The Rise of DeFi

Transcript

and and exciting space like defy welcome all of you who who are joining us now and uh i'm beyond excited to represent the western chapter today who put this event together for you the rise of defy and such a hot topic because this industry is unfolding in front of in front of our eyes and basically just imagine if you're in 1973 when options started trading on wall street so such new financial products are similar to i mean similar to that financial products are being created right now in front of our eyes

and we managed to secure some of the leading protocols some of the leading projects from the space of defy or the the ecosystem of defy and this event is consisting of three parts first we have demelza from coin telegraph she's going to to basically give us an overview what is what happened this year in defy and also we will talk about predictions later and in the second part we have ilia who's going to basically um tell us a few statements and stunning and gustav are going to debate that basically the debate is among the three of them and in the third part we have a panel discussion

with uh with everyone and gaspard and uh demas is going to join us there as well so let's kick this off the mazda the floor is yours and very happy to have you thanks a lot emmy for inviting me to join and i just want to say i'm a journalist so the rest of the people on the panel are the real deal um but definitely thank you for having me on i will kind of introduce us to d5 i'm not sure how much experience the audience has with d5 so far so we're going to take it from the beginning and [Music] just cover the basics let's see here

we'll scream okay can everybody see my slides in full screen mode awesome okay so basically to i guess introduce defy the way that i like to think about it is we basically want to you know build an entire financial service uh you know entire financial system without intermediaries so basically how did this start well if you think about it you know bitcoin was decentralized money that was a great revolution that added competition again to money this was this was fantastic but as you know you know bitcoin is very volatile so it's really hard to do loans with volatile assets and this was you know something we

experienced under the gold standard um different economists like larry white and george sulgin have you know discussed uh basically how monies that have um inelastic supplies or you know are very susceptible to demand shocks can really change the price quickly and and influence people's decision making so you know we needed some type of stable currency some kind of stable stable coin that could be the basis for more financial interaction which would be you know loans or trading so uh what happened first was basically you know we had maker dell

um and that that basically started in 2017 and maker dell was a stable coin and also at the same time a kind of like miniature bank or like collateralized lending program and the the basic idea is this you know if i go to take out a loan right now would i want to take out that loan in swiss francs or would i want to take out that loan in bitcoin and you know if i have to make repayments in bitcoin and i know that bitcoin is more deflationary and and that possibly as i make those loan payments it's going to get harder and harder for me because bitcoin's value is going up in terms of um not only nominally in terms of fiat currency but also in real terms and in terms of what i can buy with it purchasing power

i would rather take it out in something like swiss francs you know because it's stable or you know uh decreasing in value so uh basically we started out with stable coins and this you know this isn't that different from the history of finance of all humans you know of how we all evolved um in a financial way it's just that over the last 10 000 years or so we basically built a financial system that relies on counterparties and now we're basically rebuilding that entire financial system within a span of like three years but this time without counter parties and you know after we figured out how to basically um you know use a medium of exchange uh like gold or copper or seashells or

whatever we then wanted to start to trade assets and that's where some of these decentralized exchanges come in because now we can trade um a money for another money we can trade a money for a utility like like like let's say a digital good or service and that was kind of the revolution of the decentralized exchanges of course many came out um you know you had bancor uh you had uniswap and and now we've had we have you know we just have a plethora of decentralized exchanges and all of them have solve a different um you know they have they solved the problems in different ways um and then finally we had lending and borrowing so this was the next next step of the financial system so

once we had um coin we had a way to trade stable coins now we have lending and borrowing and this this is really where we're starting to expand the whole financial system as much as we can without intermediaries or um at the least reliable reliant on them as possible you know some some of the oracles uh still rely on people picking the who's who's gonna provide the price inputs and stuff like that but anyways um to come back to this first slide we right depends on where you look so we were discussing this earlier d5 pulse i think says the market's around 14.5 billion um d5 rate says it's around 13 billion um so i guess it depends on which how

you measure uh collateral locked up in these different d5 programs but overall it's grown between 19 x and 20 x in 2020 alone so this is really phenomenal i gave a speech for uh bitcoin swiss in january of earlier this year and it the market cap was still under a billion and and my prediction at that time was this this will become a billion dollar market this has the last year has so um uh secede um you know exceeded my expectations uh by by growing not to be above a billion but but to be way above a billion so i'm not gonna spend too much time on the lexicon but

if you would like to you know i have a couple slides here on lexicon i will just briefly compare c5 with d5 so you know a lot of people there early on you know a lot of people were kind of thinking like okay is is block fi is celsius is nexo is that considered d5 because they're taking my money and they're lending it out and i'm getting a rate of return similar to if i were to lend it out on a on a decentralized protocol like compound um so no those are those are centralized finance applications right and and what's the main key ingredient here is that they're taking custody of your private keys so you know if you giving up your

private keys to a company you are interested reintroducing counterparty risk it doesn't mean you shouldn't do it you know let everybody take their own decision understand the risks fully but there is there are a lot of firms in this space that are kind of um you know for for the beginner it's it's easy for them to think they're a d5 application but if you have to give up your private key it's it's really not it's really not regarding metrics a lot of people you know they always quote the total value locked so that's you know what we just quoted you know 13.5 billion 14.5 billion but this number can be misleading um why number one you know a company that's

like a protocol that's really well um you know uh really well funded they can park funds their own funds in their own protocol to inflate this value okay so this this can be inflated by the company itself so that people believe it's more successful than it is secondly you know you have this process of where you can basically uh you know borrow funds use those funds to lock them up on another protocol or even on that protocol itself and by by you know yield farming or by constantly borrowing funds in order to take out a new loan

