Fireside Chat: Stablecoins and the Future of Online Payments / Stani Kulechov, Joseph Schweitzer

Transcript

I can't exactly see okay we're going to say thank you for being here before we pause for one minute while we wait for chairs they are prettier and comfier we got drugged so we're so it's a conference rug but thanks for coming on on our rainy afternoon so we'll just like uh Sonny's gonna dance for a little bit oh yeah it's not a robin ah when's rave okay

uh we can we could possibly dig in and then pause for uh pause for chairs yeah we should do that would you guys like the audience vote chairs or just go for it okay we got go for it good everybody this is stani I don't know if you've uh if you've met Stoney but stani is uh he works for a small project called ethlend and they are uh they're pivoting into a an updated project called Ave more recently after Ave studies taken on uh allotted lens and lens is working in the uh decentralized social media space and our chairs are here oh by the way and we now also have well

okay I'll pause we'll pause small swap oh I can't do that one get you oh that's bad oh this is better yeah okay yeah let's start this was an example of building in public there is a I'll even leave out a couple of the lame jokes so you guys know stani from Ave and from lens and uh he's also been playing on Twitter as you've heard with uh uh announcements related to a new stable coin called go and uh we're gonna dig in there to uh to

start things off go is uh all that Sunny run through what is go and why do we need it now yeah um who who by the way knows what go is already I think we can move to the next question we'll quickly explain um something about go um so um obviously like what what go does is that um you can supply uh your cryptographic assets into the um of a protocol and earned yield as as you have done probably I know there's a lot of Agents here um and then you can mint um go stable coins so you can earn on your collateral as you are borrowing

um so it's it's a basically a Ave protocol and of a community native stablecoin but what's fascinating is about go is the the actual structure itself so go is made from facilitators so each facilitator has a bucket that can mean specific amount of go and and the first bucket is effectively main thing go against your positions on Ave the second one is basically flash mint and go but most exciting thing is that um all the um Reserve factors of the revenue that comes from go come goes directly to the avidao and that's interesting because the other protocol uh while it's it's something that our

team build um it's actually governed by the the decentralized organization meaning that we uh can't go and change the code but there's actually people coming together and probably a lot of folks in audience that has participated of a governance where's Mark Zeller I I know he's here so um uh and and that's very interesting way of actually having a native uh stablecoin uh within the other ecosystem but the biggest difference for us uh is that we're trying to kind of bring a bit bigger um or a bit more long-term Vision on getting go into various different kind of use cases and especially payments um and it's actually quite important

because you know we're today um here in the um uh place where you know this we've we've operated here over 10 years um you know there's a Bitcoin machine you can pay um and buy crypto for example a bunch of other cryptocurrencies and Bitcoin in the first place tried to solve peer-to-peer transactions between users and over the past years with with as a community we're able to create a very um resilient and robust Financial infrastructure uh on the blockchain so we have programmable Finance with decent as Finance we have a way to earn yield uh hold stable value uh exchange value

from one asset to another but something that we really haven't solved properly yet is actually how we could use um it's almost these assets especially stable coins on day-to-day payments for example and outside of decent as Finance so so I would some way want to say Joseph that everything we build is incredible and amazing and I'm super glad to see how many of these D5 protocols and and these interests organizations have been evolving um but the next kind of like a thing where I'm super excited about for D5 is that how the hell we get everyone to use this infrastructure and that's where I

think a lot of people are here to build so looking into this digging into this one a bit further I've been spending a lot of my time in this venue as well and sunny and I were just talking uh uh backstage mother father of three walks in with a few kids and wants to order a coffee real quick we can convince them of the tenets of decentralization and try and get them to onboard with a public private key pair or something but this uh this idea what does the perfect adoption look like when people can utilize the technology without knowing that they need to use it you know what is the road to getting their look like and kind of as an aside Ave sorry go as

a stable coin how is it structured is it like uh like a floating Peg or is it to the dollar like many other stable coins have been that sort of easily easy enough to follow in your mind yeah so um It's Made in the way it's easy to follow so it's uh it it tracks the um dollar currency but effectively you can use the same infrastructure to um actually create also other kinds of trackers so whether that could be some other currency or something completely new that we've uh we haven't used or seen before so that element of familiarity is is is there and I I personally think that um to to the point of your question of

