Stani Kulechov: The Aave Token-Centric Future Is Here (...And What's Coming Next)

Transcript

The only way to get DeFi to to mainstream u is by building experiences that feel like fintech. So abstracting away wallets uh gas fees uh networks and being able to link your bank accounts into a app and deposit in few seconds is the experience that passes the sort of uh fintech test. It feels like a unification of labs and DAO and through the proposal there's several points that I think we want to get into. One of them is that you know Avid Labs is making an ask and it just kind of shows Tony that the future of these token markets are going to start to look a lot more like public equities right quarterly earnings calls quarterly reports investor

relations capital markets teams. >> Welcome back to the rollup. I'm Robbie. >> I'm Andy. Rob and I met at the University of Florida in 2017 where we first found out about digital assets. >> We learned a lot along the way and we're bringing you face to face with the leaders of our industry. >> Sit back, relax, and enjoy today's episode. >> Stani, welcome back to the show, man. Good to see you. Big week. >> Good to see you, everyone. And happy Friday. >> Happy Friday, man. Congrats on the proposal. A will win. >> Thank you. Thank you. It's uh it's um I think interesting times in uh DeFi at the moment and also for for a and also a labs as a team but but also where u the whole ecosystem uh is going and and the potential uh of of a and defi uh for the

future. I think we're gonna probably talk about it a little bit a little bit more. >> Yes. >> Yeah. Yeah. I think just some context setting right stony we've kind of been going through this kind of sophistication and maturation phase of the industry broadly right and I think there's certain token designs that that were prohibited due to regulatory um you know regimes previously I talked about imagine seeing Andre Cronier's valueless governance token medium article be written today as a new token structure right and I we talked about returning to fundamentals we talked about this idea of of the revenue meta which is kind of a beam but it it also works in terms of like oh this is where the space is going

towards cash flowing tokens towards this new idea of actually unifying token and equity. Why don't you just break down the A labs proposal a will win to the DAO and why this matters for a next phase of growth. >> Yeah. No, I agree kind of uh on the the the landscape of of the tokens is is is a very interesting inflection point. Um and the the AV win proposal is um that has been for us a a way sort of a to try to think about like a how does the token value capture work? And there's there's obviously like when you

go all the way back to the early days, you know, the the project itself was funded by uh an ICO back in um 2017 um when we were uh Eatland uh at that time and uh very experimental project, one of the first uh would say uh DeFi uh protocols uh first lending protocol uh at that point and more of like a peer-to-peer model and at that point the the the idea of uh token token economics uh token value capture and and and whole DeFi space was completely different and obviously over the years things have uh been evolved uh quite concretely. When we think about um at that point when uh

things started off for for Eatland, our sort of a main idea was that how do we actually uh are able to build this uh sort of a infrastructure that could be connected to any sort of a use case uh in lending and and down the line could become um a a a backbone for uh financial systems. and and and the the same way as for example the pro internet protocols like IP and HTTP are servicing everyone and and be as uh little as opinated as possible. So effectively everything started with uh with experimentation and overlaps. Uh back then as the EANET team we were the contributors of this uh systems and over

the years obviously 2020 came we launched uh the first version of the uh of a protocol which which was fundamentally very different what we did uh in in the past. um and then followed DeFi and that 2020 uh year was fundamentally uh important for us not just because uh the the protocol itself started to get traction uh protocol market fit but because that was when a lot of these uh initial uh sort of uh uh governance functionalities started to uh be built into the system. So at that point uh AIP1 uh was something that we uh

released and AIP1 also defined uh effectively what the token governance is for the a protocol what does it do uh what's the purpose um and also what is the value capture of the protocol and it's stated uh effectively that um any sort of uh protocol revenue that's that that revenue that is created uh the protocol takes portion of that uh revenue into the Dow Treasury and then the Dow Treasury can be used to fund different sort of initiatives whether that's uh further development of the protocol uh further um uh uh research and re research as well or uh paying for

