The future of decentralized liquidity aggregation

Transcript

hey everyone thank you for coming i guess it was hard yesterday after all the parties so it was the same for me too so let's get started um munir i'm the founder of powerswap it's a liquidity aggregator on ethereum blockchain polygon bsc and others i'm going to talk to you today about the future of liquidity aggregation and how i think it's going to evolve just to start let's kind of define layers for d5 protocols it's oversimplified but at least it gives a visibility on how on how they are mainly interact with each other so in general we have the assets layer where they have the tokens and so on we have what you call the capital

aggregators which are like the amms the landing protocols and others and then on top of those they are uh what we call the service aggregators uh like paris webserie on in argent and so on where is this coming from it's coming from uh benson ben thompson aggregation theory that's kind of tries to create a literature behind aggregation in the context of web 2.0 and here we try to find parallels in web 3.0 so how ben thompson now like the aggregation theory defines aggregators in are those who have those three characteristics uh so first they have

direct relationships with users uh you don't need anyone to use the service uh in web 2.0 that can be any service that you know like google facebook yahoo or whatever in in defy it will be a uniswap like nobody needs the permission or a middleman to use unisop you just use uniswap through their ui or any alternative ui there is what you call zero marginal cost for serving users well the information of the product is served through internet there is no physical way of delivering or there is no cost of delivering the the products so that goes for web 2.0 but it goes even more for web 3.0 because we web 2.0 they still have a cost of running servers of the logistics and so

on in web 3.0 it doesn't make any difference to have one user in one million users because it's simply code running on the blockchain not operated by the protocol or by data and what the what's he called also is demand-driven multi-sided networks with decreasing acquisition costs which means there are well we're talking about network effects here and the cost of acquisition decreases over time like once we have a user and we have the other user for instance in facebook we'll have one user with their friends who's going to bring other friends and so on and so forth and in amm on a unisof for instance we will have a liquidity provider with a with a trader uh the more traders the more liquidity providers and so on it's a virtual cycle

and i mean in web 2.0 like companies they don't even need their particles don't even need to do acquisition per se but uh here the idea is to talk about the organic side of acquiring users which means users would acquire themselves other users and there are also levels for aggregators and here i will try to see if there are web 3.0 that can fit in the first place here um so there are what they call supply acquisition which means uh those aggregators they have to literally acquire the supply side in order to serve the demand side like for instance netflix

they will buy movies or acquire movies in order to serve their users and the more movies they buy uh the more users they have the better they will finance themselves to buy better movies and theirs will be happier and will come back it will bring other users and so on there are still an aggregator like defeats all those three characteristics but they still have a very significant cost for acquiring the supply side we have something that is close by the the level 2 which there is no real ownership of the supply but it comes at a cost for instance uber they have drivers they're not their drivers they don't own the drivers but there is an onboarding cost for having those drivers

but they have direct relationships with the users so that that's an example and i can't think of a default protocol fit in here definitely not in the first one and the second one may be some c5 project like changely for instance the third level is what you call zero cost supply which means there is no cost for supply no cost for demand and that can be for instance a social network for instance it can be a google for instance where the supply is say say it's coming from internet i mean google is track tracking websites and the users are coming to google but that can be also any

here any uh liquidity protocol or any d5 protocol where there is no cost of having the supply no cost and having the demand uh like an amm where users would supply liquidity and other users will trade so i think d5 fits more on the level three and finally there is a third one that i try to think and see if there is a mapping we can have here is in what they call super aggregators and those are obviously the facebook the googles and so on who they have users and suppliers but they had a third party which called advertisers and those are the customers at the end per se because those are the ones that monetize like the brink monetization to to to the to the company

um i can't think of any web 3.0 that is a super aggregator but i think mostly we are on the level three uh in most the case maybe some kind some some and leverage um so aggregation also exists in traditional finance uh people call it sor but also in d5 people call it sr it's just just the technique that it's used the sr stands for smart older routing it's used a lot in the forex markets to simply beat the market price like deliver price that is better than the markets the use cases are more complex than what we have right now in defy well we can got to get into more details but it's something that is very highly