how we get people to actually use the technology is that we've we need to create different kinds of bridges and and I think uh people in general are very uh hesitant to change this um and especially because if you are used to something uh everything that is new might be a bit uh scary to people um and we've seen this with with various different kinds of Technologies so like we've aren't an interesting situation as a whole crypto community at this moment um I kind of feel that we are doing a lot of innovation and I personally feel that um you know I've I'm innovating in in the space quite a lot and and there are plenty of people doing so and you know a lot of you travel from uh one

hackathon to another to to build something very cool um and it it's all exciting and helpful but at the same time it feels that there's a lot of people um you know in the world that really doesn't understand what we're doing uh or feels that you know it's maybe not as exciting or big or uh maybe even um the path to go forward and I think here's where we actually need to think about it and like stop for a second and think about like how we build these Bridges with the uh people outside of our space um because we can't create a fascinating economy between us and trade stable coins um you know Swap nfts and um you know and and send money

to each other CNS names but if you actually want this technology to go uh beyond our community uh we need to start start building these Bridges and I think that's where um things like that are familiar so if you are able to transact with a value that that represents uh um something that you use on a daily basis but the way it's secured uh for you and and the benefits that you're getting are better um then I think we could go to the right direction and I usually tell people to um build like not build D5 but build just like better faster and stronger Finance because that's the way to actually

um just build something way more way more better but also familiar and as I mentioned that some of the tech industries and and um other Industries had the similar challenges if you think about for example cars um you know when automobiles came over 100 years ago people were actually you know scared of them and everyone was thinking that you're losing your job and you're um actually um introducing something that actually is replacing the horse which is like beloved family member uh back in those days so what the car industry basically did is that they started to create familiar Concepts um like for example that we still use today like horsepower so having more

horsepower is a familiar terminology and naming cars after horses and and you have in each technology kind of like a similar um uh bridges that has been built and I think that's valuable in the conceptual level and and how you kind of like design something for mainstream and then actually the the um the the the use case so let's say that with your example where uh you have a mom or or that coming and buying uh coffee um how important for them it is to actually know that they're using crypto or stable coins while just making it available for them and and securing the transactions with a blockchain but

without making actually a big deal about it and I think that's kind of like the part we have to be moving towards so there's over a thousand of you here now the hackathon just kicked off an hour or so ago um so the Ave and lens Crews have bounties out there I do most of my work with ethereum Foundation we have bounties out there if any of you want to go build you know things that look like Fiat to Fiat tools with crypto in the middle or we all have these Tap and Pay systems now that go crypto to Fiat but can we go the other way around uh uh please by all means find one another form teams go do that so in the construction of go

um there are many different types of stable coins out there now we've seen uh you know with capitalistic systems looking at public-private Partnerships 100 treasury-backed models we've seen the failure of under collateralized stable coins over collateralized stable coins die in company have been out there for a long time but remained a little more Niche how have you learned from some of these experiments what makes go different yeah I mean it's um it's interesting because people sometimes come to me and say that you know there's already a bunch of stable coins and I keep telling people that there isn't enough stable coins yeah so what I saying is that um there's surely something already

existing but that will be the same as saying like hey there's already computers why aren't we building better computers or hey there's you know um electric cars why we can better build better electric cars for example and what I think surely there's different kinds of features uh that really makes go unique and and very uh flexible as a stable coin that that could scale um but for me like what is valuable actually looking at like beyond go and all these communities is that how the communities are managing um the risk and reward aspect because end of the day like all the um now don't get scared what I'm gonna say is that

like all these protocols will look like look the same pretty much and they probably will have the same uh security parity meaning that um there's gonna be there's not going to be a big difference um actually when you are using one let's say Landing protocol um and or another instead of the one you were using um and in fact our web protocol has been also constantly forked and it provides um quite good public good so I think at some point um and I I have this concept called liquid citizen which means that you can actually relatively easily uh choose what you want to support and uh um contribute to um as a community

