Why your yield is not sustainable

Transcript

well hello everyone welcome uh to my fcc talk hi there guys uh how's everyone doing still okay this is the last day of fcc can i get ao yes we're still awake nice uh nobody fell asleep during the long talk of vitalik or everyone still made it all right uh thank you for coming to my talk i'm frank greenkemper i'm a product manager at oasis.app and formerly we were a team within the maker foundation but last year in june we split off as oasis.app and are now our own separate company

and oh wait the the clickbaity title why you are all here is why your yield is not sustainable and i'm wondering how many digiums there are in the room i see hands going up already so that's good yeah so at oasis.app i'll first just introduce what what we're doing so you have a little bit of context and we want to be the most trusted place to deploy your capital into d5 and uh we're doing that right now with the mega protocol but we're also expanding beyond that to be uh yeah more

access so that you can access more d5 protocols uh through the most secure ui and connecting it all together uh earning yield in one position while borrowing your it from another position for example and taking the yield spread things like that so we're thinking about yield a lot and how to do that in a safe way because as justice at arcore you don't want users to like run away from you after they've just earned uh yeah a negative yield um so yeah at the moment right now what you can do uh on os.app is you come with

some of the top tokens in the space and at the moment those are just the ones from the maker protocol uh which with you can for example just use the vanilla functionality which is just borrowing dye so you uh put your your tokens up for collateral you borrow some dye you pay back the die after you're done with whatever you want to do with the die and you pull back your collateral but that's just plain boring stuff that only the the big boys do out there uh the the djinns uh obviously want to do something with the die straight away uh so they use it for example to multiply their exposure so

it's leverage like trading uh where they immediately swapped the generated die for more collateral to go yeah a couple x high and recently we've also announced oasis earn where you can earn a yield in yeah in my opinion one of the best strategies out there in d5 at the moment so if you want to check that out you can go i see one of the builders here of the underlying protocol so that he's very happy that i say that so if you want to check that out you can do so on os.net

and at the moment what we're building furthermore is uh additional uh automation tools uh to optimize your position so for example we've just yesterday launched um a way where your your position will be constantly sold uh to uh if if the price appreciates it it buys more of your position to increase your position and if the price depreciates uh you get you sell some of it to save your position uh keeping you at a constant multiple uh and also for example stop-loss feature uh all decentralized

um and we're creating a product also for the yield seeking investors so additional ways to additional earn features basically so additional yield features but there there are uh yeah so many uh different kind of yields uh out there and uh that's what what i'll talk about in the the rest of this presentation um and oh yeah one one big it's always cool to see the the big billions uh so uh yeah when when we we recently crossed the two billion mark on our uh multiply product

uh that has been launched since september so thank you all users for for using it so indeed why why talk about unsustainable yields well at the moment that i wrote the application for this presentation home had just had its boom and bust and i was just so frustrated that uh even though that was happening the next one for example klima dao i don't know how many people are aware of that uh that that just um gained a ton of popularity and there was were so many uh other forks uh and everyone was just hey this is the best yield you

can get in d5 and no one really understood what's where it came from or what it what it exactly was uh and obviously more recently uh we've had the the let's go uh board announcing that uh uh that they will uh capitalize um the anchor protocol to to sustain the yield there so so everyone was still trusting uh that in february of this year uh that this this would all be very safe so this this this was when uh uh when i was applying for this

presentation and i was like okay uh i i sure hope that this will all be all right by the time that i arrive in paris and well what happened is obviously uh uh i think you you all know uh here uh but uh yeah luna doesn't exist anymore basically um and it's so frustrating because it's so much wasted time and energy uh in the whole space when people keep praising this uh and yeah keep keep building another version of just the same old uh that that yeah in the end doesn't work and even the very big players uh

they they don't understand the risks at all of of these uh yeah yields i i'm i don't even want to call them yields but yeah celsius literally this was tweeted after they uh they found the filing um the legal filing where the they actually heated they entered the regional savings into om at the top of yeah what was it uh 1400 or something like that and it's now worth almost zero um so yeah that's that's too bad for everyone who had any money in celsius and yeah this this craze is continued

with uh investors keeping putting money in these farms that's that promised 200 plus percent apys and this was so so yeah frustrating to see but luckily even the the people who first praised uh luna so this was a a tweet where a person was like a step by step to earn 20 interest they finally saw the light uh when it all blew up um this is uh this is the most important thing about where all this non-sustainable yield comes from uh so the same person tweeted uh where where's

the money actually coming from that i've been shilling to my family and my friends that are now losing all of their money well so obviously it comes from inflating the token with with a lot of rewards and people sell those rewards for for whatever they want and hopefully they get a yield by that but many times the inflation is just so big that it ends up blowing up anyways so in the case of luna there was very little real yield and it was mainly just a ton of inflation and same with ohms same with

