The Goal: Financial Freedom w/ Aiham and Tenzent (Silo Finance)

Transcript

[Music] thank you hello and welcome back to the strangewater podcast thank you for joining us this week this podcast derives its name from a quote by Frank Herbert the author of Dune survival is the ability to swim in strange water well suffice it to say that the world of crypto is very strange water made even more dangerous because it's largely Uncharted and while we don't yet have Maps we can learn from the people who are jumping head first into these choppy Seas and sometimes you're right out there with these swimmers possibly struggling

to keep your own head above water these are the moments where the questions change from how to keep swimming to why am I even out here today's conversation is an emphatic answer by aham and Tenzin of Silo Finance Silo is a protocol that provides risk isolated money markets on ethereum and arbitrone and while you'll learn a lot about Silo we get so much bigger this conversation begins in the weeds of the borrowing and lending Market within defy and ends with an exploration of what binds us to Define ethereum building a legitimately free and fair Financial system before we begin please do not take

Financial advice from this or any other podcast ethereum and decentralized finance will change the world one day but you can easily lose all of your money in the process all right let's start the show AJ tencent welcome to the podcast thank you for joining me thank you so much Rex happy to be here awesome so um you know I think before we kind of get into anything even get into Silo let's just kind of do background so AJ would you start us off give us a little bit about who you are um what how you like learned and became an adult and then what brought you to

crypto I'm my name is AJ or I am one of the founders of Silo uh super excited to be here thank you so much for having us uh well uh you know I've been I've been in the industry for like since 2015 uh spread a couple of white papers you know all of a sudden turned djin like like instantly uh you know uh got into uh a uh had the opportunity to do a couple of startups didn't work at basically projects that never matured to become uh a project on the blockchain project uh yeah my background is economics and and growth hacking

um uh so yeah that's uh I've studied the economics marketing you know and I've been I've been doing that since uh since then very cool and tencent what about you yeah absolutely so uh me you know still working on the becoming an adult part but uh I uh I've been uh in crypto since I would say 2017 2016 was my first dabble uh I started actually middle Manning uh Bitcoin so just doing like essentially like my own little freelance business through like paxful and those types of services um and uh and I did really well and then actually I dropped off I dropped the ball there uh and then I came back to

the space um when I uh joined a fund and uh really I started getting involved with a ton of dials more than anything uh and contributing and you know even you know signing on multi-cigs and whatnot um but uh yeah no uh very excited about the space uh Silo was probably the project I was the most excited about uh you know like the whole the whole since I've been into crypto right and uh that also comes from the part that I was a big Rory fan but um I'm so excited that uh that uh I got to join the project very cool so um I think that's a great opportunity to Pivot to Silo and so we can like uh have a foundation for the

this conversation and um what I really want to talk to you guys is about like what debt means and why this is an exciting place to be but um AJ will you would you just give um the background of Silo um basically the origin story what you got got you excited and into the problem space and then ultimately like what is silo yeah well the story started back uh in the crypto summer farming many tokens and now you need to uh you know to leverage you need to uh to take loans you need to basically diversify your portfolio whatever and there's no lending uh um there's no there are no lending markets that's what was really the idea uh to be honest back then we I never I

didn't know much about the risk in in the current iterations of the lendings back then was Ave V2 on compound also uh V2 and then we got to know when we started thinking about creating lending markets for these super risky uh you know uh crypto assets so we got to know uh the risk involved in the in the current uh lending protocols and why they cannot list they cannot whitelist those uh risky assets as as collateral so you could not use them to take debt basically um uh and and then this idea of of Silo was created and obviously uh rally then was at its uh Prime creating these

isolated shared pool though uh she still I was was it was a great idea uh I think and great implementation obviously uh so that was really the idea to fix this problem well um who can say equilateral is should be used or a certain asset should be collateral or not is it governance is it the users of the community for example Pepe is hot today maybe in their Community they trust it as collateral might be someone that will find someone to provide loan uh to be the counter report risk uh a risky counterpart for Pepe who can decide that well certainly Avid governance can say no and they have

the right to and they should actually say no the way that Ave is designed but maybe uh in and they can get a a certain isolated market and then they these users who believe uh in the in the worthiness of of Pepe escalator they can actually extend loans to them so that was really the solution the solution is create isolated markets and then these alternative markets you just connect basically A lender on borrower and the two sites and then uh that's that's that's how D5 can scale how that can scale yeah yeah and I think you know all of us who um it's it funny tends in for you to say that you still have growing up to do when I'm sitting here with a you know 2015 or in

a 2017 here as a 2021 her being like Oh my God everything I say comes from inexperience but um I think any any of us that were um around during that time like sawari as something that was like really exciting and different and like really showed that you can take these you know primitive ideas uh that were you know like obvious and like put them into motion and like they would work um and then you know at least in my opinion it was a real tragedy to watch that hack happen um and uh you know the end of like what I thought was a great protocol and a great team and so um tenzan you said that like that whole episode was um kind of important to you and like

