How aggregation will improve liquidity on DEXs

Transcript

yes nope hello everyone thanks for coming my name is veneer I'm the founder of Paris WAP which is a liquidity aggregator on the ethereum blockchain and I'm here to talk to you today about aggregation and liquidity how it will that contribute in this improvement of liquidity on the etherion blockchain and blockchains in general so just before we start just a quick poll among of you who already used decentralized exchanges or lending protocols okay looks like a half of the room which is just cool but let me explain quickly for those who haven't so that we can all be in sync so taxes are exchanges that allow the exchange of of

assets and they have two key properties that differentiate them from centralized exchanges which is the custody Texas don't hold custody of users users could trade from their wallets directly to the to the decks and the decks is a set of smart contracts and all they could trade from a proxy contracts that is cosign between the user and the X and the X has already only the authorization to spend the contract when the users approved it so that's Texas in a nutshell and also the settlement is made on chain of course so let the protocols are interesting to Texas because they have a key property they are tokenized so when I lend my die for instance to compound

or to Ave I get an e rc 20 that represents my my share for instance a via get a die which always equals to and I and compound I get C die so that's tokenization that we have in lending protocols allows them to be liquid so I can get my CD I my a die and spend them or trade them in a decentralized exchange which is which is cool which opens the door for composability as we most of us know there are multiple scenarios we could do there are multiple levels of benefits I can do I can get double triple quadruple benefits a typical example we give is that they can go to maker I put in some piece because I think the price will go up

we'll get some dye put it in compound half seed I can get the interest then go to open open an option and get also some some benefits from there and have the tree making profits for me along and all the time and I can do it in a disc fully decentralized fashion which means I can exit anytime I can re-enter I can spend only the profits which is which is cool so that opens as well the door for aggregators in multiple kinds whether those are text aggregators lending aggregators you I agree HS as we would see later in one example I like a lot is iron which is a landing protocol aggregators so it arbitrage is basically between multiple protocol and in pools

or pools those are compound evade dy/dx and the the principle is very simple it will switch where the profit is higher or will the interest level is higher so if compound has 10% in Ave it has 12% well it will switch to away and so on and so forth and one other kind of aggregator that if you want to qualify it like that is curved so curve is like a unit swap it has only stable coins that's the difference which makes it with you know swap and it allows liquidity providers to earn fees on every transaction every trade and what it does it creates multiple pools that are connected to other pools for instance curve there is a pool for

compound which means I would put my die it will convert it to see die some earning the interest in am earning also also the trading fees on on each trade which is also a double benefits you know what's cool about curve it integrates it I earn which is already an aggregator so we are an aggregator of an aggregator and we're getting the fees of curve we're gaining the benefits of I earn that's generating the best the best possible yield among among liquidity protocol of amount landing protocol sorry so we could maybe classify the aggregators in multiple degrees of levels this is inspired by the work for off trend L nor from topo financed which

is inspired by Ben Thompson Tyrael aggregation that talks a lot about web 2.0 aggregators it has Google ubirr Airbnb and so on and it was a temptation to apply this in to defy and how could this be applied the weather should it be applied but anyways so the bad most basic layer is the assets that the ether the ERC 20 and so on and right on top we have the tools capital aggregators which is the Dex's and the lending protocols and so on in right on top we have those services that leverages those aggregators such as curve I earn such as ray which is similar to I earn the xyg

pair swap one inch others that tries to leverage the lending protocols the service the capital aggregators and other service protocols with leverages other service protocols and so on and on top we have the you is that tries to give a 360-degree vision on what's happening in defy and helps the users make a decision among other features such as abstract in the complexity of of off of ethereum in what school has we saw we have aggregators that aggregates other aggregators like on the same level but we have as well aggregates that are basically capital aggregators such as 0x which recently created a liquidity

aggregator that is connected to curve in iron and also connected to other capital aggregators such as the para swap L sorry such as the eunice wabun compound and and so on which is which is interesting so aggregate aggregation helps in any ways in the in defy of improving the liquidity and that's an example that we have an impaired swap for instance this trade what wouldn't be possible two months ago if I converts that's a big amount of course and unusual in India Phi so I would go for 1 million defy a 1 million die to USD see I would get even more USD see but that's enough we will do this trade but not not

on this slide but that's because it leverages curve in using the iron pool and knowing that curve in iron launched only only two months two months ago and took as well a trade from from Oasis and it went like that so pair swap used curve that uses iron in iron was able to generate this this good amount of liquidity the amount of trade that's because it a great other capital aggregators and we also used use used always about the point is using curve thanks to this underlying aggregation of multiple layers of aggregation we were able to make to convert 1 million to even at least slightly more than 1

million dollars worth of dying and even war had to just to highlight the fact that we could use also make a lot lots of going back between aggregators for instance if I would have the same amount of die but in a die something that I put in in Ave as a land if I want to exit for instance to be SDC because I want to exit the utha to exit $2 because it's coinbase and so on or it could be another token but the point is is that here I used the smart contract of Ave I did an inland from a Ave then the aggregator engine went to curve that uses I earn then went to Khyber 200 in two ways this trade done two months two

