38° AVC Subcommittee Meeting | Support Scope Bounded Mutable Alignment Artifact | Maker

Transcript

w [Music] [Music]

[Music] [Music] [Music] welcome to our 38th ABC sub Comm meeting for sing Finance we are in our the second week

and today scope it's regarding support so hello GM GM uh Clocky Julia Pomo Anon Builder PB blue Pipkin I see already Our Guest is here so we're going to start the meeting um as you have seen in our Forum post um we're going to discuss different topics regarding this on this particular scope with a guest right away since uh we have a lot

of questions regarding this topics so first of all uh we're encourage everyone that probably has doubts or questions wants to know more and as you can see we're also today going to discuss uh regarding the topic of the moment we're gonna discuss some um questions regarding Etha and Moro um and this is very interesting because we're going to focus um on what has been said about the risks and talk about it and what are the the actual risks and also kind of like tell and understand which are are not I think

this is a very important topic since it's it has been happening lately hey good to see you your name and so yes I think this is the perfect moment good time in as well with true name that's as always asking rant questions and everyone please um let's make this very um active participation and so yes that also topics such as of course regarding spark um who I think T Our Guest for today has a lot to share with us when it comes to uh probably updates or information that uh understands better it knows more knows more about about

this um we're also going to try to to get to know more about what is happening with those subs that we don't hear more or read about uh this includes the real assets subow and also the the main the topic itself real or asset and what it has to do with the with the subd Dow and um the framework so yes we've seen lately um like people asking questions related to okay what happening with certain Sub sub so again this is the the really good timing for us to have the as a guest so

hello welcome to um I'm going to start first by asking you to introduce yourself so tell us about you and what is your experience what have you been doing and and maker prob and if you want tell us a little bit more before starting with with the questions how are you hi Chris thank you for having me one second let's see if I can actually activate the camera yeah I can quick um there we go okay I can see me now I can see the screen cool he I'm T um I've been part of the maker ecosystem for about I think three years now uh start as a community member and then joined a

core unit what was called one of the independent teams at that time um and then uh for the last year and a half I had been part of Phoenix lab which is a ecosystem um actor um currently focus on building uh spark I've actually just recently left uh Phenix clap um and now I'm taking time some time off uh but I think I'm always going to stick around around the maor family essentially well I'm definitely not yeah yeah I'm not gonna turn on the camera I'm start saying that but thank you for doing it it's I think it's one of the first guests to to turn on the camera

and thank you for also giving us the this Alpha I don't think that many people knew about it that you are no longer part of this spark uh Team so well we're not going to uh maybe you want to tell us more about it but you might know a different um I don't know like certain topics that we don't know and we need to more to to understand a little bit better so let's start with the questions then um regarding I know that a lot that a lot of people wanted to know when it comes to uh morona and we are going to get there um also Thea right we're going to also talk about the the actual risks

that are happening but let's start focusing first on on spark so yeah if you tell us anything related to to the talken how is it going and how will the launch of the uh of the token of the asbk token impact users and if you could tell us how is it going to work like will spk holders gain the ability to make decisions through voting or what is going to be the the system like what can you tell us about that the token yeah um so actually those is my point I think the list of topics that you have is really good uh I would just flip them so we go from the bigger Concepts down to like very very much the

implementation because of Tina um just jumping around a bit on the spk launch this what happen with the saow launch uh or the launch of the saow uh and the new maker brand um I still don't know a specific date for this uh clearly hasn't been announced or anything uh so we're still kind of waiting on that uh but essentially once that will happen um particularly spark has been running a a n drop campaign um for the last few months uh so that means from Day Zero um the idea is that the users that been farming the token should basically receive that token um again there's a

lot of things that still need to be confirmed and there's going to be still small tweaks up to the point of the launch itself but I think it BR strog it pretty clear that's kind of going to be the situation um once that happens um and this is going to relate uh to the discussion like broad discussion about subow and basically end game itself is what powers will spk tokens have at that point uh that will very much depend on maker governance and the maker voters of how how much essentially how much responsibility they defer to spark uh subd down um and this comes back to the point of sat in general why this idea has been um

has been been implemented for the last two years is that there was way too much uh decision making happening at a single level which is maker governance um it was basically impossible for a single person to um correctly uh basically um effectively participate in governance uh you would be you were being asked to not only read discuss have an opinion on and also vote uh on very different topics from Tech implementations of smart contracts uh to real asset so basically financial and legal contracts uh also the hiring and firing of um teams from very different strokes um so the idea is to kind of

atomize this and to make it more manageable um so when it comes to down to exactly how much um Freedom or Independence they sub has uh it very much depends on how um going to be moved around but it really depends on how much it makes sense for them to have um so taking the example spark spark is currently under under the subow there's the uh spark l so the The Lending engine and now there's a secondary credit line or DDM uh that is going to Aina um this is being managed on the same way that is being managed at the maker level when when it comes to setting the parameters of volts is been

managed by expert teams that have been uh been appointed by maker governance so the question is um once the supp launches should spk token holders directly Define this rate or should they also essentially appoint an expert to do this um this Intel will essentially be up to the spk holders but then on the make governance level you have to decide how much uh degrees of freedom you allow the spk holders to have so that kind of non answer makes sense it's kind of like it really it's uh has to be defined by Mega governance how much Freedom uh they give the F holders to have and it really will be

down back to how much risk uh this comes down to um do allow s holders to just um mint infinite amount of die or do you give it a maximum level of it does that kind of answer the question a bit Yeah you gave a lot of information that I don't think that uh we had it at least personally very clear so yeah thank you um is there like any uh date for the launch of the spk token I um not that I've heard of um so this is all because it's not that uh spark will launch by itself it will launch uh in conjunction with the other subd plus the

rebranding of maker itself uh and the launch of the new maker tokens so what we call SNS NST and sorry uh and ngt so new stable coin token and new governance uh token U so I think there's a lot of coordination there happening and there hasn't been you have to have all the different players in aign to actually be able to launch yeah and regarding this as well um the the system that the governance system on the structure is going to be like will there be um a delegate system in place or it's going to be like the spk holders are