finding getting excited about Silo and AJ as you mentioned you've already uh you know the idea was in motion if not already launched how did that like cataclysmic moment in you know the defy lending space like really change what how both of you saw um the entire industry and like what lessons did you take away and how you're um building silo yeah so I I mean I can say that for um Rory I mean the really thing that I hadn't found Silo until after the Rari hack uh but for for me really the I it's not so much the hack that changed my perception as much as it was Rory itself which was okay how can we do this in a safe manner because I just looked at all

the other models and I was uh trying to get some tokens listed and with amen and it was uh just a nightmare and impossible and and it's as am says right it's it would be irresponsible for them uh to do such a thing um but uh I think the Rory hack really taught us that um you need some form of structure or commonality among the markets right like the the Rari hack is still due to the exact same issue right it was still because of the shared pool model that they were able to pair multiple assets that had high risk profiles together um whereas when you're talking about uh Silo we pair things with common assets

which are very trusted assets right so it's eth and usdc and ether and Zai on uh ethereum on arbitrum we use usdc and on ethereum we use our own stable coin yeah you know uh I remember like when we entered if a global hackathon uh to work on the idea to work on the proof of concept to see the initial response Rari was there obviously I think karate fuse pools and specific diffuse pools uh were basically a different versions of Avia and each version you can ascribe like a a pro a risk profile to it like like this is super Legion this is less that's that was the idea but technically

speaking yes they all shared the the technical infrastructure with a compound Fork each one of them but technically each Fork you could play with it you could amend it so that's why the hack didn't really affect every single version of the pool they're actually a couple of them but not every one of them because they not they they took the the code they created they made some some adjustments each one of them depending for example like if there was a a shared pool uh a fuse pool for LP tokens that they had to do couple of adjustments to it so and then but but the adjustments wouldn't apply to every single already deployed pool uh so the idea was was for us we know that there is uh a demand for

borrowing against exotic tokens uh there's otherwise underserved will we call them underserved uh crypto assets because simply no one except them as collateral but we didn't like really the the uh we wanted to give kind of uniform way as far as the counterpart the the counterpart uh taking the risk someone providing you with with Eve someone providing you with usdc uh and obviously each each market could Implement a curve uh interest rate countries rate curve such that if it's super risky if let's say you're lending usdc against Pepe I would probably demand an average of

variable rates still but 30 40 maybe right which we have seen with value back then so we've learned a lot of uh from them and it happened before the rally hack was just really incidental unfortunately I think they they could have probably if they had probably they didn't have much interest in continuing the project because you know things happen right things happen and these guys are Builders uh great Builders great innovators uh and and probably they lost some interest or something happened I don't know but it wasn't really the reason I think of for for for losing that business I think yeah and this is definitely not a Rari podcast we don't need to like litigate it but I I think you're definitely right that the the lesson of that was much

more in you know in about like politics and like legalities and like weird things about like value changes during like the reimbursement period or your point is it's a project fell apart during the social layer and not because of like the concept or the code or um anything exactly but but as far as the risk isolation I think Rory got validated obviously they had found they had a great uh product Market fit at one point uh but this idea clicked uh in the people's mind and also the silos clicked in people's mind it was October November we had graduated from um uh graduated if Global um

was was I think it was cream the second hack of cream Finance and uh and and uh and before that was was fused uh I'm sorry not excuse sorry um which one on the balance more chain uh Venus Venus Venus got hacked the same way it was exactly it was like Ave but then they had white listed uh Venus uh the vxs I think was was called so that people started thinking like oh wow I'm well how because I'm depositing usdc into the spool so how come someone borrowed my usdc with something else like uh so people didn't understand this concept of shared pool

um and uh it and and I think it still people don't know I think 90 of the fight today still don't know anything about risk isolation or the risk of of lending in general that taking a debt basically yeah and so sometimes actually when I explain that to people they're like isn't that what when I explain like how Silo works and how we do risk isolation they're like wait that's that's not how Ave works and then they're like confused and then I have to explain to them and they're like they get really good they're like oh wow like I didn't know it was this is what I was dealing with uh even some uh people from teams that I will not name didn't didn't know that a lot of these facts um so yeah I mean I think we're dealing with an education yeah like let it let

it be clear right there this is not a moral statement it's a factual statement that like with Ave like it the whole Foundation of that is like you're basically trusting in they will not pick like whack assets and their Capital base is so big that even if something happens you're probably not going to get wiped out and like that's a model you can run at 10 billion dollars and with 10 billion dollars is significant in the market like it is for Ave and crypto but in the real world that doesn't work and for Silo that doesn't work and like you're you're kind of answering that with the first principles like different way of thinking about lending right and it doesn't need to be a bad asset by the

