Mounir Benchemled: ParaSwap – Solving Liquidity for DeFi #408

Transcript

[Music] hi welcome to epicenter the podcast where we interview crypto founders builders and thought leaders i'm sebastian cuccio and i'm here with frederica ernst today we're speaking with munir benjamled he's the founder of paraswap they're a dex aggregator and they aggregate more than 20 decentralized exchanges and amms before we talk to munir though we'd like to tell you about our sponsors for today's episode gnosis safe is a smart wallet for a securely managing digital asset and what makes noises safe different is that it allows you to find customized access

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organizational management and beyond visit gnosis dash safe dot io to learn more and to get started with your own safe welcome to the input center podcast the podcast we're interviewing crypto founders builders and thought leaders i'm sebastian guccio and i'm here with felika ernst today we're speaking with munia benshemled who is the founder of paris swap paraswap is a amm dex aggregator and also a sponsor of this podcast so um here uh thanks for joining us today thank you subscriber for having me it's a pleasure having been here so before you found a pair swap uh you know you worked at a couple of startups in france and um i was surprised to find out that you worked for the paris metro

system and you worked also i think for sncf which is the the french railway and you worked at like several other startups as well and uh i found that it was kind of interesting as a background for someone who you know came into d5 around 2017 2018 he also co-founded d5 france which is uh like a sort of association here in france that has grown to several hundred members and has produced really great content i think educating people about defy and they do like meetups and things like that and has been i feel like kind of instrumental to um a lot of the projects that we're now seeing come out of france so you know tell us a bit about your journey and you know what brought you to uh you know co-founded d5 france and then eventually uh found periscope

yeah actually i have uh most i would say of my time of my career i worked into the transportation industry that's what you saw with the french railway station a railway company and metro i worked also the competitor of uber uh it was also here in paris and i meanwhile mean working at those companies i've been connected to the crypto ecosystem uh i started with bitcoin in 2012 the first time and especially in 2013 when i started really embracing the philosophy behind the bitcoin and crypto and until 2017 this is where i went straight into crypto and was doing almost exclusively crypto content

actually i left my job just to build something on crypto at the time i didn't have any idea on what to do exactly i just was sure i was just sure that uh it's in crypto where i want to build something or maybe join a company it took me some time until 2019 this is when i started power swap and the rest is history what made you decide to start um a dax aggregator because um i i mean even at the time there were already exaggerators around right so in 2019 there was only one at the time maybe two actually and the idea came before those two appear i was a user of ethel data and uh during the ico

craze actually that was the best place where we can find liquidity for those ico tokens and the initial idea was to build a better version of it because it was good i mean it was serving its purpose but the user experience was not great it was too slow too expensive especially with gas at the time and the idea was to build a dex that is just better than it'll delta and that was late 2018 and there was some some histories with the del delta at the time so uh which and at the same time there was uniswap kyber and bancor that started having some traction relative to that period i mean that period was making 1 million a day was something huge and

so i said let's not maybe build a dext because there are maybe very interesting products let's gather the liquidity of all those daxes into a single place and so that the end users will have access to a higher liquidity so that was the initial idea i mean the second iteration sorry and during that time i saw two products that were launched the one one of them is called total i think it still is it exists and that was the first aggregator then they came one inch and for me was great because i mean i was i thought i had this idea first but other people had it and implemented it so which means it's a kind of a market validation for for the idea i had and launched so i decided in fact to to maybe iterate and do

something different by launching a pure retail app like something that will democratize uh defy and access to taxes that anyone can use and that was launched in june 2019 it got a lot of excitement from from many people and a lot of good feedback but actually nobody was literally using it it was a very naive approach in 2019 launching a defy app for retail that anyone can use which led me to iterate and build something for the defy community which looks a lot like what is personal today cool before we we dive into periscope i mean i i want to talk a little bit about the the french crypto ecosystem we're both in france and very much involved in

it uh in various ways and you you founded your co-founded d5 france you know i mentioned earlier it's uh it's sort of a non-profit that has you know organizes meetups and produces uh educational content around defy and i think like a lot of people outside france probably get you know probably have uh interacted with the french ecosystem like through hcc but you know how how big is the french defy ecosystem and like how do you feel like d5 france has contributed to you know the proliferation like there's been just so many like really interesting projects coming up france uh in last recent months how important do you think d5 france was to bootstrapping like the d5 community that