going to directly participate when it comes to voting so this is actually a really cool let's say feature of sou which is the subow itself should be will be able to most likely choose what the governance system they want to have um do you want to have do you want to force delegation so no uh spk holder can actually vote directly but they are forced to delegate to a let's say a preset list of delegates or do you not have any traffic delegation whatsoever and you and you kind of enforce direct democracy um or you have a mixture an open system kind of what maker has had for the last few years um it's I think

the cool thing is like every sub will be able to kind of choose an experiment depending also what their objective is um if you think about we talk about this a bit more later if you have a very very Niche subow that maybe does only we assets and it it comes down to very complex um deals or systems maybe direct Mar doesn't really benefit that much the the system at the end of the day governance really just means decision making so it's like how do you want to make decisions uh do you want to bring as many people as possible or do you want to focus only on Experts are able to provide that decision both systems have kind of a pros and cons on it um so ultimately

really is about like okay what the what's the real objective of the subow therefore what's the governance system that will allow that subow to achieve its objective yeah it it sub out is going to be like very independent and could make any kind of experimentation it doesn't matter like if they fail I think that that's the purpose right like if if it's it's better if they exactly as long as they here yeah and the ultimate the really important things and like the let's say we call like the gers or what the limits of this experimentation is is that at no point should makeer be at any risk and by extension no die holders should be at

any risk so no matter what type of expectation happens at sub down level in the in their worst case scenario it shouldn't have a neg negative repercussion into maker basically saying shortly maker should never lose money should never be a risk of losing money so if you take sparland as an example spark land itself is a over calized lending system uh meaning that the risk of insolvency is fairly low compared to other systems let's say under collateralized Landing so I could actually set up a system that really uh similar to um the uh like the version one of we were lasted uh protocols uh

such as um centri fug Maple goldfinch and so on you could say hey give me money so I'll use maker money and I'll go and and lend out uh funds to comp companies but I'm not asking for any that is fairly uh risky because the company can just go bus so simply just decide not to pay me back and at some point I I have no money so that point I represent a very big risk to make so something like Spar length um is very low risk because not only uh do I actually have the money in the system it's also fully Unchained so at any point in a single second I can actually bring back the money speaking like at the high level um

if I actually want to go in and say actually there's a very important Market that has been addressed um where we can look at for example uh loans to smmes uh that have always been underserved by the transition banking system uh and the this loans are under catalized and um you can only claim back your money maybe after like 30 days or 60 days um that is still that's still something that as a I think as a system we want to explore um but that carries a lot more risk so in that case you would need to have a lot more g g rails for that to work so for example a big thing is you the sub itself should have its own treasury its own back of of of money that if any of those bills go bad

and they can't recuperate they get back their loan they able to basically essentially pay back maker uh so maker never loses money again um so um again it's kind of like a a function of the risk uh that you're exposing the system to to how much uh car race you need to have on your own at that moment um if you think about that system uh for example when it comes back to the point of view from governance is maybe that type of Highly specialized and like let's say fairly risky Endeavor should actually have less decision making Freedom um and maybe more experts involved and maybe put more direct oversight from make governance brand

like as much Freedom as maybe other sub house can have interesting so to to understand this point what you're saying is that as long as it's not risky because um what personally I was understanding is that uh okay subd are experimentations and they can you know try their own thing but as long as it's not risky for maker because if some does make something and and goes wrong and it fails and risk maker they they're trying to avoid that so it has to I mean they can try whatever experimentation they want to but as long as it's not risky for for makeer

right um yeah and again it's this idea of like Risk is a is a range and you can have things that are like less risky and um some that are less risky um and your idea is that you want to be able to diversify as much as possible um but then you also need to take like you you have to approach this to separate uh Endeavors differently um you can have for example let's think about the most let's say the most risk uh way of like lending money uh which is asking for more collateral than what you're actually lending out uh charging a very low fee that means that the the users are very low risk of actually not being able to return the money um at that point that is a very safe business and a business that will for sure have users

but you're not going to make uh that much money like the the on the profit level it's going to be very low which is fine it's very low risk low reward that's um that that that's fully understandable I actually present a great opportunity to actually have dye in the Sy being minted out based off that if you look at something that might give you a high yield but also represents more risk um there you might be in a position where you're in poti actually make more money but also you have more risk to actually go bust and actually not be able to get the money back um so at the end you kind of do this like risk reward calculation and basically is this worth it it's like is this much uh future profit worth the risk that you're taking and then how do

you minimize that risk so what happens if the worst case scenario happens how do you get out of that how do you minimize that um so what we hopefully we get to see in the future when we have a lot more subd Dows in the system is you're going to have Subs that might actually look extremely risky um but they're in the position where they are on they have the independence to go out and fail and if they do fail um there's no negative repercussions to maker because they have Junior Capital they have their own treasury they're able to pay back um they have all the systems in place uh to ensure that um this the basic doesn't infect negatively back into maker and all the other

subs okay that's that was a good point to make it clear um so it's not like if a subd fails maker fails it's it it depends it depends on different situation and how is like the toomics and and talking about it actually to the the next question actually there is another one uh where will subd get these treasuries though okay what from where yeah uh it's a good point from paper uh on the point is how do they actually build our treasury uh so uh you're correct for now there's there's no clear message on this uh the first point is uh this sub will actually be making profits those profits should be firstly going

into the treasury that means that at the start this companies this sorry this subd will actually have very little money in those treasury there'll be extreme money going in um I think at that point it makes sense that they still have a low of guard rails and they don't have that much let's say uh freedom of decision making themselves and as much as they accumulate a treasury and they're able to withstand negative U let's say loss of capital at that point they should be able to be given more uh Freedom uh to kind of experiment as much as they want to um again this this idea of uh providing G provide Independence um but not but again ultimately ultimately what want to

ensure and what the entire system should be able to ensure is that D is never at risk die holders are never at risk of all all this type of experation D users at least in my personal opinion shouldn't care too much about every specific deal or every specific um funding area that maker uh finds in they should be able to trust a system that no matter that is what is being done uh there's always um guard rails to prevent uh a catastrophic situation from happening best answer I've actually ever heard on