service provider such as for example risk management and and other uh services that effectively add value into the uh protocol. So it kind of like that opened the doors for uh the community to come and contribute and that year also is when uh the DeFi summer was peing. So uh you had this interesting yields uh on chain at the same time when you know it was COVID uh interest rates were low uh everywhere in the traditional world. Um and then you had these uh governance tokens on on top of it uh sort of a that protocols are are were giving uh for users ability to own these uh piece of

uh pieces of in infrastructure. So coming out of there and uh over time obviously labs has been a uh uh fundamentally important uh participant and and kind of permanent contributor in the a uh ecosystem. uh building some of the infrastructure from like the global stable coin of a V4 and so forth. But one sort of uh big thing for us uh as a big kind of a push back has been always the regulatory uncertainty.

And over the past uh few years, I think it's been uh extremely uh hard to be a a DeFi builder uh whether it's someone who is in in US or um in Europe or any anywhere any part of the world. And we were experiencing uh years of uh uh risk that came out of that uncertainty and aggressive uh policies by the SEC uh to pretty much almost every single uh DeFi protocol that was um out there and that sort of pushed a lot of the the innovation back and a lot of the adoption back and I feel like uh that also affected the the whole

growth of DeFi. So if you look at the existing uh growth phase where where DeFi is today uh let's say it's in in total 120 billion uh last year peaked at uh 220 or so billion and going few years back uh it was 200 billion. A lot of that sort of limitations uh came from the fact that uh it was extremely uh risky for a lot of DeFi teams to actually uh contribute and and push push the innovation and push the uh growth uh further. And the the the a will win proposal um uh effectively establishes a really really important uh uh uh part of

the whole um uh uh story is that um the labs you know the the labs as a as a contributor um builds products and and wants to be su self sustainable and and wants to create a product layer that then acquires uh users and then increases the economical activity of the of a protocol. Um and one of the things that has been really challenging is to understand that well where does the value capture go? Does it go into the uh a token or the the the the AV apps in form of equity? Um and the second question is that so when you get funding let's say into the labs to

to basically grow these products and compete with uh the biggest uh Finex in the world um uh and and grow the protocol at the same time where kind of like the focus is going to go and how to ensure that everyone who is contributing growing the protocol are thinking and focusing on the other token and and being token and going back and forth and there's a lot of discussions in the in the past months uh about this topic and and and and DeFi in g general D5 protocols and D5 teams had to rethink uh about how to think about token value capture and tokconomics and how to go away of this model of like these are just governance tokens um you know

valueless tokens but actually these are fundamentally important businesses that are being built now and could be uh empowering the whole financial infrastructure uh over a long-term period and how do we basically ensure that that is very clear um and that's where the a will win uh proposal uh comes into place where we from a labs we want to show a extremely strong uh commitment but also alignment uh with the avi token holders and ensure that the work that we are doing is seen going as a value capture at a 100% rate on on anything that's basically we're

building on the product layer directly into the DAO. So it takes the AIP1 which basically gives a mandate that the protocol generates revenue and that revenue goes uh into the avid treasury into also that products that that are being built let's say outside of the the protocol uh by ava labs uh 100% of that revenue is going to the avid uh treasury and that is fundamentally a big thing because it unlocks a completely new streams, not just a one stream, but streams of revenue outside of the blending business model into new sorts of business models and also on the

product layer. And that is a big benefit for what this proposal actually does for uh for the a uh ecosystem. >> Yeet is built for big moments, the most fun you'll ever have with your crypto. Go to yeet.com to yeet into your next game. Not your keys, not your coins. From the team that pioneered cold storage, Treasure has just released its new wallet. Guys, if you are still using hot wallets in 2025, 2026, you are missing the entire point. Secure your coins. Get a treasure at treasure.io. I I think that traces through the entire history leading from AIP1 all the way through to a will win which is

transcended several eras of DeFi. Um and you know we were also early contributors of DeFi. You may not remember a grants was actually the first the first dollar that the the rollup made way back in 2021 I think for doing DeFi education. And so you know we've kind of grown as A's grown and as the space has grown and I think there was a tremendous effort to decentralize early on could have been due to regulatory we there was also a strong belief that decentralized governance was the right path to organize a community working on an underlying protocol layer and we were fighting forces of centralization and intermediaries.

