DeFi By Design EP#57: Decongesting Ethereum through DeversiFi

Transcript

welcome to d5 by design where we talk all things blockchain and cryptocurrency while striving to educate empower and enrich it's your boy andy and welcome back to the defy slate youtube channel smash the like button on this video that really helps us out and sit back and enjoy the content thank you very much what's going on guys welcome to episode 57 of the d5 by design podcast and we are here today after good old barry silbert said it's going to be a big week and it has not been a big week i'm waiting for the big week to be happening what is going on barry what are you doing to us plebs over here um here we are talking about ethereum again who would have thought we're

talking about scaling again who would have thought and it's really important because there's there's actually some really interesting interesting developments coming out in the scaling world um we're actually like really inching close to getting the deployment of some active scaling solutions that are going to actually really make an impact on the ethereum community um up until now i think like the most active ethereum um you know scaling solution has been the arbitrary chain um you know it's still kind of in its infancy but it's been working out quite well um and of course uh we have optimism and actually recently here's a little alpha for you guys zk sync just launched their change so you can add the rpc in metamask and you can deposit onto zk sync

and me thinks there's going to be some sort of reward for being on there early slash interacting and doing some transactions there so maybe try to check that one out um and see what's going on there but today we have the pleasure of speaking for with will from diversify uh will is an ethereum og and has been into scaling ethereum for i mean years now and we've just been inching closer and closer to uh more developments and just actually bringing a tons and tons of users to these at their ethereum scaling solutions and this one in particular is starkware and starknet so we're going to dive into what that is what's going on at diversify uh what what the air drops all about what the scaling is all about

um you know and and and how you guys can be active in you know doing your part to get ethereum un congested or decongested so let's get over to robbie get them going get them fired up and uh get started here morning andy yeah it's uh it's another beautiful day in florida out here um we're talking to will from diversify ready to dig into some staking solutions um starkwear in particular is to me very interesting because it differs from some of the other roll-up or zk technology types of solutions um andy mentioned uh zk sync launching as well it's a nice little airdrop hunt a bit of alpha there for you and we got some more air drops to talk about

here so i will pass it over to will and let him introduce himself and a bit about diversify cool thanks very much i'm will i'm the founder of diversify diversify is a layer 2 hub for d5 that's built on top of starcx which is one like one of the first scaling solutions from starkware what you can do on diversify is trade send funds and um borrowing lens do basically most of what you want to do in d5 um but without paying gas costs from your metamask wallet or ledger and uh actually the kind of next stage of diversify is also going to be launching on start net which you mentioned which is going to be starkware's sort of second scaling solution which is this open permissionless and decentralized network

version of the roll-up um and we're also going to be building something on that which is going to be launching uh when when the main net launches and you're on mute yeah yeah cool um real quick will just for our audience we're kind of getting into you know the layered sugar i'm sure um a lot of them have played around on avalanche and phantom but we're kind of getting closer to a world where we're going to be actually on ethereum layer 2 so if you want to give us just a quick rundown not too technical of the difference of the two rollups and starkware kind of what the benefits the pros and cons are of each you know nothing too crazy but if you're if you

were to explain those to you know a newbie um you know and what the pros and cons are yeah so there's quite a few roll-ups um in ethereum at the moment most of them are just now going live i mean there's arbitrary which many people might have used now which is live um in a kind of beta format there's still some like security properties which aren't fully as secure as they will ever end up being um and starcx is also one that's currently live and that's the one that diversifies built on top of as is dydx for example diverse i can kind of you can kind of think of as like the spot trading version of um dydx which is for derivatives um and the the

major difference between those options and also zk sync for example is that um this roll up uh that we're using which is kind of built on this stark proof technology um is application specific so everything about like the individual roll up is designed for a specific application so actually like dydx and diversify both use that same technology but we use it in very different ways for specific applications so uh dydx is on a rollup which is not directly like the same one that we're on and they've optimized it for derivatives trading and we're and on our wall up we've optimized it for generalized d5 so you can do you can do things like trade and do amm swaps and provide the quality

to amm pools uh and do some simple like d5 pooling to earn yield and make some transfers but you can't just deploy smart contracts whereas on some other like future um ethereum rollups you can just deploy smart contracts exactly the same way that you would on avalanche or phantom or ethereum um but you don't but like the problem there is that you also like therefore don't get the same benefits in terms of like super low cost and the super high speed that you can get from what we're doing where it's like really optimized for those applications so will by removing some of that functionality it it kind of restrains the scope of this this roll up and allows it to move faster move more efficiently because it doesn't have some of these extraneous functions that it