member on chain and at that point you have to kind of like think about like what's left for the community to actually distinguish itself and I think that's where that especially decent just finance that risk and reward comes into play and I'm I've been following quite a lot for the past couple of years how these different communities are managing risk um and and how they're basically creating different kinds of financial opportunities and I think that's the differentiator because if we want to build a very resilient sustainable Financial system it has to look something where there's a lot of options and choices for the users and

the more choices the more room for actually the users and the people to come and contribute to those communities and and manage that phrase so I do think that there's going to be like technical parity with all these protocols but then it's up to the more of uh like what what how the risk management of the community uh will look like which is going to be the speak English anymore anyways [Laughter] um tongue twisters so so one of the things kind of bouncing off of this um if there's anybody in this room that I've ever talked your head off uh uh I'm usually going on about though in this

industry anything that can be tried will be tried so I agree on sort of more Stables the better we explore all models we see what works and what doesn't hopefully without too much collateral damage uh moving forward um but you know as Ave is also iterated and innovated is there a need to um I guess is there a need for the appeal for D5 platforms to grow to change to sort of Market to more users in a way or do they just need to be better at what they do so that these other systems work so when it comes to Ave for example it is is you know this is these

institutional um programs that you guys were working on uh uh still um you know of great interest or is growing peer-to-peer sort of usership of great interest or at this point is it just making sure that it works it works well so that people can make use of it through their Forks through their experimentation uh and so on yeah I guess it's kind of like thinking about the audience and where what it is today for example I I do think yeah D5 has grown quite a lot for the past few years um I think from a few thousand people to um to to quite significant number that that is today interacting not just with

the other protocol and on various networks and I actually I like the fact that there's different networks and we don't all have to be on uh ethereum because it will be quite expensive but but also that when we look at the data at Ave uh We've we've seen that for example in networks where the transaction fees are lower uh we see smaller deposits but more users which is kind of of the the idea of um of of providing like a access to finance and and um democratizing Finance in general but I I do think that um something that has uh evolved quite a lot is that especially within the other

community and the other of a Dao is that it has become more professional so uh when we talk to people that necessarily aren't the typical Legions um you know setting yield forms on in in the basement but are actually you know working in financial institutions or excited about the space um and kind of have high hopes for um D5 becoming more available and and used in institutional scale um something that we hear quite often is is that the level of professionalism that we are starting to see in decentralized finance is something that actually like starts to create those those accesses to to these audiences and that basically also includes different

kinds of risk management service providers um smart contract code Audits and verifications and and protocol provisions and and also development uh work so I I just think that um that kind of like a niche audience has been growing constantly um but now we're going more towards a part where we see more institutions participating and this in fact happened uh during last year um uh before FDX uh what happened is that we had a approach we were participating in project guardian where for example JPM first

time um they deployed a fork of the other protocol uh where um they did it on a public blockchain that four can use verifiable credentials and used um cash deposits as assets on on the protocol so that was first public blockchain uh interaction from uh financial institution at that scale um I mean if if that will if FTX would happen earlier probably that that won't happen at all but but but the point is here is that um there's a huge amount of interest from institutions um while I do think is that we still need to think about like how we built

defy and what's the the kind of main audience and and build these networks and communities that they kind of like support the more Community ethos of decentralization um but I think I've never been as bullish on D5 as I'm today and specifically because now we've built a lot of that base layer so we have a lot of this base uh line protocols where we can do different kinds of financial transactions and the kind of next more interesting step is that well how will the D5 front end and the the access point look like so who gonna who's gonna build that that part and I do have questions on both front

ends and on institutional pieces uh that I'm curious about but you also mentioned uh the Dow in governance in general um stani and I have known each other in one way or another for 5.4 six-ish years and getting decentralized governance right is hard hence my Ethan joke you know kind of like when I came in um we've seen uh uh you know this 2021 era of app launches that you know useless governance tokens to completely plutocratic systems where one entity gets 30 another entity gets 30 you sell 30 of the tokens and then you vote with the tokens you know how have you guys

learned over time um you know how is Ave governance changed in a way that will be more uh conducive to incentivizing participation to seeing actual distribution amongst token holders and people taking leadership positions Within yeah it's a fascinating question because the whole question of like the the governance and how it should look like it really reflects what the underlying uh kind of like a scope is you know in in other community the scope is quite um simple it's the other protocol and things that happen in the community so many of for example the boundaries that you mentioned that are coming from

