Geneva DevChain meeting 06/10/2020

Transcript

great so i'm going to give an overview of d5 on uh ethereum you can see here uh obviously you all know that uh the growth of d phi on ethereum has been explosive on the left you can see the increase in btc in a wrapped manner that has moved on to the ethereum blockchain you can see uh the on the right you can see the growth of uh uniswap compared to coinbase and you could also you're probably all aware there's been huge growth in stable coins all of these dexes stable coins and btc moving on to ethereum have incredibly enabled um d5 growth so uh but as of today if you

look at if you look at d5 if you stand back obviously in the industry it's uh explosive but it's very tiny in uh in the context of the overall financial marketplace so my estimate is it's less than one percent uh of the market today uh it's mainly uh the value is mainly focused in public blockchains and uh money markets so why do people you still use cfi um even if of course defy offers um some some better attributes one of the main reasons we think is that they feel safer in c5 it's you know it's the human psychology of something you're more comfortable with it has perceived less risk with it our view is

that in 10 years that d5 will capture approximately a fifth of the market so it's an incredible growth of about 230x from where we are now to capture that uh 20 that'll be mainly focused in debt and money markets i think you'll see a decline in some things for example uh cash and precious metals should decline significantly and who will be the drivers of this adoption we think it'll be mainly um savers and uh savers essentially are people who are both individuals and institutions who are disadvantaged by the fact that uh the return that yields on bank deposits and on

bonds are so incredibly low that it encourages people to think of alternatives of course one of the alternatives is to cut out the margin that you get in the center and have it shared with users and then the other driver we think will be people who are frankly annoyed at the system called the 99 and so savers will be asking where did my yield go the disadvantage will be asking where did my dreams go there's a high correlation between the size of the finance industry and the decline of essentially a value captured by the middle class globalization is also a factor of course and one of the things that we think is needed for mass adoption

is a link to the real economy and is a bridge between the traditional and the uh crypto fiat systems and then you know very importantly that feeling of safety so what you see here on your screen is probably foreign to many people in d5 but it's the most common thing that people in traditional finance look at which is their bloomberg terminal which lists all of their products you know it's very different than going to you know coin gecko or going to some other tool or querying the blockchain to see how your you know yield farming is going but in the traditional world in the world of you know asset management this is the typical thing that you would see so for our company for example to try and

make traditional finance people feel safer with um you know with a blockchain based product we've um we've had our products listed on bloomberg and received an isin securities code which is kind of the standard thing that you would get in traditional finance so our view is is that disruption is inevitable that defy offers superior value and superior values and you can see the misperceptions about adoption in the share prices of uh things like the music industry which you see on the top left books top right newspaper media bottom left and then on the bottom right is uh is the european bank index which you can see following a somewhat similar

curve so it's not easy essentially to project um project disruption and the growth of defy is certainly disruptive and we see many defy companies essentially as like almost like real options through a basket of options and some of them obviously won't be worth very much probably most of them won't be worth very much but out of this defy experiment will arise companies like amazon or netflix so our little contribution to disruption is basically based on safety it's the opposite end of the spectrum from yield farming so we use essentially decentralization by cutting out the banks in the center we add insurance to our product and it's

uh it's based well it's really enabled by the blockchain and what it does is essentially it offers an insured interest bearing deposit account here's an example that we can talk about uh that is um how we create our product which is which ultimately the end leads to insured collateral so one of the well on the right hand side uh of cresco finn here we do essentially what banks do and we do we do lending we also purchase invoices one of the things that we do with invoices is that we make sure that the seller and the buyer go through our blockchain using a smart contract because it does that we only finance those things that are

already registered on the chain so it's very clear that the buyer has an obligation to pay for it you can't dispute it it's not fraudulent it's what blockchains do best it's open transparent shared with everybody and so we finance the seller now we get paid by the buyer later based on what's written to the chain if the buyer doesn't pay the insurance company pays and so what we have at the end is we have the ability by cutting out the bank to place certificates of deposit which is basically a a savings account an insured savings account with our traditional investors which we do in dollars euros and francs what we're looking to do now essentially

is to use this insured collateral and tokenize it and put it into d5 money markets so there's um an example essentially of by using the blockchain it's a process that works in the traditional world has a lot of demand in the traditional world and we think it will in the crypto world as well so one of the things that we have been working with uh c layer on is creating uh securities tokens so we're going to create securities tokens for the insured collateral that we'll be putting in to defy money markets and we're also going to collateralize our own shares and we're going to list them on uniswap

so it's a bit uh it's a bit different for a regulated company but you know we're firm believers in crypto and also in decentralized finance so we've worked with uh cyril as well on uh at sea layer about how we do that one of the things that we're going to do is we're going to have the pure securities token which is represented here by the crez token which i like to think of as heavier has all the compliance functionality with it and then we have a wrapped securities token which is lighter so to speak easier to you know easier and flexible to trade and cost less gas so cyril do you want to do you want to talk a little bit about some of the

functionality that c layer uses because essentially it's the it's the c layer engine that we have inside sure um so i'm i'm very happy that um to have a project like chris coffin using the the c layer so most of you might be familiar already with the c layer because we we've talked uh several times about the um what is about so that the project i'm working on it's the idea to have um with we inside an erc20 um token to have all the compliance um

as if you were running on the traditional car banking with a database on a server um so so the real interest and added value with chris coffin um that it allows the token holders to own the equity um the same way as if um they will go with the lawyers with the notary to to sign for the transmission or of the shares um and because chris coffin is very um interested by doing defy along with compliance um

it's it's really a game changer i think um to other both project working together um so christ coffee will be the first project to use the version 1.2 of the c layer which is going to be released anytime from now so probably before the end of the week um eventually um [Music] in this release of the 1.2 um there are two major functionality which has we are provided the first one is a voting session mechanism so most of the governance mechanism you

have on the file right now only allows you token others to vote on on very few tiny parameters maybe some of the protocols but it's it's quite limited as all the governance is um usually done off chain uh through um developer calls uh developer meetings and a lot of happens on twitter and telegram as well but it's not really transparent it's not really fair for all um token holders so with this voting session you have i think two access to core functionalities which are provided the first one is that

voting happens on the regular fashion on the periodic fashion which are voting station i was inspired by the the swiss some votations mechanism here to be honest um so you can predict when that happens and whatever the proposals are and whether proposed it's so you know that it's just what happens in a regular fashion uh every x days so that's the the first interesting functionality the second one um that's [Music]

the rules of the voting sessions can also be changed and configured through votes so the process yourself is parameterized like the number of days a campaign devoting the campaign lasts the number of proposals that you can have per sessions or the number of um tokens [Music] are needed to be able to propose make a proposal to the community so a lot of different parameters i was not existing but a lot of different parameters

can be also modified by the community itself to uh churn the parameters um and the the governance itself and any kind of proposal maybe um yeah both off-chain proposal that can be uh voted on chain and also um obviously um any uh transactions can be signed by the voting contracts so it's completely composable with the rest of the file so that's that's the the main component of the role is 1.2 and the second um interesting component of the release 1.2

is the wrap token so um as you can see on this uh on the picture of chris coffin which is why um i think it was good to keep it displayed um that's um you can have the a token which is very cheap to transfer um um is a convertible one for one at any time with the quest token at the condition obviously that you get white listed and and uh properly approved by the the company itself so you really mimic um here what's happened in the traditional economy traditional finance but it's unchained the boundary

is unchained so it really reduces the risk of execution between the the um traditional finance and the and decentralized science um so that's that's uh all for me at this presentation so robert do you want to conclude about uh chris coffee sure i would say the the great thing about the token and how cereal has designed the c layer is it perfectly imitates some swiss law so essentially you can see the w cres token as being equivalent to a share

that would trade like on the the six stock exchange in zurich and then when somebody buys a share of a company like nestle for example what they essentially are doing is they're exchanging the share that they've purchased on the exchange for being registered directly in the books of uh nestle and then they have all the rights of essentially governance and economic rights so it's really cool that cyril has created something that matches uh matches swiss law so it didn't give our legal and compliance officer and our lawyer as much as a heart attack as i thought it might so it was good so that's it thank you very much uh robert for this

presentation um so don't know if you have um a question for roberts oh there is a francoise lardoni which is asking your question roberts do you consider applying your solution to commodity trade finance uh yeah i like the idea of commodity trade finance um essentially what we do is um we do everything a bank does and by putting it on the blockchain we can get insurance and the best way because we cut out the possibility of dispute and fraud so what we've found

