EXTRA - A New Era for DeFi | Scoopy Trooples of Alchemix

Transcript

[Music] hey bank list nation welcome to this special edition of the bank list podcast today i'm talking with scoopy trouples of the alchemics protocol we had scooby on a while ago on the state of the nation to talk all about uh alcoholics v1 and also the new eth vaults that were coming online shortly thereafter and today we are getting an update as to the state of the alchemics ecosystem the story of the al ethe faults and what happened with that and also the story of the coming v2 of alcomix as well as their layer two plans and then i also pick scoopy's brain with what he is calling a new era for defy which is using olympus dow's primitive with to replace the traditional yield farming

mechanism where you just deposit your liquidity into a contract and then you receive the governance tokens as a reward for depositing your liquidity uh scoopy thinks that that the time of that model for yield farming has come to an end and is going to be replaced by something much more sustainable much more long-term aligned and so we go into the details of that as well so i hope you enjoyed this update as to the state of alchemix v2 as well as goofy's uh brain with regards to what's going on in defy and so we're going to go ahead and get right into that conversation but first a moment to talk about some of these fantastic sponsors that make the show possible matcha everyone's favorite dex aggregator has just launched an open beta for gasless trading so if you're

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and they will go through automatically while you're away so when you're making a trade head over to matcha.xyz bankless connect your wallet and start getting some of the best prices and most liquidity when you trade your crypto assets alchemix is one of the coolest new defy apps on the scene it introduces self-paying loans allowing you to spend and save at the same time deposit the die stablecoin into the alchemics vault in order to get an advance on the interest it generates borrow up to 50 of the total amount of your deposited die in the form of al usd stablecoin here's the craziest part the loan pays itself back and you cannot be liquidated

unlock your assets potential in the ultimate defy savings account and brand new to alcmix is the eth fault where you can deposit eth into the application borrow al-eth against your deposits while having your advance gradually paid back over time v2 is rapidly approaching which will allow for even more collateral types plus a variety of yield strategies to choose from harness the power of alchemix at alchemix.fi that's a-l-c-h-e-m-i-x dot f-i follow alchemix on twitter at alcomixfi and join the discord to keep up to date with alchemix v2 and to get involved in governance all right bankless nation today we are

here with scoopy trooples of the alcamix protocol scoopy trooples in addition to having one of the coolest and most fun names to say in all of crypto twitter it has been with alcamix since day one and has co-founded it and alcamix has uh really just planted its flag with one of the cool new d5 primitives that the rest of d5 hooks into so scooby triples welcome and back to bank list yeah it's great to be back man i'm really pumped to be here and you know talk about alchemics and sort of like you know just d5 in general man thanks for having me on yeah so the last time we had you on it was uh during alcamix's uh v1 days and not yet getting into the world of v2 but yet now

alchemix is in its v2 so uh scoopy can you tell us uh the upgrade from v1 to v2 and where alkamix is now oh let me issue a little correction we're not done with v2 just yet um it just entered code freeze and it's going to go into its audit at the end of the month and uh you know hopefully we will be able to get that out by the end of the year if not then you know very early next year we'll be having v2 out fantastic so what are the big upgrades that v2 is bringing along so um in v1 we only have one collateral type and that's dyed and that means al usd and same thing with e that means al eth

and and we only have one strategy that's yearn for both of those uh in version two of alchemics uh we are just going to blow open the doors for what we're going to be able to do um multi-collateral al usd so you know lots of new stable coin collaterals are going to be uh collateral for al usd so you could think of like you know sort of like the big one so dye usdc tether but also like a lot of the new decentralized stable coins in this past year a bunch of really a new like really high quality decentralized stable coins have come out uh i'd say most notably um lusd and magic internet money and i think adding those to the mix and also some of the other like kind of

up-and-coming uh decentralized stable coins is going to really you know you know bring it like make alchemics a big tent for lots of different assets in the space very cool that is we like it in the world of defy where things open up uh so are is each one of these stable coins going to have their own vault or is it going to be all collapsed into one or a few volts are collateral's going to be mixed together or they're going to be siloed so the collaterals are all going to kind of work together to be a big composite position for you um and then so like let's say you just have you know it's split between three different collateral types and let's say you know you have a thousand bucks in there

you'll be able to borrow 500 usd off of that okay regardless of you know how much you have in either one of them it'll work all seamlessly together and i think one of the cooler things about this is that not only are we having multi-collateral usd and you know al eth as well but also multi-strategy so inside of each collateral type we'll be offering an ever-growing selection of strategies um you know think about all the different yield aggregators so right now it's just yearn but we're going to be adding ave we're going to be adding compound we're going to be adding like pickle harvest steak dow and more to come because i know there's going to be some more innovations in the yield aggregator space as well so um and

the cool thing is you can you don't have to like go all in on one strategy you can mix it up however you want to so if you want to go like half and year and half and staked out you can do that you can make it whatever composition you want so it ends up being kind of like a meta yield aggregator that you can sort of build to your own risk tolerances um and let's say like you know one of the underlying strategies like you know has a suffer as a black swan event your collateral and other strategies are fine you're only going to take that loss in that one strategy so it's really going to be you kind of parameterizing your own risk tolerance in addition to your yield you know preferences and stuff like that

so it's going to be really really powerful okay so this isn't i don't if it corrects me if i'm wrong but because of uh v2 you're not going to be getting more yield than you previously would have the big unlock the big innovation is being able to more finely tune what you are exposed to the risks that you're exposed to is that correct um yes but also since you're going to have different yield providers to choose from you could end up having higher yields than you know what urine is presently offering okay yeah because different yield aggregators use different strategies and you know so there are going to be some differences in that um we're also really looking into taking