um you know there was a lot of things that happened in the middle which which you explained in AIP1 and and now we find ourselves at at a at a point in time where we're we're seeing the the decentralization that spread a lot of people and things out and diffused all of this operationally. We we're seeing a lot of it consolidate and come back. And here at the world we've been talking about this unification and and that's really what the proposal feels like. It feels like a unification of labs and DAO and through the proposal there's several points that I think we want to get into.

One of them is that you know Aid Labs is making an ask. I believe the ask is I want to make sure that we we get this right but it is for a certain amount of USDC and a certain amount of A and so you know if the DAO is to you know commit to this ask and and uh you know provide this USDC and this a to a labs in exchange for 100% of the revenue generated via the protocol and some of the other products from A. It almost feels like, you know, the Dow is kind of buying out the labs. And so, could you unpack the is this the right way to

think about this? The it's this exchange of money now for money later. And you know, if if we get into the numbers here, I believe the revenue that we saw in the in the in the thread that A posted was upwards of hund00 million throughout all of uh I believe it's per year throughout all of these a products. Um the the cash and a that the labs entity is asking for 75,000 a uh at these prices roughly uh 8 to10 million.

It's a significant portion of the Dow's a holdings. And then there's USDC um of which the A Dow holds $161 million. Uh and it's asking for 40 the A labs uh is asking for 42.5 million of stable coins, 25 million in primary, 17.5 million in milestone grants. And so this is a substantial ask, but it seems as if the A DAO would recoup this investment in a short amount of time, perhaps even one year or less. Is that the right way to think about this proposal? And can you just verify this math that you know this this investment that the Dow makes in labs would get

recouped in a year or two? >> Yeah, the there's of course there's different stable coins. not every everything is um in the um USDC. So there's different proportions of of that and and assets and and typically stable coins in the treasury are also um earning uh as well. And something to to think about is that um when it comes to the the a uh treasury effectively it's not um a static treasury like in many of these Dows. So throughout the years uh over the past um uh eight eight years we've been able to effectively build uh a uh a a a protocol um and and an

infrastructure both both a and a native go stablecoin uh into a place where it's revenue generating um very few dows and very few protocols are in the same state um as as as for example um now but fundamentally uh that means there's ongoing revenue. There's a one important part of that is that uh the protocol has um usage um and it has users and that is something that the a labs uh develop protocol layer is uh is supporting and driving that traffic and experience and and so forth and and the way we think about it is that um our original

approach was that um maybe actually the the products of the other labs can actually be self- sustained and developed outside of the protocol. Um, and that's a way to effectively uh grow the products uh fund raise and and really compete on user acquisition at the same level as for example a lot of these uh fintexs are doing. Um but at the same time you get this sort of same problem of uh uh value capture which is uh fundamentally uh an a a uh uh place where you have to think about is is the value going for example into the equity

or into the token. And the way to solve this is uh kind of like an interesting and and uh a little bit similar model as UNISOP unification uh proposal. Um so there's some uh ingredients there but uh a bit different model uh is applied here. Um so in unisoft unification proposal they are foregoing all the application fees to basically drive traffic uh into the protocol and also monetize on the protocol level. In the a will win proposal, the um uh the the the the trade effectively here is that the protocol itself is earning and the

protocol is uh creating revenue and with good treasury management um that revenue is is is managed well and treasury is managed well. But at the same time as Aalaps are is building these products uh it generates additional revenue and then the idea here is that that additional revenue is now at 100% rate um directed to the Avidal treasury. So that effectively means that um the the the uh as the products are growing uh which is effectively uh a app and a app is our new offering that is fully tailored to

consumers because we believe that the only way to get DeFi to to mainstream u is by building experiences that feel like fintech. So abstracting away wallets, uh gas fees, uh networks and being able to link your bank account into a app and deposit in few seconds is the experience that um is is uh passes the the sort of a fintech test. Uh then obviously there is a pro which is um about the sophisticated DeFi experience but also close connectivity to banking.