the the first like the easiest application of uh these invoices uh to then the blockchain is like for commodity trade finance would be inputs rather than the outputs so for example you could have somebody who works a certain number of hours a day like staffing for example is is good for the blockchain we have a project in the united kingdom where nurses who work for nhs um like the hospital system in the uk they at the moment you work like a shift for eight hours and it's recorded on paper and it's not very efficient and eventually the government essentially the health

service pays the staffing company that provides nurses and by putting it all on chain you eliminate the dispute and so then we just have the pure credit risk against the government and then and you have to wait you know 30 days or whatever so commodity trade finance it works fine and i'm very interested in commodity trade finance if it's based on inputs if it's outputs however it just gets more complicated to do it on chain you know like coffee beans for example like you ship coffee beans you know it depends obviously like you know what those coffee beans look like when they arrive their humidity uh i mean are they essentially acceptable

or or not so it's if it's output based it's just a little bit harder to do things on chain as you know you need links to the outside world oracles or whatever so yeah so and then uh robert zaremba is asking uh what does the w mean it's uh wrapped that's right um but cyril do you want to talk about i mean i think of it in terms of uh the real world where you have a where you have a share exchanged on like you know the six stock exchange and like you buy a share of nestle essentially what you're just what you're buying is wrapped in a sense it's the right to go

to nestle and say look i purchased this i purchased this share certificate in you know in zurich on the stock exchange and i want to be registered in the company's books so that i can you know participate in governance decisions and also receive dividends so what cyril has created essentially uh mimics the swiss system i mean cyril do you want to talk about it economically the w in how it wraps and how it works because you have a way to wrap it and unwrap it so exactly so um um as usual in in in i would say 19 science and and more even in d5 uh you were using what's work and work brought very well i think

the fact that uh today most of the bitcoin are trade much more bitcoin are traded um on on italian than on bitcoin itself uh is show the raw success of the ra btc uh some say it's a good or a bad thing but it showed that it really works well at least on the technical level um and i'm just raising the same concepts the concept of a wrap token um in this case in particular the the the wrap token is the the token itself um the christ token um and the fact that is wrapped or the way it is wrapped

is different from due to swap mechanism while in a swap you have a fluctuating uh price between the two tokens for trading rates between the two tokens here you have a guaranteed by the smart contract but they always been one two one the same for ethereum and the rapid time you have in d5 as well uh i don't know exactly an exam so john maxinea is saying even is similar to an exam of rap extend i don't know exactly the nxm but i would believe that if the the wa nxm is the wrap nxm that should be more or less the same yes [Music]

um so i will i will have to to check exactly to see how it's done but it's it's still a very when applied uh to regulation it's very efficient um yeah but your question is good about nexus mutual because it is it is quite similar and again what's what serial has created really perfectly imitates swiss law so if you want to buy and sell shares it doesn't concern the company so you want to buy and sell shares of of nestle in the on the stock market you just do it between individuals you don't have to go to the company first and say hey i want to buy your share on the stock exchange and

you know the company doesn't have any role in it they don't approve uh you they don't do kyc it's the same thing here so you know you buy your share like in the stock market the same as you would buy a wrapped token that cyril has created and then if you want to if you want to be registered in the company registry which is the official book of shareholders under swiss law then you have to essentially go through the mechanism that stereo has created to exchange your your wrapped token for your uh crez token which is which essentially does open you up to kyc under swiss law you you don't actually have to do

kyc for buying equity you just have to give your you have to provide your name address date of birth if you're an individual and the company does have the right like swiss companies in general in their statutes have the right to exclude people if they want and that is also protected under the code of obligations but what we've done for example is we've modified our statutes such that if somebody wants to become a registered shareholder the company cannot arbitrarily say yes or no to them we have a little formula that you know we're going to encode into a smart contract in the future which is basically if somebody is on a swiss government

sanctions list then we don't accept that person but if they're not then we do accept them oh and and we don't accept americans i mean no no no implication that they're the same as people on swiss government sanctions list but you know u.s securities law is uh is a challenge so so we're not so we're not taking americans but yeah at that point when you go from rapt to the underlying then the company could have a role of controlling you know kyc very good we also have another question from francois would it work if you had certified outputs

quality control and related document needed in the transaction yeah it would yeah it definitely would i mean i really like i really want to explore what we were doing to kind of replace traditional banking and uh it's just the more firm i mean he's got it absolutely right the the more firm that the outputs are the clearer they are the more that they can be coded essentially um the better they work i mean as an example you could it's easy to put on the blockchain you know hours of input for an artist to make like a a piece of art for example because you could say like the artists work 40 hours a week and and we pay on that basis and we get

insurance that if the whatever the buyer doesn't pay then the insurance company pays but if your output is that the piece of art is beautiful then it's just very subjective so yeah you've got it absolute you've got it absolutely right the the clearer the outputs and the you know the simpler the essential the oracles the connections to the traditional world are the the easier it is for us but yeah we'd like to we would like to replace core banking so i mean we're going to be looking at everything banks do it just it's simpler the more that you can put it into straightforward code essentially so maybe a last um question we will have

more time with the panel later on uh maybe a last question from nancy um so robert you mean replacing traditional banking with bank like n26 well i think the idea essentially the idea is essentially beside behind what we're doing is replacing banking with code so the more it can be codified and then and the more it matches the same risk return characteristics of a savings account like a bank account i think the greater the chance of replacing it so n26 essentially functions still like a bank i mean they do fractional reserve type of banking

they you know our idea is to be we're built on a different technology stack uh the blockchain stack and our ideas is that it's decentralized so it doesn't use fractional reserve banking our profits come from essentially matching capital to um you know to loans or to or to purchasing of invoices or anything else like that that we can that we can code and then get insurance for because we think the we think the missing element essentially is is insurance because people feel safe going to a bank because you you've you know there is some government insurance and you feel that you know the bank will be there tomorrow whereas

you know you don't farm yams with the same kind of like you know good feeling that it's very very safe and secure so that's the idea many thank um uh robert for this introduction and this is this presentation of chris coffin uh so we are very lucky so mark is is there now um i'm going to let you speak maybe so present yourself will let the robot go first if if that's fine to you hi everyone yes so should i go now or uh or mark is now going i'm not good great

yes uh so thanks robert for a great presentation like a few times when suddenly was mentioning that i was confused it's the question for me also there's too many robbers around yes anyhow okay let me show you the screen uh okay is everyone here invisible i remember last time there was something wrong with that okay so i'm going to talk about

new year's what and my recent experience of bridging ethereum assets of ethereum uh a new swap is an amm uh as an experiment i was coding uh in a summer and recently also a build a team i think a few people here are are there we are yes where we are hacking to make a proof of concept of bridging this assets um and we are bridging ethereum assets um to a new blockchain uh so quick intro about meme i'm doing in general uh iit research and development software smart contracts uh all the things about

software engineering fintech last year i was doing a lot of stuff related to the corporate voting not only here in the swiss ecosystem and had a chance to work with many blockchains my main focus now is region network which is building on cosmos sdk um okay so okay that's weird sorry for this background should be right uh continues liquidity pose i was presenting it more in detail in uh july during the testing and before we were also talking about am names i think at least a year or something at

the end of the last year so i will not go much into the details only saying that um last year we had probably three four amms and this summer it was the cambrian explosion of uh all the amm tools so more like half of them probably had the food in the name and the most famous one was is i think and then it's still the sushi one and we've been all experiencing all these news about the amms but for those who probably were not here in july and our other presentations so there is more general concept what's

called a little critical something about it okay as a smart contract which is um trustless and um have some mechanism of managing the sound of the liquidity uh and the primary use case for that is automated market making making so this is what is the amm and um usually all these amps are useful for training so um uh the previous project robert was presenting guess that they want to uh cesco or uh their abuse is called the coins they what they want to do they want to put in

a unit swap so basically what it means that it's like a um cast of the less or a broker bro or less um trading venue at amm that's where everyone can at any point come trade um and um yeah and and execute the transaction um okay and one of the biggest problems in am men's is like the conflict between the liquidity pools and the arbitragers and arbitrators are there to discover the price to balance the liquidity team