used in in in trade five the big difference is that we will see some detail later is that this kind of aggregators if we classify it as an aggregator then it will come to to define in the user uh is not accessible to every to anyone as we're used to in v5 it exists a lot in c5 as well uh there are some big companies like tagomy that was acquired by coinbase uh it's something very common in cfi and also definitely in defy so this is also we are one of the aggregators in defy but the key difference with trade file we won't even get into too much detail is that insify and defy anyone can have access to maybe with

different levels but still but in c in trade 5 only brokers in certain category of users can have access to aggregation so let's focus more on c5 versus v5 i mean trade phi today the big advantages that cfi has is uh serving or giving users more options like if i go to binance or coinbase i can trade bitcoin xrp whatever is not ethereum but i cannot do that i have to stay on a single blockchain each time if i go through d5 like ethereum polygon and so on but the thing that is defy is missing is what you call atomicity so if there is an aggregation service like parasol for instance running

on c5 it cannot guarantee me as a user that i will have that amount like i'm saying 1 8 to 2 000 die i need to be sure to either receive 2 000 die or revert and get back by 1 8 that's not possible in c5 because they will have buyers and sellers the buyers already bought my eth and gave me less than two thousand dies so i want to do the the opposite way i will end up with less it may be more but most of the cases i will end up with less is in defy at least on smart contract platforms i will get end up exactly with what i spent maybe less little bits of gas and that's what you call the atomicity

now how will that look like in layer two well i think it's gonna be even better because there will be cheaper transactions less fees so i think those uh i would say good things we have right now it can be better but new complex use cases are going to be introduced because now we can do maybe high frequency trading we can do more other books we can do like a binance or a coin based use case we can do it on chain on layer twos that is not possible not really feasible on layer 2 so which means the complexity it's going to grow but the possibilities are going to stay the same but the question is how will aggregation like liquidity aggregation look like in cross chain and that's where we are

going to right now we are already on a on a layer two or like entering the rail to the layer two uh normalization where it become normal to run on layer two um i think the next steps definitely is going cross chain and it's still in early stages the problem with going cross chain is we start to touch the same problems we have in c5 so if i'm have say an eth on ethereum and i want my die on polygon well not putting i'm sorry on uh on stark nets or zk sync well there it's more complex than that it's not one transaction those are multi transactions uh two or at least three transactions

and this is breaking this atomicity uh or like this guarantee that the blockchain the native blockchain can can give me so there needs to be other ways uh but still there is no way to be hundred percent sure that's uh or to guarantee this atomicity because we simply broke what you call composability and defined so there will be more complex products that will be built on top of of current exchanges and the question is now is will the current aggregators stay aggregators [Music] i think it depends because in my opinion a uniswap in the future will be a pure back-end

and other user-facing products or other trader facing products will run on top of all of those and what they will leverage is not necessarily this supply and and the demand side of those what they will leverage is the algorithms that this protocols are using they're like the complexity that is built all the possibilities that it allows for those broadcasts to use fusing and the future aggregators maybe they exist maybe they will they will exist in the future and i think this would look like wallets and any user-facing app like a ui or even an api we can classify it as a trader developer facing facing products and balancer and euro swap and so on will stay purely on

the back end as right now we have a financial infrastructure that is obsolete and if i would replace that infrastructure and allow new category of aggregators to emerge thank you for attention that was my talk [Applause] do you guys have any questions yeah it's q a team thank you oh thank you thank you for for the talk so you say that at the empire swap gonna be

uh the user interface so at the end gonna be like the new the future fintech companies so they're gonna be connected you're gonna be connected to the fintech it won't be uni swap connected to fintech gonna be para swap in this case according to fintech companies or yeah it can be also a revolut using defy as a defy protocols as a backend as well if they are serving crypto even even maybe non-crypto assets uh in powershop right now you can see it as uh the user the user interface but you can see it also has the back end behind behind paraswap and the same thing for you unit swap your sub there is unisof that exchange that is the ui that can that is

definitely an aggregator right now and can become an aggregator in the future but the unisa as a protocol is a pure infrastructure and that i think what unisap will become in the future well thank you you