Inside PancakeSwap's Multi-chain Expansion Strategy | Mochi, Head Chef at PancakeSwap

Transcript

and I think as crypto develops further dexus and def5 platforms must be multichain as well the way I I see crypto is that it's on the development path of the internet to become part a key part of that multi-chain future uh P swop has to expand uh multichain it has to be focused on uh where the users are and also where the technology is scaling towards we teed up with the Wormhole Foundation stewards of the Wormhole protocol that leading interoperability platform powering Crossing transfers for 200 plus multi-chain teams P Unique War NFD just for zero exu listeners today before we get into today's episode just

a quick disclaimer the views expressed on this podcast by either myself or any guests are their personal views and do not represent the views of any Associated organization nothing in this episode should be construed or relied upon as Financial technical tax legal or other advice all right let's jump into the episode all right guys welcome back to another episode of zerox research we have a great episode lined up today with jef Moi the head of pancake saw a leading decks on binance Smart chain today is Thursday March 7th and this episode will be airing on Friday March 15th as a reminder be sure to use code0x research 10 at app. blockworks research.com for 10% off your annual subscription and for those of you who are already Subs I'm sorry but this is

only for first time customers all right then on to the interview with Chef Bui the head of pancake SW thank you so much for coming on today thanks Ren and I'm glad to be here yeah a lot of our listeners may not be caught up on pancake swap or know much about it Journey do you mind sort of setting the stage a little for listeners explaining how pancake swap is a differentiated deck as well as the sort of previously previously implemented V3 upgrades sure I I'm happy to do so so in a nutshell in 2023 Peg swap went into a highly focused period with the main aim of becoming the best multi-chain defi platform so

specifically what that means is that the panak shop kitchen team uh had an aim to uh make it so that users could assess all the core D5 functions easily on multiple different chains and this would include uh providing liquidity including uh swapping and doing various forms of uh staking launch pads Etc on on many different chains without having to learn the newest upcoming defi Lego and jump around various projects to enjoy the benefits of all that is developing within crypto and so this is what we mostly achieved in 2023 now talking about our V3 specifically uh what we did was we

improved on Unis v3's implementation via two methods so the first is providing onchain farming Rewards for LPS that is based on a deflationary reward token so uh I think as Renu would know many first generation dexes uh did this um you know rewarding of uh Native sorry rewarding of uh liquidity providers with their native Dex token rewards however many of these tokens were hyperinflationary by Design and so their prices were not sustainable in the longer run and so many of these tokens collapsed and many of the liquidity providers then left these taxes because uh trading fees were

simply not sufficient to cover in permanent loss suffered by by them and so what we did as an improvement over uh the V3 model was to provide uh our kick to economics on top of it and uh is Prov and is provided in a way where uh you know the pancake swap team and the protocol could buy back all the kick tokens that we emit to LPS as rewards so what we achieved in V3 is uh a model where we could subsidize uh impermanent loss suffered by liquidity providers with a financially sound token model that keeps them perpetually in the liquidity pools so that's the first thing and the second major Improvement we made was introducing the VC V escr

model uh into V3 and I we we do believe this is a a first so we've grown a voting uh ecosystem which allows altcoin projects to build liquidity in a concentrated manner on panak world and this is a significant benefit so previously the largest venue for building liquidity with the sort of uh voting mechanism was cinet uh but which used a stable swap uh you know pricing methodology but v3's Capital efficiency is you know depending on how you you provide liquidity between three to sometimes up to a few hundred times higher than the stable swap model so what that means is projects can build deep liquidity on PX V3 much cheaper uh

than using the same model on curve and they can also receive K commissions to help them build liquidity quickly as opposed to you know Unis which has no incentives reserved for building up uh altcoin projects so to to kind of end that off uh you know V3 has enabled pan SW to become a significant multichain Dex in 2023 uh yeah and so but you know we do think there's still many obstacles that we we're trying to to deal with yeah I really appreciate the sort of intro explainer and it seems like at least with B3 you guys managed to take sort of a bit of the best of like each decks and sort of incorporate it into pancake St and you mention that there are still some obstacles with where V3 is today and I know you guys have some

exciting plans so would you mind diving a little into just where V3 is today and sort of some areas in which pancakes off is still lacking sure uh so V3 today allows panak SW to execute uh a lot of trading volume with relatively little uh you know Capital so to to give you a comparison uh pangas V2 which use the nonconcentrated liquidity model the the simplified uh distributed liquidity model we had about as of today I think five to six times more uh liquidity in V2 at the very Peak but uh in comparison V3 is now EX buing way more volumes than

than V2 and so we are on uh you know B&B chain as I think we we most well known on but we're also on ethereum we're on arbitrum and we're on nine different chains and uh with relatively little liquidity on ethereum we are now the fourth largest deck in terms of trading volume on ethereum Main net so that's where V3 is at currently uh and then talking about the uh you know shortcomings of V3 we we think there are four main ones I the first is uh hang B3 is still relatively inflexible in terms of uh you know providing iing models for assets so as you may have seen also in in uh know recent years there are assets

