Stani Kulechov: Aave – 3.0 #444

Transcript

welcome to epicenter the show which talks about the technologies projects and people driving decentralization and the blockchain revolution i'm frederica arnst and today i'm speaking with stani who is the founder of avo ava is one of the big landing markets on ethereum and now also other chains but before we talk with stani about ava let me tell you about our sponsors this week our first one is a stake wallet steak wallet is a fake is a new favorite multi-chain mobile wallet that puts the power of web 3 at your fingertips in just a few tabs you can stake and manage your assets on over 22 built-in protocols including all major evms l2s and non-evms like cosmos

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library helping developers connect to ethereum and they recently announced a pledge to commit two and a half percent of their total tokens applied to um a git coin aqueduct head over to kelly telly ho dot cash to try the telly ho community edition and play around with its features before it's upcoming version one and down launch so it's stani it's super good to have you back on you've actually been on before uh during ecc at the very beginning of uh the covet epidemic um so that was just over two years ago yeah that was uh i i can't believe how much time has passed since then was it two or three years ago

even it was it was two years ago two years ago yeah that's uh that's basically so two years ago that means uh in d5 uh 20 years at least one year one year in uh real life is uh 20 years in dfi so many things happened happened so quickly all the time so 20 years is true and this is particularly true today so today we're recording this may 12th 2022 so we are about um two days into the collapse of the stable coin project terror so it's collapsed from a 40 billion dollar market cap

by 99 and as we speak the chain was halted a few hours ago and this is very much not my usual mo i don't really talk about recent events especially not in the beginning of the episode but um i think this is this is one of these ecosystem moments it's kind of like mount gox and the dao it's kind of it it i'm pretty sure this is gonna um haunt us for a while so um let's let's talk about this now so if if you think about landing markets um like aven compound um especially a while ago they kind of they

used to be stable coin king makers right so i mean why am i saying that so basically if you look um at the of at the stable coin demand a large fraction of that was fostered through rewards this burst to liquidity providers um in the form of the native governance tokens um and basically which pools got rewarded was a protocol decision so and traditionally the stable coin stable coin pools were highly reported um driving demand for the corresponding stablecoins so super long lead up to my first question um what's your take on stablecoins and stablecoin mechanisms and how has it evolved over the years

that's a very very good starter uh right there i i i definitely think um yeah what what happened with uh the uh usd and terra i i don't think that the the uh mechanism there was uh pretty much kind of like an algorithmic design um and i think there was a lot of reliance on on market forces uh and the community and wider um kind of like a crypto community trust uh that uh the the functionality and and mechanism of that stable point basically is is something that works and holds the

the peg so what what actually holds the peg is isn't uh actually the the mechanisms it's the our perception of those mechanisms and uh the ufc stable coin uh that terra community had there um what was some interesting elements first of all uh you had this kind of like a burning uh minting mechanism between luna and the ust but at the same time they started to collateralize um partially the the stable coin and build trust so it's it's a perception it's the same thing for example with usd

from tether where we have a stable point that everyone has been trusting for years and they have issues previously in terms of transparency and whatever but still it's been trading at the one dollar range and and because of the perception so that's the thing like how and what kind of mechanism you you trust but also like uh i've been uh in the five hours uh i think six years when when we didn't have the event term the five wasn't really actually coined yet so it was very early we had one uh decentralized exchange ether delta and ava's very first

protocol uh it land was was uh probably second or third like financial decency financial nature in nature application then we start to see like more the ecosystem to grow but like even in our first version we didn't have any stable coins just to give some history for for the audiences that uh the main stable coin tether uh was on omni chain uh which isn't even bitcoin so uh centralized exchanges were supporting usd and and they were integrating with the omni chain and later uh then we started to have like uh stable points in in the ethereum network and across other new networks that that were picking abstraction but

to give an example uh in the very beginning you could actually borrow for example uh ether that was pegged to usd value so you could come to our deposit different kinds of tokens and then borrow let's say 100 usd board of ethereum and then come later back and return 100 usd words of ethereum and this was tricky because uh your debt uh has will be usd nominated uh but it means that if you want to use that uh value you need to convert it to real usd quite soon because of the volatility so of of ethereum so stable coins that are you know that you have a you have an

