Easy StarkNet Opportunity: zkLend Money Market Demo

Transcript

foreign what's going on guys welcome back to the row up your home for layer two news media education we are doing a really cool demo today uh with Brian from ZK lend ckland is a up and coming protocol in the burgeoning start net ecosystem um and we're excited to show you guys how to earn some yield participate in some of the interesting opportunities that they are building over there and overall get a feel for exactly what's going on in the start net ecosystem currently so without further Ado Brian how are you um how's how's the building been and um yeah man glad to have you back

really really nice to see you guys again um I'm doing really good um the project itself it's um going fast fantastic we I mean the building process non-stop we have shipped the Alpha version of mainnet since mid-may and currently right now the um traction has been going really strong for start net and for all the Levi projects so we're really happy with um what's going on so far and really excited about all the new developments um that's going to happen in the next couple months and happy to share more in the rest of these uh this podcast awesome yeah it almost feels like starknot is still underground and uh they did such a great job like Stark net

did such a great job of cultivating a culture where we've seen other networks launch and then everyone's you know rushing to it to get those first off incentives and then it kind of dissipates over time but starknet has done a very smooth and gradual job of kind of ramping up production and it almost still feels like it's underground but we you know know the ones who are using the chain know that there are uh protocols and applications that are live and uh starting to pick up traction so zklend is obviously one of them um and we're gonna we're gonna dive into the ZK lens platform and talk all about those uh those opportunities that are available on starknet amazing yeah yeah so let's dive into it

um maybe you could give us a quick you know uh elevator pitch on ZK lend and then we'll dive into the uh we'll dive into the uh demo of the platform sure sure of course so um secretland we are building a money lending protocol or money market protocol on certain ad and I believe we are one of the early years and one of the first protocol to come on to Mainland on start net um the the gist of secret Land we had two protocol basically one protocol and two products on it underneath we have the Artemis which is basically the sticky land and then also the Apollo which is secular institutional um particulant by itself it's very similar to a lot of the other

um uh peers in the market right now for example have a compound where it allows users to borrow and lend professionally and then on the other side for the institutional part which we will start building uh later part of this year or early next year that one will include a kyc and whitelisting component where institutions being able to onboard and getting into the pool and they will have to go through an email check and for example um CTF and whitelisting of their wallets before they can actually interact with other institutional users um and this one actually we are quite excited because I think start net it's one of the role of that actually it's

not specifically cater for privacy but because of the layer 3 component um that it's being able to have a privacy layering um that's actually good for institutions and being able to provide a setting where institutions are able to do transactions behind closed door per se so that's kind of as a whole what what secure line is and would love to uh dive into the demo in a bit yeah yeah that sounds great um feel free to to pull up your screen you know when you're ready I I think you know kind of as you do there's there's a lot to hit on there because we saw even if you go back to 2018 there was like this movement of like permissioned

blockchains and people had this idea of blockchain not Bitcoin because they they wanted it to be like almost like a Walled Garden and they didn't welcome back Andy uh you know they they wanted they wanted these walled Gardens they didn't want to let everyone in on blockchain um you know if you had an institution uh they wanted only only clients of that institution on that blockchain they didn't want to let everyone in but now you mentioned with this layer three component you kind of get the best of both worlds because you get this like this almost like membrane around uh certain portion of the chain where you can kind of gate

keep who's in and who's out for that specific uh application but it doesn't have to keep everyone out and that's what we kind of see with these layer twos and layer threes um account abstraction on starknet allows uh certain permissioned uh components where only only kyc individuals or institutions are able to get into that portion of the chain and access those elements of the application but it's it's not like that per those permissions apply universally to everyone on the protocol is that is that a fair yeah yeah absolutely absolutely and I I think you had a very good point that um back in 2018-19 we have a lot of

those private blockchains or for example a mixer where um you have the Privacy bacon but it's not to to the extent where for example Regulators would be comfortable because it's behind um uh behind eight heat and then the data was basically held by one centralized party but what the layer 3 enables like you said it's basically a amalgamation of um a layer on top of the composer composable layer too so all the data are not actually lost but it's just being kept by for example you have two options later on you would have one being kept off chain or being on chain as well so if you choose the option of keeping it off chain it's just being held by a

