How Dinero Is Reshaping Liquid Staking | 0xSami

Transcript

this is my view on decentralized stable coins right I think that we as an industry um defi side crypto side whatever it is have not proven the ability to efficiently tokenize our own assets the polygon Community grants program was launched with 1 billion tokens all four polygon Builders season 1 is live right now and features 35 million in madic to support the next generation of polygon products builders on polygon these grants are for you join the aggregated future today by applying at polygon.net friend nothing said on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show

are solely our opinions not Financial advice Pacho Ryan and our guests May hold positions in the company's funds or projects discussed what's up guys welcome back to another episode of zerx research today I'm joined by Danny from blockworks research and Sammy from daero uh previously known as redacted cartel thanks for coming on Sammy what's up guys thanks for the invite so throughout the podcast we'll mainly focus on daero but before we get started Sammy do you want to maybe give a quick overview of redacted and daero the product Suite maybe Hidden Hand and Pyrex and why you guys shifted away from redacted cartel towards the narrow I I think that throughout the throughout this whole um podcast like it'll start to make more sense than me just explaining it now but

I think that we launched redacted at the tail end of 2021 um we raised around 72 million between our public and private sale uh with support from Maven 11 and some others and at that time um defi was just in a different place we had this very strong focus on um creating liquid infrastructure for liquidity on chain and the the interesting thing about that is that uh we made we made very good money without having to spend a lot of money is in like tokens and stuff like that um so we were one of the few profitable D5 projects but the problem was that there was a very low glass ceiling so for example Hidden Hand

um was very very profitable for us um and still is uh but you know your your total addressable Market is in the millions which is like in it's a very good business but in the grand scheme of crypto you can only reach like a certain point um and when the def5 market was hotter um it was like the biggest bribe Market out there we expanded to a bunch of different chains and markets um and then the same was true with Pyrex we did um pxt VX and I think at Peak less about deposits more about the price of convex at the at the peak uh it was around like 25 million in tvl and that those numbers like Sound small but like considering how big of an opportunity these things were we basically like came in and we

dominated right um so we started very small and we succeeded and and I think in our two years of existence we never you know misappropriated any Capital we never got hacked we never um did anything out of the ordinary or I guess actually we never did any of the regular D5 things um depending on how you look at it and um and and then you know as I think like a lot of projects in crypto like start very broad they say like you know we're going to bring a billion users on chain we're going to get your mom a metamask all this stuff um and and then you see them like over two years three years just start to like become more and more Niche right uh in terms of what they're actually good at

and I think we went the opposite route right um which is like what an actual startup should do is it should start very small have like one very attainable thing attain it um and then just shoot for the stars right or slowly go to shoot for the stars and that's what we're doing now and um I'm excited to talk about it you know with ipx eth and some of the other developments we have coming yeah um so from what I can remember uh when you guys first launched the white paper daero was meant to be a stable coin backed by lsds um and you guys moved away from this a bit I guess like you have a separate liquid staking product now and an upcoming collateral backed um product the stable coin product what I guess I

could you talk a bit about both of those yeah so we're still doing that right um let so you know redacted was this like overarching brand um and one of the products was hit in hand one of the products was pyx and then the big one we were going for was daero and then what we realized was that daero was um a three-prong system right which it still is it's um an eth staking product pxe the stable coin which was called daero now it's called PX USD and um our relayer and all three of them play all really well with each other U that create like very Diversified yield that could like live on its own um and be sustainable without you know um token or any of these other things and that's still the goal that's still exactly what

we're doing but what we realized was that we had such a big opportunity with it that um all the other stuff we were doing and spending resources on and essentially wasting time with was holding us back and we got really inspired by um the bitow to mantle pivot the um ribbon to AO pivot um where you know you have this like brand that you start out with and then you just keep firing shots and then something really lands um and then you just focus on that and that's what that's what it is right that's all it is we never the daero product is not changing um but the second part that comes is the stable coin PX USD and in order to do that um we need way more tvl uh we need uh we need need distribution

because this we want the stable coin to be uh Native leverage for the um e staking product right and there's so many ways that we can do that which we're starting to like roll out now um our institutional staking product our uh branded SL white label LST product we're doing with other chains the reaking integration we have coming um so many different things but you need the you need the LST to be big um and sustainable uh before you can just like uh you know make it collateral for a stable coin and you can borrow against pxe now but um we're playing with some very unique you know mechanism designs with the stable coin that would obviously imply that it needs deeper liquidity and stuff right um so there's