we have now so if a started in q4 like around september 2019 it started by just a coincidence uh there was this big defy group in telegram and somebody asked the question about is someone from france here or like is someone speaking from french here somebody replied then somebody else replied we were like five talking and then we said let's create a group we created the group called the d5 friends and this is where the five friends started we had like 30 people and very active very highly engaged and continued growing and then we are organized the first meet up in paris and we were highly surprised because we were expecting normally in meetups people

have like 50 60 70 no shows we have an except we have around uh a hundred and something total with the 50 percent in live stream and 80 people inside and that was 2019 where like people were barely talking about defy so this is really when d5 front started and the engagement was until now with there is no uh lost in like quality very very highly engaging in the subject are really interesting so i think many of the projects you see today i won't say they came out of the five friends because the reference is not really an entity but i would say they were inspired by the project and the contents that was present in the five

friends uh then now it's been almost two years and i don't know if you need some of the project right now that's that will launch like uh morpho uh like paradigm like uh gedify so these guys uh were very i would say active participants in d5 fronts so yeah i it's hard to say it can they came from there but i would i would highly give credits to the community of the five francs to to inspire these guys to launch to launch to announce this project it's really cool to see like all the all this i feel like d5 france was you know a big inspiration to these people and i i give it a lot of credit for you know um proposing the the ecosystem here in

france so you know before before we dive into paris swap maybe just a quick reminder for those perhaps who are you know tuning in for the first time here you know give us a sort of an overview of like what is a dex aggregator and what's its purpose so aggregators are like airline companies that's the easiest example i i give it's like an expedia or a kayak.com where it gathers its supply in here in defy what we call liquidity from different sources actually hundreds maybe thousands of searches if we count the pools of each tax and tries to deliver a price that is better than the market that the value proposition of dax aggregators is trying to beat the

market price uh and that's either for end users or maybe for protocol users or api users in a nutshell so currently around 20 or so of trading volume goes through dex aggregators the other eighty percent go through trading destinations directly why do you think that is i would say uh the market is still maybe not aware hundred percent of uh of uh of aggregators also uh one funny thing is that among the other volume that recounts like the other eighty percent contains also the volume coming from from aggregators so normally uh the volume for aggregators maybe is more more than

that because they're often double counting like a trade that was uh when if a trader will go through power swap maybe it will touch us up once or twice or three times and unisa will get this volume counted three times and parasite will get it counted once or another aggregators so i would say there is part of uh i would say publicity that is not enough and that's also the same thing in airline companies many people still go directly to ryanair france air america and so on but also there is this double counting that that's happening uh so let's say it's uh one kind of both and there are also many projects uh they will go directly to unison because it's one of the best uh sorry the biggest uh exchanges so that will go straight and integrate unit swap just because it's

known enough that they will go only only there and miss out on the liquidity of variations so if you look at the fees that users are slapped with i would kind of count them in three different buckets right so basically there's gas and then there is slippage and then there is um extracted mev right i mean would you agree munir well miv i mean it's common from for all taxes or anything that is on chain trading that has maybe no native protection we can maybe discuss more into that uh i mean the fees yes they are paid the paid anyways excuse me what was the third the gas you mean the gas overhead yeah that's true so what we

what we do and i think now it's becoming a standard in tax aggregators is that prices will always take uh guys into consideration like for instance you are getting a thousand dollars maybe uh you will be getting less than one thousand they will be getting 995 995 dollars uh as our destination token um because the 1000 will come with a higher gas so those gas weight is taken into consideration in calculating those aggregation algorithms uh in order to argue that something else is we did and also other boxes aggregators have done is rebuilding those native routers of indexes like uniswap they have a router

it was rebuilt by us by others in order to consume less gas so ours consume five percent less gas than unisa v2 and we are also working on the v5 on our smart contracts that will minimize the the overhead uh to a i would say few 10 10 20 40k uh still cinnamon on overhead but much less given the advantage we get to use in agriculture and what do you think is the typical trade size from which it is worthwhile using a dex aggregator instead of just a trading destination like uni swap because basically if if you have gas overhead by going through several