this is paper thank you paper for your question and and T name says the tokens also will have Market making from maker core we understand so is there uh a market value that would be captured for the UN the unior capital um so um while answer the first part of the of the point true name can you uh Cy a little bit what you mean by capturing um that value um the last time I looked at the subow economics and this is coming back to the subow tokens and The Elixir essentially the liquidity

between setout tokens and mkr or ngt um the idea is that as they grow in value uh that value should get be able to be a CR pack into maker like a part of it um now when the same way that maker has this back stop which is like if maker itself loses money has its own treasury if that gets depleted fully it has mkr as value so they can really the system prints more mkr sells it to the market to be able to get back the money to be able to pay the debt so there's no bad debts are exposed to but this means that because you're printing more mkr you're deleting the value of mkr itself uh this

is essentially the back stuff that we always talk about all stuff that we also have this system this back back stop system um which maker has basically very much a first um preferen control let's say of liquidating a subow and this is the way that um maker will in the future essentially k out the subow from the system it will essentially sell off all the subow tokens um rending them uh valueless recouping all all the funds back into the system okay so um T says sub out tokens will have a secondary Market liquidity

correct so would their sub out token market value held by the subow from part of the buffer um it's a good question I'm not sure I don't think directly I think directly yes because um what you like for me is I have two subs A and B um if they both let's say they operate the same type of product but one has a a big treasure and the other one doesn't then the subd B that actually has a treasury is more valuable uh than subd not only do they have uh let's say cash flows but they also have uh Equity um that again I always think about this in terms of risk but you can also think about Enterprise Value or just like how

much is this um entity worth how much is this uh System worth is it's what's able to generate plus what it already has it awesome thank you true name paper for the questions and I encourage everyone to participate as well to I think this is the the perfect time and also probably Tel has a lot of a lot of knowledge and uh even with what he's saying it makes us ask even more questions so this is perfect now um let's go back to the point about we were talking about spark so regarding the profits that are being generated from

spark um and the Mora bolt and in other strategies so in the future like will they be still under makerd ownership or uh will spk have the opportunity to be accumulated profits on their own good point so um again very much sub to J because really as an organization we're learning as we go through this system to like actually what works uh if you look at the the documents that were first presented uh as the end game a lot of things have already have changed and been adjusted essentially um but basically um let's talk more in in the

future in the future in the deal future um maker has deferred the responsibility of the decision making of a lot of these things uh to the sub down uh make it will essentially a vote on how of whether they extend a credit line or DDM to sub a um and based on those parameters let's say parameters is like the amount of money I'm willing to allow you to Mint plus what interest rate I'm going to charge you for that meting um now this decision will be made based of what the subow is intending to do or will actually do with those funds um the idea Le like on the thetical level uh the idea is that maker is what we call a senior lender is

someone that is looking for the most the highest level of security and Assurance I will always get the money back um and by that means I will also they allow they basically say okay I'm not I'm gonna try to make the most amount of money in the world I'm just gonna try to make a moderate amount of money um and then you what you have is kind of like the junior l the junior trench which is like hey I'm I'm want to make more money but I'm also willing to take more risk so therefore I don't have the full Return of the capital assured so that's kind of what the subd decision will be in a way um so under that what you end up having is maker should basically extend credit

lines to different subd um it should be a a it should be at the interest rate that allows the subow to charge a premium to a um a basically a spread that they able to claim as profit themselves um and they they basically have the incentive to go in and actually go and try to me die into the world make deals um find different ways of of capturing demand for D um and hopefully new Noble ways that we haven't thought of uh as of today um the idea is that uh for example with Athena volt make should charge a base rate on that and then anything from base on top that fluctuate

with the market that should be be able to be captured by the subow itself uh so maker should always prioritize uh safety and also predictability uh so always charging a rate that they also know that they're always going to get um what happens with in the case of Athena but also with uh with sparland sparland itself is let's say tomorrow no one the market demands uh any any more um any more debt any any more lending also that will go to zero and it can Spike up if tomorrow again like 100 people wake up and like I want to uh to borrow more guy um the interest race will Spike the ideal scenar scenario is

that maker doesn't see the spikes at all maker just sees a fixed percentage that they always charge consistently um and they always they and that should give them predictability U so again very different ways that they should be operating maker against the subow me should always be looking at this predictability and security the subow should be looking at basically growth and uh taking appropriate risks I don't know if it's the fact that it's it's a video but it's it's I I feel like it's better when it comes to explaining so it does helps a lot it's a handlan it helps the hand help a lot I think it now can you please elaborate

more on this on the economics of spk yes uh there's actually a post um that I think this is the latest it's probably it's from actually last year so there's some details have changed but I think like generally bro Strokes it's still the same I'm going to place it here um toomics well we have the um I think there a couple components uh the main component uh I mean the most most the latest component has been the airdrop that was something that wasn't uh in the initial uh system and the initial ideas at least um that that has been Incorporated um then you have a

component for essentially incentivizing and paying teams that are going to be contributing directly to the to the actual subow itself basically running and maintaining it this also includes governance and delegates and whatnot and then you have the what we call what we call the the the the farming um out token farming I think is the full name um here is divided into two sections it's for both die users or NST uh and also ngt users or mkr users I'm going to start using NST and ngt because it's like the appropriate you'll be those tokens uh not necessarily the

current tokens that will be part of this farming system let's say so uh essentially as of now it's a very simple system of just basically staking or locking your tokens um into the into the fing essentially um it's basically what you're giving up is what we call the uh the opportunity you're you're giving up your opportunity cost so whenever you make a decision you put your your your fund somewhere you basically have anity because of you're not because you puted them here you don't put them in the other place um so with nstd is a very very direct opportunity cost which is like do you want to farm the sub out

token if yes that means that you're not uh for example you're not putting your your NST into the DSR and you're not getting the DSR rate act which today for example is 13% annualized um so that'll be kind of the at least for now that's the design of the system uh you get to uh lock your your tokens there um and then you basically return you get a a allocation of the sub toets same thing with ngt there's the um instead of having the DSR what you have and I it's not live yet it's the it hasn't it has changed their name a bit it was first called the Sagitarius engine I think now it's called the loog stake engine uh