I think that and hopefully I'm answering your questions here but like I I think that um the approach we're taking is like the right way where we're looking for new distribution mechanisms new users where we can pull this in without having to like you know launch a new token and do some like big points campaign and some behind the scenes like you know tvl raise uh type thing where like that Capital won't actually be there if we can find you know sticky Capital with people committing twoe threeyear lockups on this eth and uh the the things you can do with leverage and debt are very spicy um compared to having to work around a system where all the capital of the system can just leave in a date right yeah I think that's a great overview and I think we're going to want to ask about kind of all the pieces that

you just mentioned but um I guess looking at um on the LST side of things or the the E side side of things you guys separated out um pxe and then apx eth um in in the product so I guess can you run over over the differences between the two and what was really the decision behind kind of offering both of those two different sticking derivatives in this in this case yeah so our staking model is designed after uh fraxis FRX e um it it's essentially like a a two trunch system right uh you have a junior trunch which is pxe which is what everyone deposits into um pxe itself is not actually yielding the ethereum yield uh

but it is where our treasury that we've built up over the past two years of um you know influential assets like Aura and convex and Vell and all these other stuff um goes towards incentivizing people to hold on to pxe so it's a bit more of a risk on type of yield it's significantly higher um but everyone who chooses to opt into that Junior trunch is sacrificing the ethereum meal to everyone in the senior trunch which is apx e um and apxe everyone who enters that system uh is exposed to Pure ethereum yield which uh for the past like six months for us has netted three times four times higher yield than um any other LST on the market and uh they are they are the ones sacrificing the

defi yields to the pxe holders so really what we're doing is not two different lsts it's more of just um an abstraction of yield where we play with ratios um to like provide more yield to the people who want certain things because what we've seen is that um and you see it with like lrts as well right um some you see with Lotts and like Pendle right which became a big thing this year it's like some people are willing to sacrifice the yield in order to buy assets at a discount and then some people just only want the yield right and they think the yield is going to go up and um when you when you start playing with abstraction you open up like really cool doors in terms of um what you can do with yield um so that's like the best way to look at it okay

yeah great overview and and then I guess to follow on I mean you mentioned um you know fra as an example or similar product I guess I'm curious for daero itself and and what you guys have with pxe and apx eth like how where's the differentiation play out for daero relative to other like staking related or LS you know eth lsts yeah um so are the the the vision we have for it is um one uh availability right um and then to diversification right so what I mean by availability is um we can the way we've created this LSD and it's not a it's not a fork of any other LSD we sort

of built this own solution in house um is that it really focuses in on the validator uh side of things and it's less about actually with every with every LST you have the same tribalism that exists with l1s and stable coins and all of these different things right um and the Medan bones of all of this stuff uh is actually in what you can do with your validator right um and for us it's actually less about the output of pxe that's just where we started but for us we are able to like go to an institution um like Galaxy or laser neora we're able to go to layer twos and we're able to Output what they want which for example in the case of ipx eth is segregated yield segregated

collateral segregated valid dator set which is very very key which no one's really cracked yet um on the layer two side of things we're able to provide a branded LST kind of like um like blast eth or meth or something like that um and we're able to like abstract away this whole process of actually running an ethereum node um down to our core infrastructure and it's less about pushing pxe into the masses and more about creating those really good tvl syncs and then in terms of the yield um diversification when we have our igen layer integration going live um the way the system will work will be uh ether enters the system it's staked with us

it's restak into one of our partners um igen pods and all of the AVS yield which um we working with a few different avss uh to use exclusiv VR validators for this is pushed to pxe so those people who want the more risk on yield AVS yield defi yields is all going to pxe and then same as before all the ethereum yield goes to apxe um so at any point we could be the highest yielding LST or LRT depending on uh how risk on the market is if that makes sense that does make sense and I think um I guess yield Dynamics are important with lsts but with lrts I imagine they're going to be a lot more important because I feel like that market is really wide open and a lot of people are a bit worried about I

their yield side um I wanted to ask you about the reaking thing but you covered it a bit so I guess I'm going to talk a bit about institutional adoption that's the Northstar for all lsds um you recently partnered with laser digital um what does that look like like how does that side work what does it look like to offer an Institutional LSD well it's a headache for one um uh but beyond it being a headache I I think that you know we've worked we've been beside these guys for a long time through um personal connections and stuff and like I was saying before all we all we needed to do was prove ourselves on a smaller scale to be able to do things on the bigger

scale and uh when they came to us you know they were late to the ETF game the laser digital is the crypto subsidiary of Neo Securities right um and which is one of the biggest IBS in the world um and in Asia and um they relate to the ETF game um you could say they relate to crypto in general compared to some of the others whove have been around for a very long time despite what they might say and we we were obviously interested in building the E staking side of things and we we were building it alongside them put it on the market sort of like a test and prod thing for like six months um to prove that it works and to prove that it can scale and uh what we are