asset that you know that it's you know paid to one usd um let's say one die one usd uh it really simplifies the uh usability on blockchain so you actually have value that you can just hold store and it doesn't fluctuate much and that gives you a lot of uh usability and and you can build a lot of applications on top and down the line after first stable points were created the next thing what happened was the interest rate market so essentially the other protocol um is an example where you supply cryptographic assets and for example mainly stable points and you earn yields and because the liquidity has been very narrow in decentralized

finance over the years especially in the beginning you could easily receive four to five to six percent yield uh without any kind of like a liquidity mining in native uh protocol tokens that's very attractive uh value proposition for uh every single person who is looking at their checking account or a savings account that doesn't offer them almost like uh dust that's just kind of like a back story and and i i think like when it comes to different stablecoin solutions and and mechanisms uh there are different kinds of right so there is the very first model that uh you see

usdt and and uscc had where you have the one-on-one collaboration so effectively uh you have a promise where where you have a equal amount of funds either in bank account as cash or in some other instrument that are uh highly highly liquid and and low risk uh then we have the next model where we have over globalization so let's say that's uh you deposit a certain amount of cryptographic value let's say in ethereum and then you mean a stable coin against that uh collateral but less less of the amount that you actually deposit

so you have over qualization and if the value of that collateral uh declines uh and and below the value that you this table has been issued and and for that user uh there is liquidation so so there's a mechanism to uphold the the colonization value within the whole protocol so it it technically shouldn't go below that and then looking at how the liquidations work so so so what's uh it's not very capital efficient when you have a stable point where you have overlooked realization um so this has sparked a lot of discussions like how to make a stable point where you introduce the the globalization and you basically have some sort of

algorithm that is backing or using market forces or um using something else and then collateralizing fully the the position and this is what many of these uh so-called algorithmic stable points i've been uh trying to kind of like a solve and i think it's a very valuable and interesting problem to solve because if you think about it uh us dollar it doesn't have uh so it does have this technical redeemability but it isn't backed by any kind of like uh direct value it's backed on directly by the u.s economy and of course the ability of the u.s economy to collect taxes running infrastructure

and and all this bunch of economical uh features so essentially if this can happen in real life how you can make it work in same or similar manner uh in decentralized finance and reduce that qualitization requirement which allows you to scale because you're not relying on those different kind of assets and this is how we've seen various experimentations the thing is that crypto is volatile and everyone who most most of the uh participants were in the space they are risk takers they make quick decisions so uh this k it's just very hard to do in a very small scale and i think that's

where um for example the usd terrace stablecoin had become issues i mean if if for time being if the market has been bullish over a long period of time and continue to grow maybe we will not have seen this issue uh yet but it's it's still very fascinating to see as an experimentation but also what is uh difficult here is that many folks that actually believed in that stable coin uh they really believed in the fact that it keeps the peg and they're uh we're confident on that as a user even though the the time of uh from the

inception is very short so it just shows also the fact that uh one thing i want to say is that in in decent just fine as an in open ecosystem uh like like the web 3 anyone can come and and just build new things and innovate and look at the code bases and improve them redeploy that's the beauty of uh you know scaling and accelerating innovation and solving problems and making impact uh but also it means that um there are sort of people that are looking what you're doing and if it's interesting gets attention they will come and and interact with that smartphone check or stablecoin or whatever the application is and and if it's not actually

uh well designed or the market isn't ready for that kind of idea then the problem starts i kind of want to push back a little bit here so this narrative that um the us dollar is not backed by anything i think this is a narrative that we hear often um on crypto twitter and in this ecosystem generally and i think it's a narrative um that is at the very least omitting a large part of the truth so if you look at um the entire dollar ecosystem

the mat the the fact of the matter is that the vast majority of dollars are actually backed by something um basically so basically dollars are are create so basically someone goes to the bank and says i need a loan to buy a house bonds for example yeah yeah so basically and i mean this is this is how almost all of the dollars are created um as at in as part of loans and mortgages and i mean and then they they are collateralized um not by things that are super easily liquidated um so things like houses for instance or cars or i mean or even just personal reputation if i if i get a credit card loan um but it is it is actually backed

by some real value so i i am not i am not sure whether um a purely algorithmic stablecoin can ever work you you touch a very good point because that's how essentially most of the money is created when someone is taking a bank loan and at that point uh the bank is assessing credit uh credit fortiness and and and basically creates that uh value so so essentially when you get a uh get a funding to buy a house for example at that point the funds are created and and and the the uh person is paying interest on that and it it's actually quite interesting