um uh data committee where for example if they have to produce the data later on it's still able to do that rather than being able to kind of um erase all record so to speak so I think this is someone different from what we see from the previous version of how private blockchain or the Privacy layering actually baked into layer three I'm glad you mentioned the the composability of it because I think that is what's lost in a lot of the permission blockchain architectures when you try to stand up these walls and create walled Gardens you you accomplish you know what the goal is which is basically like um only allowing certain institutions or people into this into this ecosystem but

you lose all of the composability with the rest of the the blockchain and the the rest of the ecosystem so what starts yeah Robin just add account uh yeah just add a a a Counterpoint there I think a big one that we've seen is the um is the gaming industry as well as just other niches that don't necessarily require composability with let's say other dexes or other money markets right like if you know if there's an application which only requires users to use that one application to bridge on just to use that and Bridge off to use others um and it's a good enough app like game or like a um like we've seen with um with uh D gate and dydx they have uh

perp Texas that like people just go to that chain just to use that you know that's the time when that advanced speed and um kind of higher scale Tech outweighs the cost of not being able to like you know deposit on ZK lens and then go and take your LP somehow and then borrow against or deposit on Jedi swap take your LP one day borrow against it on CK lend in the future like you don't really need to do that stuff if you're just trying to you know game or if you're just trying to trade a derivatives decks um so I see the point for sure but I just want to offer that counter opinion as as far as depending on the application the users have different needs um as far as composability goes totally yeah I think there is certain

use cases where it makes sense to kind of like gatekeep and keep um the user the set of users on a protocol um according to certain permissions but you know if you lose composability then you might that might be a trade-off for you so if you can get the best of both worlds if you can you know make sure that the users on this protocol meet a certain criteria and you can get composability with the rest of the ecosystem um I I think you're able to kind of make a qualified decision and balance um okay you know I want these users to to fall into this kind of bucket and I also want it to be composable with maybe the liquidity of the rest of the chain and it seems like layer twos and

starknet in particular is able to accomplish that um by kind of layering account abstraction on top of the chain and then also letting uh protocols in the chain interoperate with with the other applications in the ecosystem yeah O'Brien without further Ado uh welcome to ZK Len guys uh welcome to the dashboard um starknet happens to be a permissionless ecosystem so shout out starknet I know there's been some transaction problems but Brian you said those have been cleared up yeah yeah that's right um um so yeah man let's jump right into it and give you the stage yeah just the prefer says um start it it's on it's Alpha as well and

then we are also on our main net Alpha so um things do get jammed up things do get broken sometimes and just what we've seen about two to three weeks ago um I think the TPS was just hitting the move and then um there were just a lot of congestions and a lot of campaigns going on so um I think this is um a pain a growing pain that a lot of users are actually experiencing but um Silver Lining if there is upgrade coming coming through and um uh I'll definitely talk about that in a bit but uh before that so why don't I go through um kind of kind of I believe uh demo of what CQ and it's about so what you're seeing right now in front of

you is the um seeking land Mainland Alpha and this version it's only the Artemis side which is for the permissionless user side so um this one it's still kind of the main ad um Alpha version version zero so right now we support the five currency that are supported by starnet and um the features it's still relatively fundamental so to speak what it means it's um it's basically moral lending um there's no uh sticking no tokens no distribution reward just yet we want to make sure that the more and Landing works and all the features um it will come in as soon as we hit the Genesis um so on the first page we try to keep it plain and simple

um so you see the three figures there um basically the the turtle Market size it's probably referred to as the TBL of the protocol we had about 1.5 mil by about one and a half months um that's not too bad given um the tvl for certain it's around 70 mil at the moment and for D5 I think it's about half of that or so I think we are about the top five or top four top five protocol in terms of TBR locked um and for now uh you will see that there are the five currencies and if you click on for example each right now um these are still to come because we're still working on our indexer and the historical data will be coming in once we have um a rolling average of the past

