The Power of Credit Delegation

Transcript

is it to work ugh yeah okay sorry okay can you hear me

please welcome the next speaker stanley kuachev from ava oh hello hello testing yeah pretty cool uh pretty cool to see so many nerds in real life again in such a small place uh yeah and that was very nice welcome talk from uh jerome and um thank you ecc team for organizing putting this event together i think they deserve one additional clap because putting this event these circumstances isn't a very easy thing to do and thank you everyone being here

um yeah so today uh the track is the flight track that's going to present a talk and uh the topic is uh the power of credit delegation so oh let me see if this thing okay cool okay so the topic is uh the power of credit delegation it's very very um sexy topic i'm not sure how many have of you have heard about credit delegation or even what ava is but ava basically is a decentralized

financial protocol and that allows anyone to stake permissionless fashion cryptographic asset into this protocol and earn yield and then borrow assets against those those those collateral assets and today we're going to talk about a particular feature in the uh protocol called credit delegation and main reason why i'm talking about it today is that this particular feature has so many interesting potential uh from builder perspective what kind of functionality you can build but also what kind of impact it could have uh as bringing decentralized finance and

the liquidity that we have now in decentralized finance into the more uh real economy and there's some agenda that i have set up for you guys and there's going to be a very interesting uh live presentation as well of of delegating credit to someone else uh and taking a under collateralized uh loan and let's hope it works um during this uh talk uh so mainly interesting thing is that uh decentralized finance has grown quite substantially over the past uh year and a half i would say maybe even two years so hcc is very interesting event because i think it was 2017 when i was the first time

here presenting something slightly more technical and and related to dfi as well and that was the very early days we had a project called eat land uh which is short for ethereum landing i don't know how many of you guys remember ethan if you raise your hand that's quite many a lot of ogs here that's that's cool and those days pretty much were where these interest finance didn't exist kind of like as an uh ecosystem so there were a few projects out there that was kyber uh later you saw a maker down uni swap coming uh into the um main net and there wasn't many users i think in 2017

we have made had maybe 20 20 or 15 d5 users and today we have uh over a million uh addresses and even growing more so it was very early in in few years ago and i think one of the uh aspects why recently as finance has grown substantially is mainly because there is certain characteristics such as of course uh obtaining yield but not only that that you are able to get uh yield on your cryptographic dollars and and the emerge of stable coins bringing these opportunities that you can actually deposit in in dfi protocols and or more compared what traditional bank is offering and traditional finance is

offering for you today but actually even more about the ecosystem because there is so many baseline protocols that you can build as a developer new functionality and and new layers and new products on top of an existing ecosystem that it actually creates this kind of like a constant arbitrage of developers innovating on ongoing basis and this ha this is the reason why d5 is growing so fast all the time and we went from in general i think from a few million uh in 2019 to tens of millions in beginning of 2020

in terms of value locked so pretty typical metric is is to measure how much value the smart contracts are holding uh to a this year where you see protocols holding billions worth of value um in the whole um well per protocol and the whole d5 space is roughly fluctuating in value from 100 billion to 50 billion depending on of course the the uh markets and and the collateral values so this just shows how quickly things can evolve from very narrow and when we compare to traditional finance uh the space is very small still so there's a lot of things to be to to build but also it shows how much there's actually

uh adoption to be done and i think we're nowhere near close uh where we should be in terms of like how much we could actually take the five further and this is about uh credit delegation will be one of those functions that has the potential also take that liquidity that is locked in decentralized finance and bring it to real economy as well and at the same time we've seen rise of different stable points so um i mean one of the interesting stablecoin projects maker dolls dies interesting because of the decentralized algorithmic nature but we see more stable coins coming in and there's still a lot of space to build

uh non-usd base stable coins and there's an interesting project called dry that are actually trying to get a way of of begging to to usd and the u.s economy so i guess over time this chart grows quite a lot but it also reflects the confidence in in decentralized finance because obviously building smart contract-based system is systems is very difficult and uh requires a lot of effort from the security perspective and the growth also reflects that there is more comfort and we have better protocols and higher quality protocols at the moment and and this has also driven some institutional adoption