abacron style those are capital allocations from the avadao as well so there's kind of like a quite relatively clear scope um what is difficult for Ave Dao is that if you compare two other protocols in in Ave you have this component of collateralization so there's a certain amount of risk management involved and as markets are moving and assets are moving dynamically all the time you also need to manage serious dynamically and obviously because the other community is known to be

driven by Innovation so there is constantly some sort of protocol updates fixes or even smaller improvements that are done in a upgradable way they all cause risk so in in some perspective there's there's this kind of like a human error error involved um as well and I'm surprised how um the arbit Dao but also like uh looking at a few other communities how well they've actually managed the risk given that you know you have a bunch of people across the world coming together voting on different kinds of decisions and and actually make it work better than you know the transition traditional Finance um and probably most of the people there

are and across the fire without a financial degree so I think that's a uh amazing accomplishment um but I but I do think that uh it's really like a question of like what kind of things should be governed and and what like even maybe in the in the beginning you probably want to think about like how do you go towards Progressive decentralization and this is the very typical Playbook that Ava has followed and then um maybe the next step is that what is this what are the steps to follow to um also on governance so how do you get rid of governance in in things where it doesn't provide the value or it adds risk that comes that happens constantly

so there's kind of like those two parts that has to be taken into consideration so you need governance but also you also need to know where not to apply governance as well yeah I guess we this is how we get to ossification Within These systems or at least governance minimalism but um so you also mentioned a few answers ago the word front ends which gave me this thought on uh I had this conversation yesterday with someone here um when we think about the different types of parties that we want to use systems like these you know you guys have probably all heard uh at some point or another some other large defy application maybe they have to

track some things on their normal front end because of regulatory requirement maybe even someday some groups or others will be forced to kycu on the normal front end this is because you know you might have an entity where some developers work and the entity owns the URL and um you know in order to for them to be compliant then they need to follow whatever jurisdictions you know compliance requires but at the root level we have these contracts that we've built that kind of serve the world um as far as you know given everything that's happened regulatory recently and there's been more and more pressure on the industry when you think about the future and Adoption of this technology

is it possible for us to get to a point where let's say the Enterprise side and the the users here can all be utilizing the same contracts even if they have different entrant points entrance points for let's say institutions to use Go versus these two to liquidity provide or is there still some kind of a need to divide the intranets from the internets where you know the the we see some for large financial institutions for example that are only able to onboard if you have the right certification from a company um so so where do you see this going in the future as far as who can participate in these systems will everybody be able to use the same thing or will we kind of need to divide as we go to use case

depending yeah I mean short answers uh yes that um kind of like like you know all roads will come together I I think that's you know that's the vision um I think quite a lot of people share uh in in this community um I also think that it's also at this stage important because we're we're building uh D5 from the public goods perspective um so so like our kind of vision is that um our protocol becomes um enough evolved that you know it's it's just um there and can serve on any network that that is um available and and it provides access to to everyone and and

that's the the beauty of uh decentralized uh systems and kind of like permissionless access that it's it really functions in a new neutral way so you know a person from one part of the world gets the same uh treatment as a person another part of the world and that's very important when it comes to finance and um but also I know that you know once we have a good public good infrastructure what's also fascinating is that you know what you can actually build on top that might be some sort of um tailored versions of what you can actually create and optimize um so I think this both things will exist in parallel uh but I think like

the the main mission is to have a public first facing uh Financial infrastructure that's not really owned by um any or like a group of uh people or entities and I think like internet started this way so you know we had a very decentralized um idea of of what the intern should be and it centralized very quickly because you know it's it's very easier to use a service service provider um and you know today when we look at internet in general you know it's it's basically run by big companies so the big Tech and our kind of like a goal is also to say that

um internet needs to be more Equitable and Democratic so there should be dials they should be used users who have a stake and they're able to have ownership of the networks they use daily basis but there should be still companies because they do some things quite efficiently so but the the balance that we have now on the internet and also in the financial uh infrastructure isn't really Equitable at the moment and fair and and that's why that public infrastructure Finance as public infrastructure is is the main goal um and then I don't really care about what people build um this might be an easy one but uh I'm

covered in uh optimism stuff with my pin and my bright red socks and one of the Ave bounties I think related to deploying uh uh something on uh optimism on l2's as people do move throughout tying it back to the hackathon again from uh one layer two to another some point layer threes side chains everybody's everything is evm based which is great um do we do you have any worries about um you know liquidity depth beneath them or are we able to tie these systems together relatively soon through efficient bridging and whatnot yeah um