uh sort of like curve lps like the the ones that are made up of stable coin positions um and you know like going into convex which is like a really awesome you know platform for curve lps uh is going to also like increase the amount of yield that our users are going to be able to have in alchemix v2 so we're expecting yield to go up um you know choice to go up and you know people being able to sort of choose their own spectrum of uh you know risk involved in alchemics okay so one of the questions i had when you talked about having like multi-collateral al usd where you could have like die or lusd uh as the deposit um my mind went to well what about

having a stable coin curve lp position where you're lping a bunch of stable coins into curve and using that as the deposit like can you do that or why is that nonsense yeah that's what i just said so those um those curve lp positions um they're really cool because they work as a composite of all of the tokens that are underlying but they also have a sort of thing about like number go up about them because the trading fees from curve end up going to the lp token so lp tokens underlying value you know tends to go up and to the right gradually over time so you know of course not all the lp tokens are made equal we have to do a lot of risk parameterization to see which ones

are acceptable as collateral but i think that you know they are going to be a very good addition to alchemics and we can accept you know a lot of that for sure i would imagine as a yield optimization protocol having your collateral be curve lp positions and then also being able to borrow more stable coins to go yield farm even more that seems to be just like an insane amount of yield yeah it's just going to be yield you know all day and all night yeah we're excited for it okay so alcomix has now integrated into more yield bearing strategies and is also integrated into more stable coins but what about protocols that have

integrated more into alcoholics can you talk about how you guys have become becoming adopted in in the greater defy ecosystem so in version one there's no real greater adoption for other protocols going into alchemics we as a security measure because you know we really wanted to make sure everything was as safe as possible we did not allow for smart contracts to interact with alchemics and that would prevent flash loans and other you know exports associated with them uh but a version two is uh being audited by one of the best firms in the business uh runtime verification and we were designing v2 with them all summer long with security in mind and it's going into audit with them it's going to pass through like formal

verification and you know lots and lots and lots of testing and so we're going to be able to make version 2 a lot more composable where any you know person any application any dow can plug into alchemics and use it for themselves so this really seems to be alchemix's stepping into the wild moment where you are fully unleashing allowing the powers of defy to get integrated which is like a double-edged sword right like well if you become more and more permissionless well you get more and more used but also if you become more and more permissionless you increase your surface area for exploits uh so this seems like uh

alcomix is uh we're ready for the wild we're ready for the risks moment we think we're we think we've got this uh and with this protocol is locked down and we're ready for the integrations is that is that the right vibe yeah totally i think like when new protocols launch v1 is always sort of like like really like glorified beta where we have to cut features and you have to sort of like do things in order to just ship and get your product out and then v2 is really like kind of the vision that you had originally for your v1 and then i think it was a t11s from twitter and he's like so then what's you know v3 and then v3 is actually the true v2 right so i don't know i don't know when

v3 is coming out don't ask me please but the love of god but i am super excited for our v2 yes well congratulations for making it all this way and i think one of the biggest strengths that alchemix has is its community which i think is evidenced by uh one what happened when there was the accidental exploit of the east vaults which is why i thought you guys were at v2 because i thought the eat faults we were v2 at the very beginning that's that's how i got that mix up um so scooby can you uh tell us the story of the east vaults and the resulting rallying of the community behind it yeah so when like we launched our alley fault like uh you know we were really

confident that it was secure it was passing all of our internal tests and everything like that but there was a weird thing that happened in the deploy sequence where one of the vault adapters that handles you know moving your uh your eth collateral to urine um it failed its deployment two times but there was no error message involved and so the vault that finally got deployed was at the wrong index number that we anticipated but it was at the same address and we didn't have a sanity check because we didn't think that could happen and so when we called pool id 0 to harvest the yield from it it read that there was a balance of nothing supposed to be in there but then it saw there was all this ethan there

thinking that this was profit and then it used all of that eid to then repay everyone's debt erroneously uh and so then people were free to just like withdraw their collateral and have this free ali at that time um and a lot of people who like we you know obviously were like really distraught that this had happened um and we're kind of scrambling what are we going to do and then a lot of people in our discord spoke up is like hey i got free stuff can i give it back where should i send it and then it dawned on us hey what if we just asked nicely um and it ended up being really successful a lot of people in the community gave it back i think it was a over 200 wallets gave

eth back and a lot more people donated we finally made good on our promise and we made a patron nft that has metadata for how much each people donated back to alchemics um and that will have some functionality in uh some future apps that we have very neat uh do you know how much total eth was lost and then how what percentage of that eat was recovered um yeah there was around um 2300 eath that was lost and we got a little bit over 50 back some of that was uh you know our team members kind of rallying together and and making donations of our own as well in addition to the community so i'd say

like minus that we were under half but you know still even then it was you know a very awesome thing to see our community come together right it's kind of even weird to think that like you got anything back at all like people got free eth why would they give it back to you and so like what lessons or what takeaways do you have by the the fact that so many people gave any bet anything back at all like what what are your big takeaways about what this tells you about maybe the alchemics community or maybe defy at large well i mean i think it speaks to the larger ethereum community um you know when if you you know foster a good community and you know people think you're a good actor in the community then they want to do good by you and i

