DAPPCON 2024: Circles 2.0 - Fireside Chat - Stani Kulechov

Transcript

thank you for joining us today this is a very special moment in the history of defi as you know lending borrowing these are Financial Primitives that are really the most important ones for any Financial system and it's also the foundation and layer of of D5 and well money markets is a category that a has been dominating for The Last 5 Years the the a code base is been um this been holding more than 75% of all of the loans originated in basically

every layer one layer two basically the whole industry it also as of today it holds more than $2 billion of tvl and well so that's one of the the key things it it has also passed the test of time which is critical in our industry it's survive even a once in a century event like black Thursday you know that's something not many can can tell Without Really any scratch and well few Cycles it's matur enough to have survived you know cost discipline of all

of these bare markets it's stable it's strong and it's also well resilient and also anyone who's been long enough in this industry in defi can tell you that historically every leader in each of their defi categories has consistently and historically reiterated and driving the innovation in their category so I don't think you you have to be a wizard to to predict or forecast that AB is going to continue dominating and and driving the innovation in their vertical money markets and well this is what we're

going to discuss today we're going to discuss the next iteration of a a before and also the vision for for a 2030 a proposal that is active on on A's Forum so well please join me in welcoming Stanny Stan it's a pleasure yeah it's a pleasure having you with with us today you told me something interesting um was it like it was yesterday about you were using a way before um back in the kind of um uh predecessor uh ethland and you were actually putting loans into because itand was more of a um um order matching

type of u u um Ling protocol and you were saying that you were you were already uh doing those loans and trying to get match and and whatnot so you you've been for you you you probably even have been liquidated probably once or twice over over the years yeah it was I remember it was it was a really cool cool experiment re peerto beer was tough to match yeah but yeah the interesting thing is how you kept iterating right and and and moving and now well and I mean just go back in to go back in history um that was um 2016 when we were starting to think about um e and and kind of like I I I felt really

strong about um eer Delta which was probably like the only decentralized uh exchange where you can um interact with non-custodial um addresses and and set Place orders in order book and my kind of idea there was that what if you could actually U use this value that is on chain use that as a collateral U borrow against it and also earn yield on your assets um and back in those times like the the liquidity was extremely low so um if you think liquidity is low in bare Market you it was multiple times lower and and the kind of idea of uh pulling assets together from from risk

perspective was um a little bit of too early at that point so that kind of like Auto matching um felt the most natural way of of of creating what um itan was uh back in the day and I think Innovation uh such as uh with with Unis unop pools and and this automated liquidity markets and and Bank were even uh back in those days and and and little bit recently on the landing side even uh compound Pro that you could actually start pulling some of these assets uh together um into the same market and and and pull the risk and and I think um the whole Space has uh evolved uh quite a

lot um but our vision always has been uh pretty much the same like how we can actually get this U technology um adopted globally because we truly want to build uh permissionless uh Global uh financial markets where everyone has the equal opportunity to participate um and also get receive liquidity earn from from u a uh with with the same uh conditions and um these uh protocol iterations for us and and kind of like the bigger um AA 2030 vision is is just like a signal from us that we're we're we're not really um there yet um from the perspective of of a and the

technology and and wider uh defi ecosystem and I I think recently I I I stated that um it will take a decade for defi to actually get adoption and it's going to be slow um and the fact that it's going to be slow adoption is actually a good thing because Finance is a really fragile uh space and an infrastructure so you want to adopt something that is really mature uh works well uh is reliable um empowers a lot people and you know great a better Financial uh infrastructure and and that's what we we we recently um uh obviously before we we've been talking with uh Emelia and Emilia did uh

recently a really amazing presentation about what we're uh planning to build we've been thinking about V4 for roughly a year now but the broader uh a uh 2030 vision is about how how we can create a a more of a long-term commitment in a road map as a contributor as a Labs into the um a DA and a is a de just Dow so there's uh governance um there's delegations and and there is service providers that contribute technically or with other types of expertise into the ecosystem and kind of like how we can signal a nordstar where we have this uh Innovation based um progress and a has