different smart contracts then if you if you're only trading for say a thousand euros or something it might not be worthwhile right um i would say depends also on the gas conditions and depends on the blockchain they were talking about ethereum in general we we tell users better to use taxes in general not only aggregators starting from around thousand dollars and that also that depends a lot on the gas price markets as i said unit swap in all the forks are cheaper now in aggregators than on the taxes themselves so yeah it depends i would say mostly on the market in using usage of taxes and not only on aggregates do we have a sense of

how much people are saving on average by using dex aggregators you know like you know if you have the trade 500 uh and you have the choice between index going straight to the decks or the dex aggregator you know how much could people expect to to save like to optimize like their their trade their what are the gains that they can expect so depends there are two categories there is the long tail and high cap tokens uh solve the high cap in general it's a couple of say 0.5 percent or less than 0.5 for small amounts for a high amount like more than 1 billion dollars it can range over one one two percent depends on on liquidity uh for low cap or the long tail uh it

depends most of the long tail are in a single deck so for five hundred dollars i would say ninety percent of the cases it will be on a single tax on a uni swap for instance in our selling uh unique solid variable position is uh go use as instead of unesco because our our dax is cheaper than unisa up in terms of gas so say yes i would classify them in two categories uh if it's a low cap maybe five hundred to one thousand dollars will will still make sense but in this case we're looking into gas a gas and in the high gap or maybe high high volume or like high high amounts this is where we're going to be looking at the percentage on how much an aggregator is better than negative with nature things

it's always good to compare many users what they will are doing is they are opening between multiple uh tag tabs in in their in their google chrome or whatever they're using and comparing those uh that's why we have a table like instead of people doing that we can show them the prices in a single table so that they can compare themselves and see which one is best interesting so one of the things that i think people are used to seeing on the decks aggregator is like the router but i'm not like particularly familiar about how that works like what the router actually does so can you explain like what is the the router and like what role it plays in the trade so router is why there are two things

there is the algorithm part so like the data side that will run algorithm and gives the user a price and that is as good as the best price of the market or better than the markets and there's the second part that is the execution which is the smart contract of the set of smart contracts that will execute this trade so if you look at the first part which is the route inside or like the algorithm side uh so there is a lot of engineering and algorithms uh that are involved like a cocktail of algorithms that are involved in order to maximize the price and minimize the fees which are that are the gas here and that uses uh i would say well we can get into the details but as you said a set of

algorithms and also it's we try to have a real-time connections to the liquidity and that's what liquidity which means we are connected to the full nodes and try to source prices as fast as possible in order to stay connected to the markets and the execution side is smart contracts that will execute on multiple taxes and make sure the prices that are returned matches the expectation of the users otherwise it will revert so it's an atomic trade it will either 100 execute or or fully reversed and the users will get back their funds and that's a guarantee that the evm is giving to the user so what are the challenges of running attacks aggregators

i would say there are many uh because there's a lot of engineering complexity on the back-end side but the biggest challenge is staying synchronized with the liquidity of the blockchain because there's a lot of data if you look at our traffic we are doing hundreds of calls per second if you look at our our some of our back-end system we are making thousands or tens of thousands sometimes with calls per second it's uh it's very high traffic it looks a little bit like it wasn't like that but right now it looks more and more like traditional finance uh i mean a lot of computations all all the times a lot of engineering strategies in order to deliver a high consistency and that's not an option to deliver inconsistent prices so i would

say this is the first in major parts and obviously like any d5 protocol uh security is always the main concern on trying to deliver smart contract that are secure because i mean people if they execute the trade on our smart contract we have literally no control so these things have to be highly secure highly audited and the engineering practices have to be done very well let's let's talk about governance a little bit before doing this interview you know i posted on twitter that we were going to be speaking with you and you know asked what we should ask as a question and a vast majority of people were interested in knowing if uh if paraswap would have a token soon and other dex aggregators have issued a

token either in the form of an airdrop or like some other distribution methods and these tokens are typically for governance so tell us a little bit about like why a dex aggregator would have a token and if this is something that you guys are considering since this seems to be so much enthusiasm about a potential periscope token yeah the famous when token so i would say yes the answer the short answer is yes but the outside motivations are not necessarily the same as you may have seen in other activators some aggregators were a pivot from a non-performing project to to an aggregator some some others had also amms and the main use case was the dmm