think we see that a lot in ethereum not with everybody in the space but you know probably more than any other blockchain in the space you see a lot of good actors and good people and ethereum in general another thing is that you know we asked nicely you know we we took calls with our community we spent time all that time before launching ali it's really trying to grow and foster our community and have it be a nice friendly welcoming place for people so we got the right people into the application um so i think that's part of it you really you know in crypto you know you can fork any project out there you know the even if the code isn't public on github you can pull it off the blockchain reverse engineer and

deploy it yourself it's it's you know anybody you know who's a decent coder can do that but um you can't fork a community and that's something that we really really learned with ali and we love our community and you know and are so grateful that you know we were able to recover so much of the funds uh in that incident how much do you think the nft had to do with that recovery that's a really hard one to say um i think we ended up getting around like a couple hundred eth returned or just donated to us because people felt bad for us and you know small donations and stuff like that and that's including you know some of

our team members you know giving back and just trying to support our protocol as well but um yeah like it was really big you know and i think when you kind of offer somebody a little some a little carrot it's a lot better than a stick for sure like if we went out you know and you know we're threatening people to give it back i think we would have gotten almost nothing so that brings me to my next question not too long ago uh a kind of similar-ish thing happened to compound where uh comp token was issued way faster than it should have been uh and then robert leshner famously tweets out um anyone that got comp tokens that they shouldn't

have either return it or basically threaten to dox uh people that got this token to the irs saying like hey we will report your tokens as income when you saw that tweet out of robert what did you think well i disagree with the fact that he was threatening to dox people personally i think he was more stating the fact that you know if you're trading on coinbase then they know who you are you know and therefore coinbase will dox you to the irs not not him personally yeah correct and i mean i think when he said that he was probably under a lot of duress a lot of pressure you know i had probably people you know trolling him fighting him probably up for 24 hours straight

because i was there at the same time you know and i wanted to pull my hair out and when we're tired and we're stressed we don't make the best decisions sometimes so i'm really willing to give robert a pass on that one because i know the guy and he's a great guy and you know i want to stick together with my d5 brethren and founders because you know being on the other side it you know people who are not involved in projects they don't know how tough it can be sometimes you know and the pressures and you know like in trying to work with it in this 24 7 industry i mean i kind of understand why bankers you know and in wall street keep the hours that they do you know it helps them keep their own

sanity and you know and that's something that i think you know all the builders in d5 you know we we try our best we you know to do good by the community to build and you know to do the best that we can but you know it we we're all people at the end of the day too so we're gonna slip up we're gonna mess up uh you know at times so yeah i know i totally agree with that take and even robert like followed up that in that tweet it's like oh yeah guys that was a boneheaded tweet sorry about that um but yeah everyone's just trying to do the right thing the thing they feel is right um it's just an interesting little dynamic and defy that some of these things happen and then people go to crypto twitter to see the drama um

go ahead i remember before i was a founder and when like you know a hack happened or something spicy happened i'd weigh in with my hot take you know and you know fudge something and you know get all the engagement from it and it felt good to get that engagement but then like i started realizing that that kind of stuff like while it is like a little like you know growth hack for your twitter account like you know it kind of just makes you a dick yeah like and like especially being on the other side like i don't want to do that i want to be you know you know of course if there's a really bad actor in this space call them out but for the people who are out there and they just messed up or something like that you know i have no interest in you

know going after those people anymore totally totally um so scoopy we are hopefully at the cusp of a massive migration to layer two does alchemix have any layer two planes yeah so um we now have had five forks of alchemics at this point in time um and we realized that um you know if we don't go and cross the chasm to uh layer twos and other chains and other people will do it and fork our protocol over there um so definitely the we are looking to go to arbitram and um and polygon

uh they're the most ethereum aligned um you know layer twos and side chains out there um but we're also open to what the community wants in alchemics and if that is avalanche if that is phantom if that is a bsc or solano or one of these other you know kind of like new and i would say viable side chains um then i think that it's worth considering for us to do so have you noticed any desire out of the uh and first off am i pronouncing it incorrectly when i say alchemics and because you're saying alchemics is it is one of those correct um i like to say alchemics i i did come up with the term but um if you say that's

fine too uh we have you know people from like all over the world on our team and everyone on the team says it differently so it doesn't bother me i didn't even notice you were saying it differently than i was so okay in that case i'll stick with that with alchemics then so yeah is there any um alignment or community coherence about having alchemix being deployed on a non-ethereum layer one yeah there's been some debate um in our discord um somebody just was uh talking about the recent podcast that you did with roon from maker dow and a lot of the points that he made and i've given it i've almost listened to the whole thing and i think roon makes a lot of good points um especially with the fact that uh you

know like bridges are what they are right now which is sort of a glorified multisig um but i also see that there's a lot of like innovations being made in the bridging space and uh i'm really really uh excited about uh connext um and for full disclosure um as a part of eagle capital we did do a round with uh connext so i also am in that round so full disclosure there as well yes and i think that's going to bring you know a lot more security and trustlessness to uh you know bridging from you know one chain to another because you know they have really awesome technology lets you just send it from you know any evm chain to any other evm chain right

um what about roon's argument that like um his argument is that like a lot of defy apps will have this incentive to deploy on everything that they can ever in all the l1s regardless of the evm compatibility or not but then he says that well if you have an alchemix on ethereum and then you have an alchemix on solana you actually uh because you are doing the whole multi-chain strategy you actually might generate sufficient network effects outside of your home base which is ethereum that you actually might force a core migration of like your energies to a different chain and that and so roone's argument is that well he that's