it's essentially a a form of a yield for uh ngt users so what is currently mkr um so the same thing do you want to would you rather get yield from that system from the loxa engine or would you rather um G ownership of tokens uh for the subd down um and that's there's a schedule and I think let me open it quickly I think it runs on a I think it's fully farmed out in eight years 10 years I want to say um yes 10 years the the although there's the um there's a decreasing curve so essentially in the

first four years I'm pretty sure already 50% of the total amount of tokens is are going to be um essentially farmed out um similar to how this curve like the Bitcoin H kind of thing the fact that you're trying to use the current names even though it always changed so you're that's that's good to and it's hard to keep up but but yes um no it's very easy to just like talk about NST all all day every day and then you talk to someone that doesn't talk on NST terms every day and then they look at you as like what language are you

speaking U I think that there is this thing that we have uh to keep up when it comes to always changing the names uh all the time and not only that but like kind of like I don't know it terms that probably in the real world means something different and in here it's it's something else um now if we talk about maker now we also have to uh relate it to real war assets so can you tell us anything about uh what real assets um spark is currently or you're currently analyzing for for spark yeah um I don't have that much info

mainly because on on the spark level um we haven't been focusing on real asset we've been focused more on Chain Solutions uh although you have for example Athena could be considered real asset just because of the I think we currently call anything that's off chain we call it we assets so Athena has a very big component that is off chain they're probably would kind of categorize in that section um but basically broadly not just spark but just in general maker and the other subow there there are subow that are focused on W assets um which again I don't have any details so sorry about that um but on the on the theoretical level maker has been doing real assets for like a very long time um I remember

the first few team Finance teams that were doing deals um with through centrifuge um and also directly with uh I think like I think it's called credit foret name like credit generators basically the person that would actually take the money um there's a lot of experimentation which is very interesting but also the problem was like it posed like a big of a risk because although the amounts compared to the total size of the system were very small and there were at least if one deal went bad and actually there's a deal that went bad I think it's like 10 million die that will never be recovered um but again that can be that is paid

off by the maker treasury uh so no users have any any solvency problem the problem there is Theos an existential risk to the entire system so if one bad deal it affects everyone right because it's actually everyone's treasury uh that one is sitting there what we call it the Surplus buffer um so the concept of Subs theide is okay now all this decision making all this risk is just put into the subd um this itself um will in the future again when it has it on Treasury it will be able to to actually pay any any loss of capital that they have um but essentially means that if I'm sitting at

a spark subow I don't really I'm not affected by what the rural ass sub is doing um I mean we are in a sort of competition against like if something goes bad with them it doesn't devalue die of the CR line that uh that I have ESS or also doesn't impact the maker itself um so that's kind of the that's a big reason to actually move to the subd model to be able to have this R AET deals that are usually under collateralized uh put be put into a framework that has guard rail that basically doesn't um doesn't risk doesn't it doesn't pose any existential

crisis uh to the maker system uh as it could have been um previously now that you're describing that what what's kind of like the the advantages of how and why is it is so important to have uh subs and this structure like what do you feel is the most let's say I don't know if disadvantages or risky um part of this kind of a structure well it's a good point um so we we I we spoke at this idea of deferral of responsibility referral decision making down to the sub down um

at the day there's a there's a degree low G you can put in on a smart contract level on a governance level um on a process level I mean um by the end of day you are you are essentially inheriting the risk of the other entity um this is similar to how when the DD M what used to be called the d3m uh was a credit line that extended to external protocols such as a and compound the problem there is It's very effective system to M die but also means that maker essentially that point inherited all the risk from a no matter what happened at a all the decision making that happened a where maker had no say in the matter affected maker if a would have at that point had bad debt

for what reason been hacked maker would have a lost the loan that they made to a or technically a users through the a protocol so here it's kind of the same thing um again there's a lot more garage and a lot more thought put into exactly uh what part of the system gets to basically take a decision on what but at the end of the day if forever reason uh maker governance on boards a sub out that is essentially just bad or corrupt worse or yeah playing bad there's no corruption this the funniest thing about all the things is most time

it's just not people being trying to be bad bad actors it's just like their incompetence um it's kind of like you can't blame him almost in way it's like you didn't mean to you're just really incompetent of what you do um you're inheriting that risk um so I think that's the main thing um every time you you increase the total credit line that and again you're increasing that risk into the system um and again um so there's a lot of things there's the um um figure what the American um military commander said this uh it's like there's the known unknowns and the unknown unknowns um so while you

can kind of work around the unknowns that you kind of know like I I know that I'm not sure if this can blow up or not there a things that you have no idea that can actually happen um and I can bring it back to 2020 with black Thursday where liquidations the liquidation system essentially failed because no one thought in that it could have been it could have been possible that the network the The Ether network was so over congested with transactions that no one could actually submit a proper transaction into the liquidation system so things like that there like could that happen again I'm not sure what if that happens again or what if something completely different happened um so yeah that's kind of and also

that's why the um the launch doesn't that's why also make your governance is not basically inviting everyone to just create their own Dow it's kind of like a a let's say a beta launch or like a slow launch because of this because all the details hav't been hashed out you're not really sure what can actually go wrong right now uh so you kind of start experimenting with uh with known teams um you kind of start like building up this uh there's things unfortunately that I can I can build an entirely Noble system and I can try it with with 10 die and it works perfectly but then the moment you give me a million D it breaks completely you have no idea that breaks

until you put that million di but now if you scale it up to a billion you have the system was like there's a lot of systems that work perfectly fine with 100 million but then when it comes with when you put a billion in it they they sub working all they start behaving in ways that you never uh thought Could Happen um so well so yeah just trying to close my point here um it's kind of it's interesting to defer decision making into select group of people um but also brings the idea that if those people are wrong that kind of still impacts you maybe doesn't burden you with the workload of having to make that decision

but the ultimate decision you're trying to obviously limit that but like it will affect you no no if you don't want don't like it yeah I think that the now they're currently like looking for risk parameters experts like more people not just H well V Labs um but that was a good point that you made there it's that there there are like different things that um since there are not so much information about uh there's need to be more like consideration and to take into account different aspects that right now

is kind of difficult to know so it's very good to that we're having this conversation because you're you're telling us and you're explaining to us certain things that probably on the Forum there's not that very clear or with more details but still there's need to uh we still need more information for example you you said that okay you have also no information regarding the the other subs like like the reward as Subs so uh I don't know if it's me but it it's frozen your your screen but as long as you can listen to me and talk it's it's it's fine so let's move on to uh next part it