that don't necessarily follow the XY to K pricing model one example would be for uh I think social tokens tend to use some kind of bonding curves that you know start from zero and go up as more people buy them and you know it doesn't really follow the same sort of uh curve and I think the second thing that V3 laes is uh execution functions that are comparable with centralized exchanges then third you know the Perpetual problem of providing liquidity is impermanent loss and that's definitely something that V3 also suffers from and lastly uh if we're talking about you know gas fees especially on ethereum Main net is very pricey for uh users whether it's liquidity providers or

swappers to be uh you know engaging in a lot of uh so I think these are all challenges that V3 faces and needs to you know be improved on in the next iteration now I really appreciate the the frankness in some of the problems that uh V3 is facing and think the main goal of today's conversation is to sort of go through how you guys are going to tackle those problems and I know you guys have a huge upgrade coming up that we are personally very excited for term pancake swap V4 and uh for those listening it's comprised of a three- layer architecture I'm going to put something on the screen right now uh the three layer architecture includes the accounting layer the amm layer and the custom layer and so muchi would you mind

walking through each of these layers in a bit of detail for the listeners sure so uh before I dive into the details the entire uh you know the three layers in in together is really what is pegas V4 but let's you know break it down into uh the components to understand how we've built them up and what they are set out to do do uh let's start from the left so it's that's the accounting layer so this is a fairly simple layer uh the accounting layer is per simply a layer that holds token balances across all liquidity pools so uh you know whatever pairs of liquidity you're providing to Peg swap uh as

opposed to in the current V3 where you know there is a pull for let's say e usdc usdc BNB uh uh in the next version of SW all this will be simply be put in one layer and so all funds regardless of what liquidity pools are in this uh Vault layer called the accounting layer and so all it does is it interacts with users you know whether you're Trader or your liquidity provider to take the token that you're swapping and return the token uh that you're supposed to receive when you interact with package V4 the next layer is the amm layer and this I think is the first interesting layer this layer houses all current and Future pricing curves that will exist on page V4 so at launch page V4 will

support uh the most common uh amm pricing model which is the uh Unis swop uh V2 pricing model x y k but under the V3 uh you know approach which is the concentrated Equity amm or more commonly known as the xy2 K model we will also support uh the liquidity book model which is the X Plus y K model that is used in Trader Joe but uh aside from these two pricing models the amm layer is envisioned with a larger goal of being able to house any pricing curves and any pricing Logics created in the future so taking as an example the bonding curve that we previously uh you

know raised as an example this is something that can be incorporated into the amm layer so uh our the reason for doing it uh in this manner is that the existing two amm models that are supported of the Box in V4 is like I I previously raised not suitable for every single asset out there and so if uh there is in the future a better pricing model or even new pricing models for assets that you know need a a different pricing model pengas for V4 is built such that these new models can be added in so aside from the price bonding curve you know you could add in the stable swap curve uh which curve find users even experimental ones you know some for some of your very

uh defi native uh users you might have heard for example of sque which is the square e uh pricing curve uh there's no reason why any of these can be added into the package for V4 amm layer and so this is built flexibly for what comes in the future uh lastly we let's look at the right so that's the custom layer the custom layer is where hooks or or extra Logics that can be executed by a user you know whether your Trader or liquidity provider stays so this is where if uh you know any developer with is package or any third party hook developer if uh they created specific functionalities then Traders and LPS

will be able to access them at this layer and what this layer does is interact with the amm layer uh together to execute know very interesting uh Logics upon uh swaps or you know liquidity provide uh on liquidity provision in conjunction with whichever amm pricing curve that you think is suitable for for the asset so uh at a high level you know this is what pancakes SW V4 is doing and if I were to sum it up is really you know a the three layers work together to provide a uh a perspective on um liquidity provision where us users can provide liquidity to any kind of pricing curve that they

think uh is suitable for the assets and then there is a layer that provides a rich level of functionality for swaps and liquidity providers to Pro to execute more complicated functions that they can do now at uh V3 yeah that's super cool I think one of the key takeaways I have here is that this allows liquidity providers or people sort of like initiating liquidity po to have much more expressibility and customizability over what the liquidity pool looks like and I think that's a trend that we've seen across defy as a whole as you sort of like progress through the different stages from sort of very simple models whether that's like dexes or lendingsuite.co where a lot of the

expressivity covers in and you know leading dexes such as unisoft have lean into hooks pretty heavily even though they AR live um and hooks are kind of like externally deployed contracts that enable this greater customization over the liquidity Pro site and I'm excited to hear from you what type of things are you expecting people to be built here in terms of hooks sure uh I think hooks really are General category which try to help dexes compete with centralized exchanges at least uh initially I think this is what Hooks will achieve so personally as a user of a DEX today I find uh you know like you said that dexes are very simple