because it means that every single single uh dollar that is or a pound or a euro that is actually out there someone is paying interest on that so the the kind of like i think the backing is an interesting concept because you can it can be very concrete or you can think of uh about it in very widely so in this case when you buy for example a house you can think about it are you actually is is the house actually backing the loan and and the currency or is it back is it backed by your credit fortiness or is it backed by the fact that um

it has it has demand so if you are not able to repay your loan there is someone who is willing to buy it and repay to your loans all of these tie into each other right so basically i mean with the the majority of people with um day jobs if they go to the bank and say um can i get a loan for eight hundred thousand dollars for instance um and and the the bank asks what do you need it for and the person says oh i want to buy a house here um and basically its value is a million um and uh and basically i have two hundred thousand as a down payment um then uh the bank's uh answer is going to look

very different as if that person walked into the bank and says can i can i loan uh 800 000 um and the bank asks what do you want to do for it and do with it and the person says oh i don't know yet but i'm definitely credit worthy because i i have a job right so i mean it i i think um i mean yeah sure obvi obviously ties in with the fact that um that the house has a market value um and generally real estate is more i mean not super stable but i mean it's it's uh stabler than many other assets um so yeah i think i think the these things are not mutually exclusive right and i think they're not mutually exclusive but

also it's kind of like it's also like if you go down deeper you can even think of like am i actually is it actually backed by by the house by my credit 14s uh or by my personal equity uh in in that sense so when you look at the the algorithmic stable points uh essentially when where you can uh mint uh a lot of kind of like a native equity token or assets and and backed by that like are you actually using the the protocol as a collateral so i definitely agree like it's not completely um mutually exclusive uh and that's why kind of like a credit and and and collaboration is very

uh hard topic in crypto it's very like we're we have a very um kind of like a uh heterogenic approach in the sense that you know if it's if it's not traded or exchanges you know like how can you use as a collateral you know same for example nft it's like if you have nfts like how we can use them as a clutter because they don't have the market price but they have value there's a lot of kind of like a difficulties when it comes to uh collaboration and and backing exactly so but here the problem is not collateralization as such it's the price oracle right so basically getting getting a price feed and this is also

one of the attack vectors for for lending markets um kind of manipulating the price awkward but we'll get to that later so basically let's kind of let's loop back to to stablecoin so basically if you think about different stablecoin designs so as you said there's the ones where the stablecoin is actually backed by some sort of fiat value so basically um a good example would be usdc or usdt if if everything is as bitfinex says and then there are stable coins that are backed by um unchained values um such as uh dye and uh and rye um and then there are

algorithmic stable coins that are either not backed at all kind of like uh ust um or fractionally backed like like fracks for instance right so um and for a long time the achilles heel of lending markets in terms of from a security perspective um was um that you needed to make sure that every single asset that you accept every single kind of collateral by itself um is 100 percent trustworthy and not manipulable um so this has kind of this has changed with with um the most recent version of avo

but um maybe maybe let's let's talk about um what the um what what an attack or doesn't even need to be an attack what um the vulnerability would have looked like say for instance um you would have had um a centralized saber coin emitter um go haywire and just print an endless supply of whatever stable coin they issued um that was accepted as a collateral honorable so basically the question is for a long time the main achilles seal of lending markets such as other was that that collateral uh different types of

collateral when shielded against one another right so basically if you if one of the collaterals kind of had a catastrophic failure and the value would go to zero um that would impact the entire lending market yeah exactly so uh essentially that's how we we were building uh protocols that you have to pull collateral composition uh meaning that uh normally for example that when you come to the uh to the other protocol as a user you can supply cryptographic assets so typically you might have a portfolio of assets so you might have a bit of eats you might have a bit of ave you might have a bit of let's say uni and then you supply them uh and then uh

what happens is that you can draw stable coins or any other asset that you you you want to and in that case uh if one of those assets for some reason uh goes down uh it it affects the whole kind of like a landing market but with uh the the version uh three of the other protocol uh what we wanted to do is that we first of all we first of all in version three we focused quite a lot uh on on two topics uh one was the uh security and risk mitigation and the second topic uh pretty much was the topic of capital efficiency so in