always been about uh innovation in Defi and Contin continuing this path until there is like a significant breakthroughs in in in adoption MH so what is the background of this of this vision and also what's the the main Innovation behind your your vision and ab before the way I think about Innovation is that um I guess like one type of innovation is obviously disruptive innovation um which I think was the case early in the early defi days there was a lot of new exciting things that captured a lot of liquidity um and we see some sort of a disruptive Innovations or even

simplifications of existing products that just uh get more adoption and attention and I think the way we think about Innovation uh within AA is that we kind of like are setting a goal like long-term goal where we should be at at at some point and and how do we get there in in this cumulative iterations um so a lot of things we usually have in in each version there's there's basically some interesting kind of like a big bets or features uh that are we're betting that are really um going to be significantly empowering for the AA users um and some of these features are also just increment incremental um progression of of pre

previous uh iterations so kind of like a little bit of a uh combination um there and I think uh our goal also is that um a you know it it can be a um a really good progression for um the user experience and and the way we think about um the protocol designs and and features and uh and and products in general is that we're trying to figure out like what is the main needs of the main uh user within the a protocol uh and how we can make that user's life uh more easier better um more safer uh more efficient more optimized as an example so so you

mentioned this solving problems of the users we know liquidity fragmentation is one of the largest problems we have identified today so how how do you see AB before solving these problems how do you see um improving the liquidity within you know all of these chains that a currently is is the leader yeah it's I mean we kind of created the problem because we we deployed in so many networks um or at least contributed but uh from a health standpoint so the the way we think about like the the multichain um environment is that if there's some sort of a user base um and and it's a wide enough to

have a financial layer it's definitely going to have a financial layer um and that means basically defi that means like a unisab and stable coins and and so forth um and obviously then there's uh the the question of uh how people could move liquidity most users are might be using just one network so for example if you onboard today into the uh you're using defi most likely as a new user you might not be using uh for example the L1 you might be actually using a a rollup um instead optimistic uh zik roll up um and and and the way we think about it is that a and defa has to be where those

users are there's there's some exceptions into this uh thinking for example there might be uh networks where you have some sort of special purpose um uh functionality that can be for example gaming or some other activity um but if it's kind of like a more general purpose ecosystem there's going to be defi there and we saw this early so we've uh with the a uh Community we've been deploying um the a protocol into multiple networks and a actually is a a protocol that is cross-chain governed so um one of the um avow contributors uh bgd labs they they basically built this version three of um

AA governance which has this cross chain um ability to vote cross chain and also make those votes on L2 and what is interesting here is that um you don't need really multi6 but you have two governance across multiple uh Networks works so the governance piece is kind of solve in in the cross chain uh world that we we have at a um and the the more the missing component is the how to move uh cross chain liquidity more seamlessly um and I think um most of the users will just use one specific Network where they they actually want to transact but there's other types of users that want to rebalance the liquidity between networks and take advantage of that Arbitrage and for those cases what we're thinking with the

um and it's part of the AA 2030 vision is a cross chain liquidity layer so in in the future what we're thinking is that there's going to be a AA Network as as a main liquidity Hub um and down the line that AA Network can be optimized uh to serve that main purpose of lending borrowing storing liquidity but then with the U component of cross chain liquidity layer liquidity can be moved more seamlessly between these different deployments and this is just based on this uh feature that we already have uh in Ava V3 called portals but in in V4 we're optimizing this feature and making it uh a bit more uh General uh purpose so in that case um what's interesting

with a protocol like AA is that it's a a place to store your assets because you're earning and putting those assets into work compared to amm for example where uh from what I understand and from my research is that you kind of like you don't have that need to actually store um liquidity so most liquidity will be in in some sort of um um liquidity layers like um a protocol with some sort of uh tokenization um and that becomes a place where you want to make an efficient layer of of moving liquidity um ac across networks and there's obviously tools like um ccip which is really helpful and chain link has been working