and interest as well which is very nice nice thing um yeah and as these protocols become more battle tested so the the key component of dfi is that all code is transparent um so over time as more and more developers are looking into what we're building and and auditing the code uh these protocols become more battle tested so the risks of of some sort of like a bug or vulnerability uh decreases and that that helps also the uh adoption as well uh but there are some things in india at the moment that kind of are stuck uh i would say that a

lot of focus has been now um on on of course pretty much uh capital efficiency so how you could actually take the funds of of of depositors and users and aggregate them across protocols and and just chasing the the highest arbitrage opportunities and and we see a lot of yield aggregators come that has come during this year and last year uh wiring is a good example where uh you aggregate pretty much capital across all the baseline protocols such as for example ave compound and other lending protocols and interestingly here is that

this has been the main focus now uh in in the space and increasing the value locked as well and i think this is very nice in the sense that we see more optimization in the space but something that's very important is that when we innovate new protocols we should also kind of consider like how we get more yield sources and how do we make more new opportunities and how do we empower more people uh not just all of us who are here and are technically capable of using dfi directly or to use a scan or user user interfaces but also we need to consider how we take defined to the next next stage and get it usable

also for mainstreamers and those are kind of like very interesting uh topics to solve because that's new yield that's new opportunities and new empowerment that's pretty much like what decentralization is is all about and i'm thinking that credit delegation could be uh pretty interesting here and and could play a a big part especially as uh all the yield optimization has been done properly and many of these d5 protocols rates are uh decreasing in fluctuation so kind of like the next step is to think about now that we have uh spent uh plenty of time of actually getting

uh getting capital into decentralized finance and um converting dollars to cryptographic dollars and then yield bearing uh cryptographic dollars the next thing is kind of the thing so if we have this if you think about like decentralized finance as a ocean liquidity ocean or a like a marketplace where algorithms and liquidity match together so whenever you build a better algorithm you attract more liquidity and one of the things we need to think about if we have this kind of like a vast pool of liquidity that isn't um like governed by by any entity and it's just living there in this uh decentralized network for example in ethereum

how we actually can get that liquidity out of decentralized finance and finance opportunities that are uh in real life uh in in the real economy across globally and i truly believe that uh dfi as it's now uh growing all the time it becomes pretty much like a vacuum of liquidity where we see more and more funds going in and and then like the next step will be to think how do we get those funds out of the system uh and and there's a couple of ways one of the ways ways is to uh collateralize more assets in in real life so there's a few projects uh doing that centrifuge is a good example where they tokenize depth

they're looking into tokenizing real property and and and then eventually using them as a collateral uh in the um other ecosystem and other protocol and that's what that's one of the ways that you collateralize the real world value and when it comes to undercollateralized loans it's actually always collateralized because essentially what happens in in d5 protocols is that you are using cryptographic assets as a collateral that are relatively liquid in amms uh but nothing stops you actually of using for example non-fungible tokens as a collateral that might be let's say less liquid uh but someone is always ready to actually underwrite and take that kind of like a

default risk and that's one way and another way is is pretty much like creating trust networks around these lending protocols and and trust network means that you're actually delegating the the borrowing power uh to someone else and trusting that there is going to be repayment so you're using someone else's reputation or some some sort of like a additional let's say off chain agreement or however you want to secure your loan um as a collateral so it's it's always kind of like all all loan relationships are always collateralized some way eventually even like with the reputation at stake and this is a big opportunity because if

someone figures out how you could actually use great delegation and and finance different opportunities uh in real economy uh that could be very interesting in terms of scaling finance uh from dfi and bringing competitive liquidity um to the real economy compared to traditional finance and there's still um this kind of like a um situation in real economy where young entrepreneurs are not getting for example loans for their startups uh there's a lot of underserved people across globally it's not a problem of for example in in developing countries these are problems of uh everyday life uh in in us in uk in europe

uh and and across globally so there's always a gap where someone doesn't get finance for some sort of idea it can be a startup it can be uh it can be even personal loans so what the idea with credit delegation is that you pretty much take the credit from uh from the the our protocol and delegate it to someone some entity and then kind of like create this debt market uh around that is off chain and one of the important things is that uh when we look at like real lending rates uh across globally for example we see the rate of uh brazil brazil singapore uh this is just

