Interchain Lending with Dohko of Mars Protocol

Transcript

we are live my guest today is doco he is a March contributor and had a product at Delphi Labs today we're talking about Mars the Mars protocol Mars Hub we're gonna be diving deep into the product credit accounts understanding the outposts model which they're innovating on and why they built on osmosis and also the long-term vision for the Mars protocol I'm also dying to find out why he thinks l2s on ethereum won't scale before we get started make sure to hit the like button hit notification Bell And subscribe to get notified when I go live every week and remember that none of what we discussed here on the interop is investment advice and if you enjoy this content please

consider staking with us for validating on avmos on Quicksilver and I'm super happy to say that our osmosis validator is now live we are not currently in the active validator set but just two spots away from being in the active Elder is that so why don't you delegate some osmo to interrupt and help us get there my guest today doco is coming up next right here on the internet [Music]

foreign thanks for joining me on the podcast hey nice nice to be here so uh Mars protocol has launched I think a lot of people have been waiting for this it launched uh I think two weeks ago or is that about right yeah that's that's about right yeah yeah let's close that and it's it's probably one of the most anticipated D5 projects in Cosmos since osmosis you know I I think it's up there on par with that level of hype and excitement so we're going to be talking today about uh the protocol and diving into some of the technical bits here also the

tokenomics and the D5 uh aspects as well the finance lending and borrowing of course but first I want to uh get to know you a little bit this is a bit unusual it's the first time I do like an on uh um interview but uh yeah maybe tell the audience a little bit about who you are and what your background is and what led you to become a contributor on Mars yeah yeah for sure first of all say at the beginning when you introduce me uh a product at not had a product at Delta Labs yeah just just to be clear with that thank you I know of course um so yeah so what's my background um yes I have you know I'm like my

background is in um like CS uh engineering uh that's what I study in school um and then you know I worked for several years after that and then as a financial engineer uh and then kind of like the the Wall Street World um and you know kind of like in the New York area and and from there um yeah so like I saw folks on several different things there it was mostly like you know uh Global macro hedge funds or you know like building like trading um so it's like trading signals the economic indicators that kind of good stuff right um and then from there you know I got into product and you know just like always worked in fintech and uh been following Bitcoin since or Bitcoin and

um crypto since its early days to be honest like 2011 is when I learned about it so it's pretty early on uh I've been always following it yeah we always following it'd be always on the sidelines because I just to me it was always like yeah it's great but it's got this other thing you know that and then what I ended up learning over time is like all the problems that I initially thought uh kind of like crypto had eventually they started getting solved one after the other it's a good it's a great lesson of like if humans to me it was personal lesson like humans really get to to do something they eventually achieve it uh and so to me what really got me to over the line was like the introduction of D5 um yeah stable coins and even decentralized table coins with some

failures that we know of uh but that got me over the line like dexes D5 activity like that because to me that was like really really the value add and the true ethos of crypto cool and uh maybe for our audience and also a little bit for myself like understanding the relationship between Mars and Delphi labs and the kind of broader organization that is Delphi so I know Delphi because I get their newsletter and I know that like they put up great research but they also have this Labs uh arm that is I think is the or the arm that is building Mars can you describe a bit of the organization here and what you guys are doing it sort of

at the high level yeah for sure uh so so Delphi uh Delphi uh Delphi Labs is is an independent kind of like arm um under it falls under the umbrella of Delphi digital which digital does all sorts of other things like Ventures and research uh to crypto um and Delphi Labs is contributes uh to two protocols uh and specifically it's it's one of the contributors of uh Mars protocol I would say yeah it's kind of unique I guess I mean there's a lot of oftentimes funds will often also do research and but having I think having a fund that also

has such a um a a high output lab right that is that is building protocols in-house I mean you know in in large enough funds you'll have developers and researchers that are maybe helping portfolio companies but in crypto at least it's not it's not common for a fund to have an internal um development house right that's Building Product uh what do you think about Delphi that makes that possible well I would I would say that um it's not really like that because the fun is its own entity and in Labs it's its own sense empty they're like separated uh they're like just like different legal entities are separated so they don't it's not that like it's not like you

know what is uh sort of like hedge funds uh sorry um it's mostly it's not really hedge funds it's more city um early stage uh web 2 kind of funds that also sometimes have like developers in there building ideas and it's not like that it's like they're independent from each other so lab purpose is this is literally just like to contribute either through crypto space and push it Forward basically and and then and essentially in this case contribute to Mars okay and so sort of funded by of course like funded by um Delphi so they're essentially finding their own products through the slabs entity yeah so I believe Delphi lab just self-funded yes okay interesting so yeah let's get into Mars a little bit

uh what's about what's the background here and how did this idea come to be like what is some of the um you know early ideas that led Mars to become a product yeah so we're going back to the early Tara days uh which kind of precedes me but um so so but but I was definitely like a user of Mars um so yeah so I think the idea the idea behind Mars is um to it you know of course it starts initially as this um kind of like as a as a traditional money market uh and we call that functionality in Mars is the Red Bank but uh but then it develops

also further into um you know like this idea of this this more this sort of like idea of um One Stop Shop place where you can go as a user to do all your kind of like defy activity right um so taking a step back right so you know if you look at uh arguably one of the most successful products in crypto so far has been centralized exchanges so and so why why is that right I mean really the reason is is because it's like this One-Stop shop that the user can go to and pretty much they can do everything on these exchanges um arguably minus D5 activities but they can do they can do that they can do pretty much everything on the exchange it's got this kind of like somewhat

intuitive like ux um and on top of that so that's one thing right it's easy and it's got everything in under one hood and on top of that you can get uh in some of these like essential exchanges you can get um efficient Capital efficiency right so you can do this thing over where you can cross collateralize your positions under one account right so if you look if you remember like before we blew up FTX as this concept of sub accounts and and the beauty of that concept was that you could actually take one spot position and use that maybe as collateral to take a per position actually the cross-colorization that you have in traditional Finance you had it you have it on centralized exchanges through that so that's kind of like the two I would argue to choose things that make them very successful right

um and so like our view is uh we believe that crypto should like the whole point of purpose to be decentralized right and so we wanna we wanna do we we want to build kind of like a One-Stop Shop product similar it gives you a similar experience with centralized exchange where you would go and you can do all your activities right um and under one account essentially um that has the capital efficiency of the centralized changes through the cross-colorization of assets so imagine something this place that you can go you can do spot trading uh you can do margin trading you can do D so the central exchange Stuff Plus D5 Primitives right so like farming leverage eel farming vaults you know even potentially perps option vaults all that under one place

with one account with one LTV basically foreign I think I I even forgot about this but Mars actually started on Terra and when Tara collapsed then you know there was a question of where it would it would build the next version and that end up being uh in the IBC sort of Cosmos ecosystem but more more closely uh tied to osmosis exactly yeah so so what happened was that um after the collapse uh we really took some time to to reflect of what will be our next step we did really a thorough investigation of like well we we try to be like as much as we could