and then other use cases show up which are also interesting um for us and our vision is building a d5 project or defy protocol is it means decentralization so building uh let's say a centralized ui centralized backend is just a mean to an end and not the end itself maybe that's what my feeling i have for some other project that's um it's very important to keep a say a intellectual property on some of the things that have been built but for us the future uh everything has to be decentralized and we should be able to literally raise our hands in this thing continue to work paris up as attack

should continue to work maybe press up that io which is a domain name that uses legacy uh attack systems maybe it will decentralize i mean we have no choice right now but the tech itself the smart contracts the the back end and all the tech should be decentralized and to do that in a secure way uh and also an incentivizing way that needs some incentive mechanisms so that's why a token will make sense uh when this will happen we don't have a date yet if it will happen only when we get there i don't have an answer right now uh but we are working into only very creative models in order to make this thing uh i would say uh useful and i for me the token is not also a an end it's also a

mean to an end because it's a tool that helps on maximizing decentralization or solving some product problems right now that we have identified and i will have some information maybe in the next few weeks or next few months you can say when exactly but we are working on some very interesting i don't know if the twitter mobs will be satisfied with that answer well actually so when you were talking about this it kind of brought up some some other things that i'm interested in picking your brain on so you mentioned that you know the d5 the the back end you know would um need to be decentralized and that that's kind of the goal and that the front ends uh you know there could be a website or something like that and

you know recently there was a bit of uproar when um when uniswap uh you know delisted some tokens and you know people started kind of like raising their hands up and saying yeah we need to like decentralize all front ends et cetera and um what are your thoughts on this like do you think that it's it's like really important for also like all the frontends to be centralized or you know should there be companies kind of running those and you know what are the some of the best technologies that are available today for this to happen or you know what things are you even if not mature like which technologies are you most uh excited about in terms of like being able to also decentralize you know front-end stuff so i think it's hard to decentralize front end today

but while keeping a high quality of service uh because we can use services like ens and so on but there is no uh the tooling that we have in web 2.0 uh you know for content delivery networks and caching and all those systems uh still unlocking there are some bridges uh like one is used by cloudflare that can bring web 2.0 to links into ipfs but still also not all browsers have supports for ibf as domains still we will be going through web 2.0 again so the point is is we are always coming back to a point what putin web 2.0 and we are seeing having to open an account and put a credit card and pay a cloud flare or equivalent so it's hard to be a

pure uh or a purist decentralized right now today but there are some features who are like some products who are building i forget the names but some interesting ones and that's one part like the delivery parts there is another part is building the software itself when we build a software with the team we have a github that is centralized we have uh the whole process of building we are a small team so we have i don't know depending on his team like you have a scrum master product manager and so on and we do that to keep things efficient by decentralizing it's very hard to have good consensus um and that's also again talking about purism in decentralization but we can i think i always think that

we can have pragmatism and decentralization and that's what made many projects successful while being sufficiently decentralized so how we do it ourselves i'm not sure yet so right now it's much more productive to keep things the old way until we reach a critical mass in terms of usage in terms of maybe decentralizing what we can be decentralized today and can be efficiently decentralized like our smart contract system uh power supporting all those things and once we reach that maybe at that time the tooling or the infrastructure for decentralizing the front end will be will be mature enough to to decentralize the front running attacks can be how do i put this delicately regulatory fraud

is it also difficult to run a tax aggregator from a legal point of view or or do you guys just take take the stance that basically the only service you guys are providing is telling people you know where they can trade and you're not actually facilitating the trading yourself yeah i see it personally i mean i'm not a legal i mean legal is my not my expertise i can say only my opinion i think it's a pure software because the liquidity is not on paraswap it's not on the aggregator the liquidity is on the underlying tax the tokens are not listed in parallel are listed on the underlying taxes so in my opinion if there are any any any

regulatory i would say challenges will happen first on taxes and not on aggregators it's also the case in traditional finance where middlewares uh like they they call them also like how we'd like to see ourselves the middleware uh are not subject to the same regulations and sometimes and not to no regulations at all uh compared to the venues where the trading happens because the problem is in centralized finance there are many middleweights i mean there are if they would if each one of them would be regulated it's just not not going to be possible so that's why the regulation happened on the both ends on the front end and on the back-end side which is the training venue and the end-user interface or the broker in the case of defy maybe finance will have

