How Data Providers Will Bridge Centralized and Decentralized Finance

Transcript

oh hello welcome everyone um so my name is omron i'm going to be talking about

bridging c5 and defy and we're going to look at that through infrastructure and especially data infrastructure um so i'm going to start talking relax it's going only going to be 20 minutes hopefully a very nice digestive break i don't have a clicker is there a clicker sorry my bad shall i start again i'll start again yep all right hello everyone uh my name is amber subberron and we're going to be talking about how do we bridge c5 and defy so

just one kind of statement to open this talk the first thing is about the availability of reliable and actionable financial data and how it's key for individuals institutions and enterprises alike in order to build financial applications on ethereum we hear a lot about defy finance without reliable financial data is kind of useless so here we'll talk about this importance of data the importance notably of the interoperability between cfi and d5 from an infrastructure standpoint and how we at kyco are approaching it through the lens of financial data so very quick intro on myself and kaiko my name is amr subhan i'm a

mathematician by training and i worked about a decade in traditional investment banking before joining full-time the crypto life back in 2016 and i'm now the ceo of kaiko so kaiko is the leading provider of enterprise grade financial data on ethereum on blockchain we offer an api data platform that gives access to real-time and historical market data covering pretty much any type of crypto assets that trades anywhere we cover currently 120 000 different crypto asset instruments we cover spots futures options swap we look at centralized exchanges we look at decentralized exchanges

and we answer the hard question of what is the price of any given crypto assets our clients and our kind of addressable markets are institutions so we're a b2b focused company we work with institutions enterprises in the space that need data infrastructure in order to enable either investment strategies or just products a couple of edges we do what's called like on-ramp off-ramp from and to the blockchain from a data perspective i'll get back to that later we define standards and we build this interoperability between institutions in traditional finance and what's going on on chain and we have a quite unique data set our team is 30 people headquartered in paris we have an office in new york

we're opening an office in singapore and we're hiring so if you like what's coming next feel free to reach out so just to set a little bit the the scope of the of the conversation here it's really about blockchain as a technology and as a platform to enable the application of find the development of financial applications and how do we create programmable money how do we implement financial contracts and how do we create financial instruments i'm a huge believer in the adoption of blockchain as a core infrastructure for traditional finance to kind of come on chain so either you think about traditional finance moving on chain or you think about that as the growth of defy regardless what i believe in is that

we're going to use blockchain in the future to represent the ownership of any type of traditional assets and to represent the transfer of that ownership the opportunity is huge we're talking what i call digital finance or global wealth kind of onboarded onto a blockchain from an infrastructure standpoint and we know it works right when we look at d5 defy is a very incredible sandbox if we compare it in terms of size to traditional capital markets but it's a sandbox that proves that blockchain just works you can implement all kind of financial applications we now have money markets decentralized exchanges lending protocols a lot of incredible things that are just relatively basic financial applications that now live on chain

so going back to infrastructure and this interoperability of infrastructure what is first of all market infrastructure market infrastructure are all of these providers that enable a more kind of institutional use of different services we're thinking data providers etp issuers when you hear about etfs or trackers or all those financial products those are created by etp issuers there are regulated entities you have market makers you have calculation agents brokerages exchanges clearing and settlement houses custodians all of these kind of infrastructure companies are very important for the establishment of any kind of in industry just a very quick kind of overview of all the different market

infrastructure companies that are out there it's huge the landscape is continuously growing an impressive amount of kind of funding is being thrown at those companies because we understand the value of having these companies just building and laying out the fundamental bricks for d5 to grow and to onboard onto the blockchain more traditional assets so now moving to what keiko does best data infrastructure what is it what is why is it useful it's useful from pretty much everything when it comes to financial applications so market data actually powers financial markets for everything what you're seeing here on the side are the different use cases for market data you need it for live data feeds you need

this for historical data for strategic back testing you need that for research you need that for post trade valuation you need data for evaluating assets under custody you need data for monitoring markets and above prices you have those notions of market debt bid ask spreads liquidity all of these things are derived from financial market data who uses that everyone within the kind of b2b markets we're working with brokerage companies we're working with custodians we're working with market makers regulators audit companies tax companies institutional investors asset managers etc however it's a hard it's a hard thing um there is this notion that

data is free either because centralized exchanges publish their data for free or because decentralized exchanges live on a blockchain and data is inherently free however there's a lot of hard kind of industry pain points that make this a very hard problem to solve if you want to do it reliably and at scale and those problems are first of all it's an incredibly fragmented exchange landscape hundreds of exchanges different kinds of on-chain protocols there's no standard taxonomies i'll give an example of how we're solving that in the later stage um it's time consuming it's expensive i don't want i'd be ashamed sharing how much we're paying in terms of just servers and google cloud and aws and ovh and all of these things