says oh can you hear me yeah yeah that there's if there's any other questions before I go to our next one um if not there was some other topics we wanted to discuss um but I think that D has mentioning a lot about H sparland already not just spark about the talken about the stepd and how it's going to work or what they're planning to to do in the organization sorry Chris can you hear me you can hear me

right think we're having a problem oh okay it's me oh okay okay so everyone can hear me okay cool um okay I thought it was me okay so while Chris um figes out how you can listen to me um Maran said when governance system in spark do you expect only the maker governance actors to participate or could you also aim to create spks on governance the same question goes for the community or the ecosystem in general service providers advis picture um it's a very good point um I think I think part of the value um the advantage that the sub system brings

um to maker itself is to be able to basically onboard uh new new actors into the system the problem before was that let's say um for examp I I I was previous in the previous live I was the um facilitator for the data Insight core unit essentially we would do data engineering provide data to people do a couple data analysis that um if you wanted to bring in a new team and say hey I like this team I think they should also do analytics the problem was like well there's already a already a team that does this um plus you everyone has to vote on them and then maybe analytics

is not that like that mission critical but let's think about like a new a new um a new risk advisor so instead of having block analytic say hey let's have a let's have another one or let's have a a new prot engineering team actually building and maintaining the smart contracts in the system if they were very they were very um there were decisions that had an an immense amount of impact into the system uh so again it carried a low of risk now with the subd down model you limit that risk just to the subd down and actually if it works great the single subow other subs can can copy that model or basically hire the same uh EOS system actors to

actually perform the same service to them so it's a great way to First validate the current mstem actors that do provide value real value a problem that we had before is um we had way too many teams that were EMB boed at one point and well maybe once when they were on ported they were actually providing value maybe in the long run they stopped providing value or they didn't provide as much value as what the they cost to maintain what the budget asked for um and it's very difficult to readjust that but if you atomize that and you bring it to a subow level it's like hey if the subow uh is needing this type of services and

H is this action actually is a great act to do um X Y and Z then the next subd can look at like well we have similar needs let's also hire this sub actor to actually provide this service to us um it's again it's kind of in the same topic of experimentation it helps you make decisions drisk decision making um and kind of like scope down the impact of of people on teams uh progressively give them more uh more scope if they actually show the value that they can provide to the uh to the system as a whole um okay Chris if you can hear me

um do Maran uh he's right so he might have a followup if not uh we can continue with your questions which yes there's always something happen with Discord me but uh can you hear me everyone if not let me just yeah okay good so um yeah the perfect that you we had more questions in the chat because there is something else regarding I think we're gonna pass a little bit for spark we do have also more questions but I think that there is um regarding the topic of AA and and Moro that I wanted to focus on um so

when it comes to the orle fixed pricing there has been like a lot of discussion right so um could you tell us the advantages for certain used cases and also like H any drawbacks for cases where this um decision of this idea might be not the best one the best ideal yeah [Music] so um

they downwards so uh why do I fix Oracle essentially just assume the price is one instead of reading from the from the market what the actual price what people are trading it for is um first point is C that this is not new to maker um currently spark sparland and actually A3 also has this when it comes to Lio uh State teeth we also use that we also have we assume that one WRA State teeth is always worth one eth uh no matter what it's trading outside and the main point is that uh these tokens have their value

is not the main source of value doesn't come directly from what it's trading in the IMM in Unis swop or cop for example but it's really what their backing is and the case of Lido I think it's a better example it's a cleaner example let's say because essentially is Lio takes in your e they deposit in to um so they have operators that basically run nodes on the network um they they themselves they basically just create a IOU token which is the lier to Li State be saying hey you have a an e token that we are using to validate transactions um and we give you a yield to that now what happens if let's say

it's St this uh like no one for some reason people just know I I'm very influential right saying Li is bad I don't like say this and everyone just sells State de and just plumet down to zero the Lio system is still still working Lio still has your e there they're still used to collateralize um their operations and then if you actually grab your state te you go into the system you say I would like my e back they are able to keep it back um so in that case maybe listening to what the market is pricing this token at at every single point doesn't make that much sense because if there's a mass Panic for no with no real reason you could

essentially be saying assuming taking the price saying okay so the light of St this is wor zero nothing I'm G to liquidate all my users and then in an hour it's all back again because people panicked now to paper paper point this is true lighter is a much more uh transparent system it's very easy to see because it's everything's fairly much on chain uh and it's way more liquid than that um now for the case of Athena and this kind of brings a little bit back atina is a little bit more complex um because um atina has enough chain component um at a very high level and I'm going to basically minimize a lot of the the complexity of thetha system what Athena does is you give them your East

and they basically go and L it out into binance another um another centralized exchanges they do this because uh there's an instrument called Perpetual feature uh that Traders are particularly happy to use that to leverage their positions so if I'm a Trader I'm on bance and I have one e but I want to uh leverage up on I'm going to buy more Perpetual Futures go long and then all of a sudden I'm exposed to I technically have 10 E I really have just like I just asked 9e as a loan um and then I either make a l money or lose a l money right

what thinga does is because there's so many Traders doing this the the interest rate they're willing to pay is quite is quite High it used to be when they announced it was like I think or something something ridiculous um so it's very profitable to be on the other side of this trade to say hey I'm going to lend you my eat to you you're going to pay me the 70% I'm going to be happy at the end of the term H you give me back my eat plus 70% in fees um so this whole system is happening on itself it's an centralized change it's not it's not un at all um there's a couple more exchanges and there's custodial in between I don't think we need to get into that right now um but

essentially um there's basically you you take out the E from the system itself and you bring it enough chain so if for for whatever reason there's a panic in the market with Athena and the price drops extremely fast because also there's not that much trading of SD or liquidity for it itself there again similar to Li not the same but similar the value is really just locked up in binance so as long as binance works and all the other exchanges work theales work and this like sudden Panic would that would usually U make makeer spark more for liquidate users instantly uh would be incorrect you were just reading you Bas have a sub like you have