some challenges in the future but again i mean i have no legal expertise i can really say what's going to happen sure how does how does periscope currently make money so right now by default the price app is free it doesn't have any fees or any extra fees there are two models two business models that were deployed in production right now uh one of them is what you call performance fees and that's a very minimal i mean i even have hard time coordinates a fee because it's less than a one basis point it's just a break-even fee to just finance i would say whatever infrastructure is uh behind behind the api and that's 50 we share the um i would

say the upside with the end users in case they receive more than expected and the second one is with partners so anyone will integrate our api if they choose to they cannot choose to uh if they want to monetize we share fees with partners so it's 15 for whatever fees they set they can put them to one to three percent whatever they want even to zero percent we are totally agnostic and we take a share focus so when you say integration partners like uh who do you have in mind here uh argent uh ledger uh metamask and all of those who choose to monetize but we have a lot who haven't monetized at all like uh uh barcelo swap one as one of them

that choose to not extract value because value also can be extracted in many ways and each product have their own method or like their own approach of extractivities so i wanted to come back to something that i noticed that i didn't i didn't ask but when we were talking earlier about the uh about about fees you you announced earlier this year that you had released this uh redux token which claims that it can reduce gas fees by up to 50 how does that work but it used to work because now with the london hard fork uh it's no longer usable because uh there was a change in the evm and the gas tokens hours i mean our previous

redux and others are no longer possible and basically the concept was uh if you remove storage from the blockchain you get refunds in order to incentivize people to remove storage and the the idea was interesting but many people started abusing between coaches like us some way to creating artificial storage like smart contracts and uh when the gas was was cheap and removing the storage was because with high it's like it was like an arbitrage in order to reduce gas fees it was very useful with when gas was very expensive but yeah right now it's no longer possible thank you vitalik that's uh that's what's happened yeah uh yeah that that certainly i mean

in the grand scheme of things it was probably good uh that this move happened because people were abusing it and basically the way that it was in basically wasn't used in the way that it was envisaged to be used so uh yeah um so maybe let's talk about the d5 ecosystem as it you know as a larger arena what we currently see is um trading sizes being economically limited on layer one right so basically uh back in the day you could you know send ten dollars worth of something and you know it cost like 10 cents it was fine and now that trades have become much more expensive the economic viability has kind of

gone down for these smaller trades so basically they get pushed to layer two what are your thoughts on the dynamics between layer one and layer 2 and with regards to trading how do you see this interplay in an equilibrium state in say a year or two yeah maybe year can be a little bit easy to predict uh more than that is very hard i mean even one years will be challenging so right now we saw the big success of side chains which are not layer twos but maybe they what they have in common with layer twos is high throughputs and low fees and they attracted a significant amount of retail which

were starting becoming to start to lose at some point in d5 from say defy summer till the launch of bsc pretty much uh it was kind of exclusively defy didn't play using taxes and aggregators and other other d5 platforms so i would say uh we have a clear sign that layer twos are and will continue uh including uh the retail and right now it's hard to to say if we look at the player trees as proper layers like zika labs optimistic collabs and not the side chains and how this would play out we will see but i think uh it will be also one of the biggest

engines of driving retail i'm hesitating a bit because what i saw and what drove a lot of interest is all those incentives we were seeing in those side chains so i think that for layer two to succeed to attract uh users there has to be some kind of incentive like some kind of a highly attractive product for this for these people to come and leave the side chains and go for layer twos we want them to do something in my opinion because it's it's much more secure and they rely on the security on ethereum but in order to do so there has to be this incentive because the security incentive is not enough for retail because simply there is a lack of understanding of those properties

yeah interesting can you maybe explain how you differentiate layer 2 and side chains so what to use the quote is to you a layer to something that shares the economic guarantees of of ethereum layer one or how do you how are they connected yeah for me layer 2 relies on the existence of ethereum like it cannot exist without without ethereum and a side chain isn't just an l1 that has either compatibility with ethereum like polygon for instance smart code the smart contract the trans here would run there but it has its own security uh assumptions and it's completely

independent it's like a solana for instance it's a layer one which says that it's not a site chain because it's not compatible with ethereum in terms of evm and so on now okay and do you think that um the likes of um polygon and say xdi can that you would characterize as side chains um do you think they can somehow attract the security guarantees that ethereum player one currently affords or i mean it doesn't have to be the exact same security guarantees right basically they just have to be commensurate with the use case yeah i think they it doesn't have to be of course and