way it could also be a very good asset but a liquid asset if an asset becomes liquid then you also run a run a risk of bad debt which we've seen briefly we've seen briefly with when curve squeezed happened with the Avi uh I think was his name attacked the uh Ave protocol yeah you're right yeah yeah and you know I I think that is pretty there's there's a very curious thing that's happening in crypto where we have recognized that if you lock things off of the market like the mathematical function of that is like the same amount of value is expressed through fewer

tokens or whatever and so therefore the price is higher and like we Rejoice right like that that kind of is like the fundamental principle of each staking at first principles and then curve and curve locking and all that stuff and the flip side of that is we are like soaking up as much liquidity as possible and that makes lending like more and more scary as like um crypto becomes like further and further down this road and so none of us here are trying to say like throw any shade at Ave or suggest that that kind of model shouldn't exist but like especially as um crypto like evolves from like four guys who understand what we're doing

issuing two assets to like the entire world entering this open platform like it becomes important to deal with this risk and like these isolated markets are um you know at least how I can think of the safest way you can do lending like you can only borrow what your my role is right it's it's not different from uh what curve USD is doing the Primitive the Len the stable coin primitive each version you could mint it in a single collateral name it whatever you want and it would be completely risk isolated from another version that is minted by a token acid you don't trust but just don't use the other one but completely isolate it

so actually that's a great segue into the next question I wanted to ask you guys which is the I think there's a lot of like really interesting innovations that are happening on in the lending D5 lending space right and if if we can say that the kind of first explosion of defy creativity in lending space was like Ave maker compound um it seems like we're now entering a world where like things are becoming much more sophisticated and like interesting and whether that's like silos isolated markets or vendor Finance implementing something that some people call call options some people call unliquidatable loans or um you know even if like a third model which is this curve USD

right I think like there's a lot of like more interesting diverse things that are going on here and I guess um I'll throw it to either of you when you see like The Innovation is happening in the D5 space like what are the things that are that you think are really interesting and defy native and cool that we should be excited about and what are some of the features that um you know maybe are a little bit more concerning or maybe like less safe than we understand um at first one is yeah I mean uh the stuff that I'm most excited about would probably be uh I I like kind of like the the math heavy stuff right so I do I'm really excited about what curve is doing with uh with the with curvusd and the

lending component really that it is um and how they've managed to uh essentially create a a it's more it's more than than a DEX right it's now a complete Financial product because it has the stable coin it has the lending protocol and it has uh the decks right all the to a limited extend the lending protocol but um but it does and so I think uh the one who brings it together uh will probably win um and the one who creates you know this the safest stable coin yeah I can I can add yeah I can maybe add a little bit so this is a kind of conversation I think

stablecoin we have not yet uh so if you think about D5 as a it should be up to one big it should should be one ecosystem and a sticky one once you enter it you don't need to exit it that's that's called the stickiness of this uh so you referred you've referred I think to that as that's why we need this debt because that's how you take that you don't need to and I I think we all agree that this that either has either to be kind of somehow derived from or backed by eth or a derivative of e or something related to Eve but not necessarily something external like uh usdc or usdt with all due respect to those of course that they they have obviously solve a big huge problem and and and they're proved to be resilient

uh to to as a result as you can expect from something centralized uh but for for this uh for for our work ecosystem to continue growing we need a stable coin and we haven't really yet cracked this um and and I was that's why I'm personally excited about curve USD as a primitive that's being tested right now despite all the the fuss around it and I understand it because of the lack of communications around it and and these these guys are you know ogs they don't communicate much which is I think important but they're testing it on production which I really respect I think that's the best way to to test it before it becomes something I'm excited

about that uh um I'm excited about fixed rate uh uh interest uh lending I'm excited about it uh I think uh it there is there is a big Market I'm not sure how big it is going to be but uh it should be um you know should be something uh important uh I'm also excited about the order book uh uh not amms I would say or the book exchanges like uh carbon from the bancor team has released something I think we need it we need kind of like uh basically uh a way to match these sellers and buyers and on all like in in that way on chain it's also you know we so any any kind of Reliance on anything

off chain would be great I think there are two exciting areas to work on one of them is the curve uh I'm sorry the stable coin and the other one is Oracles still we have not figured that that out we still addicted to centralized Solutions Yeah well yeah yeah for sure and I think I think like the problem with like a lot of oracles and a lot of like anything that touches off chain is that like the technology is still like the math is still being written and like um you know and I think like we need to make a lot of progress on like ZK proofs to have any expectation that um we can basically like trustlessly communicate in and out of ethereum um with any like reasonable like security guarantees or speed or anything

but anyway keeping us within the realm of um like lending and D5 so one of the things that I find like particularly interesting about the curve USD and how that's going to change everything is that um we're changing the the fundamental like liquidation engine of debt in when in this like um what they call like the Llama Or like but in the curve USD form right because when you take debt um let's say on maker and you draw closer and closer to liquidation and then you hit that point and then you get liquidated basically your entire collateral chunk is sold into the open market