and then using the those borrowed funds as collateral for the new loan this artificially can inflate this total value locked figure so we don't actually really know what the original um you know value locked is i mean you could make an upper bound and a lower bound based on collateralization ratios for these different protocols but like for example if i if i put a hundred dollars worth of ethereum on um on a maker dow cdp and i have a collateralization ratio of 150 so that means i can get out about 66 uh die now i take those 66 die i send them to compound as collateral for alone

well compounds showing that that's locked value right um but in reality that's kind of like a derivative it's like i just sent a synthetic like i just well it's not dies not synthetic but i mean i just sent like a a borrowed money um to to that which you know it's it's not that different from our current financial system which that is how we measure that you know the m1 so it's not it's not too too far away from how we measure our current monetary system but the the number that i prefer for measuring success or measuring growth is daily active users and that's because you know it's a lot harder to have

non-zero account balances and using them on a daily basis so if you look at this chart for about the past month or so i think yeah for about past couple months we've had around 40 000 measured users per day and in november which i'll discuss later uh we we surpassed the million dollar a million user in one month um milestone okay um amy how much time do i have left one minute no no no one just think give me a moment have to unmute myself you

have 10 more minutes oh 10 more minutes okay i've been talking too fast then okay um in terms of i'll just quickly go into yield forming because that's a huge topic and everybody seems to want to understand how this works so as i already kind of discussed um you know it basically comes from this idea of of a crop rotating okay so crop rotating on your field when you basically use the same field or the same asset but you maximize the return of that asset by planting multiple crops throughout the year or getting um you know using various strategies on that asset so you know coming from a

traditional financial perspective it's not that different from what we do in our everyday life so for example yield farming is basically the simplest way to put it is finding ways to maximize a rate of return on capital where your capital is normally an ethereum based asset um so you know there's different ways you can there's different ways that yield farmers try to maximize their return one could be for example moving an ethereum based asset from one protocol to another if the yield on that protocol is higher um that's not that different from when you have swiss francs and you go to ubs and you say how much can i get on

a savings you know on a bank account what's my interest rate uh apy per year on my money and then you go to credit suisse and you ask them the same thing so this is really similar similar concept another one is where you can actually like let's say that you have usdc but you realize that rates on usdt are higher well you know you think to yourself well usdt is a little bit riskier it is a little bit riskier but the rates are a little bit higher maybe i'll put a little bit of my money into that i'll swap my coins and i will lend those out i'll provide usdt as liquidity well that's not that different from you know taking your um swiss francs and trading them into

euros if european like if european union bank accounts paid a higher interest rate so that's a really similar concept um now where did where does the yield come from well you know there's so many different uh ways now that yield farmers generate yield but the original one was from transaction fees so here's a quote from um consensus latest report on d5 that came out a couple days ago like a week ago it's excellent report if everybody anybody wants to read that for research so instead of wall street market makers or centralized cryptocurrency exchanges collecting the lion's share of trading fees automated market makers provided returns and voting rights to

anyone willing to add liquidity okay so this is the first uh you know first source of revenue for people that want a yield farm but now there's been a lot more over our time okay so for get um governance tokens you know they'll be like little um little faucets randomly awarding people um what uniswap did what was pretty unique um where they just gave out you know a new token to anyone that had interacted with the protocol earlier this year um but of course you know as you get into this space it gets more and more like risky let's put it that way so um you know there's there's

ways that people can expec um you know increase their yields by doing things like leverage which is this idea where i said earlier you know you deposit coins as collateral you borrow coins you use those borrowed coins as collateral and this way you can really like juice your yields you know in the same way that somebody would juice their yields by margin trading on the stock market um and you know this includes risk you know if you if you um if the price of the collateral decreases enough and you get your positions liquidated you know you're gonna you're gonna get wrecked so there's a lot of risk associated with this okay now uh just almost i'm almost

finished here but one thing that a lot of people don't talk about is this impermanent loss concept so i'm not going to focus on it too much here but you definitely want to look at you know is the decentralized exchange that i am uh providing liquidity to does that have an automated market maker and is that automated market maker you know what is the formula used to basically figure out um the ratios between my coins and the price of on the price that i'm charging people that trade with me in my liquidity pool because there's there's curve um and there's and there's uniswap and they're using different formulas

and in permanent loss is going to be more or less impacting traders and there haven't been there has not been a lot of research done on how much impermanent losses actually you know traders are losing due to impermanent loss and they haven't there hasn't been a lot of research done on ways to lessen your loss which um i am trying i have i'm working on a paper right now to try to figure out some of these these um strategies but one you know basically it it all has to do with the fact that you know a lot of the decentralized exchanges are not connected to the real world they don't have a way to pull in price data from centralized exchanges

where there's uh where there might be an arbitrage opportunity occurring and this arbitrage opportunity occurs um because you know it's it is decentralized it's not relying on a single or like a centralized price feed so there is a potential to lose money and i think i can't remember now but i think i basically read if the price i have to check but if the price of your asset like ethereum or so decreases by um i have to forget but well anyways you can see it on this chart if it decreases by you know around uh i think it's like around 40 or so you lose five percent of your

value of your of your coin of your coins um you know of the of your total return compared to if you had just held and not provided liquidity okay but you guys can definitely check these numbers online there's a lot of calculators uh unisop has one and a lot of other uh dexes have one so all right to finalize on a good note here's some milestones to be proud of so in february we passed the billion dollar mark so that was that was a huge mark because all during 2019 we were like in the 700 you know 100 million to 700 million range so this was a huge huge jump

up um right before the whole shutdown stuff happened and then in september una swaps trade valium uh surpassed coin bases so we had a decentralized exchange that had higher trade volume than a centralized exchange this was pretty phenomenal um in november we had at least one million active users on the various uh oh oh sorry this is the top ten only on ethereum so you know when you count up all the other ones and plus there's decentralized um applications going on on other coin other chains too like eos i don't i don't really follow that but um you know something's going on there and