it can be also as good as ethereum if it's done in a different way i mean why not i think something that's something we started to see like polygon with the merge with hermes uh maybe they are building something uh more solid than what exists right now i mean they have to start somewhere they don't need to have full bulletproof security from from day one they made they choose to get the traction and now they are maybe building new models that are more solid than what existed before it also the same thing with ethereum it's each year it's more and more solid so i think polygon will will get theirs at some points cool what what what do you think is

currently missing in the in the ethereum defy ecosystem it's currently missing but i think it's brought the d5 ecosystem there are many many things going on but for me uh maybe we will come back to the same subjects i think layer twos are missing because now ethereum is still a degen place and retail are going to side chains so i think layer 2 will bring back ethereum to its initial it's a philosophy of being inclusive and bringing i would say uh yeah maybe cliche sounds cliche like financial freedom to to to everyone how do you see the

evolution of trading happening so basically if you look at um if you look at the history of taxes on ethereum um we used to have the order book taxes right and then basically they were overtaken by amms which in a way was unlikely because the user experiences is worse but the tech basically the feasibility is better so how do you see that play out in the long run will we see more and more sophisticated amms like unit swap v3 or will there be a return of um operators order book taxes i think they will we will continue uh i mean in this direction of innovation it

doesn't have to be either or in unison v3 is the proof it's it's a merge between older book models and amms so it has the best of both worlds they can the convenience of using amm and also the sophistication of using order book maybe right now uh we the new challenges with mev for instance pushed the ecosystem for new innovations like this new uh i don't know it called like swap but with an m things like uh amms but are executing trades in batches in order but i think that's also what what coswop is doing with with moses in order to reduce to reduce mev and maximize the price that the user is

going to get so i think those are new trends it's always the case it's not nothing is new like a mms existed maybe since 2016 or early 2017 with bancor but only in 2019 that people started talking about it maybe also with uh with batch patch executions it was uh it was it was pioneered by nurses and only right now people uh it became became cool and trendy but there is also a necessity because at the time there was no mev and there were we didn't have those challenges and right now since we started to see them that people notice the the benefits of using such systems so i think yeah the innovation is building one is building on top of the others uh and hard to say what's what's gonna what's gonna show up in the future

but i think other books and a ms and product built on top of those will continue to mean to innovate i'd like to just come back to the the discussion you were having earlier about l1s and l2s do you think that l2s are just destined to capture much of the liquidity that exists in l1 i mean if if fees there are so much cheaper and transactions happen much quicker do you think it's just natural for most of the most of like pools and uh transaction volume just move into l2s that's what we hope will happen but the issue uh with that is we are creating new problem uh that is

new kinds of fragmentation we used to have it in and once it was solved uh partially by aggregators as well by gathering this this this this fragmentation but right now we have a new kind of fragmentation where we cannot apply the same security i would say native security guarantees provided by the same l1 so i hard to say if liquidity is going to be concentrated if on a single l2 or mostly on an l2 or maybe cross multiple attitudes but that again created also new opportunities for innovations by creating solid bridges that are highly secure and highly decentralized still i think we are not there yet but we see

some very early very positive early signs that some of those bridges are going to make this this possible make this this composibility that we lost the possible and inefficient do you think it will be possible to like this is something i was thinking about earlier i don't know if this is possible maybe you guys have an answer let's say someone has like a you know bunch of liquidity positions on one ether address and like they're you know in uh you know they're in ave and maybe they have like a cdp or something will it be possible to do sort of a one-click migrate you know perhaps losing flash loans so that you could just basically move all all of your positions onto an l2 without having to like liquidate those positions

etc and you mean across l2s no from like l1 to l2 so like let's say you want to take advantage of you know something like polygon but um you were already like invested in in an l1 uh smart contract could you just simply move those positions like do sort of like a migrate contract that would migrate all your positions onto l2 so that you can benefit from like lower fees and faster transactions yeah so there are two parts of that there is the part that is proper to l1 like avoiding liquidations and so on that's a problem that we know how to solve with the tools like flash loans and so on the challenging part is moving liquidity to the other side and making all this process atomic so that's what we lose and maybe in l1 we lose the