it's actually um quite consuming there's no historical data available um that's less true for on-chain stuff obviously on chain the data is there and stays there it's more about how do you extract it from a blockchain however for centralized exchange data they give all of the kind of real-time trades and order books through apis but that disappears over time and finally reliability you know with data it's garbage in garbage out if you have good data you can build intelligence on top of the good data if you actually build intelligence on top of unreliable data well you end up with something that is as unreliable as the data you had initially so all of these are really industry pain points and this is what we're solving with keiko

um how is market data bridging all of that there's new market entrants that are coming into the d5 blockchain crypto space and they need to rely on accurate and timely market data feeds those channels in order to ensure consistent data delivery are super important both on chain and off chain and so we are building data channels in order to deliver data both to traditional participants now you've seen this kind of strong institutionalization of the space with the arrival of a lot of large banks and institutions and asset managers that are now looking very actively at crypto these guys need reliable data feed right we need to be able to take data on chain and bring it to

a fidelity for example so this is a problem for which you need crypto data channels that can be integrated with traditional infrastructures and of course you also need to incentivize users on the other side right so reliable and familiar data is important it's not just about delivering kind of bulk raw data it's also about making that data intelligible and usable by the end user so crypto market data must be interoperable and um i shouldn't maybe this is not the right room to say that but i'm amazed at what we're building with d5 but i also think we shouldn't forget about looking at what exists and taking the best of what's already there right the current

kind of capital markets world may be in some ways a bit antiquated in some other ways they've been decade of financial engineering where we have been thinking and working on how to implement just finance at a large scale so a lot of things have already been built a lot of financial infrastructures have already been built it's thinking about how crypto enables us to rethink and potentially transform and improve a lot of parts of markets and especially into how we represent ownership and how we transfer ownership in an entirely decentralized way however collaboration is essential and we at caico i come from the traditional financial investment banking industry i'm completely passionate about

blockchain and crypto and defy but i really think that leveraging both is key to enabling uh defy success at large so in practice what do we do and how do we try to address that problem we're connected to all the centralized exchange in order to get their market data we're also running ethereum nodes in order to extract uniswap and other d5 protocols data we then put all of that into a consolidated data pipeline where we clean the data we standardize it we store it we create a whole suite of analytics and then we deliver this data and we deliver it in various ways a few of them are very traditional type of institutional plumbing which is a data feed a market api stream

protocols but we also deliver data back on chain so we work with oracles and we provide any kind of traditional dex data sorry sex data onto oracles and vice and versa technically if we're thinking of using blockchain to enable the application of real life financial contract we will need the ability for a data company to write on chain data that is not necessarily found on chain so it's about building this on-ramp off-ramp from into the blockchain from a purely data perspective this is our defy roadmap it's pretty it's pretty heavy it's to talk about the fact that initially for institutions all the defy world and decentralized

exchange data was a little bit considered less liquid and less interesting i think this is changing this is really shifting now we're getting increasing interest from traditional institutions to understand data and for us to actually model those new types of data sets that are created by on-chain protocols and have for them to get access to that data in an intelligible way so we've released uni-swap and sushi swap already we have curve coming up balancer one inch and we're working on also adding liquidity events the notions of a liquidity pool is very different than one of an order book which is how traditionally offer and demand are represented on traditional exchanges and so we're also also working not just on implementing d5 protocols and putting that into a

traditional financial data box but rather trying to understand how we can model those new types of data as well so why is it very important this is a quick thing to really kind of express one more time the importance of data at every stage of the investment life cycle we're thinking pre-trade you need historical data for research you need to run back testings on strategies you need to understand how an asset behaves and that could be going from kind of a retail user who's investing in a new crypto and he just doesn't want to buy necessarily the top of the bubble or at the bottom of a dip or whatever it's important to understand the past it's important to understand real-time data during the trading process and that goes through looking at things that go above prices

going back to the notions of liquidity that are extremely important especially in crypto we're very often based by the notions of market cap that can be important but it's very important to understand what is the available market depth and what is the actual liquidity placed on order books so real time trading data very important and then post trade for not for retail users but for most regulated entities post trade data is very important when you need to do reporting in the context of any kind of regulatory requirements you need to have reliable data that you can use to measure performance and this is another part that we have a proposition for just a very simple example on what i was

saying earlier about enabling interoperability from an architecture and infrastructure standpoint we've been working for over three years with bloomberg on the expansion of an existing data standard uh called figgy and that is currently being extended by kaiko to cater for crypto assets i'll give a very basic example when you invest in a product or a cryptocurrency and you say this financial contract is based on the price of bitcoin how do you record that from uh from from a kind of computer standpoint the price of bitcoin doesn't mean a thing the price of bitcoin against dollar kind of means something but it's not very accurate either if you say the price of bitcoin dollar at 4 pm on coinbase that means something and that can be