unbiased and then you know and do research around where would you make sense to build and it's kind of interesting because we went through this like really deep exploration about layer twos about you know like a lot on other you know like super fast like things like apples and and ended up we went in like full circle back to Cosmos like this makes sense this is like really we truly believe in the thesis of the app chains uh we we like you know that's also where expertise is but like this is like where we should be building um and it makes sense and we actually even published like I think a report about that um fully transparent with the thought process pros and cons of course there's pros and cons right yeah it's this uh finding a home for labs article I think that you published

a few some sometime after after the Tara collapse right exactly right yeah yeah it's it's great article I I reference uh that article uh quite often um in when you know talking about customers to people or kind of pitching Cosmos to folks yeah so talking about the product a little bit um you know I think most people that have been encrypted for a while are familiar with lending products on ethereum like Ave like compound you know money markets in that sense and have used those money markets and you know even that like if you think back to 2018 2019 when these ideas were being first discussed

I think for a lot of people it took a while including myself it took a while to go to conjure up how how these systems worked and essentially the way they Works they work on a collateral basis so you have you put some amount of collateral into the system uh that collateral gets pulled between all of the users and then other users or even you know the same users are able to borrow other assets against that collateral I think that's a model that the defy industry understands really well now it understands the um the way that um both lenders and borrowers are are charged for borrowing and remunerated for Lending uh it understands the way

that liquidity pools function there are even now you know other protocols being built on top of that like Morpho that try to you know reduce the spread between the borrow and uh and lend rates by doing peer-to-peer matching so I feel like that's a space that's been thoroughly um explored and and built on on ethereum in Cosmos though we don't have very many of these lending markets I mean there's there are a few so there's like Umi um I believe on Juno we have uh maybe wind or some some other uh I'm not quite familiar with with the protocols over on Juno but I think there are some Landing

markets there and and then there's Mars but the fact that uh we have IBC connected chains I think really kind of introduces a whole new design space that is very different from what we know on ethereum what what are some of those unique opportunities that Technologies like IBC and Cosmic models have enable that aren't possible in the ethereum world and you know perhaps improve on what we already know in that space yeah yeah for sure that's a good question so before I dive deep a little deep in the IBC to answer the ABC side let me let me speak a little bit about

the Mars like unique architecture which I think kind of like would be a good leeway into that um so so what we believe so we we before I even go there I think we have I wanted to talk about a little bit about our thesis right so um so the beauty of IBC is that it opens up both sorts of like potentials right and like and the thing is it's like um like it allows you to do asynchronous uh transactions across different chains and that's that's really really powerful um however um at this point in time for um the ability to the the concept of synchronous composability is actually um quite necessary for

um a leveraged protocol to function on a specific chain um there's a variety of reasons for this um but I think the main reasons there's two the two main reasons that I can that I generally go back to are one is saw this ability to sort of like bundle within a transaction bundle multiple actions right so like I may be within just just to give really practical example when you do like um sort of like something simple like uh margin trading right for you to do that you have to you would have to like deposit collateral first then you would have to like borrow some assets against that collateral and then then you would have to trade what you borrowed which is the short asset right into the long asset right

um and and that's like three or four like different actions right that you have to do um so you really need to be able and at the end of those actions you need to make sure that um the account that you're doing these actions on is not it's still like the value of the collateral is still more than the value of the depth right um so the ltvs make sense so for you to do this uh in in uh in a seamless way where you don't you can only do it in one transaction you really need this the synchronous composibility of the chain right now in the future you could do it for IBC in a secret way but I think right now that's that's that's that's necessary we're not there yet I think with the IBC asynchronous asynchronicity um that said that's one thing the other

thing is leverage which I think is the most important thing like so so with them so what do I mean by leverage in this case I mean not necessarily leverage but the ability to like liquidate right um You really need speed to liquidate and so for you to like perform a liquidation properly and use even a concept of a flash loan which is which is which is the only thing it really allows you to achieve uh sort of like uh sort of like Capital efficiency with your liquidation as a liquidator you really need speed and that's increased composability in order to do that and so that's kind of like why Secrets is necessary at this point but things can change in the future and I would expect them to change and I think think we will adapt to that can I think can you just elaborate on

why this synchronous composability is necessary but and by synchronous composability you mean that all the transactions are happening in the same block I presume yeah that's right and that's right why is it that asynchronicity because I mean like you know look in web 2 we have all sorts of asynchronicity that happens and you know things time out Etc um I think in in blockchain as Things become more modular and chains become more Sovereign and there there are more of these kind of state machines that are independent from each other we are going to need this kind of asynchronous um interaction uh but yeah it's sort of like that's framing the context it in that context why is it such that asynchronicity is necessary for things

like liquidations or just to understand you know what is the what is the real Crux of the issue here yeah it's just about things like if you if you if you remember these actions that I mentioned all in one transaction like the depositing the collateral the borrowing if you were to like for example deposit collateral on one train right and then like borrow on another right like that would take time right you would have to wait for the blocks essentially for for blocks before you get the answer that you were like that you were able to like do that and then by that time maybe the prices moved and um and you enrolling back the transaction so that's the other thing right with the synchronous ability you you wait until the end uh and if the transaction if all the criterias of the act of the transactions are met

um you pass it you know it was a valid transaction otherwise you roll back you can roll back you can't really do that in an easy way uh asynchronously right which I I truly believe we're going to solve these problems I think there's a completely solve problems going back to the initial thing that I told you that I've learned we eventually solved the problems right but right now we're not I don't think we're quite there yet um to join a scale away okay so so the synchronous composability is unnecessary to do any of these actions um yeah maybe let's come back to you know Mars protocol and in that context and and how uh how how how things exist today effectively where we don't have this synchronous composability between chains

right no so let so let's get to that so essentially the so our thesis is at this point it makes sense that that they're going to be that there will be um multiple deep chains that will become D5 hubs and and it's completely plausible that multiple trains will be successful as defy hops right so what so that means that these These Chains will have effectivity and and will have liquidity and so when where there is liquidity and there is defectivity and there is a need for leverage uh in we we want to be there basically that's the thesis of March you want to be there and that's kind of like where this whole architectural approach of the hubbins book model uh where we have Mars chain which is also known as Mars Hub right

um that acts as a coordination layer for governance and then for fee collection and what we call the safety module um and then we have cosmoasms more contracts deployed essentially on the chains that we want to be on right which we call outposts that's why this model makes sense right um and ultimately we can talk more about that but that's I don't know if that makes sense yeah absolutely I'd love to talk more about this Outpost model because it's something that you know I've heard many people talk about over the last months I suppose probably since Cosmo verse uh Sunny has been talking about this as well here on the podcast uh uh but