synchronous atomicity like we are hundred percent sure that will this fully hesitate fully reverts but the thing here is that this i would say uh synchronous atomicity that was lost i mean there's no way to have it so there are ways but they are not 100 central and decentralized uh there are some trade-offs and that's in any way it's about engineering it's all about making trade-offs and making the right trade-offs and building on top of what has been what has been done so there are solutions like connects that will allow you to programmatically do this where by executing smart contract on one side moving the funds to the other side and executing the contract on the other side

again so you will say you have die on ave and you borrow the usdt it's gonna pay back your loan and take out the die move the die to say you know arbitrary for instance and then you're gonna deposit the die again and uh depart the diamond arbitrage and borrow the usbt all of this is the same smart contract at the end if you look at it it's just the instructions we are giving to the smart contracts but the question here is who is doing this work i mean somebody has to push a button and has to do it but you can as user initiate the first first transaction but then moving the funds to from l1 to arbitram um well in connects they are using market makers who the system is still not custodial

but they are responsible for this operation so there is an execution trust you are trusting that they will execute your transaction in time and they will puts your funds on the other side in time so that's they would say the only trade-off that exists in other projects they try to build different models like instead of using market makers they will use oracles and validators of the oracles like chain link we don't know which who has who is right because none of this is highly battle tested but the idea seems quite simply interesting super interesting so one of the other hot topics of the moment is mev right so basically if you look at dex aggregators like paraswap they offer mev protection against some sorts of mev right so

basically against backgrounding for instance but not quite as well on front running and sandwiching do you have plans to kind of protect your users against these kinds of attacks uh yeah well there are multiple things that can be done here well first of all on the front-end side where users don't need to broadcast the transaction uh to the miners actually called what you call the the dark forest they can send it to specific networks like flashbots uh like blocks route and so on so that's that's that's better but this can swap also that's doing dispatch processing which is very helpful but then also there are

native products that are immediate resistant like virus pool which is a network of professional market makers it's like an on-chain otc trading and the codes are fixed as otc i mean i'm selling x and expecting y and that's why it's fixed as long as it experience time so that's uh natively what we're doing but that's only one of the taxes among others but if 100 of the trade is executed on parasol pool there is literally no possibility to have any slippage or any kind of run training attack but the users can do it themselves and you can help them by integrating these kinds of features on the ui side like flashbots uh like limits orders with dot swap blocks route so as we wrap up here i want to maybe

take a step back a little bit and you know look at the d5 ecosystem uh from a broader perspective what are your thoughts on the institutionalization of d5 do you think it'll happen and perhaps more importantly do you think it'll happen on ethereum or perhaps some other platform well it's definitely already happening as we saw with ave and other pro and whether it's ethereum or not i think so because institutions are interested normally what i'm what i can see in two things uh first is in the liquidity and there is nd5 in the returns that d5 can provide to them and the second thing on the technology and both are built on ethereum uh so if it's not on ethereum

it will be on a fork of ethereum so it depends on the motivations of the institutions if it's just about technology so it may be on a private floor called ethereum which is still i mean credit to ethereum uh if it's about liquidity so it should happen on mainnet and if it's not the main net on a layer two so i would say very very likely that this would be on ethereum we see some innovation also on solana on polka dots but ethereum has the critical mass i mean has the the lion's share of this and i would see institutions starting with ethereum beyond the ethereum ecosystem rather than going for for other other blockchains do you think that like uh efficient and secure bridges you know

could potentially you know lead institutions to at least uh i mean you know perhaps ethereum is you know the platform where most of it happens but what role do bridges play in making it such that other platforms can either also capture uh some of the activity well also uh i would always put that relative to the motivations uh so if it's uh and also on the amounts that are at stake so i i would say it's very hard to know right now uh it's still in the beginning uh in ave maybe it's a good it's a good project to watch and see the outcome on how this will play

but institutions are security for institutions something very important because what is at stake is is very high so i don't know i mean hard to know if for me it will be either ethereum or a private blockchain because it's giving these institutions a uh insurance that things will be safer so yeah i don't i don't know how to play exactly but i see hardly them using something besides ethereum or private projects do you think um institutional money is going to change what d5 currently is yeah i mean about uh i i can't really say but what

we can make a parallel with the cbdcs they are that are trying to run on blockchains and some of them are considering public blockchains uh what i heard at least in france uh they are considering all blockchains i mean they are not going for a single one they are testing each and every major major blockchain in order to figure out which one would work best but uh this is the i mean i would say the biggest uh biggest players like states and governments in any ways this will be highly centralized so it's not going to be d5 maybe we don't even know that if defy users will even have access to this money that normally is is reserved for banks in high in big institutions so