months ago would make me lose ninety almost 99% of my fund it was just infeasible of course the user could still go away do it manually and land from away and then go to Eunice web - to Khyber or to other tune other decks but the yield or the price acquisition price would never be as as good as this one because we were able to do it in one transaction user would have to do it in multiple transaction waiting for blocks few minutes sometimes few hours depends on the congestion but here we have a guarantee and the transaction would fail if it won't return these exact amounts with some slippage tolerant that we can control of course so here we have an

aggregation of an aggregation of an aggregation in multiple levels of aggregation that made this that made this possible which wasn't possible yes just that whew to less than two months and two months ago so what's next I would say liquidity is great we went we we went above the billion dollars USD locked only a few weeks ago which is a great milestone to resell to what that was celebrated and but it's not enough I mean 1 billion dollars it compared to the traditional finance it's just nothing even compared to centralized exchanges so the next steps I think we need more liquidity you need to onboard other market makers we enter onboard

other other users from from either the centralized world right they now they have possibilities that they didn't have before we have ways we have just we could leverage what we already have to get this good yields and users are attracted by volume and volume I mean by liquidity liquidity attract users so at least we solve part of the problem and this could bring in wall users in on our side what we did we created a private pool something that market makers that work with us exclusively can element can elements can add in some some liquidity which gives great prices for for users and that's something we're working on are we trying to improve because there's

so much indexes cross-chain I think is key that's where the first questions we had all the first feedbacks we had when we're trying to table the the app to users the first question was where is Bitcoin you saying you're doing crypto but I don't see Bitcoin because that's what people people know so I think Christine is great in project like T BTC is something that seems more concrete and other than other temptations so I think I think the cross chain should be should be something in UX and UX it's a bit abstract because it can seem UX that having a good UI easy to use is enough but I think it's not I think good UX is also speed is also having a good support and so on and so forth at something that

is doing better and it should I think it should be done even even at a better level and it should go further so that's all I had to say thank you for it we'll be happy to take some questions no questions they're out of periods about doing Bitcoin on the file do you think that tivities is one of the most

important ones what do you think about in another cross chains or I think I think they are good project we haven't they haven't made their proofs yet I mean they they're not really launched and used the only issue with that is that they are obtained project which means that the blockchain should opt-in into those those mean to substitute us up straight through to polka dot and to cosmos in order to be to enable this cross chain otherwise otherwise the apps need to switch to those hubs for instance in cosmos in order to enable this discussed in swaps but the issue with that is that the liquidity could

not just move right of the bets you need to move either everyone to like it ether means for instance in cosmos in order to have the unit's operating there to the Khyber's and the bankers and so on which is not easy to do it needs to convince like everyone to move to cosmos before it has the liquidity ed has the capability to be to do cross the in swaps I think any questions what would you see as the next step in enabling that cross chain functionality what is needed to achieve it or to get

closer to it I think project like T beauties like Ren Ren as well are doing a great job which is I think more concrete's it leverages what's already working with leverages a cross chain that has a critical mass already like aetherium and tries to bring in the other chains into into the ethereum instead of doing the opposite so I think this is looks more rational as abroad as a approach of making of making the cross chain and making it also an efficient way because to bring in users from the outside world that have the that I used to use the coin base and Finance and used to have their their trades made in one click and see the results and telling them right now wait there is a block to be mined and maybe you need to

wait two blocks in and so on and so far this is not great UX for the users it's hard to convince the everyone like most of the people to come yep hey thanks for the representation quick question around monetization or how if you've thought about it and how this relates also to competition right so we've seen this 1-inch periscope there's more also coming online so how do you look at this and what I use initial thoughts yeah yeah so the most naive approach when you're making a deck

service on aggregation decks is to take a transaction fee on each one which is which could work at mid short term short mid term I think but what we saw in traditional finance this is like how they started which tend to be a race to the bottom so it could work for like the next five years but I think it's nuts it's not enough it's not like enough to make a profitable business running running on this so there are other approaches for us what we see for instance is capitalizing on our own liquidity for instance that's something that should incentivize other traders to put in liquidity and also given them or

building for them the right tools that will allow them to make unspread for instance mirror they trade with other centralized exchanges so that they can make quick quick profits in in in arbitrage opportunities typically those are one or one of the approaches yeah among others you watch we saw on Finance and what there are things we shouldn't you cannot do like trading a guy against their users and we that's thankfully we use aetherium now or a blockchain so that everyone would notice so it's great that nobody can do this but we could build services for for traders insights data and all that stuff that could be that could have some great value for for

for those third-party users in algorithmic specific specific algorithms that only some kind of users could use that can make them in profit it makes sense only when big amounts are involved but also what's what's great about defi is that compared for the competition side is that users as in web 2.0 the Google and Yahoo's and all that stuff is there there is a low to zero switching cost so even though one of the actors is like dominating having the winner-takes-all approach like what Google and Facebook basically did this is something that doesn't make a lot of sense in in defy because users could switch from one

service to the other and that's how we saw for instance Ave that lunch and only one months ago they had something like 20 million is locked into into into their pools which is something we don't see in the regular world alright so uh thank you for anything [Applause]