and uh that's that that's like wonderful and there are incentive incentivized that there are differences between different trading venues so if on one venue a price goes up and on the other venue it didn't yet it hasn't been yet um it hasn't went up yet then they can buy cheap on the the second one and sell expensive on the on the first one uh so everything is fine except with the losses for the liquidity providers and uh this is what we what we call in general gamma um in

economics and basically what it means that uh the liquidity provider is like long in both in both assets so at amm and the liquidity pool usually as in case of the uni spa for sushi swap or many many others um the liquidity provider provides a stake or the assets of of of both assets as we have in that in that pool balancer um extend that idea and the balancer we can have a multi-token helpfuls some more than two but important thing is that the liquidity provider is long in both assets so if there is

um a change if the value changes oh and uh the liquidity provider wants to um mistake from the from the pool and get back the liquidity he provided he usually has a loss so in fact the only time he doesn't have a loss is when the price when he put the liquidity and withdrawal is the same otherwise there is always loss because it's the arbitrage who is taking the profit so to limit those losses um there is a mac there are different mechanisms

the most basic one is the fee so whenever there is a trade uh the arbitrage remains a trade he needs to pay some fee and this fee goes then back to the liquidity providers but again if the streets are too small then yeah nothing the liquidity providers are not happy so there are this concept i wanted to mention here's something i was researched researching recently of virtual balances so instead of creating this opportunity for arbitragers where they can immediately move uh or do a big trades to uh equalize equalize somehow the balance of the uh the prices between different pools

yes we want to do it step by step this is what one inch is implementing um another mechanism which is very very popular for limiting the the losses of the liquidity pro lucidity providers is introducing kind of um of a utility button yeah so if okay we covered so what else they can they can earn and so we can create a new token why not maybe you can create a two tokens um yes so they need to they need to get

something else if this this fees are too small or if we can't afford um let's say uh this mechanism of the virtual balances um maybe we can start a little bit uh later during the final yes what are the process unconscious of these first 12 balances however um here i would like to mention about this governance circles and this is something that i will focus on later on the most popular mechanism is introducing this governance token which creates additional value in them which builds up some value in the market and we can trade it again uh so the question i want to ask here yes is the governance token

uh the right mechanism yes uh for um reimbursing them the losses of lp maybe what's also worth to point here is that the governance circumstance usually and how it's implemented in the different protocols doesn't go only to the am sort of liquidity provider but very often goes to the market makers as well which is kind of illogical right you should incentivize everyone that arbitrages are already they all they're already there because there's an opportunity and in fact most of the trade is done by them these days so what's this uni swap idea so um like i said yes i was starting started

hacking it early this summer um i wanted to find out how i can solve the following problems one the price explosion on ethereum um ethereum amms second like i said limiting the the losses of them of the other of the liquidity providers uh third being secure safe uh fourth being composable and five uh open and thriving so what does it mean open and driving it means that okay we create a commun

common good uh so that's what this opens what what embraces the the open picture of of um of being open uh as an am man everyone should be able to use it without any restriction um so let's say if for some um compliance reason i would like to maybe like just take on the previous presentation if i would like to limit someone of using the the venue this should be done in my opinion on the token level yes because um the venue itself it's a tool yeah like that everyone should be able to use it we are not creating a weapon yes we are creating um a component yes

which then through a composibility we can do some limitations uh thriving basically means that yes everyone can freely compose on that and can use it in a different other uh protocols and systems and i'm claiming here that um most of the current defy ecosystems including the uni swap three doesn't comply with this open and freezing [Music] requirements of features yes for the amen so why yes uh and i think

why because the one of the the root here is in this governance utility this governance tokens uh recently there was a lot to say about um fair after issuance for trades and all of these things the governance token even if it's let's say minted in a fair way can create some imbalances so the if you go back yes the common good is not any more common because it will go always it will be always targeted yes towards the people who who have the governance

power so the the basic mechanism the basic utility of of this tool is changing yes because it's not i would like to claim is not anymore a common good moreover through the examples we have today we haven't seen how this governance token has uh won the uh the value like that was the justification for this price and how is the views so let me give you this this few examples for unit one i think this is a perfect by the way unison one is a perfect example of

an open entrancing ecosystem except it doesn't solve the the losses of liquidity providers so this one gamma so yeah uniform version one i claim it's a common good uniform version three although introduces governance tokens yes we did the claim i'm doing now okay we yet to see if this governance will be really open and treating or allow for it like a treating ecosystem but based on the other examples i don't think so um so it's very hard to value the the value of this governance tokens it's very hard also to to see how those will be used

yeah so uh who people of course are able to um to trade them and then some ways are able to acquire this governance token and move the direction of this common goods into uh like let's say the good of um of the of the wealth majority or well in fact that's like not worth a majority but the most wealthy uh poor part of the ecosystem which usually turns out to be a minority by um by the total amount um and another thing to say about units for version 3

is that we already see that um [Music] the big exchanges they took on that and they own a lot of the state not mentioning the vcs which are behind the uni swap compound so companies pack is also a great example similar to version one they have an on-chain governance and on chain execution meaning that um the governance is really something that we can reason about so everything is happening on chain and we have uh 24 hour exit time if something that we don't like about the compound and if somebody would like to change something this will still have

a time to exit and say sorry if i don't like it i don't agree with this guys i'm exiting so it's very good approach but again not trivial all right if uh maybe if i would like to like from all of these examples if i would need to bet on something that could be trading i would say compound sushi swamp uh okay it has a governance uh on-chain governance but often execution uh so comparing to to compound meaning that okay if i will decide as a majority of the of the of the voters by devoting power we'll decide on the sushi stuff that hey we are increasing the fee to one percent then i can't validate it uh the

execution of it is happening off chain so then again based on the admin rights or the developers there they will at some point yes move and do that change they are free to do different change and the only way how we can how we can see it is observing it right after but that might be too late jesus uh entre governance and engine executions are similar to compound but it's very very slow um i also think that they don't build a bigger community so we have like few vaulting barrier and they are really targeting the thesis protocol so i don't see how this case came in fact that's um excuse me to interrupt

do you have many more slides how much time how much more time do i have um you you told me that you you need 10 minutes uh yeah i i was for the for the demon uh okay then uh let's go quickly to i only want to see this say like this slide more and then i will go to demon is it okay yeah good okay um so um yeah a few things there you need like this is just to show this example as to where it goes uniform version 3 offers 1 000 of the governance tokens with uni tokens for the unisocks holders so i find kind of a job yes i've bought

in the previously socks with a unison brand now all of the sudden the unispot is um rewarding me for good stock and some worth back on that time it was a few weeks ago that's one thousand dollars sushi swap they use it they they created the whole venue using with this governance tokens using the vampire attack we were talking about it last last month so all of this i think it's easy to see that this is a creative construction of office of cards many of the tokens are in fact treated using the ponzi scheme so one using another one copying copying like forking the code doing some change and incentivizing to

do immigration uh uh creating more and more governance tokens so at some point it will collapse it will collapse you know the most powerful people who are the best connected to the ecosystem they will have time to exit others they would have the big losses okay so those are this is all like all the backgrounds of of this research i'm doing and this i started to create them like in the hackathon we created the proof concept of um moving the um ethereum assets to an ear i will skip here this trust assumptions in the panel somebody would like to talk about it just ask me i would only say that it's

fully trusted so there is we don't need to trust any any single person so let me do a demo now very quickly can you see the screen i guess yes so what i will do we created um uh an interval uh a token a few of them so here is for example a letter on the ringtd and i want to create lots of it and i need to like copy one of the big

number uh i just need a big number because we um denominate everything with 24 decimals so just cooking like 8 with 24 decimals uh so this is an interior on the linkedinby i need to uh to make a transaction what this will do yes uh it will the contract will mean for me the tokens okay then the transaction is confirmed let's see [Music] okay refreshing here you can see it here okay

but maybe in the meantime i will like now to bridge that i would like to be rich that balance so i want to send all of it oh sorry so that big number was simply 8 000. uh i want to move all of that usd to um to a smart contract uh on the new year and then try that on on your swap uh okay so i'm just copying like this number so 8 with 27 zeros and clicking on execute

and transaction fee and by the way so um all of it is deployed and it's kindness kind of just like this decentralized uh network for uh static assets so let me in the website it works very very well you can just put it there and the website is not controlled by any single so there are a few transactions here thank you robert i think that the demonstration it may be uh taking a bit more time than we have um so i will give the uh okay so let me only like summarize what's happening here with like 10 seconds and i will finish it so just to show you what's happening here is that okay we are