compared to uh you know a centralized exchange or even traditional web to Trey uh financial institutions uh that's it dexus already provide 24hour 24/7 you know availability of liquidity and also permissionless price Discovery so there's no such thing as uh you know Market hours right the market is always on and there's you don't wait for anybody to pull you a price the liquidity pool is always uh providing a price to you as a user so then what it should be able to do next is to do everything and anything a user would want uh or ever want from a centralized exchange or from a web to tr five firm so I do think that um the Hops that will

initially develop are going to be focused on helping liquidity providers and swappers and projects alike to tap on uh feature reach functions that currently exist on centralized exchanges and uh TR trei uh you know uh uh platforms so these are things like your DCA functionality your limit order functionality your stoploss functionality and then I think going forward uh as more things get developed you start to look at uh you know more complicated functionality we I'm not sure if this you know in the future available but even things like dark poool trading which is a institutional only uh you know feature may may actually be possible through

hooks even though that might be a very complicated one so you know this is uh you know we we we do hope that initially I think a lot of the functionality is borrowed from TR five but and and ciz exchange es but over the longer term uh you know liquidity provisioning yl people is different from uh web 2 and you know centralized exchange so we hope there's something interesting that is uh unique to LPS uh you know there's big build on V4 as well now that that dark idea is really cool I never thought about it maybe some combination of like ZK or like FH to sort of enable that functionality I guess as an objective podcast Hite

obviously pancakes exists in a really competitive deck landscape right and so the question I do have to ask is why would a developer build a hook on pancak swoft or someone like unisoft sure no I I think that's a it's a very valid question so uh the way we have designed package SW V4 is such that uh we are not forcing developers to choose uh we don't think uh in the first place that they should be forced to choose between unit Swap and and SW or any other V4 uh deployments so P SW V4 even though architecturally it is different from how unisoft has designed their V4 it is still designed in a way

that hooks are uh deployed on unisoft V4 can also be concurrently deployed on pageb B4 and so uh the architectural differences doesn't really affect uh you if you're a hook developer and so um the only time that you will one two or n up developing hooks that are specific to package swap is when you want to access uh Express um ideas that can only be executed on pan for V4 so for example if uh you wanted to access zero slippage trading via a bin pool uh you know that that idea only sort of exists in bin pools then you can develop hooks that

are compatible with this type of uh pricing models on on P what V4 and so uh you know if you're looking to to do something that is slightly different from the XY K although you would then come to pan or V4 uh to do so but otherwise you know we don't force developers to choose and we don't see why they they should or want to have to choose gotcha that makes a lot of sense I think for a lot of people in crypto when they think of pancak up they maybe still thinking of sort of like the OG uh BNB chain deployment right and in fact that's just not the case today you guys are on nine different chains including ethereum apas space arum and zing and that's like a pretty wide range of

chains you know both from like where they sit in terms of like L1 l2s or also like sort of different VMS so what drove the decision to go cross chain because I would assume the pancakes of brand value is still strongest on this home chain B&B chain oh you're right you're right you're you're totally right that uh pancake swaps brand is the strongest on BMB ch however I think that taken aside I I think taking a broader view uh into where crypto is developing the crypto World in general is becoming very multi-chain and I think as crypto develops further dexas and def5 platforms must be multi chain as well the way I I see crypto is that it's on

the development path of the internet eventually we will all think and see a singular large platform that supports all crypto activity but the infrastructure behind the internet even today is not that there is a single technological standard uh you know powering your video your image your emails right your message passing there are several different standards that all are behind the scenes in in you know if I were to put it that way and so I think crypto is going to go uh in that same way where there's a lot of changee but you know eventually it will just look like a singular uh interface to to users however to become part a key part of that multi-chain future uh pangop has to

expand uh multi-chain and has to be focused on uh where the users are and also where the technology is scaling towards so our Focus now is mostly on evm and evm scaling layer tools and that's because we recognize that there's a strong developer L culture on these chains so um something you know On a related note in terms of uh expanding multi chain we also table a governance discussion allowing third party teams to F pancak swap uh and you know receive official recognition so that pancake swap as a protocol we we see that we can service more users on emerging standers and blockchains as well woro is the

leading interoperability platform for multi-chain Bridges and applications with over 1 billion messages sent and 40 billion in value transferred woro leads the industry in Cross chain message volume and total value transferred if you're a builder woro has an extensive suet of tools and infrastructure to securely build multi-chain applications you can use Wormhole to power D5 nfts governance and so much more and Wormhole supports over 30 blockchains and six different run times came unique Wormhole NFD just for zerox research listeners today F out a form proof that you've listened to today's episode to receive a PO app and you'll get an email over the coming weeks to claim your limited edition nft I wanted to follow up there on something you mentioned and allowing third party developers to Fork what does