like examples but we see like higher high rates as well in europe when it comes to loans that doesn't have mortgages or are under collateralized and what's interesting about decentralized finances and its collateral collateralized nature is over time the yields are and the borrowing rates are going slightly down as the market matures and the protocols become more uh resilient and what's interesting is that if you're able to get competitive liquidity from decent class finance uh through the real economy uh we can beat those rates that are uh across globally very high and we can create actually products and services that uh pretty much finds those kind of

like funding opportunities and and and empowers people that's it that is where uh things become very uh interesting so in essence uh how uh credit delegation has been experienced uh previously so essentially there's two experiments that we we did it before we implemented in the ave uh latest version two and one experiment we did with diversify where diversify is decentralized exchange and they had one market maker that that pretty much needed liquidity to fund their uh fund their trades and what happened is one of the other depositors delegated their credit to

diversify and they secured this agreement with a off-chain loan so they use this project called open law where you can create a contract legal agreement template and an actual loan agreement and you sign the loan agreement with the metamask and you can also call make smart contract calls from uh from the template and essentially uh they called all the functions for the credit delegation from from the the um open law legal agreement and then another experiment that we've seen with what was quite high is um wirns uh y a link walt where you pretty much deposited

uh a tokens into this world and then uh the depositors delegated credit to a smart contract that actually then uh aggregated capital across uh different kinds of uh yield opportunities in dfi and uh for to obtain obtain the interest rate and essentially what's interesting about that particular case is that there wasn't um interior a credit risk because you know already what the wires smart contract was doing because it can only draw the credit uh supplied a few protocols to to gain the interest rate and repay the loan so that is also like very interesting use case that we will

go uh here but essentially the idea is that we have uh on chain liquidity market that's that's ah but that's that's unit swap and and balancer that's basically what we have there and that's like collateralized you have funds there and what's the idea is that we can create with credit delegation this off-chain debt market uh which means that uh you can create different kinds of functionalities and add like a trust layer um on top of uh decentralized finance and utilize that trust layer to aggregate capital from that debt market to other uh yield opportunities in real economy so these are the three kind of like main

main use cases we have been mapped out so one is under collateralized loans so you can create smart contracts uh that act as a vault uh and and then you can aggregate the capital uh you can you can pretty much like aggregate the capital by letting the depositors of ava to choose which kind of wallet they want to delegate their borrowing power and and the world owners could be for example entities that are reputable uh and they have a lot of stake in terms of like defaulting on that particular loan or that world actually even can use some sort of a collateral that isn't accepted in in the other protocol because of lack of liquidity or some other particular reason it could be

actually shares of of of a decentralized organization as well a dao could be an example collateral there and then of course you could do a reputation based uh credit delegation to trusted ens domains for example if some of you today delegates uh credit to me stani.ed i kind of like i'm pretty sure i will not most likely default that loan because i have so so much reputational risk and maybe uh i will not be invited to speak here next year so that's just an example what uh what could happen and and then of course delegation to smart contract which was was uh the wiring example where there's a

closed loop system where when you delegate you kind of understand that the smart contract can only do a couple of things and nothing else and you can always call the funds back so that's that's a use case as well and uh yeah the most interesting one uh where you actually delegate to to the vault for under collateralist loans you could have a a entity that could be let's say young entrepreneur finance inc that wants to fund let's say young entrepreneurs across globally or some particular jurisdiction and and they have their own kind of like a credit scoring algorithm let's say that they uh they they find uh funding opportunities with low risk

of of default but with the new algorithms and and kind of like our innovative one that's that space and are not using let's say traditional uh credit rating uh mechanisms and and pretty much like this uh like the relationship between the other depositors who are providing liquidity into the other protocol and earning yield let's say on usdc they're delegating credit to this entity funding entity so they're pretty much making a smart contract call to put the funds into this the borrowing power delegation to this smartphone check and that entity is pulling the funds out this is basically trust uh based reputation maybe there's some sort of collateral that could be used over a period of time maybe it's a dow