terms of like risk mitigation um one of the main features that we added uh of course we added also like supply caps uh borrow caps so essentially each and every single asset can be capped so you can list uh assets more quicker but then with a smaller uh supply cap but the interesting feature is uh the so-called isolation mode where we silo a collateral away from the other collaterals so what it what it means is that you can come into the other protocol uh and supply one particular asset that is listed as isolation mode uh with a lower cap on top of that if if needed and usually there is is a cap

then you can borrow stable points against that particular asset so the idea what we are trying to solve here is that because there's the space is moving very quickly uh but there's many asset uh listing requests from the community members and it's very important that we take always as a community uh the risk aspect uh quite quite involved and and this allows to scale and list more uh assets uh more quicker without introducing this unlimited or uh unknown risk into the other protocol so essentially it's it helps to scale the protocol but also

mitigate uh risk in in that sense and i definitely agree like um this kind of like an infinite mint has has has its own issue but also within terms of stable points uh centralized stable points like usd and usdc you will always pretty much have the issue of you are not necessarily knowing what is the um [Music] how the underlying assets are collateralized and to what extent uh but maybe the future is where you know you might have a stable coin that is trusted enough and they might start reducing collateralization but then the

the problem is always the perception of the the public so let's say that's uh we can easily trust uh usdt uh in case when the market is fine but then when the market is actually taking a hit and valuations are decreasing and there's sort of panic that is the moment where the actual real uh stress test will happen [Music] yeah yeah absolutely um and basically um being being able to kind of list um assets with a lower um with a lower threshold for security um this has kind of gone hand in hand with

um our governance right so basically the other thing that has been upgraded majorly um is uh is the governance mechanism behind alpha tell us about that yeah so essentially what we have uh in the version three of the other protocols so we try to think of uh different kinds of ways of minimizing uh governance as well because governance is also it's it's a way of coordinating effectively uh in a decentralized way and and innovating and improving the protocol making important decisions and implementing them but at the same time uh getting all the all the decision making into the main

governance is something that is very uh burdensome process i mean we had recently uh over the past couple of weeks multiple votes and each vote what requires uh decent amount of quorum and uh this slows down uh some simple uh governance updates such as risk parameter updates which just needs like small tweaking uh periodically so we added uh this so-called risk admin feature uh into the uh lending pools meaning that you can actually uh delegate that function to a external smart contract that might have uh various different kind of logics so it

might have a logic that you know you can tweak the risk parameters up to certain thresholds uh between certain certain kind of like a threshold and then you could essentially create additional logic there that you can trust someone like gauntlet uh to do those changes and submit them even like a daily basis uh with a based on some sort of machine learning algorithm or you can add some sort of uh staking functionality where saving more of it or staked off will increase the loan to value ratios like the options are quite open and there is like room to build those things so

that's the kind of like a main thing in terms of like being able to uh tweak the uh risk parameters and then of course we have the we made similar kind of like a uh governance update in the uh part of uh listing uh where we created this listing admins where similarly logic can be delegated to another smart contract uh and and create some sort of staking or uh just delegate it the the listing into a smaller quorum or even like a bigger world like that's that's the idea of uh governance that it needs to be uh uh flexible as well and speaking of governance it's

something that we all have been always innovating so we since our other governance launch uh we innovated quite a lot what was uh what is currently used in the the final ecosystem because it's very difficult to delegate voting uh the other governance supports actually uh separate both delegation and uh proposition power delegation so you can delegate proposition power to a developer who creates the proposal and then just pull protocol politician the uh the uh voting power to vote on on decisions and from that we also innovated uh to create cross-chain governance as well

between uh different networks that we have so there is uh there is sort of innovation on on that side and i think it's still uh where we're gonna improve uh more so kind of like the now the focus point is actually in uh ensuring that we have governance where you can vote in low cost and something like snapshot might be an interesting solution and optimistic voting as well cool there's there's two things that i kind of want to loop in here maybe the first the first thing is uh you just mentioned protocol politicians so i mean this is kind of what we've seen um increasingly over the last couple of months basically people who um

are active in a number of d5 protocols and act as uh as delegates for voting um how do you see the increasing profess professionalization in the governance of d5 protocols do you think this is a good thing or do you think this is something where that's that's um a symptom of governance that's not quite there yet for the user it's very early so for me when i look at the other governance i see a lot of delegation so uh there's sort of uh governance power uh and voting power delegated to uh university blockchain association so berkeley standard