yeah I'm not like entirely sure I understand the difference between The Outpost model and the way that protocols like Ave are managing their cross chain liquidity so I think that would be a really interesting uh different it would be interesting to kind of make the distinction between the way things are done on in the ethereum world with platforms like Ave and The Outpost model which appears to be more prevalent and at least more practical when you have something like IBC facilitating cross-chain transactions yeah yeah for sure so I thought I thought how it works on on on on Mars so the way it works on Mars is that the so the liquidity of a chain is going

essentially stays on on that chain right so like um so for the Outpost model where now we're launching osmosis and and and so like and we'll talk more about the the difference between Red Bank which is the money market functionality and the credit accounts but liquidity that's used there will stay there right so like the liquidity stays on osmosis basically um and so um and so if we launch on somewhere on another chain um it will be the same right I don't know if you know like injector Juno what any chain do you think of Cosmos if we do if we end up launching there it will it look it will stay there right so we had a conversation in the past where um and this has been asked also in the past by by some people in the community

it's um why this actually I think this is where you're getting at why this versus maybe have the liquidity on kind of like the Hub or have the hob act as an orchestration layer of liquidity where essentially you can have you know you can have liquidity on Mineral effects on Juno right and then you and there's need of more liquidity osmosis and the Hub can kind of orchestrate this and and channel that liquidity to osmosis somehow right asynchronously so this is entirely possible let's be super clear um within within the current Universe of Cosmos um and through and this is and through IBC and and this is also why it's powerful however it's more it's not necessarily technology uh limitation

because it's possible it's more like a risk thing like because different chains are going to have different risk parameters um you know like some trees might have bridges on them right centuries but not like some chains might have more liquidity than others right so the interest rates when you go when you build the money market right the interest rates that you're going to get on a chain are going to be reflective essentially of their liquidity of the risk parameters and then all all that right in the moment that you start channeling out the liquidity from one chain to another what ends up happening is you're subsidizing interest rates of one chain with the other and users on one chain are taking more risk than um than they then probably they're they're you know that they sign up for right like I'm on this chain like you know

you're essentially like trying moving sometimes interest rates and and there's a reason why nature sets are different right so uh yeah so there's that risk consideration to make now that doesn't mean that that doesn't mean that someone can come and build a vault right that does that that just looks at interest rates on a chain and versus other chains does some like dealt unusual thing um sorry um uh yeah uh hedging thing you know where like you know you're not taking like one position over the other and then tries to our this kind of interest rate someone could do that um not against that but that would be an explicit type of strategy where essentially whoever's sticking their money into that knows that that's the risk they're taking right versus The Chain versus stop doing it automatically

and that wouldn't be like a good uh risk proposition I think for the users so just so I get this straight on The Outpost model the The Hub right in this case the Mars Hub is a central point of liquidity it has contracts on other chains that is interacting with through IBC whatever liquidity so let's say I'm a I'm an osmosis user and I've got liquidity on osmosis now I want to you know I want to I want to borrow I want to borrow some uh I've got some some usdc I want to borrow some atom let's say and I want to do that through Mars well

one way I could I could do that is just to send over my atom over on on Mars and uh I could I could you know do that lending boring operation um but I think from a user perspective what we're getting at here is we're saying okay this liquidity position that I have on osmosis can be can be leveraged as collateral and this is where it gets interesting right with these Integrations where you can say okay this liquidity position that you know sits on osmosis and sort of has to live on osmosis can't really move or it's it's kind of tricky to move it let's integrate Mars into osmosis such that

for the user it's it's very simple right they have one button that that liquidity uh position um gets uh added as collateral on Mars and then they can then borrow some assets and you know do some sort of a leverage on on osmosis right let's take that take that collateral and uh and trade it trade for some other assets so this is the kind of user experience that we can achieve with these outposts right is that where we're getting to well let's be clear I don't know if I miserred you but um The Hub does not own hold any liquidity The Hub the market yeah the Mars top the chain Marshall

chain um all it does it's responsible for um setting governance um so through governance you can update some more contracts it can change like Risk parameters on the outposts right so the outposts have Smart contracts right deployed on them um and then the marsab is through governance can you know it can can pass changes of risk parameters of the positive caps um white listing assets right um can and update the the essentially the smart contracts but um and on top of that it the way the Hub Works essentially is that um the the fees the protocol fees on the Outpost um get channeled back to the hub and they get distributed to

um to the um to the stakers right to Mars stakers on the Hub right I mean not all and not all the protocol fees go to go through them there's a part there's a fraction that goes to the safety fund and um yeah and so I would say that but it's it's important to understand this is the model it's basically it's just like this hubbins book model as the Hub is kind of this coordination layer of governance and in fee collection um and and of and and ultimately holds also the safety fund um and then eventually we'll yeah yeah so so there is actually no liquidity in any case there's no liquidity on the Hub it's all outposts exactly right yes okay interesting so we're going to get back to the Red Bank and in just a second

here but when when I'm interfacing with the red bank right now and I I didn't get into the I didn't get to put liquidity on the Red Bank because I was uh you know I I was too late and and now the allocations are filled up but uh raising the Cavs we're raising the Caps there's a governance we're both Zone chain raise the Caps so you'll you'll you have a chance okay so so if if I'm doing that uh and I'm moving Adam let's say into Red Bank in order to be able to borrow usdc or something of that matter like that I'm actually not moving Adam there or how how is that actually working yeah so um you so the way it works is that the outposts are going are essentially smart contracts deployed on the Chain uh in

this case osmosis and um okay yeah your osmosis is facilitating is acting as the as The Outpost in this case yeah The Outpost is osmosis basically yeah okay got it okay I see so osmosis is the you know the the primary and kind of first Outpost that you guys are are are are launching there are others or will be others just that currently you've built this kind of privileged integration with osmosis yeah I suppose this is the first um they're going to be others in the future um but to be honest there's a lot of

work we to further Ado on osmosis right now so we're very focused on that and we're very excited to be working with them they're a freaking awesome team yeah absolutely they are uh so yeah so just going back to this this Outpost model uh what what are the what are then the uh so we have the this osmosis Outpost that is holding the liquidity for uh borrowing and lending now if if there's another Outpost that's I don't know on on like you know kind of Windex or something like that or some

other some other decks and and you have an outpost there how is that liquidity is it effectively separate liquidity or is it getting pulled somehow or is there some mechanism that allows that liquidity to act as one pool of liquidity and what are some of the complexities and having to deal with many different things yeah it's it's separate liquidity um it's it's like it's its own kind of like Outpost with its own liquidity um and it's like a separate chain um and then they're not commingled there's no yeah as I was saying earlier there's no like substitute there's no like uh coordination of liquidity through the Hub if they're separate like

outposts with separate liquidity um there is a safety module we have on the Hub um where it when it said what it does it collects uh a fraction of protocol revenue and whenever we Deploy on a new Outpost and they actually sort of like a backstop in case because there's like bed depth uh governance can decide to deploy some of the assets of the safety module to to to cover that right um and um yeah and so like eventually when you expand other outposts uh governments can decide to um extend the safety module to those outposts as well but um and then eventually vote if there's a situation of and all that but that is that is the

model as of now uh the liquidity is isolated basically that's interesting so when doesn't doesn't pooling the liquidity somehow impact the price of that liquidity wouldn't having more liquidity in one place make it cheaper to borrow and just sort of make things overall better for for defy users yeah that's what I was saying earlier uh so if you do that and again as I said like it's not a technology problem it can be done um but if you do that you end up um one one use essentially like one