programmatically kind of extracted and and you can use that data so what we've done is that we've extended that standard called figgy in order to have unique identifiers to describe the asset level such as bitcoin the pair level such as bitcoin dollar or bitcoin euro and to drill down to the exchange level the trading venue level so you'd have a specific uh semantically meaningless identifier to clearly identify in a contract in kind of metadata the exchange level figue so you can say now i'm implementing a contract and for the settlement price i want the average price of bitcoin dollar on whatever exchange at that specific time over that period

of time and here you have precision you have reliability and you're able to know how you're going to find the price that is going to be used as a settlement price for your contract and this enables automation and this enables interoperability between traditional finance and decentralized finance so i've tried to squeeze it in not too long if there's any question and if i have time happy to take them but otherwise feel free to reach out so is there any question hi amber that's a really interesting

talk thank you very much um so now we're freaky there is this data standard framework um that say if i'm on bloomberg i can plug into this to to understand the pricing data right what are some of the adoption adoption challenges you've seen from traditional finance getting into crypto so about the standard uh just one point on that is i think it's a good point you know what are the the pain points creating a standard is easy getting people to use your standard is the hard problem uh that's why we decided to not start creating a standard but rather choose a standard that is widely used there are 800 million figures in circulations

today for all kind of traditional asset class equities debt loans corporate debt anything and and so we've decided to take an existing standard that are being used by capital markets institution and extend that standard to cater for crypto assets so that's kind of first part on on the standard we hope that the fact that it's already an existing standard is going to make adoption very easy and now in terms of institutional adoption um i'm going back referring to that initial slide around market infrastructure not just data the ability to have a reliable custodian the ability to have reliable execution the ability to have regulation in place it's really about the fundamental bricks for institutionalizing and when i say that it's not a negative thing about

defy and i'm not saying necessarily bring the traditional finance people onto the blockchain i'm just thinking we should look at what is happening in traditional finance and take some of those necessary bricks and build that on chain and it's happening i mean it's completely happening i just want to stress how in order to grow and to scale and to attract more people onto that space we need to have those reliable providers of kind of core support and infrastructure for the industry at large thank you very much thanks is that it for the questions do you have any uh plans to provide

other kinds of data as financial that i'm thinking about uh other kinds of unchain metrics uh yes at some points it's definitely something we would want to do for now we've we've taken the approach of uh focusing on the more scarce data in terms of availability so centralized exchange data disappears over time whereas for example when we've implemented uni swap we were able to backfill all historical data because here it's really a technical challenge so unchained data is definitely going to come we're starting to focus on what we do best which is still financial data within on chain and we're not yet doing network metrics um there are competitors that are doing very well network metrics

so we're kind of for now sticking to financial data and actually adding value more towards financial data we're working on using the options data to create some implied vol surfaces we're working on you know things that would be more taking financial data a bit further and adding layers of intelligence to that rather than necessarily trying to do all things data on crypto hi uh have you seen any any platform or marketplace with a significant volume of securities traded on the blockchain uh you mean security tokens uh as in like chairs or derivatives yes yeah yeah absolutely well it's starting um there are you know there's archaics in in the uk that are building their

security token platform they just got an mtf license so it's it's starting and and for me this is the you know the most incredible way that we can really rethink financial systems is really today if you think about it a share certificate or a debt certificate is already represented in an entirely digital way right it's just like the way to get your digital ownership of that thing isn't incredibly centralized and incredibly kind of cumbersome in terms of intermediaries so how about we actually start by representing ownership on blockchains for anything i'm not talking necessarily like digital art which is also interesting but completely different let's start with assets that you actually need to prove that you own i mean

you know any kind of investment that you do whenever you borrow money whenever you land money whenever you buy property this is a relatively low hanging fruit is let's start representing ownership of assets in a different way from a back-end standpoint uh so i'm i really think there's a huge opportunity for the security token landscape yeah i'm actually i'm actually working on something in that area another question uh do you have any interesting clients from like government sector that you can share um we're we're under heavy nda for most of our clients so not really but we we did present our services recently to the sec they're very interested in understanding um you know the valuation services how how

do we actually give a fair price for what was the price of bitcoin dollar that day for example because a lot of regulated institutions in the us for example have to report their daily nav so how do you fix a methodology to to find what is the price you're going to use for your nav calculation all of those considerations are very important for regulators and the other one is generally regulators work with academia and this is to do research on market surveillance fake volume fake trading all of these things are something else that is interesting from a data standpoint for regulators i think i'm over time but if you want to reach out uh

hear my details and happy to take anything and we're hiring we're growing so feel free to reach out if you have any interest okay right we're good i think i think we're good cool thanks you