uh you know all these universities they they actually they contribute into decentralized finance and the three protocols and and actively both uh which is amazing because uh student networks and and those are ways to also kind of like uh to delegate the decentralized to be able to decentralize an ecosystem and it goes back to the like early days of the internet where universities were the ones who were connecting and and creating connectivity within computer networks so for me that's that's been very fascinating progress um we could see more actually more active um uh like governance

activity but i think the the issue at the moment is uh the fact that you uh you need to pay very high gas fees when you vote on ethereum but that might change on layer twos of course that would be a different story and and and eventually uh one one another thing is that there's also this kind of idea of lending votes out and i think that's that's a kind of a thing that is very um concerning to me because uh you know the idea of uh that you can actually borrow let's say uh certain amount of aquarium and just vote with with uh two thousand dollars as this frightening uh idea

yeah i mean this is something that have has been i mean basically the idea of vote buying and dark towers and this has been around forever and i mean even in in the curve wars governance i mean it's it's it's happening right so what do you think we need to look out for in order to kind of retain a healthy governance i think like or organic voting is important so that that the the voting behavior you know corresponds of the intent of the community so the discussions that have been in the the community forums and um that there there's kind of like uh the voting the snapshot signaling and

then the actual engine voting corresponds what has been discussed so there there's like you shouldn't see like surprises last minute on chain uh but um i i i kind of uh feel that with the um curve wars is is that some of the voting behavior that can be done without actually governance you know just some sort of staking and support that's like one thing and then it's also happening in most of the this kind of like a token economics so you you vote um there but like uh in my opinion the most challenging part is

uh being able to kind of like a bribe uh get voting power and then using that to to achieve your own uh kind of a goal and then you are not like necessarily looking for a consensus what you have in the community because if you think about the idea of uh consensus and uh how it works is that in web 3 communities you usually try to achieve as wide consensus as possible uh so these the solutions and implementations should look like more of a compromise that everyone is kind of satisfied because you wanna you wanna you wanna make everyone happy uh as as many people as possible happy

because there's always a risk that the community part of the community members they can actually fork the protocol and create a new community and and create a risk of kind of like a forking but forking should happen as well so it's it's organic behaviors creating new communities and and new ideas so but it's still very early to say where in which direction things are gonna go i would love to see more like innovation regarding the experience uh of voting and especially regarding um increasing the vote participation so kind of like many people don't care about to vote but if it can be made very simple uh and elegantly and brought up to the

users closely that will help to increase the avoid participation because that's that's what decentralization is that you can participate i totally get that um i feel a part of the problem is that it's so much work to keep up right i mean i'm i'm i'm a full-time web 3 person i can't keep up it's like it's not because i'm a slow reader it's just because there's so much going on so basically you kind of to kind of know what happens in the governance of all the protocols you kind of partake in i mean basically keeping up with like maker and uni and other and compound and you know all of these different things takes a lot of time and there's a lot of votes um

so do you have you guys thought about disincentivizing not voting so basically things like people who don't vote they're diluted in terms of governance tokens so maybe maybe maybe they shouldn't hold a governance token have you thought about kind of divorcing the idea of um having this fee accrual token um from the idea of having a separate governance token because currently everything is kind of oh i mean governance and ownership is always kind of amalgamated into one do you think that's sustainable yeah i i think uh this is the sense of

why incentivizing the the voting is is quite tricky because you are you know touching the the holders assets and you because like when you have a governance talk and you have like the governance power uh and then there's like certain things attached which is voting or something else and um for for me it's kind of like a tricky idea uh to implement and i would rather uh see kind of like innovation where uh we try to incentivize voting and also incentivize active uh uh participation in the governance or in the community but that's the same thing right so i mean basically given giving

extra tokens to people who vote and kind of uh uh slashing people who don't vote is effectively the same thing yeah i think it's just like kind of like uh as optics it's very hard to swallow for a kind of like a token holder uh in the sense that you some people just you know they don't want to vote they just want to delegate their votes to someone else and you know that's that's fine because they want to trust uh protocol politicians for example but delegating is not the so basically people who delegate they're not the problem right it's people who don't vote at all um who are the problem right they're not a problem either because they you know there's different roles when you are part of a community so when

you're holding an asset you are you're basically also betting on that project and you're uh part of that community and you work you're you're supporting uh the value of the community and then there is the the voting behavior so i think um i mean voting always has a cost right so you know if uh if you vote online it costs time it might cost you uh a computer or you know a bus ticket or car ride to somewhere to vote and some time whatever is the mechanism same in on chain as well so like there's definitely mechanisms of like that there's there's already kind of like challenges there to to go and vote

