DeFi 3.0: Rethinking Finance in the Age of Utility and Scale

Transcript

So, thank you very much everybody for coming in here. It's uh quite an interesting uh dynamic, right? We talked about the travel rule before and I don't think that kind of applies to us, right? Or maybe yes, right? So, that's going to be something we're not going to be covering today. So, it's DeFi 2 uh 3.0. So, for us, we're rethinking finance uh in the age of utility and scale. I think this is very important. Many of you here and I just want to get a show of hands. So, who has not engaged in decentralized finance at all? Like, it's a newbie. No, we're preaching to the choir, guys. So, let's uh let's get this started. So, this is quite good. So, um so thank you very much. My name is Cladio. I'm co-founder of Metapple. We're a

multi-chain liquid staking DAO. Uh we started on near then we were multi-chain EVM and nonem. Uh I'm proud member of the crypto value association. I'm co-sharing with Patricio Savala the LATAM chapter. We've been working since uh Devcon uh in Bgotaa, we kind of get everything started there. So really excited about DeFi uh because for us coming from emerging markets or what we're calling frontier markets, that's our bread and butter, right? Travel rule doesn't really apply in LATAM. So anyhow, so let's get this started. Uh let's uh first uh round of introductions from our panelists. So Marcel, hello everyone. Nice to meet you. My name is Marcel. Um I'm a board member of the Cryptovy Association. Um one one hat

I wear but today I'm actually here as a founder and CEO of Thor Wallet. Um Thor wallet is a non-custodial DeFi wallet. Uh we have a couple of USBs like crosschain swaps. So you can trade with us across different blockchains. We were the first wallet to allow for a Bitcoin to unwrapped Bitcoin native Bitcoin to Ethereum. By now this has expanded to like 18 different layer one chains. Um we are also optionally a multi- signature solution. So you can cosign with a second device, a third device. Um but not only for EVM assets but actually any token any chain. Um so very convenient for high security and we have

also in implemented uh Swiss bank account and the global masterard uh multicurrency masterard euros franks uh dollar and euro uh natively into the non-custodial wallet and like that we'd like to basically become the one-stop shop of DeFi instead of going to centralized institution you should immediately come to us and yeah happy to uh talk how that Perfect. Alex, go ahead my friend. Yeah. Well, first of all, Viva Mexico. We have two Mexicans here in the panel. So, yes. Uh that that makes me pretty happy. Um I'm co-founder of my protocol. Uh it's a friendly fork

of Fortune. It's a crosschain liquidity protocol that allows to have crosschain swaps between tokens that with wildly different designs, not only like EVM to EVM. It's actually what Thor wallet here uses in the back end as the rails to make these uh bitcoin to you know pretty much any of these tokens uh swap and we are essentially bringing scalability, redundancy and more impact to what uh started four years ago. So uh happy to be here. Yeah, thank you very much for coming all the way from Mexico. Oris, want to introduce yourself? Yeah, of course. Like from what I hear like we all trying to solve same problem so far like one-stop shop. Yeah, it's I am the sillo at 1 in. 1 in is the aggregation uh of liquidity is roaching. We're

rooting liquidity and I would say that one in is kind of a a security facing roing layer uh for B2C B2B B2B T2C business with the risk management framework that we also try now to offer as a as a service and nice nice to be here. Thank you very much. Last but not least, Michael. Hi everybody. I'm Michael. I'm the CEO of Liquidity. We develop uh DeFi protocols on Ethereum that allow you to take out loans against your ether. So if you don't want to sell ether but need liquidity or want to leverage, you can go to liquidity. It's similar to maker. Um and the protocol

since 2021 has processed more than 4.5 billion in loans autonomously. That's about liquidity. Thank you very much. And as you can see here, the panel is all about builders, right? This is people that have been in the trenches uh during the ups and downs, right? But uh the most important thing that I want for you to get out of this is you have you will have you can you're going to have an eavesdropping event with us, right? So I'm going to ask and also Marcel about giving us some insights on the metrics like is is global scale adoption happening or not? What are some of the key opportunities and challenges as well? Because for many of us that are in DeFi, we kind of feel like, oh yes,