finally um because we're working on a report on vcs right now uh d5 raised over 250 million from venture capitalists in 2020 so this is this is huge this is a huge number and ave congratulations oh they're on the panel they'll speak later alba makes up about 13 of that so that was that was a fantastic uh huge success for you guys yeah it was awesome okay um okay so in case anybody wants to get a beginner introduction to d5 um please take this uh report here it's pretty in-depth it explains the different platforms explains you know the different risks different strategies but it's just

just an introduction get to know your players and the general uh lexicon metrics etc now if you want to do an advanced approach where you want to learn about some of the more sophisticated strategies some of them greater risks we we also wrote an advanced guide that we published about a month ago at our research team at cointelegraph and i just wanted to do a quick shout out uh this is alexander um who has helped us a lot on the d5 report and he works closely with our team at cointelegraph and also i wanted to shout out coin telegraph so if if anyone has any marketing needs

or uh we are the largest we get 10 million views a month on average and the last couple weeks two last two weeks we've had multiple days with over one million views so um huge success at cointelegraph and yeah thank you thanks a lot for having me amy the mazda thank you so much virtual club and the big club from from me um it's always uh fantastic to to have your insights and uh i'm going to ask later what is your prediction for 2021 and beyond during the panel and i would love to transition now to the second part where we have the fireside debate and i

hand it over to elio and i would like each three of you to please introduce yourself um and we can kick off the fireside debate now okay thank you annie so hey guys uh uh as you can see for today's fireside debates we've got uh very strong speakers gurus and the evangelists of defy uh gustaf farinto from maker and stanni kulesho from avia so guys would you like to quickly introduce yourself gustav yeah so hey everyone my name is gustav i've been working with the mega foundation for a bit over two years now almost coming up in two and a half years

i'm responsible for european and african business development last year spent a lot of time in in asia setting up our business teams out there so i work really on the partnership side of things which also makes it so me and stani we are quite great friends so it's good to see you again stani but yeah so and maker is basically we are the the project we also mentioned in in the presentation before we are the currently the the biggest d5 project i believe in in total value locked um and we we issue the decent ply stable coin called die it's the biggest and i think probably the only really significant decent fly stable coin um so we we're really excited to see all the

progress that um the d5 has been having in you know the last six months or so you know something that we have theorized about for many many years so uh so it's really good to see it kind of like flourishing uh you know we're still early in the journey but uh we're very excited uh thank you gustav uh stanley yes so my name is uh stanley i'm the founder and ceo of oven so now there is a decentralized liquidity protocol in the sense that it's optimized for landing and borrowing so so practically as an end user you can uh deposit various uh cryptographic assets

uh that are on ethereum network and and accepted by the protocol and earn interest and stable coins are pretty much the the most uh kind of like deposited asset in the sense that uh where you're earning yield and and diet represents uh quite big part of it uh yeah and also you can besides depositing your uh your assets to to blend them out and earn you can also uh borrow against your uh assets so they become as a collateral or then you can delegate this functionality and delegate your credit line to someone else uh that you can you you basically trust and uh i used to so a bit of background i used to develop

web 2 financial applications so so what uh many called these days fintech financial technology and and now in 2017 uh practically started to build web 3 financial applications which which is practically uh dfi so so so kind of like the bank the back end of the the the new banking world and um 2017 we launched uh kind of like the the first lending protocol it land and uh it was actually a smaller community and and proof of concept and over the time it evolved what obvi is today and uh yeah and pretty excited to be

here especially with gustav we we uh we're we're uh quite a long long time friends uh in in the dfi uh space and and happy to uh to be here okay thank you stanny so and my name is ilya volkov i'm a ceo of eukodler and cva western chapter chair um guys i'm a big fan of defy and of course i believe in the future of this genius idea but here in this discussion i'm on the opposite side and i represent the centralized platform so i'm not a crazy bastard uh i just you know on the opposite side for the debate

reasons so let's have fun and let's get started our debates uh to start debates i'd like to uh say a few words uh we had a very nice pre-party uh during our preparations for this event and there was a very nice discussion with a bold statement like pure and idealistic defy similar to pure and idealistic communism uh so let me explain a bit uh you know i was born in soviet union and i learned that communism is a very nice framework with just one big issue uh with the lack of responsibility and lack of liability

so everything around was soviet everything around was mine uh mine so but no one actually was responsible for that everything so i guess that defy has the same liability issue uh we all know that capitalism won out over communism thanks to private ownership rights correct so for something to work effectively it must have an owner a responsible and liable person so soviet communism failed and we all don't want the fight to fail right uh but we're lucky and now we can learn from the past so i have some some number of bold and contradictory statements about defy to debate for example of

course i'd like to discuss uh manipulation issues um manipulations with the flash loans uh with flashlight hacks and of course not only i'd like to speak about uh kyc and iml issues uh about money launderers and stuff like that and of course i have questions about skin in the game and let's let's probably start from skin in the game topic so my question is the following do defy protocol and platform creators have their skin in the game so uh basically who is really liable if defy platform fail if protocol fail um so is there a lack of protection from

errors and customer mistakes uh of course there is no such an issue with the sapphire there is a clear reliability uh but let's speak about defy uh stanley would you like to to to debate on this topic uh yeah yeah definitely i mean uh practically so so i mean we had a great presentation about uh what what practically uh uh decentralized finances and what what kind of tendencies we have seen but uh for me i mean in general i see i see decent class finance kind of like a um wider spectrum in the sense that for example bitcoin for me is decent class finance

uh it's practically practical financial platform with incentives model and and ethereum uh especially because uh practically you have incentives in ethereum and with the staking for example it pretty much uh reminds uh a yield protocol and the interesting part about today with this interest finances is the smart contract capability that you can actually uh build uh more more functionality so if you look at practically bitcoin as it is and and whether or ethereum whether there is uh responsibility on on on how the the the bitcoin works and and so forth i i think the the kind of like idea is that um you you basically aren't putting the

