Zubin Koticha: Opyn – The Insurance Platform Which Protects Your DeFi Deposits #344

Transcript

this is epicenter episode 344 with guests zuben co-teacher hi welcome to epicenter my name is sonia agarwal and today we have on with us zhuben Fertitta who is the co-founder and CEO of open which is a company building decentralized options on top of aetherium so this is actually a very interesting episode for me because Zubin as well as both of his co-founders a partner in Alexis we go way back we were all students at UC Berkeley together where

we were all part of this student organization called blockchain at Berkeley and we used to do a lot of stuff together a lot of research and you know we would compete in hackathons together and I dropped out to start working on cosmos but the three of them continued working together on a lot of cool stuff especially with proof of stake research and they eventually ended up forming this company together and on top of being students together I actually was roommates with both Zubin and a partner back last year when we lived in SF so it was really interesting because I got to sort of watch the evolution of open when it started as you know from just them wandering and

looking for an idea to actually end up building and iterating on different sorts of product products until they finally found the open which the current protocol which really found this sort of great market fit and it is just exploded in popularity in the past couple of months so what open essentially lets you do is it lets you get insurance on events on aetherium but not using the way you might traditionally think of insurance where you some sort of mutual program where you have an appraiser that kind of you know judges how the appraises risk

and whatnot instead you know there's this notion in aetherium where you can tokenize anything right and so they use the ability to create options on tokens as an insurance mechanism so let's say you want to hedge against maker smart contract risk you can buy your die and hold die but then what you can also do is buy insurance on that die so even if maker gets hacked you can always sell your die and claim insurance on that so we go really into depth in the episode and go very deep on to all sorts of things especially you know if you're if

you're into finance this is this is definitely an episode for you we talked about you know some really cool stuff about like it's a really technical stuff really about how price discovery of options premiums works and just in like you know differences between American versus European options and what edge cases they might be actually why they might be priced differently and we talked a lot about obviously the open protocol and how they built this on chain and about how they do capital efficiency of doing the protocol as well as you know some really cool stuff that we didn't even get to at the end where we'd slightly touched on it where they are building a new sort of automated market maker similar to Yunus whap but

it's called the constant product volatility AMM it called Vega swap and so you know a lot of math and a lot of finance so if that's you're sick you should definitely check out this episode so enjoying so today we have on with us Zubin cotija he is one of the cofounders of the open protocol and very close friend of mine and thanks coming on the show Zubin thanks for having me I'm pretty familiar with your background of how you got involved in crypto but could you share it with the rest of the audience I really just got lucky late 2016 early 2017 I was having a bunch of discussions with a bunch of friends on Finance which is actually my

passion my intellectual passion is financial markets I just think they're so exciting there's always something new happening it's kind of insane to me how a market price is a single number that's a determinant of sometimes millions of different human interactions and to me that that's incredible having this kind of passion for finance I was studying at Berkeley and in in 2016-2017 I was also studying both kind of economics finance as well as computer science I discovered crypto and specifically aetherium and I realized I'd solved very fundamental issues that existed in financial markets and I realized it unlocked an entirely new

world being able to customize assets being able to have like a really quick settlement time being able to have much lower barriers to trust right because in derivatives markets there's actually way more kind of questions of trust than there are on spot markets so I think that's actually a really interesting consideration going forward and once I discovered the crypto I realized I don't want to go into traditional financial markets I want to do this full-time for the rest of my life I want to build up an entirely new financial system built on top of aetherium and ever since then I've been lucky to say that that's my full-time work but it doesn't feel like work it hasn't felt like work for a second you co-founded with them two women upon and Alexis tell us how you met and came

to co-found who covers what in the company with sunny Alexis Aparna and I were all part of blocked in at Berkeley kind of in like 2017 heyday and it was a group of 120 ish students who were all like super passionate about crypto I think at least 10 people ended up dropping out of Berkeley just to pursue crypto full-time and it was like the no pun intended epicenter of a lot of what was going on in terms of the college a scene when it came to crypto but they must have hated that student club I mean losing all those good students and you know having them drop out Berkeley both hated it and loved it I think it was like a very weird

relationship where we were both a student Club we were kind of doing like real things with companies in the space and so we were you know many times those were like paid gigs and so it's very strange what exactly we were but I think Berkeley may have hated it but crypto generally benefited a lot from it and at blockchain at Berkeley I met Alexis and Aparna who were two of like the most like brilliant and hardworking and kind of passionate minds when it came to this and we just realized we worked really well together on very similar problems we were all interested in proof of stake at the time and we were doing research on that and it just kind of ended up being like we would work all night

together odd like 3:00 4:00 in the morning every single day after class on prove a state research and wouldn't have anyone else's as my co-founders who covets work in the company with them the three of you all three of us are technical and that you know that really helps when it comes to building up a product in crypto and the way it is right now is that Aparna is a CTO I'm the CEO and alexis is the chief product officer I would say like we're too early to compartmentalize what things are happening in a very clear way you know the startup you're doing everything together at an early stage protocol but generally Aparna's in charge of like architecting the code alexis is in terms

of designing front-end related stuff and i kind of dip my hand in both of those worlds a little bit so no it's a nice thing to have everyone being technical we've recently actually hired two additional people to come on and we have a few contractors as well they're helping us and you know we've kind of kept that technology 'those where everyone can code at the company could you tell us a little bit about how the product evolved so you know before you settled on the current product of like you know options you were working on some other stuff largely in the deep eye space can you tell us a little bit about what you started building there and then why you pivoted to focus on the current product after kind of working on this

proof of stake research we started getting like really excited about d5 we saw that this was the real place where large amounts of usage and innovation was happening and for me this was like perfect because I just love finance for so long so when dphi started to come about we decided you know let's kind of work instead of just on pure research like actually implementation take a lot of the crypto economics research that we're doing earlier and we see defy is almost like applied crypto economics actually building out these systems and using mechanism design to build things that people use and so at first we started building a margin trading platform on top of compound and yoonah

swap and you know people were pretty excited about it it was something that eventually got you know hundreds of thousands of volume dollars in volume per week however for us you know at that time dy/dx started to launch this was pretty early on actually this was before compound v2 was out that we started on it and so dy/dx you know launched and start to get serious volumes and people started using kind of maker and in saddam with maker for the same purpose and it was something that had a lot of kind of intellectual passion for us it was something that was like really really interesting but we didn't see like a long-term path forward in terms of building something with network effects