everything is going up into the right, but maybe on a global scale and for people that in traditional finance, maybe this is something not really significant, but I'm here to tell you that it is. So, you want to share some insights and and numbers on one inch? Let's kick it off of course. So, uh listen, in terms of matrix, you know, we was one inch. I don't know if you know, but we do a lot with not just B2C like, you know, interface layer. We have a lot of B2B business and it's actually maybe a more successful part of phone. That's why we see a lot of analytics insight you know of what is happening on the market. So what I can definitely say is that defy is just a friction of a thread fight right now but we constantly growing doesn't matter on the market

good bad at least with one inch we always grow in terms of volumes. Yeah. So if you can compare like the markets uh the daily volumes at IMM is around 810 bill per day at at CFI is like 150 around bill per day. Uh NASDAQ alone is 300. Yeah. At at 1 in uh we like at total volume over like a bit more of the five years is uh almost 700 uh bill and and only almost 40 bill for the last months in May in terms of volumes. So uh and again it's always growing. We always see the number of users that that are growing you know and the number of

institutional users that are growing. We don't have users we have wallets but we can say by the amount of funds they holding you know like kind of and we also try to identify unique wallets. So always raising you know always uh growing just the friction but we are confidently moving forward definitely and um and I don't know if the question of uh any particular market or maybe region that is maybe outstanding the last six months for you um well APAC APE Middle East definitely for us it's growing growing also the interesting fact is that the uh the mobile application uh application layer

is growing. Yeah. In terms of usage from what we see uh as a as a first first touch use for D5. We also have because of the bit of a business we have you know many uh kind of centralized actors more the C5s uh using one infrastructure for roaching and we see how the big players uh that are in the space with the new group of users that haven't used D5 yet with the help of incentivization can adopt DeFi. What what does it mean is that we see that if the centralized uh player gives some incentives for their users to use defy they do that and in very big volumes uh which is and again like mobile application guys is is

rising. Yeah. And that that's what I was coming to, right? Like Marcel, this is I I think uh um I've I've been a fan, right? Like what you have been building, right? And you have never stopped, right? But again, like adoption is key and I think you have first size in first insights into global global adoption as well. Care to share some of numbers? Yeah, absolutely. So also maybe for some better understanding here, Thor wallet um we have for example implemented 1 in. So 1 in is an aggregator we use. We have also implemented Maya chain for crosschain um trading routes basically.

So we have a couple of those um aggregators and they compete with each other um for the best pricing um and then we serve that to our users. Um generally I can basically agree um we push hardware cards and we see the gross numbers growing. Um we're roughly at 200 million per month now crosschain volume. Um which is yeah basically just the the crosschain routes and then also some some others on top like EVMS etc. Um and and with those numbers we are right now the top driving crosschain or volume driver. Um so we

still have a lot of room to grow you know to to get to the billions. Um what what I can share maybe some anecdotes or or also what we like to work at is right now we we see growth but particularly probably those users are already familiar with blockchain defy um they there are various wallets out there they like our services that come to us and then they stick because we also have the multi- signature the card maybe a pretty interface but um we are growing a lot from the existing market which is growing. Yes. But more and more we also see people from trade fry from Revolute

um and and those kind of application moving over and we we see that in our support tickets that when when question comes up with um why are there different USDC's on on different chains or um I get a error message that I do not have enough gas or what is gas um and and those are Then the things we want to work on that eventually we want to have a wallet that is complete gasless and users can you know interact with with chains without needing to know what that means. So there we're we're still early I would say um and but we know the direction where we want to go.