messy and so he's just going to stick to ethereum and ethereum only because he doesn't actually want to contribute energies to building on an ethereum competitor because if that ethereum competitor wins then maker has to do this messy migration to this new chain do you align with that argument at all or do you think that it's not entirely accurate um i could see that happening um you know but i think as far as alchemics goes um you know the way that we're envisioning the way uh to deploy on other chains is that we would um instead of like giving minting keys for you know our owl assets on other chains we would do is kind of mint them on layer one ethereum and then

bridge them over to other chains and then just instead of like you know when you go to borrow alisd minting from the zero address it would just um you know be you know taken from the actual contract itself would have a balance of the owl assets there and i think by doing that we can still like have the security guarantees and ensure that ethereum l1 is our hub it's our main base and if somebody wants to go from polygon over to avalanche or something like that then they would have to go to ethereum mainnet then over to the other you know to the other chain so i you know definitely ethereum is you know the most secure it's the chain that i have the most uh philosophical alignment

uh with by far uh because they never sacrificed on decentralization whereas other ones you know you know even if they have a really cool uh consensus mechanism a lot of times it's kind of just like dpos at the end of the day right and i think ethereum uh you know will manage to you know maintain um you know their security and decentralization while also finding a way for scaling whether that's through sharding in eth2 but also roll-ups and i actually think that if uh you know zk sync and or starkware really delivers with their evm compatible zk rollups then it's game over for all these other chains anyway

honestly like why would you go there when you can have lightning fast super cheap transactions with the full security of ethereum so but you know that that technology is still a little far away out and if there's opportunities if there's demand on other chains i think you know it should be you know at least considered to go and expand over there so um roone's argument you talked about how like if you guys don't deploy alcoholics contracts on a layer twos then somebody else will and roone's argument is kind of similar the similar but with other layer ones right and so you talked about how you actually don't need your minting contracts on under competitor a layer one you could just report the assets

over there and that would be good enough but then roone's argument was like okay well you can bridge your assets over but then you just leave the opportunity for someone to just fork your code and add the minting contracts to that alternative layer one and now you have a competitor there that's native towards that ecosystem where your assets are just bridged over there and are non-native but what you're saying is you think that um the connex protocol the i t xp or ixtp protocol the inter interchange communication protocol you think that that is sufficiently secure where that won't the the non-nativity of alchemics assets on other layer ones don't doesn't matter is that correct um i i don't i haven't done like a super

super deep technical dive so i can't say without a shadow of a doubt if it's like as secure you know you know 100 secure or not um but i know that the connects team has been working on this for years and they have an awesome team so i think if anybody can deliver you know a sufficiently trustless bridge it's them and yeah that's where i feel on that and i think like to kind of counter roone's opinion on this is that you know even if you are on l1 there are going to be other people who try to take your lunch anyway even on that chain i mean look at um you know lusd they're kind of going back to like the the die single collateral die purity of just

only eth collateral then you have mim with their ultra aggressive strategy for expansion going across chains and using yield bearing collaterals and you also have like usdp you know you have you know there's there's lots of competition even on l1 i think that's probably the place where the competition's the fiercest and so like i think a lot of you know you know protocols that have a name for themselves on l1 when they go over to l2 or to a side chain it's like a really big deal over there because they don't have sort of the the legitimacy of some of these big names and so when they go over there you know people are excited because you know it kind of brings legitimacy to their chain as well

that's that's a really good take um as we finish off the uh aspects of alchemix i want to ask about uh governance and community with regards to because you talked about alcoholics v2 and all the technical updates that are coming along there but there's always the issue of the community participation in governance and the state of the discord uh so how has the community rallied around alchemics governments and and what are those dynamics like how how do you guys tackle the governance problem um i mean i think we have a governance channel in our discord and people like come up with ideas a lot and we also have a governance forum and before like i was kind of like the sole

officer of the dow making proposals and you know trying to get them through and but then recently i'm just like hey you know this is a great idea why don't you write a proposal and telling that to people and i think it's like of the last six proposals only two of them were written by me and the rest were written by other community members so it's really good to see the people in the community coming into the fold and writing proposals um you know getting active in governance um and like going forward in v2 since it's going to be a lot more composable and people are going to be able to build apps on top of it we want to get the community involved even more in like community development as well

um right now you know alchemix v1 doesn't have any extensibility to it you can't compose apps with it so it kind of cuts people off but v2 is not like that at all and people have been expressing interest so we're actually using uh or like kind of beta testing uh some uh some coordination tools internally uh one is called coordinate it's made by the urine team yep and basically the gist of this one is that you get a bunch of people together in an instance and then uh you set like a time period like maybe a month maybe two months and then you fund it saying okay there's let's say there's fifty thousand dollars worth of rewards for here everybody in the instance gets a token called give and then based on the amount of give tokens that they receive from others in

the instance it determines their payout you know so people will be posting up their git commits you know their other contributions whether that's through education or marketing and things like that people will see like what others are doing um and then give those tokens to them accordingly and in order i think they have a really cool tool that helps you visualize it too that it's like sort of like this graph uh that you can see who is giving tokens to who so that way if like you know some bad actors get in there and like try to make a cartel and game the system you know the the admins and the system can just be like yo you're out of here nice nice so yeah community community um incentivization i think is is how dows ultimately win uh sorry so where are you

in the process of uh implementing that have you already had your first coordinate round uh finish um we're just beta testing just like really small it's not formal yet uh but like we're trying to get the structures in place our team is crunching super hard right now on our v2 code um we're like yeah we're having code freeze either today or tomorrow and then we are you know finishing up our testing and documentation suite uh for the remainder of the month and then once we have a little breather there um we are going to go full steam ahead and you know and really get the organization ready for more and more contributors to come in and work with us right yeah smart contracts are hard and also so is governance right uh so it