um and that that might be more of a anyway point is like that's how traditional lending works right and with the like curve USD with the Llama construction you're continuously changing your collateral position to be more stable as your volatile asset goes down and like what that does is um like takes out these like massive sort of Damocles like chunks that um can like completely change the market and like move into like bigger problems right and so one I think that um well I'll take a pause here and and let you guys um weigh in do you think that this like is this big a deal on is and and transforming how liquidity flows

through the system in these like moments of high volatility yeah so I I mean I I that's you you hit it right on the nail right I mean I think that's a the most incredible part about curb USD is actually the its liquidation engine um and uh I think that also something that is worth noting that I think is really cool is you're removing kind of an off-chain component because uh well not removing it but you're swapping it over to a a different uh off chain component which is you know order matching essentially um but yeah no I agree like if you have loans that essentially liquidate you for nothing um then you know liquidations all of a sudden don't become so bad and users might not want to be a might not want to avoid it which will only bring more

traffic to uh Lending um and I see it as an absolute win we still I honestly still don't understand uh all the details or or the possibilities of of it but I I see the it fixes a lot of user experience issues um uh and I can see uh pure versions of of it being very successful as successful as as how much liquidity uh available so right right now I can see that uh you can you can actually use you can mint because of this gradual liquidation or this this you don't have to liquidate much you really don't need super super high liquidity

uh available in the pool to to to liquidate however the price manipulation uh is still uh and it still might be an issue um uh because of you know so many so many reasons so still many many components but I think it's uh yes it will provide a lot of uh yeah it fixes a lot of user user experience uh issues so when you guys as a lending protocol yourself like see this kind of new primitive and this new innovation on like how lending is even possible when you see it come down the pipeline um because we're in ethereum because we're in open source world I'm going to assume that like that that's an exciting

thing and we all think of like how can we build on top of it um but I guess I guess the the direct question is like when you see specifically curve USD and like the changes that um it can do to lending like how do you think about taking some of those like lessons and some of those features and integrating them into your protocol uh well it was still uh it's still being tested right now that's why yeah I'm really excited let's be clear it's like four days old yeah exactly uh but I I from a user from a user's perspective if uh I would like to have I would like to see lending markets uh where uh the counterpart to you the one ending you

basically we're lending you a stable coin and this table coin I would like to uh to have like a pure version either minted by eth or some LSD that is less decent uh less centralized um and that can scale something like LUSD probably but uh but I I think uh there might be less pressure maybe yeah Joshua understands a lot about tencent understands a lot about the mechanism of ESD I haven't really delved into it much but I think this this type of liquidation doesn't put a lot of pressure on on on on the peg upward probably or or something like that uh so you'd still you wouldn't probably have

like curve USD equal one dollar but it will hover around a dollar which is great uh and then uh you don't have to worry a lot about uh liquidation um or like swings in in in price so maybe this will scale without having to create to to create the sophisticated you know mechanisms to stabilize the peg you just need uh to create use cases for it and and the more it gets bored out uh probably it will stabilize it uh pretty pretty much I would say uh like die the version the first version of it which was if pure Eve but it was like benefiting also from from die being in all these pools and and stabilizing it

so uh I would say a use case I would say I would like to have uh you know what lending protocol is is have it as actually a bridge asset if if the mechanisms to be solid uh and instead of um like usdc the one we have right now on arbitrum um and if it's liquid enough obviously it has to be super liquid so you can liquidate um if you liquidate the the curve ESD uh in a direct way so it'll have to be uh yeah so that that's why I I'm excited about it now as far as liquidation engine uh yeah we can I can we can think about so many use cases uh um about it but I I think uh uh what I like about was something that I'm I'm looking at

exactly is having this stable cone primitive so you can mint this stable coin in any way in any by you know using any collateral and as long as this collateral is liquid you probably have a stable stable coin uh and and this ability uh you can think of you can create basically stable coins that appeal to uh with a varying degree of risk it could be something minted by super risky collateral all the way to very very stable ones isolated stable coins yeah exactly yeah you know I I think it's a it's a great idea why not I mean well I so God I think you open up a can of worms and like a million different

directions which we can go I think um I think like one one thing that is like we are a little bit like lost with like this term stablecoin because of like its association with like money and dollars and all this stuff but like one way to think of what a stable coin is is really just like a protocol that is gathering as much tvl as possible and then is realizing like hold on like the whole point of Defy is like composability and like the ability like basically what a stable coin is you projecting your tvl out back into the ecosystem without like releasing it from

your protocol and so I like definitely see that like if you stop thinking of like stable coins as this like money that like Protocols are just like creating out of thin air and more like a receipt for the value that like is backed by that protocol then you know like a lot of these Concepts around um like every protocol having a stable coin and like curve being the Beating Heart of D5 like become like a lot more um let's say digestible so I don't know if that resonates with any um of like the way that you think and um you know I know that Silo does mint a stable coin and so I don't know do you