that actually puts their shares as a collateral and then that part particular entity then uh further lends out the capital to different kinds of uh yield opportunities and again you can between that relationship as well use some sort of collateral it could be a convertible depth note with equity in it there's a lot of things you can actually do but pretty much like the idea here is that you take capital from dfi you create the trust network in between and further aggregate and i think the most uh beautiful part of the whole design and architecture is that actually at no point the protocol is taking any risk it's actually the the credit delegator that is uh taking that additional risk because they are earning additional

percentage so between the other depositor and the young entrepreneur finance inc there is some sort of a kind of like a parameter for example for the delegators to uh to receive more additional yield that that entity is paying because of the uh under collateralized kind of like a nature of this relationship but itself if there's a default scenario uh the only people that get wrecked uh is pretty much like the ave depositors that are choosing to take that additional risk and delegate their credit to that particular entity but the protocol itself will not [Music] be at risk because the other depositors have the collateral in the system and yeah so this is quite fascinating uh

experiment this is something that someone can actually build and hack and uh try out how it works so pretty much uh you create a vault and and then um smart contract-based world where uh different users with their ens domains they can come and and simply uh ask for for for uh credit delegation and then this vault maybe uh gets a a certain amount of let's say 100 each of uh delegations and or let's say uh 500 000 uh ufc board of delegations and then there might be a dial that actually then takes those uh applications from dns domain base holders and then just delegates

them and and in the dial shape pretty much decides um uh what kind of loans anyone could get and this is interesting because it's reputation based but then you're using kind of like your ens name and and your uh public personality as a collateral and by the way many of these examples they might not have a direct legal recourse but i believe actually that a landing system to work doesn't actually need to have uh legal recourse and that's how lending was born uh in in in the days where there wasn't any kind of like a way uh necessarily to obtain what you lend it out to someone else and this kind of like lending activity is still exist in commercial

relationships which where you have frequent uh lending and frequent lending and frequent repayments so there's kind of like a i think we should always abandon the idea that you know if there isn't uh collateral or if there isn't um ability to do a legal recourse you can't have the relationship and the borrower will escape i think this kind of like a model to work you need to be very uh optimistic then uh there's the easier use case where actually you provide liquidity uh to a vault and and then that world has some sort of uh behavior it might be doing some sort of like a strategies across dfi and then there's there isn't like a credit

uh risk there it's an interesting use case and probably more towards directed to kind of like a yield aggregators yeah so uh this is interesting part because like the idea of the talk was actually also inspire you of all i know there's developers here to build different kinds of things around credit delegation i think there's a lot of potential here and since everyone is focusing on optimizing guild building aggregators um and and um kind of like a uh uh d5 yield farms uh i think there's a lot of space actually to look into this topic and just build something something very uh valuable

for like a real economy that uh empowers a lot of people and what you can actually build is some sort of uh uh way to actually rate uh who will get great delegations whether uh it's an entity like the example of the off chain entity or it's a ens based system that you could use uh you can also create some sort of pricing strategies because the next issue to solve is that let's say if you have a depositor deposits into the other protocol to earn uh the next question will be kind of like uh what will be the cost of delegating credit to someone else and taking and underwriting that uh under undercollateralized uh loan risk so that kind of information is is uh valuable

yeah so uh one of the things i wanted to actually show you all is is an example of how the uh the the credit delegation works in in practice so we're going to do an example here just to give overview what we have here yeah so it's it's fairly kind of like the graph looks complex but there's a lot of technical parts there but essentially you have a uh depositor that is coming into ave and deposits let's say usdc to earn that uh two percent or two and a half and and and then the

other governance power whatever is the the current fluctuating rate uh and then uh once you are done that as a as the procedure then you pretty much delegate the the credit uh to a a particular address uh so to a delegate it can be an ethereum address so you can delegate credit to your friend or you could pretty much delegate to a smart contract that then aggregates that those delegations from other depositors as well and then uh takes that cap takes that borrow out of the ave protocol and and then distributes its uh further so this is the kind of functionality and

pretty much you approve a delegation and you can change that delegation approval in the future you can increase it decrease it's set to zero and interesting part here is that once you delegated the the credit to someone else let's say to your friend it's pretty much becomes a trust relationship so you're moving from a system where you are have a collateralized relationship cryptographic collateral to something where you are now trusting another entity so uh we'll do a quick demonstration on on how this works so of course like the uh since we are