yeah i mean i still i mean it's not my expertise i can i can't say exactly but if defy will change how the perception of money for people that i can definitely say yes are you afraid of the regulatory landscape and where it's currently headed in europe not not not afraid at all because we had some discussions with many regulators in many countries the common denominator with all of them is that they are all pro innovation and they like to talk to builders and they would like to see more builders the only thing is how d5 fits into the current regulatory

frameworks which i think it doesn't so the challenge is how will the future regulations look like that will try to regulate define and now what i like is that regulators understand very well how different at least the ones we talked to maybe we haven't seen the whole the whole the whole picture but once we talk to and we see in multiple countries they like innovation but they are still i would say those institutions are very complex and uh have different agenda than builders i mean they have protection uh consumer protection rules anti-money laundering and so on so how will this look like i don't think it will be as bad as people think but i

definitely think it will be very highly challenging yeah i mean this is a topic that i'm personally very invested in and interested about working at adan and everything and i i feel that at one point it will actually come to a head because the agendas are so different and i i really think that at the moment the builders and the ins and the regulators are not putting really all their cards on the table like the builders are trying to convince regulators that what they're doing is like you know innovative and everything but what i think institutions you know um fail to fully grasp is that crypto and d5 is a is a power play i mean it's it's fundamentally there to disrupt you know um central

concentrations of power and you know whether whether that becomes apparent to regulators before they regulate crypto or you know it kind of like comes up after you know we'll like one one side of this fight is going to get um it will you know we'll be disappointed and i i have a feeling that the regulators with the power that they do have will probably end up having the upper hand and you know we might end up with like a future of d5 that looks a lot more like spotify netflix than bittorrent and you know which which has its advantages and you know like uh still allows like innovation to foster and everything like a sort of wild west world where you know the future of

finance and like world you know global economies are governed by you know shattery super coders i think is unlikely i don't know if you have anything to to add to that or if any reactions to that at all yeah i i cannot agree with you in that sense i mean the world will always have some order in one way or the other and maybe human beings expect to have this predictability uh than not having any kind of visibility on who has control of what so maybe it's not gonna look like this but if i again is very small and the use cases are very limited today and the disrupting and changing completely the financial system is not on the table here it's more what is on the table

right now for builders is just making things better just making exchange of value better uh just making exchange of digital value better that is the order of today right now and i think no matter what's happened as you said we will have the netflix and amazon primes and so on for sure but whether we will have very sophisticated bittorrents that will be more and more established i think that we will have it as well because the blockchains right now and especially ethereum and maybe bitcoin as well are hard to i mean cannot be stops and what's built on top of those cannot be stopped so maybe other people who didn't have access to finance before will always have this kind of access and that

i think is irreversible so what projects are you most interested about today like what really kind of gets you excited uh in the d5 space right now like what's up kind of like the casper at the forefront of innovation well maybe we discuss it layer twos but also bridges with layer twos those are things i'm looking at not looking too much in nfts i don't know how but uh maybe to to focus and what uh what we're doing we actually had a really good idea yeah i had some cool ideas about energies but since we're not really highly involved we didn't have the time to to really focus and focus on them but always ideas in the aggregation side i mean that's what what we do so so that's what we've been we've been thinking thinking about

but i think the biggest things that are happening today in my opinion most interesting things are happening is those connections between uh blockchains and between layer twos that i think is very challenging in an intellectual point of view and also in a kind of user demand point of view yeah i agree i think like creating the bridges here is one of the most important things like you want to have i think we we want a future where assets and liquidity can just move pretty flawlessly you know pretty seamlessly between platforms and like even you know between like player one so you know like having assets being able to move from ethereum to solana or cosmos and

i think is a vision of blockchain that i've always kind of been excited about and i i i'm hoping that it really goes in that direction that we do have like true interoperability between everything so yeah that's that's also something i'm very very interested in seeing happening and playing out yeah munir thanks so much for joining us today for coming on the podcast and uh telling us about periswap and your your your vision for d5 and uh yeah looking forward to seeing where the continued growth of paraswap well thank you for having me it was a pleasure being here it was a pleasure to have you on thank you for joining us on this week's episode we release new episodes every week you can find and subscribe to the show

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