have any like philosophical thoughts on um like what stable coins are and what they mean to you and we're not uh we we did the stable coin so V1 is all about experimentation for us we're experimenting obviously the core business is lending uh we needed this uh stable coin to see what works so it doesn't work and how we can learn from it for the future versions uh I uh we uh pretty much uh we all for decentralized ones so I would like I would love to to probably promote one with a fully decentralized um but yes you're absolutely right as far as so I think a stable coin has to be convertibly stable but also most

importantly decentralized because of any any reason I mean um uh if you don't want a centralized entity controlling it but as far as user experience uh you shouldn't you shouldn't really worry about much about the pack you shouldn't worry about uh the liquidity backing it you shouldn't worry about all these uh things and it's a long way for curvusd to build that that's why uh usdc is sticky today and usdt is super sticky because they're everywhere extreme everywhere you go and it's very liquid uh so exchanging hundreds of millions of dollars like in even spot doesn't really change anything so it can always redeem

it and that's that's something we might uh I don't know if you will have that soon with a decentralized one but that's what your stablecoin should do I mean we've we've experienced this in our protocol we know the limitation of our stable coin that fell short of of what we uh had theorized for it so the stable coin is like you're totally sunsetting it should we like not really continue down that route and no no we're continuing absolutely but I'm saying that uh it uh it's not like we're the energy of a protocol is yeah no I mean like it it has its own problems for example it's not super liquid today so if you want to exchange uh exchange it to me at least E oil price impact will

always uh hate you uh so it's design uh has its laws uh now is there going to be a second version yes uh better version absolutely so that's why the wood created it and I think uh uh the biggest challenge is to create deep liquidity for the stable coin uh at the bank and that is the biggest challenge Julie now obviously uh this type of um an asset liquidation mechanism that uh uh uh the Llama liquid the Llama liquidation is is great because probably you don't need super deeply ability for uh basically kind of you don't need that much at the peg the liquidity but we

still don't know but the question is like how are you going to build the Deep liquidity for one version of those table counts to become the main stable coin that is a biggest challenge because otherwise if it's not liquid users are not going to use it what do you do with it really so let's say today you invented this curve USD you minted five million of them what do you do with it really I do think that that is like the problem that we have right is that like look why do I hold usdc over every other staplecoin including tether right but that I hold usdc not because like it is the most stable which it is right I hold usdc because like I genuinely believe that like if I need to get out of crypto because like the government's coming for

me like usdc will be the route out right like I don't believe that like the government is going to go after Circle and be like we're taking the 80 billion dollars of his underlying here and like everyone who thought that they had good receipts even though we told you it was legal like you know I I believe that if the government is like coming after um crypto like you you know they'll have good they still have like the the like institutions and the people who like followed the rules that are going to be like the appropriate ways to get ourselves out and I think the problem that we have in defy is that like in order for our money to be useful it has to get out and like the reason I don't hold any

like decentralized stable coin like LUSD or whatever it's because nobody in the world is going to take my LUSD like it's only good for D5 and so um I I think that like the the big unlock that we all need is that we need like defy to have a purpose in the real world for like real economic activity and like that solves like a lot of these problems and like AJ your point exactly that like we need people to take out debt so that like they're stuck around in D5 but the problem is like the only reason to take out debt is either to continue gambling on D5 or to take it out of D5 um and so I think like that is like kind of the Chicken and the Egg problem that

we're in right now and so sorry that was a little uncoherent because of my like point about escaping the system through usdc but the bottom line is like this the problems is stable coins as a like philosophical concept is that like it's all well and good we just need them to be actually useful and like you can continue to make them useful in D5 we just need them to be useful outside of D5 um seems like seems like you have some pushback not at all actually I was thinking about two things what if you let's say you have a building today downtown San Francisco and this building is is worth 100 million dollars uh and this is a probably the kind of the polar

opposite of let's say curve us ESD minted back by East purely by Eve right these two worlds so one of them is utilizing the real world asset and which is a great topic to even to cover here and let's say there is a black rock type or or maybe BlackRock says like hey this is a stable coin right now and we're going to Mint it against this building we you know mint maybe 10 million or 100 million and they go uh and create your erc20 token minted or backed by this building and they have all the legalities around it let's say have a legal framework around it and they they enter D5 and they create 100 million dollar pool or 200 million dollar pool on curve 100 million this nothing to you

know uh silver coin and 100 million usdc or even whatever that is now you've all of a sudden you've created actually a a stable coin uh that is minted by by this real world asset so if you've got that now uh yes that will have users users will probably some users will trust it some user will simply transfer that trust because they trust this company backing it right all these reports or maybe they would in D5 we try we as much as we don't like to trust but we actually use trust all the time because you know we think things are going to continue to be okay right uh I I don't know if that's okay if that's a good stable coin