I I think the uh security aspect is still kind of like a concern to me when it comes to like so don't get me wrong I'm a big fan of layer choose and and um ZK Roll-Ups and optimistic Roll-Ups but but I think it's that we're we're going very quickly towards utilizing these networks um and even when we look at kind of like the the amounts of assets that are uh going to layer twos that's quite significant and what I think is that um the um the infrastructure there from security perspective isn't uh

necessarily uh complete so I kind of like a feel that we're going too fast and we should slow down and I I I think like you can do more Innovation on layer twos um but like the the mainnet has a lot of uh value even just like securing assets and not only storing hashes but down the line we're going to go to a path where layer twos have um incredible Tech um and actually you can transact there with a relatively low cost and I think that's where things become interesting because um if you can actually derive that uh layer 1 security um into a roll up and have low transaction fees that actually opens a completely

new use cases and even in finance and I think something that I personally would love to see uh is kind of like a use cases regarding um that front-end infrastructure of payments and settlements between people um and even even more Innovative way than we maybe have uh used to in in the past when we are you know buying cup of coffee or um I would definitely want to see some exciting ways to actually pay and reward uh users um and but I do think that's like if if I will build something today uh probably like I'll just go to that layer or two and deploy there something instead of ethereum because you know the costs are lower you get more users more users

means more feedback better product better protocol uh I think that's where that's probably will be my playbook yeah the settlement to the main chain is sort of the Game Changer in all of this because you can go use an evm copy anywhere but if we remove the the uh you know attack Vector if it's not having its World War III proof security then Things become a bit more funky do you think that the l2s become a bit more use case specific over time like if go succeeds in a major way could you see a ghost specific L2 where every application kind of you know syncs to the same place before it goes back to this layer one or will it kind of continue to live in whichever ecosystem becomes the defy home is kind of in one

place whereas the social media home is kind of in another yeah I mean looking at the past the other protocol is deployed in multiple networks so and um I think it's probably one of the rarest protocols where you have actually cross chain governance meaning that um you know if um uh let's say uh Mark Zeller from avechan initiative if he does a proposal on um which is a Community member you know that does a proposal on um on the polygon Network to change some of the risk parameters um users the token holders on ethereum network they can actually vote on that proposal and there's a crochet messaging

and this was actually available before many of the Cross chain messaging protocols were built um but just the the use case was the the cross-chain governance uh perspective um and I think there's value on being a bit everywhere because I feel that like every network has has its own community and kind of like our own vision and it brings that kind of like a financial layer there too and you know other protocol is an empowering technology so the idea of it is to enable users to do something else um you know you probably some of you were during the by summer you were boring things from Ava to farm something

else but the idea is that it's enabling technology down the line I could see some value if there is like a specific Network dedicated to specific code transactions that have uh very high velocity and throughput and I think that that's basically what something like payments are because the thing about payments it's not just like going and buying a cup of coffee that like that's a crypto specific problem that we're trying to solve like we're in so baby steps but if you go down the line like how do you actually settle payments in you know microseconds and you know have a lot of finality there and and a lot of scale and and that's where things become

uh quite interesting so in those kind of use cases I would see definitely could be exciting um we have just a couple of minutes left and I still hope one of you does build this uh uh Fiat 2 token stablecoin mechanism so find one another afterwards but uh uh there is a little bit of time for audience q a so take like four seconds to think about it okay and yes that didn't take very long uh uh we've got time for just a couple and we'll see where it goes and your name first if you can if you if you speak out loud I can repeat the question