clima all those yeah products so what does a yield make what makes yield sustainable and it's very simple there's just one rule and the only rule is that uh sustainable yield is if there are people to willing to pay your yield for a product on the other side it's that simple that's nothing else if people are not paying your your yield for a product then it's likely negative sum or just plain ponzi game it's it's that that's it so that's my presentation now i'll i'll

go into this a little bit deeper so uh what products are people actually willing to pay for well obviously trading is one of the biggest use cases people just want to have a different exposure to a different asset so you can earn a yield by becoming a market maker that's sustainable for sure infrastructure providing and as uh selling block space uh if people are willing to to pay for uh for having their their um having their transactions included then that can be as a sustainable way of uh of yield as well

and the last big chunk is the lending borrowing that's sustainable as well as long as there is a use case for for doing the landing borrowing and it's not just landing and borrowing for liquidity mining the underlying token of the landing market and there's not much real real volume going around so in the case of infrastructure providing yeah this is mostly at the moment transactions fees for the block space and does it mean that proof of stake is therefore automatically sustainable uh well in my opinion no because uh or the yields there uh i i must say

uh it might be no it really depends on the transaction volume so as long as your proof of stake system has enough uh transaction volume to keep um yet to pay the the yields of the people who are doing the infrastructure providing then the product makes sense and possibly possibly in the future other yield sources could be from state rent when the state gets this high that it needs to be rented or in the sequencing on layer two can also be a possibility then for landing and borrowing um it's uh currently in crypto mostly over collateralized crypto uh lending and

borrowing and the the use case so this is the actual product that people are using is just going long and short for example in oasis multiply people are are fine with paying a yield for going long because otherwise they can't go long people are also looking for yield spreads so if they can borrow some some money here and and they know that they can lend it out for more somewhere else with that is a product in itself as well uh this is basically being the the the quick money versus the slow money um uh and people also just uh are willing

to pay for lending by just to get liquidity to buy whatever to buy a house people just want to live in a house so people are fine with paying an interest on their mortgage um and that's also where i see the the the biggest um sources of yield in the future in uh crypto if we uh get even more uh yeah into interactions with the real world uh so real world asset lending borrowing and uh possibly also the risk assessed uh under collateralized lending uh projects like trufy if that's that that yeah expands a bit further

uh and yeah then a speculation of what products some people might be willing to pay for i think options could be we've seen a couple of uh good tries but i i haven't seen any um any projects at the moment that that have reached enough volume for insurance i think insurance in general uh could be a great source of yield because people uh yeah want to be insured however at the moment the smart contract risk insurance in my opinion doesn't make sense because it's a bit like a turkey yield where uh the turkey is alive the whole time until uh at some point uh it's

thanksgiving and then uh their beautiful life ends uh and the same for smart contract insurance uh when you're providing uh the the insurance when you're underwriting it uh then all is good for as long as the smart contract doesn't get hacked but when it gets hacked yes you lose all your principle or whatever and there are some solutions for it and protocols trying things there but it looks like turkey heal to me and then maybe there will be other products that people are willing to pay for but yeah um if you want to give a yield to your users you gotta find okay what is this product uh that people are paying for that i

am giving yield for to my users and uh yeah lastly uh the uh yeah sorry what we've recently seen is um that the yields in in d5 have uh gone down so drastically that now uh the money markets are are offering better rates in traditional finance than in d5 whilst it has been the opposite for since the beginning of defy so what this what this means is if we want to uh get some better better yields in crypto again

some better sustainable yields in crypto not just yields that are are paid by inflation uh then we have to build something people are willing to pay for that solves a job for users and in my opinion the biggest opportunity right now is integrating the real world and that's it so thank you very much for uh coming to my talk [Applause] thank you for a break from questions we've gone a little over time but this is our last presentation in this room so let's go ahead and

take a question hey so you uh you recommended that it was like um insurance and something else for like the potential of d5 and then you had some question marks so what do you think about game fight do you think that has potential uh there's much potential in web free as it does in the real world yeah so uh if you're thinking about the product there uh what kind of like uh let's say you're a staker or something like you're putting money up for game fi what i can see is uh and getting a yield on that where where would that yield be coming

from i i can see people just paying for products just to progress further or something like that but yeah why would people need to put up money for for that beforehand and why would that money from the person who uh who paid for the product necessarily go to the person who provided the money up front that that's a bit unclear to me uh so i i think there are beautiful business models to be made but if you can really use it as a yield source i'm doubting it other questions out there okay thank you again frank

and please