to send a transaction on a different blockchain we need to uh like go through a validation for the contract so that's why we have a few transactions here and then on the near side we also need to send a transaction to prove um that here on the on the ethereum site everything went correctly so there is like an implementation of the lifeline and that's why we don't need to trust anyone okay so thank you thank you very much rob it was much interesting presentation um mark do you have your mic available or should

i [Music] do it again it's all right how are you guys very happy to just as someone as important as you and defy to join us today no not really really we are all the community you know so today we will talk about ave and i prepared like a small presentation because all these technical meetups uh we always talk about

boring technical stuff and sometimes it's always good to take a step back and try to get the bigger picture of what we are talking about so i will take like 15 each minute uh to e if i'm allowed to uh to give like a broader uh vision of the fight and where is inside that is that all right on your side you just cut your mic seriously yes i try to not make too much noise okay okay so let's do it there will be an introduction to the question can you guys see my screen

it's perfect yeah so defy in 20 minutes or less which is like a big big challenge because there's so many things happening in the device so let's get to the chase and dive into it basically what defy is uh beside the decentralized finance it's more ethos than any than anything and it was around core value and basically what are the core value of d5 it's around the idea of being and creating protocols that are non-custodian and that's one of the biggest important points you are the owner of your money that's one of the promises of defy for the first time of financial history

you own your own assets you don't put them into a custodian you don't uh put your money into a bank and the bank just uh owe you some debt to you and just can play around with your money as much as they want as long as they follow some rules there's no middlemen as well it's you and the protocol you don't need to have middlemen taking your commission taking some control over your funds this one is highly debated but it's an important topic d5 should be permissionless that means you don't have to do kyc know your customer process so you don't show

your id your passport in order to interact with the d5 platform in the eyes of a d5 platform you just a string of 42 hexadecimal characters that start with x and that's it uh any user um working with rv which is a d5 platform and my our user or the rv protocol user for us are just random string of 42 characters we don't know who they are we don't know where they are in the world and as long as they follow the rules and the rules are defined by the code uh it's pretty fine and there's nothing we can do to stop one of them or to limit one of them or to

tweak the position of one of them and i think it's a very a huge value proposition and i think there's some topic here for the debate after the presentation uh there's no paperwork because who likes to do paperwork i'm very sorry for the the jurist and lawyers in the audience but nobody like your job is very well respected but nobody likes the paperwork and that part of the job and also it's less important in the european union i don't know what's the situation swiss uh to be honest but uh it's uh very well known in the for example that you can have a credit card

that is a score that will attract your financial history with custodians and banking partners and will influence your rights and your market condition in order to get loans in order to get basically everything so in the areas that enforce a credit score if you don't have a good credit score uh you're far sure activity is much more limited and i love this meme that i put on the right corner what's the point of defy and basically not really burn the banks but propose an alternative in the context of the blockchain transaction

but when we dive into it and we realize what is the reality of the dfi ecosystem we realized that the ethos that pretty much everybody agrees on is more a goal that's than something we can all agree that is achieved as of today so yes for sure the paperwork part the non-custodian part doesn't exist in the fire as of today and will probably uh not exist in that form at least at the protocol layer in the mid or even long term but when we kind of consider what are the business case what are the use case

uh the no middleman rule doesn't make sense in every case i just put here the the logo of dharma dharma is a wallet that allows anybody to uh do some on-ramp so convert their fiat currency into cryptocurrencies and directly on the behalf of their user deposit that cryptocurrency to a financial protocol that is called compound and basically if you already use the ethereum blockchain yourself you instantly realize that you have to be fairly technical to use it because you have to put an extension into your web plugin uh which is most of

the time meta mask or one of the alternative you have to buy a special piece of hardware which is a ledger wallet or a taser wallet or one of the alternative you have to sign transaction you have to buy some ethereum in order to pay the transaction fee and you have to interact with several product calls and signed transactions and all this kind of stuff which is fairly complicated for the average joe and having some kind of services that abstract all the technicalities away in exchange of a small cut of the earnings is that is that really terrible and a lot of people don't think so that much and

the main difference is that in d5 you have the choice so if you want to do your homework and interact directly with the protocols and be a technical guy you can do it and if you want to take the easy path and the great user experience path you can do it and you will your earnings will be slightly very slightly uh less than the direct but it's fine and the nokia wayc part is super interesting when your collaterals are all decentralized blockchain assets so when you use uh eats when you use bitcoin when you use link or whatever other assets but if you want to have a broader

experience and reach other class of assets like for example in swiss realty which is a exposition to real estate in in the the united states or real world asset tokenized invoice tokenizing we will extend a lot of other stuff those assets are heavily regulated so if defy wants to be something more than just a bunch of nerds that are exchanging money together maybe some of their these defy products will have some further kyc and one of the good things once again is that you have the option in d5 if you

don't want to interact with these classes of assets if you don't want to the kyc you can stay in the decentralized assets uh pool and it's completely fine and that's probably the point i want to transmit uh not everything is 100 decentralized not everything is 100 centralized it's a spectrum and basically you have several protocols that place themselves at different uh place inside the spectrum you have the traditional finance that i call the all finance uh sorry if you are working banking uh with like the very old one like society general and

bien pepe or credit suisse the neobanks n26 in germany are manzo i think it's sweets i'm not quite sure about one revolution in the uk and you have c file centralized finance so products that access the cryptocurrency markets but in a custodian way uh with uh some with being a middleman with some kyc and the the big example of that are kindness in france nexo i could say also crypto.com uh they are the biggest players in that class

slightly more decentralized you will have uh exchange uh that can allow you to buy and sell cryptocurrency with very small threshold where you can you don't have to do kyc but usually it's very very small amount of money and usually if you want to really interact with this kind of platform you will have to do some currency monoliths which is a great project that allows you to uh input your cryptocurrency into a debit card and convert it on the fly in order to uh pay on every um like every point of sale basically and then you have d5 but even within the file

just like robert said in the previous year uh presentation you have some protocols that are more decentralized than the other for example ave is a d5 protocol but until the version 2 of the protocol which is a few weeks from now the rv team and i'm part of it has some uh special privilege in order to upgrade uh the smart contract list new assets uh pose some reserve uh some some access to uh to some tokens but never never never access to user funds it's just a way to uh modify the protocol in order to

provide new features but with the but what we will be in the future is basically what you swap is today uh smart contracts that are invitable that anybody can create a new pool with a new asset and anybody uh can interact with and there's no uh specific administration keys to it so keep in mind d5 is a spectrum and every project is somewhere in the spectrum so it doesn't make sense to waste time to say this project is defined this project is c5 we don't care as long as we understand the common itos and where we are placed in the scale it's all fine there's some

growth and there's some adjustable market for everyone what is the system that is behind the lending protocol so ave is a lending protocol a money market sometimes you hear a lending pool protocol so what is this system how does it work uh it's not an innovation it's a technical innovation because it use blockchain but on the financial side it's not an ev evolution at all it's not an innovation at all because uh it's all based on what we call the lombard credit system which is basically which tried during the middle age in europe and which is as old as human beings

uh so one of the first bigger and biggest player in that market was nakado the creator of the stable kind die and basically what a stable coin is is that uh it's the cryptocurrency asset uh crypto assets that is paid to a fiduciary currency or it's back to something else and basically one die is our value the value of one die is always very very close to the value of one usd and how does it works is that you have to uh input the deposit into the system

and that will allow you to create a debt and basically that debt is part of the money creation it's part of the supply creation of the die assets but you have to pay back and when you pay back uh that diet that you created when you took your loan uh is destroyed and those many of you in the audience are saying well that's all central bank work and exactly that's how central bank or in a broad way a commercial bank will work and it's exactly the same system you create uh the uh the asset by the loans and you destroy

uh the circulating supply by uh repaying the loan so nothing new what is important to uh remember it's a it's a lumbar credit system so you have to deposit more than the value of your loans so your loan to value ratio it's always below 100 you have to be over collateralized uh in d5 why uh you are over characterized it's because it's blockchain there's no kyc it's permissionless so if someone uh borrows some uh some money and doesn't want to pay back we don't even know who he is so oh can we send the public force to force him to pay back his loan it's impossible so