that process look like can anyone sort of permission to see fork the code or for example is it a sty more like UDA model where if you want to Fork the code you need to go to like a dow governance vote it is more so the letter I think uh foring the code is not uh difficult right I think U there have been many fxs of of many different uh protocols whether it's Dex or defy uh where we think we um provide value for other uh uh protocols that are trying to focus one is um pis as a as a team we are focused on technological development so we're always trying to bring the latest and also uh to add on more things uh you

know to pancak SW V4 as well as you know a def5 platform that surrounds the tax uh but the other thing uh that we think we provide a lot of value to is we have built a a brand name of trust around the package of brand and we have a we are you know serving at a large existing user base and so recognition of a team that's officially working with us has had us look through how they F their code and you know getting our official recognition via d vot as well and not just our the kitchen but our as in the the kick uh token holders I think is valuable you know for various teams that are trying to build out their deas on their chains as

well following this sort of line of thought behind the multichain expansion right I think in some cases you've seen protocol teams expand the new chains under a new brand for example V Dr AER Drome or for example you've also seen the other side of the equation where teams have expanded the new chains under the same brand for example unisoft and maybe like in between there's like unibot which is unibot on ethereum but then there's like uniso on Sana what do you think about those like few options and would you explain like which one you like more or what's the rational behind like just sticking with the core pancake SW brand across all of these different chains sure uh from my perspective I

think expanding via new brands and new tokens if it's operated by the team is not preferable how we have done our expansion is to uh you know expand to each chain via the the main pancakes of brand and under the same toen for this approach we see this as uh the preferred approach because one we focused on the token that has uh you know is originally associated with pancakes we are not there issuing new tokens uh and trying to manage multiple tokens at once we're trying to focus on building the pan swap protocol and the cake token and so one

that there is that and two I think uh where the affiliate approach that we we're coming in with that does involve other teams fing pancakes under their own brand name but that is only on the basis that the Peng SW team is not running these uh Forks that's why we choose to officially recognize them after you know speaking with them one of our experiences when we uh you know went to the the first few chains is we realized that although crypto will be a multi-chain future users should be multi-chain today users are L Sil on their chains uh for example you know users of BMB chain may not want to go to ethereum because ethereum just has a

very high gas fees right so um there is a point where I think each chain you go to if you want to serve that chains users and projects properly you do need to invest uh sufficient effort and you need to invest uh sufficient marketing and Community efforts to to those chain and so for brands that are official Fox of package we do think it's better if they run their own brand have their own team run their own to and that helps them serve their particular Community better than if let's say pan SW was in 30 different chains and trying to service you know 30 different uh communities all and and 30 groups of um protocols all under the the same team that is running the the main

panage gotcha yeah that makes sense I'm in general not a big fan of sort of brand dilution and I prefer like a single token and all of the value uring to that single token rather than launching compartive tokens although like in some select few cases maybe I can see like a reason for doing so I wanted to shift gears a little bit here to decks and more so decks Innovation right we haven't seen a significant amount of Dex inovation in recent years and it feels like there's sort of Cycles to it you know like every one and a half year a huge Dex and Innovation comes along but it's not like a constant like stepwise Innovation it's always like a huge like jump in sort of what's possible on dexas and I guess the latest

example of this is probably pan SW V4 and uni uni V4 and uni X why do you think that Dynamic sort of exists in terms of like a long time behind or sort of a long time between these like large amounts of innovation rather than like small incremental improvements I I would disagree with the uh idea that I think uh I would disagree with the idea that uh Innovation is always in giant leaps and uh that there hasn't been incremental uh Innovation I think the state of Dex Innovation is that uh even between V3 and V4 for UNIS and pank SW there has been a lot of

attempts to try different ideas the issue with I think what's perceived in crypto Twitter or in general public is that there just hasn't been a noticeable leap in adoption and a noticeable leap in benefits uh you know as compared to say the transition from V2 to V3 uh and our team has been looking through many different ideas that have you know occurred in the past one or two years but you know to be to be fair I think this perception comes out because Tech Innovation is a very difficult topic uh at the tech level there's a lot of Reliance or know technological Reliance on developments that are sometimes outside of what the the def

team can do but also there are a lot of attempts that just simply don't uh you know become as big as Unis swap so uh you know I will name some that I think are relatively more successful but maybe from the public perspective uh isn't really like the biggest Innovation ever so I think uh for example Maverick amm did try a very a fairly Innovative approach to liquidity provision where you don't have to keep uh you know changing how how you liquidate position uh I I would I would classify that as you know Innovation as well in in our space but of course you know it's it's not at the scale of unit of V3 or V4 so uh you know there are many of these ideas I think that are floating around

uh it's just that I think Unis SW has consistently uh found ways to to make the big impacts uh more visible and so I think this is where uh this perception comes from no I I totally agree with you on that and I appreciate you uh pushing back I do think like Maverick and how they sort of had these like automated liquidity vaults and also a few other deck just in the past years so have sort of tried to improve upon various incentive models and I do think that there's overall like exciting Innovation happening in the space although probably unisoft has the largest mind share but if you like look under the hood there's still a lot of like fun experiments sort of being done sticking on the topic of sort of Dex