doing is we are providing the infrastructure in Tech like I said our deposit mechanism our withdraw mechanism which is really cool if you guys want to get into that um our defi Service uh or like our defi liquidity that we can provide our defi yields um and all the different things that have built into pxe eventually the native leverage with the stable coin um and the Diversified yield that we're looking at with our um our RPC and um are reaking so so they're taking the whole thing and they're white labeling it right um and what it looks like is again it outputs the same token but when ether comes in from a retail depositor or any of us um it looks like any other LSD I think everyone knows how

this works at this point right but for them what our system is able to do is it's able to recognize deposits coming from certain addresses for example a white labeled laser digital address right The Ether enters the system um it's segregated away from the rest of the validator set as it's building up that 32e Reserve it's staked with Galaxy on another segregated validator set um and also has a segregated um yield that that gets produced out of it the nice thing for us is that even though we are have we recognize that flow from the retail flow and we can separate it it's still producing the the same token and we can still recognize the same fees on it um as we would with any other deposit right um so really what they've done is they've taken it they've changed a few

of the Lego pieces um and they've built their own sort of solution uh in collaboration with us and Galaxy and um throughout the rest of the year you're going to hear about like the different platforms that this will get you know um listed on I guess you could say or made available for subscription on um that will make it as easy as any institutional place any broker ra whatever it is um to like pick up the phone and uh subscribe to whatever vehicle gets produced um to like uh provide this ipx e product to those people right so the main focus has been B Toc Integrations um that's that's the main focus yeah I think that we get really inspired by uh paos of all people

I know they have their own problems but um I think pao's actually cracked the nut with this right and I think uh in some ways like optimism is doing the same thing right where uh they recognize what they can monetize which is the fact that optimism in the long run everyone's going to get forced into you know closing down their sequencer for some decentralized sequencer nonsense whatever right um but they recognize that they can monetize something like op stack paxos recognizes that they can monetize something like T bills right and we recognize that we can monetize the ethal right um and whether we're packaging up solutions for institutions to provide or we're packaging up solutions for other chains or um like apps to provide or even if we're packaging it for ourselves to eventually

do our stable coin or whatever um we recognize that it's more about creating the infrastructure than it is about creating a product with like a big tvl number that makes sense and how you mentioned that you're going to have some other Integrations this year how do you approach that onboarding institutions um what is that I guess BD look like or is it so we are actually uh not able to you know solicit a fund uh we we're not licensed Brokers we are the ones that are building and providing the tech right um and uh it's it's really on laser here to be the ones pushing and uh to find LPS and

subscribers um to find people that come into this you know this will be their main eth product that they provide to all the people in their Asset Management platform um we are you know not um the ones that are able to like go out and find people we what we can do is we can do whatever we can on the onchain side of things and we can lean on you know their like however many people they have on their sales team to like go out uh understand the product and sell it to all the people that are subscribed to them right that makes sense um and before we move on to stable coins I have one last thing is um you mentioned deposit and withdrawal mechanics and something cool that you guys are doing on the withdrawal end what is it yeah okay so thanks for bringing that up this

is actually one of the cooler things about our design um is that we have a withdrawal mechanism um where when ether comes into our system because we have that abstraction we don't actually have to stake 100% of the stake to maximize our yield right like I was saying we're doing three times four times higher yield than the rest of the market um but we don't have to uh necessarily um stake everything in order to achieve that yield right so what we have is this liquid uh or we have this like liquid unstaked buffer right and what we can do for certain Integrations is we're able to provide them this buffer which they can execute withdrawals against without having to wait on or without having to depend on

potentially like the depth of liquidity pools to swap out or potentially like having to wait you know whatever one week two weeks to like exit the validator queue right um which is like liquidity is like a big problem that's like facing these lsts right now from doing something like what we're doing um on the ipxe side because the uncertainty with with which is a big thing in the fund world is not in existence here because we're able to like provide and satisfy those withdraws instantly that makes sense um I think had some good coverage there on lsts and LRT discussion um I think on the other side of things would love to talk more about the stable coin kind of piece of the business here um starting off maybe just generally Sam I'd love to get your kind

of overview or opinion on what you think the competition for decentralized stable coins looks like today um are are there any like key steps that you know daero needs to take to ensure that PX USD is adopted compared to all the other you know Alternatives that are out there today um you know die go you you can run off the list um do you guys have you know a specific approach in mind when it comes to like incentivization rewards um to encourage people to to start adopting and using um pxd um so we have a few ideas in mind I'd say that you know 90% of the teams Focus right now is on pxe um and working and scaling that so I don't want to get too into um PX USD because the thing