Outpost ends up subsidizing the interest rate on another Outpost like for one interest rate to go down the other one is to go up right so someone is losing someone is gaining someone is losing right and then the question about interest rates you have to ask yourself is why are interest rates different between you know different outposts right different chains the reason is is there's all sorts of considerations right the liquidity is different the risk is different and then so as a user who's providing who's depositing for perhaps into Mars or is borrow and sorry sorry into um a osmosis Outpost or borrowing uh from the Red Bank and use Moses Outpost you're you're you're you're you want to be exposed to the risks of Osmosis you don't want to inherit like they're and subsidize you

know like the risk of another chain right so that's so there's a like a risk component around this and again somebody can't be done it's just about there's risk considerations that need to be done and eventually in the future maybe maybe like you know there's there could be a solution like a vault or something but um but it's not it's not it doesn't make sense from Mary's perspective to do this thing right now at this point okay that's interesting uh all right so we've sort of come back full circle to the initial problem uh I realize okay so how would this Vault work then well I mean what are some of the mitigative solutions here since we don't have atomicity and you know yeah synchronicity between chains with

different states Vault you mentioned Vault some and I'd like to understand how how that might work Solutions it's just that I thought this is like you could build like this kind of like Vault uh that uh and I haven't like architected or anything but it's more like you could build like a specific Vault that does this thing where it grabs an interest rate like you know borrows from one from one outposts and deploys to another outposts like taking advantage of different different interest rates uh but there's complexities around that too because it's asynchronous right so like you know you you know you gotta you're limited kind of the risk there um it's just just a thought you know like it could be done outside of an orchestration layer on the marsab essentially yeah

is there do you think that this ends up yeah I'm curious that's to counter the the market dynamics that this creates and trying to wrap my head around how different it is with how different it is from uh say Ave and the way that composability between chains is being managed there where on the on the ethereum side you you have Ave it is pool and liquidity from uh different Ave deployments on other chains I'm not exactly sure what the bridging mechanism there and I don't is it synchronous the way that they're the way that they're doing it is it asynchronous do they run into the same

problem essentially yeah so I am I'm to be honest I'm not familiar with how they're doing it if they're doing it if it's synchronous or synchronous and how often they they make that um yeah but to be honest I believe I personally believe they're segregated I believe that like each individual like a chain it's kind of like this this model that we're talking about it's like each individual chain is is segregated I have to go back and review it but I think they're segregated as well because there's complexity and the complexity is always the same you're on shifting liquidity from like one chain to another okay yeah and so does it does it introduce it I mean because you know if there's if if all the liquid like if you look at the D5 ecosystem in Cosmos most of the

liquidity is in osmosis now okay you're gonna have some uh secondary and tertiary exchanges with less liquidity and maybe less activity does having to what extent does this push users to want to use exchange or amms that have you know the most liquidity because and and I think this kind of compounds when you start adding more features and more outposts and more functionality like lending and borrowing Etc um do we end up in like a winner take

all kind of scenario or do you think that the secondary exchanges are going to continue to be relevant I I personally believe that um there's going to be uh multiple D5 hubs that can be equally successful um which each it it's just gonna have its own advantage and and um and then features and protocols built on top which might be slightly different I mean there's order book ones there's like amm ones um you know and then like and then there's you know there's always this argument which one's better you know uh uh but yeah so I I like it I think you know it in the same way there's a lot of centralized exchanges you know and then and you know they're doing the properly the same product it could be multiple D5 hubs that are successful to be honest

yeah I think osmosis also wants to do outposts on uh on other cosmosm chains yeah yeah I do like yeah I don't know the the detail of that but yeah for sure yeah yeah uh okay this is like I'm I'm I I must have been here I'm I'm learning as I'm going here because I Mars is not a protocol that I've spent a lot of time uh researching and and so I'm kind of figuring out also how this works and building my mental model around it as we're having this conversation um but yeah yeah I would let me just add one thing I think the main reason why liquidity is segregated uh across

different chains even for things like Avi and compound and all that the main reason and it's because literally what happened what happens is like in the moment that you start um unifying the liquidity creating this coordination layer of liquidity you're only as secure as the least secure chain where you're on basically absolutely because that's a get that gets hacked then like all the liquidity funnels there like automatically because you know like and all of a sudden like you're just like it's kind of like you know you're only as secure as your least secure point right so that's I think that's the main reason why um we're not there yet um does the does the Hub do price coordination as well between these uh between the different outposts or is it

not involved in that at all uh yeah I don't know what do you mean breast coordination well is it acting also as uh uh an oracle to align pricing between the different because it feels like if it's connected to all the chains it could also maybe serve a role in um homogenizing prices between different Chains No yeah so I think you're talking about like uh sort of like price oracles um yeah if if yeah yeah so I to be honest I don't know if the Hub is providing that kind of service but I but I but you know but there is um you know there's there are specific

price oracles out there that eventually I think you'll get you know to Cosmos also things like uh chain link pith that do that they're pretty good at doing that yeah what I mean is like since the since the Mars Hub is connected to all these defy hubs uh to all these other D5 chains it could act as an oracles if osmosis wanted to know what the price of some asset is over on another chain that you haven't outpost on that output that Outpost could be getting the price over on that chain and feeding it to us most is such that it creates it's like an additional layer of data that the Mars protocol by virtue of being connected to all these other chains can provide to to the ecosystem of change that's

connected to it do you see what I mean yeah I see what you're saying like yeah yeah I see what you're saying yes yeah potentially yeah okay well let's let's look at the products then so there there are two products there's the Red Bank and there's fields of Mars uh yeah can you describe the two products and then we'll we'll go a little bit more into detail for each yeah yeah for sure so the Red Bank is has it's the it's like a traditional money market type of functionality like the obvious that you mentioned earlier like it's pretty much similar right uh user can deposit assets uh in in the Red Bank and and they can borrow assets using the assets to deposit it as collateral so they have like there is um