incorrect uh or you have limited information um now it's great for this it solves for this like flash crashes that have no fundamental value no that they don't they're not don't make really much sense it's just people speculated now what what the problem is the problem is that you are basically um underwriting of you say I validate that USD and S will always be worth $1 which again not just like a sudden Cate just just not work out let's say there's something happens with binance uh I think as indust see entities we assumed

were incredibly secure and correct everything and all a sudden they were in shambles so that actually happens um you're exposing yourself to this because everyone else in the market is reading the market price and they say hey s USD is not worth $1 it's worth 90 cents and you keep claiming it's worth $1 people are going to be like cool I'm going my SSC you assume it's $1 I'm going to take the loan from you and then just going to disappear because you're basically giving me free money um so you have both sides and it's really just a balance of what risk you think is more likely to happen uh compar to um so in the case of Thea the idea is you there's

an assumption or there's a trust in that in that same case um that uh the fina system works correctly will work will work correctly and the worth case scenario where the market price just uh dumb so the system fails for whatever reason um depositors which entail within payback maker but essentially we can simplify this and being like maker will be able to get their money back they'll just have to wait till CA liquidates and buy send some money back and so on again it's very big assumption it's a trust assumption it's uh in traditional we call this counterpart risk you exposed to aena which themselves are exposed to

binas to copper seos and the other custodial um and so on and again there's a actually I'm going to link up here this is very interesting atha is very keenly aware of this they they show they try to show as transparent as possible how Diversified they are but in certain cases like today for example they're not that well Diversified when it comes to exchanges for example if we look up here um 62% of all the of all the positions are in binos although they have one two three four five six other exchanges they B can Dent compared to the the total amount of binance so uh in the same way that we talked about this inheritance of risk from one

entity to the other G is still exposed to this tomorrow aena decides Dees to scrap all the exchanges scrap all the exes and just put money into One bank account that is the decision that impacts negatively maker um so it's a essentially you look at risk you look at how to mitigate them and then you make a risk adjusted decision whe this makes sense or not um and then on the other side maker has like basically controls to actually be able to mitigate this um so as you might know um rather than doing basically adjusting the parameters

of this DDM through governance which we currently have I think we still have uh two weeks uh from proposal to Executive vote plus uh it used to be 48 Hours delay between like voting confirmation and execution but I think now it went down to 16 hours um for theable particularly this is going down to a um to a multis or even a a ea signed by one of the governance uh facilitat uh so again it allows for more rap rapid response um but also incur some more risks the nice thing about if anything that most things that go through make a

governance is like they should be highly vented and there's a lot of time to actually wait like you can see that decision happening the same way that SD rate changes and any user that is an S diagnosed basically with two weeks in advance uh usually uh that their rate is going to change uh it it the again we're talking about with predictability it's a it's a very good user experience to actually know what's going to happen uh ideally maker is the most predictable system in the world because with predi stability comes Peace of Mind Essen uh now me's going through some changes so this is clearly not the case nowadays um we've seen it when uh there was the emergency executive that

interest rates from 6% all the all the way up to 16% uh in pretty much basically over a weekend um hopefully that basically is a tulous time that kind of we kind of figure our things out and don't need to make such drastic decisions essentially there are two just two questions related to these but first would like to ask you today if it's okay with you we can go on since we already have uh an hour in this y perfect so we're talking about this great Etha and morall so um focusing on this if the TBL

continues to to growth as its current rate so reaching 600 million or even uh 1K do you believe that the parameters set for the VA are like enough to ensure un chain liquidity or do you think that this is something that it's beneficial or not really how do you see this part um good point let me check actually because I I saw this morning that the Thea rate was it just plummeted like it's not even that interesting anymore it's not even 50% it's like 177% um in that case yeah okay so as you see API apy is currently

17% uh and if I go to block analytica Moro Market page uh FUSD is charging 21% to borrowers but currently if you're a if you're someone that basically has leverage up on susd using uh Dina and S you're basically losing money maybe on the daily basis not that much but like you're basically losing money um what's bound to happen is that users are going to start deleveraging themselves meaning they're going to basically give back their debt and then they're going to close the positions so that means that this credit line is going to go low going to go way lower um

because you currently have it's not it's it's Ste down quite significant um so I think this is a normal response to the market you essentially have people willing to pay 70% uh uh to basically borrow Ur to be able to leverage up um the more people are willing to lend them lend to them the the more competition there is on the supply side the lower the rate will be uh and at some point there's a position where it's like it you as a as a liquidity provider do you actually are that incentivized to give money um to this type of Traders uh currently for

70% annualized I don't think it's worth it uh so this credit lines is is surely going to lower down and taper down um with with that in in mind um now to your specific question of are the parameters set up correctly currently I don't I don't know that much that you to give you a proper opinion on this um the nice thing and here's maybe uh well ungovern ungoverned Protocols are really cool uh this is nice thing of having a very d a very active governance or like basic uh active teams like blog analytic working on this that um the more we the gr line increases uh the more the

parameters will actually um be essentially be trimming and focusing on actually um ensuring that nothing disastrous can happen going back to that top topic do you have anyone in mind besides uh blood analytica who could kind of like take the role I don't know if it's as scope advisor for RIS but but just someone that knows or is an expert in when it comes to risk parameter that can also be in in the end game very good question I've been thinking about this idea of the role The