with stable coins is that the the landscape changes every three months right and I think that the only one great tool that stable coins are is uh a means of Leverage for the collateral that you want right um and that's what we view PX USD as more right like I could come and say like you know we want to um get integrated into visa and master card and all this stuff but like that's not actually what we're aiming to do what we're aiming to do is be the most efficient debt solution and own all the leverage and margin around pxe um and also use that as a tool to like play with the leverage between who's staking in apxe and who's not um so we're working with different Oracle partners for our big pxe pools and big pxe

Integrations for that um and and really what we want to do there is own the margin around pxe more than anything right um and if we can continue to scale PX SE and grow it out to um the size that we know it can get to um then I think it'll be a very useful tool rather than having to depend on um an A or a maker to do this for us right um I think you'll find that like over the next few years a lot more people will launch their own sort of like Niche smaller stable coin which isn't about solving the you know US dollar Cris shortage crisis in different countries but is more about acting as a means of Leverage for their products makes a lot of sense I like the way you describe it um I I

think it's it's a different take than we've seen um maybe more generally in the space to basically use the stable coin as as a tool to kind of enhance the overall product Suite that you're offering um which I think makes a lot of sense I I guess I'm curious then um more generally just about the stable coin sector like do you see outside of just using you know PX USD as like a tool in relation to the to the platform in general like do you see uh a future path for decentralized stable coins as compared to you know like their centralized counterparts like today we see you know tether and circle sort of dominate the kind of overall stable coin Market um do you see that picture changing or is it really like does it really just come down to

building a great product suite and if PX USD is is implemented well kind of as part of your protocol and how it performs um that's all you need it to do it's interesting because like we kind of want to be um at the Forefront of this uh in terms okay this is my view on decentralized stable coins right I think that we as an industry um defi side crypto side whatever it is have not proven the ability to efficiently tokenize our own assets we haven't even been able to like you know maximize the tokenization of BTC or eth um or any other major cap right so how are we as an industry able to bring on T bills and all of these different things uh into the market right um if we can't

even tokenize our own native assets right remember nft loans what a mess those were right um and I think that we want to be at the Forefront of being able to like uh of being rails for this stuff right so both bringing onchain assets to the real world and bringing real world assets onchain right um and if we can do that and continue to like build out our infrastructure then I think decentralized stable coins sure they have a chance right because um we we just need to be able as an industry to get better at like tokenizing stuff and proving Demand with people who actually need over collateralized leverage right you know we U maybe not us but like the average

person doesn't need over collateralized debt this is not something that like really serves much utilities and they need uncollateralized debt right um which they can go get anywhere in the real world um relatively easy right uh whereas with us if we can like bring the institutions on board get them for familiar with how operations work on chain build out the offchain infrastructure around it Prime brokerages and all these different things that can satisfy their needs in terms of margin then I think that decentralized stable coins do have a chance because we need them to be able to access eth on chain um in a compliant way in order to eventually access these these tokens right um right now they have access to these rwas and all these other um like assets but they can't necessarily do anything with them after

they mint them right you'll notice with like a lot of these like wa stable coin type projects is that they manage to strike like some huge tvl deal with someone and they just hold the token in their wallet right there's no there's nothing beyond that right um and the only way decentralized stable coins can beat those types of products which you're minting at 101% 100% CR um is actually to like provide that utility in a compliant and um efficient way for these guys to access right um so I hope with stuff like ipx eth we can continue to like build those veils where they can access stuff like eth in a very easy way and then eventually be able to access those stable coins and make more of a dent on the pie chart okay so I think you answered it kind of within your

answer but I I guess maybe just to drive the point home it sounds like in terms of a differentiating factor here for daero like you describe you know these R projects bringing you know US dollar yields on chain but they're kind of separated from the rest of the ecosystem for example so you know clients can come in and get exposure directly to that but then they don't have you know the ability to then get access to eth and other products and then you've got you know DEC centralized stable coins that are on the other side of that where you know you can you can make use of um the opposite piece of that puzzle do you guys see yourself as really an opportunity to bridge that Gap and just provide this kind of seamless exposure to kind of both ends of that yeah ex exactly I think I the end goal is if we