Innovation um I think one thing that with these like large upgrades especially for example right like the Singleton model and like the flash accounting that's something especially on the flash accounting site that's only enabled by core protocol upgrades for example to ethereum as part of uh denen I think and so the key unlock there for sort of like the flash accounting is transition storage right um do you think that these large deck Innovations is currently limited by upgrades and technological improvements to the underlying BAS and that constraint will like always sort of exist um I I think it's true to a certain extent so uh going back to my

point about you know centralized exchange functionality and trii functionality uh from the experiments that I have seen uh in the past two to three years there have been attempts to put a lot of these uh you know let's say like limit orders on chain and there are some um fairly successful implementations uh today but I think the general limitation uh that there is a level of constraint at the Corporal level is true so for example you know the Danon upgrade that you you mentioned uh that has a lot uh you know V4 upgrade and correctly you know as you have noted

it's not something that uh defi teams are are going to be able to do so uh that protocol upgrade had to come before V4 uh could go live but I I think that um most of the difficulties around implementing these features are around cost and scale so uh and and complex functionality does range know from slightly complex to very complex and today e l2s and all l1s I think are sufficiently cheap enough to try to implement some of these features at scale via folks so going back again to things like stop liit orders I think these are definitely not limited by protocol level upgrades but bigger

functionalities like using ZK to you know Shield some of your information as you do trades and then back reference these uh and then you need to stall our data on chain that is still probably a little bit more challenging so I think we do have to you know as as Dex teams we do have to try out more uh functionality via the books and to see what uh the limits are especially in terms of you know onchain execution how much gas you actually pay for these things before really saying that okay it's we're limited by the call protocol gotcha yeah that makes total sense um one thing that you sort of mentioned sort of exploring the limits right and execution one thing that I

feel like a few dexs have started to do is to go cross chain not in the sense of Crossing deployments but also realize that hey we have liquidity on all of these different chains and so at some point maybe we could become a bridge right um and bridges as a space overall has evolved very rapidly and a few dexes these days are also sort of cross chain Bridges and we have seen this sort of evolution of these Bridges dexes and Evans moving to this like intent based RFQ model and I want to hear does pancake swab have any plans to sort of explore the intense space or just more so what are your general thoughts on intense sure sure uh I I finding very interesting that uh intense suddenly

became like a new uh model within dexus and defi because think for you know what the narrative is wor RFQ models have been around for a really long time in fact they have been around for for years in this space uh we at Pang uh tried an early attempt at a intend based model last year in 23 as well uh before this you know the the the the term intent based model called on as a Nar on crypto tutor so what we did was slightly different on our swap page today uh we have a logic that helps users uh route through either the amm or send rfqs to selected Market maker partners and we offer the best of these two uh quotes So

if you say you know trade $1,000 we'll compare for for e as an example we'll compare what the EMF is giving in terms of e and what the the the RFQ is sending back in terms of E for execution and then we just give the user the the the users the better trade so we we didn't implement this at scale but it's still available on etherum and uh BMB chain pack SW which allows us to especially on ethereum offer most of the popular tokens without actually having a liquidity P now this intent based model has its PKS which is as I mentioned you don't need a liquidity p on chain to service the trade but it also has drawbacks uh so I do think it's a good compliment to amm deex uh trading

platform so rfqs you know as you have mentioned is is actually a model that's I think a better solution for cross chain swaps at this point uh especially when we also speak to uh RFQ providers uh you know when talking about swapping a token on let say B&B chain to a token on ethereum and vice versa but RFQ models don't have permanent and instant liquidity that amm have so I I do think over the longer term uh these two will coexist although I personally do hope that amm overcome a lot of the uh you know shortcomings that I've previously mentioned and also you know find a way to to use bridges in a way that uh you could always assess cross chain

liquidity instantly um but you know that's say I I don't really know uh whether that can be solved perfectly and so for now I would say that amm rfqs will probably coexist uh for the forceable future yeah I definitely AG Greer and I I hope that they can live synergistically with each other um although I think a lot of that remains to be seen um going to the side more theoretical side of things right you mentioned sort of like the limits of dexus and whether you know we can solve a lot of the problems that amms have today and I was curious about what your view is for the end game for dexus and Dex architecture say like 10 years down