30 days we have those data and it will be coming in in the next couple weeks um it is in our backlog um if you look further down into the assets you will be able to see for example the interest rate model industry curve where you would be able to see the two curves and then we use the two curves interesting model and then uh where um the optimize uh utilization will be and this is some something similar to Apple how many compound is doing it where we have um the interest rate at a relatively flat um uh interesting curve until it hits a uh you optimized usability session point where after that we actually want to discourage people from throwing too much

of it or so that we have a very high interest rate growth after that on the right side you will see some of the market details for the specific assets you're looking at um this one I won't bore you with detail but let me try to do a forward and line transactions so then um we get a sense of How It's actually being done so um correct wallet on the side so right now I have connect myself with a demo wallet that I have um currently I have done a few transactions earlier today just to keep the wallet from showing it blank if you look at the dashboard page what you will see right here is that I have supplied two currencies one of them is usdt and

the other one is usdc and on the flip side I'm using that to borrow um BDC wbdc on starnet so if we look at my account right now my net API this one is weighted on the actual principal amount of how much I'm borrowing and how much I'm lending so it's right now works out to be about 1.34 and the health factor is about 13 so I'm still very very comfortable liquidation would come in at around um Health factor of one and basically I'm more of a brand I'm more of a 1.5 type of guy I'm more of a 1.5 Health Factor so yeah you know what I'm saying yeah

you can you can go as slow as you want but lower than one liquid external Liquidator would probably start coming in and look at your position because um I think one feature that starting that enables us as the Atlantic protocol is that um on typical L1 London protocol you would see that your liquidations would take off a chunk of for example 50 um repayment for example what I mean by that it's you use your usdc 100 as collateral if your liquidation comes in they have um a right to liquidate up to 30 or 50 of your collateral but for us um we do it a much gentler way in because the the fees is actually a lot less so um

because the transaction fee is much much less on L2 so what we're able to do is um when for example your health Factor Falls below zero point level one to 0.95 or 0.9 um if external Liquidator refuse that they want to make the profit from that 0.1 of your or boring size they are able to liquidate just at 0.1 and bring you back to one and then they won't be able to bring you back further up let's say they won't be able to um they could take you more than um what you are being owned for so in that sense you won't be able to get penalized for being penalized going going under the health factor of one so you'll always be able to have the

benefit of Doubt and if you want to stay at 1.5 that's totally fine it will still show as yellowish on the bar but um not for non-financial advice but I think everyone has different way of doing three things um yeah no I think that that kind of mechanism overall is starting to gain popularity curve USD just launched their product right soft because similar kind of yeah I think you're cutting up cutting in and out a little bit Andy when um doing High lending markets should be taking people for 50 or all their collateral if yeah you know

if they're only down 10 from them yeah absolutely um I I think I get just a uh what you mentioned so I think um we are starting to see a lot more Protocols are trying to cater to a less abrupt um liquidation mechanism and repayment mechanism as well so um I think it it's something that it's enabled because it's starting to make economic sense because of the layer 2 aspect of um the reduced transaction fee as a whole um so continuing with the demo so right now we have um uh my existing supplies that much and then my my existing boring it's only

about um 20 so what I can do is I can actually go to the market side um I can choose any of the currency right here I can choose for example each I can go Supply and then in my wallet I would be able to uh in in the pop-up I would be able to see how much balance I have in my wallet and then um being able to click on this collateralization Factor this is actually something that's enabled by account obstructive as well previously if we enable it we will have to probably sign three transactions it before we actually get approved and then we deposit and then we enable it as a collateral so we have to sign it three times but right now understand that

we're only having needed to do it once because but basically the multi-call functions uh multiple features under account abstractions um able to Bunch all the transactions together in one single permission uh and one single signing so on this side we're able to for example um Supply 0.03 let's say and then that would at the bottom increase my borrowing power from 232 all the way up to 279 and um basically the limit use will get unchanged because I'm not borrowing so Quantico hit enable and Supply you would see all three transactions are being combined together in one single