can provide um a decentralized stable coin with a centralized stable coin experience then we've probably cracked the nut right um and if we can continue to like enable our collateral of choice which is pxe um to act as that form of um centralized collateral um then we can probably very efficiently do so right that makes sense I um I want to bring it back to what you mentioned about that and um leverage and PX USD and I just want to understand how you guys are I guess like the thought process behind that and why you think that's the most important bit about PX USD um is is in terms of the collateral yeah and like how that approach of because what you

mentioned is like you want to use it as a tool for debt and leverage um okay so if you are uh in the real world if you're holding um some asset right um a lot of people will block you know who necessarily is the one providing margin for this right if you are an issuer of a like a like a like a steth for example right um so much of your protocols value AUM tvl whatever you want to call it um is in the hands of some Liquidator that you don't even know um and their forms of liquidations are extremely extremely inefficient right um it's a means to an end for Liquidators on chain right now

right um and you leak a ton of value by just giving up you know a was doing this right um or a recognized this with with gho right um by you know letting other stable coins come in and being the Liquidator they were giving up a ton of value to the stable coins when they could have just done it themselves right and recognize those interest rates for themselves and I think that you want to be able to like own enough of the stack to where you have no systematic risks or dependencies on other protocols um because a lot of them are doing very funky things with like you know margin which I think we're better off just like owning ourselves um even if it is less efficient or less

um less liquid than some of the other stuff um I think it's important to own parts of the stack that you consider core right once you reach a stage of like a Ste or a w there's no um there's no reaking or anything that can like bring more value to it you can't like you know start a new curve pool and juice it the way we can right now in the early stages right it really does just come down to um uh like margin right people start using it as collateral and they start doing other things with it and once we do get to that stage we want to be able to be the ones that issue all those loans against it so that we can make sure that that value doesn't leak elsewhere um the same way that we own all the yields internally and we own the institutional

product internally um and I think you can do that without going down the rabbit hole of let's do our own decks and let's do our own L2 and let's do our own whatever pers platform I think you can just recognize like your road map in terms of what this assets like um adoption will look like over time and recognize the key things of that adoption that you would want to own and like monopolize um so that you don't have to depend on anyone else for adoption I think that makes a lot of sense and this one I think the last uh part of the product Suite that I want to ask about is the relayer um I guess let's start off with what does that look like and how it fits into PX USD and pxe so I'm going to I'm going to avoid this question for now uh

just because we made some developments on it recently and I want to confirm with like our advisers that it uh works right now we have some like really cool stuff like um that we're working on on that side um that I just want to that we will publish like probably before like the end of the year um but I want to make sure that everything like I don't want to like promise the world here um so I'll probably like I'll probably skip out on that but like the main purpose of that also um in terms of like the niche that we're trying to like Target there is more in the account abstraction realm um so that we can like take the stable coin uh what we want to do is like make it the stable coin like

a a universal gas token for like any L1 or L2 right and obviously that doesn't sound like it would need to be a thing right now um but I do think that as more layer tws pop up um more side chains pop up more layer ones pop up who knows what'll come up off of salon l2s and all of these different things I think like the tribalism and um segregation of like uh network activity that's happening all these things that you could really crack like some huge like potential multi multi-billion dollar problems um just through uh like a account abstraction um so that's kind of what we're thinking again thinking long down the road map with like pxe and PX USD eventually I think our relay and RPC um can solve

like a real problem because we have that block space to play with if pxe works out kind of related to this question how does the remainder of the product Suite play with daero um and E L SD the E LSD and the stable coin like how does Hidden Hand and Pyrex fit into all of this does it fit into all of it um those those products are a means to an end right um I think that we can lean on um the influence we get from Hidden Hand as well as like the liquidity we get from some of the older Pyrex products as a means to Bringing more yield to the products um I don't think they're like crucial to our growth because I think that um if we scale the way we want to scale scale obviously um then those will

just be tapped out in terms of what we can do with them um so we view them more as like stepping stones um in terms of proving our ability to work with other groups and as well as uh using it as you know Diversified revenue and uh as the same using it the same way like other people use it you know like rocket pool is one of our biggest users um that and Stat originally when they had their huge liquidity mine was using Hidden Hand a lot um to like get liquidity going and uh we view we view Hidden Hand the same way that the advantage is that we just don't pay any fees hey guys permissionless the event for crypto natives is heading west to Salt Lake City and we're bringing the biggest names in crypto together for an