the road when with got into like the theoretical limits of like blockchains and like what's possible with smart contracts what do you hope dex's and Dex architecture looks like yeah I I think having run you know early version of uh intent based architecture and also the deck architecture for quite a while uh I do hope uh you know as I kind of said just now that dexus win out in the long run um the the key problems with dexus to today I can see uh profitability issues for LPS which makes them um less likely to put up big amounts of capitals into uh Capital into

the the the liquidity pools which then uh limits their ability to execute large size trades so today if you wanted to trade a billion dollars it instantly you you really can't do so on a de very well because one there's not that much Capital to execute instantly and two slippage is something that you have to deal with which is you know if you're dealing with large RSQ makers you you you probably wouldn't have this uh slippage issue so um I do hope that uh we you know at Pang SW with V4 and future Generations help to solve uh LP profitability issues and uiux uh issues

which keeps users um know onboarded onto uh swapping and and providing liquidity via amm that in the future amms will be large enough to compete with rfqs very consistently and the you know again the permanent availability of liquidity and the instant execution I think is an advantage uh that rfqs cannot have and so I think if amm can resolve these key issues there is a good chance that the very longterm end game would be that daxas might I'll execute rfqs uh you know over like a large amounts of capital and over a longer time but again

I think this is assuming that a lot of issues get worked out over the next few iterations whether it's Bridges liquidity uh inal law so there are a lot of things to solve before we can get to that point yeah uh diving into the lp profitability issue a bit more I think one of the hot debates right now is lvr or L versus versus rebalancing or sort of top of block sex Dex Arbitrage and that's been a consistent pain point for liquidity providers because a lot of value is extracted away from them when these arbitrages or Searchers come in to sort of execute that Arbitrage what are your thoughts on how that gets solved or do you have just any thoughts in general

around like lvr and solving LP profitability and what a potential solution looks like sure I I we we are working on a solution right now that we haven't fully formed but we do think the large uh kind of the direction of solving this is to uh balance the profitability of arbitrages and LPS better so as you correctly described uh the the problem today is that LPS are suffering uh I think too much uh vi from from arbitrages uh Arbitrage is a normal activity I I don't think characterizing Arbitrage as uh uh value destroying is accurate all the time uh even in

traditional Finance you have firms uh that do hftd trading that essentially are arbitragers as well uh at a very very tiny you know clip but they do provide liquidity in the market so what we think the uh principle uh solution to fixing this is to make sure that LPS are benefiting more from uh sexx Arbitrage as they are today relative you know to they are today so we are looking for and working on a solution that we think has has potential but uh it's not something that we have fully formed our uh you know solution yet so it's a bit early for for me to kind of discuss this at detail yeah no that's toally fair I'll

be excited to bring you on uh and to sort of hear how you guys are tackling this because there's a lot of teams in the space working on this issue I wanted to shift GE here a little into sort of talking about pancakes as a whole there are hundreds of different chains today and on these hundreds of different chains there are at minimum probably like five dexes or more you know a lot of these like new quote unquote ghost chains the only thing that they have is like 10 dexes which always L the top in terms of TBL what do you view as pancake soft's sustainable competitive advantage in this multi-chain world filled with dexus yeah good question uh you you're right there are a lot of uh chains where

there there's just a bunch of dexes uh executing trades I think that is the fundamental uh need in a lot of a lot of these chains so for you know like we previously alluded to foring contract and setting up a DEX is not difficult uh so having having a DEX and having liquidity is not necessarily uh the the hardest task so I think panging swaps sustainable competitive advantage is in the Kens culture of execution uh in 2023 uh you know if I were to just list out some of the the things that we've done we've push out V3 we've expanded to nine chains we've fixed the Ki uh tokenomics as well from a

hyperinflationary token to a deflationary token we've introduced uh the V escro model the V token model which is now used to build allcoin liquidity on panc Swap and then now uh you know we are shortly going to release is a production version of V4 that's all happen in about one year and so you know as a as a I think dexus as a vertical a crypto vertical is quite understood and I think everyone has an idea of what dexes need to do uh in order to continue growing so I do think the the real sustainable competitive Advantage is in the people that are working on these ideas and executing them to the best that they can and I do feel that panak

swaps sustainable competitive Advantage is in the the people that we've brought together to execute these ideas I I love to hear that I think a lot of the time when you're inpt are you're really backing the team and the founders not necessarily just sort of the idea there just because things move so quickly in crypto right you have to be on your feet you have to always pay attention to the competitive landscape and half the time you need to Pivot and innovate or die to be honest um one of the things I wanted to talk a bit more about my mental model when I think about hooks right and how that or what that really means for a decks is that it transforms the decks from like a very simple deck to more so like a platform

right and on this platform developers can launch much more customized decks as they can create these much more expressive liquidity Poes how do you think about turning pancak SW into a DEX platform or like a DEX ecosystem from what it is today I it uh yeah I think I think for us we've always seen pancake swap uh as I think since last year as more of an ecosystem uh development yeah well since since mid mid last year also so I do think this is the way forward for all dexas and um in terms of uh you know ecosystem building

