. So the token representing the put if the option is into the money. So let's say that you know the you have to receive in your case the BTC the sell sorry the buyer to redeem the option has to provide the BTC and then it can redeem the 100k collateral from the system and this happens in a fully automated way from the settlement. So what the buyer needs to do he needs to he has the right to exercise the option.

So he has to send the in this case the BTC and it will receive the um the stable coin and you as a user you will receive basically the BTC that you buying at the cheaper price. Um all of this is fully collateralized. When we say that there is no counterparty risk what I mean is like let's say that this buyer is blowing up um it's going you know bankruptcy. What happened in that case like you as a seller you will get back the stable coin which at that point they even worth more. So actually as a seller you are you know it's your lucky day if the counterparty blows up. Um so yeah the system is safe in that sense and purely on chain and again it's uh fully collateralized so there is no

issue with margining or anything like that liquidations or something like that. So when gold and tokenized assets are going to come out as available instruments basically it is also going to give the defy user an easy access to real world volatility basically. Yeah, pretty much basically you can access the you can trade the volatility from gold uh which is again real world volatility but you can do that on chain with you know all the transparency and even the settlement process here like you know you don't have to trust any other party and so on but like yeah as a user the

thing I'm excited about gold is as you said like basically it's not crypto volatility anymore but like it's real world volatility it's like a completely different asset and the fact that we can do that on chain is it's pretty unique Um, so yeah, that's uh exciting. It's probably going to take a couple of weeks um before we can launch it. But uh I think it's going to be I don't know. I'm curious about once we launch it like the demand out of it because on crypto demand I think we've done you know pretty good job. Um I would like to see like how it's going to perform on something like gold and the the beauty of the protocol is actually fairly easy to integrate those assets.

So it's also very easy to make those tests and see like is this going to work or not. It's like you know it's not it's not amount of the amount of resources needed to launch a new market is very is very low. So we can explore and play a lot with that. >> Thank you. Hi, thank you for the presentation. Um, uh, from my understanding, everything, uh, the the only assets that can be listed are actual tokens. Um, have you thought about

derivatives in any way? and not that um the nice things about real world assets is when they launch Burps on them that they don't actually need the asset to be tokenized which unlocks anything that you want. You just need an index price and you start trading you for about how that can be done. Um so for example on hyper liquid right um I think you mentioned you know HP3 for example which are you know very liquid markets for for purps and so on. So the way we designed the protocol now for mostly as I mentioned for like purely DeFi safety and so on. It's like you you only use token, you know, tokens uh as

collateral. And the reason we do that is mostly to make sure that that collateral is always worth supposed to be. Um the issue if you use a synthetic, you know, like a per and so on. Um is that then you you know you don't know if that collateral is is always there, right? Um because there are synthetic position, you might ended up in liquidations or whatever like that. So the for us it's important to make sure that SSL element layer is safe and is using asset that they are that they are safe. So we are not for now doing anything like that. I know that there are some projects that they're trying to tokenize those for example HP3 positions

which could be interesting but on the other side again we need to figure it out like how do they tokenize them like what you know what's the mechanism behind how do I balance and and all of that but if we believe that they are you know interesting instrument we can use them as collateral and again the beauty of the product is that the buyer will be do will doing his own due diligence on those collaterals. If they think that they are, you know, safe enough, they can price them. If they don't think they're not safe, they're not going to price. They're not going to buy that. And that's basically like, you know, the you know, adding risk to to the protocol in in a cross level. So, we yeah, we I saw a few per liquid doing that and we're looking into I mean, I'm

looking into that. I don't I don't I think it's just a matter of like we need to figure out how good they are those those instruments but it could be a very interesting way to get even more liquidity because I agree with you like now as a token like especially on stocks like having a tokenized stock is nice but like the per market on HP3 is way more liquid way more exciting right so yeah I think you know that's the beauty of defi like there's a lot of innovation and there someone is going to figure it out to package those as a token instrument we can potentially integrate Yeah.

>> Hi. So, the protocol had a huge success achieving in less than one year hundred of million uh in volumes every month and uh I'm wondering how you attribute this success. it was uh uh your marketing skills but actually I don't see that you are spending any until now you haven't spent any money marketing or it's just that the market really wanted this kind of product because it was tired of uh the alternative uh uh sketchy models there the exchanges >> yeah I think it's um so yeah you're right we don't spend on marketing like I

think this is most the the most size spending we had is probably this barer. So yeah, we don't spend much on marketing. Um I think the reason for success is is a combination of factors. Um the first one is that the way we how we simplified the product and how we made the income opportunity out of it is actually something that users were looking for. Um especially on hyperl with people like for example the hype they wanted to earn on top of hype. This is was a way to earn from volatility which it was not available anywhere else. Right? if you had IP I mean the only way was going as I mentioned like OTC but it's not very accessible so I would say the product was good um or at least that's what users say like they

actually enjoy the product they it's it's very simple they know exactly what happens like in you know in a very simple UI there is not like no one ever complain about the outcome or risk it's like I know exactly what happens and when I know the trade I'm getting into and every user is you know even if they got exercise at the end of the game they're like I knew I will say you know I was willing to do that. So definitely the product the other aspect for example on on the cash secure pools that I've seen working is that yield around defy collapsed. Um there's pretty much no yield around lending and so on and the users that they still had an onchain presence and they wanted to earn on their asset they realized that actually volatility was high. So earning from

volatility was a good opportunity. So I would say it was a good product in the right in the right time and on the other side I think what users also liked it was that we are very like even in ter you mentioned marketing like yeah we don't do any marketing but we are very straightforward we like they know exactly what happens they you know they we've been talking to users like as I mentioned before we jib and myself were like I don't think cash secure puts is going to work and users were No, we want them. Can you please launch it? We launch them and they're using it. And that's something like even to build a community works a lot because people were like oh I'm you know you listen to me you launch the product I wanted. So

combination of factor but the main thing is that in defy basically there were no way of accessing volatility. Um that's probably like we we found a very big gap and the reason is like everyone else left. It was like you know no no options product around anymore basically in DeFi and we were able to fill the spot at the right time. >> Congrats. >> Thanks. You know I think uh you're you're part of that because it's uh I mean he's going to be on a panel now but Perban is also one of the risk market makers. So we wouldn't be here without