has to take into account yeah it doesn't have to handle every crazy thing you can imagine someone doing with a smart contract it's just super tailored and optimized for exactly the kind of things you want to do and you you can add new stuff and you know it is possible to extend and upgrade it and we've for example diversifies doing an upgrade in two weeks which will add amm functionality whereas we started with like order book trading um and that is still going to be super efficient because we've tailored everything to work there for like four amms but it doesn't we don't have to deal with all these random things that could be deployed with smart contracts and so the cost per transaction is really really low whereas even now on arbitram which is still in roll up sort of being rolled out phase

um transactions are still now costing like three or four dollars per transaction just because ethereum is getting so expensive whereas we're like you know much much less than a dollar for transactions right right you know i i see a a world where once this amm is launched and even now um where you we can onboard users from fcx and coinbase and binance straight to this uh you know straight to this roll up and into this system um is that something that you that you guys are working on um you know and hold of utmost importance or um how do you feel about that concept yeah it's completely essential i mean my personal view and this has got like more

strong over the last six months just because we've seen the way that uh the entire space is going um is that ethereum main chain like much as i love it much as i'm a bigger theorem holder is not going to be for regular people to use in in a year's time i mean already now it's like it's so painful every time i have to use it i almost want to like you know smash my laptop and i think we're not going to see people going via ethereum to get to roll ups they're going to be going to roll-ups directly from centralized exchanges or from other roll-ups by bridges um and we're almost at that point now i mean on those bridges you can already move move around for example from diversify you can go directly to polygon and back and actually most people when they're onboarding to

diversify come via our polygon bridge not fire and ethereum deposit and we also already have a bit for next bridge where you can send usdt from bitfinex directly to diversify and have it on layer 2 able to use it within this defaulting system and back um but like most exchanges haven't yet fully onboarded and integrated with layer 2s but that's just gonna have to be the natural way it doesn't make sense to send 200 transfers of tokens on layer one even if you're using it to deposit to a layer two because it just is um so painful yeah yeah uh i was aping into a meme coin last night d-y-o-r um i got like half rub but anyways it was it was like 400 to get in and out it

was just ridiculous um yeah it's nuts i mean is is the process to set up the like that bridge from the centralized exchange to a roll-up or you know to um a layer or two is that like a tedious and difficult process or is it something that like a dev team um like yours is is able to do you know quite easily it's super easy and and it's i mean um essentially all you need to do is be able to make transfers on um on that roll-up and you can i mean you can think of a roll-up really i mean actually what a rollup really is is a standalone blockchain which happens to derive security from ethereum via this proof system and most exchanges are already

integrated with like 20 or 30 blockchains um so it's just one more to support an ad but there has to be enough demand and like enough critical mass to make that worthwhile uh in the case of us doing the integration with bitfinex for this bridge it took about three days of actual developer time from you know their team in our team combined which is not like not much at all and that's including testing and everything else it's just that um i think right now the reality is there's just like the migration of users from layer one to layer two on ethereum has been pretty slow and there's like lots of there's lots of things that keep layer one super sticky including all the liquidity from unit swap and other protocols that make it like less uh fast for people to to move over and

deploy things and start using things on any of the any of the different layer 2 solutions and of course there's competition now from avalanche from like whole bunch of other like um side chains and so um we like the the kind of growth is happening and there's some really great trackers out there like layer 2 beat which shows like the tvl of layer two growing over time but they'll there has to come like a turning point at some point where this like you know suddenly it gets enough that all the exchanges integrate and everyone moves over but we're not quite there we kind of feel like we're approaching that tipping point but it hasn't happened well is there a hesitation that centralized exchanges have and bitfinex might be kind of ahead of the curve here but when like i'm

thinking about coinbase and their earned product where you know they pay a few percent um on any deposits in crypto that are held in their exchange is there any hesitation for these centralized exchanges to open the floodgates to defy because they might lose some of the users that are currently trading on their their centralized exchange i mean there's always a natural um there's always been a natural competition there but we've also seen how successful it can be when peop when like exchanges really adopt these things so finance smart chain i think is like the is the perfect example that everyone looks at where they gain so much like they gain so much from actually directly integrating kind of a side chain um with defy on because

users want d5 you just do want to now use their wallet like directly interact with d5 from their own wallets and there's no point fighting that and equally you know someone like coinbase has invested so much in terms of infrastructure people in like building their centralized business on centralized rails ipoint in the us like they they can't fully adopt defy but they do i i i'm pretty sure like from what i've had but do actually want to embrace it and want to help with adoption because they're not going to fight against the way that the industry is going um so i think i think we'll we will definitely see all these bridges and other and like even just like centralized exchanges they're actually integrating to offer defy you know yields and things um but yeah the kind of general trend is so strong now of people wanting to