responsibility into one single entity but the whole community is is responsible i i think the the communist example was interesting in the sense that uh i never heard that by the way before so that that was that was like the very interesting part but maybe like uh as your perspective that uh you see that kind of like the the the power is given to the the the government and they they may make all the kind of like decisions you're making you don't have to decide but the thing is with decentralized finance is that actually uh you become the decision maker uh yourself and and then at that point it's up to you to basically make those decisions so you can practice as a decision maker

decide what's what's going to be updated what's going to happen in the the other protocol in the maker protocol and and and basically if you don't want to make those decisions you can actually delegate that power and decision-making to to to someone else so i definitely see like this kind of uh difference in in this uh perspective but but also like uh in terms of like responsibility and and uh i think the idea of like this interest finance and smart contracts in general is to build various protections uh into the protocol so definitely it's like a sandbox but it's also like an internet so so the way you could browse internet and browse different kinds of uh you know sites uh interact with

different ways uh when it comes to decent class finance it's the very same but practically uh with finance you can basically choose different kinds of things and not just finance it it's it's practically anything that is on chain and smart contracts talk to each other so we what this interest finance is doing is it's taking like practically all of the banking infrastructure and and connecting them together to to talk with each other to remove inefficiency in uh in that sense i think uh you you can create different kinds of protocols some of the d5 protocols are very responsible they're they're building different kinds of uh mechanisms uh to protect the users and and make efficient uh best execution some are

lacking this and the lack might be because of the the fact that the the development team might be very fresh on what they're doing or it's a fork of something and there's not much uh innovation on top so there's various reasons but but the clear fact is that you could actually build those mechanisms uh in into the d5 protocols but but i i lived uh to to do stuff the rest of the yeah i think i think like just just um just like like the comment like the communism thing i think um i don't quite agree with the statement um but but because like i think that like communism that was basically you know all the power to the government right and then it came with capitalism it was you know

at least like in the pure sense of capitalism like more power to the companies right um and that is what we have seen you know develop a lot especially in the tech scene in the us for example that like these companies become more and more powerful right and then we have d5 where it's it's it's power to the consumer right i mean you know you're completely responsible for your own actions um and and of course this you know represents kind of like a dilemma right because if people they do things that they don't fully understand um which you know happens traditionally quite a lot uh you will have people making mistakes right uh and and the thing in like um indeed sometimes finding encrypts in general then these things will end up becoming quite

punishing potentially right because you could potentially use your funds you could use some some protocol that you know um isn't you know very safe or like it gets hacked or something but but in the end like the responsibility lies on your own hands uh of course there is um that is like in in the in the perfect world of course of like if you're like a very d5 fanatic but of course there's like a long time until that stage gets reached right so whenever default protocols start developing i mean they still have a developer team you know most of the stuff is done you know by a team that actually exists you know who they are so in that sense you know when something get hacks these days i mean a lot of people actually come

to the team and try to get the team to help them right um so that sounds like you have some people who you know in in some sense is responsible for the project um but but at the same time you know in the end like the responsibility lies with the with the end user um and and then i think you know so if you're like one of those users who doesn't really understand these things in debt and i mean you know even though you know stanley and i we've quite experienced in this field i mean there's still stuff that you know pops up every other week that you know i mean i'm sure that like neither of us understands before you know we take a look at it and since we work with it it's quite easy to take a look at it because it's kind of like you know connected to

our job um but but you also have like very mature protocols so you know you have protocols that have like you know shown you know very strong security roadmaps uh you know protocols that have been operating for like a long time that has gone through like several iterations and kind of like you know reach like a state of like maturity right and i think if you if you take it from kind of like that standpoint there's definitely places you know where you can interact with it without needing to be an expert where you don't take on you know unnecessary risks uh but of course with the d5 boom over the summer like people were you know chasing very high returns um because you know i don't think that for a lot of people it's probably not like super fun to you know like borrow

die and earn you know like five percent in ava it's not really that thrilling i mean it's a great use case and you know we see people do that as well but but you know if a lot of the people came coming in they all of a sudden you know wanted to chase you know like the very high returns that also were mentioned it's kind of like yield farming craze and then you kind of like have this this you know section where you have like people who don't really understand the protocols that well who in the end is kind of responsible for their own actions uh coupled together with like protocols that are not mature and and i think that is like a dangerous path that the d5 walked down on this this summer i think it brought some a lot of good stuff with it

it made the supply explode and we like still sitting uh where it kind of like left off uh but i definitely see why there's like a lot of people commenting like debating this topic here because um you know you you want the user to be safe um but at the same time it's all the users like own responsibility so if they choose to do things that you know even experienced users would deem as being like unsafe you know it kind of like you put yourself in a mess right okay yeah sounds like everyone in defy has uh his own skin in the game everyone so i think i think that's a good question because i mean you know there's always like reputational risk involved so so i mean people debate this issue and nothing is

always like very clear but for example like let's say auditors who audit smart contracts should they have skin in the game and you know because they just read code and if there is box like some people might blame them but you know at the end of the day everyone has reputational skin in the game unless it's you're participating something which which has completely anonymous setting you know that's that might be more challenging but also i see this liability uh actually kind of like removing of the liability uh with built-in functions in the smart contract kind of like even better thing that we have let's say c5 or traditional finance because i know for example that a a lender in centralized finance uh has a liability but if it's the if it