So you can pull funds in additional security on the wallet management and you can connect your own wallets. And the third product is the uh a kit which is more on the API SDK level um enabling integrations of the AV protocol in a safe and secure enterprisegrade uh level um for for example FinTex and traditional uh institutions. Then there's obviously the the horizon market which is a RWA uh uh play that we think is is going to go grow substantially. So the way to think about it is that um these products will uh effectively grow the revenue for um a because we grow uh

the user bases uh user activities and that grows the economical activity uh for the protocol going directly to the consumers servicing uh sophisticated uh DeFi users and then enterprise uh uh sales for uh Finex and by foregoing the revenue uh of these products that could be as big as any sort of uh uh fintech in in the future. Um the trade here is effectively that the avid funds a budget annually for uh a labs uh not just build and maintain these products at a extremely high quality um but also to to grow these products and invest into

customer acquisition. So the way to think about here is that um the DAO effectively is investing into uh protocol innovation uh R&D and product innovation and and and product growth and that expands the uh revenue capture surface and also the the the velocity of of of revenue uh over the upcoming uh years. And fundamentally what we're saying is that aaps will keep building forprofit products and expand the profit surface but all the profit is going to go to one place which is the a token and by doing that uh that creates uh uh that removes

the uncertainty uh between value capture and that makes things more uh simple for anyone who are thinking about the ava token or thinking about thinking how are thinking how do um how the relationship with the labs and the uh the protocol the DAO and and the token holders is is is structured um and I think that's that's a uh really good model because um what I'm very excited about is also to look into the traditional uh public markets and think about what kind of things we can bring from there to actually make tokens that are running uh incredibly uh potential

businesses on chain and how to improve those governance uh mechanisms uh for the token holders and I think that is a uh really uh interesting uh topic as well. >> Yeah, I mean I think the industry wants tokens with clear value acral mechanisms undeniably. I also think that this proposal from the more institutional folks that I've just spoken to about it in the last 24 hours uh makes the token much more investable from an institutional standpoint which I think is very important and and and it just kind of shows that the future of these token markets are going to start to look a lot more like public equities right quarterly earnings calls quarterly reports investor relations capital

markets teams uh onetoone engagement with large holders you know more top- down hierarchical uh decision-m on product as a as a competitive advantage just kind of just this different regime is enabling a different structure. So you've talked about kind of how this proposal will allow you to go and compete with some of the largest uh fintech applications with your full product suite. You also you also talked about the continued funding development and execution from the the lab side. I'm curious how A V4 uh pertains to this, right? Why this is such a central part of the proposal uh and what V4 unlocks from the A

perspective as it pertains to you know the token being the central part a token-entric future why that why V4 creates a interesting dynamic for the token. No, you're you're absolutely right also in the sense that um you know the best execution environment for uh ideas and businesses um is is typically startups and scaleups where you have a very little friction you can move really fast um and that type of an environment is where the products should be. So uh decentralized governance govern governance works really well when you want to add resiliency uh additional accountability and and transparency and

and that's where basically um in other protocol's case uh you have this uh uh system where every sort of a parameter that goes into the protocol asset listing has a prevetted process and that ensures that end to end uh the protocol is safe and secure and that's why a as a protocol is is is a leader because the risk is managed really well and there's checks and balances when it comes to the the proto player. Um you can't really use uh decentralized governance um uh voting and you know uh for example what kind of a features are should be voted into an application or what kind of things should be on on a landing page and and whatnot. you have to operate uh