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future and boost scrap quality project the polygon Community grants program was launched with 1 billion tokens All For polygon Builders season one of the community grants program is live right now and features 35 million in madic to support the next generation of polygon projects for Builders on polygon or projects interested in migrating these Grant are for you join the aggregated future and feel empowered to grow in an infinite web of unified interoperable chains apply today at polygons. technology grants just in terms of growing like the level of integration of of you know the LST and even the stable coin throughout maybe defi or other protocols and and raising General liquidity of them um increasing access

um those are obviously very important so I do you guys is there anything specific in terms of like the go to market the strategy and kind of um pushing for greater usage integration of these throughout the space look like so I think our main um ideology ideology there lies in the fact that um we can lean on the fact that other people need native yield um and lean into their distribution and their Runway to like push these this product out to their users um without having to actually run um an LST system which is quite complicated and expensive right um so all the go to market for the rest of the year you'll see we'll be dependent on not us bringing pxe to scroll or something right um and us having to

incentivize it and do everything like that um but us partnering with a layer two um what's one that we announced we haven't announced any yet but okay like mode for example I think our community knows that the op stack ler too um mode can provide native ethal to all of the users on the Chain without having to actually like even interact with pxe right um but yet we recognize all of those all of that tvl and we recognize all of those fees because they're using our stack right um so that's kind of how we're thinking of like the go to Mar and we're working with you know 10 plus different layer twos and layer ones on um enabling this right now

um and I think like the ipxe announcement is sort of like the the wind we needed behind our backs um to like really push this out to prove that you know these guys can work with us so can you yeah that makes a lot of sense and that's I mean that level of um partnership integration whichever word you want to call it with um l2s and different chains is pretty impressive honestly I was not aware um I guess kind of piggybacking off of that that topic um how are you guys thinking about revenue and fees for the protocol um it it sounds like there's a 10% yield tax on PX e as well as some Redemption and instant Redemption fees um is that something where we're looking to at some point return that to the Token holder

base or is that further out and for the time being it's you know it's just being acred to the protocol as a whole yeah so um we for every product we've ever put out Hidden Hand um Pyrex whatever um always we have a split you know usually 50/50 one for Opex and one for distribution um to the to the users who um are participating in governance right so with with butterfly which was the old token we had like a 16 white or 16 we lock mechanism where people could uh lock their butterfly and then every Epoch every two weeks they would get um the eth that was collected amongst all these different protocols that we had

distributed to them now with daero the problem with like locks not to go on a rent the problem with like locks is that it really hurts like liquidity profile um so it's really hard to like get volume going you know we had like with butterfly we had like 90% of the supply locked at times and and then like the other 10% was basically just like uh was like us like providing liquidity so um uh like locks are good in theory but like in practice they get pretty complicated um whereas with um the industry standard of sorts now which is just like the single side stake mechanism which like you know most like protocol uh design experts will be like

oh it's just a leak of value or stuff it has it there's a reason everyone's doing it and that's what I've come to realize to I was pretty vocal about like single side staking mechanisms suck but I realized that uh when it comes to you're you're always your second product which is the token never never confuse the two your token and your actual product um uh sometimes like a single side staking mechanism Works um in terms of getting the metrics you need to actually um push it along to other venues for people to and stuff right and um because we're doing just like a single side stake uh we can't do the distributions anymore but this the same fee distribution still stays in place uh but it'll be passed

back via a BuyBacks instead of um just straight e distributions for now okay yeah that makes sense um I think kind of going a little further there um you know I think as a whole and as a category we've seen you know there's a lot of demand for liquid staking and staking just in general um I mean you can go and look at Lio and coinbase eth and things like that right there's there's a ton of demand for like stake eth and and similar um but we've seen a lot of the providers um and especially smaller providers as well struggle in terms of the valuation um within this kind of category is that something that you see changing or is it you know do you guys have to really you know beef up your product stack and offerings to um make

sure the market understands that and and you know maybe rates you appropriately I think it's not my place to talk about our token price but I can talk about like the general LST LRT pricing because it's just a mess right um sorry were you gonna say something I was just gonna add on to that by saying I think like less so daero um right you don't have to speak specifically on Dao itself but just in general like what is the what what's the right move are there Right Moves for LSD providers in general to to kind of go about it um so I think like the most obvious um example is um like something like jto versus something like uh ldo right um and then even something like um like ether five where

that fits into the picture right and I think what you notice with all of them is that uh Lio for example had really good growth this year um it pulled in like a ton of tvl uh but the market prices um the upside potential of eth compared to Soul much lower and that's why you see something like jto sort of um get the attention that it does right and um same with reaking you see that it's just a directly a a lever play beta play against igen layer success right um so it often comes down to what is the main dependency for this token uh with