defaults that we we saw with the uh i can't remember creed or something like that when they went to bankruptcy i mean i i kind of understand that there will be like consequences but then if i have those built-in features in smart contracts uh actually i don't need to worry that uh what would be the consequences and what might happen because the smart contract will not allow that kind of situation uh to happen and i think that that is the kind of like a key that um for me is is very interesting yeah yeah i think you should come and come in here as well like you know like in like in like d5 you trust the technology which everyone can see and you trust the protocols in c5 you have to trust this like black box and like what people put out in like their quarterly reports

i mean we have this much assets but like there's no way of actually finding out whether you actually have those assets because even though you have some very big c5 protocols i haven't seen a single report from any of them on like how many assets to actually manage uh of anything that could be verified on chain so you know like you it's kind of like two different things you have to trust right you trust yourself and the technology or do you trust the company and and you know c5 is quite similar to you know like trusting the banks in the past except that they are not banks right they simply are not they they are like fintech startups you know with people who doesn't even need necessarily to have any financial background i'm not saying that c5 is bad in general but i'm just saying like it's different levels of

trust you need to have yeah that's true that's true so by the way it would be really nice to find a way to motivate uh like auditors of smart contracts it would be nice to find some some way to structure this motivation and liability in the form of some some part of smart contact okay but anyway let's let's move on uh and let's talk about kyc and iml so as we all know uh one of the biggest concerns for the entire crypto community and for the entire industry is the potential of money laundering right so does uh defy have an efficient iml tools speaking about sapphire actually

everything is clear so we have some number of obligations we we have to use a lot of different kyc and ml tools traditional ones crypt iml tools etcetera etcetera so uh guys what's about defy uh what's about dirty funds potential to to to to work with the dirty funds on on define uh gustav would you like to start um yeah i mean so [Music] there's a lot of these analytical companies out there who does you know active analytics of you know the transactions coming in and out um to my knowledge a lot of the d5 protocols to work with these types of companies

um so i mean i i definitely agree that it is like a hot topic i'm probably not the best one to comment on it because i'm not i don't have a legal background i know that stunning does so uh so pass it on to him in a bit but but but i mean i know that like a lot of the protocols they definitely you know do what they can on on this topic here um but but yeah i mean it definitely diff it's very different from from the c5 projects right and and one of the things um which is also quite uh important to kind of like look into is is you know like i mean blockchain in general you know like bitcoin transaction ethereum transactions you cannot impose uh kyc and like a transactional level on on that front right uh so so for

for these assets to kind of like you know stay true to like the nature of where they come from um you know i think it's very difficult to impose it on a protocol level um another thing is also like these these applications here right i mean c5 they often focus on you know specific jurisdictions uh when when you launch an application and you know a dab on ethereum you're global from day one um so you know since you enter a global environment and like a global community um that just makes this topic like even more difficult right because you know like how do you impose something uh where you're like global from day one right um but yeah but yeah stunning maybe can give some uh legal comments on this topic

one thing is interesting about this uh kind of like kycaml and so forth is that uh like i i agree that there is not much like commentary on on like what what is dfi and how how basically you said it and and it's easier to to to basically look at centros finance and and say that okay uh this is kind of like the business model so uh practically this kind of like a kyc applies based on uh the local uh kyc rules and and so forth but what's interesting here is that uh like i i think we need to start already thinking about uh the fact that uh let's say dfi in its decentralized form

let's say what what what practically uh uh mercury is what ava is and and what what uh unified for example is uh it's it's practically uh quite similar uh to ethereum or or bitcoin they do have like some of the properties they have are more decentralized some are less uh in the sense so let's say if you take take a look about into bitcoin or ethereum there are financial uh protocols so basically you transfer funds right and they have practically uh yield curves in the sense that let's say if you mine blocks uh you run the software you get compensated and and ethereum's taking or staking

protocols you actually get uh yield for for locking funds and and validating and in practically what what uh so-called d5 today is is also a financial platform uh decentralized in the sense it's the essential the decentralized manner governed uh it might be secured by uh a token uh which is already in let's say one network or part partially or fully with with let's say the underlying network like for example ethereum so it's it's kind of like a a continuation what we have and what we've seen in c5 for example uh it's very difficult to actually regulate uh bitcoin or ethereum and and i think like you could even try to regulate but it

hasn't happened so so practice what's happened is that uh practical regulators and actually the market participants are uh entering into regulation by the services they are providing so let's say if you are providing services to buy and sell exchange uh cryptocurrencies practically that service is is where you are regulated but the currency itself the the financial protocol like bitcoin ethereum uh d5 in its purest form aren't practically in the sense that uh regulated and and this is interesting because uh let's say if you have a uh you know you have a wallet in in you know uh which is uh let's say um not non-custodial

right so so you create a wallet and and you basically have a bitcoin and you can basically interact so so what actually like if you think about even like from not just the protocol perspective but thinking about that like the front-end access perspective that we have now in in in d5 different user interfaces uh practically there isn't even a wallet because you you have to there's this kind of like bring your wallet policy so you bring your ledger you bring your meta mask and and then you connect so you just use a library that the the front end provides to connect to the blockchain and then you interact with your without giving the custody so so actually like there's even uh like less kind of like a a um challenge in in

that sense but when it comes to actually uh amling akyc in a lot larger sense uh the the the topics are pretty much the same as in bitcoin i mean uh let's say aml as a kind of like a issue you know it's it's it's becoming very difficult uh in the sense that uh if the gatekeepers uh whether it's like centralized exchange or lending providers are actually kind of like being the gateway and and like ports like on the on the liquidity that comes and goes uh this kind of activity becomes difficult in in that sense and and um that's kind of like my view so so like

if you have like real defy it's not different from bitcoin or interior yeah okay they're interested interesting topic topic but we we are limited uh in time so let's let let's uh try to discuss a couple of more topics so let's maybe speak about manipulation with the flash loans and uh not only so as for flash long hacks uh as i remember maybe i'm wrong the first successful flash loan attack was on defy project b that a uh with lost around 350 k dollars back in february and the latest one was with value defy and