get like and getting used to that control of using all these products from their own wallets that i think that the kind of defy side is still gonna is gonna win long term yeah yeah and they may onboard the um side chains first because the side chains have a lot of money effectively like we've seen avalanche phantom um harmony even just launch these wild incentive programs of hundreds of millions so you know they might be able to push the needle a little quicker than some of the others but but it seems like i think you know the over time um at least the way that i view it is those will those will continue to grow but once that kind of liquidity slows down it should be at about a similar

time when these um ethereum layer twos are really hitting stride um so i think we'll probably see a pretty large migration of ethereum kind of og kind of decentralization thought process towards those other more um more secure if you will layer two so is that kind of how you think about um these these side chains versus the ethereum scaling solutions like what is your what is your view of the multi-chain world like now and like what are your thought processes what's been your experience and then what like in about a year from now you know what what do you think will be different so i i i'm like increasingly a believer that like we're very much in and will be continued to be in a multi-chain world

and then there's going to be multiple like tailored application specific blockchains for doing different things and some of those will be fully evm compatible some of them won't and there's a lot going on in cosmos in polkadot all sorts of other like ways of achieving scalable d5 scalable like other applications um in the kind of d5 worlds like around ethereum including like all of its like all these sidechains that are evm compatible right now there's just a need like if most people it's well even if they can afford to use d5 on ethereum it's just not fun like no one wants to be um aping into all these things and using all these products when they're paying these kind of fees and so people are naturally attracted to avalanche and

even more there's all these incentives and high yields on those other protocols and so they're filling a need and you know actually they are giving better security models than lot like lots of um alternatives that are that are out there um not as strong as ethereum but you know that there's there's a trade-off between usability in terms of cost and speed versus ethereum where they're winning um but the difference is that we haven't yet seen that kind of explosion of incentives in the ethereum layer two worlds the only sort of really powerful incentive program that's already launched um is on vydx where they've launched uh their token and like liquidity mining and loads of incentives and actually they've

become in terms of volume now like compare like comparable and ahead of many like centralized derivatives platforms and so it's been hugely successful and that kind of shows the potential of what i think what the entire layer two space can do but when we look at optimism arbitrarily diversify and others which haven't yet done um any of these programs and are still growing pretty fast are still getting more and more adoption and you know even even compared with some of the side chains which are spending lots of in terms of token incentives it's a good i think a very good sign and that comes from the fact of course that it's closer to the heart of like the ethereum system which still has the most assets because what most sort of other chains are trying to do is essentially

incentivize people to move their assets from ethereum oh and like bridge them over to those other chains um but so it's gonna be a sort of smaller hop to come to layer two once those incentives turn on right right yeah i think i think those layer twos all of them will have a token i mean that's gonna happen i mean that might have to happen 100 i think it's it's inevitable and and that's the only um that's the only thing that can like precipitate these big at least like for these big shifts to happen fast because it does require it does kind of basically require critical mass and it's possible to build up critical mass over two or three years from having like the best product of all that time but when you're in such a competitive environment

if you want it to happen in six months or like a year then you need to be incentivizing people to to move and so i i think it's completely inevitable that every single layer two is gonna have um its own token well can you unpack that critical mass type of concept as you know is it like an economic incentive that um pushes people to move from l2 to l1 or l1 to l2 um or is it more of like a metric of demand what is critical mass to you and kind of what does it represent once a protocol or an application achieves it so i think you can look at it like on a protocol level and then like a whole ecosystem level so like within it within

let's say one layer two you've got maybe one protocol that's i don't know equivalent to like a dex amm protocol which has some liquidity and you need liquidity providers and you need traders to make it worthwhile for those liquidity providers to be there and to start with you don't really have either so there's like maybe a tiny bit of liquidity the first users who come over try and use the protocol and they try and trade and like to get huge snippets so they say well this is stupid and they maybe withdraw their funds back to layer one and say well maybe i'll check it out again in six months but over time like you see you know more more people depositing putting a bit into the amm because you know actually maybe they can get high yields because the slippage is high and then so that like that's like on one protocol

level and and the more that come obviously the more attractive it is for users and kind of it's a snowball effect but then you've got alongside that developers who have a choice and say well i could deploy to that layer too which has like a not very liquid decks but not much else or i could deploy to you know let's say at the moment like avalanche which has now curve like are they a whole bunch of other stuff going on so like actually makes sense for me to do that because i want my protocol to integrate with all of those and they've got good liquidity and so then you get a snowball effect again with um developers who are building more and more there and then users want to go there because there's more stuff available and so there's kind of a certain amount of