that's why all the defy protocol uh do what we call overcrowded errors known because if the borrowers doesn't pay back there's an incentive that can be created to pay someone to pay the debt on the behalf of the original borrowers because there's money to be distributed from the collateral of the borrowers and what is for me the cornerstone of the divide growth that we witnessed him with nest this year is the stable coins and the stable coins are basically uh what what was the missing part of the blockchain and cryptocurrency ecosystem

because a stablecoin when you think about it it's a peer-to-peer cash system and uh in 2008 uh and almost 12 years uh ago when uh someone uh named satoshi nakamoto created a published a white paper saying a bitcoin an electronic peer to peer cash system there was this idea of having some cash on the internet having some money this enterprise money on the internet and what money is one of the most commonly accepted definition is that money should be a store value

a unit of account and a medium exchange and when you look at the stable coins uh it just fits all the the criteria the store value well fishery currency uh of course this inflation but for most of them uh you have done before losing all your money through inflation most of the people just earn some wage and then spend most of it and then i have some savings but the same things are working so who cares you need to becomes we all have a good vision of what is the worst of one dollars medium of the exchange well one dollars is easy to exchange to pay for goods and services because

if you are a business owner you are not a trader so if you accept for example bitcoin you have to believe that the value of bitcoin uh will be at the time of the transaction until the time where you will sell in order to settle your your accounting will be at the same price or higher otherwise you just lost money and a business owner the job of the company is to have some cost put some margin on it and sell it for a profit so a business owner cannot trade with the currency which is the the cash flow of the business that's why a stable coin is much more interesting for them

and that's why for me the stable coin is a peer-to-peer electronic cash system and it fits a lot of criteria and there's a lot of different actors that are interested into using stablecoin first of all the investors that can use them as a unit of accounts and also as an aging tool so if they think that there's going to be a market downturn in the future and and instead of selling their position and creating for example a tax event i don't know it works in swiss but i'm speaking as a french ear they can take a small stop into their position by rebalancing part

of their capital into stable currents and uh in the longer term they can uh increase or re uh restart their position uh uh back into cryptocurrency without having to have the burden of tax uh speculation it can be used for leverage so you can have some capital uh in cryptocurrency using us deposits into a loans in order to borrow stable coins in order to buy more cryptocurrency in order to borrow again and again and again you know finance work uh retails can use it as cash which is easier uh to use than uh bitcoin ethereum and speculative assets savings excuse me guys i will need one

second i hope everything is fine so uh okay i need to give you back the mic sorry guys my issue at home but it's fixed so i was saying that several actors that's the point of uh here we are and uh as savings so the decentralized saving accounts i will talk about it and what i call honest work the farming

which is in everyone's minds are these uh these days and uh we also will talk about it so what's the point of a decentralized saving icons well in the times and age of negative interest rates uh and i think you guys in swiss are very much affected by that uh it can be an option like you can leverage a defy to swap some fiduciary currency into stable coins so you end up with a non-speculative asset well which is back to the usd and basically you can provide liquidity into a decentralized finance platform on the liquidity provider side and that

equity will be used by borrowers which are speculators or just people in need of liquidity and they will pay interest and as the protocols are decentralized and there's no middlemen and there's no particular commission some protocol takes a commission but the orders don't uh all the interests paid by the borrowers are directly paid back to you as to you as a part of the liquidity provider pool and basically that's a way to have some passive income and i will say that eighty percent of the users of d5 are at this step

because it's a low risk there's still some risk because maybe the protocol can fail maybe there can be a arc maybe the stable coin can fail so there's always some risks there's nothing that is zero risk but the risk is fairly limited and uh the earnings will not be triple digits but you will have some uh uh reliable stream of income that way and eighty percent of people are not speculators and uh they stop there when they under define and i think it's pretty fine uh how much can you can you make uh in defy is one of the most common question as well uh

in that topic the world defy landscape changed a lot uh the past few months so that's p d5 used to be epoi driven so organic yield driven the borrowers were paying interest directly to the lenders and you uh that was uh the main yield form and you add some platform like loan scan or this one is d5 prime that will show you the 30-day average and the rate of today of every platform on every asset so die is a stable current usdc is a stable current and you can see that uh during the time of this uh time frame uh you get uh this

amount of interest rates and i i put the the stump act because uh to remind everybody it's not zero risk uh because for example one of this lending platform called bzx or this product of bzx was fulcrum was act uh uh several times this year which led to user lost effects and basically what changed uh during that period uh the reason period is that the the permissionless way and the decentralized way uh if i operate i need that

if i can get some yield on one platform why will i stop there if i'm ready to take some risk maybe i can uh put my asset into this platform i will get the iu from that platform and that iou i will put it as a liquidity provider on the second platform i will get an iu from there then on a third then on the fourth and basically that was the yield taking error so stacking yield on top of each other obviously when you do that you stack the risk because uh you are not exposed to one platform anymore but you are exposed to the uh technical risk and financial risk of two three or four different platform at

the same time and but that was a time where you were able to find some double digit yield into d5 and basically one of the the biggest uh and one of the main strategy at the time was to uh stack the yield of the protocol curve with the protocol y earned with the protocol ave and basically with the three of them you you ended up with like 12 to 15 to 20 percent apy return that was more risky but i will say still pretty much under control because at the end of the

day if you know what you do uh that money comes from somewhere and that somewhere is actual economic activity there's some traders doing some swap there's some borrowers paying interest and you're just leveraging several platforms at the same time what happened during this summer is that we end up into another and what i would say the dark side of d5 uh and uh the the term for them is dejean farming dejan for degenerate so it uh it's uh it's a spell itself i would say and this is a era where you get like four digit yields but for what and robert uh

talked about it a bit more in the earlier presentation but basically some platform when you provide liquidity will distribute to you some uh governance tokens that you can sell on the market and obviously uh they have market values but not every platform is really intentional and some of them are just cans like and uh all just not financially viable because uh distributing for digital yields are not financially valuable in the short term and midterm and let's not talk about the long term and obviously it ended bad for many actors but it was also

a time of maximum opportunity for the more uh dedicated and informed users but as robert said just before uh 98 of the the person that went into that side just got some token that went very very fast to zero in value so that's one of the things and what i want to say about that is that you have to remind yourself this is a permissionless protocol this is a permissionless ecosystem permissionness means anybody that can write and that has the skill to write a few

lines of code is able to uh to uh it is able to uh to publish on the italian blockchain it's a smart contract to publish a platform and to basically take user in so and it's a really important innovation but obviously that will allow the best and the worst and that's not because there's some scam that's not because the words exist that you have to throw the world technology apart it's not a bag it's a feature anybody can publish code yeah we just have to inform the community

and investor asked to do some research before entering some financial projects and to finish uh if we want to talk about d5 d5 like 2020 was pretty much the d5 year in the cryptocurrency market we saw huge growth from 600 million dollars market to more than 10 billion dollar market no and all of that happened in like less than two months six months but if we take a step back and i think it's an important part uh it's still a relatively small market like compared to finance compared to

many things it's still a very small market the rates are defined by supply and demand usually it's because there's some actual economic activity when we put on the side the dejan farming stuff it's because of organic economic activity that you have some rate and some yield there's some fluctuation at each block uh that will find equilibrium and when you are interested or the market works uh the cryptocurrency and the defined market are super interesting because it's a way to witness in real time market equilibrium being reached uh game theory uh happening

and all this kind of stuff but on the limitation i would say that forno the deposit marimeter are too strict uh the over characterization is uh very strict and doesn't allow a wide range of use case because usually when i want to buy a car for example i don't have into my checking accounts or even saving accounts 1.5 two times or three times the amount of the car if i want to take a loan because if i have this amount into my savings account i just buy the car directly i don't take a loan in order to buy the car and uh so what defy needs it's a way to create undercooked errors

loans which is the loans the kind of loans that 95 of people tax and also the technical sides there's some arc and critical failures of protocol that can happen that has happened and i will probably unfortunately happen in the future so how do you prevent uh the the shortfall events and uh the acts well you cannot prevent it in the technical way because if the bag is here there's some smart man that will find it and if there's a financial incentive to exploit it they will do it for sure uh there's some way that obviously but not every hacker is away that otherwise we