in terms of building something that actually helped the community significantly over what else existed out there and so kind of along this journey we saw that as a early example of defy composability she's you know purely being built on top of other protocols if something bad were to happen to either you know swap or compound from the contractual level everything would kind of for us and our users would grind to a halt or worse you know our users would lose money and so we saw that there's like these kind of issues that come with composability where there's this entire stack of things from the protocol to like consensus to the actual value of ease to compound itself to there's these this entire level of things that could

go wrong and any one of the dominoes would cause like a spiraling effect for us we started to think about how can we deal with these risks that are compounding and defy no pun intended and mitigate them for the user in a very real and like you know usable way that's where open came from so you started with like one to solve the insurance problem it more so than like starting from the direction oh I want we want to build options on chain and you came to the conclusion that best way you figured out how to solve this a torus problem this throughput option so can you tell us a little bit about why and how this works and why do put options help solve insurance and even what are options in

general I think there's two parts to unpack about that the first is what are put options and the second is like what are the design properties of insurance so let me start with the desired properties of an insurance contract especially one on chain let's say we have any asset right let's say a see token right representing deposits on compound insurance is we want the value of that asset to always stay kind of above some minimum threshold another way of saying that is like if we put a bunch of USD see on compound a thousand US CC and then we got a C token we get a thousand dollars worth of C tokens of see USD see if

compound gets hacked if there's some kind of liquidity crisis or liquidity crunch a truly ensured position would allow us to no matter what always redeem our C token for a thousand USD C right and you can again have different levels of like premiums and coverage you can say all right no matter what I'll be able to always redeem 900 US DC or 800 USD C right and so this is the way we're thinking about it we're like is there any way to make this like as protocol permissionless as possible without minimize the use of any Oracle's or any individuals to figure out if there was a hack or not and that's when we came up with the idea of using options as insurance and the ways that it works is

and this is very much the way that it works in traditional finance is that if my C token for whatever reason gets loose value whether that's a protocol level hacker or whatever I always have the right to exchange that see token with another counterpart party on a different protocol for a certain amount of value let's say a thousand US CC so no matter what I can use my C token to get my thousand USD see from compound that I deposited there or I can use this other protocol that you know we use as insurance if I can't get a thousand US you see out of carbonic exchanger for my counterparty of this insurance contract now what exactly is an option so derivatives in general financial

derivatives are kind of any asset that derives their price based on the value of some underlying asset right and the main kind of derivatives you know or maybe let's say the ones that come spring to mind quickest or futures and options and they're a little bit different but let's talk about that it's easier to wrap your head around options if futures are well more so a futures contract is basically a contract that allows you to swap two assets at a specific ratio or price in the future and so let's say Sonny and I say hey you know Sonny I want to give you some Eve I'm gonna sell some ease to you but I don't want to do it today I don't have

any today tomorrow I'll have some meat so let's do it tomorrow at the price of two hundred and thirty dollars per year which is actually the current spot price apiece and Sonny says yeah that sounds good now in the meantime if Ethan price then I'll still be obligated to sell you my 1/8 for two hundred and forty dollars or two hundred forty US DC or two thirty five or whatever number I said earlier I probably should have chosen more round number except two thirty earlier but and that specified price we have to make that exchange tomorrow both of us are obligated to do that and if Ethan's gone up in price well you know let's say eath is trading at five

hundred dollars on the market i still have to give you my eath for two hundred and forty dollars when i could have been selling it on the market for five hundred right similarly if eath has gone down and prized a lot well then I'm selling you my Ethan get two hundred and forty dollars in exchange when on the market I could only get a hundred dollars in exchange now the key thing about this is that we are both obligated into this transaction tomorrow and it's clear that in both of the cases I talked about whether it goes up or down one person is either getting the eath buying it for very cheap or they're buying these for very expensive and on the other side one person is selling their youth for very cheap or for very expensive compared to the

market price if you could think of it almost like in this future we already did the transaction today we're only we just you know the execution is delayed like but we've already sort of agreed upon all the terms of the deal already at this moment of time there's no further decision-making that needs to be made yes exactly and technically sometimes you can get out of the features contract ahead of time and there's actually a difference between a forward contract which is actually what I really described in a futures contract where there's like actually mark-to-market every day but that's kind of all details it's exactly as you said right and the key thing to note is that on that future date someone's going to be upset right both

people are obligated someone is selling their youth for to cheap or buying it for too expensive someone is on the bad side of the trade because you know both people are obligated unless the price remains stable unless the price remains exactly stable yes exactly for an options contract it's a little different where one site is obligated and one side has a option right has a decision to make whether or not they want to make this trade in the future so Sonny you and I can say you know Sonny I want to have the right to sell you eat at 240 dollars tomorrow but I don't want the obligation to do that right so now you're in the state of obligation where I can make this choice whether or not I

want to exercise whether I want to make this trade for 240 tomorrow and you will have to do it you will have to oblige me no matter what and so clearly in life it's always better to have more options to have more choices and so the person who has the option whether or not to make the exchange needs to be paying the other person to take on this ahead of time instead of like a futures contract where you usually settle it at the fair price right you say like okay let's take today's price and then tomorrow we're gonna actually make the exchange with an options contract your to get an option you have to pay the other person and so we say someone is

buying the option they're gaining this option to make a transaction the future the other side is selling this option or writing this option and they're making money up front a priori in order to take on that obligation so it's a little bit different there's no cash flow in the beginning and a futures contract and there is for an options contract and that's the price of the option or the premium of the option if I turn this around so you said you wanted this to be used for insurance so basically I pay the premium which is the insurance premium and then basically I get a payout if the event happens if the price falls below a certain price because that's when I can exercise the option and make the difference from you

to the current market price can we talk a little bit about how options are actually traded in the legacy financial system because I mean they're a big thing and when you say insurance in my mind I immediately think for almost all kinds of insurance you actually need an insurable interest right I can buy fire insurance on my house but I can't buy fire insurance on your house and I mean for good reason this is the case for most forms of insurance in the traditional financial system in US how much our options used as a speculative tool and in US how much are they used as a mechanism of insuring a interest I can imagine they being a farmer and having

an option on like the weather or something but can you kind of put numbers on this for us it's really hard to put numbers on something like that as you know it's a great question because for example bank could buy options which they had then go and sell to a counterparty who actually wants to make a hedge and so is the bank making a speculative decision because they don't have the underlying asset that they're trying to hedge against or are they just like trying to make like you know some small spread and sell it to a person who really wants an insurance contract so it's extremely hard to take data and figure that out but suffice to say that there's trillions of dollars of options being bought just for the insurance and hedging use case by a number of

different companies who are trying to hedge risks that they do happen right and I think you got to a main point right it's that the difference between an option being used for kind of a hedging use case and an option being used for a speculation use case is that often the person has exposure to a certain type of risk and they're using this option to kind of hedge that risk perfectly now let's take the example of the compound we talked about right if I put $1,000 on compound and then I have an option to sell my see USD scene for exactly a thousand dollars then because I really do have that money on compound and you know let's say compound gets hacked then