Advisory roles I think they're called I I have a personal pet peeve with the uh with the wording of the atlas on this because it ask that the advisor has no conflict of interest and the problem that we have not even particularly it's we're a nich it's very few people that are actually working on this at the scale that we're working at um so if you if you truly find someone that has no conflict of interest whatsoever I'm comfortably com to be able to tell you that they have no experience whatsoever um the people that have the experience and able to do and give you advice advice proper good advice on what the rate should be what the par should

be have conflict of interest they're working industry they've been working industry before um so I'm I don't have a specific name in mind or a team in mind that uh that would tackle this I would say that I think they it would be great to see a revisit of this role in a way that takes into account that there will be conflicts of interest I know if you look at risk providers I only know two others uh and none of them have the same let's say methodology as blog analytica this are Gauntlet and Chaos laabs they focus more on what I and I could be wrong here but I'm pretty sure they focus more on uh modeling um like uh of

risk um they well Kos laabs currently works for a cont just working with a Now is working I think they're only doing stuff for Mor for their own Vol I think techically they have concept of Interest with maker a there we go thanks yeah exactly agent based analysis essentially they're running simulations and they kind of simulate not only it's like if number goes up this things happens but also I have an agent I have an user that if rate goes up they do this I have another agent that if rate goes up I do this other thing and they kind of try to make reality as much

um I think there needs to be a there needs to be a framework where you can you can have these other teams or you have these experts again I don't think unforunately this can be outsourced classes I think you do really do need to have um you need to have experts on this uh and if there's an expert if they're an expert they're working on something else but technically you could consider it as competition to maker um I think what you want to have is um you want to have more I think more the most transparent possible opinion this concepts are just not graspable for everyday people uh so you need to find a way to have this kind of validation of

experts U how do you achieve that I have no idea yeah that was something that I was come coming up with since in the last Twitter space or X space where run mentioned that they are looking for risk parameter experts so I wanted to kind of like okay is there's someone that you have in your mind so you mentioned actually to the cabs and and some others apart from what B analytica and I think that it's uh I mean that they're looking for let's start also kind of a have in mind who could take that role not necessarily as a scope advisor since we there's nothing that we know about it there's no like updates on that so uh but it's a good um

Insight that you're giv to that role now this is the last question I promise um so a few days ago H I think it's here it's not but JMA from the team as well he posted uh in the Forum about a an idea an initiative about that it's kind of like similar to or well it's it's like a comparison between H usde and this is called es di so so it's enhan saving die and this product idea was specifically designed to work with with maker so here in the pause it wres oh you you read it perfect because I was

trying to give like a summary but so actually actually this idea has been Ted in maker I think it was like three years ago that this idea discuss at that point it was called ether die and actually when we presented Phoenix labs the idea of spark to the community the we have we had ether die actually in the initial post thinking like this might actually happen like anytime so it didn't end up happening um so the idea as as far as I understand is basically just creating our own liquid staking e derivative product um I think it's a good idea I think we like mag should be do doing it um the problem there is like

you need to have experts running this um and like what's the incentive for an expert to actually running this uh plus also um that we we see it currently with light of State teeth against the other lsts which is it's incredibly like Network effects are incredibly strong um maker maker on boarded rocket e a long long time ago and it's still barely paid the Oracle Fe that he incurred and it's a sad thing it's a sad thing that um people don't users users in general are not looking for as much diversity as

possible but they also um it also also presents a problem with like from a user experience point perspective is like I don't want to choose a worth of product just for the sake of the entire network while I I get less value or less worth user experience um on individual basis um actually paper mentioned this a bit ago when we talking about Tina that not only are you are we Isa exposed to Li STD but they also exposed to more exotic LSD such m e and be e um the

diversity uh as me to basically so buying Li to go by be um be is smaller I'm not sure exactly how it works it has less of a Lindy effect essentially has been less proven has less time in the market than than Li is um so unfortunately is a lesser product um so you also have to consider this idea of like if makeer ENT is this what is the demand for this um what is the demand and also the uh the business model that you can have behind this uh at a mar perspective at the market perspect not just at maker um I think I think there's a main maker has had a culture of building things in

house because when maker uh first got created there was basically no defi there was no there was no environment at which they can pull from other experts actually use their their thing um big reason why chronical uh Labs of basically the chronical oracles uh exist it's because at that point there weren't some proper Oracle providers that can actually fulfill this um now that we do have an ecosystem um it's a very good position to have from a culture of building in a house of like making this decision do we build this in a house or do we uh basically collaborate with an external party that might be experts on their own rights on this um so kind of

bring this to to a more concrete point is like should make it create a on should they should make it basically uh provide a e Vault uh for light rocket as it's already been doing um again I'm very much forward to experimentation I think it should be experimented on it should be tried on but it's incredibly difficult thing to achieve uh because you have a lowest conal scale benefits uh they only achieve once you get to a like a stage like basically the size Flo um and also on the other side the opportunity cost instead of spending time resources money on this uh what other type of experience could you be

doing that might actually rip more benefits to make ultimately the whole I mean make it before subd but currently now it's subd you want to diversify the the collateral um underpinning die as much as possible um so I think it's more looking into that uh how much diversity collateral diversity you can you can get uh to ensure the resiliency of by itself you brought up lots of dows so I this is we are going to end with this part you also discussed the the kind of like the structure that you're thinking

for the subow but there is this concept that anyone can build a subow I think that that was a beginning how it started so this how do you think this this could be more practical or like achievable so we can have in in the future as that is a purpose to have many more St outs yeah um I'm a very big fan of this I really want to see exal teams coming in and building their own Subs I've uh the last few years I contrib a maker and just meeting people from other teams I've seen amazing things amazing teams that just simply lack the I like to call it distribution Channel and I think

maker has that distribution Channel already set up um I think the one important thing is that um I think there still needs there still needs there's a lot of refinement to be done with how what a subd is what it can be and how it should operate how it should relate back to maker um that I see this like basically beta launch as being quite a necessity before opening up um I think it's a we be very unfortunate if we opened it up had two 10 new subow and um one of them fail catastrophically and the right G rails W put in place and that affects

the entire system and then basically that uh takes the confidence out of the system to actually have more subs I think we need to have them um I yeah I think it's a matter of time to have them I think just be a market PR eventually we need to have more subs we need to have more diversity uh but how do you effectively Cho how do you effective voting as sat that will actually provide value and benefit to the me ecosystem as opposed to uh taking it away we saw it with um with core units that the first core units uh were I mean the still around so they definitely work um but we kept on boarding more and more cor units in the

name of experimentation but the problem with that typee of experimentation is that it had no um it had no um it had no goal it had no uh it had no point at which you like you they had you had no way of measuring how successful an experiment of cor unit was um you also had no there was there was a problem with incentives as well there was there was no upside because all all routines basically run on a budget you just get a monthly St then you would have to produce value um so it let's say let's say i s that Accord while