aside from V4 we have built a lot of other pieces that we think will interface with the V4 and the V4 hooks so I I'll just go through you know how we see this as ecosystem effort rather than you know just pure V4 and V4 hooks alone uh We've integrated with a a variety of uh V3 position managers across uh D5 those guys uh generally build out things to help you manage your concentrated liquidity position and uh We've you know chosen protocols that have different approaches to how they manage Equity so there's very little overlap in terms of the strategy uh the V KCK thing uh V Esco model that I've mentioned that's also an ecosystem uh

build up for projects to come on the pancakes world and then uh this V4 you know the hooks that we we built uh we are looking for people to build and uh encouraging people to build uh you know we want them to not just build hooks to okay like here's a limit order here here's a a stop loss that you know people want to use we are also hoping that they will uh look at what other parts of P SW have built which are also know inspired by other good things in in the def ecosystem and to get folks that call on you know position managers to position liquidity better call on uh you know our launch pad ifo to create better functionality when projects are launching tokens so uh we do look at

this V4 and hopes as a ecosystem uh effort and not just here's a ecosystem of that you can use for all but more so build functionality that uses that works with the rest of what the defi will need and what users will need when they come to defy one part of sort of kickstarting this developer ecosystem and this ecosystem as a whole are incentives or various initiatives right and I know you guys have some exciting fans so would you mind walking us through some of the initiatives you guys have in place to Kickstart developer activity sure so we're going to e London uh I think you know on March 15 which is the release date today and so we'll be

hosting our first uh hackathon to bring awareness to pancakes of V4 and to encourage developers to build hooks on V4 because we will also be explaining the architecture that we just went through earlier and how to to build this uh these hooks on pancakes or V4 but additionally we are also announcing a 500,000 ecosystem sorry US dollar like 500K ecos system fund that's dedicated to supporting developers to develop these Hooks and to bring on more developer related events to foster a community to build books on pancakes SW and primarily we will also you know focus on rewarding the developers that books that are used on on P V4 so uh

this initiative will go to supporting devs that are truly in the ecosystem the utility to promote you know more expressive lping and and trading activity and on top of that I think you know to allow value alignment we also will uh you know allow developers and I think we'll encourage developers to charge their own fees on their own hooks and I think that's a way to encourage developers to see pangus or V4 as a platform where they're not just uh you know writing code out of pure curiosity and the uh desire to to contribute to to an ecosystem but also one that uh you know gives them Financial alignment to develop tools that people will use that

that people find valuable and we do think that uh you know the market will gravitate towards hooks that have high uh usage so this fund that we set up is uh you know to get them to that point of uh widespread adoption that point about financial alignment is great to hear and I think it makes perfect sense because I've always sort of saw a potential risk at least in unisoft V4 and hooks will likely open source you know it's not probably not that hard to Fork a hook and at some point you're going to end up with like 10 versions of the same hook and you're going to need some Financial alignment there in order to make sure that doesn't happen in terms of financial alignment there's one more thing I wanted to talk about which is tokenomics you mentioned just now that

cake used to be a highly inflationary token and now you guys sort of have a deflationary mechanisms such as burning a small percentage of Trades uh burning profit from per trading and sort of like various fun l ticket mechanisms I would love for you to dive a bit more into those deflationary mechanisms and also dive into the numbers a bit more in terms of how that has been performing sure uh I think on the mechanisms I will I in the the sources of how we burn KCK hours I will just go through that quickly because it's a long list of just products and uh you know percentages of how we use that to burn but uh so on on on the product we p P from has about 10 OD products now and on

the number of these we we do collect fees so the general mechanism is fees that we collect are are you know real dollars that are spent by users for activities that they they view the fees are worth for uh and then we spend those fees on acquiring the kick token back from the open market and we send them uh to the burn address to to effectively remove them from circulation so um at a high level Ki used to be uh you know and Ste is Supply to mostly liquidity providers to cover their perment lots and a portion of it also goes to stakers to encourage them to stick and participate in the v k ecosystem uh in you know let's say this point last year this day last year cake

was inflating at approximately 20 to 25% a year and at higher level that is quite unsustainable and so in the year what we did was we looked at what we could do with V3 looked at uh the lp rewards that we needed to give look at the entire tokenomics and we decided to lower uh our toomics and by October I believe uh late October last year we've hit the point where pancak sw's Ki token was effectively Net Zero uh inflation so that uh came to an end and then um now we are slightly deflationary so so of all the def5 products that we we collect

fees and then we we burn uh in terms of numbers right I think you you asked about numbers I think we're net burning about half a million US dollars to about a million uh dollars of cake tokens out of the market every month so this means that even though we are emitting cake tokens as liquidity mining rewards as staking rewards we are still on the monthly basis buying out uh all those tokens and then another half to a million tokens with real fees to deflate the K topens blood and uh I just want to talk a little bit about what comes after because that's really what we've achieved so with V4 we you know as I mentioned we looking to be able to um improve LP fe uh metric and so that that