losses uh around six or seven million therefore as well yeah so let's speak about uh this issue guys so yeah uh do you see any any ways to to fix uh this kind of vulnerabilities uh so um no yeah maybe you have some projections to sapphi yeah gustav please yeah so so i think um first i think it's pretty important that we kind of like understand what flash loans is right so so flash loans uh you know pioneered by by ava um so i'm sure stanley has some some good comments on this topic as well but basically flash loans is just like whenever you have a liquidity pool so

let's say that you know i i put my die in aven uh i put you know let's say you know there's like a million dollars of dynava you know people put in their money but only 500 000 is currently being being borrowed by other people right so that means to have 500 000 dime just just sits in the protocol does nothing what they what they did is that they allow people to borrow these 500 000 die almost for free it's like it has like a very small fee and all they need to do is they need to return it back at the end of one transaction um with the fee paid so that basically means you know if i see an arbitrage opportunity i can borrow this die for free almost and you know i can do the arbitrage maybe i make two percent i

repay it and now i've scored 1.5 percent so most of what flash loans is being used for is arbitrage and and since this is this is people just basically you know doing one bundle transaction you know there can be like a lot of transaction but all within the same block so it's like a bundle transaction within one block so you know you can do 10 15 transactions you know swapping it for other currencies you know borrowing lending all these kind of things here and then you just return the money after one after like at the end of the block and do one transaction um this means that that like the flash loan manipulation or like the flash loan stuff is also possible without flash loans what flash loans did was it democratized the access to capital right

so before the only ones who could do these kind of like schemes was people with a lot of money now it just allowed everyone to do it so you know like before let's say that you know you know i'm the brilliant guy but stanley is the big whale we would go together and we would try to do these things the two of us and you know make a profit um but with the flash loans you know i could do it alone i wouldn't need you know the guy with the money i don't need to be aware of myself so it really democratized the access to be able to do these more complicated transactions um in regards to like protection against it that basically means that this was always something that the protocols had to protect against right this this isn't like some new edge case or like some new feature that like

ave implemented that all of a sudden could attack other protocols this was something that was always possible um you mentioned bcx they lost i think it was 3.5 million or something but but they weren't like that big but like they relied on like a single oracle price right they did something that like all the major d5 protocols that this is a really bad idea do not rely on a single oracle price if you do that you open up yourself to manipulation of that price so whether the manipulation came from a flash loan or not i mean that doesn't matter right because like people could have manipulated without taking a flashlight you just need a capital so in that sense i think that flash loans definitely made this like a more common topic but it also made it something that people started thinking more and more

about and the good thing about that is that you know the industry is still quite young i mean you know we we celebrated the the maker dao one year anniversary a couple weeks ago i think avi has their one year anniversary of of the current version of the protocol soon and they're launching their version two as well so like and these are like two of the biggest projects right so all of these parts are still relatively new um the size of what we're seeing the industry growing into now is also quite new and you still have a lot of pro you know these like neural projects coming out which are like not mature not very well audited you know maybe the team doesn't have the necessary security expertise to actually make a setup that doesn't these things

doesn't happen to but i never thought that flash loans was like the issue right it like made it a more common appearance because now it was possible for people without capital but it was always something that the project had to deal with right um and a lot of these things happen to projects who doesn't take like you know who doesn't follow like the industry standards right uh who doesn't follow you know the security regime that like the big projects do of course you have like you know outliers like for example compound also had a lot of liquidations not too long ago because they also relied on like a single uh price source for their markets um so so there's also some of the big ones that that have have done some of these

mistakes right but but you know i think it more speaks to like the immaturity of like the security level of the protocols if these things happen to them okay yeah stanley would you would you like to add something yeah i mean it's it's it's it's pretty simple i think gustav uh summoned everything up there and i i think it's it's quite the same it's actually not a uh d5 c5 uh try to fight kind of like a separate thing it's like if you build bad cars they will you know people will crash if you uh if you build let's say way to custody uh user funds on an exchange that uh has vulnerabilities uh it would get uh hacked uh and and so on

and same for d file practically you need to have uh software that is um not just i mean uh reliable but the the the correct word is is kind of like that uh it works in in the in the behavior that you you practically expect and and and that is that is the thing that uh i mean uh you you have to develop things very carefully in security in mind these are financial applications and the thing with defy is that it's just not just like uh one like uh you know black box application but the beauty of d5 is that all of the smart contracts are public so you actually know what's happening so i could like if i would go like let's say as a user to uh centralized lending provider like

uhodler or let's say celsius what not i don't know what's going on there i mean i i really need to trust what you would say to me uh in in your letter or something like that but the thing in d5 is that you actually see everything all the transactions not just the value that is there in smart contracts but actually like uh how much is borrowed how much interest rate is is paid and and actually the interesting part for for centralized finance is that some of those properties could be actually built in some ways and added as well so but in terms of like the flashlights vulnerabilities it's pretty much like uh this this attack vector existed before

but it just democrats democratizes it as gustav said yeah i think i think actually that topic brings us back to the skin in the game topic and liability because um speaking about your example with cars uh if some engineer uh builds a bad car and it's proven that somebody died just because of some fault of this particular engineer uh he will go to to prison so it's about liability um i'm not sure the protocol creators uh have such such a liability at least yet so probably in the future i'm not sure a

car manufacturer has it in that sense but but i mean i don't think like it's falls on like the individual engineer um okay company so yeah yeah but but but i mean i i get the point here but then again you know like i think like in regards like skin in the game you know like if if you're like someone who spent you know a year building a protocol and something happens i mean you have plenty of skin in the game right i mean you would never want your own project to fail then you've you know wasted a year of your life your business opportunity is gone i mean a lot of the projects that these things happen to they never recover right yeah yeah that's true so you know i i i don't really like the skin in the game i like i understand