in a sort of uh autonomy, product autonomy and and people who build the best products in the world uh you know and now and in the past and you know if if you think about like Steve Jobs and and and a lot of these uh icons um they have a lot of uh product auton autonomy so there needs to be this sort of uh um independent decision- making of how and what needs to be built on the application layer. uh and iterate quickly and and take risks. So, one of the things that I'm uh really a big fan of is is that we never know what sort of initiative or a product or a feature actually is going to be um a groundbreaking feature. So,

for example, when uh we were developing the uh a uh a v3 uh we added uh one interesting feature which is called uh e- mode. So it's sort of an efficiency modes where um uh you could get a a really high loan to value ratio between assets that are corre correlated and that works really well for uh users that are looping these assets and and that created a lot of uh uh net deposits for the other protocol. But when we were brainstorming about this feature uh and and and uh implemented it, we didn't understand exactly the impact and it turns out it was a really good impact and some features have less uh impacts uh but the main point is that you never

know beforehand. So you have to keep innovating and iterating and AV4 um follows the same sort of innovation pattern that we've done uh almost the past decade where uh we build things uh but we build in a way uh in a in a structure where we can actually uh add new add new products and and features and test them out. So V4 is kind of like a combination of the best of the both both worlds. So we have uh what B3 exactly does really well uh at the moment but also adding a sort of uh modular architecture uh with the hubs and spokes where hubs are where the

liquidity is concentrated and spokes are um borrowing configurations where the hubs are giving credit lines to those spokes and spokes can be any sort of even custom uh implementation. So what it really enables is that you get the same sort of a experience as you get uh today but you can bootstrap really quickly new uh collaterals and use cases uh with uh proper risk management uh by giving new credit lines from uh from the hub and I think av4 is something that uh uh is is going to be a a gamecher as a sort of a baseline but what I'm even more interested is that if you look at

DeFi today and and we're sitting at 120 uh billion uh TVL mark as an example and picked at 200 and few years ago it was um at a 200 uh billion peak. What that really tells us is that DeFi has been able to prove itself really well through resiliency. Um on 10 of 10 of uh last year we liquidated over um 200 million worth of collateral in in in in the time frame of minutes and uh we liquidated um over a week ago uh half a billion worth of collateral in a period of a week. So these crypto assets has and lending against Bitcoin and Ethereum has proven sort of a resiliency. So if you if you

can use this type of infrastructure for uh the most s sort of dynamic assets um that means that um uh you kind of like a have battle tested uh the infrastructure and with a v4 we can actually keep expanding that use case. So whenever there's interesting native primitives that are coming into uh from any any part of DeFi, we're able to iterate quickly on board them uh without uh taking excessive risk. Um and at the same time uh we know that we need to bring all the value into onchain. uh and then that comes from tokenization which can be supported with um uh av4 but also

in the future the lending for example might not have any sort of a tokenization but you need to have some sort of a custom adapters to adapt to that use case so that's where the monolith the the modular model really uh uh plays a a a a very uh significant role so I'm very uh bullish on on uh expanding a into lending against u traditional assets like what we're doing with uh Horizon lending against uh uh RWBAs but also I think that um if you look at where things are going over the next uh sort of uh decades um you know we we have AI we have a uh we basically

have almost unlimited amount of intelligence at anyone's disposal um we're going to have extremely cheap um energy uh from solar. We're going to have batteries. We're going to have robotics. Uh we're going to have a lot of uh uh a lot of resources around everyone that really uh makes uh labor abundant, intelligence abundant, energy abundant, um and and really kind of like a creates this sort of a uh new world. and getting towards that transaction transition we need financing right so if you look at the next uh uh maybe 50 years if we are able to use a as a protocol to finance

sort of uh uh the future maybe we will grow it uh bring it faster by 10 20 uh uh 30 years and that is for me personally more interesting than you know uh tokenizing uh anything that can be already traded in a traditional exchange or mortgages uh uh and and so forth because that is basically the future we want to bet on and for a vision going uh for the next uh uh decades you know we want to have a futurep proof vision where a lot of the collateral is coming from basically these types of high quality yield sources and that can be uh distributed through the a pro the a kit all the way to the whole uh user bases so there's a

lot of connecting dots between the product layer a v4 um and there's going to be a lot of quick wins but the long-term horizon here is that uh a should be used effectively to to finance the whole kind of a global transition into this uh new world we're we're starting to head towards >> looking for yield that stands out infinifi gives you just that deposit stable coins and earn far more than the current savings rate infinify is a battle tested reliable defy platform that is ready to go. Head to infinifi.xyz.