subsidizes uh reduces their impermanent loss uh even more so you know it or rather the fees will cover their imp even more and so what we expect there is that as LP fees increase uh we do think that less kick tokens would be required to subsidize uh them to stay in the liquidity pools and so we are going to push that deflationary toomics uh even more uh you know in the negative Direction and so that is what uh we expect to be able to do when V4 has launched gotcha no I I really appreciate the thoughtfulness that you guys have put into so sort of like changing up the tokenomics cuz obviously a lot of like

protocols not just defi protocols have historically had high inflation and a lot of them have struggled to bring that back down or balance it out so it's nice to see you guys have managed to successfully tackle that one more thing on sort of like tokenomics one of the bigger shakeups in recent weeks has been the uni fees switch proposal where a percentage of LP fees is taken and then is redistributed to UNI token holders who have both staked and dedicated your tokens and I wanted to hear your thoughts on the uni Fe sarch proposal yeah i' I've been following that uh quite closely as well I'm really glad that they are considering it uh at at a principal level I think the protocols success and the token should be connected um so this is a model that

pancak swap is is also doing uh we do collect a portion of fees from Trading out of the lp fees as well and uh if you're a kick Staker we do share some of the protocol Revenue with sters as well so we do think uh this particular action is definitely uh in the right direction and for a you well-rounded utility token I think this is an important part of the utility uh that that should be you know for a DEX or a def5 project gotcha yeah and I completely agree as sort of a closing question I wanted you ask what are you the most sorry what are you most excited about in 2024 for packet of or perhaps just D5

crypto in general yeah so uh I think V4 is the most exciting thing to me uh within the deck space within the the defi space that we we are working on so uh I I I didn't mention this previously so H for V4 will be released as an open source uh codebase it'll be fully open source so the idea we have there you know like you said uh we want to uh we want to see continued Innovation on the on the deck space and so we think that our release of P V4 as an open source coase would then encourage more developers to look at what we've already built and to you know if they wish to build on us as a

hook but if they see that uh you know what we've made is still you know that there's still something out there that they would like to improve upon then that's something that they can also iterate on and uh you know so uh I am very excited about the the the level of innovation and experimentation that V4 will will bring on and I do think our contribution to uh the deck Space by making V4 open source you know we we'll make for exciting time in uh Dex development so that's what I am personally you know working on this very excited about that's great to he that you guys are going to open source food and I know that's not always the

case for every protoc in defi I wanted to give you the opportunity to leave any closing thoughts that you might have or perhaps a call to action and to end off with where can listeners find you and learn more about pancakes sv4 sure so uh as you are listening to this we're probably right now at East London with a both uh and we'll be you know addressing the uh the audience and we'll have a workshop as well so if you are in London and you're attending East London to come uh take take a look and also even though we are Anonymous developers we actually have shfs uh now at the booth so you can go find us uh you know

we might not tell you our names but uh you know we are definitely there you can definitely speak to us about V if you're not there at the event physically yourself uh you know that's unfortunate but uh there are a lot of other places uh you can you can learn more about V4 so if you're a developer we have a landing page for developer was to look at the code base that we we've released and also uh you know how to navigate pangis V4 and uh if you're more General user you're not looking at the code that much uh poft has a block where we write out what we think about uh you know V4 in a more General sense right we're not talking so much about the the technical details there and uh so we we do have a

variety of different Outlets whether you know it's physical it's online for you to come and see and interact with V4 so uh you know definitely uh check us out and you know whichever uh area you're interested in whether it's hooks protocol development uh do feel free and we do encourage you to to connect with us and learn more gotcha and just as the last thing could you share what pancak soft socials are where they can find you on Twitter yep uh and that's uh twitter.com pancakes swap for our uh Twitter account and uh I I can't I can't uh I can't remember off hand our telegram link I think it's

t.me pancakes as well but if I got that wrong please do go to pancakes. finance and our links are all at the bottom left of the page we will put in the show notes for all of you guys and all of the things that jefi just mentioned but anyways thank you so much jefi for coming on this was a fantastic conversation and I'm really really looking forward to the overall launch of Pancakes all4 and all the best of the launch thank you very much Ren and yeah thank you for the the questions and having me on your platform to talk about V4 really appreciate it anytime have a good one we have teamed up with the weho foundation stewards of the Wormhole protocol the leading interoperability platform powering Crossing transfers for

over 200 plus multi-chain dabs Wormhole isn't just a bridge it's the leading interoperability platform for multi-chain applications so go and claim your unique wor nfts just for zerox research listeners today hit the link in the description to fill out a form and to prove that you've listened to today's episode and receive a p app you get an email over the coming weeks to claim your limited edition [Music] nft