Yes. I I think for for for many here in the audience, right, you need to understand that it's always difficult there there's no way to signal, right, a a region because as Orura said, they're just wallets, right? And we try not to get too much into details in the analytics and getting to really know our customers, which is kind of what DeFi does. But another important aspect here is that on the mobile applications, we've seen the that it's shifting, right, in APAC, right? We see in the Middle East as well, right? The the adoption is there, right? Um but I care to share something uh um around where do you see the pain point you you talked about something as simple as gas right and sometimes you have to explain to

users about that right that you need gas in order to operate in order to use DeFi do you think abstracting that is going to enable more growth yes no what are the some of the key challenges Alex you care care to share a little bit around that yeah gas is important finality is another so it's very difficult to explain the concept of a transaction will take a a while to confirm. So, how do we abstract that away as well? Because, you know, finality on Bitcoin is important if you're talking about, you know, moving 10 or $100 million. But if you already know that your transaction is with a big enough gas in the me poolool uh or already in a block that you know just has one confirmation,

you can already tell the user you know you have your money chill because you know sometimes you're like oh I I cannot spend it. What's going on? So things like I look a lot at Stripe because in Stripe is the same thing. You don't have the money in your bank account. it's in your Stripe account and they say, you know, oh, it's in flight and you know, in three or five days you can withdraw it or something like that, but they don't tell you, oh, your money is not here or oh, you cannot move your money because that that makes users panic. So it's how how do we look at examples of trade uh examples of fintech uh examples in in banking uh at how do they keep users calm and have the experience be smooth and take those learnings and apply them into crypto which of course

makes our job more difficult because the simpler it looks for them the more engineering work we had to do both in the back end and in the front end and customer service as well. Oh yeah, customer customer it's a lot of tickets every day. But um the these are the key things uh and there are many pain points uh with time finality gas. Um people don't understand sometimes the concept of there being multiple chains. How do you abstract that as well? Because, you know, we we love to show the the kitchen because we're passionate about the engineering, about the design, about the system, and we and we kind of try and convey that to the user excitedly, but you know, the user just wants to sit

down, have food, and go. They don't want to go and see your kitchen, even if it's amazing. So, how how do you make it a very nice, easy to use sitdown restaurant? That's kind of what we have to think about. Yeah. And and and I think uh Michael, it's important. Lending is at the center of DeFi, right? Right. It it is a very important component, right? And but then h global adoption of it, it's a challenge, right? It's like overcolorization, right? Like do they understand like what are some of the key challenges and and what are the opportunities that you're seeing for a lending protocol to really hit global scale.

I I think the opportunity and the nice thing about DeFi, you roll it out worldwide. Everybody can access it from the web browser. And if you have a great product and together with incentive you can grow really quickly. Uh so I think that's really the nice part and it moves swiftly. Um and that has very well worked for us like that. Where do I see the challenge? You know we talked about dexes and trading and stable coin is the other big killer use case which I think is fantastic but with borrowing and lending we're coming into an area where I think we have challenges. Exactly to the topic we had before. Um the major challenge is we're going to financial institutions and say

hey why don't you plug in in this great infrastructure and take out use DeFi for your clients. And Bitcoin Swiss did a great use case with us two years ago. Their client could take out a margin loan against their ETH at Bitcoin Swiss with the company and then they could choose to directly take out the loan not with Bitcoin Swiss but with liquidity. So they put the um their collateral into liquidity and got the loan from liquidity as a counterparty and that worked because there is no company no counterparty.

But the challenge for all these institutions with borrowing and lending is with these travel rules and AML they can't really tap DeFi because they don't know who's on the other side. I go to a whose money is coming in. So there I see a big challenge kind of where we need to be careful that DeFi doesn't become a niche and kind of regulation protects the big player like yeah the rails right the regulatory rails I think that's we're still well of course Switzerland here don't get me wrong you kind of you are on the right track right but then in in in well more so or less more so or less right no but it's not the wa west like going to APAC or LATAM right but you know a good example I don't know

who's aware of it. Switzerland wanted to introduce crazy stable coin rules that just makes stable coins not interesting because you can't send it to anybody. A stable coin from the Swiss bank doesn't work and we we almost introduce such regulation. That's what what I say we need to be very careful even if it's not a sexy topic. they don't like to talk about it and with self-hosted wallet it works there just I see when you see this great technology this great companies and products where will the challenges come from there I see challenges you know yes so so then coming into into adoption utility right and and we heard right now from Michael as I said I believe that lending is at the core