I always have the ability to get a payout of $1,000 through this option contract by not owning this production contract however if I don't have that money on compound but I want to make this kind of bet that compound is unstable or that there is some risk and I think it's being under priced and that maybe that's speculative play so it's very hard to put you know kind of to separate it like that but options one way to think of them as you know with the Sonny and me example one person is shifting their risk perfectly onto the other person and so usually it's the person who's buying the option is shifting the risk away from them on to

the person who's selling them the option and it's a really good way to shift risks around so there usually is like kind of half speculation half insurance is one way to think about it how are these options typically priced because basically with an insurance if I take out fire insurance on my house obviously there'll be an underwriter who has to know where I live and so on and whether I like playing with candles and whatever but I was the pricing how does it quite traditionally four options on the legacy financial system and how does it work on open also really quick do you think it's worth like kind of distilling I feel like one thing where maybe in my mind think that jumbled a little bit here is

when we were saying insurance it's almost like two different types of insurance were talking about here there's one which is what I think Frederico is trying to bring to earlier the type of insurance where I get sort of home insurance on my house is very different than you know more of like financial insurance on financial assets is this right in thinking of these as two very distinct sort of classes of things are they really actually you know joint in some fundamental way it's funny that you're saying that because I have the same impression but basically with me the distinction is slightly different with me the distinction is whether you actually need an insurer but interest whether you can buy basically what I would call a parametric insurance where because you get a payout depending on what happens which is kind

of like a bet actually so there's a bunch of great questions there that should be just sold upon so the first is something what's the difference between insurance and an option on your house well if you think about your house as a financial asset which it is and you have a put option on your house you have the right to sell your house let specific price and a fire comes and burns down your house you still have the right to sell your house at that price right so a put option still works as financial insurance in that case but people don't use options for houses in that way usually and the reason being that you don't

really get this benefit of like having a large fungible financial market being built on top of that option contract now let's say you pooled houses together and then you made kind of this real estate index and you had options being settled by some Oracle betas based on this real estate index then it could become something like insurance where there's like a large citywide fire that would still affect property prices not clear exactly how it affected or if there was some kind of other macro risk you had to guess it by this option and this could you know lead to more widely traded option or more widely traded financial market so it could be more appropriate

for an option there I think that there's a bunch of different things that are happening right the first being is it an asset that is fungible and like widely traded if it's not then maybe an option isn't the perfect thing then the next thing is is it an asset where some subjective quality about it needs to be determined by a human as to whether some problem happened right and to me something like compound doesn't seem like that it's very easy to say like this thing lost value so I will then myself sell the option and if it's easy to sell or an exchange or is it not so easy to sell our exchange right and so you want fire insurer

for house you want to be able to rebuild your house you don't want to necessarily sell your house and then buy another one next door right and so if it's low on fungibility and hard to exchange that's also something that's probably not as good to be an option it's more like traditional insurance but the kind of notion of a put option as insurance is one that's like very widely accepted and well understood in traditional finance as financial insurance but it can extend beyond that in a world like crypto we're way more things are financial than they were option what's unique here in the crypto sense here is when you're using put options as insurance it would be sort of like let's say I was hedging against the price of ether going down

but where you guys are basically proposing is you can also use it to hedge against more complex types of risk other than just pure price risks you can use it to hedge against smart contract risks because let's say I hold a bunch of die if there's some major smart contract within the maker contracts as a whole open has no sense of knowing did maker get hacked but what it does do is if my die goes down in value because maker got hacked I can basically use open there so that's sort of like to put it in comparison to the other insurance products in the deep eye ecosystem like Nexus mutual for example they have to make decisions on understanding was a contract hacked or not open has no need to do have any sort of this like

introspection into the nature of other contracts exactly we take it from this group of individuals deciding what happened and whether that counts as like an insurable event and we say like no we're gonna make it kind of like a game theory question where it's only profitable for someone to make a claim or to make an exercise for themselves if some problem happened and by doing that we're you know first of all I think it's a more crypto native approach but also I think it's beyond that it's also kind of it allows you to scale much better without having like individuals looking at every single problem right and I think kind of along that set of ideas sunny you made a really good point there

anytime you have any class or value sitting on chain no matter what it is if it's tokenized especially if it's tokenized and fungible then you can basically write an option on it and so you can in this way using open like for example DX Dow write DX now is a great example of a you know important contract that actually is not tokenized so let's say DX Dow gets hacked and you know DX tile is securing quite a bit of value and how can I use open to sort of ensure my voting rights on the X Dow I'm actually not intimately familiar with

like the mechanics of DX Dow but is it possible to write a wrapper contract that itself represents voting rights on the X Dow I'll give you an example that might make sense for drink I do you wanna respond to that no because in principle the key XL they can withdraw reputation the DX now could revoke Zubin reputation just because they don't like his face into both passes so basically it's not something that has to be fair it's just a democratic process in a way in principle you could say I want to insure against my reputation being lost but then again it's not a market in the democracy in a way I think there's a better example but

it's like the kind of lack of fungibility of voting rights right they're not exactly perfectly fundable assets they can be behaved very differently through this kind of democratic process of reading code was talking about an example that makes a lot of sense so let's take a non tokenized one if you put dye in the DSR it's just sitting there right you're not getting some ERC 20 token that represents that die until someone made a wrapper contract called try and what you do is you send your value to this wrapper contract which then routes it essentially to dye this wrapper contract represents your fraction of all try and try represents a fraction of all die and

the DSR right you can essentially do this at any point and then you can you know essentially write a option on that try and so if something wrong happens with the DSR itself you still have insurance let's say like for some reason all the dye in the DSR gets locked and all the other dye is working perfectly the diode DSR gets locked if you have a option on your child and what you can still redeem your child from value so there's very many cases when there's like a fungibility of an asset that has value where you can essentially just like create a raptor token on top of it and then write an option on that does that make sense yeah I think so so can you talk about how exactly that option is priced yeah so this is a great question