so the question from Rick was uh uh that there's some concern that he's got about um Reliance on external factors and asked if there was potential for something like an oracle this Ave V4 feel free to go into context about you know the for those that are newer here uh what a little bit of this means uh the use of oracles and so on and so forth yeah I mean um as I mentioned previously that's um the Ave um the the kind of like a business model of the other protocol is is quite unique because you have this idea of collateralization um uh and and to understand what's the collateralization so if you supply certain amount of cryptographic assets and and um you you borrow liquidity

let's say stable coins um uh you kind of need to price these assets and the way uh we have solved the the problem in in uh D5 is that we rely on Smart contracts that post uh feeds uh that you can fetch those those price feeds um and and have a working system now the issue with oracles is that you know it does uh increase or introduce uh centralized um also failure point and I think the the um some of the Oracle providers uh chain link is is quite widely used in decent test Finance they've done a lot of work

um in terms of mitigating various kinds of risks um and being battle tested in various moments but the the I think the kind of like a challenge is that um the whole Space is relying pretty much on chain link and now what people are thinking um nd5 is that well how do you actually can be less um relying on one entity or how you could actually even create something better so I I personally think there's different ways you could actually build alternative systems but I think like the the first step is to how you can actually decentralized or diversify that that risk that you have from oracles and

I think there's enough liquidity in this and just Finance is that you you could actually uh make the economics work because if the economics doesn't work then it's very hard to make this all price for its to to to work and I think there's decent amount of um New Market entries coming from Oracle providers I think there was one prism called this API tree and there's probably a couple of other ones so it's a space like if you really want to innovate um that's a lot of upside there because I think there's there's definitely innovation that is needed cool um so since we've got less than a minute left I just wanted to say on a personal note

okay go for it yeah sorry uh one more questions uh I'm curious do you think that the existing tendency to build more and more stable coins uh proves that crypto tokens did not become a real money in terms of this money functions like medium of exchange unit of account um and yeah so and if now then what's the reason to like and what's the future of stable coins if like crypto tokens would become a real money like for micropayments and those they are the utilities like which we use money for yeah I mean this is a very good question

because like um um you know there are a lot of people here and and also I personally believe like you know it is also ultrasound money in in some ways and and uh like the the idea is that you know you could use just the um accounting unit of a blockchain to settle let's say payment transactions and whatnot I guess like um you could do that and that's been available for quite a long time uh you know if if you don't have to pay a lot of transaction fees right I think the the one of the challenges is that uh the actual value of that uh unit is fluctuating quite a lot so I think especially when we I was talking about in the beginning of the talk about

um the fact that we need to build Bridges if you want to get more uh adoption of let's say stable coins into uh the internet payments infrastructure which is actually a huge opportunity because if you think about like um uh the stripes and papers of the world how much and the results and credit cards traction there is um I I think that um having some sort of a stable value is is important for people um especially when you are settling transactions or you're earning for example salary but you know even with the national currencies it's not really happening in every jurisdiction you know we if you go as far as Argentina you know the inflation might be 50 uh there

meaning that whatever you earn in a half a year um you can lose it um lose the value and and that's another side of of the coin and and the problem but I do believe if if there is some sort of a accounting unit that is widely used that could stabilize um down the line and also there's the third thing that the you know stable coins they don't need to track actually a a currency that is uh somewhere in an economy um but they could actually track something else um that that is more uh you know interesting for for the um day-to-day usage or like economy as well all right we are out of time I did just want to say that stani has a lot going

on at the moment uh he's been active on Twitter about some big life changes that are some coming soon so I want to say thank you so much for taking the time to to to be here we've been trying to uh uh grow a new community and a new big event in the ethereum ecosystem here in Prague we're luckier than most blockchain ecosystems to have things like you know ECC is run by ethereum France Devcon is ethereum foundation Denver is by Denver Prague is from parallel nipolis and duct tape Productions and on and on and on and on all of us are by obvious Raves are by Ave and we have this this real uh distributed element um that uh you know each planet edcon I could I could roll them all out but it's

um it's it's it's the more of these we can grow the stronger the ecosystem you know is and to Ave into lens thank you for your support even during your busiest life moments congratulations and thank you all so much [Applause] [Music] thank you