stuff which we've seen happen multiple times we saw it happen with ethereum in the early days we saw it recently happened with solana in terms of there just being enough going on that people wanted to keep building there and add more stuff we're starting to see it happen on some of these other like alternative evm chains and i think we will see it happen to layer twos in the future but you need to kind of get to that where there's enough going on and enough people enough liquidity that it's fun and interesting to for everyone else to come and join the party i mean it's the same as organizing a party right there has to be fun good people there but for you to want to go and you tell everyone else that fun people are coming um and if you pay them in tokens even better like because it's

going to get yeah really fast yeah yeah arbitrary has been slow on that there's not a whole lot going on there yet i'm sure there's quite a lot yeah i'm sure there's um protocols that are just going to be you know putting their uh apps there and moving there but a combination of that with a token launch will probably be you know a huge a huge push for this critical mass that you speak of and i mean speaking about diversify here have you guys seen um any um changes in usage or metrics lately um you know and what what are kind of the things that you guys look at uh to assess you know your own critical mess as a protocol um whether it's volume or transactions or

users or you know how how how do you look at it and what have been some of the changes recently so the main thing we sort of look at is like funded addresses um that have that have migrated funds to layer 2 and kept them there so we see like a lot more deposits and withdrawals but not not everyone like sticks around with all their funds and so we try and track like over time the growth in funded accounts um which is kind of people who have stopped who've like moved to later and stuck there with their funds um and that's i think like basically been accelerating throughout the year um but really over the last few months even more started to go kind of you know closer to parabolic in terms of um stickiness of users um and right now like what we offer is

order book trading and like all the markets we have have good liquidity but there's not that many of them it's like 20 30 markets so you can imagine as i mentioned before in terms of critical mass that's like that's good if you are the kind of person who just wants to trade like all the bigger you know bitcoin ethereum like most of the big like d5 tokens uh matic a few bunch of other things that we have but if you want to like try all the new stuff you you kind of can't do it on diversify layer 2 today and that was one of the biggest problems we had in terms of like really getting like that critical mass adoption you can also do some stuff on diversify like uh deposit into into compound and yield um you can transfer funds to other people you can do some like uh like new

token launches we have this thing called the dlm which is similar to like a balanced launch pool um and we've done two of those now including um like the initial pre-pre-sale like launch of dvf which is going to be diversified token when we do liquidity mining and air drops and everything else um and so uh you know there's stuff going on but it's not like you can just trade thousands of tokens everything every time then you and so the big thing that's going to change that for us is going to be the amm launch um and that's why we've spent so much time like building that that's been our main focus really over the whole summer um because that was then set alongside all the books and mean that um for any new token anyone can create a market deposit funds into um the amm

pool start adding yield on through fees when people are trading it and also means that then um users can like trade basically anything they can trade on layer one um without needing to sort of move their funds back out pay gas fees um and that's kind of gonna make a big step change um and on top of that of course we're gonna add liquidity mining um so that a whole bunch of these amm pools will be incentivized for people to deposit and they'll also be trader rewards so that um people who are actually like among those early traders will be earning dvf tokens for um for trading on there too and some to like migrate over their their trading volume and liquidity and so we see that as being like you know like basically

incentivizing both sides to make sure that there's the critical mass on layer two for people to come over and make that switch and actually you know there's already a kind of an incentive to make the switch like in terms of a carrot because sorry in terms of the stick because it's just so painful and expensive now on layer one but a lot of people kind of feel like they don't have the choice just because the choice of tokens anywhere else including arbitrary and other layer two is just isn't big enough and most things especially new things you still need to be on layer one in order to trade them um but that's that's that's the thing we kind of need to change yeah and by launching that amm you kind of decentralize the listing process so that anyone if they want to trade a pair

that's not listed they can go and create their own pool um and can you kind of describe or i guess extend that train of thought like you know you have the amm um and now that that opens up some of these different economic incentives in terms of liquidity mining what what is the plan with dvf um and kind of once the amm is launched how how will that change how diversify looks and how some of the uh the interactions that are possible that that users can use the system for yeah so i mean right now there's two ways to use diversifies the trader um there's you can use it through the trading screen and you can use it through the swap screen um and swap just looks exactly like it

would on like unisop today if you go there you see how much you're gonna get you press like buy or sell um but the difference on that screen will be that um in the like with this upgrade you get the best price that either comes from one of the amm pools or from the order books so actually it means that um you're usually getting a better price probably than just what the amms provide because other market makers or other people who are placing orders can have like put limit orders that are you know around the price of that bid and so um it's a really flexible system and that's pretty rare like there's not other a ms where you can um you know not just get a m price but also better prices from from other sources at the