because it's a it's it's costly for you and especially the problem is when you don't have like idea or time to go into the into the uh proposals and understand them very well it's very difficult to vote in that case in many cases these products these proposals are very technical and very difficult to understand but i think when it comes to actually this is incentivizing it's just very hard topic because you you want to support the community but you don't want to necessarily vote but you want to have your assets as a whole so as a conceptual idea it's challenging but what i think might be easier is that you could incentivize the

voting by uh inflation which is kind of like the same thing but optically and as a feeling uh for a community member it's different but i'm more curious not about that but i'm curious about actually creating voting rights that aren't related to the governance token itself because government tokens they have value but for example if you are an active committee member or you care about the product care about the protocol uh in that case uh you could get a special right to vote uh with a certain voting uh power and and and and participate and i think that might be more interesting

because um you know you are actually giving voting power for people who are active and and they follow what's going on and and that way kind of like bring more diverse governance i think that could be uh more interesting and something that optimism um team has been also working towards yeah i think we could talk about this topic for hours but there's one more thing i kind of i i really want to cover um and that is interoperability and different layer ones so other has deployed to a number of um layer ones different from ethereum the original layer one forever

how how has the community decided which which chains deploy on and how do you think about interoperability across different um chains forever i mean typically kind of splitting liquidity is usually um not not a great idea so tell us how you go about this so uh it's quite simple to be honest so there there's a proposal someone proposes in the other governance forum that uh you know there's this other network and it has uh edm you know and there's some abstraction and might be even part of that community that

proposal then the other governance has a snapshot vote whether to deploy there and usually there might be some community member that is deploying the the contracts which is relatively uh straightforward um uh thing to do well um technically uh protecting all people and with some smart contract experience of course and and and essentially usually the idea is that um when you look at the other community it's very uh inclusive community so it listed assets that weren't listed in other mining protocols in very early but very conservative uh risk parameters uh deployed as a first protocol like big

protocol into polygon and into avalanche and kind of like it's been always kind of like a inclusive community in that sense and i think like every single community uh is uh also a reach into new audience and and i think that's the the kind of like a key moment because ethereum also is is quite uh heavy on transaction costs so if you are joining the webster community you might be joining elsewhere through polygon or avalanche or optimism or arbitrium with with the the the layer twos so that's like given so there is communities in different networks and the challenge is actually

uh moving funds between those networks and that's where the trickiest part comes because uh they when you move funds you are using a so-called bridge and and that means where you actually uh move into a a kind of like a scenario where it's very difficult to secure that bridging functionality and that's where i think the the current oculus hill is but what we can do instead of uh focusing on bridging assets between one network to another one layer one to another layer one uh focus and building functionality uh for the layer twos because the layer twos are inheriting the security of uh

player one and that's where that's where in my opinion the the future is because you can transact in relatively low uh transaction costs on on layer two but then you are submitting the state of the layer two periodically into ethereum for example and you get the the security that that you uh need so i think that's where we're going towards yeah yeah that makes that makes a lot of sense um so in terms of um um i think i've covered most of my questions but because ava apparently was not enough you launched a new protocol named lens tell us about lens what what it does

this protocol is essentially a decentralized social graph and what it means is that you can create an on-chain profile and and basically follow other profiles and both the open chain profile is tokenized as nfc and the follow relationships are tokens and as nfts as well so for example if i have a your follower ft so i follow to you and i'm i can be the token uh id uh once i'm your biggest fan at that point um when you have let's say 1 000 uh followers and you publish content uh on on the lens protocol what happens is

that that content is uh dynamically represented in the uh follow nfts meaning if i'm looking at your follow nft in my wallet or open c i will see your latest content so essentially we created this uh way of dynamically distribute content between you and your audience um and then have that social relationship and then of course if i like your content and i can actually uh mint a immutable copy of that content so i can mint an nft as any other that is immutable and essentially what we're trying to solve here is that uh for example if you create a account in twitter you have

uh 100 000 followers uh you know if those followers are locked into that platform so pretty much the platform controls you know how your audience will interact with you the features that they're going to be adding um how much those features or algorithms will help you so you are at the mercy of that uh platform whatever that platform is so lens protocol the idea is that instead of uh your profile being just a number in a database of a social media platform uh it's actually on chain meaning that you have uh you have the control of your profile and and your uh audience your followers the the the uh uh distribution of the