signing so once I signed that the app would get added to my supply side and for borrowing it's the same thing so let's say if I want to borrow um let's say this one right here the USD key so right now my borrowing limit is about 221 to 11 sorry so if I go to 11 it would basically almost maxed out my borrowing limits and then it would bring my borrowing power all the way to 0.0.2 um and then conversely what there's what this means that for the health Factor it would actually bring in my health factor from 15 to about one so um I won't go ahead with this

transaction just yet but let's say we go with 20. and then borrowing the same transactions and then once we go borrow and then go sign it may take up to about three to five minutes before the whole thing gets uh shown on this dashboard because um the current transaction time before I started it's still about I would say five to eight minutes or so once we get confirmation on L2 it would take about three to five minutes so right now it's not not showing just yet but um just wait maybe come back in about five minutes and then it would it should show there um Silver Lining it um version 0.12 it's coming for startnet this upgrade will actually improve the

speed by um at least five to ten times so what this means is we're expecting um The Experience we're using all protocol including um so you can learn to be very very seamless and then very very instantaneous after that um let me pause here and see if there are any other stuff that I want to show um just a quick dashboard of some of the health factor and also some of the details of my borrowing and lending so on the borrowing on the lending side I have lent about 325 um current apy for all planet is 1.44 and boring I have two currency borrowed and then that would be a blend of 20

plus another 20 that I just borrowed and that would turn out to be about let's say two two percentage area um in the next couple months we are going to add more features to it I think one definitely is that we want to add more assets to it right now we only have five um Bravo just had an announcement coming out two weeks ago about supporting um stickies on starnet so that is something that we're actually looking into that's one and then two we want to build a transaction Builder so then we can actually structure basically a shopping cart you can um click a few assets you want to borrow and you want to deposit um all together and then you will be

able to do it in one single transactions so instead of going back and forth to let's say you uh Supply usdc and then go back to oral usdt you can structure all that in one single in one single transaction and just submit once and being able to wait five minutes and it would all go through in one single go and that's uh that's the power of the multi-call function like exactly yeah the ability to bundle those transactions together I think you know the most intuitive benefit is that it takes away some clicks right because you don't have to approve and then approve again and then deposit but I think there's there's deeper advantages to bundling those transactions together and you mentioned

it's like a transaction Builder where you can kind of like create these recipes and Chef together certain strategies um and execute those strategies at once like folding right where like you kind of exactly Supply bar supply borrow how how would the multi-call function um let someone execute a folding strategy more efficiently right right so right now for folding strategy I would assume a lot of the you Farmers um they would have their apis that would have their Bots to basically calculate it and then they would um accumulate all the rewards they get and then being able to add back to the deposit so then they don't get liquidated and they would keep on deposition growing so um with multi-call

what you're able to do with um at a very initial instance you will be able to for example let's say um I deposit it and then I want to borrow um uh another currency and then um to give some background I don't need to interrupt but I think for for anyone who's not familiar with with folding I just want to kind of kind of frame this because there there was some very lucrative opportunities to do this folding strategy on uh on some some lending and borrowing exchanges where um you would uh take some eth uh Supply it and then borrow borrow eth right and then you take what you borrow and you redeposit it as collateral so if I for

instance uh hypothetical numbers I could I could take one eth Supply it as collateral and then borrow 0.9 eth right so now I have one eth as collateral I have 0.9 as debt but then I that would make my health Factor really low because I'm borrowing almost my entire collateral the my loan to value is almost one to one so instead I could take that 0.9 each that I just borrowed and now deposit it now I have 1.9 eth in collateral and only 0.9 in debt and then I could continue to do that almost like I have a sheet of paper and I fold it as many times as I can so I fold them in half fold in half again until it gets so thick um that I can't fold it anymore and I

have quite a bit of eth in uh collateral accumulating in apy so that that's kind of a folding strategy that I think has been particularly profitable um in lending markets across the ecosystem and now someone that would that would require quite a few transactions to supply borrow Supply borrow go back and forth and fold over and over again but now with multi-call I think someone could do that basically in in one shot yeah yeah that's right so um the multi-core and then also you would also need to have the programmability of um basically a wallet so that when you hit let's say your cat speeds it's equivalent equals to