so I think you first asked about pricing in like the traditional financial world this is a really good question it was actually a you know very difficult problem to solve for a long time and people use different methods to kind of simplify it and then there's kind of the meme is just like Oh price of everything using black Scholes but black Scholes isn't really a way to price an option black Scholes is a formula that takes some notion idealized notion of implied volatility which is the volatility of the underlying asset so let's say we have this option on e right if has a lot of volatility so what black Scholes allows us to do is if we have some estimate of how volatile eat will be in

the future then we can use that future estimate to price this option perfectly and that's what black Scholes does it takes things in the volatility of space and turns that into things in the price of option space so that's very complicated in a lot of jargon let me break it down a little bit is that there are a number of different ways to price options on that if someone has a kind of estimate of how volatile an asset will be in the future then that person can price an option right and there's also other ways to price options you can look at other options that are very similar and use that to figure out what the

price of a different option right and so what you end up getting is the market has different estimates of volatility and how eath is going to act and entail risks etc and the market will then out of that like converge to some market price of these auctions I mean this works especially well at getting efficient prices one like the underlying asset is really really like widely traded and the option itself is also a very popular option now how does it work for open well for options like the options on compounds he tokens like that's an entirely new asset class that never existed before and so the market kind of

you know has been figuring it out and there's been a lot of irrationality and mispricing along the way but moving towards like increasing levels of rationality after the combat options we launched an eighth put option series which like allows you to hedge against eath flash crashes like happen on Black Thursday and that has been extremely kind of consistent relative to the compound insurance and in how it's priced and it follows very close to the debit price which is like this off chain options protocol that allows you eat options and there are some horrible opportunities that emerge but captured pretty quickly by very sophisticated like market participants and essentially this market price emerges that allows

you to estimate how volatile eat is going to be in the future which is a really crazy concept you can take option prices and take an estimate of how volatile each will be going forward I'm still not 100% certain on on what exactly determines the option price so I hope you understand they basically pass volatility is a good indicator typically of future volatility but basically when you say the open options price is similar to dare but what I mean basically the volumes traded on devaron are like orders of magnitude larger than an open in my view that the open price would just follow the derivate price right because because I

mean basically but then that kind of begets the question how are the options priced on therapist and yeah I kind of understand like the market the market finds a price and basically there's probably different people who have different opinions about the future volatility of of assets and how that could go is the answer at its core it's not an exact science it's a market mechanism and the market kind of decides what the price is exactly right so you can think of it like this the way that markets price implied volatility or price options is the same way that they priced the underlying right how does the market determine what the price of eath is right that's something that's very much not an exact science and I think

you touch upon that point that estimating what volatility on the is going to be in the future is like never going to be an exact science no one has that perfect ability to press the future and as a result you have extremely intelligent minds and that are that are trading on these markets that are kind of all collaborating and competing against each other in a way that a single market price will emerge right and so that's where alpha comes from right that's where you know if an investor is able to price volatility or to estimate volatility better than all the competitors then that investor is going to outperform those other

investors right and so everyone is competing to find the best market price just like they are for ease mm-hm so let's talk about the difference between traditional options markets and open so basically on traditional options markets you need an issuer right if I can't just buy an option on anything that I want what's that like for open so basically on open can anyone kind off this new option so I said you guys what's what's the process yeah so this is really interesting I think there's a lot of things to unpack here but the main the short answer is yes anyone can list their own new option on any asset right and we made the protocol permissionless in a way that like no

there's it's quite easy to to do that there's certain like parameters you have to work within but for the most part you can build an option on you know on someone built an option on on like curve crv right so and people can build options on whatever they want as the next token len token and whatever you want you can do that then the other question you had was about like the difference between traditional markets and an issuer and and how open works and I think this is also a great question so in open the way it works is you know if you can remember Sonny and I have

decided we're going to do a trade in the future right and the way it works is that I have this right but not an obligation right at this option to give Sonny 1/8 and in return somebody's gonna give me to 40 USD see right now for me I don't need to keep any collateral as the option buyers the person who owns the option because I will only ever make this exercise event when it is profitable for me but it being profitable for me means necessarily that is unprofitable for son right and so Sonny needs to get 240 USD seen sitting in a vault to allow for this physical settlement right and so

let's say Sonny is 240 USD see sitting there until the option expires I come and I exchange my 1e and automatically the contract will send me Sonny's 240 USD see Sonny is the right now to take the 1a that I put down there right and that's how settlement works here now there's a couple of different things there and that's pretty much actually how the entire protocol works if Sonny wants to come and mint a new option that the world has never seen before let's say and a strike price of one hundred and thirty three dollars and five cents right then Sonny just puts a hundred and thirty three dollars and five cents into a vault and can mint that new option or

let's say Sonny wants to write an option on a new asset like like the link token right then Sonny puts down you know however much the strike price is down in that vault and the contract that Sonny is essentially like customizing says that that will be a lot by anyone who holds the option if they send in one link right and so that exchange will happen in the future so when I put it down into that vault I first get the o token and then I go figure out how to sell it exactly so it's actually like minting diorite you're like putting down a bunch of collateral in a vault to mid die and you can do whatever you want with it and you can sell it to someone you you wouldn't

want to hold it it's like going and opening a CDP and then holding the die that results like it doesn't provide any value to you it only provides value when you can sell it on an exchange or something like that and so that's exactly what people would do yeah so this opens up questions about capital offense efficiency I know you're gonna ask about this video but stuff but yeah we'd love to talk about that that's the basic high-level how open works before asking about I thought that's so literal I was going to ask what capital in efficiency here conversely that means as the person who has opened the vault and if I buy back the oh tokens from the market I can close it again right so basically I can I can get out at any time

exactly right so it's just unwinding it just like it's it's very actually similar to the maker system I think logically to think about it that helps a lot so it's just like buying back die and then burning it against your vault and you can take out your ears just like that you can buy back the oh tokens that you've minted and then use that to close out at any time does this mean that oh tokens have to be American options No right so the question of when two parties can exercise is a different question than when a seller can exit or a buyer can exit the position because it knows who the opener of that was it allows me to exit as well before exactly right so another way to say this right

so that you know Sonny used the word American option now American option is one of which the I as the buyer of the option can exercise I can change my 1/8 for Sonny's to 40 USD C at any time before the option expires the European option only allows you to do that upon x3 it's not that one of them is more you know highly traded in Europe and one of them is more highly traded an American I think it has something to do with the fact that you know America we love freedom so we give the freedom to exercise at any time before X free I'm just kidding it's just called American to european it's just a nomenclature thing and the thing with European options is an even though they can only be exercised at X 3 which is one second and time they usually have the exact