Havachi is fast and private per trading secured by ZK with Celestia underneath. Go to habachi.xyz to start trading today. Estani and I think you make a really important point. We've seen decentralized organizations become oified for better or worse in the past, right? You you look at Bitcoin, it's effectively oified. Uh you look at Ethereum, it operates on you know timelines that are very very long. Um lending is still a very active and hyper uh hyper innovative segment of this industry and a has the chance to do something really really special. um the way you put it is essentially finance

the future. And I think there's an incredibly powerful um effect that this could have on not just the AV ecosystem but DeFi and and finance at large if we can effectively bring these tokenized assets on chain and extend credit on these assets and A is rising through the ranks as one of the top banks in the world and this is the job of banks is to finance the future. A has the chance to extend credit and create a wealth effect for high quality assets in exogenous sources of yield. And this this is a really really special uh opportunity and time in the market. Yeah. I also think

that um the margin really comes for from like not being I I I think like the businesses that are run on uh sort of like um bringing full access run on like a very thin margins let's say like if you have a brokerage uh that allows any access to you know trading any any stock for example um or any fund investment and so forth. If you're a lending protocol and you just enable any sort of assets and lend the trust that you basically create wi-i with within the audiences um I I I think that's form of like a accessibility business have um a very low margins and I think where the the the margins are higher and and and

the the mode is more defensive um is actually when you have a bit more opinionated or quite an opinionated take on um what sort of asset should be tokenized listed as a collateral uh borrowed against um and what is the composition of of the yield. So the the way I think about it is that the the the the business models uh whether it's onchain or offchain that just purely like provide any sort of access can be outco competed really quickly uh with the right incentives, the right amount of funding uh product execution and that competition is fierce for very thin margins and that creates a very very thin uh value uh layer. But basically a

a setup where you have a a really opinionated take on what are the uh the best financial um opportunities uh in the future have high quality yield and high quality uh user bases. You end up in a place where you actually have a lot of dispensability and that translates into the branding uh and that allows also to capture additional revenue. That is why the uh a app a pro and a kit are extremely important for uh the aid is is not because it only allows uh to ensure distribution whether it's consumers uh fintex and institutions existing uh defi users um but it allows to actually build

upon that margin uh and add upsell to the users and and build better products and also products and features where you and move faster and monetize faster because protocol development is is of course uh moving much slower pace, right? And that is kind of like a why this setup uh where the not only the protocol layer but the product layer is bringing additional revenue streams into the other DAO is such a uh powerful example and focusing on really good products itself is is really important and I think in DeFi we kind of uh lack on on the idea of building uh extremely good uh products and uh distribution and we are trying to sell all this sort of

uh uh infrastructure to each other and and FinTex but in in reality a lot of those sort of uh integrations will get commoditized. So that is why the the the sovereign sort of a protocol layer is important for for a >> and that kind of explains there then why this protocol includes brand brand governance right I mean maybe you could talk a bit about that the A brand and why you feel formal stewardship of the of the brand at this current stage is so important >> yeah I think it's it's really important because um in the past for example a labs and you know a uh Aidawa and a token holders they they effectively

share a brand surfaces and I think when you know we have a setup where basically uh any usage of the brand or branded products the revenue goes to the to the u ava that creates a sort of a revenue and product alignment but more importantly is that we want to ensure that um even if a labs will exist for example in the future that the brand is protected uh in any sort of for any sort of a uh outcome and that that is why it was important for us to to put into the uh same proposal and that brand is also used for uh growing the the the a products uh on the product layer growing