makes sense to to take those things um one at a time uh how how big is the the alchemics team and are you guys a formal like registered company or is it more of a loosely defined set of internet contributors um we are a yeah loosely defined set of internet contributors frog army you know um and our team is let me count now we've added somebody recently so we have um so what does it mean to add someone how does that work if you're a company so we have sort of like an internal core team without like a company and um so instead of like you know pre-mining a bunch of uh alchemic tokens and then giving them to like you know the

founders or core team members uh what we did is we we made like a special pool in our in our farming contract and then made a token for it that only the core members have uh and then you know we all get the same amount of this token um so it's very egalitarian and flat and then we put it in this uh the staking contract and we get alcx kind of linearly vested towards us that way cool very cool yes um so when like when we onboard somebody usually what happens is we give them a couple months trial to see if they they're a good fit with us you know to get a you know see if they're a good worker and they you know gel with a team and then we do a unanimous vote to bring somebody

in so everyone's in agreement so and so let's make them core then they become core neat neat okay so that's very much decentralized from day one ethos is that right uh yes uh i mean the team is like a core team so it has some like centralization aspect to it and we do have some managerial roles um you know because we have a multi-sig and time lock right um for our governance at the moment um so you know you know like it's like that so we have we're on our way towards decentralization right well as opposed to like employment contracts and and stuff like that it seems to be your your dog fooding defy in order to create your organization

yes we pay you know like yeah and you uh die to our you know people who come in you know and then once they become part of core and they get the the time token to stake into the to the uh you know staking pools contract that we have then they become you know alcx lifers at that point and so you talked about coordinate and also you have in your roadmap to really double down on governance but any last comments about how you have incentivized the community to self-actualize and you know write the proposals themselves it's fantastic to see that you only wrote two out of the six proposals do you have any like tips or or tricks to help incentivize the community to actually

go from just like a discord stray thought idea to an actual proposal any anything we can learn there yeah whenever anybody uh writes a proposal so uh like so four of the last six we've had a lot more than six total but um um like i we have a really awesome like we have the tip cc bot and we have it hooked up with al usd al eth and alcx and whenever anybody writes a proposal we always make sure to give them a generous tip whether it passes or not um i know that synthetics did that um in their discord when any anybody would write a synthetic improvement proposal and i noticed that and and i saw that how that got people you know actively writing proposals and i thought yeah why

don't we do the same very cool hey guys i hope you're enjoying the conversation with scoopy thus far in the second half of the show is when we get into this new d5 primitive with regards to uh liquidity mining and governance token yield farming scoopy thinks that if this is adopted across all protocols that have yield farming mechanisms that we might actually be able to see a resurgence of the eth d5 ratio the ether to dpi token because uh he thinks that a lot of tokens have not seen the price appreciation that they could have because of this um now broken yield farming mechanism uh that we is just not up to date with the

current state of defy so scoopy walks us through this new primitive that he thinks can change the tide of defy and so we're going to go ahead and get right into that but first a moment to talk about some of these fantastic sponsors that make this show possible arbitrary is an ethereum scaling solution that's going to completely change how we use defy and nfts and now it's live and has over a hundred projects deployed gas fees on ethereum l1 suck too many people want to use ethereum and it doesn't have enough capacity for all of us and that's why teams like arbitrary have been hard at work developing layer two solutions that makes transactions on ethereum cheap and instant arbitrary increases ethereum's throughput by orders of magnitude at a fraction of the cost of what we are used to paying when interacting with arbitrum you can get

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or nfc experience that you've always wanted living a bankless life requires taking control over your own private keys not your keys not your crypto that's why so many in the bankless nation already have their ledger hardware wallet which makes proper private key management a breeze but the ledger ecosystem is much more than just a secure hardware wallet ledger is the combination of the ledger hardware wallet and the ledger live app and if you're used to seeing all of your crypto services and favorite device apps all in one spot ledger live is where you want to be not only does ledger let you buy your crypto assets straight from the app but it also hooks into all of the defy apps and services that you're used to using ledger live you can stake your ethan lido swap on dexes like paraswap

or display your nfts with rainbow you can also use wallet connect inside of ledger live to connect to all the other defy apps that keep coming online defy never stops growing and the ledger live app grows alongside with it so click the link in the show notes to see all of the defy apps that ledger live has and stay tuned as more apps come online and if you don't have a ledger hardware wallet what are you even waiting for go to ledger.com grab a ledger download ledger live and get all of your defy apps all in one space so scoopy you recently uh put out a tweet thread about defy 2.0 which talked about a new generation of defy apps that are coming online into the ecosystem could you like

summarize your thoughts that you put into your thread for the listeners yeah so i think like if you take a top-down approach to it it's sort of the difference between yield farming and protocol controlled value right so when you're doing yield farming essentially you know you put in a token into a staking contract and then you get the governance token back out from it you know as a reward for doing it's a renting of liquidity um and then what happens in that since you know a lot of times there might be like a stable asset pair like for alchemists we have uh the al usd three curve pool and then the al-eth pool um in in the alitha you know saddle and curveballs right so those are all like

very very low risk for people to supply liquidity and so they kind of just treat it as like you know a place where they can get alcx and then dump it you know and that's the kind of same across everywhere in d5 anywhere anyone that offers you know a pull two or pool ones or more of like these kind of stable asset pools you know you know people just sort of see that the governance token as their yield and they'll cash it out to eat their stable coins and you know this this then kind of like migrates over to the pool two or normally pool two are people who are very aligned with the project you know they feel good enough in order to take that risk and the impermanent loss and hoping that the rewards that they get will more than make up for the