um your your uh interest rate coming in so that would basically to a point where it's no longer profitable for you to keep folding so um basically you can you can set that or you can have a algorithm that actually calculates it and for the folding strategy that we're seeing right now it may not make a hundred percent sense just on the protocol itself because intrinsically the borrowing growing cost is higher than the lending cost But ultimately because we will have distribution with what's coming in when our token starts to um uh get get listed and that will use that as a distribution we want to incentivize borrowing and Landing so depending on where the reward stands um it totally makes sense for example you

would want to borrow ease and then um so you want more ease and then they redeployed it back to even and just to get the the distribution reward and then keep looping it and until you can basically do no more until you can Loop no more yeah I I think that's that's a great way to put it so let's talk more about the distribution rewards and the plans for for the token um you know uh it sounds like it'll it'll be uh incentivizing markets what is kind of the rollout plan the roadmap for the token and and how do you see that fitting into the ecosystem sure sure um so for us having a token it's basically

um something that we want to support the the operations of the protocol um it's not something that it's definitely needed but it will definitely choose up um the operation of it whether that be a safety module staking and also distribution reward so for us um the token plan that we target to have our tokens around the Q4 of 2023 so the the the last quarter of this year and we want to have the token to support um our next version of the main ad coming out and that version would expect to come out I would say around September time where the Regenesis is completed um once that Regenesis complete will have the version one and that would include

um what we see right here already plus um things like isolated Market assuming other other protocol would have their tokens listed let's say um I'm hearing things from let's say ckx or I'm hearing things from let's say Bravo they may have their tokens let's say and then if um they get listed on Layer Two we want to be the guys that actually support and provide liquidity so isolated Market is something that it's a brain transport to support that and um also staking it something that we felt that because right now um our protocol we are able to use a lot of the risk management mechanism to um basically actually a lot of the market rates a lot of the liquidity

rates but we still have to have buffer for um for bad day basically so sticking with it would be used for providing a buffer for the safety module and we would have staking reports on top of that and lastly it's a distribution reward how we do that it basically depend on um on the day at the time of the day and also how the market shifts if we feel that um for us actually we want to push e to closer to the optimal utilization we may want to incentivize borrowing on ease rather than on the Linux side so then borrowing it would be having higher rewards and having a better rate and then you'll be able to basically

overcharge between let's say different Landing protocol on different layers or even only a one or just choosing between different currency and then being able to swap into the right currency and then and then be able to make um rewards from that uh absolutely massive value proposition I I love how you're you're taking lessons from the other lending markets that that have already deployed on on if mainnet and you're using the best of those and learning from their mistakes as well for instance um we we've talked to see low Finance which is all isolated markets they don't have any any pooled markets and I want to make sure that I understand ZK lens approach correctly you guys intend on having a pooled model for some of the

most liquid assets that you showed us today and then an isolated model for the less liquid tokens is that right absolutely yeah so so I would Envision that once we have um the layer of two that let's say starting tokens as a whole they get support from layer ones and then they will also be um listed on Layer Two as well and once their Market size and marketing fluctuation it's um proven to be somewhat of a blue chips or somewhat of a dietary assets then we definitely want to move it back to the actual um Commando pool one rather than the isolated Market it's more a ring fence written against where we try not to have cross-costed collateralization between

the the higher higher market cap ones with ones that might have um higher volatility in terms of pricing or that may be more subjected to different anti-factors right because the potential for uh bad debt or contagion is very is is much higher in the newer tokens you don't want them to affect uh the Blue Chips if you will but once uh those new tokens establish themselves as highly liquid uh then you can enter them into the commingled pool and they become much more Capital efficient and I think I think that is spot on on how to balance risk mitigation and capital efficiency with some of the models that we've seen uh very provenly successful over on

mainnet you guys are able to do the Best of Both Worlds and that's that's just one element because then you go on to to uh mention how the token is going to be used for the safety module and I think that's another element that we've seen as a successful model um of course within Ave and within some of the other lending and borrowing models yep yep I I think um we definitely are taking a lot of lessons from um predecessors and also very successful protocol because I think they have been around they have been um having really great Innovations and um we are not trying to mimic or trying to just to be a copycat but I think we definitely want to pay tribute to what they have done so far for the uh so so