the topic like you know people want to see i guess like legal repercussions against developers but but you know again it's it's very very difficult also because some some of these protocols they have a lot of community contributions right so you know i think a good example is yearn uh the finance you know i believe that like most of the contributions come from like people and and you know like not people working for a company but people submitting code through like an open framework and and you know maker for example uh make it our protocol we also have people who who you know works directly for the protocol and and you know in the future this will you know come into play in a much bigger way right this will be something that

like most of the d5 projects they're looking to kind of like um decentralize themselves completely by by you know opening up for community contributions right um but but i mean sort of like skin in the game if you're like you know funding like founding a protocol uh i mean i think it you know you do definitely have skin in the game um i'm not i'm not sure like what lynch you would need to have it uh you know but but yeah like yeah i think you definitely have skin in the game okay okay so i have one more topic um it's about smart contracts it's about delays and smart contract updates and in case of vulnerabilities so uh the core of any defy service is a smart contract right that cannot be updated instantly in case

of vulnerability that means that if there is a vulnerability or something does not work properly you have to go through voting process you have to probably do a fork or even recreate the application and all of that is time consuming and additional time could result in additional losses for users right so uh let's discuss the this topic uh during our pre-party augusta has made some good points gustaf would you like to to start yeah um so i mean so the the reason why for example maker we we have a delay uh i'm pretty i'm pretty sure uh you guys have it too right

uh yeah before any upgrades it's basically so so if if you don't have a delay that basically means that you open up for another attack vector which is like a majority attack right so what if someone pulled enough funds for example we have flash loan to to push a vote through and you could do like an instant upgrade right you could basically you know upgrade the contracts to to you know be manipulated in some way that you could like steal all the collateral or you could print infinite money or you know in makeup for example right so the reason for the delay is is to kind of like close off the attack vector that like if there's a governance attack there's a very small chance of it actually you know being able to proceed so at maker we have one like all the different parts especially the

parts that are like more prone to attacks known in the industry for example the oracles we have security measures around each oracle um so for example we have a one-hour delay on on all of our oracles before they come into the system and that basically means that if someone manages to manipulate the price of oracle um we can we can go and we can freeze that asset so you know it will be frozen at the price at the last given price uh for example right um but but yeah i mean if someone managed to somehow you know figure out some way of of a vulnerability that's basically this delay which is which is in the protocol to make sure that you know if there's a governance attack you know you can base you're basically

resilient against that one right and i think one of the interesting things about this topic was that for example um the end of last year um when maker was recently launched we didn't have a delay on the governance because at that point we saw that like the chance of bargaining smart contracts you know potentially would be greater than the chance of a governance attack and and the community like a guy from the community he like wrote this like you know quite aggressive blog post about it and kind of like went in and said oh like you can you can you know you can steal all the money in maker by doing a b and c um so like what you always want to do as a protocol is you want to look at okay what is the most likely attack vectors that you have and how do you protect

yourself against them so as the project matures and as you know you have gone through these i mean we have we have a full formal verification on maker for example so you know people basically uh you know using mathematics and and algorithms to calculate vulnerabilities in the protocol so running through like a lot of different scenarios in the protocols we also have had um like i think it's like three or four different auditing companies auditing the system in incomplete including you know the best from both like asia the best from the u.s top auditing companies from europe so we really have had like this like very very rigorous security auditing scheme around the protocol and

and you know continuous bug bounties and so on so so like having done all that work on the security front um we didn't you know have come to a point where like if an attack is gonna happen it's probably not gonna be you know someone breaking our code unless that you know someone comes out smarter than all of these other guys that looked at it and find something that they haven't found which is which seems very unlikely so that's why you chose to have these like delays in the upgradability it's like as the protocols mature uh you you think that like a potential like a governance attack might be bigger and you really want to make sure that that doesn't happen right um but but you know it's it's very common for every protocol to have some kind of delay before changes gets implemented so you kind of can go in and and you

know be resilient against malicious actors in governance that you know over time becomes like the most likely attack vector okay uh guys we have just a few minutes left uh so stanley would you like to add to this uh topic yeah i mean it's like decentralization is a process and kind of like you you want that things are not changed uh kind of easily so there's like certainty but you don't want it to be in the beginning kind of like you you want to um this to happen progressively in the sense that let's say in the beginning you you might want to have more control as the the genesis team so you can fix box quick quick quicker but over the time kind of like passes and the more value there is in the

protocol let's say um for example in 12 months there might be uh 52 to let's say 100 billion just just a number of locked assets in in in uh maker in other and in that point like you you kind of like want that uh things can just just be easily changed in in the sense that there's this certainty right but in the beginning you want to keep the kind of like the the flexibility of changing and and like some of the diva protocols are very like uh kind of like there's sort of due diligence there's like uh in maker in in for example other version two we have five audits for my verification and you know and and also uh white hackers looking at the code so

there is sort of effort put into the whole um security aspect but still you you kind of like in the beginning once you have that uh that control okay perfect so uh let's maybe uh um recap the debate and summarize our takeaways in uh you know 30 seconds i mean 30 seconds each so gustav you're 30 seconds yeah i think i think that we have seen a tremendous growth in d5 um you know d5 definitely is starting to prove that it's here to stay um the innovation level in this topic specifically is is just very very high it's really manifested itself as

like the one of the prime use cases for ethereum in its current stage so you know if you're like interested in in this topic and you think it's exciting you know i can definitely recommend you looking more into it um it's definitely something that you know will vanish tomorrow or anything like that and you know working in d5 is also tremendously fun especially when we we get to you know meet each other and there's a lot of awesome people here so you know like if you have any interest in the space i could definitely recommend that you know you you start spending more time in it you know maybe on the periphery maybe for one of the projects it's uh it's a lot of fun okay perfect stunning yeah i mean it's getting more interesting i mean now pretty much d5 now is becoming like