a v4 and and also the reason why uh we have all these elements in the same proposal because they're all interconnected so uh a v4 enables a lot of these uh revenue streams uh the branding is used to grow um the product layer um and and and also um that that sort of uh reason is is is basically uh there. So I think uh in overall uh this proposal should set a uh extremely strong foundation on how we from Avala's perspective are uh working uh uh as as part of the DAO. So, so oblapse is part of the DAO but working uh towards like a

one uh direction and and and one goal. So, it it highlights the importance of being token centric and and sending that signal uh to everyone. And that's just the baseline and and then the next steps is is thinking of upcoming years of like how we get get to the next lay next sort of uh improvements that we can do like how do we add more transparency protection and um those kind of things that already exist in the traditional capital markets but taking the good parts and leaving the bad parts out and applying them in token world because I truly hate the narrative of like tokens are worthless because you know they do control an extremely important

infrastructure. But this infrastructure is not going to be that valuable if we don't go beyond um these exa these existing uh crypto assets. You know, if you want to trade all the value in the world, yeah, you need to go beyond uh the crypto value. You need to go into any value that is is is basically a potential target. >> Yeah. And you know you you stunning you speak about the the product layer, the protocol layer and the brand governance. All of these are reinforcing one another. Um another part of this proposal is the cur the curation of a of a foundation an independent foundation

that would hold the a IP and the trademarks uh and some of the branding rights. How will the independence of this foundation be assured to the A DAO and a labs? What do you see for the structure of this foundation? Maybe who do you see should be on a board for this foundation? And if there is a disagreement, you know, between A Labs and and A DAO, how do you ensure that this foundation makes the correct decision on behalf of A? Yeah, the independence is is the the the key there uh element and I think independence is something that is you know established also in in traditional

uh boards and and there is different ways to do that and and obviously like a labs is is part of ao. It's sort of a a permanent contributor uh into the a uh protocol. we get paid for uh doing certain things like building the AV4 and previous versions and uh have some sort of uh also marketing uh budgets in the past and and here it's it's more about consolidate consolidation and and and basically going uh effectively for a growth mode from a a startup uh mode and of course in in Dow there's there's uh always various different opinions and you know the strongest voices don't really actually own the DAO and that's

also like the beauty whether it's Cyclops or someone else um and that doesn't really that that is the beauty of actually um uh Dows is that you know anyone can have their voice and opinion but what truly matters is what is on chain uh and and what basically decisions are are are made and it works in the same way in running these traditional businesses uh as well uh end of the day decisions needs to be made um when it comes to uh execution in regards to the the actual uh foundation. Um there needs to be just purely uh independence uh from from any uh any any party in including u uh labs and everyone else.

>> Donnie uh just a couple more things just coming back just to finalize and and crystallize the the economic structure here. Could you just give the audience a quick run through as to how directing 100% of the revenue from a labsu built products will change the existing economics of a I think a lot of fundamental analysis are really excited about a lot of protocols and tokens that are redirecting capital back on a pro programmatic consistent basis. Maybe you could just talk through like what that what your current model is and then what you expect the changes to be in the economics in in the flywheel as a whole uh you know if this goes through.

>> Yeah. Yeah, the existing model is uh sort of quite quite quite simple and what we established um uh back in uh 2020 with the IP1 uh which is simple that uh revenue uh borrowing revenue comes uh into the protocol and portion of that is taken into uh the aid and then that's sort of like one business model where users supply stable coins and they're borrowed and and that generates interest. There's also the Aative Go stable coin which is sort of a second line of uh business um where the A protocol itself operates uh at a takes a margin of of the lending um in go

lending in in in in the most cases and in the of the core market there's for example 100% of uh u margin that goes into a DAO because there's on the borrowing side because there is no uh LPS as technically the the A as a protocol is the um LP there and what basically happens with the A will win proposal is that in some ways a third uh business line is is created.