we're uh dfi legions we're going to test in in production um so there is a function called in the other protocol called borrow allow once so when you query the allow ones you should get zero for example in this case so this particular test account uh i just queried uh pretty much that does my current address give a delegation is there any delegation into this another address so there wasn't anything and uh the next thing is to set the actual uh delegation so i'm going to set

it's it's a function that you call called approve delegation the delegate the address you want to do the delegation it can be pretty much any address or a smart contract we can put the amount and of course like as a proper degen always use the fast yes yeah you can choose when you when you

repay you can you can do it pretty much like once you get the delegation you you can actually as a delegate you can choose when you are uh when you pull like when you take the actual delegation back so it can you can draw the credit even later if you get it today okay cool we we got a uh we got to see it in the blog it's exciting okay so i queried the the the same

function and now we have uh we have one ethereum world of delegations uh in in this and the the amount you delegate is in way so whatever asset you are using so that's done and the actual core part is that uh you can just delegate uh you have to delegate on the depth token itself so how the other protocol works is that when you deposit into the protocol a token is minted and at the same time when you borrow from the protocol there is a debt token that gets minted either it's a stable debt token if you choose a stable rate or uh then it might be also a variable one if you choose variable

and now that i got the delegation the next thing is is pretty much doing the borrow so i'm going to switch to my other agent account and by the way the reason i'm doing it from either scan because our user interface isn't ready so if someone wants to build that like you can reach the other grounds down and okay then we set the amount interested model so two is the

variable and interest rate model one is the uh the stable one referral is zero and then the behalf address is pretty much uh where i delegated from so i'm boring behalf of this particular person and and quickly to show you before i do that so um i'm going to switch here yeah well let's do this way yeah i'm gonna make this call fast again of course and at the same time i'm going quickly

to the other account and i'm going to look at my dashboard and i don't have any borrowings here so this is the this is the view of from the other user interface where i have a collateral here so i have ob i have wrapped b to c i have eat um by the way that's all i always have rest in this steak is in the staked safety module and and the next thing what happens is that when someone borrows the the uh delegation a borrow position is open uh in in my account so let's see if uh that transaction worked yeah it'll so what happened here

is that i got a borrow uh the usda usdc i borrowed then i got uh variable debt tokens minted as well so everything went fine i borrowed the health of my other account uh 10 usdc which means that now i actually have two choices i can uh repay this this loan back or i can run away so this is like under collateralist loans but uh it's not that scary as it actually is because this thing can actually work and now i see uh here the borrow of 10 usdc so pretty much now i don't have that usdc and what we created is actually a undercollateralized

loan relationship with two accounts and this is the future of dfi because if we make this work on scale and we have trust networks and way actually to rate ens domains rates entities that are applying for the credit uh we have actually a lot of uh ability to empower uh communities in real life and essentially onboard more default liquidity into traditional finance and that's when people start to give us even more credit that we're doing uh yeah and pretty much that's uh uh that's it on on that part and there's one more thing related to to um to the actually uh live live

presentation is that uh if you let me see if i find the slide yeah if you if you do the uh credit delegation yourself uh to someone else during uh ecc uh you will be able to and repaid back so i want to see the repayment as well and who does it first will get a uh rava ticket so if someone doesn't know yet what rava is it's pretty much rave we are organizing with ave uh on wednesday uh it's at from from uh six uh to four a.m or or all until lunch i don't know how how far it will go but basically whoever does it first

will get the the ticket and and bragging rights and and uh let's see what else you can get uh later but that's that's a good start so the the the objective is that you delegate credit use the other protocol delegate credit to someone else and and repay that so you can't use your own two accounts there needs to be two people doing this so both of the both of the persons will get tickets to rave and uh the bragging rights so um yeah and pretty much that was uh maybe i have something more to you let's see now okay that was that was it i want to thank uh nicola who is here helped me with the presentation

and the whole other team uh making this happen as well i need to see team and all of you people i want to thank also all the uh everyone in the other community that is using the protocol and and you know making ava more aware of what we're doing and and yeah want to thank my mom and dad and thank you everyone developers.ava.com or docs.over.com and then there's developer section and yeah and if you need any help reach out