to be honest with you I don't know versus instead will come back by by E if the question is about who is taking the risk and and and at the U.N do we understand the risk uh and I think D5 should be open to both worlds honestly this I this idea of canceling each other that's just weird for me it's like okay that's usdc don't use it it's not yes okay great if you don't well if you really don't trust the centralized version of stablecoin you shouldn't be in D5 and all together then well I thank you um this train of thought um makes me think of cbdc's you know because like the the way people intellectually engage with cbdc's it's

like you know it is anathema to ethereum and like if if a cbdc exists it means like the world is a darker place and like I don't know I mean I think that like exactly what you're saying like if you you should be able to Mint a stable coin against a real world asset like the government should be able to Mint a stable coin like these are all just like digital assets and like we should all be happy about that you can choose to use it or not but we should all be happy about it because like where do you think you exchange and like settle and use digital assets I'll give you a hint right now it's like four chains in the future it's going to be one ethereum and well plus role and the altitudes yeah

yeah yeah another thing that I really think is like kind of worth putting out there and I would love to get your thoughts on this is like I'm a believer that the the closer we get to like true ethereum the more likely it is that like real people will actually never touch this stuff and like what curve USD is a perfect example where like I could totally imagine a world where like in the real world like no humans are actually like minting curve USD and like trying to use that at the grocery store to buy apples or whatever like curve USD all of these things they're like their communication layers for smart contracts which are just autonomous computer

programs and like I can just totally imagine a world where just like Grandma like has never thought about like her SSL certificate before she sends her email like no one will ever think about like the curve USD representation of value as they like go by their house so just buy their house well that's because of the regulations right probably because there's a an environment of you know of trust that was created by by regulating the industry and I think that's probably what we need uh I think uh it's and I'm not saying so here's the problem with regulating without using losing your privacy seems extremely

thick you know tricky to achieve number one number two yes with governments having their own stable coins all of a sudden they'll uh it'll probably even spend their own blockchains actually and all of a sudden you're using uh decentralized version of a blockchain that is actually not decentralized but yeah but but that's honestly the deeper question is are we ready as as humans today do we do we have the mental capacity to understand what it takes to be a free human I mean do we really value Freedom honestly speaking I mean we're still I mean I'm not gonna talk philosophy much because probably I tend to talk a lot about that but uh are we really do

we really care about freedom I mean aren't we all still children uh like always looking for this father or figure to kind of belong to whatever that be it a government or Elon Musk or uh or or or Mitch from curve although he's not pausing himself like that but we we just say Yeah in our space yeah yeah exactly if you talk exactly because so because if you if you think about it uh you know this decentralization I think the best thing about it is not necessarily it's because it's decentralized because a lot of Defy is not actually decentralized it's actually the transparency it's just

simply in the open at least there's a great level of transparency in the settlements and all the the the the Atomic version of these stuff uh but yeah so I but but still as I don't know if if our if the group of users us the one that care about those things the couple of millions of people out of the uh like eight nine billion people maybe that's it maybe for now maybe I'll take 50 100 years to actually get there to get to a point where humans will start demanding decentralization demanding transparency demanding uh uh those Solutions or demanding sovereignty basically but we

don't think we're Sovereign yet no I mean we're we're objectively not sovereign and I think what we all just learned in this last week from Ledger is that even about this the even of us that think that we're suffering or not suffering right um and I think that like I think your points on Phil philosophy are like very very true and like you know I think some people listening might take issue with them but I do not like I very much agree that like they're like these ideas of like you know being truly free and stuff are sound good on paper but are not like really part of what The Human Experience want and what we want is like community and dependence on each other and like to to to build together which is the

opposite of Freedom um and so I'm with you 100 the only point I was actually trying to make was that I think that we're dealing with like technology that's so early in nascent right now that we're like actually tinkering with the wires and as we get further and further like down the development rabbit hole it's just like these you know protocols like um curve or like uniswap will be like so deep down under the hood and so abstracted Away by like layers and lit you know like I doubt in 10 years I doubt anyone will ever deposit into Silo I bet they'll be on their Chase app and like the chase will be say here's your centralized rate

and here's your decentralized rate and then through the decentralized rate they'll really be getting that from a decentralized aggregator that is showing that Silo is like the best rate for this tranche of capital and like that's the point right like that's the point of composability and computer science and like everything that we're what we're trying to build here yeah yeah and I'd agree with that Vision as well of the middleware kind of taking Center Stage for D5 uh even even soon right in the near term um and that should be the end goal for D5 right now let's remove the financial component from the financial industry and let's just make them run an app right and run a front end uh and you know and then you can get the benefit