impermanent loss but like when other people are dumping and that toxic liquidity comes in you know and that toxic liquidity is in there because they think they can dump on the believers and profit off of them um and in that dynamic the even the believers will be like man because you know such and such this giant vc whale or whoever is dumping on me the only good strategy for me left over now is to do this right yes and so it turns what should be a community you know coordination tool into a pvp game and people are are trying to outsmart and you know be more cunning than one each other and

you know play off of each other so it you know kind of gets rid of that cooperation uh you know that you really really actually need an endow and a decentralized protocol and uh you know i think deep down i knew this you know like probably back in may or even like june and i was scrambling thinking what can we do to fix it what can we do to fix it how can we turn this tide around um you know i'd done like you know a lot of analysis of other uh you know protocols that had yield farming especially as like kind of like d5 and the d5 pulse index was like really kind of lagging against eth it dawned on me that the even with all these great

revenues these d5 protocols are pulling in and they're skyrocketing tvls like their token prices weren't matching with them you know and they were bleeding against eth so terribly and i was like yeah why is this and that's where i had that realization about like these liquidity flows and you know this like kind of pvp like kind of dynamic that's going there and there was one protocol that that stan that stood out you know compared to all the other ones one that i initially uh brushed off and that's a olympus dell and instead of um just having people yield farm you know and you know get the token that way what they did is they they offered you know their community discounted prices to get

their the elite the om token by essentially purchasing their lp tokens so what was once a rent to own is now a kind of bond to own or pay to rent is now a uh bond to own model for uh for protocols okay and what happens is like the protocol starts getting more and more of its own liquidity and the protocol is not going to dump on itself right ah okay mm-hmm right and as you know the the protocol gets more and more and more of

its share of like the liquidity on the markets then it gives everybody involved all the investors involved a lot of confidence that the bottom is not going to fall out right and then traders know that hey you know there's all this liquidity i know i can trade and you know the markets are still going to be there so traders are trading volume goes up and then people's like you know investors come in and they're like wow you know you know the the market makers are not dumping and manipulating the price i'm going to get in i think this is a good investment you know and sort of all this stuff like kind of dawned on me that it it kind of flipped the dynamic on its head um you know because liquidity is super important but how you get it really

matters and seeing how the olympus dow community was really cooperative with each other and you know everyone was really you know vibing over there for lack of a better word you know it made me like yeah really think about it and so over the summer i reached out to olympus dow and i asked them about you know possibly offering their their tech for uh you know alchemics uh because i wanted to do something about this and i was kind of hesitant to add things like token vesting and you know other lock up mechanisms um and you know and or even like really dramatically altering the uh the

emissions schedule because especially the last one dramatically altering the emission schedules i've seen other projects do this and it kind of backfired you know people were expecting there would be a pump once the inflation went down but then nothing happened and then the protocol didn't have as much incentivization for liquidity and then the you know the tvl dropped and then it kind of went down this like you know spiral um and i also as somebody who you know has been yield farming since 2018 uh now yeah i guess it was 2018 no no it wasn't 2018 it was early 2019 when synthetics sort of had their kind of ad hoc s eath pool on uniswap that they

incentivized i was in there in the early days and then obviously compound wi-fi and and the rest um and i really like your farming but i don't like yield farming contracts where it's like they make you lock up like or you try to go claim and you can't get all the tokens and you have to vest them i i never liked that you know i was like not my cup of tea so when i approached them about olympus dow you know in you know and using their bonding services and they were like yes we actually started thinking about this ourselves and offering this to other protocols because we had the same realizations as you and that was kind of the seeds of olympus pro which is their newly launched app that we you know we were one of the launch

partners with them and um so essentially you know somebody what they can do is um they can kind of trade lp tokens for uh you know a governance token at a discount okay um and the way that it works is really genius basically um there's no oracles involved it's all just market dynamics so it's just you initialize the you know the the bond program said initial price how much you know tokens that you want to sell weekly and things like that and uh the olympus dell team actually helps you set this all up and they're there to support you so if you are not thinking about going there there is a lot of support um and then you know the more time there is

between bond sales the greater the discount will be and then when somebody finally does buy the bond the price goes up so the discount then goes away right so there's always kinds of fines it always always tries to find what the value like how much the market wants to discount the you know the token at the time and so there's always you know constant buy pressure for the bond so the the protocol is always going to be you know increasing its liquidity this way it's not as fast it's not like a shortcut to getting liquidity like a you know pull two would be or liquidity mining is it's more of a gradual process so it's more sustainable at the same time right because there's always

trade-offs yes yes it's a lot more sustainable yeah you're not going to inflate your your token away by doing this okay so let's let's go through the dynamics of this just uh one more time just because i haven't totally wrapped my head around this um the currency that you're using to buy the token is that defined or is that up to any protocol that wants to use this method it's completely up to any other protocol for what they want to do um if like right now it's a common token it's lp shares lp so swap unit et cetera um those lp shares are used to um you know you bought you basically trade

those lp shares for the gov the native governance token and so it's the lp share of the governance token so like if it's alchemists it's alchemics eth is the lp share and you're selling a l c a l alchemics eth l p share for more alchemics correct yes that's correct um but it doesn't have to be limited to that um alchemics we have other pools that are really important to us like the alios g3 curve pool and then al eath pools pretty soon we're going to be offering uh the bonding service for them as well so people can trade in those tokens for alcx as well and that's going to be really important for the long-term sustainability of alchemics because we definitely need liquid markets for our