same time um and so uh that's going to like really improve things for for like traders and of course alongside the much bigger bigger audience but the big difference for liquidity providers is that yeah you can just provide amm and liquidity and there'll be a certain set of incentives incentivized pools through dvf um so basically there's a 50 50 of the dbs supply is held by a treasury which is already set up um controlled by uh token holders who can vote on how it's spent um and initially that's part of that every month is going to be allocated to these dvf incentives so part of each month these incentives will

go to liquidity providers and to start with like our team has chosen a certain number of these um amm pools to be incentivized but token holders will be able to change those so i kind of similar to like how it works on the sushi swap now so if um like they can say actually there's these new this new this new token's launched and we think it should be incentivized with some dvdf to get people to deposit some liquidity and so that you know for the next month like let's add some dvf awards to that and anyone providing liquidity will land those and then on the other side traders who are trading on any pool not just the ones that receive lp incentives and can earn some dvf in proportion to their um fees that they pay so uh every seven days there's a certain

pool of dvf rewards um and that gets split amongst everyone who's traded on diversify uh each seven days and you can claim them and so it's kind of cool in that that then also incentivize people to trade not just on that incentivized pools but on all the other amen pools and markets which is good for lps and encourages people to come and provide liquidity and and we wanted to make sure it was like a really sustainable system because that like if you only incentivize lp pools um and you don't have much like organic trading volume from at the start then as soon as ddf rewards stopped um you might see like lps disappear whereas because you have both sides um you should have like a bit more of a like a two-way flow which incentivizes all sorts of other yeah

like some really good um balanced network balance effects um right so that's pretty cool and then like longer term we'd imagine like ddf rewards like slowly tailoring down which is up to up to the dow but it has the ability to kind of change how big they are and then um the the dow can eventually vote if it wants to to just turn a switch which will lead to a percentage of fees that are collected and going directly to anyone who's taking dvf tokens awesome yeah there's a lot of of intermingled kind of tokenomics there that play into into a the value of dbf and b bringing bringing real users to to diversify

unfortunately for you know for the traders who are who are trading fees are going to be quite small when they do trade so those those weekly dvf rewards will likely be more than the fees that they even paid um you know and it kind of it reminds me a bit of balancer which is the only amm now guys on on um a theory main net that will actually basically compensate you for your gas fees so if you can guys and you're and you have to be trading on mainnet and you're doing something in a large repair i would just do it on balancer because they'll basically pay you in battle tokens um you know and so it just kind of that that reminds me of what of what you know

y'all kind of doing here and it's a it's really cool concept um as far as as far as dvf goes as um as as a launch process we know there will be an airdrop will there also be um that lbp that you speak of kind of the uh the auction process over a few days or is it strictly just an air drop so so we actually did that small like initial um yeah like market where about two months ago we sold some and to like early users of diversify through this process and so it'll just be the air drop now and of course like the the majority of awards which can be done over time from from liquidity providers and traders

and then as of recently we saw entropy come to y'all's platform to do their their launch of their erp token um how did that go and you know what is uh what is the incentive for entropy or other projects to come um to y'all and launch their token um through y'all's bathroom the entropy sale was really cool it was the first one other than uh for dvf that had happened on on the platform um i think they they mainly chose it because uh a they were launching their protocol on polygon and we had the polygon bridge which made it really easy for like smaller users to get funds on to diversify and participate but also because then because there's no gas fees like a lot a lot of a much bigger number

of like smaller users can can start buying you could buy erp during the during the 48 hour period and so the sale had i think just over three times like their goal in terms of um usdc raised which was really good to see um and actually the kind of average buy size was much smaller than it is on any like on chain um yeah like uh eat like ideos and things like that so um it was like really successful in every metric in terms of numbers of particip participants but also funds raised and um the kind of like it was for us it was a bit of a demonstration we want to like you know make sure people could see that like other other teams could come and do

this and how easy it was and how smoothly it ran um and the other thing to remember is actually because i think one like the mechanism is very similar to the balancer sort of um launch pool but actually even just to run that now as a team you need to have you spend quite a lot on gas because you have to constantly like adjust the um the parameters i can cost like 10 000 or more dollars like over the course of the period just to like run it and of course that like produces what you what you collect um so uh it was like it's completely free from that perspective and um quite cool and probably we're going to be aiming to run sort of what one or so of those at least um on diversify per month and in future like

uh because right now like in terms of the ui it requires us to do some work in terms of our teams like make it really run smoothly but um we're gonna open source that so that teams can just like freely run them uh with diversify without um without even needing to have any uh contact with us yeah as an airdrop recipient soon well i imagine i'll be i've traded there before and used it and i think i'll put a proposal up on the governance form for dbf stakers to receive some sort of reward in all of the future lbp launches so whether it's just a proportional amount to what you have or