content and essentially every anyone can come and build a social media application on top of the lens protocol and and this means that every single user that comes to those different applications are growth hacking the same uh social uh graph and the applications can decide how they curate uh the content the data moderate and and so forth but essentially you have the key uh infrastructure yourself super interesting so if you think about other decentralized networks um that have been around so steam bitcloud dso whatever it's called now um mastodon

and so on none of these have gathered any serious traction um so what did they get wrong i think there's a lot of things there i i mean essentially like there's been social media networks before uh twitter before uh facebook uh and even like there's social media networks even that uh started early and got a little traction and and pretty much diet later like myspace for example if you go today to myspace and try the application it barely works and the company even

that voted latest they informed that you know they because of a server migration they lost uh all the user data before 2015 if i remember uh correctly so this is just showcases like first of all why you need to own your profile and and and the connectivity with your followers but the reason in my opinion with with the models like steemit and bitcloud is that they focus on uh the kind of like value part so for example that you have a profile you have value uh you know you have uh let's say that you have a a post and and you know there's token

economics that if you like the post you basically have some sort of monetization and and i think what we are doing with lance protocol is uh it hasn't any relation to that it's completely different things so where we are actually focusing on the ownership aspect so we think that if you uh if you own your key you own your coupe you own your crypto you want your access to various d5 protocols you should also have uh ownership on your profile and the audience and and basically distribute your content to um kind of like a battery uh on-chain ecosystem and i think that the important

point to see here is that building a social network itself is very hard so we saw with clubhouse how much effort it takes where all the vcs were pushing a lot of effort to to actually break uh break through the the network effects and uh this creates very big uh barrier for many uh but for example if you as a developer you don't need to focus on the network effects but you can actually come create a completely new innovative way to interact with content uh the next thing you know you might get traction uh because you created something new or you create amazing cool interesting algorithm so it just

showcases like how uh different approach we have from what we've seen before and i think i observed that so like these synthesized networks they don't need to grow very fast so normally you have to build a good social media application in two to three years if it doesn't get traction you start you need to start thinking something or pivoting to something else inventory networks can grow slowly good examples is ems you know ethereum name service started as as basically uh having your ethereum name there's utility and and now you know there's uh quite vast amount of ens names uh today but it started from very small

pops is a good example uh you know where uh you have one person uh patricia going to uh events in different hackathons defcon and so forth and giving proof of attestation badges essentially over the time it actually grown to a a kind of like a habit to many people in in web 3 and and continues to grow so it just shows that if you build something very valuable and something that useful enos is useful because you can send funds to to a more simple address lens is useful because you can create your profile have followings and no one can take that away from you and you if you create a

big brand you can even transfer that uh profile nft to someone else um so it just showcases that there is sort of a lot of goals to do actually the building but also that you create uh utility and we've seen already uh we had a uh lf drove hackathon together with eat global we had over 530 hackers with 130 submissions which was like unexpected for us a few weeks after the test test launch so it just shows that there's so many developers out there that are just eager uh to build something new uh in in the social media space

yeah i mean i think this is this is uh a true hands down and i think uh i mean twitter is uh many people's favorite pet peeve right i mean basically how how it displays um the the the different tweets and which order shows them to you in and how badly searchable it is and uh um so you you actually uh pulled a social media stunt uh on twitter uh a week or two ago and where you got banned supposedly for writing that you were the twitter interim ceo and you have implemented the edit button and um

yeah so supposedly uh twitter banned you for for that and you made it on to bloomberg so give us give us the download how did you really get banned yeah so that's the thing because like uh there was a lot of narrative about uh elon musk buying uh twitter and and and making it private so essentially that means there's sort of freedom to do uh whatever you want to do and also at the same time he was talking quite a lot about the freedom of speech narrative uh you know and and also kind of like uh he's known to post a lot of jokes in in twitter uh i mean i i found it very funny and i found very funny to actually tweet that uh well now then i'm the new

introvert ceo of twitter and people started to kind of laugh about it and then i also uh made a tweet about uh setting up on 90 day roadmap for twitter including shipping the um edit pattern next week um integrating with uh supporting uh ethereum and ens uh integrating with lens protocol and and and so forth so essentially i think i went to sleep and when i woke up in the morning uh i i heard from my partner that i'm banned from from twitter and and and there was like a big free study hashtag free stunning movement going on and i think after a day