all for all that is the deposited under their account essentially they have uh a health Factor that's all we call it it's essentially just like a Max LTV of the account and of course they can borrow uh over collateralize right so that means that um the value of their collateral is superior to the value of their uh depth by a certain margin and if that kind of like uh you know like margin is hit um then basically they they can be liquidated right uh so so to make sure that the protocol is always solvent so traditional annoying Market functionality not nothing nothing new at this point there if it makes sense and and then so the next piece of functionality is and so we have released

that right we released that you know raised the Caps so we're raising the Caps there as well um and then that's that's pretty important piece of functionality pretty important solid D5 primitive uh to achieve leverage and you know it's like I think I think like it's a fundamental for China cosmosis to have the next thing we're releasing uh soon is our credit accounts credit accounts are a new D5 primitive and Cosmos um essentially it's going back to the analogy of the uh centralized exchanges it's kind of like think of it as like a um sort of like account where you can um where you can do all your diff activity on it right so um so the potential of that is that you can do things like

um margin trading you can do things like um and leverage deal farming you can do things like you know leverage vaults um you know the future maybe even potentially purpose right and you and each individual asset that you're holding your account can act as collateral for another asset right um so that's kind of like the concept behind the credit accounts um so how does it and and you can and you can essentially borrow um you can achieve leverage on the credit accounts um that is um that that is like two three X or potentially more of the amount of deposited Federal that you have right so in that sense it's not um so the account will always be over collateralized right and I'll explain to

you what that means in a second but um from a user perspective he's getting more he's basically able to borrow multiple with with um you know with leverages like more that has more value than his collateral uh in his account so which that's that's quite Innovative if that makes sense and we can talk more how that works yeah yeah so maybe just explaining how this looks like from the user perspective so let's say on Ave you want to borrow some eth you would deposit a um you it's sorry sorry if you want to borrow ustc so you're going to borrow 100 of usdc you would have to deposit like 150 of each or something like that right you have over collateralized this

is money markets on crypto as we've known them for years with Mars though uh you would be able to to borrow 100 usdc you could borrow you could deposit fifty dollars in collateral or some lower amount so if in fact if it kind of feels under collateralized but what's actually happening is that those borrowed assets you're not just taking them and like moving them to another chain or like you know doing whatever you want with them they are sitting inside of a contract and that contract has specific functionalities that it can allow and so the assets that you will be borrowing with that money which is essentially what you're doing with a credit account you're getting that call out you're getting that that

um you're getting that that money in order to be able to you know leverage it to do something else right like purchase some other asset or invest in some other asset or yield Farm or something like that uh the the contract itself will be over collateralized relative to the collateral that the user put in because those borrowed assets are also going against uh The Borrowed position is that a good way to describe it that's a perfect way to describe it you got it 100 right okay like so the short the short sentences is I can borrow more than the value of the assets I deposited so from my perspective it's under coloradoized but unlike Ave I Can't Take the Money and Run it's it's it's it's the the mind that what I'm borrowing is

stays in the account right so that means at the account level at the Smart contract level it's actually over collateralized right so because it's there because the account because through the account you only have a specific set of whitelisted actions and if you want to withdraw you can but when you're withdrawing it's always making sure that you still are over chloralized within the account that makes sense yeah and does at any point I mean does that does that account so you can you could add more collateral to that account which would then increase your ability to borrow or your ability to Leverage for the user what what kind of Leverage What what multiple leverage are we looking at here in terms of what the

protocol will be able to uh allow yeah so that's a good question so let me start by saying that um so let me let me throw a little bit of terminology out so that people are are ever clear right so the credit account primitive uh we're calling that the Rover so the Rover credit counts so then when people hear Rover that's what it means but a Rover is also the name of the contract so you know but anyway so they're overcrowd accounts um within Rover the credit credit accounts there's things you can do like margin trading leverage deal farming so we're only going to allow one functionality at launch for now uh which is going to be lever Geo farming okay and we'll talk more about how that works um later on

um in a future really in the future future time you know we're gonna you know enable the other functionalities like margin trading cross colonization all that but when we're starting you know we're starting with just this because you know it's a new primitive you know there's this you know we just want to make sure we're being responsible um now with that do I have to get back to your question um how do we determine how much leverage a user can take so um we actually uh published a um a risk framework um that that we believe it's quite Innovative um that it's pretty comprehensive way of looking at how we assess sort of like how do we determine the amount of Leverage that a user can take against like um assets right and in this case leverage your farming your your the asset is evolved right it's an Apollo

Vault but how do you uh how do you do that right and so there is the methodology walks through the whole uh you know the framework what's the whole methodology um and um and again that's just like um an initial suggestion of course and what we think makes sense to follow of course anyone can can suggest through governance either a different methodology or an update to the risk frame to the to this framework so to raise parameters um but then methodology is actually quite conservative um and if you look at what are we going to be launching to begin with we're going to be launching um Apollo vaults Auto compounding vaults on osmosis LPS passive liquidity um and there's only two two vaults that we're launching right now that we're

going to be launching one is osmo atom uh 14 day uh locked Vault and the other one is um osmo axler usdc 14 day and if you look at those parameters they're quite conservative you're not going to be able to do leverage more than two and a two two and a half close to three x leverage um I would have to look but it's it's around it's less than it's around 3x leverage of most that you can do and that's the most that you can do um and of course if you're gonna do that I would encourage everybody to be responsible because like the higher leverage means higher potential return but it also means higher risk and the risk there is you get liquidated so like but that is the maximum leverage around around that around that number basically that parameter 3x which means that if

you deposit at fifty dollars worth of osmore atom or both you can only actually one of the two you can only you would be able you would be able to borrow up to 100 so that your position is like 150 with 50 of collateral right if that's 3x it's around that okay okay so can you maybe just describe this leverage yield farming uh and how that works and is it is it leveraging Apollo is that yeah yeah so the way it works is this right so so it leverages uh leverage you'll find me leverages uh yeah the Apollo uh so I follow this building and releasing soon um Auto compounding vaults which what this evolves to do is that they allow users to take a position in in um in an LP osmosis uh the Vault will have a

specific lock-up period so like if you take agos modem on the 14 day Vault it will lock your assets from the 14 day lockout period um and then all it does it basically um I mean where does it basically um collects their words I believe on a daily basis and auto compounds them um I I don't I think I think it's daily but I need to double track AR compounds those rewards right um and that's basically how it works it's just an automation tool over dlps and so and so what we would after you launch when we launched our Rover what we'll be doing is we'll be whitelisting these two vaults the 14 days of the stew and and the typical user experience which are things where you're getting at is going to be that a user will come on um essentially what we call Farm right

the field you're farming the fields of Mars um and he will open an account a credit account a Rover account the Pod it will be seamless for that process but it will essentially pick an asset he wants to deposit into the account um which osmo Adam or axeliers to see is one of the three white listed assets um and then pick the amount of Leverage he wants to take right so does he want like 2x leverage three you know if it's 3X 3X or less I don't know uh and then with the system what the system will do the front end will do we'll will borrow the other asset right so if they're they can deposit osmo atom or both right and then pick one asset to borrow from the Red Bank