back uh and then I think makes sense the start and then it stops being making sense my whole existence is for my cun to actually make sense if I don't adapt I just play uh I just try to pretend as much as possible so people don't basically fire me that was problem with the uh it's very much like how became by bloated and I see paper writing and I think he'll he'll this is going to have a way more accurate description of what the state of it was before um so the point is how do you how do you make this not be a repeat of core units uh with subd how do you on board the team there actually going to produce value that has

skin in the game that is not working they're just going to be put it out by from the system almost immediately and not just carried on and getting their the fails paid just because no one wants to be the bad guy that has to fire them yeah I also say nothing nothing because they're they're typing but uh waiting for paper paper point on this um yeah yeah exactly uh so paper Point says this will still be a problem I think look at the

two arrangers this is mentioning monal and block tower they're doing the same thing and there's a clear difference in quality and return K didn't have contractuals and are supposed to but no clear governance will act upon it correct when core units came up the idea was like Hey anyone can create core units if a core unit is doing a bad job it's just simply a new team the market essentially will basically dictate a new team shows up let's say I of the DAT of the data coent uh hopefully I I hope I did a good job but let's say I did a disastrous job you would expect a new team with of the analytics come up and be like hey we want to do this job because we think T is not doing a good job um on theory

that sound great right you're gonna have they're GNA be on boarded you're gonna have a time where you have two teams running and doing exactly the same thing and basically imagine let's say that we also get paid the same like we have the same budget both teams one team is producing way more value than the other one it's very easy decisions like hey tell thanks for for doing this but you're clearly not you know no really good investment uh we're gonna kick you and your team out in practice this never happened because in practice uh I have to be a this a proper insane like catastrophic public disaster uh to actually warn people's attention to actually go and farm just because there also there's people like there was a low way more things happening so like do you

really want to figure out what T how bad a job is T doing um and the on the other side is from the the new team perspective even if there's a team will hungry for to do work and provide value on the analytics front it's very difficult on a human level to look at an organization and say hey there's a team of analytics doing there I'm just going to apply and try to do the do their job and take and get them out most people don't see themselves as a bad person the bad guys so they're basically have no there no real incentive to do it and on the other side from a governance perspective a new team coming up it's a new analytics team saying hey one of this the same job that is doing

um the the theory dictated that we should have redundant teams so we had we should have two teams doing the same thing but in practice it's like it's a very big waste of money there's also unless you put very strong kpis you're still not going to be able to measure them like measure correctly who's doing a better job maybe the other team produces way more analysis and stuff than my team but maybe most of the analysis are not that important and like I produce maybe one analysis per month and it's actually super point and it's great and everyone loves it um maybe one team is better at selling themselves on Twitter than than my team um maybe I build a whole infrastructure back end that no one

understands and no one sees but that means that uh I can run a linear a linear team and only spend maybe a thousand bucks a month on on infrastructure while the other guys just like keep punching AWS and asking for more things and end up spending 10 times more it's very difficult from a govern's perspective to to make this assessment essentially um so the hope is that if governance only has to validate a a subow and they have their own bottom line it means that a subow if they hire me and I'm doing analytics and I'm doing a great job they're like cool you can continue if I'm doing a bad job they're like hey we're going to look for someone else um sorry and because we want more value

from it or because you although you provide some value it's very it's you're too expensive it's a more of a team decision or a small small community decision um so that's what we that's the idea that's what it's been tried been tried to avoid basically a repeat of core units um hopefully hopefully happens but again back to your your question uh yes it will be the the end state is to have multiple subd outs but you you can't go ahead and just like go 10 new ones because it's just going to be insane um again let's think the most important thing for me I think is like we need to reduce the governance workload like it can't be that you need

to have like I need to spend like all your weeks and your weekends reading and to stay up to date to have an opinion on every single little fact to actually be able to vote act correctly um I think the introduction of the delegation made a lot sense back then because a normal user had no way of taking care of everything um but at the same time we Al also reloaded govern um delegates even a single delegate couldn't do everything so uh again on the governor side I'm not I'm not as um as I don't have all the info but um when you guys doing this idea of the concept of ABCs makes a lot of sense it's like hey have people that kind of have the same idea Ponder

through this decisions B come out with a with a answer basically an edit that they would like to have get pushed that into the edits of the atlas and then that brings back a separate entity that comes in and actually goes and executes that um uh that decision making uh and yeah and paper says it's very hard to displace an incumbent especially when there are high switching cost totally agree um so ideally you maybe you can't avoid this High switching cost but ideally you have um you ESS have this like semi-independent entities that you're not you're not covering entire cost of them ideally and again this is not currently happening

all the teams are currently running on budget directly paid by maker but in the future every subd should be able to self- sustain themselves even to the point of being being having their own decision making of like being able to run at a loss if they have a Trey they can pay for that um and then that kind of like it the decision is no longer makers it's the subd to how they want to operate and how they want to grow and what's valuable to them or not uh but again it's extremely hard well thank you so much D for more than an hour uh being with and explaining us all these topics that are

relevant for what is happening today in in maker in the end game uh I'm going to give you one h a minute for you to say to say goodbye or and to say something that you haven't mentioned before maybe what is going to happen with to now that it's no longer with spark only if you want to share but yeah I want to give you f great uh well Chris no first of all thanks for having me um I love talking about this Nery things uh super interesting also I don't have all the answers and I I feel like in my op is just a destillation of a love of others opinions and writings that I get for example particularly on the the Hina

topics um you share with me mon post but I also highly recommend people to read uh stach vers so like heuts uh stuff that he publishes uh and also one true Kirk um Kirk is is used to be part of Vols protocol now is building a new protocol called credit Guild uh and he also publishes super well detailed and like I read them and basically I I end up figuring out what what the hell is going on uh so I encourage you to to read them um on my own self I'm just taking some time off it's been three years of just non non-stop work so I'm

going to enjoy a bit and in the meantime I'm here in Buenas and being part of moo which is kind of like a kind of zalu type event essentially it's a cowork where crypto friendly people come and for like a month a month and a half now we're in the we still have a whole month ahead of us um doing workshops um chatting with each other uh I've done already a stable coin Workshop there I I want to do another one there um next week I think we have protocol Labs coming in as well and chatting with us um yeah everyone's around you're more than happy to come it's a great how great fun and yeah thank you thank you everyone by the

way great great jacket cool cool jacket byebye everyone you everyone [Music]