same price as American options because they can be sold on the free market or on the open market I should say for their you know for their worth which is usually greater than their cash value which is that how much they're going to be exercised for but the not as helpful on open on flash crashes though right like you know let's say there's a you know we see these happen on exchanges all the time where there's a bug in the exchange and the price of BTC drops like a cent for like for like five seconds and an American option would be nice for that because I could have something Mike be watching that and execute immediately when that happens while that maybe it isn't possible with European exactly so

that's a great point which is that like there are certain edge cases and which American options are better so one is the question of liquidity how liquid is the options market another question is like how liquid is the underlying market because maybe you want you you know you would incur large amount of slippage through trying to buy an asset and instead you couldn't have an American option that allows you to like five that slippage and so there's a couple of questions like and the one that you talked about is some like technical educators as well which is why open options right now are American for the smart contract related stuff but that that is a really good and interesting point now I mean one of one of the edge

cases where basically an American option is preferable to European option but this when you run the risk of the option issuer going bust right so basically you can't be sure that your option is actually that you'll be paid back at face value at the time that the option set it's then actually an American option is preferable because you can you can redeem it when you begin to have doubts that the person that you have entered into this contract with is credit worthy but on open as you said earlier everything is fully collateralized so basically you actually have to over collateralize all the options on open and the reason is uber knows I'm going to ask this is because I

told him you for the show and that one of my main criticisms of the system was that it's really capital inefficient so ways you have to put up a lot of capital to actually offer this options which especially makes make options that are pretty far out from the current price very illiquid because you need to put up a lot of capital basically the the inverse of the probability of that happening so Zubin you told me that everything's very true that that's currently correct but everything is going to get much better with version two so tell us about version two yeah so let me let me dive into version two first I want to expand on kind of what you were saying Fredrika so very similar

to the the dye ecosystem right you're putting down a bunch of capital to minton asset and capital efficiency represents how much capital you've put down relative to the amount of asset you can think of that you've minted the value of those assets right now let's take a super out of the money option that means that if like I would not exercise it right now if it were American so let's take a put option on e that means a put option means you have the right to sell an asset so put option on e is the exact kind of option that Sonny and I were talking about earlier and let's say the strike price is at a hundred USD see so that means that in one day 24 hours

from now I get to choose whether to give Sonny you know my 1/8 in return for his 100 USD see now I'm only gonna ever exercise it gonna have this option to exercise I'm only ever gonna exercise only ever gonna make this exchange whether my one eath is worth less than 100 USD see Sonny would give me in return and that only happens if in one day Black Thursday happens again and eath is worth $90 right in which case I'll get Sonny's hundred USD see and I'll give him one eighth which is worth $90 my net profit from exercise is $10 so you can think of all right this option should be worth salt like

the probability of eath flash crashing 290 dollars in one day times the payout I would get of like 10 dollars or even more potentially right let's say there's like a 1% chance then will this eath is worth sorry this is this this option should be worth only like 10 cents or less right and this is very high level way of thinking about volatility it's not actually the right way but it's one way of thinking about right now that means this option is worth 10 cents but Sonny needs to put down the entire value of the collateral the entire strike price 100 USD C in order to mint something and sell something that's

worth 10 cents now that's clearly really capital and efficient right compared to maker where you need 1 point 5 X the amount of you know dye that you minted as collateral here you need it's like a hundred times as much right and so four out of the many options this doesn't work the best way to do it instead was to make sure that Sonny had more than the premium of the option in the price of this option right and so the option is worth 10 cents sunny only needs 15 cents 20 cents or $1 right now that's the key question that we you know again we're starting to build out v2 which is exciting and we're doing a lot of this like kind of

ideation and getting a lot of opinions from the community so if you're interested in just like reach out to me about any kind of research questions you had but for v2 the question is how do we ensure that the amount of margin or collateral that Sonny has it's always worth more than the premium and for that you need some way to estimate the premium really quickly and there's two ways to do that the first way to do that is to have some kind of Oracle based on the price that it's trading on you to swamp now that doesn't make a lot of sense because we've seen not only can you to swap market prices change quickly but even with you to swap V 2 options are so volatile that to make sure that there's you know that you're always kind of have more margin than the premium of

the option is like really hard when there's a big market change in the price of ease or something like that alright so we need to that doesn't work so what is it another way we could do it now this is a little bit more involved but the idea is to look at two things the first is a shock parameter and this is actually kind of how Clearing House let's do it in traditional finance and this shock parameter will say how much can the price of each slide or crash before a liquidation event will happen right in different protocols have different shock parameters for example maker has 33% so if you're 1.5 x collateralized if eath falls 33% then

you're exactly one to one cut collateralized okay so let's take a shot pull-up parameter of 33 percent which represents a 150 percent collateralization ratio then the next thing is we want some over estimate of the options premium not just the actual options premium and we want something that will always be an overestimate of the options premium okay so the way to do this is something called linear interpolation right and this is a little bit more involved but essentially any option has something called Delta which represents the amount that the option would move with a $1 change in the price of eath right and the maximum Delta of any option is it

has a magnitude of 1 which means that an option is never going to move more in its price in absolute dollar terms than equal in percent terms it's much higher because the option can be worth cents and move one dollar whereas eath is worth $200 and moving one dollar right but in dollar terms it's always capped at one so then what you can do is you can take the value of an at the money option essentially draw this perfectly straight line from the at the money option to likes infinitely in the money and out of the money options right um and you can cap the change in the options price and say if there's a