some sort of set amount over time be really really cool to have like entropy tokens over like a three month span you know have them agree or you know any future launches to some sort of their token allocation to dbs takers um which will you know obviously increase the value of dbf and staking um and hopefully get the dvf people interested further in the product and the project that they have so it's kind of a win-win for both parties um and that would be really interesting to see yeah i really like that i mean the whole idea of like aligning um teams around like diversify and for example one of the reasons why we really liked entropy is because

um you know one of their goals is to try and make their uh protocol which is a lossless prediction market available um to as many people as possible and therefore that they were exploring layer two solutions and again longer term we could imagine that something like that running on the rails that we've built um in the same roll-up and so um what we're hoping is yeah a lot of a lot of those teams if they can align themselves through yeah token distributions and other things um can also end up building on on the same roll-up yeah that's awesome and it aligns the aligns the teams that are all like you said building around diversify um and andy mentions one way to align the incentives between these teams i'm

curious and i kind of see i i'm kind of thinking about the hub and spoke model again where we didn't bring it up on this podcast but we we've talked about in the past where um ethereum is the hub and then you have some different spokes in in terms of these different chains um and with regards to to this diversify more launch pad type of concept or diversify as the hub and has some of the other teams as around the perimeter um you know as far as those spokes i'm curious what the incentive model is between the teams that are launching and diversify andy pointed to a great uh potential alignment of incentives between some of

those teams that are on the perimeter but what is kind of the incentive model between one of those newly started team newly started projects and uh diversify in the middle i think i think it's going to depend which time frame we're looking at because you know for example this first one with entropy um our goal was partly just to demonstrate like how it all worked and have it have another one to show and sort of point to and say look this works really nicely um but you know the clear benefits for like diversify in terms of like layer two is that we onboarded like you know and can on board on each of these like thousands of new users um who come and try it for the first time and go oh wow like actually all of this works without gas fees i just connected my

metamask and i can like access all this d5 stuff including um like these launch pad tokens um which is like a great way of onboarding people um and because it's kind of like a fun experience as well uh and then like actually it collects fees during the course of the kind of sale and afterwards those markets continue running um but longer term i think it's more of as you kind of as we kind of touched on like really demonstrating like and and open sourcing these tools so that um like what we're building becomes more of an infrastructure piece because like we've always started off and that's kind of been diversified mindset of like building a lot of the core components

ourselves but as we're handing over more and more to token holder governance and open sourcing things we really need and want like lots of these other projects to realize that they could they can basically like piggyback on a lot of the layer two infrastructure that we've built because upgrading and moving to layer two isn't easy it does take like developer time you have to have quite like you know we've got an 18-person developer team essentially which lots of like smaller and newer teams can't do it especially even if they can they have to dedicate them to their core protocol they can't spend them on like layer two like only um and so that's like the collaboration we can really see where we can really help lots of teams to port over and start to

make the make the you know get the benefits of layer two without needing to do all of the the work from scratch yeah so this question might be more geared towards founders or other other builders in the space it it sounds like there's um a route where an already existing project can migrate over to l2 with diversify it doesn't have to be a newly started project that's kind of sprouting um and and doing so from l2 natively yeah i mean it's going to depend on on the project and as i mentioned like because of the way diversified structured um it's very much uh like it has to be tailored solutions but there's certain things that you know are common across nearly all d5 products

which is for example trading um amns transfers and those kind of things we already support we also we already support air drops a bunch of other things that lots of you know protocols and products need around them and then that that kind of you know each of those can be considered as kind of modules that you know if you're if you then want to build on layer two okay you may need to design like one new module and we can help with that um but then all the other stuff like you can kind of make use of that already exist um and one of the things to kind of mention about sort of starkex which is kind of the you know the roll-up tech is that it uses this language called cairo which um you can write any smart contract in you can write hated stuff it just requires

just a different language than solidity that you use for smart contracts um but one of the things that's coming with start net which is kind of the next version um is this thing called warp which is a transpiler so you can then um take solidity smart contracts and um turn them into cairo code and so it's not the most efficient way of using layer 2 but it means that if you want like a quick way of getting to layer 2 you could just you can use that um on maybe like your core protocol and then make use of these optimized like other pieces that we already have um and so that's kind of the route that we imagine in the future of how teams could really quickly sort of migrate up yeah the network impact of diversify