center yes it is a tough nut to crack it's not easy right But I believe that that's that's where where things start to get interesting where the opportunities lies into how do you enable institutions coming in because to be honest yes it is great that you are enable somebody in El Salvador to coll overcolaterize their Bitcoin and get and get a$100 $200 loan but let's be honest like that that's the tail end of it right we need to address first the lion's head right and this is bringing in institutions which kind of in DeFi where we're a little bit kind of like oh you were there we were here right But I I think now we're coming into a middle ground and I think this is interesting and I think what you're building here uh Aluks with with Maya is really really key. Can you explain to us what what you

have done? What are some of the key challenges in growing your protocol? Because at the end of the day as I said before like DeFi protocols are enablers for L1's or L2s to grow and you're being kind of the forefront a little bit on it, right? Yeah. So yeah, it's definitely challenging because you when when you're building a cross index, you're not only worried about your own code and like what you're doing, you have to also worry about updates in every single chain you are you're integrating plugging into. Yeah. And the thing is we're not only just like integrating with an RPC or something. We or validators have to run a full node uh in those chains and they have to kind of connect it all and deploy it together.

but also uh have uh threshold cryptography vaults in those other chains. So it gets a bit complicated but that is still manageable. The problem is then how do you take that to the users and I think that's that's where people like Thor wallet here with Marcel and other teams come in which is how do they wrap it all in like a nice little gift for for the users to just download it works it it's easy to use and have other use cases that mandate uh or require this crosschain interaction because yes you some people want to hold Bitcoin and save on Bitcoin but then they have to spend on a credit card so then they can now move through Maya to arbitum USDC

top of their cart spending the restaurant or but now you know they want to you know pay at a pay with crypto at a coffee place or they can move through Maya to Dash which is accepted in many vendors worldwide uh and but but how do you connect with all of these because we don't only need to wallet we also need to be on Trust Wallet on on one inch on ledger so that interfacing it's like this B2B side and this regulatory stuff comes up as Well, you know, uh, uh, they have concerns because many of them have companies. Ledger is a manufacturing company in the end. They're producing ledgers. So, they're somewhere geographically. They need to be compliant. So, these these questions start to arise. And where do you draw

the line? I think it's also a problem. Yeah. And Michael care to share you you you kind of were also um an important component, right? Like it's it's lending as I said. Uh, but then adoption, how does it how does it happen, right? do you start where how do you solve the chicken and egg problem right it's like do you go to institutions do you go to uh high netw worth individuals do you go to uh retail like how can you kickstart really defi 3.0 zero in this new era. I I think the great thing is that you have direct access to retail. I think that's really the starting point there.

You see a lot of appetite, a lot of capital um or kind of this um yield funds and so on. So it's not traditional institutional normally also that takes a lot of time. Um yeah and and then you can kickstart it. But to be honest, in DeFi, a lot is about incentives, you know, like Revolute sending me all week I get 70 if I onboard something. Defi is is not different, but it's more direct. Um, but then you need to have a good product. I I think a very nice use case that did did a really great job was Etheino. You know, introducing a really good product, tokenizing a trade, making it easy to access is is a good product. um having

some incentives and and they scaled it up. So I think it's it's two things really having good product and and you need some incentives to grow faster. Um yeah and and talking about a great product and incentives and and a full suite Oris tell us about 1 in what's your perspective on it right you mobile application you got lots of things happening maybe share a little bit of alpha if you can but anyhow tell us like what's the vision for 1 in growing in the next in this new defi 3.0 zero era. Yeah, I just will add to Michael you know that I really think that incentives and incentives by the right community is the key for adoption. Yeah, because even with revolute you have incentives with revolute but if you will come to the

revolute user with our incentives he was like oh oh what what what is it what is was what the animal is that you know so it's it's really sometimes complicated to go to different communities gold one revolute GP uh Morgan you know and make them to adopt DeFi so maybe institutionals should be more working on adoption using DI as a infrastructure grade level uh that we're building all as you mentioned In the beginning we all builders you know we build sync and we build defy adoption for trefy for CFI and uh and and someone outside the defi.