33% change in the value of eath what does this mean that this option will be worth later right and then at any time you say any option will need the amount of capital that is at least as high as the value of that same option of eath craft immediately to 32% and then you also choose some over estimate of volatility again volatility is positively correlated with an options price and so let's say you choose a volatile a 500% that means it is bound to move you know 500 percent per year within you know some kind of probability distribution then you can say okay we're

basically saying we're overestimating price and we're adding a shock parameter and this this is still over collateralized this option even if those two things went wrong the actual implied volatility of East for at the money options is actually 80% on debit so five hundred percent it's just massive over estimate right and what you get again is a up collateral system that is like you know depending on the exact option but can be anywhere as much as like five to 10x more capital efficient as the current implementation of open and so just to recap what you do is you will try to figure out an upper bound of the

options price if you were to crash 33% and volatility we're at 500% and you use that anthem of the option to kind of interpolate to the out of the money options and at the end into many options and using these over estimates for any arbitrary option you can make sure you're over capitalized that's how it would work within a certain confidence into what interval right so basically you'd always have like the the Black Swan event where basically you happen to be under collateralized that once because everything in the book went wrong so what would happen in that case right so this is where you were gonna ask me questions about like you know

tokenization and kind of monetization this is where you know it's a very similar set of assumptions that you have for maker where if Eve crashes like 90 percent in a minute like the whole makers system is like kind of wrecked to a certain extent so you have to make some kind of you have to be get comfortable with some level of tail risk again being like very mindful of it and having like a lot of buffer but there's there's always the black swan right if you want to get under capitalized or get more capital efficient and what happens here is very similar that outside of a

you know event that would destroy all of the rest of defy open would always be over capitalist and then you can do what maker did which work really well on Black Thursday which is have some kind of asset that can be used to plug like any kind of under capitalization or like any kind of insolvency of the system and so that's one way to think about adding a governance and kind of tokenization to the protocol is having a very similar NPR like model so on that Thursday what actually but what happened just just you know for background is so the mpi Hoda's actually had to jump in and be cmp I was was auctioned off and in response to the events on blacks as they

make her introduced us DC as another type of collateral right in to add more elasticity to the system because we see there wasn't enough dye to actually close close out are the underwater CDP's this was my point exactly so it's not something that you would expect to happen on any given day but especially in this word well while they say that he is high and sometimes even higher like on days like like Thursday it can happen right so basically you want to make sure that you have like this layer where of governance or someone who is ultimately responsible in order for people not to lose faith much earlier what maker has

it's it's got that I mean it's fairly crude i mean basically it's it's the it's the maker say sales of NPR tokens and then the global settlement but basically having that as a credible last line of resort even if you think you will never use it just because you have it you'll probably never lose it but basically this this make sure that people don't lose trust in the system much earlier right so what I got food zon that for open exactly and I think it worked beautifully for maker on Black Thursday I'm not sure what mayor would have done if they didn't have the ability to kind of plug the capital holes in the system with MKR so it worked really well and you know TFI

continued functioning i think there are lessons to be learned from that including being even more aggressive and that's why we've chosen like really ridiculously high parameters for like volatility etc the system is actually even more cap like kind of conservative than i said but for like a number of different kind of edge case reasons but that's the main gist of it and i think that a similar thing would provide a lot of kind of confidence for for users of open as well so I think that's one very a whole way to go forward but it's not necessarily the only one and again it's an open dialogue between us and the

community and so I would love to hear anyone's opinions or thoughts on that but that is one way to do it so I see why you want to be able to post collateral that's much less than the total amount but you want it to be you know using more cash settlement that makes a lot of sense you know in the paper you mentioned that you also want to allow people to post collateral in an asset type that's different than what the underlying actually is why is this such a desirable feature especially when weighed against like the seemed like a lot of additional complexity so what's the benefit out of that and an additional risk this is a great question right it comes from a key observation if

you look at the original options we're making some compound options let's say that to ensure someone you're making you know you need a hundred percent of the capital and so you're you're making like a 10% per year on it and compound is yielding you five percent right now putting money into open to ensure someone's compound deposits is not very different from putting that money into compound itself right and so if I'm putting a thousand USD C into compound I'll lose it if compound gets hacked if I'm putting a thousand USD C into a open option I will also lose it if compound

gets hot I'm but I also have this additional risk of like open smart contracts on top of that and so is this weird dynamic if like the insurance is more than the interest rate on compound ah then no one's gonna buy insurance because then they're getting a negative interest rate by like having assets on compliment than insure them and if the interest rate is below the one on compound then you just put your money on to open rather than putting it into compound in the first place so what you need there instead is the ability to put down E and get like ten percent on your eath instead and that's like one way to think about it it's like you want to put as collateral the asset that has the lowest

interest rate so that's the lowest opportunity cost of being use as collateral but it also has the highest risk right well like price risk yeah so that that is like a problem is like it has some you know very significant price risk but it also allows you to hide you against some problems with USC see like if US DC itself is the issue then eath is not gonna you know collapse and so I think it's it's a trade-off there it's a really interesting mechanism design question that you brought up um now for more like eath options right why would we want a different asset well in traditional finance usually people are putting down like dollars or our fiat

currency when they're minting options or when they're writing options I should say um and for a call option on eath right it's actually different than a put option on East now put option on 'if I have the right to give you my one you money and you'll give me like 240 you are CC in turn right but if it was a call option it's the other way around where I have still have the ability in this option but the option is the opposite one it's the option to give you two hundred and forty US DC in return for your one each sunny and so for you to write that option instead of putting

240 US DC in a vault you would actually put one eath in the vault so that if I come with my 240 USD see later I always you know we'll get your one-eighth in return but so you're putting that Etha gun to mint this option but you don't want to be putting down a tremendous option you actually want to be putting down USD because most people mint options and like it's kind of the more logical thing is to put down USD see us as collateral unless you want to write a covered call which is where you own the asset that you have an option on top of which is exactly what it's talking about there so there's a bunch of different reasons why we would

want a different asset and it's also kind of brings up what Friedrich Oh talked about earlier which is that the maker system got much more kind of you know resilient after and robust after adding multiple different collateral types like us DC plus eath are both allowed to two men died similarly a multitude of different collateral type should be used to mint options in our view so um I want to talk about a little bit about going back to you about how we achieve Bunge ability because that's sort of like an important aspect so you know a couple like two weeks ago I was helping one of my friends with her

hackathon project and you know I was able to write a put option contract in like 30 lines of code but that's not the hard part of what you guys are done with the primary thing where you guys have done is figured out how to add to really tokenize and make these assets fungible and there's a lot of parameters that go into the options and so the term for this is called a series which is a set of options that sort of have all the same parameterization and thus they are fungible with each other how do you decide what parameterizations get turned into series is like you probably don't want to make a contract for two hundred thirty three dollars and five cents but how do we know what segments to do it on

and also when it comes to things like expiration dates who decides what expiration dates are yeah this is a great question so as you said the desired properties that these options are fungible so they can be trained on gonna swap they can be traded on on Dex's they can be kind of it's just having them made fungible swayed better right so the goal setting into this protocol is to make everything ERC 20s every option now the way it works is that two options that are different right if I have an option to you know again a put option on either a strike of 250 that's a different option than one with the strike up to 40 if I have an option with an expiry of you know one week that's a different option