reach out us in in discord we'll help you out does anyone have questions from the public you can ask them now who is going to rave we still have some time here i will pass you the microphone hey thanks uh just a just a quick follow up on the question on repayment can can rather than repay

from the other side can you demand repayment early so because it's a trust relationship you basically need to build that functionality what you can do is always repay earlier like it's it's kind of like an ongoing kind of um relationship or you can do like stages at which you may call it back like six months twelve months eight whatever yeah you can do it even all of chain and then what's what was missing actually is that you can create some sort of a smart contract based accounting logic like who owns who and then you can even improve it by creating like let's say uh some sort of another depth token or let's say if someone defaults you you send that address a default token and you know

gamified a bit with with nfts there's sort of things you can build like this is very very like uh bare minimum like a foundation yeah so so you will have the interest rate is running on you so pretty much like the idea is that the uh the person you delegate to has to pay the interest rate the variable plus premium on top so let's say if you're paying two percent two and a half uh on on the other protocol then you pretty much need to charge

the the the person you are delegating to that plus a premium two percent or three percent whatever is the credit risk involved and probably in the beginning it's quite higher because it's very experimental can you repeat uh just wait for the microphone uh this rate you're talking about is this uh fixed or can any individual create an individual rate yeah so so the rates are either variable or stable like in the other protocol so the only thing you're doing besides what you normally do in ave as a

borrower you basically delegate that borrowing power to someone else uh so what you could do you could even agree with someone with a fixed rate but you always have the variable leg there that you need to be careful of so the easiest way is to agree upon kind of like a other variable rate plus like premium the same way as you had like let's say in real life you have library interest rate and premium top marginal on top but uh can i set the premium or it's average setting the preview now you can decide yeah and and i could create a walt and say that hey if you guys delegate to this particular world what happens is that i will pay you five percent extra because i'm going to use the funds in some particular way that yields me more

and has some sort of risk involved so then i will be paying the variable of a plus five on premium and i might be lending those funds in let's say brazil permissionless hi thank you stenny so just a quick question thinking of layer two so if we use mainnet right now for delegating the credit um you know like low income communities would need to spend more gas you know rather than taking like a small credit loan how difficult would it be to integrate this to say a layer two solution or like yeah polygon for example or

any similar you can do this already like uh on on polygon polygon is not layer two it's a side chain with proof of stake but you can already do there and minimize cost but i think anyways like ethereum will become like more of a kind of like layer like you probably see less transactioning on ethereum and more transactioning on later twos and ethereum is a kind of a network where you store hashes like and use the higher security uh so i guess like if you implement something like this on layer two you just need to have the other market there and and delegate what's interesting actually about what you're saying is is how you could delegate cross networks so let's say if i have a big collateral in layer one let's say uh like let's say a million worth of uh

collateral how could i delegate it to to other networks and recognize there but that's cross chain functionality and ernesto from our team uh our cto is going to have a talk technical telecom cross chain functionality and i something i recommend to ask him as well because that's very uh fascinating it's something that ave now deals a lot is how we build cross-chain defy there's a lot of issues there and a lot of kind of challenges that we're facing and kind of like tracking such as cross-chain governance and also like cross-chain funds management between the protocols to make everything a bit more capital efficient so this is a great question from the technical side to to him uh hey stanley uh is a delegation live

on polygon yet yeah yeah i like this shirt thank you uh so uh when do you expect like uh like what you were just talking about like cross chain um compatibility for for delegation i i think like growth chain comparability it's it's still like i mean it's kind of the same question as previously so i don't think like you you can track events between chains and i don't know like exactly like how you would do this in in cross chain environment uh but if there's someone smarter than me and there there are plenty you can actually build something something that handles this this thank logic i got it

um yeah so the question is i guess do you pull like delegations together just like one-to-one because let's say i'm a dao who wants to open a credit line for under collaterized loans like can you do that right now because then like you probably would need multiple users i'm not like i'm sure they're a bunch of whales but let's say like my dao wants the credit line for 10 million like yeah how do i go about it i think the coolest coolest solution will be creating a smart contract world where you just allow people to come and delegate there and let's say it's an open world which has a bonding curve you know the more delegations there are the less interest you're getting so the bonding card dictates the pricing of the the risk of the world and then uh it could be like a a wall