much for the ecosystem and what what has been working and then we we definitely want to add that and being able to add our permutations to it and um definitely we are trying to pick um some of the best lessons learned from all these protocol and being able to um put it in uh even better combinations and see if we can get better results by uh combining um all the different features together yeah yeah and I I think the combination of uh new and improved user experience along with the multi-call functions is going to level up GK lend to a point where uh it's not possible to execute some of the functionality that you know other other uh networks enable just

because you guys are on starknet and you guys have account abstraction and you've developed the user experience from the ground up you're able to to cherry pick uh kind of the best features from around the ecosystem and put them together and combine them uh with the the advantages of of starknet yeah yeah absolutely and since you mentioned account instruction actually I I want to highlight that multicult is only kind of extracting the service of what I can abstraction offer offers us because I think ultimately there are a few things we can we can do um the security Attraction part actually helps to um basically you know it seedless the wallet seedless so user adoptions it's going to be massive later on and then

for the Gatsby um abstraction basically that when it's massive it's all because what it means is you're able to pay your gas by a third party or let's say see can that pays against for the users or you would be able to get paid again in other currency rather than just the native ease as well um and lastly the it's the programmability of the wallet so what it means is um let's say right now when you have a a position and then you're afraid of being it being liquidated you have all these different protocols that actually send you a message or sends you email to say okay you're at the point of liquidations or cql would say your email but these are still very passive if you're able to program your wallet to have a sub wallet and you will be able to basically Auto

Pay Auto top up um your position be as soon as it hits a kind of a liquidation threshold so that it's something that um basically recurring recurring payments or automated payments these are something that um I think a lot of wallet that also I think these are working with starnet on this one and I do feel that in the next six to eight months something will come up and then this will be a massive feature for all devices not just divide but I mean yeah but but Visa too you know you mentioned a partnership between visa and starknet to to top up whether it's gift cards or whether it's debit cards that is a massive value add to the entire not just D5 ecosystem but the Trad fi as well

um I I can see the possibilities because if you have a sub wallet connected to your to your programmable wallet you can almost have your built-in like safety module right you just have like yeah it's almost like you have a savings account and you have a checking account and you know you're making most of your transactions through your checking account if it ever gets too low and you're going to hit like an overdraft fee it's it transfers some money from your savings account into your checking account so that you don't hit an overdraft fee and I I I can see how that uh provides automatic um security and safety into defy um at at a very seamless and streamlined way

um provides a massive boost to user experience beautiful well yeah yeah Brian this has been a pleasure I'm I'm super excited to see what comes out of ZK land I think you know you gave us a great taste um and there's just gonna be more coming out as Stark net hits its Regenesis uh in September um the rollout of isolated markets uh ZK uh lend token and staking as well as incentives uh for Lending and markets I think I think that gives our audience lots to be excited about uh and there's plenty of opportunities to get involved um so for anyone who does want to get involved how should they find you how should they get in touch um how should they join the community and start to contribute

sure um I think the easiest would be through the score we are very active on our Discord channel so our update or our tweet and we'll also be um shown on the Discord as well our Twitter account is also very informative it has a lot of new campaigns coming up and that we are actually just having another um cold Martin quest with startnet ID um basically it's a you deposit 30 and then you would you would be able to get um uh a a quest rewards for for that and um I think lastly it's our website are documentations and our gift book actually has a lot of very good information but uh when in doubt always reach out to us and the score telegram

or um just Twitter had us at DM and then we'll be able to get back to you as soon as possible awesome yeah we'll post this natively on on Twitter um and of course we'll tag you guys so um for anyone who is listening you know go ahead check out uh ZK lens profile shoot him a DM uh if uh if the message resonates with you and uh lots lots to be excited about um Brian thanks for coming on man it was a it was a pleasure yeah thanks friend yeah yeah always always a pleasure speaking with you guys classic cheers man cheers