compared to the last time we spoke seems to be massively accelerated um i think it was about a year ago maybe six to eight months where diversify was still um you know exploring some staking options and exploring some different uh liquidity mining incentives around trading in particular but it was still very much so an application where someone could come and and trade and and that was about about it whereas now really diversify seems to have become more of a protocol where other applications can come build on top either launch a pool launch a market pair on the amm or interact with diversifying one of these

other ways where it's building composability across the entire ecosystem rather than just building up its own audience of of traders that's 100 what our aim is i wouldn't say we're fully there yet but we're definitely yeah compared to eight months ago whenever it was we've gone a long way i think hopefully you know the next checkpoint um six months from now i think we will have made that transition even more completely but that's definitely been like our stated goal for quite a while now is that we want to you know become this protocol that like come become at a protocol level and sort of be more of a yeah a hub for these things cool well a little bit off topic here what do you think about nfts on layer 2 open c is simply unusable um what's like

do you have any any any alpha for us i mean what's going on there do you know yeah so i mean there's a lot going on with nfts on layer two there's also i think solana's taking a lot of share from ethereum at the moment um but it's pretty i like i think immutable which is um the kind of leading star hex based uh nft platform is now offering the ability for pretty much any like nft like issuer to really quickly like reissue on layer 2 and have them tradable there which is pretty cool um diversify actually also has like at a really low level like the ability to support nfts and that's kind of almost like bait in but we haven't like put anything available for developers or

like in our ui to do that yet but there will like that's definitely on our on our own roadmap um but for nfts to me it almost makes like even more sense for it to be on layer 2 because um you know these things don't necessarily like move a lot but there's no that doesn't really make it doesn't make sense when you're moving a jpeg to pay like hundreds of dollars to do that um and so it will really depend i think on the marketplaces openc just has such like a strong market like market share grip in ethereum that it's really hard for anyone who's not collaborating with them i think to like even if you built like you know a much better ui a much better um like product on layer 2 for trading nfts

it would still be hard to win people over just because um because like everyone goes to open c to look at nfcs and otherwise people just don't see them um so i think it's a really hard challenge um it's even harder than for dexes just because like the market share is just so much more centralized and literally it's like 99 is on openc right now but there it's gonna happen it's definitely gonna happen because um it's just you know it's so much so needed probably i think whoever wins it will launch a really successful token that like in some way incentivizes people to um to move over but we'll have to wait and see yeah definitely waiting for the openc token that'll be a nice one um do you own any uh any uh apes or penguins or uh

or punks or uh art blocks or what's your experience being with nfcs i've i've had a whole bunch of things in the past um my so like my main uh like ethereum nfc at the moment is uh loot um which i was quite a big fan of just because uh like cool concept and i i kind of got i really like there's the idea of like community building all sorts of like games and tools around like the core loot nft which um if anyone doesn't know is like just like a list of seven like adventure items um and then the idea was like you know maybe other people could build like maps and games and other things which use these we haven't seen i guess like the attention span is like

short for a lot of people in in crypto and so like it's a big ask for like there to be a huge game instantly build up around stuff um but it's still cool like how much stuff has has happened around it so yeah that's my favorite yeah cool yeah there was a panel at uh liz conn um of some of the different um i think uh the founder of axi that was up there and a couple of other uh gamified nft projects and they described kind of the the process of making a really engaging game um how it takes like 10 years plus i kind of opened my eyes to you know why we haven't seen some more immersive games around nfts with utility and different different

value there yeah definitely i mean yeah like building a building a good game especially on like a big scale is hard um but obviously the yeah i mean even compared to d5 you know the number of people who obviously who play games is higher than people who who use finance in the real world so yeah it's pretty exciting yeah yeah i'm sure there's a massive one coming down the pipeline yeah it's interesting it is there a world where nfcs will be using d5 like do you think that we can see um non-fungible you know items be used in you know intertwined with d5 because we see it all the time in real life like we all have cars and homes and um you know

things and clothes and you know even this computer right but like what is what's the interaction you think you know indeed fight are we gonna have to get to a little bit more like real world applications or you know what's your thoughts as far as outside of gamification because i think that's like the main use case now is like um you know it's like an extra add-on almost right um but you know is there any actual utility that you see coming yeah i mean there's um like representing real world things is a harder thing because you need oracles and all much other stuff but actually one of the reasons why so for example one of the reasons why diversify was first looking to do nft um like integration onto into the protocol uh

was for nfts for insurance um so that's where basically like within like the diversified ui you'd be able to purchase uh these like insurance nfts from various different like insurance protocols in crypto which you know things like nexus unslashed um bridge mutual there's a whole bunch of bunch of them now um and then you could basically hold that and if like for whatever reason you like lost funds in certain ways um or like even if like diversify had some sort of like smart contract issue um despite audits touchwood um then you would like be able to you know get your funds back um based on holding that nft and i think those kind of things that