that dao created that pulls the liquidity so one-on-one delegations are uh a bit more like kind of like a clunkier i would say that the coolest thing to do is like create a uh a wall that that accepts delegations like more widely and even cooler thing would be that the dao puts some sort of like a collateral that isn't in the other protocol like collateral like membership tokens or something like that or future meeting rights of of that dao memberships or something that could be very very cool thing actually to do so i guess the question is like do you want other projects to build on top or is it probably gonna have its own like pulling so like uh there is a couple of implementations of this this uh like pulled walt uh i think uh

andre chronia did one uh version even during the like y-a-link walt there's another version as well uh someone else uh did in a hackathon uh but like ah itself like we want to be like at the base layer and focus on like security having as secure protocol as possible on the base layer and see like this kind of products actually being built and if someone is building something like this uh that involves credit delegation happy i'm happy to help uh with my team and and um to to to basically uh on all the details and everything thanks just doesn't work oh okay um you mentioned ens domains in s names a few times

what happens when an ens name is resolved and has some reputation and are you actually then kind of commoditizing reputation and following the selling of reputation totally yeah so that's the thing like kind of like reputation is already commoditized like blockchain just makes things kind of like more clear and store of value so instead of like your reputation soaring between your friends what happens is that your reputation becomes stored as a value in chain social reputation so the thing is that we quite a lot of focus on on using kind of like a monetary value like your c20s as a collateral but there is much much more value in let's say not just non-fungible value but also social value that can be stored on chain everything

that we we're doing and ens domains are very good example because i for example will not default on my own enos domain because it would look bad you know and i think it's an interesting use case where you can kind of like build reputation systems and because of the nature of the blockchain and storing the value there and events you kind of don't want to have that kind of event stored there so there is like much more power in this reputational system that we could build without actually having legal recourse and that could be very empowering actually and even if someone defaults it's not the end of the world because like essentially a long relationship should be very natural you know there might be

defaults but then you repay certain functionalities and i think in an economy in general we're moving towards this kind of like a idea where you kind of like can start up over again uh and and and have even multiple accounts and and um you know avatars and and whatnot so i guess like this is something that people should just start experimenting with reputation and that was one of the ideas in italian in the beginning that it's reputational it has reputational based component there but we focused on cryptographic collaterals because it was so early in defined hey um what do you imagine will be the main obstacles to overcome for this to

reach massive adoption uh i i think kind of like one of the things is that what like what i mean like peer-to-peer decentralized systems have been existed of course before like ethereum uh and and blockchain itself but what blockchain does very well is kind of like handling the crypto economics so i think those are things that you need to get right like how you use crypto economics and incentivize repayments and and this kind of like a generation of uh great scoring but also it requires people just starting to build i mean this functionality exists and there's sort of things you can build and just kind of like optimistic thinking and i think for the past year with optimistic roll-ups uh and what um is doing with their

optimistic oracle this kind of thinking has been uh coming into the space uh quite a lot and this is good because you could actually apply this to to systems where you could use reputation or under collateral stones because you don't need to always think always the kind of worst case scenario you know if you have uh 100 000 loans and or let's say users and you have a certain default ratio and it doesn't fluctuate much even if there isn't legal recourse that's actually good so i think people just need to experiment and start innovating and uh i think we'll see some progress here at some point is there a time element that can get

invoked meaning like i i'd like to make a loan to efcc for so that they can produce ecc five that's going to be a year from now i'm willing to make it that's a one-year loan not a 10-year loan you know something like that so that there's like time certain at which i'm going to get paid back and if not then that's an event of default yeah because the the functionality itself it's just uh delegation so it's there isn't any kind of like a time component there but you can build the time component in relationship and you could build even like a smart contract layer which even has default events so if you don't repay up to this point uh something will basically

happen if you have some sort of uh collateral the the example with itc is perfect because we know that there's every year let's say uh roughly like 500 to 800 nerds are coming here and it's pretty much a guarantee that we are here always you know and hcc needs funds you know they sponsor things and this could be a way to get liquidity early and then repay with the sponsorships and tickets and whatnot so that's a that's a very good use case where they're using they could use their reputation and because they are very significant member in the community they won't want to default necessarily on the debt thanks thank you so who's going to build the future of

france thank you