So even at one in we have the goal not to go outside defi space to random user you know on the street and sell defi. We go and target cfi users. We go and want to target users and not necessarily directly but through the infrastructure we are offering them. So then they come out this idea of uh uh transparency uh adaptability easiness and etc. But coming to your question sorry on on one inch you know what we do the best and what I said in the beginning is we wrote liquidity yeah and sometimes maybe it's also the problem of institutional adoption is that we have so many chains you know we have so many assets we have

so many liquidity which is fragmented distributed enough and it scares them like what to do with that and it seems as as a problem. Yeah, but it is not 1 in and always you have a solution to the problem. What we do at 1 in we do the aggregation of all the available liquidity. you know we are finding the solution for the liquidity fragmentation and we normalize pri price passes in a way that uh in the end you know we we might go as far as to the traditional broker or NASDAQ even you know like to kind of it's a lot of hops but it possible you know to give the end user the best uh uh call data instruction to go and and swap to user uh to our

institutional user or to the end user institutional for the B2B T2C approach. Perfect. Marcel, care to chip in on that one? Um, yeah, I think it's it's very important to note that everyone on this panel has a very important stake in making DeFi great, right? It's it's very modular and we work on different problems and we want to solve it for for the greater good in the end. I mean it's a business and we can make money but there is also also some uh probably higher interest uh purpose purpose behind it and so we as as mentioned uh we we already used two

like we we can also implement lending and borrowing in in a wallet. So then we are simply an interface that allows this great technology to face towards the users. Um and very similar to you know the internet technology that was basically you can say invented to share information worldwide for free. So you have global access to to information. DeFi is here to make the financial system free and accessible for everyone and transparent and you know no monopoly, no gatekeeping, peer-to-peer, no middleman, interesting yields, just in the end um I

would say a better financial system for a society and if we keep on grinding all of us individually um on in this model aspect eventually it it will just grow Since technology moved so fast, internet, you know, in the '9s was was crap. It you had to plug in the modem. It made weird sounds. It was very expensive. Only expert used it. And and now we have 5G and everyone is like, you know, connected connected and and DeFi is growing at a similar rate, probably actually faster um than the internet. So we will solve all those issues. I'm quite certain.

Um, it just takes a bit more time. Well, it's exactly it. It takes time and it and it's the great thing about DeFi, right? It's like the the the narrative around the Lego bricks. So, you're and you're seeing it here in its full-on potential. Um, so we we got a little bit of time here. Um, and I do want people to get the best of you, right? So, I'm kind of I kind of force you to to be in this place. If you have any questions, you got four builders here and one panel that I would suggest you pick their brains. So, any questions from the audience? There you go.

responsibility. I love it. Want to go for it? Sure. So, there's two things that we have to have clear. When you're talking about protocols and infrastructure, some set of roots apply. when we when you're talking about interfaces and the actual tools that facilitate the usage of set protocols that another set of rule applies. So, uh, this the latter is where you can introduce things like KYC, address screening, uh, uh, many many tools that they're not always very effective. And I think, uh, that that is that is a problem. Uh, because you you

do have this enormous cost to end users of all of these KYC processes in in central exchanges. And, you know, the cost is huge. And what has really the benefit been? How many elicit flows have really been cut? Is it actually working? because it's very cheap to buy a central exchange account in the market. You can buy one from another person's name for 50 bucks. So, how really effective are you being uh closing in into DeFi that's really innovating for the end user for the little guys to have access to banking uh um when you're trying to kind of bring enforcement upstream to the financial level. Now, when you're talking about protocols, that's neutral infrastructure. It's a

highway building. uh you cannot blame a highway if you know some some person uh drove through it after you know assaulting somebody because you helped them escape doesn't really make sense. So you cannot really go and tell Bitcoin or tell Ethereum or tell, you know, a decentralized exchange, you know, stop this or don't do that because first they don't really know. Uh it's all code. It's all immutable code doing things automatically. Uh and second, it's still permission.