uh i got back into twitter and then i was joking that i'm back as internship of twitter and i think it's a good example of you know kind of like you know testing the waters but also like how like how the algorithms work who decides who gets banned you know and and what happens because for me twitter was the uh only like public-facing uh social media that i'm using that's where all my audiences because like if i lose that connectivity with my audience i lose my voice essentially um so that was very scary uh but also like gave a lot of uh ideas how and why why it's so important to build

decentralized social [Music] what should twitter become i mean should they adopt lent i mean if if you were if you were to that's easy they should become a front end from for the lens protocol because it's it's uh it's in powers but i mean we're not there yet i mean lens protocol is just it's been on test net it's going to maint and probably it's in maine that maybe when this goes live who knows but like uh this goes nice to live tomorrow so i i doubt it yeah okay good good good unless unless we make some magic so uh but uh i think it's also like we want to experiment how how this goes and and see

what kind of uh you know what kind of uh feedback we get you know if it works i hope that you know the future of social is built on top of lands and and and has an element of blockchain so that's my uh that's my kind of recommendation as as a heavy twitter user do you think twitter under elon is going to become better than it currently is better the question is better for who because you know essentially twitter is a company they need to make profit uh they need to have algorithms that just basically find ways to basically get value from the users so the users are the product there

there are people who are willing to pay for uh for utility but it's really it's really hard to tell i personally think he could build a better twitter better product but also it takes time to to uh get things through with the organization that big what do you think of twitter's open source initiative bluesky i think it's a interesting also approach uh it's quite different it's more federated uh and it's more of like they believe in approach where you know you could have name space in in blockchain but we believe that you can have way more i mean we we approached the uh social media from the

perspective of uh decentralization and how we've we've uh we've been always native smart project builders so that's what we uh we we're betting on um but also i i think um i would love to see some more tangible uh initiatives and experimentation from them and i think there's so many topics to solve in the in in this interest social and social media in general so uh from moderation uh modernization and so forth so like we we need more people in the space to build things if you look at your day i mean your day i assume like mine only has 24 hours so how how are you going to split your time

between other and lens protocol are there synergies even there are signatures but i i i pretty much spend uh half of time in in the the the other related things and half in in lens but it really depends we have a great team uh there's almost 100 people working at abe and and the team and um you know it's it's not the only things we're working upon so there's sort of things we're we're planning and building and researching so it's it's more about uh i mean i thought that the the actual product is the organization so um yeah so it is i i think i'm not worried about my time that much as far as i get like a couple of days a

year off what's on the road map for both lens and other and i mean basically maybe let's uh set two years as the time horizon here because when you ex extrapolate from past data this is when we'll have you on again so i think we're gonna be doing the same thing so we're going to build uh web3 infrastructure product services and and so forth but like what we want to achieve is that whatever we do move the space forward as as fast as possible because i think decentralization and web 3 can build will bring a lot of impact to all the users uh so definitely like that's where i think space is going so

if if we are able to be one of the builders in the space and contribute a lot of uh [Music] infrastructure then we're in the right right place looking back on the last couple of days we have seen again that this ecosystem um there's never boring day right so basically things with or often turn out different than you think they will um but if if you would make a prediction for the rest of this year what do you think um what's what do you think the major trend is going to be for for not not just for lens and uh and ava but for the wider ecosystem in terms of like the trends uh

i think definitely uh obviously that three social is something we i think is a big trend and it's coming because naturally especially with the discussion about uh social media moderation and and the issues with the um the three platforms that's gonna be like a big trend i also think the layer two is is very important infrastructure so later to use um you know they they allow scalability and there is where we see uh new applications being built if i'm pressing you now for for one prediction of something that people generally do not expect in the ecosystem for layer

twos and how that's going to go until the end of the year do you have did you have something you you would want to venture here i don't know if i want to say anything to get trouble later uh i would say there's going to be more users than now okay at least more addresses generated more addresses generated in webtree yeah i think uh i think this this is a pretty safe prediction yeah i don't want to promise that uh luna will get back to peg uh sorry the usd gets back to back or anything like that so i think i'm gonna go with a save but good thank you for coming on stanley

this was uh this was very illuminating thank you so much it was very very good thanks again