will not spend so much in security uh insur what i call insurance for the crop is that you have like two market leaders uh in the insurance uh platform uh there's a third one i will uh briefly talk about there's nexus mutual which is a mutual mutual yeah mutual uh based in the uk where uh it's kyc so you have to identify yourself you have to be a member in order to buy and sell insurance for the smart contract but basically you can buy a cover for your exposition inside a protocol and basically if there's an arc or if there's a

bug into the contract uh the nexus mutual fund will pay you back uh your uh the amount you covered there's also and that's one of the biggest markets in um traditional finance the dairy battery path and uh with that uh open is uh doing some options and uh basically you can buy a put or call option uh directly on uh uh your deposits on the value of your deposit into financial protocol and that value uh will uh value of your option contract will

increase or decrease the according to what happened uh during the uh the time of the the contract and one last thing i want to talk about is that with rv which is our protocol we launch what we call the safety module and basically we have a native asset which is a go of announcer set uh in harvey that is called the ave asset and that other asset can be used uh for speculative reasons but also uh and most of all for governance in order to vote on improvement of the protocol and also can be used to protect the protocol so basically what happened if there's an

arc and you didn't take a cover insurance uh into a defy platform well for most of them you just lost your money and that's very sad and that's part of the risk with rv now there's this pool of assets that are here to protect the liquidity providers into the other protocol this safety module is brand new it's four days old but there's already 74 million dollars in it and basically the rules of the safety modules you can go deeper into the details if you want to read the avenomics that

are available on our website rv.com but basically up to 30 percent of this amount can be used uh directly to cover what we call bad depth so the result of a short foray event or critical failure of the protocol and what are the flip side for the the people sticking into the safety module they get the inflation of the rv assets plus most of the protocol fees so it's a responsibility but it's a paid responsibility and i think i talk enough and we should go to the uh to the panel thank you very

much for your time guys thank you very very very much mark i was really exhausted with the you and the two rabbits so let me ask for activation of the two rabbits and i will stop this roberts okay we uh all all the three were there um just uh yes i've shared the link for the telegram of defy swiss so if you're interested in defy uh look at the message uh we have the this small swiss community uh which is um um like uh uh sister community from the d5

france the huge device from which uh mark is an influence member not the list um so yes let's let's start with the panel um so if you have questions for the speakers you may ask them in the chat and we'll we'll take some of them through the panel um otherwise i will i will maybe uh um start um with a first question um [Music] so let's start with a generic one um what's for you um what is the decentralized part of

this centralized finance but someone want to talk about it how much is decentralized or what is the decentralization in this centralized finance i may take on it first um i think that the the principal idea here is that uh i own uh my assets so today for example yes the only way down the only decentralized finance we have or the the closest thing for the centralized finance we have is cash but not even because a government is like the body

who is um or the central bank yes who has like the whole all power about it but i think this is the closest what you can get because there will always be some compliance as you or one year uh that's you know uh we need to obey but i would put like a on a separate thing yeah so okay we live in a world we live we have some rules we have some um yeah systems but the most the centralized things we have is the cache yes i really own this cache yes um and uh i would say that will be the

foundation of the decentralized finance and then on top of that are these protocol systems what we've been discussing here how we can how we can use it how we can manage it yeah so like moving it now like so so having it in in a way that is efficient so cash is not efficient if i want to send it to you to let's say mark well how can i do it send a pigeon do we put in a post yeah so i will go to the bank and then like all the all the centralized finance or the decentralization of the cash is disappearing is once i'm putting it rubbish do you want also to have uh to say something about the decentralized

part for you which are much more business like yeah i think it's i i think you've got it right i think it's about trust i think robert the other robert has got it right it's it's about oh it's about you know it's not having trust somebody in the center so you own your you own your assets you know i mean when you put your when you put your assets on ave like you you keep control of it like you know exactly also what's what's happening to it it's completely different in the in the traditional world i mean i mean defy could also be called like honest finance because or transparent finance and you put it in the centralized world and

you put your money in the bank and legally it becomes the property of the bank you become an a you know an unsecured creditor against the bank and then the bank can do whatever they whatever they want with it so that's what i think the big difference is for centralization versus fifa i like the word honest i mean the the way how you you know put it in yeah it's i mean centralized finance is based on it's it's really based on significant deceptions you you see why people become like bitcoin maximalists because you when you figure out like just how dishonest the centralized system is you know you can you know there should be warning labels on some of the

books that you read you know it's like you just get so upset and i think it like i think it drives you naturally to i think it drives humanity naturally to decentralized finance because it's a human value to want to control like control yourself the the product of your your hard work and to have it done in a transparent way so mark do you want to add something and there was a question of dda we say what do you think about having to trust a smart contract is there another custodial risk related to a smart contract so i have to state that i agree completely with the pioneers which is not fun because a good panel is when we are new

but obviously as i said at the beginning of my part of the presentation uh it's a itos and uh basically having some honest or auditable like the auditable part is really important if you want to know how much money does into ave you don't have to ask me or trust me you just check the ethereum blockchain uh a smart contract that it's called lendingpoolcore that you can find very easily in the documentation or yourself if you know where to look and you will find every single sent that is into the protocol and you can apply you cannot tweak the books in define like everything is there and auditable finance is

one of the magnitudes for sure uh about having to trust a smart contract well obviously there's always some trust i'm trusting right now my very buggy uh internet provider to make sure that this meetup will be a success uh or in the fact that i will be able to communicate with you but what can i do i will not plant myself some uh some fiber optics directly between switzerlands and portugal in order to have these meetups there's always some trust involved into the technology on that side obviously at rv and every single protocol there's a huge infancy around security so for example uh

you can find on avid.com security all the audits that has been done or codes you have exactly the same thing in one of the biggest platform called compound that robert talked about during his presentation and also make a dao and most of them they have huge budget attentions and uh effort put into making sure that your money is safe within the technology very very good very very good let's move on maybe to another topic so have uh okay let's go let's go with this one um so most protocols

are or are most protocol ponzi um in particular in the context of imm um how do i can an investor differentiate a ponzi from a non-ponzi um a protocol particularly at the beginning of the protocol when you have this massive new entry of participants mark do you want to start on this one yeah there's a good ponzi and there's a bad bunny it's like the other hunters i don't know if you are joking so the good ponzi is that you put some

money and if you are earlier than the other you make more money that the the last one that get in and so the bad ponzi is that you put some money but you are not as early as you can and obviously it's the same for every financial assets what's the point obviously there's some real quantity like pyramid schemes into ethereum and into finance and those ones are pretty huge and uh there's a lot of risk but what define appearance keep to just a financial asset that is an investment based on growth is that usually under appearance there's no active uh economic activity there's no development you just uh try to be earlier than the other guys

and you will make some money uh when you put some money into uni swap for example you are betting on the growth of the volume of d5 all the time which has been a good bet until no and uh if you think that d5 will still grow it might be a good that in the future when you put some money as a liquidity provider on compound or harvey you are betting that there will be some borrowers in the future in order to provide you some yield but it's linked to actual economical activity a ponzi usually doesn't have that part and i think that will be the difference very good rolex good one

[Music] you go ahead brother okay thanks so uh i would argue here a little bit uh i don't think there is any good ponzi or ponzir but yeah of course you can use the opportunity you don't use the opportunity and in general like that's the definition of the ponzi is that the early the guys who are early they they win on the uh on the losses of of the night guys and in general that was bad this is not sustainable uh well i don't think it's easy yes how to find a ponzi i like you know there's so much risk in general like if you see all these protocols

i was chatting on the defy uh last week on the defense quiz uh i don't remember maybe you can remind me there was this this i was asking about this how clean finance i think you know that was two weeks few weeks ago cream finance so so many people again rush it up no there's no evil token release no white paper about the mechanics and and yes people are investing so i mean i never well there's so much opportunities i'm so deep in the blockchain and yet i sometimes i feel like a loser because i'm not using this opportunity but on the other hand like i already learned my lessons that you know i'm like in engineer i i'm like deep diving into like the above the

research and the coding and then i already wake up one day like after a month of looking at my wallet and think oh no there was a dump so but more specifically answering your question i i like what my mark said is that [Music] if there is this opportunity and if you if you do it correctly we we can use it but if like if the if the protocol what is defining is that okay reusing other protocols so so the basic mechanic where one protocol is building on the other one but doing the incentive based on the activity we will absorb from the