um and so then it will borrow that asset it will kind of use a zapper and make sure that it's 50 50 put it into an LP and then stick that essentially into the into the into the Apollo vaults right um so the user will have in his account um The Vault um LPS with the amount of like uh with this exposure right I don't know if you started with fifty dollars maybe he has 150 right um and then it will have an amount of depth that he owes the right back basically yeah is the idea here also for like to what extent are these strategies built by the Mars team and to what extent can set in the

future uh users of the protocol suggest or build or propose uh strategies for other users to use is there a social component here that might be interesting to explore in the future yeah yeah absolutely so I I think and we want to encourage anybody that has an idea um of of building a vault right um for for Mars and and we want to encourage them to engage with us on Discord um show us the idea um and then you know like if then we can be you know like there's the there's different things we can do but basically the idea is like yeah anybody who has a good idea wants to build a vault we absolutely encourage the initiate that

conversation with us and then if if you you know like if the ball is a good idea and and gets voted and all that then you know like and it goes to governance um and then we can assign a risk parameter to it and we win eventually white listed tomorrow so yeah I think I think it is definitely um it is a crucial component for other people to come in and build and help us build these things yeah for sure so what are the uh what are the risk parameters that get taken into account when evaluating a strategy I mean of course I understand right now you guys are building these strategies and um and have most of the control over those strategies but

when when determining which strategy is a good strategy and which white label service is uh allowed in uh the uh the vaults the Rover vault um or maybe sorry in the Rover account what what kind of things are you looking at in terms of determining what is the level of risk are you looking at the stability of the protocol that you're interacting with or like the the security of the chain is it at that level of the stack or is it mostly uh Financial Risk such as like the amount of liquidity uh in these in these uh in the security pools or the the apis or

well what's the what's the level of of uh of depth that is being taken into account when when looking at risk parameters yeah yeah for sure so so first I would say that generally vaults um are an automation tool right so for example in this case it's like the ability to collect rewards and how to compound them right um and and so that that's what they do right think about the urine vaults and all that right um so but so and anybody can come up with an idea and can sort of like you know discuss about it and you know I mean it goes through governance and then you know you vote for it or not right so the risk parameters are the same right the the risk methodology that's that that's out there again you know like uh how does that I can tell you how that

works but again that's that's like you know like it's not set in stone right that's just like a suggestion of a mythology to be used anybody can come in and suggest another one they said earlier but the pathology itself has qualitative and quantitative components so there's like things like you know um uh smart contract risk um there is things like you know sort of like um just these qualitative components right um uh yeah and then I can't come up with other ones right now but there's like a bunch of them and it's in the mythology and then there is like sort of like so these are qualitative but this is like quantitative components right so and the qualitative generally are like things like yes and no kind of like that doesn't Mitch doesn't meet this criteria yes uh okay let's move forward right they'll meet the criteria generally like

and it's also transparents out there but basically if you commit to this area like yeah then let's look at the quantitative ones the quantitative ones generally are things like um we use this we use a concept of uh sort of like value or risk which is really use the traditional finance and we just look we just look that just tells you kind of like um um the risk associated to price movements of of that asset right um there is also things like liquidity adjustments right if this is a bridged asset versus a non-bridged asset if it's like what's what's the current liquidity and the depth of that liquidity uh on chain right there's all these adjustments but from this kind of like while you're at risk right um and But ultimately what it's trying to tell you if you think if you take a

step back and without getting too much into quantitative stuff ultimately the goal is um how much uh like like how much risk how much should this collateral in this case the vault is the collateral right how much it like how much do we um trust this collateral to be like um kind of like an asset uh that uh that is um kind of like that doesn't that doesn't like move uh that that that's price risk is kind of like um the volatility that it has it's probably Associated to like the amount of like the the value we want to give to this collateral right plus the considerations can make on its liquidity basically right and on top of that it's and it's not to be clear I just want to

have one thing and it's not just about this kind of like these qualitative components of the risk parameters and all that and it's and the max ltvs right so the amount of collateral power do we want that to have right it's not just that it's also about we also have another risk parameter otherwise parameters called that we call deposit caps which limits the exposure of total kind of like um assets that total like exposure to that asset basically right so uh you know for example like you know when we talk about raise the Caps that those are deposit caps basically um and that protects you from all sorts of other risks you know uh as well um yeah one a big one being liquidations because when uh where you're when you have an assault like the way

liquidations work right the Liquidator will pay adapt asset and we'll ask you know ask a specific asset on the account that is collateral and then generally the Liquidator you know is Dr neutral so what they'll do they'll they'll sell that asset right so if the spre if if the slippage they're getting on that asset is higher than you know like the liquidation bonus they're getting on it it's not convenient for him to do that right so that's a consideration that goes into these deposit caps right if like for the accounts or risk if they will get most of them get liquidated you know what would be this lipid right and would that incentive would that be make sense for Liquidators right so you you got to balance these things essentially a risk a leverage portal call it's really important it gets the risk

methodology right and that's why we spent a lot of energy into that and we're open to suggestions like to improve it and all that from the community so fuel of Mars is really the the initial product that brings some amount of innovation I suppose because I mean the the um the Red Bank is a lending protocol you know we've seen these sites these protocols exist in crypto uh the Red Bank I think is really where a lot of the sorry the fields of Mars is really where a lot of the Innovation is coming from is the idea here for platforms that have outposts so the osmosis the wind windexes the loop

finances Etc is the idea for these uh protocols to also leverage uh Mars to build their own products in-house using the Mars platform or with that building mostly come from the Mars team as they deploy those contracts to uh existing chains yeah so as of now um you know Mars contributors are like I think they're planned to be that they're responsible for deploying outposts um on future chains but we're talking about uh you know like the future right

now yeah so like basically in the future we'll be like a Mars SDK that allows chains to deploy an outpost and you know build all kinds of innovative D5 products leveraging the tools that Mars provides yeah it's not planned at this point but anything is possible basically yeah okay but is that is that the product Vision long term that that Mars is because I'm trying to understand like what is the benefit of of you of you know what's the benefit for a chain to be connected to Mars uh the benefit of the chain yeah yeah the

benefit it's also first of all like I think like you you hit uh the hill in the head the nil in the head when you mentioned that um the greatest Innovation is the D5 primitive of the credit accounts that's for sure um and and ultimately the goal of a chain to have an outpost on is to gain as we discussed earlier to gain Capital efficiency um and so like and then and kind of like yeah because that's what leverage does leverage ultimately helps you achieve Capital efficiency um and you're deploying capital in a more efficient way but on top of that a couple of fishes it's not just about the use of letters it's also like the ability to cross-collateralize the assets in in an account right so it's like this gain of capital efficiency