Lio it's eth with jto it's soul with with ether F it's it's Aon layer um and that's like what ends up pricing the main um the main Crux of all these valuations which is the um what's the right word for it uh spec speculation side of these tokens right which which dominates majority of their valuations right and then the the core value of it uh in is um you know usually 10% or less um is like you know how you can pass the value that you generate back to the users but what what what the what people fail to recognize when it comes down to like how much are you Distributing back

to the users in terms of BuyBacks or fees or whatever is how much you actually like spent to attract that Capital um to you know eventually divide it up it's it's like profit versus Revenue right um Revenue can be really high but your your Opex uh could also be extremely high which like in the case of Lio like worked um back then because you know they spent heavily heavily to get steth to where it is today and the market was just in a place where they were able to get by but now you're seeing those effects now like you know you can't dilute a token 20% 30% in a year and expect it not to come back to the market right so Lio they make a ton of money in fees but the amount of money they had to spend to get there well

eventually and right now it has caught caught up to them right um you could say the same about rocket pool um and you know with jeto yeah you could say the same about jto right it's just like uh it doesn't matter you pass the fees back or not I think what matters more is how much you spent to like actually attract those fees yeah I think that makes a lot of sense and we saw that also recently with arbitrum uh spending like $85 million on their incentive program and they made back $12 million in revenue and it's like okay you saw an increase in activity but um I definitely agree with you on that I have one question related to Bar chain that I want to ask because you guys obviously have a relatively close um relationship

I guess my main question is will bar because I know they have a bribe mechanism is that related to Hidden Hand at all um and broader what is your strategy with bar chain and maybe even other newly launching chains yeah um so I work really closely with bear chain um I'm helping run their uh Build A Bear program which is like the in-house incubator um help them like basically from the beginning with the design approval liquidity and everything um those are the homies and uh the the with bear chain specifically uh Hidden Hand is not uh correlated to the be chain bribe Market because it's just a completely different design um

but uh with uh Dao's expansion onto bear chain it I imagine it is like a second Slash new home for us um I think that we'll be able to play like the proof of liquidity game very well just considering how we did the curve and convex and AA and fome and all other all the other gauge mechanisms that came before that um but I won't talk exactly on like what it is we're going to do with them yet just because I want to respect um the privacy of the partnership uh for now and I think that um you know it because of being like a second home for us like we're doing we're spending like a ton of effort and resources there to like make sure that we're like one of the dominating players

when it comes to um proof of liquidity uh but I don't think that Hidden Hand will be there but just for like other daps probably but not for bar core um but we'll be releasing some stuff on what we want to do to like play a role in the be chain Corp uh when the time is right for them yeah that makes a lot of sense and I think similar similar to the be chain kind of um partnership or strategy that you've got going on I want to go back to you you mentioned earlier Sammy that um there's a lot of chains maybe upcoming or that are out now and and kind of exploring um LSD offerings like through through their chain um is this something that other LSD providers are not going after as

heavily and so you've been able to kind of insert yourself here um into this you know particular segment of the market or is daero like just sufficiently differentiating itself to where these you know these new chains are are coming up and saying like we just need to use their product um well the thing is that like in show me the incentive and I'll show you the outcome right um obviously I think that just the way you could just go on defi llama and assume that you know maybe they'd want to use a ether fire or Renzo for something like this but I think that the way our system is designed is that it is the most sustainable and safe way for them to actually like Implement something like this without having to run their own validated is just because of the way our code base is designed

right um and it has the least dependencies on things um so that they could like spin this up right like in some ways um when they when they choose to work with us on this they can even choose who validator set is that's operating it so in some ways like they don't even have to be in a group chat with us or something in order to do this right um it's really just them like using the infrastructure um we we're very very very steep back and um we're working with layer zero on it um that like handles all the messaging and and bridging between the two things um and there there's a few different players like involved in it it's obviously not just us um that's like making this happen um but I'd say it's sort of like a group effort to like enable this

feature for a bunch of layer tws compared to us like going to every Layer Two and being like hey like you want to spin this up and collateralize your LST with us right it's it's actually not you know if someone does a x there xchain right if xchain wants to release X eth um they could they could theoretically do it right now um using the Branded LST solution without actually even having to like contact us that's like the power of it right compared to um you know integrating so deeply into like someone else's code based like another LRT or LST provider um and you guys are in the industry you know like like how these things work like roll up as a service type conversations and stuff like that um there's no there's no dependency on

us for them to operate this and scale this uh which is what makes it so which is what makes it so appealing for them and why we've been able to get like a head start on it and you know with other lsts uh or lrts like their heads are just in different places which I think are all the right thing some are focusing on doing their own L2 swell fracks whatever ethery payments thing I think that's dope um Lio is like doing a i competitor I guess um rocket pool is just like you know the pure descent everyone has their own little niche and I think that that makes sense uh but for us I think like taking a step back from all of those guys and just like uh plugging holes that need to get plugged for different players whether it's an Institutional player or in Layer Two is probably like