other one it's it's for me like already a receipt for bonzi yes because let's say if you start like one and another on another this is what i call this house of cards because if if the one in the middle collapse we will find out okay as they are exiting all the other guys on the top of it are are gone yes like and and what mark said is how we value this thing so you you you you nailed it correctly yes with the future value what's the future value of ponzi zero yeah but it's tesla ponzi sorry it stays do you have a component on a ponzi even

in all projects yeah for me every financial asset if you wish to look it that way can be considered a ponzi but to me the key difference is the economic activity is there some actual organic activity where does the yield and the return come from if it comes from from users that are paying for service what's the point what's the issue well depending on the service if the service is like the investment that's that that's what's like that that's what we like expect differently that's why we have these regulations to protect the user robert the riot chart i have a question

from the audience to you about your revenue model and maybe within this specific question how would you define um how would you communicate to people that would believe that clay scoffing could be a ponzi and how do you um remove that that's ambiguity to investors well i would rely on what mark just said that it's tied to economic activity so we uh you know we operate we have a dual track approach so we actually operate in the real economy i mean it's on a blockchain stack but we operate in in fiat so we offer our accounts in dollars euros and francs and we do it by

cutting out the bank and getting everything insured and we offer returns that are you know well above what you can get in a in a bank account so and but we do that it's a bit different there's broadly two types of lending one is like mark a quite rightly outlined which is lombard type lending where you're lending against an asset and usually it's over collateralized so your loan is less than your asset uh you know and then the other the other type is lending against future cash flows and that's what we do so you know the d5 space hasn't really cracked that yet

the the d5 space is very much on the over collateralized asset which is amazing i mean i think the d5 space the experimentation is is really great it's really exciting it's something you don't see in traditional finance and so the way that we make our money is you know this the the more typical way is is that somebody you know comes to a bank and says i have an idea and it's going to generate future cash flows but i don't have enough money today to whatever buy the capital equipment to generate those future cash flows so the the bank you know takes a a view on it and that really doesn't exist in d5 today it's

harder to do because you really need to connect through to the real economy and um i think that will lead to mass adoption that's what i meant in my presentation that acting as a link to the real economy and then bridging traditional investors i think will hugely open the the space in d5 you see ave doing it a little bit with their credit delegation idea um which is which is amazing idea and it's it's based on essentially you know people maybe who have a track record and you you you know you as the borrower have if i understand correctly on ave you have some boring capacity but you don't use it yourself so you allocate it to somebody else and

then they use it and you participate in the in the benefits and what we do essentially to we generate our returns in a similar way to a bank does but you know a bank does like maybe i don't know 50 different types of lending for different sub sectors and you know different ways they do it and what what we do is is quite linked to the blockchain so we for example we buy invoices from small companies that are selling to larger investment grade companies and the smaller companies need working capital because they're not going to be paid for example until you know like a month later but they need the money

you know within a few days so we provide it to them by buying those invoices for the service that they provide to the large you know the the large company and then that has to go through our blockchain so that's what the the question earlier was would it work for commodity trade finance and my answer was it had to be an input so as long as it's very clear like you do the buyer doesn't question what they're getting like as long as it's you know time for example like i mean if somebody you know is a contract engineer you know globally working for like you know microsoft or apple or something like that like if they're just paid based on putting in eight hours a day then we take the

credit risk against the the buyer paying because the inputs have all been done it's very clear it's what blockchain is great for right it's open transparent everybody agrees that service has been provided you can't dispute it and then it's just the credit risk of the buyer paying and then a certain amount of time in the future and that's more traditional that's more traditional finance and that will come to that will come to deep buy i mean i hope it will i mean that's what i'm trying to do and you know so that's our revenue model this is a perfect chance so thank you very much for answering the question uh tell us darko if that that he's right i think what you just said robert is a

perfect transition uh to um the traditional finance what marx discovers the old phi um and other will bridger too because i think the the future and the power will be to bridge you too do we need to put compliance on chain or should it stay outside of the blockchain i have a huge bias on this question but i'll let you guys tell us in my opinion it's very important for what worker that said because for me we need two things uh in order to uh go from uh what is d5 right now 10 billion dollar market to what uh

can be defined which is alpha triangle market and basically those two thing is calabiti and that's why you need uh some solutions such as near uh and the rainbow bridge uh that uh has been shown very briefly by the other robots and also you need uh under collateralized loans and future cash flow and when you think of it 99 of the loans we take are future cash flow loans because uh at the end of the day uh when you do another work like there is loans the banks doesn't trust you 100 if you go to the bank and ask for a loan for your car and you don't have a job you don't have a house you don't have assets

you have a very very uh low probability to get the loan but if you work for the state and you have a wide range of assets no you have a very very high probability to get the loan why because the banks can take more safely the bet that you will have the revenue in the future so basically your collateral as a borrower is uh the the the future cash flow of what will be your earnings in the the the future according to your economic activity and when once we unlock those two things and that's why it's a great planet because

both are working in the two missing pieces of d5 so i'm very glad to be with you guys uh we we can grow defy uh tens 20 or 50 times more on what we are right now robert uh weather roberts wants to [Music] go ahead yeah i'm just like like thinking yes in a way that i think in general is that you know like if you talk about the compliance if you talk about all these things it's it's on one hand side problem you just want to like comment on the like from the other another way yes that

um it's us but at the same time protects us so i'm not sure where is the border and uh like if we can if we're if you're able to draw these borders for what we should brother of these borders because uh yes i have an impression that you know if in the 20 years or even in 10 years there will be another collapse and um and the world will turn into let's say very managed the centralized finance but will not decentralize finance then we will try to do another revolution so the question the question was is uh

cyril was how do you how do you bridge between crypto and the traditional world and how do you get uh how do you get essentially traditional users to come into crypto and i i think the answer is safety and i think that you know part of that is education part of that is making people feel you know i mean you know comfortable with their money going into like a money market like like ave and you know i think you know that this bridge you know compliance is going to be necessary for it just because that's just it's a fact of life like i mean it's a fact of life in the traditional world so the question is is compliance needs to be there for for mass adoption and you know

but the you know the only question is this really like you know what kind of compliance is it so if we you know i mean i don't i'm quite libertarian so i kind of prefer that there to be like you know you know open borderless you know free permission to do whatever but you have to accept that you know part of the financial system is used for you know really unpleasant crimes and it's not really an option it's it's it's just there that's the that's the laws in basically every territory so if you want to grow you know like you know mark's idea of like you know 20x 50x i think that's hugely understating it i think it'll be much much higher than that but i think the the a key requirement is is compliance and

you know it's one of the reasons why we're in switzerland we're a regulated entity in switzerland we do our own kyc and it's you know it's it's not that it's not that hard and once you've done kyc uh you know then those people are free to invest in any defy assets that are essentially white listed because you've got all the you you know if you work with a really great protocol like c layer for example you've got all the stuff there that so you can make it cross play i mean that's the best thing about d5 right is it's composable so you can say like here's our institutional clients in geneva and we've already done the kyc on them and they should you know hopefully be able to access

most of the markets that are set up on ave for example or whatever or or something else and i think that will lead to mass adoption but it's also like i said in my presentation it's not the tech it's really like it's what it's the benefits for users right so it's like savers looking for yield but you know also reassurance like they're not looking for a thousand percent yield and like you know they're looking for but defy can provide by cutting out the banks and operating on the blockchain stack you can offer institutions like you know even like three four five percent yield people you know people you know in the traditional world sell their mothers for another another one

percent or so you get nothing in the you know you get nothing in the traditional world but you know it's also like it's also like there's a game there's a game to be played as there's a game to be played as well right if you show up in like a you know a cat t-shirt and you know you may not get as far as if you put on like you know you know a tie and uh you know that's why our products for example we even though they're d5 products we got them we got an isin securities code for them and they're listed on bloomberg so i was at a meeting today and the the guy's like i'd love to buy your you know i'd love to buy your product but how do i do that it's a blockchain product and it's like well you know it hasn't you can type it into

your you know you can type it into your sent you know your traditional your old school terminal and you can see the number and it you know that number could also indicate something in the future that is on ave like why not it's just um but the two worlds are the two worlds are far apart but but kyc compliance is going to be a very basic thing i think like because if you show up in a cat shirt and you say like we don't do any kyc like you know people are going to think that you're you're you you're involved in something that they don't they wouldn't want to get involved i think one of the the important parts and i try to infinitize that during the presentation