protocol to work the best it can work okay so you take the preferred lp token for whatever protocol sounds like for alchemics there's multiple lp tokens so multiple multiple work and then you put it uh you bond it in the sense that like you put it into a contract for a period of time and then that by doing that you get to the ability to purchase the governance token in elk mixes in the alchemics world it's the alcx token and then you are put in the contracts and you get to purchase this token at a discount and then time passes and then over time somebody else comes

and buys the bond is that right it's a little bit different than that uh sorry i might not have explained it very well um or got you tripped up there so basically when you go to the olympus downside or olympus pro and you go to purchase a bond you'll see that there's like a certain like uh discount that you can get on it on it so but the currency that you buy the bond with is the lp share right right yep so when that happens you like the the protocol immediately gets that lp share right and then you have um there's like a seven day vesting contract for the governance token that you just bought okay that's awesome

you sell it so you sell like 90 of an lp share for a hundred dollars worth of tokens but you're not going to get those hundred dollars for seven days or so yeah they linearly vest over the period of the vesting and the investing period can be configured however you want to if you want it to be a week that's fine if you want to be a month that's fine it's just one parameter that you you set uh in the uh when you're initializing the bonds and you can also alter it you know even while it's live so okay yes okay so then what happens next so after you buy the bond you you wait um you know for it to vest if you want to do a partial claim halfway through you can do that as well or any time

and then you have that that token and you you know some people who are long-term aligned with the protocol will just hold it and add it to their portfolio um other people they might want to do is try to play the spread you know like hey i just got a nine percent discount on this alcx tokens right and if i sell now that's you know that's a you know nine percent profit i got after this week is you know assuming that the the token doesn't budge in price during that time and in theory they could just go do this again right if they got a nine percent spread nine percent arbitrage they have in theory nine percent more capital than they did if prices didn't stay if prices stayed the same so they could just keep on doing this over and over and over again and keep targeting this bread over

and over and over again uh they could potentially but there's also risk involved like if if the price of alcx goes down in the meantime then they wouldn't have profited right right so so that seven day vesting schedule is what keeps people that are less aligned away because people that are more aligned are more willing to take that price risk because they believe in the protocol regardless is that correct yes and it's also one of those things that like the alcx slp token it's very deep and very liquid and you know especially with like you know our v2 coming up we we got on olympus pro uh we were selected as one of the reactors in tokamak

um so like kind of like you know things are on the up and up i think for alchemics and if somebody's going to be in that slp pool uh for eth alchemics they might experience a lot of impermanent loss on the way up for you know alchemics assuming it does go up you know this is not financial advice uh so like that's also another layer of strategy for people um to consider while they are you know you know you know thinking about doing bonding uh through olympus pro okay so explain again to me the differences between like you know yield farming you put your ether or your your pool two tokens your your lp tokens into a contract and then you receive

governance tokens distribution in this model you put your lp tokens you sell your lp tokens to the protocol to receive the governance tokens but if you are just receiving the governance tokens which i'm pretty sure are newly minted and you are selling them to do that again and again and again how is that different than just yield the just dumping the yield farms from the original method where is it where does that difference come in so if people are only playing the strategy where they are you know like recycling the you know the the alcx they get from the bonds back into slp to buy more bonds um you know that's essentially exactly what's going on with yield farming especially like the the yield aggregators who take you know the lp

tokens and stuff like that it's essentially the exact same thing right um except that the protocol is now getting more and more and more of that liquidity share and it's rooting out the toxic liquidity that's a part of that pool so selling mechanism that forces that one-way function of liquidity into the protocol yes it's a one-way thing like the you know you know the people in olympus pro and olympus now like they're not going to be selling their own lp shares they're not going to be like cashing them out right and dumping on you and stuff like that so right because it's much more capital intensive right because you are selling your lp shares you don't get to recycle that capital because you already sold it well the thing is let's say like you you

can do that so if you trade ten thousand dollars worth of an lp share and you have a ten percent discount right then you get eleven thousand dollars with the lcx which then gives you more ammo to then go in and then sell half of it you know and then get more lp shares and then repeat the process you could do that and i'm sure that you know there are people who who use that strategy but even if they do that the protocol is earning that it's not like the is accumulating more and more of that lp and eventually you know it'll start to outnumber or like be the majority holder of liquidity in the uh you know for the protocol itself and then when that happens like it kind of you know flushes out all the the

toxic liquidity right neat so i like to think of like lp farming or like liquidity farming or yield farming rather as um kind of like a drug right like it it's like really awesome at first right it makes your protocol grow it puts you on the mat yeah yeah the steroids like or it's like you know even heroin for that matter you're in euphoria when you first launch you know the float is low and you know people the only way people can get that apy is to buy your token but eventually that you know that drug that you know becomes a problem and you become addicted to it you rely on it but it also just like a drug turns into a very toxic thing in your life or for the protocol in this case and i like to

think of like olympus pro um i know i've been like showing them so hard this today but i like to think of them as like tokenomic rehab yeah you flush out that that toxicity and you you get on your road to recovery and being you know make sure that the the you know the liquidity in the pool is aligned with the interest of the protocol right it's like it's like pesticides for the liquidity locus out there yes exactly that's a good analogy yeah no i i like it i like ending these these more technical conversations on analogies because they keep that they allow the listeners to latch on to something scoopy where where does this go if everyone starts do you think everyone