the easiest path for us to get to a billion in TV yeah I think that's I think what you just said is a really powerful take away on on kind of the strategy here is setting up a a product ecosystem to where like you don't need to directly have handshakes and conversations with um every chain or project or team that that would want to make use of your tool um that's really powerful if it can just reach some mass and and just continue to expand there from you know from its you know use as a as a meaningful and and useful product Suite so that's awesome Sammy I have um this is not related to Arrow but or reded but I want to kind of ask you guys have been around for quite some time now late 2021 um and you've come a long way

and I think um like from I guess Pro um protocol owned liquidity to institutional lsds um it's become more institutionalized and like all of defi has become a bit more institutionalized how do you see it going forward um like the ecosystem in general as someone who's like dayto day every day in def5 what do you see the next year looking like and are you happy with where it's going it's a good question I I to me I think that these okay you have to be like very like um agile in in crypto right as like a developer and sometimes you just have to go where the bid is right um that's just

the fact of the matter and uh right now you have this Dynamic that exists in crypto where defi which used to be like the most exciting thing in crypto is like living in the middle of the curve where like on the left side of the curve um everyone loves salana meme coins and um and uh they they play that game kind of like nfts last cycle and then on the right side of the curve you have the andos but you you also have eth and BTC right um and that's where the two pockets of liquidity live right now and every single D5 project exists in some of the layer twos too they just exist in the middle of the curve where they're not able to attract the more risk on Capital they're not able to attract the more risk off Capital um in some ways like

the defi bull Mark the bull market came too early for defi because we didn't solve the hack problems we didn't solve the interoperability problems we didn't we didn't solve any of the problems with defi right um which sucks uh but I think to answer your question I think that you'll see a lot more D5 projects um the ones that are serious of course start to go down this route of like being very conservative and safe and appealing to the institution whether it's a angle of compliance or not um I think you're even starting to see that from a narrative perspective to you know there's this like a big crash the other day and you see like the the sentiment on something like a is like wow a just works you know that's just like the sentiment on a now right and like it eventually it'll that

will uh just uh Blossom as a narrative right um and you know maybe like uh the very crypto native person who's on Twitter all day doesn't appreciate something like that uh but you could obviously imagine these people that are you know backing someone like uh like us like cartel to do a like an ETF competitor can appreciate something like that right like just bulletproof protocol that exists and makes a ton of money um so I think that you'll start to see this like uh I won't call it a pivot but I'll call it like a Sidetrack where a lot of Protocols are just like you know slowly uh existing and becoming more and more bulletproof and um eventually reaching the state that they want to become to in terms of immutability and

decentralization but you'll see a lot of them sort of start to take this like Sidetrack of appealing to the Institutional Investor and giving them what they want so that they can eventually come back onto the main vision and prove to the retail Market that you know look who trusts us right like they trust us they trust our code to do whatever it is they want to do ipx ether AA treasury if that comes back or something um so like you know we can provide the same we can provide the same thing to retail right um I think that that's what you'll sort of start to see in a very indirect way with a lot of protocols I think that makes a lot of sense and I I know Danny has as well but I've been thinking about cash generating protocols as well especially after the

crash it feels like it really hits you like oh some this needs to get something needs to back it up and I agree with you I think eventually we'll see more and more protocol shift towards that um before we wrap it up Danny do you have any other questions no other questions I think uh Sammy great great conversation I think you really hit the nail on the head on a lot of points here I wna ask Sammy do you have anything I guess any place you want our listeners to go to what should they do to learn more about daero or participate more in daero yeah we got hit by uh we changed the token ticker and the Twitter and the Discord and everything like that so I

I'll use the opportunity to tell you to go to our new Twitter and not get confused or distracted by any of the scams that are out there that are taking advantage of that which is um tanero din ER _ XYZ on there there's the link tree that has like all of our official links and stuff um and also just has you know you can go on the Highlight section on Twitter now and just see like all the cool developments we have going on that's like our main um Avenue of um distribution in terms of news um and then you can join us on Discord and chill with us too if you want there all fantastic I'll make sure to include those links the new links as well um Samy thanks for coming on thanks for the invite guys it's pretty cool a pleasure I you guys have some really good

questions compared to others are you currently building on polygon or interested in migrating season one of the polygon Community grants program is live right now and features 35 million in madic to support the next generation of polygon projects builders on polygon these grants are for you join the aggregated future today by applying at polygon.net