is that you have the choice it's your money so basically at the end of the day it's a spectrum so if you want to stay within the collateral uh decentralized collateral assets which is eat bitcoin and whatever what not uh you can stay there and it's fine and you can do that in a permissionless way and you will never have to show your id but uh with ave we have the multi-market approach and basically uh the main pool will be decentralized will be non kyuisi non-custody and all of that but if we want to create a a pool and a special market with roberts and

all the suits of services that he has uh that will be not permissionless but permission needs with the whitelist because you have to do the kyc on their side you know to access that services well if you don't want to use it just don't use it and it's completely fine but if you want to access new type of financial assets new type of service new types of range and a new range of uh possibility and opportunities well that's the rules and i think there's a market for everyone and i do believe i will always be myself in that five to ten percent uh or maybe less than five percent in ten

years of people that will have their own uh hardware wallets that will do my own transactions that will have my own bitcoin node at home and uh all this kind of stuff i will always be in that part but let's be serious in 10 years when we will have millions of people that will use the blockchain technology and that will it interact with the blockchain ecosystem they will not use a ledger directly they will not have their own bitcoin nodes and it's completely fine they will use things that they are happy to use that the with the user experience they uh they can access and if they want to do their homework and join us

on the technical side they are more than welcome and they will always have this option it's a spectrum and there's a market for everyone so we uh we've reached the the end time of the um of the panel um but i still have one question so i drop it and uh if you can stay a little bit a few minutes more would be awesome um because i think a topic you most of you guys mention is the governance token so for robert sharat the equity is the governance token for ivy there is as well some governance features included and robert zaramba was criticizing

the different approaches so uh uh how much of governance should be done of chain on chain or of chain we want to start you want to jump in so i was hoping that another robot will start and i will have an opportunity to respond on that so i'm not saying okay so first of all yes i'm criticizing the governance because uh usually it really doesn't work how we see how it works it's used for speculation which is not in fact what the government should be

for and um if you look at the like a certain extent if we want to have this dow for everything then we are lost we can't do it because we will just we can't analyze everything we can't vote for anything there must be some layers where we like in the politics unfortunately uh with delegate we um we let something to do to others and um and um and with what uh mark said before with this um the old farming creating the the governance and creating the value

out of it i'm i'm in general like i don't agree in that i don't think that okay yes there is a strong um relation between the elf farming and the utility because we give the power to users however it's how we make to how we make sure that this won't be like it would not kick on our back i don't know so that's why in general i'm against the governance uh i will i would like to test this in let's say smaller or in some sandboxes rather than in a d5 ecosystem where

we can we can fish people when we can we can cheat and we can build this this game i will take the flip side unless you you want to take it robert it's for you mark so basically at the end of the day obviously uh like i won't lie i spend 60 to 80 hours a week focusing to d5 and that's the the time i'm willing to share and the reality is probably above that but i'm completely fine because that's why i love and i i enjoy every minute of it

but that's a huge advancement and even with all that time spent i probably cover let's say fifteen percent of what happened in this ecosystem because there's so many things happening and if you want to be involved just like robert said uh and understand everything that happened into a protocol that's a full-time job and that's obvious because protocol financial protocol like ave is a 1.5 billion dollar protocol compound is the same thing uh uni swap is a two plus million dollar protocol obviously there's a lot of activity obviously there's a lot of area of research of uh discussion and a lot of things happen

and furthermore in d5 you have composability so it's not one protocol but the interaction between protocol so it's difficulty squared because you don't have to focus on one thing you have to focus on everything and basically it's the same with that the answer to that in real world governance was the politics like the political system because as not everybody can be like in good old athens as a citizen meaning that you have a lot of slaves and a lot of money so you can spend all your time uh to discuss politics because everybody's worked for free for you uh on your estate uh no yeah we are not in this situation we are

in uh a situation where people are more equals and most people are specialized and do an actual job and they spend already 40 plus hours every week on their task we cannot ask them to spend 60 more hours to get involved into a protocol so the answer to that is the protocol detection and basically what happened uh on compounds and on uniswap we used uh this main smart contract technology than compound and also on rv starting on the version 2 of the protocol is that you have vote delegation so basically if you have some government side set you can say well i generally agree with this guy

that talks on the internet he seems to spend 60 hours doing that and i will give my vote to this guy and he will vote for me the huge difference with the current politics is that the democracy on the blockchain and in d5 is a liquid democracy so basically if the guy you put your vote into in a real world just do like every politician say something during the campaigns and then do something completely different you basically uh in about position until the end of the mandate um the decent price finance governance if the guy starts to vote on something and you don't like it

and everything is auditable on the blockchain so you know exactly what your delegates are voting on and uh on which is who and what was the outcome uh then it's one click for you to say okay this guy doesn't have my vote anymore so that might be uh an area of optimism i think the gov i think that decentralized governance is you know in finance is one of the most important things that we can pursue as a community like i think the way it's done in traditional finances you know is is part of the root of many problems in society i mean

from from what finance finances to who they give loans to i think it you know the whole system leads to leads to inequality and exclusion and you know i mean you know there's lots of problems with having direct democracy including you know you get a lot of like you know in the tales of distribution you get a lot of like you know weirdos out there that are you know that are whatever filtered out if you just boil it down to a representative democracy but you know i mean that i i just think it's an i think it's an amazing experiment i mean it's really it's really incredible to watch it i think that you know it has a lot more to do with like how you set boundaries around it because you can't have a vote every day

i mean you know you need you know i mean you need to have like it needs to be well structured so that you get the participation up but you'd even if people don't even if you don't get a very high participation just the very fact that there is a governance mechanism will make things better i mean it's just morally better like if you if you really dislike somebody if you really dislike the management or who's doing a certain job or the way that a pro protocol is being operated you know the fact that you could organize people and vote and change it is so completely different than the you know system of guilds that we have today which are totally removed from the you know the population so i i think

that it's you know i think it's more question of how you of how you do it than you know whether you know you should have governance tokens but the the other thing with governance tokens is some of them some of them mix up governance with equity because everybody twists themselves to not issue a security that's why our company for example we're we're very open we're issuing an equity token it's one-to-one match with the shares that we have in our share registry in switzerland you buy one equity token you get one vote and you know we're you know we're gonna have to exclude u.s persons and you know there's a compliance aspect to it because to hold the equity token and vote you you have to register

and but you know at least it's honest and straightforward i think a lot of governance tokens there's this implicit idea that in the future the community can vote economic rights to those governance tokens so you're kind of mixing up good governance with what is really a security right it's an option on the future value of the of the protocol so that's very good very good so let's use a quench a little bit here uh robert what you said is just like you know like putting this governance into like this open protocols isn't it like this opposite what we want in this decentralized finance

isn't like the whole idea of creating a common goods like the democracy doesn't make sense anymore yes because democracy says that we want to change if you want to change we just deploy another stuff new stuff i don't need to ask anyone like what i like what like even with other yes okay we have a choice do you want the regulations okay here you have you can use it do you want like a pool with no rules okay you have once i will start voting i will limit the choice impact i think that that's what you describe is the unisop approach like unison v1 and uh that's a very uh interesting approach and very valuable

approach but it fits uh use case focus protocol so basically if your protocol is a bonded curve and basically uh the use case is you put a pair of asset 5050 and yeah the bonding curve is just x times uh y equal k and that's it and anybody can deploy uh a pair of assets that's something you can deploy and then never touch again and say this is a public good use it as you want for a money market like rv which like a bunch of collateral a bunch of assets that need to evolve with the market like

if we just launched it uh ave in january and just never touch it there's a huge array uh um set of features that you wouldn't have today so if you want something that evolves you need a bit more governance it's just two different points in inside the spectrum i'm not against like you know leadership or building or update something right you just need to be well managed and the thing is that once we get too much power for like a single change yes we it's it's it's not even a democracy yes it's like giving a power to people who will use this as an opportunity

yes and like having the it's not concreting the common goods in general that's what my claim is but you know i agree with you yes that we should we should always evolve it's not it's nothing against the evolution it's a construction so i will wrap now the the panel um i will let the open question otherwise basically all questions are still open we don't have the answer and if so thank you everyone for for joining i hope you enjoyed as i as i did the talk in the panel and uh maybe you can just share some links to follow up on the different telegram [Music]

thanks again everyone thank you mark for for for joining to switzerland even within the coffee shop [Music] thanks to everybody guys thank you thank you thank you for your time guys i was pleased to meet you see you thanks mark