Uh even if you dislike it, if you disagree with the person, the the problem is who's choosing who's right, who's wrong, what's allowed, what's not allowed. And when wherever you draw the line, that line will be pushed and abused. So you have to be very careful when you're talking about the protocol. We had these same debates, guys, in the internet in the 1990s. You know what what what do you do if somebody sends an illicit message, a bad picture, you know, you should go are you going to go to the guy running the servers? No. The the internet we now understand this infrastructure. It's free. It's open.

It's a worldwide web and it's permissionless to use. Now at the front end level at the at the actual tools you're talking about Facebook they should have moderation. If you're talking about X they should have moderation because they're at the front facing part. So you have to really differentiate both because they'll be mixed and then it's when it it gets confusing and ahead or just to add you that everything you know right but it's a very good question and just you know straight away you don't need to apply the bank rate compliance to to the DeFi to whatever layer. Yeah. But there are basics that you can even use on a protocol layer you not not really you know this messing this up or being a mediator unfair to someone. Yeah. So at

at Vanish we do risk we call it risk management because let's be clear we don't have rules you know at all and you really need to be proactive and it's also the problem because you're creating some some rules some frameworks and you hope they are right in the end of the day. Yeah, of course you pick up the best brains, you know, if you work with the best advisors in the space, but in the end if there is no rules, it is quite of an issue. But I mean what what we do is we actually we if if you if you take a look on DeFi, you can probably fragment them to the three layers like interface, protocol and infrastructure layer and each of them each of the each of the defies may use part of it all of it. We at one have three. Yeah. And at

each level we have uh risk management securities in a way uh blockers uh fraud preventions uh fraud manipulations we even adding market surveillance you know we do it very quietly and try to do very efficiently avoiding false positive and baby steps and we have if you're interested you can even google one in security white paper it's some uh uh principles on what we see how we can add those kind of layer of securities to generally defy to all the layers yeah And but this is a very important topic that we actually spending a lot of efforts to and actually all the space we see that we see how much you know and many protocols are doing that and we even deploying software as a service for our risk management in case guys you're

interested. Yeah. Yeah. Here IPI Marcel you want to you want to answer a question as well? Yeah. All right. Um yeah I would say I my view is like this. Um if if you really have D5 protocols that run on a decentralized protocol, they they run on that um internet computer or or that blockchain um forever, right? You you cannot shut it down. Then the question is really is it is it really DeFi in terms of is there still an admin key where you can access the code and manipulate? Can you do a rockpool? Like is it so DeFi or not? There you need to protect um the users. If it's fully

DeFi, the users are protected. There is only a technology risk which is decreasing over time. But if there are so DeFi projects, they can, you know, do shady stuff and and steal funds. That's no good. Now regulators need to understand that if a smart contract runs on a blockchain forever for eternity and it's permissionless and openless and acceptable accepted by by anyone, how do you want to how do you want to regulate it? You can't. So what you need to do is you need to regulate the exit when you go out and when you go in. So the on and off ramp that's where you need to regulate sharply. If there are um you know illicit funds flowing out at some point you want to spend them to buy

stuff. You go to the money servers you you know that's why the V wasps the virtual asset service providers they need to do AML KYC to see if there is elicit fund and that's where the bad actors can get caught in the DeFi space. is they only need to regulate if it's true DeFi or if it's so DeFi but need to understand that if it's real DeFi. Yeah, you cannot even regulate it. Yeah. So, anyhow, so we're coming to a close. Uh again, thank you very much. The panelists are going to be here for a while. So, make sure you pick their brains. Uh would like to thank each and every one of you for coming in today and each and every one of you as well. So, thank you very much. Uh and um yeah, let's wrap this up. Thank you very much

everybody. Until next time. you. Thank you guys. [Applause]