should adopt this new like primitive and does this what does this really unlock um i think that if you are a d5 protocol with uh you know a robust yield farming uh program um especially one that's finite i think that you should definitely do this because yeah you might bootstrap your liquidity but what happens when the rewards run out right aren't most of that mercenary capital especially if this is toxic liquidity flow they're just going to drop you dump your token and then move on to the next one to to you know harvest um so i definitely recommend other builders in the space other protocols to consider you know olympus dow and i think you know if more and more people

in protocols do this then it's kind of turned the tide for d5 which has kind of been suffering over the past you know number of months against in the broader market and i think it's going to be a part of the resurgence of d5 a big part of it do you think that if that this new mechanism new primitive gets adopted that like it ultimately might show up in the east dpi pair uh i mean alchemics or or ohm or what like no i mean like if you talk about it's a resurgence to defy is like do you actually think like dpi as in just like a um indicator of d5 at large do you think

that this might actually turn the tide on the uh the dpi versus eth ratio i mean if the protocols that are listed on dpi adopt this then i think yeah i think it would help turn the tide hmm interesting i also think that you know kind of a transition away from you know quote unquote worthless governance tokens to you know like tokens that do revenue share and you know you know dividends or you know however they whatever mechanism they they decide is also going to uh you know help turn the tide as well because when people see that they see it's an investable asset and then dpi they could actually you know participate in like the staking of you know these tokens in their networks and then you know use that to even

compound the gains as well so i definitely think that you know it's going to help rehab defy nice you know we saw our tvl you go up 100 x over the past year for d5 and the tokens have not 100xed along with it right interesting that's a really good point that's definitely a really good point even though it should have like by all metrics it should have right yeah no total value locked in d5 is about to hit all-time highs and tokens are not anywhere near all their all-time highs even the juggernauts are you know you know not doing well they've been flat and especially in down against east yep you know

and those are ones even with like really really really impressive revenues as well mm-hmm well scoopy you have definitely given me something to talk about so maybe i need to go over to the olympus dow and pull them into a podcast get them to talk about this yeah for sure i can intro you to people on their team yeah no problem um oh there's one other cool protocol that's like you know in you know imminently launching uh tokamak yeah yeah yeah we didn't meet the nation with them yeah yeah they're really cool and i think they're also going to be part of this like d5 2.0 wave of finding more healthy sources of liquidity for uh for you know participants in d5 and for protocols yeah so we're really

excited to be on top of them they have a yeah awesome team i'm sure you know because you talk to them and stuff like that so i'm excited to be working with them and uh yeah we just did a dow-to-dow token swap with them oh really oh that's fantastic yeah they are a large i think they're now i think our fifth or sixth largest stakeholder you know outside of like some of our investors in some of the bigger whales and you know we now have a lot of toka ourselves so we will be directing liquidity over at alchemix in the tokamak protocol that is kind of like the bullish case for token mac is that everybody wants their token because all the d5 apps want the power to direct the liquidity towards the ways that align with them so that token max seems like a perfect

protocol to do a token swap with yeah we're excited i think there's a lot of alignment and i think like yeah there's going to be a lot of dows kind of scrambling to get their hands on toca you know especially as they get reactors in the system and stuff like that so yeah we even saw it in the core event like they're like as people were vying to get selected as their reactor like you know protocols and supporters of protocols were scrambling to buy toca so they could you know influence the vote and stuff like that and it was just like the the coolest governance experiment experiment i've ever seen in my life and like i was just glued to the page i know i had a horse in the race you know so to speak you know but even then like it was just

fascinating to see you know like the leaderboard always constantly shifting you know and then seeing people lobby on twitter you know i kind of activated a cheat code and i said yeah we'll give you an nft if you vote for [Laughter] and i was looking at the data and i see like a bunch of ones that are like you know like point zero zero zero one token vote for us i'm like oh you guys just want the nft obviously but well that's pretty funny it's a pretty funny dynamics going on in in this new era of uh what is kind of like d5 2.0 right a new era of d5 protocols coming and building on on ethereum that look a lot different from the

legacy protocols wow do i use that word like make or dial compound like definitely a new cohort of protocols coming into the ecosystem right now we'll call them the generation one protocol that's a little bit nicer of a term yeah because we use legacy to knock the legacy financial system yes yes gen one you know i mean huge shout out to all all of those protocols like we're standing on on the shoulders of giants over here you know like it was originally me listening to epicenter uh podcast into 2018 with like all the interviews with roon and him talking about you know make her down and me listening to the pro like podcast like 10 times in a row just to get my mind around the idea and now

these ideas are mundane right i think how far we've come it's it's amazing and i think like when gen 3 d5 comes out we're all going to have our minds blown by you know what all those you know 16 year olds at rare capital are going to be doing known stuff i'm very very ready to just sit back and become a crypto boomer while like innovation just goes and outpaces my ability to keep up with it we'll be semi-retired farmers in a few years together man [Laughter] awesome scoopy well thank you for coming on and sharing some thoughts which are also synonymous with alpha these days on the bankless podcast if people want to learn more about what you're up to over at elk mix and anything else that you

have to share where should they go yeah so you can head over to our twitter alchemix5 you can go to our our website alchemix.phi and yeah please join our discord we have a welcoming community uh ask us anything there's always tons of people there to help you and help you get started now chemix and learn more about it and we will have all of those links in the show notes whether you're listening on youtube or on the podcast so scoopy thank you for coming and joining with uh me on the bankless podcast yeah thanks for having me david it was a blast cheers hey we hope you enjoyed the video if you did head over to bankless hq right now to develop your crypto investing skills and learn how to free yourself from

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