Uh and this third business line is um anything that is created on the proto layer uh by a labs. Um so that can be for example the existing uh swap fees that has nothing sort of a hasn't any relation to the protocol but are simply swaps on these user interfaces um and also position swaps. So if a user wants to um swap one asset that they have as a clut to another one or swap one dep position to another one um they generate fees and those fees go into the of a DAO and it's about um 10 million in fees annualized that uh is is going to the to the DAO but also any sort of uh revenue

streams we might add um uh uh even even further with new products, new launches uh and something for example we're working now in the AVA app is a a card. So for example any sort of a time a user a user is swiping their card a portion of that card swap is going to go to the aid. I think it's quite cool because you know it's a it's a very sort of a rare uh model where you think you are doing as a customer of chain and you're generating revenue that goes all the way to onchain uh that benefits uh token holders. So fundamentally um it allows labs

basically build products in autonomy add monetization features as long as they go directly uh at 100% uh into the DAO and I think that is really really powerful because on a protocol layer we can move faster uh and we can increase monetizations faster and obviously V4 on the on the protocol layer expand some of these uh revenue features for example we have a uh reinvestment feature that we are add we we added in the A V4 protocol. So when the rates on a are lower than the risk-free rates, uh the float part of the the float of the pools can be reinvested into um treasuries or onchain sort of a

risk-free uh products like Asco and and and and these types of uh products and that generates more revenue and then with the spokes you can add additional use cases um and those can range of uh using LP LP positions as collateral to lend uh go against at a 100% margin. Um or for example um borrowing um uh lending funds into qualified custodians where Bitcoin and Ethereum is used as a collateral to borrow. So this sort of OTC business is still growing um outside of D5 and this enables that revenue stream to go back to uh back to D5. So there's there's there's certain elements

on a v4 which expands this uh um revenue uh layer uh on on the on the protocol side. But for me the most exciting thing is is that now we actually have outside of protocol revenue features on whatever the users uh might be doing. So um it's going to be really interesting few like a couple of years to think about what do we add into the app to build more revenue. >> Yeah. Stan, last thing for you. What happens next if the DAO ratifies this framework? And what can the community as token holders uh expect in terms of follow-ups? Kind of what can we expect to come next?

>> Yeah, upon ratification the proposal um there's uh there's obviously you know continuous development of uh uh there's a v4 launch that is coming. So that is going to be a a big thing. there's going to be a follow-up ratification on the uh parameters uh for a v4 um and also on a continuous basis of a labs is sharing u in form of accountability reports and continuous uh reports to the a community. So one of the things we want to ensure that there is a high degree of uh transparency and accountability um and I think it's uh very easy to do because all the focus is on the token

centric uh model uh which simply needs which simply is easy to point where we have to grow where the growth is going and and what do we need to do to achieve that growth. Um and obviously the vision is is uh something that takes uh uh few years to actually develop. uh but a lot of these product launches are happening uh very soon and and we're very excited to bring D5 to millions of users and also get a integrated into the one of the biggest uh fintex um and also still not forgetting the the the sort of uh you know the the sophisticated DeFi users like myself for example um and

providing them the best experience um so we have to innovate uh quite a lot uh and there's a lot of competition Uh but also we're going to see a lot of competition coming from Fintex. They're way more better funded. Uh but we have the expertise. Um you know we re rely on smart contracts. We rely on the A protocol. So there's a lot that we can actually build and and win at the same time. >> Yeah man. A will win. Stani thanks for your time today. Congrats on the proposal and I think that the market has been the market is absolutely begging for this from tokens from the market at large uh given the I mean just the the

state of prices being down but just we are we are ready to kind of be seen in this more mature sophisticated light as it pertains to valuations comparables to to traditional markets as well as just the revenue potential for onchain onchain businesses and crypto enabled businesses. So study, hope this goes through. Hope everything goes well. Have a great weekend, man. >> Thank you. And a will win. A >> will win. Thanks for coming on. Cheers. See you studying.