than expert of two weeks and so you've got this very you know deep complexity the more different series are trading and it's hard to get a lot of liquidity on any decks if you have like an infinity of series training luckily in traditional finance you know there are series that generally trade far more than others and it's usually ask the money options that are nearer to ex-free with a certain set of like very kind of standardized expertise which is like on specific Fridays of the you know for Friday's of the year there's quarterly options and these are the ones that liquidy kind of naturally has like come around these specific

options right so building open we are trying to think of very similar questions the way we started it now and prettier also had mentioned this earlier was given that Durbin is like you know much older and is it has a significantly more volume thus far we've essentially decided to have options that are very popular and Arabic also tradable on open so that you know it just adds kind of this really nice property that people know that you know if they want to hedge it they can hedge across two platforms it allows people to arm very easily it allows for liquidity to kind of be shared amongst two different protocols entirely and it also allows people to play in options markets that we're not

able to previously like get onto dare but for whatever reason so that's one thing we try to support the options that are most popular like empirically but slightly if you want to create a new option on open it would also be fundable with options of that series what would be you would need to do is you would need to convince other people to also trade that option other people to come mint and write that option other people to buy that option all their people to list it on Eunice WAP and so the liquidity becomes like this kind of network effect that you need to build up but it does retain fungibility right and so that's a really good and very interesting point I think it's also you know Friedrich we were talking before

the show a little bit work affects this leads nicely into that kind of question of like how do oaken's interact like with each other and to what extent does fungibility affect that and if they are just completely fungible different tokens why not like create a fork up open and so these are really interesting questions as well to talk about but I think like fungibility at its core is the thing that allows the option market to form rather than it just being like individual insurance contracts between individuals peer-to-peer yeah so could you go ahead in no Kaka tell us a little bit about that like how are you thinking about changing this and

B - yeah so the network effects question is I think the biggest one and so I want to be very clear and like exactly what this means right so there's two parts of the network effect the first is if I'm going to mentor like bi or whatever a new token why would I want it to be on open rather than a four come open so that's like one question of network effects right which is like a cross o tokens does the liquidity of OneNote Oken benefit the liquidity of other champions o tokens and the second question is to what extent if I want to create a new option am i able to easily buy and sell this new option that has

never been seen before by the world and how does the liquidity of open influence that's right so these are two very similar but kind of different questions now let's look at traditional options markets the truth is in traditional options markets there's something called combination payoffs where you can use two different options to create a combination that never existed before alone and to also max you know cap your loss so I'll give you an example of this right solu let's say that we have two options between us that we've you know sold to each other so you've sold me the option to you know

put option on Etha 240 strike that means you've given me the option to give you one eath in exchange for your 240 dollars right I mean you've put 240 dollars involved for that let's say I've also sold you an option and that option is you have the right to give me 1/8 for a price of 239 dollars right so what happens in the worst case scenario to either of us right well the maximum loss for you Sonny is $1 now where does that come from its that let's say like you know your losses as someone who's selling an

option are maximized 1/8 falls to 0 and your gains as someone who's bought an option or maximized when each Falls to zero so let's say eath is falling to zero then essentially you have to pay me 240 USD C in exchange for a worthless each one East which is completely worth us now for the option that you've sold me but then you also have the option that I've given you right and that allows you to give one of the 1/8 you just got from me in exchange for my 239 USD C right and so you've essentially given away 240 USD C in the first exercise and gain 239 USD C in the second exercise and so your maximum loss

right has been $1 this whole time and so actually what we're able to do is compose these two options into one position called a put spread and we say Sunny's written a put spread with a max loss of like $1 so you only need 1 USD C total for these two options positions to exist and this is like actually really incredible because you've essentially taken selling an option and you've made it something that's that where you can cap your you're capping your losses and so instead of doing with 239 put that you bought buying for me you can instead buy like $100 people option so your maximum loss is instead just like you

know 140 or you can do it at like 140 and you have a maximum loss at 100 or you know whatever you want and so any two options in this world are able to kind of interact with each other and create a network effect in the sense that they massively reduce the capital costs of be someone who's writing a spread relative to someone who's just writing naked option um you can go beyond just credit spreads and debit spreads and put spreads and call spreads you can buy things like iron condors and butterflies and straddles and strangles which are even more complicated positions which themselves again have very defined maximum and so you can have ten different

options interacting and have one vault with a very clear defined max loss that's that's written all apiece so that's how the question one of the ways network effects are dealt with in in the next version that we're currently working on v2 so I hope that kind of makes sense so basically if I repackage that does that mean in v2 you won't have to collateralize 100% and the put spreads and the cause fred's will be used to kind of ensure that risk is managed yeah so first of all you won't need to put in a hundred percent of you know the strike price in v2 just because

we're doing some of the linear interpolation based margining that we talked about earlier but then you can go even further on your capital efficiency by having a a spread cook spreads and call spreads um and that will make it even more efficient and also you have this network effects where if someone creates an au token on a fork of open rather than open itself it can't necessarily be used as collateral in a spread right and so there's no way that they can use that to make a vault which has like a strike one so you have this massive increase in network effects and then there's a way to go even further right it's like the two options that Sonny and I talked about where e options with the same expert right put options

on each with the same X free well if you extend like some similar marketing principles then you can have an eat and a call themselves basically have let's say 1/2 the margin required for just a plane call or just a plain naked put itself and then you can go even one step further than that which is you can say like his song if Sonny has a Bitcoin option that he's bought and then he sold an Ethan you can since Bitcoin and eath are correlated you can use those together to reduce Sonny's margin requirement and you're essentially using that Bitcoin auction as collateral in the ethan and that's something called you know portfolio margin you take an

entire portfolio and say that like the margin of that entire portfolio is less than any one individual asset because there's correlations between assets again that's like probably four be three valid rather than p2 or it's like more advanced even than the next version but here's how you create like a network where every oh token is like a family that can interact better than the cannula so it sounds like me three is going to have like an inbuild matching engine because basically the matching engine itself at the you know of the trading of the trading mechanism needs to know a lot of rules about how things are composable and what can be used as a collateral for

work right yeah I think this is a great question so the marketing system itself needs to be like a lot more sophisticated as we go along and again in traditional finance exchanges are very sophisticated in the way that they use marketing I should say Clearing House is rather and there's never been an options Clearing Corporation or a clearinghouse in the United States that's you know in the last hundred plus years that's ever been fully insolvent like that's ever had to default on on any obligation so they're able to get much more aggressive margining and manage the risk at the same time so that's something that we're kind of you know we want to make define like as good as that and then the second part of this this two-sided question is the question