with that and we're using for example for uh cross chain go deployment um and it's a seemless infrastructure that is easy to deploy uh and and utilize but down the line what I think is going to happen is that you uh we're able to use uh ZK proofs actually to move liquidity across networks really really uh seamlessly um and feeling instantly and that is why I'm quite excited about U ZK rollups because you can bypass those uh waiting periods of what you have in optimistic rups when you want to move liquidity from one network to another H that's super exciting so so lot of new features you know I'm wondering how would compare the end game with a 2030 if you see any um

do you have any any comparison How would how would it fit the maker end game yeah exactly yeah I mean I've to for my kind of like a knowledge I the way I understand makeer end game is is a lot about uh the the idea of subd and utilizing subd to to expand um a 2030 is is more of a long-term signal long-term commitment of uh for Innovation and and for adoption so obviously one of the spear hitting um Innovation is is the V4 um and and optimizing the the a protocol um uh technology in a way that a can be a very

efficient market for anyone that for example is uh supplying a lean collateral and boring a simple asset like usdc as an example with liquidity premiums and what liquidity premium helps as well is that you can start actually um matching the risk and reward within the same pool uh more efficiently so for example you might be paying a a u base rate um for borrowing usdc against e but then if you're on another side of the spectrum and and pro providing more risk risk into the to the same Market uh you're paying base rate and um a liquidity premium depending on your uh position uh composition and the

collaterals that you have so what this means is that we we're basically uh we're keeping the same um user experience that the a markets um have so you can bring all your assets and then use your whole portfolio to borrow any uh type of assets that you you need to but um the big difference here is that we can price that liquidity more accurately meaning that a V4 Market becomes the kind of like a best place for you to supply a lean collateral um and borrow against it or to basically Supply also in the same Market uh more riskier uh collaterals that is accepted in the um uh risk uh profiling and I

think that's kind of like an example of like uh Innovation there that we want to do and and part of the whole 203 Vision obviously is the of a network cross chain liquidity layer but also kind of like a updated uh brand identity as well so we the way we think about it is that the the way we get into the adoption is going to still be very heavy uh heavily based on on Innovation um and and the features that we're building they need to C um obviously um more of the normal mainstream users and institutional users and that's where the smart uh accounts and segregated collaterals uh play a a big role as well I'm also wondering

what's the role of of go in this unified liquidity layer yeah go is going to have a a a signifant significant role and um as we saw with the uh Emilia's presentation there's going to be more um direct Integrations with with go into the um avv for protocol but also with the AA Network so obviously um one of the ex exciting use cases for for uh stable coins is if we get these stable coins into um traditional uh payment rails but for example with draw UPS we we can't really get there with with the cost that we have uh today but something like with um AA Network and having a validium uh chain on top of it we can

actually have very significantly uh lower cost uh for that that basically fits the criteria of payment transactions when all the transactions are a fraction of of a scent and I think that's going to be like the the very interesting uh component so so obviously go is going to be more integrated into the um iv4 um it's going to have lot of interesting features there but my kind of like a bigger Vision here um and obviously I I represent my vision that now has its own Vision with with all the uh contributors but what I would like to see personally is that we can get these stable coins into actual uh payment use cases and we're not really far of that so if you have a valid

um we we have basic account abstraction and uh we have just better uh payment infrastructure in terms of ux experience and and Integrations we're not that really far from actually being like technically ready and then the last layer is actually like how we create exciting new uh payment applications as well because like the way we pay today for example on internet is pretty much with cards but the the methods of paying is usually subscriptions um either like monthly or annually but with things like um validium you can actually start um charging by you know if if the user is scrolling a page or any different kinds of actions micro payments and and

there's a lot of uh potential there a lot of these things has been they're not really like new Concepts I I think there are people who' have been talking about micro payments for for a decade but but we're we're reaching to a point where that infrastructure is getting more better um and closer to to uh usage we have so many so many things so many new things right it's it's really exciting so sadly we don't have more time um so to round up do we have any any questions cool then well thank you so much thing is thank you so much exciting

yeah waiting for for the launch and the proposal thank you so much thank you