through leverage and cross-colonization that's essentially what Mars offers right and and then on top of Mars I would I would say I would also add because we didn't discuss much about that it's not just about the credit account itself and the functionality that it that it has that it has the caricon itself is an nft um it's transferable and there is all sorts of protocols that you can build on top of the credit account itself potentially right um You can build like secondary Market on nfts you can build like you know money manager type of functionality between the Red Band even on the right Bank you could build uh yeah there's all sorts of like you know sort of like stable lending uh there's all sorts of awesome protocols that can be built over both Primitives essentially yeah but my the what I'm trying to

understand is let's say I'm you know sub chain and I'm a massive D5 protocol uh I you know like an amm for instance and I want to build in a lending protocol I could take the Mars contracts and deploy them on my chain and and essentially own that uh whole part of the D5 stack uh without Mars like I I wouldn't need to be a Mars Outpost if because what I've learned here is that Mars is a coordination mechanism right so it's governance and things of that nature but what is the real benefit of being connected to Mars uh other than just like what it is building the protocol which is which is

open sourcing can be deployed right on the chain yeah so you so you definitely do that in the same way that you can do it Avi and other protocols right and any other protocol basically you can just like Fork them and and launch them on chain uh I think uh there's gonna be there's several advantages uh the first one the first one that comes to mind is as I said earlier the safety module so when you connect to the Mars when you're connecting your The Outpost to the Mars Hub essentially the safety module can cover that depth right potentially so like you're kind of like adding that kind of insurance which which scales really well as chains grow and the safety module accumulates fees it gets easier and easier to add chains because it and and you have that protection which is Big insurance right so that is

a huge advantage that you have already against someone else and on top of that we're adding we're gonna add soon like a backstop module which it's a further strength and it further strengthens essentially the concept of um the safety module where if you are a Staker in Mars protocol um and the the safety funds are not necessary are not sufficient to cover a loss um of adept right you you can get slashed right and your percentage of your tokens can get slash they can be sold back in the market um to cover those bad debt which does a really important thing which is it lets it it makes um stickers in Mars have skin in the game so if they if they make self-governance makes bad decisions on

governance parameters or on risk parameters or like what assets the white list and all that they ultimately pay the price right so it's this this like it's just this thing that if you had more chains you get this scalability which to me it's really really important for a leverage protocol for that protocol okay no that makes sense like yeah the having this backstop uh I think is an interesting aspect but also having this form of insurance that ensures that uh you know that the the the collateral uh um yeah that you you have you have this insurance backstop that is that is the security module uh that is essentially like what is it is kind of the service

that Mars is providing to change that connect to it right yeah it is the core of the value proposition I mean other than the code that you guys have written and that that you provide to change that uh leverage the Mars protocol this pooled uh capital in the security model is kind of the core of um of the the value proposition of being connected to Mars I say it's one yeah it's one it's one of them yeah okay but there's other things we're going to build in the future and marsab and you know so stay tuned yeah being part of the being part of an ecosystem yeah has its advantages as well yeah of course yeah of course um

yeah so some of you mentioned at the top of the episode that I wanted to also ask you before we wrap up here is you know you you said that you think that uh l2s on ethereum won't scale and so I want you to expand on that a little bit and describing why you think that is yeah so let's be clear I need to say that I believe like so first of all I believe that altitudes are actually I I paraphrased it sorry yeah yeah yeah so I think it's it's an awesome um expansion of ethereum and I think it's they make a lot of sense there's a lot of advantages they have um the thing that I do wonder and it's so I don't I don't I don't I I believe

they can scale I and in fact they probably will especially um you know if the zika technology gets gets up to speed right um I what I'm challenged a little bit with is the centralization of sequencers the sequencers implied right um because like right now they're hyper centralized entities right so I do Wonder so one of the there's several propositions that they have right um trustless like you know bridging and all that but um one of the values for positions like that they're fast right but they're fast because they have a centralized sequencer so the question I have is um you know once that becomes decentralized can they maintain gain that speed and that value proposition right and I don't know to be honest um

again as we've as we've said at the beginning like as long as you put your head into something eventually you'll build it and it will work and you'll solve that problem I think this is a solvable problem I just think that that's the only challenge that I see there to solve which I think everybody knows as well so I'm not really saying anything particularly new I would say well what what are you think are um yeah what do you think might be some solutions there I mean do you think we can actually decentralized sequences uh and I mean for me you know as as I spent you know quite a lot of time in the crypto space and looking at ways people try to engineer the engineer their way around decentralization it just seems that every everywhere you

turn there is like another thing that needs to be decentralized if it's like if it's if it's not validators it's relay or isn't if it's not that there's going to be sequencers that you know then you're looking at okay interoperability right so like we need uh uh we at first we needed um Bridge operators to you know be decentralized such that uh there wasn't like a one entity that could lead with funds and that introduces like more decentralization sorry you know at which point does this become an endless uh uh an endless sort of battle you know constantly trying to decentralize systems that

you know might be more efficient if they were centralized you know it's it's a really good philosophical question um I will tell you that in the end of the day uh what is it what is it how is it in English uh perfect is the enemy is the enemy of good so you know I think in my experience you want to work towards the 80 20. uh you're not gonna if you're gonna you're gonna achieve profession and decentralize everything and uh it you know I'm not saying ideally you get there right but you know sometimes you gotta make sometimes sometimes that's not the best solution like you mentioned right sometimes there's some level of centralization that could be acceptable depending what it is right it's all a matter of risk and it's all a matter of optimizing at

80 20. um and then once you have that you're really you can't optimize for everything right you have you have to get to a point where you're comfortable you you're able to accept the risk of what you cannot optimize basically yeah no I mean I think that's true but I I think there are there are forces in the space and certainly like a lot of people who try to push the narrative that if not if everything is not decentralized from from day one it's basically useless and I think that's wrong I think that the thing things that have been successful oftentimes started as not so decentralized but then decentralized over time

um and and then there is I think a happy middle if you look at uh the entire cosmos space and the security model of the cosmos space I think is a a sufficient uh middle ground in terms of decentralizing the the validator set and having finality in fast blocks versus you know ethereum and all the complexities around the consensus there where you know you have a very uh decentralized validator set although under the hood under the covers you realize that most of it is Lido but and and but um

but where essentially that that that that that fully you know wanting to be fully decentralized actually creates complexities in terms of block validate block finality and like two slot finality Etc uh I can't remember who was that came on the podcast recently I think it was yeah it was our uh uh Rick Dudley who you know said something to the effect that you know ethereum spent seven years trying to scale and trying to do so in a decentralized way but in the end you know that they really gain so much from uh wanting to go all the way to towards decentralization you know could could ethereum have achieved as much or not more or had it had it scaled quicker