of trading venue um and you know we can talk about this more but unit swap is currently where organs are traded but it's not the best venue for tokens right you know swap is an incredibly powerful platform but it doesn't work as well for financial derivatives like options which are have like some kind of time limit and they're approaching X burry because as time goes on the option is decreasing in price and if it expires out of the money doesn't second before expert or at the time of expert it's a worthless you know token that has no work and so on you know saw what you get is this notion of impermanent loss when two

assets are converging in their price diverging I should say press you're getting you're getting in primitive Lawson so when you have a pool where it's an O token relative to a new asset that is not like decreasing in price then you're going to get 100% earn permit losses liquidity fire and so right now as like the open team we've been the liquidity providers just like kind of as a Community Benefit role like we're not we're definitely like dealing with losses as a result of being like a liquidity provider on on you to swap right now but in the long run the question is how do we do better and there's two main ways the first is to do

what is most commonly done in traditional finance which is have a central matching engine with a really nice order book style exchange and this is kind of like you know what dy/dx has moved towards for their spot and perpetual positions the other is to build an A mm that's like similar to you know swap or maybe similar to balance or something in that family but works much better for for options and so that's what Vegas swap is which is like an earlier stage idea of a options native mm that reduces impermanent law significantly over over you to swap or

options that's something you guys are building so right now we're building v2 with like Vegas flop being like kind of still in the ideation phase and like the goal is to first really release Vegas office of paper and get like a lot of community input on it because I think is actually like quite complicated as a system but it's not necessarily that it's on the roadmap for v2 can be like a thing like on top of the 2n it's still possible the you know central matching engine is actually the best solution for users of open let's free drink I'm mentioned so should I get kind of a summaries how biggest walk works or maybe briefly because I think we're running out of time

yeah but I I'd be super interested yeah so the way it works is the super highest level is that essentially you don't want in permanent loss you want the system that knows that these options are going down in price and so it's consistently on a block-by-block basis reducing the price for offer of these options now in an options market there's two things you can think about the first is like getting pricing this option perfectly using like some notion of black Scholes and then using the market to determine implied volatility and applied volatility if someone says that they use like black Scholes to price an asset without like and that you're gonna get something like perfect market price that

doesn't actually make sense what you need is the market to input their estimate and trade implied volatility and then black Scholes comes out the other side and so Vegas walk will do is allow people to trade volatility itself and then every time they make a purchase or a sale they're trading volatility and then this AMM we'll use this volatility to kind of give an output value of the option and as every of every block goes by and there isn't a trade because it's using a constant implied volatility the value of the option fee will go down reducing the permanent loss another way to do this is just say the option is worth ten dollars right now it has a cash value of zero that means it's that you know if I were to exercise it right

now my net profit would be 0 or less than zero so it has a cash value of zero and so there's 10 blocks left let's reduce it by one dollar and value every block until x3 or we can do something more appropriate which is actually square root of time so let's reduce it by like a square root of like tea every single block so those are the way to think of Vegas law yeah and if anyone's interested looking there's that it's hidden away on the website but there's a link to the paper in there so if you can find it it's a great read what one like me on Twitter or anything one last technical question I had there's a us question before we move on to the final stuff about business model

but um can I roll over options cuz it seems like that could be a big UX annoyance if I just want to you know have something more continuous but I have to open you know I have to go buy up new oko every time is there way to roll them over easily yeah it's a great question and it's definitely something a lot of options sellers want to do where they want to continuously be just like shorting options or selling options the way you would do this is actually like it doesn't have to be native in v2 so we're thinking about doing that as a wrapper on top of v2 and you know if anyone in the community is interested in building this is actually really cool you can think of it as like a set rebalance right we're in a set rebalance there is this group of individuals who

are incentivized to make these trades between two assets and so that like let's say if you know eath bitcoin they're making like using an auction they're making they're rebalancing the set by selling one for the other right like a fair market value and you can do something very similar for open where let's say you're on the buy side and you want to like rebalance and what you can do is you can take someone's existing options position and have like this group of individuals who's all like able to rebalance that oh token that's about to expire with one that's like has a longer x3 you can do this also on the sell side by unwinding someone's option

by buying it on the market unlocking their collateral and using that to sell a new option so it's very doable to like do a set style rebalance for rollovers and and that's like one of the active research questions also for for v2 quote so this baby to when when is it when are we going to see it so v2 is going so we've still not started the you know we're still in that question of like in the research phase you only started working on it a few weeks ago and so still a lot of questions are being figured out but I would say we should have it within the next six months or so hopefully we can do it sooner than that

but at the very least it should be to Aude it in the next six months and we're trying to just build this as quick as possible because it's something that a lot of users have expressed that they're like really excited about really really want good and then basically as soon as your users are locked in because they want to deposit open options as collateral I assume that's also going to be a fee um so this is a really good question on unlike the business model on v2 i don't think taking straight-up fees protocol level fees for like an admin key to accrue is actually a very user friendly way to accrue value to the protocol one way to accrue value is you

know kind of well I guess there's there's two two ways to think about it is that having an MK r type token which is more accruing fees as like as a general overall like permissionless from home like a general overall permissionless protocol point of view where the fee isn't as much like a fee to use but more like you can think of it as like to burn and reduce the supply so that those individuals are incentivized to be like an insurance bunk similar to MK R so the N Carry R style model is seems more user friendly because it's not that you're just like giving a fee to someone because they built a protocol

it's that you're giving a fee for someone who's very active in the protocol to be an insurance fund so that's one way to think about it but again nothing is like very set in stone I don't think that v2 is gonna come out with an end kr style token built immediately in maybe we do something more like the comp style of like releasing it and then with time you can add a governance plus like recapitalisation mechanism with time but we're just trying to do it in a way that's them like most favorable for like users of the protocol in the long run and also most sustainable and so that still remains to be see how that is there's a lot of interesting ways to do

it quite fantastic we're holding on to the edges of our seats I'm really excited to see what's going to happen for a person to thank you for coming on Subin yeah thanks up thank you so much excited likewise it's been pleasure to be on here and you know options are like a 500 trillion plus dollar market in traditional finance and I think if I can do it better and I think that there's gonna be so much innovation and the opportunity is is ours for people defined to build an even better financial system good closing words thank you all right thanks so much it doesn't end here there's much more of

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