like you know makes so much sense and obviously like those are still define native and do have on-chain representation um but i think that kind of that kind of crossover we're going to see like really soon um i think that yeah like the real world assets represented will happen too but uh there's lots of there's lots of challenges for that and lots of teams working on it yeah liquidity in insurance markets um could i don't know that there's there's lots of explore there but um it seems like what you're describing takes the nexus mutual uh insurance product and then uses the d5 composability um to either fragment it or basket it with other insurance products or add some

liquidity incentives around it to to energize it a bit yeah a lot you can do on top of this yeah yeah it definitely is and also right now what we're seeing is nft projects launch um basically their own token to add utility to their project um and so you know you've seen projects be able to have um you know their original nft that you can now stake and you can stake the nft to earn um some sort of secondary token like one of the largest ones is cybercoms that you can stake them and earn a banana token amongst other things um so those are a little bit more like gaming and like fun utility but there is

i think that's kind of going to bring the nft bull run back is this utility of nft so would definitely want to be looking at projects and doing and doing research not just into rarity anymore that was kind of like uh the market but like that was the sophistication level one you know i think we still have quite a few levels of sophistication left and i think the next one is going to be these okay how can i basically earn yield on my nfts and stake them and i think that's going to be like the next driver and if you think about it it's like the most basic thing ever in d5 it's like we've been there like you know a year and a half ago it was like okay i can't i can earn yield on my assets but for the nft world it's like brand new so

it it's kind of funny to see how um you know the initial launches of nfts could kind of follow the steps of d5 to where it goes okay you know you can earn yield on your assets and then eventually you could borrow against your your nfts and then eventually you could pool them together maybe and there could be like a liquid trading market for you know apes and punks on some sort of nft amm and it just keeps going and going so ironically i think though they might follow the footsteps of d5's kind of uh growth in some ways um so if i was an nft hunter right now i'd be looking for projects that are launching uh basically a a utility or a reward token and you know trying to figure out how to get in those

and how to stake and i think that will do you well yeah so something very cool uh it's founded by a diversified alumni actually one of like our old product manager from uh almost six months ago or nine months ago now um is called porn finance which is where you can take any any actually any token any nft um and deposit it as collateral and then take a loan on that and the nice thing is you don't need a you don't need an oracle because basically lenders decide how much they're willing to lend you based on um based on the nfts that you put in and if you can't pay back within let's say like three months and they get your nft so like the kind of incentive is is on the lender and you know as the borrower you you choose

the best offer you get from lenders um and it's kind of you know could be a very good loan terms using any energy and entities you have um no matter what those represent but if you're unable to pay back that loan in three months like they're seized by the by the um by the lender which is kind of an interesting model in that it could end up with like you know lenders also getting some entities at a really good deal if you're unable to pay it back but also like you know getting liquidity on things which right now like there's not really any like easy price point to choose yeah is that a bit of a mwm pawn pwn pwn yeah like an nft pawn shop yeah exactly all right all right

very interesting interesting this looks like it could go down bad oh boy oh boy this is this is quite the uh this is quite the protocol this is awesome yeah cool man um real really really cool cool that um well what is on the um upcoming agenda and roadmap for diversify what can our community get excited about um and how can we you know be active in the community and participate so the biggest thing is going to be 24th of november which is going to be the the launch of amms and being able to create pools deposit deposit collateral and then for doing it

as well as earned for trading so that's the that's the number one thing to watch out for it's gonna be the first you know time that you can sort of earn um dvf uh and then have a stake in like what we're building uh following that there's gonna be a whole bunch of cool stuff happening over the next few months including um a few of these new um launchpad markets which is worth signing up to our mailing list for um and generally just like joining our discord and getting active because uh it's gonna be gonna be a non-stop few months that's awesome yeah well there's uh there's one question that we ask uh each person that comes on the podcast and i know we're running tight on time so uh in a couple sentences the the question is if you

were to pitch diversify and layer two scaling ethereum the entire ecosystem you're in to one person um in the elevator quick elevator pitch who would it be and why uh i mean i think a lot of people must give this answer uh but elon musk clearly has like a lot of interest in crypto um but he doesn't seem to be engaging with d5 which is surprising so i guess that would be the the number one um especially given that you know there's a a real benefit for layer twos in terms of um green like credentials and like low energy usage compared to doge or bitcoin so um yeah i think i think we've got a good good pitch for him nice yeah sweet awesome

well well thanks for coming on man and uh excited for the for these upcoming months uh and feature releases from diversify awesome yeah thank you guys best of luck will thanks for coming on cheers