but compromise on on those very rigid ideas of decentralization and it's an important philosophical question I think like one that lots of communities in the space have I've been wrestling with for a while yeah yeah but to be honest it's it's a good it's a good uh sort of like uh goal to have uh keep it in mind and and absolutely and work toward that I think that's we should take that instead of like saying you know hey it's not fully decentralized this is like thing that's not essentially so it doesn't work and no man like it's a matter of risk right everything uh that is not perfect or it adds risk now the question is are you willing to accept that risk and then do you understand it right So eventually we

want to minimize all the risk possible but you know it doesn't something something is not perfect doesn't mean it's not you know it doesn't work right so yeah I I completely agree with you basically so as as uh as we've been chatting here I'm I've been thinking about what this product effectively brings to the next wave of of defy innovation and I was also thinking about you know FTX and what most people were using that what a lot of people were using that platform was which before which was Leverage um and and you know the entire thing

sort of collapsed because of Leverage also to some extent Tara uh collapsed because it was overly uh or like the the anchor product was like a highly highly leveraged product um is the next wave of D5 products just more leverage but on chain where like traditionally centralized exchanges have been fulfilling that user need but now we're gonna have it on chain yeah so I'm gonna answer your first party question first then then I'm gonna get to the second one uh the first part being uh sort of like Leverage um

causing essentially FTX to collapse and Terra um so I I you know I think I think there's more than that I can make FTX collapse there's a whole story like yeah yeah yeah so not necessarily I would just I wouldn't say it was let's just leverage it was yeah it was improper use of people's resources like most important if you ask me I mean there were I mean like internally right there was like Leverage in turn it was like users on the platform but like right it was Miss proper use of of Leverage internally in FTX that caused it to collapse exactly and so like the question is Right would you have been a user of FTX had all their activity being on chain right like if you would have known exactly what they were doing would

you have been a user FDX I can tell you I probably know what no one would have right with all the stuff that they were doing right so um they were just like taking users deposits and you know I mean like if your activity is fully Unchained which means you're it's fully transparent like it is with defy like there you remove I think the main re the main obstacle right the main reason why the main risk of that FTX that the centralized exchanges like FTX pose there's no transparency you don't know what they're doing right just to trust them right um so there's there's that right so for for through our collapse I mean um I would I want to talk about like there's two ways you can use leverage right um there is responsible way of using leverage then there is like massive

leverage right even going back so my background is traditional Finance right even going back to traditional Finance like you know 2008 collapse right like massive leverage on and credit false swaps and then derivatives and all that right so so then people would say like man like Leverage is bad but really the problem there was also transparency yeah I mean for sure and massive leverage like these these these Banks were taking like 20 30X leverage I mean massive leverage I mean there's a point where it doesn't make sense you can't you're you're the depth that you're the risk that you're taking is so high and the service that you have to the deductive to service is it's just not you you make one tiny mistake you're done right and the whole system collapses with cascading in a cascading way right so versus a little bit of

Leverage it's always been good um and it's been like it's used properly right it's always been good um I mean the whole point of the file our financial system in in the west right of the ability to lend it's what has made us had Renaissance in Italy and had the West grow the way it has grown right so I would argue a little bit of Leverage is good uh like I don't know two three x something like that and a lot of Leverage is massive risk that's that's what I would say so and in the case of like you know Terra like you know they're like um it wasn't just that it was also kind of like you know the the economics of the system and then you know which was like yeah which was susceptible to attacks right uh which we've seen and um

there's all sorts of things that happen there that like caused that uh but to be honest it to me it was more like the whole anchor concept was maybe not sustainable to be honest in the way in the Cure in that way right maybe they could have like made modifications and made it more sustainable I think over time yeah I'm using leverage here in a sort of hand wavy way in the sense that I mean but uh yeah but you're right I think I fully agree that and this is one of the things that after FTX I think a lot of people in the D5 space and crypto in general uh this is this was part of the narrative was that sure that you know like FTX collapsed but this is exactly why we need D5 because it is transparent and so

with defy you do see all the transactions you do see where the liquidity is you do see where I mean you have perfect transparency over the entire system and so therefore are able to make more informed decisions or have services that help you make more informed decisions in terms of like how you're going to leverage your collateral I think that makes more sense I I you know from from uh from a from a protocol sort of product perspective I do worry that you know if we and if if defy summer 2024 is just a bunch of you know Mega digens um over leveraged and then you know

there are cascading liquidations and like people lose a ton of money that then you know there's going to be some challenge in terms of um crafting narratives to to defend that and of course then Regulators come in and um so yeah another word of caution I think I think uh it's more it's more as a as a word of caution to you know let's not let's not get things out of hand here where we have like massive massive leverage and massive pain in the next in the next cycle no for sure I mean but this is kind of like the the whole yeah the whole financial system is the same concept

right you have people take leverage you have speculars hedgers you know they both are important in the system you know both provide liquidity so it's the same here you know like ultimately you want to give the users to like the ability to get Capital efficiency and then make the whole system more efficient that's ultimately the goal I mean just to give you a really banal example like you can have a pool on us mostly is that it's not yielding a lot right uh but it's maybe it's a crucial one that's got two stable pair right I don't know um through it's not sexy but you know you can lever it up 2x I mean I'm not saying anything crazy and all of a sudden you know the apy is interesting and now there's more liquidity and ultimately it gives better you know better uh trades trading prices to

people right less slippage so you can get all this sort of capital efficiency if used in a good way in a responsible way ultimately it's up to the people but it's also up to the protocol designers to make sure the dress parameters are built in a good way and they're you know evangelizing you know the risks that are involved with leverage because a lot can be risky there's no doubt for sure yeah but to answer your initial question yeah I think I think this is what we're going to see and and I think this is the reason why uh literally the transition from centralization of trading activity and then sort of like uh crypto activity right from in exchanges to defy decentralized Finance which is really where it should be

um and I think that's what we'll see more and more and that's that's what Mars is trying to is trying to do is trying to give users this like amazing user experience where you can go into one place and then do all their activities uh in a capital efficient way great well uh that's uh that's a great note to end on and uh so I want to thank you for coming on the podcast and giving me uh uh an overview of Mars I've learned a lot here and hopefully on you know for the next one we can dive even deeper in some of the the economics uh but also hopefully by then you know Mars will have uh continue to grow and we'll

have like significant usage and you know lots of chains uh onboarded um you know someone here was asking when uh when when Mars on wind and maybe just quickly here if you want to address that if you have any insights here I I don't I don't have any unfortunately I don't have any insights I wish uh I think for now we're uh in the immediate future we're focused on osmosis which again I'm gonna say it again they're an amazing Team Awesome train uh there's a lot that we can do there uh we're just we're just starting right so I'm really excited to keep working with them I think they're they're great they're they're just an amazing training

cool well thanks so much for coming on once again and we'll talk soon sounds good thank you being a pleasure