the huge benefit of transparency no for sure and yeah I think like just to just tweak what you said a little bit it's like let's take the finance out of this so that we can focus on like applications and users and like people that want to do something and not just like continue to like dig into docs so that they can like justify further and further leverage on the thing that they've already like drinking the Kool-Aid on right because that's basically what D5 is today I I I think dependency or interdependency is actually quite good in in society uh and that's not the opposite of freedom I think uh so I I see that but then so here's what what I think like it's a and

we see that all the time in blockchain if there's a community that believe that happy to believe in common like you know values and they build together they all benefit from Building Together uh although each one of them should remain independent as far as exiting or entering that community and and and preserving all them there's no any type of Oppression there's no type of uh of coercion in that relationship I think uh that's the the highest level of Freedom uh is you not because you need people but you actually we need each other as humans um you you basically uh build together because that's what D5 is

uh and this is what that's why I don't understand uh the The Narrative is about canceling each other out like hey if I succeed there's there's always be a one winner that's defy has proven to be the opposite of that because it's actually reality is just one big super app uh uh that happens that this app has to connect to the real world and the real world is controlled by governments and regulations that and and then you have we have to figure this out man okay so I am definitely taking that uh like one of my favorite exercises is like what's the most reductive way that you could describe ethereum and like you know the go-to example is out of the Bitcoin

white paper it's just a timestamp server right but I I think AJ you just dropped my new favorite one which is it's just one big super app um but and I and I think that um I think you're totally right and I think yeah I I for me like ethereum is just like the property layer of the internet and like that's super cool and that's interesting and like all this decentralization like the whole point of all this is just to like kind of embed property into the internet and like I think it's really important to recognize that that offers like capabilities around freedom and choice

and like look my in-laws are Russian like still live in Moscow I've been dealing with like U.S sanctions for the first time in my life um I was I went in 2015 I was on the first train of Americans into Iran after the um after the nuclear deal was signed like I very much believe in ethereum because of like the pain and horror that Financial sanctions can cause and so I'm like a huge believer in that freedom but I also think that we have a tendency to like forget that we are humans in the real world that like need to eat and like drive on roads that are safe and like you know make sure that there's not arsenic in the water and the goal here should be to like figure out how we can

create systems that make everything better and not um just like think that we're smarter and better and different than like the 400 000 years of evolution that has like led to this moment and so um yeah I I mean any any responses I'm not really sure how we got here from isolated lending markets so so how we got to I think the I'm gonna add to this accident at Linden Market it's just another tool in defy uh to stay in defy and because I I believe uh I've mentioned uh in this conversation the underserved Community underserved community so I have this

token asset I I cannot use it it's simply and and lending is is a great uh uh Tool uh not just to leverage but also it's sticky because you want uh to keep using you want to keep owning this token actually we own Silo tokens and there is no utility for it right now other than LP you can LP but now every user is gonna LP but I would love to use it as lending now I don't know if there's someone out there that is going to give me asdc or if so I could pay them interest and take that but at least with the isolated lending Market maybe there are 100 people that are willing to give me that so at least you've created that that basically so it's basically making

D5 extensible a bit more as as a first step for us as as builders of a protocol is still in exoperation mode so this is what people forget in D5 they want Elder like their project to be the top 50 like right away or or top 100 and not everyone will make it to top 100 but sometimes you create a lot of utility for a bunch of users and and you've done your your work really uh right as long as you keep building and so that's how I see D5 D5 is still probably 10 15 years away from from where we want it but and you were you're absolutely right as far as uh like you just don't want to see this they

want to see this infrastructure at all I don't want to know if it's decentralized of centralized just give me a user interface and and let me swap A to B and I don't care if one is on arbitrome another one is on I don't know it could be on on even totally different blockchain yeah no and I I think um that is a perfect pivot to like kind of what I would like to talk about with our closing few minutes here which is um when you think about like the ethereum or the defy end game like what does that world look like and um you know you can answer that from the perspective of Silo and like what what the role of silo or borrowing is in a

robust ecosystem or what it looks like in the real world but um AJ what you just said is that we're like 10 to 15 years from like D5 being mature and like what I have to say is like we're 10 to 15 years before like ethereum is actually like usable for things in the real world and you know that comes from like an understanding of the ethereum roadmap you know and dank sharding and like clients and like all of these things that are coming that really like change what is on the table and so again with our last few minutes I'd just like to hear from from both of you like when you look forward and think about like what we are all contributing to to bring the world computer and to bring D5 online

what what is that world that you're pushing us towards uh Universal Financial Freedom that's what I think this should be about uh unfortunately along the I don't know if we're going to get there because of humans are greedy all of us tend to be greedy and tend to grab to power if we get even if you are a founder of a of a defy protocol you're still that human you're not different from someone taking um an office uh in a in a powerful government Universal Freedom yes I would want someone anywhere in the world to have access at least to some sort of this

some of the uh things that we enjoy in in some of the countries and and this can I ask you specifically like what is universal Financial Freedom mean to you because I have an idea in my head but um a position of a uh a currency that is not controlled by a single entity and that every human being has the right to use it uh and it does not lose value because of circumstances that are that are of our control as individuals um and you can transact with it you can own it you can transact with it and and

all the uh Tools around it like lending and borrowing and uh and and so so technically you could use it to buy and sell and and and transact and trust it uh that is the missing piece right now because even if you are if you live in a in a remote country and you have means you're you're free human as Fair as possible individually let's say you're you're willing to make decisions in your life and you're happier but you still happen to live in a country where this currency has devalued 30 or 40 or or whatever because of certain reason that's they're gonna that's gonna going to limit your your freedom so that's what I mean like what I mean with with

the that the freedom for the human Freedom we need some sort of a Financial Freedom yeah and I I what I basically end up saying to every person I'm speaking to is that like Americans experience crypto differently because for Americans what what we see is like oh imagine like the possibilities and the capabilities and like how much better the world could be and so we should try to build crypto and what huge swaths of the world see is like oh my God I have problems today whether it's inflation or Capital control or like fleeing violence and like crypto provides answers to real people today and I think um what you're

saying is the defy needs to get to a place where it's providing them just as much to a Westerner who wants to do like forward-looking things as like someone who like just cares about like getting food on the table for their family yeah and if if there's if the theme of the last 20 years has been about owning the means of production yourself because you're a YouTuber or you're whatever that your online freelancer you still you need this financial you need this tool in order to to have this control over your life like to have actually freedom in your life not control it's about actually being free so it means of production on its own is not enough because someone can hijack it beautiful man that is so good the what you're uh

well I just have to repeat it and then attends then I'll let you go but what you just said is that like we just spent 20 years of democratizing like the tools of earning money whether that's like YouTube or content creation or whatever but it is not enough to be able to generate the money you need to actually own it and then have sovereignty in the system for it to mean anything and like I've never thought of it that way AJ like that's beautiful and there's even more why like ethereum and crypto is just like the Natural Evolution of the internet like this is just the internet exactly exactly what we need it's exactly what hopefully will that's why I'm excited about the curve USD because

I'm thinking like well at least it's going to give me like a a niche if I believe in Ethan maybe I can transact within that world that's why I think lending is important to that because we want to give it uh uh this utility yeah awesome turns out what what is uh the D5 end game look like for you yeah hard to follow up uh ahem but uh absolutely you know I agree and you know always love everything has to say so um but I would say that for me right if our end game looks like the one vulnerability that I see kind of like in the system right now is all of us when when you came in and you first bought crypto you had to go through a centralized exchange and there had to be

this kind of third party and at a certain extent this is what a cbdc will maybe for a fix depending on how they set it up uh but it's uh the ability to transfer cash directly into the regular system without any uh sort of barriers or you know kyc um that would be the end game for uh like translating money uh or you know transmitting money around um and then for Lending really I think we need to remove uh all of the centralized points of failure that we currently have and that currently exist in most other defy systems that um that work to an extent with you know calculating prices and stuff like that like oracles uh we need to create not just a decentralized one but also it has

to be tamper proof uh because you know unusual V3 oracles can be great uh but they can all be exploited right every single one of them can be exploited it's just about how much money it costs um and um yes so removing that uh removing the the Reliance on Bots and you know um yeah that's probably what I would say um but I I wholeheartedly connect also with the uh idea of bringing Financial Freedom to the outside world because I'm I'm from uh a third world country as well but um and my buddies uh who live in Argentina very much feel this and and this is the reason they use crypto and they didn't know anything about crypto before but they take their pesos they

turn them into dollars in usdt or usdc uh and then that's how they manage to you know retain value and not get completely ripped off yeah no it tends I mean I definitely appreciate your second answer which was essentially like defy end game just needs to be like more stable and more um just secure and robust and um thank you for coming up with another answer but just like for the audience and like like the reason tense and I know each other is because um like my fiance was basically raising money to do uh medical care for like people in Panama that have like never even seen like a dentist chair before and um tends that not only like gave

like by far the biggest contribution but like we've just bonded over like what it why we're even here on this planet and like what we can do like with our time and our resources and like again like all of us are here outside of the Western Financial system for a reason and um a lot of us are here because we got betrayed for whatever reason and a lot of us are here because like we see the opportunity to like change people's lives and like I can say without a Shadow of Doubt after speaking with these two men for an hour like that is like we're here to change the world and like these two guys are here to make sure that like everyone has access to the financial tools you need to thrive in the modern world and

um yeah you know it's conversations like these and teams like these that like remind me why it's uh important to stick around so um you guys thank you so much for the time I really appreciate it I really appreciate the thoughts and um you know it's not often that you can start with uh what's your D5 protocol and end on why are we here and what does freedom mean so so appreciate it thank you for the time and yeah man thank you thank you so much enjoyed it so much we appreciate it thank you so much for having us Rex always a pleasure talking thank you