a very interesting ecosystem and it just grows and once there's going to be more things on on on top of ethereum and and you know on chain uh i think d5 could be like a backbone of everything that will happen uh in in this space and as like smart contracts talk to each other this is going to be like very very uh very fascinating uh you know i i kind of like i predicted that you know that maybe like uh five years this this default thing could be very interesting but i don't think there is any ending here because uh the amount of things that could come uh into the space not just like d5 but you know on chain on like value and and so forth uh it's just uh it's every day is more

exciting than the previous one so i mean this is like we all are kind of like blessed to be here now because this is like super super amazing what's happening in in in the device space okay okay so my 30 seconds uh in my opinion defy has a you know moral responsibility of the crypto community just because defy has made enormous headlines over the past year and the eyes of the world are watching so and to be serious um defy of course is a great idea but i think as always the truth is somewhere in the middle and i believe that the proper combination of defy and c5

uh will bring a huge value to the industry so actually i believe in the hybrid hybrid approach industry is still young and i think we will we will you know collect this puzzle with some pieces from defy part and some pieces from sapphire part so thank you guys for this interesting discussion uh debates uh passing mike to amy amy cheers and thank you so much elia thank you sonny thank you gustav this was a very friendly [Music] maybe debate lose we're losing a little bit [Music]

can transition to the third part where poor so how is it now is it better yes yeah now we can hear you okay amy will lost you hmm okay how about now a bit better okay so i will just ask the first question from from gaspard because he's representing please please um tell us about apiva or a p vine and um tell us what is what challenges

are you addressing and and yeah it's nice to see um a new company how a new company came about uh because basically you are on test that now so but i don't want to answer the question so please introduce yourself and tell us more about the company hi everyone thank you amy um i'm nisba polizzi i'm a computer science student at epfl in switzerland um and i'm also the president of the blockchain association there so we launched uh ap one with other students and alumni which has forgotten to allow trading future yield so um we basically uh try to to address a need for two main

actors first liquidity providers we want to allow them to be able to edge their risk selling their yield or part of the year leading vents at our at different rates and also for the the traders we want to allow them to be able to to speculate on the vote like volatility and of those api this annual percentage yield um so we works with the system of future and um yeah liquidity providers can cancel the future yield to traders that can then uh speculate on that so we saw that some protocols um have uh extremely volatile percent annual percentage yield that

sometimes go to a thousand percent age or hundreds um and it's a market that is moving a lot and uh and i think we we try to bring a tool for for liquidity to paradox to make this uh this ecosystem more usable as well for them um so it's a solution for the short term for for a period where we see projects coming every day and a market changing a lot and also for the long term um for maybe other type of factor bigger ones as well um yeah to make this this market more usable so indeed currently we we shipped the first alpha version pretty quickly we started the

development uh um late in august and now we just created the second version of alpha much more or something to the what will be api for the main version uh integrating av as well and so we're doing early to be able to ship the protocol in january 2020 um so right now we are integrating d5 protocols um for this year but we are also looking at other type of return on the investment for example uh you know with the staking and for example ecm 2.0 that would be things that we would like to integrate because we think there is a value and need in the fact of both engineer risk and selling it at the same thing selling in

advance yield at a fixed rate and for the traders as well to be able to to trade um on this this volatility fantastic thank you so much for the introduction uh now everyone did did um stop the video but i would like to invite back to myself because the next question is going to be addressed to to her and we have not talked at all about ethereum 2.0 and yesterday the beacon chain launched and this is a super exciting time and the mazda you have been researching ethereum too so what is what is your um take and and give us a bit more insights like what is what do you think

when will we get to uh stage 1.5 curious to hear your thoughts sure well uh congratulations that uh eth 2.0 launch that's exciting that's exciting for all of us about two weeks ago i thought you know we were too far away from um launching but we did do it so that's great uh milestone achieved and also it mean it ties into the debate that you had earlier because there will be some changes um you know there's some people that are kind of like bitcoin maximalist or they like other altcoins um you know outside of ethereum and you know uh people like

uh even willie wu uh willywoo came onto laura shins podcast and they were discussing how you know defy is gonna break down on eth 2.0 because uh you know now you're going to have sharding and you're going to have multiple chains and instead of just you know one um east chain you're going to have like 64 shards underneath one big beacon um main chain and that it would be hard to have um d5 work because you you're gonna have uh you know parallelized uh validation of transactions and for defy you need kind of um uh you know um you know you know you need synchrony you know you need um all transactions being validated

at the same time by all nodes well you know there's been a lot of evidence against that argument mainly that you know in the future even if even if d5 um is all contained in just one shard and that that's you know we don't we don't even use multiple shards d5 won't get worse than it is now it'll just stay on one shard and it will have the same trend high transaction fees and same um latency you know confirmation times that we currently experience so it you know in a worst case scenario d5 is going to be as bad as it is now um in terms of you know confirmation times and transaction fees but

it can improve a lot as well if if they find ways to enable d5 to exist on multiple shards which many companies are already working on with techniques like yanking and and uh other uh other strategies but overall you know there's you know these kind of long atomic swaps like flash loans um those might go the way the dodo so to speak so you know you can we might lose flash loans um which you know but the there's potential there's ways that even flash loans could continue to work especially within a single shard so you know a system that's contained within a shard could

still be um impacted by arbitrage using flash loan so you know we're going to have a lot of changes but um you know i think overall a lot of the kind of fear uncertainty and doubt against uh defy on on east 2.0 is is um you know you know it's a little bit um it's a little bit you know because people either want to see bitcoin you know maximalism or they want to see other chains that they've invested in uh go up in value so be careful what you read fantastic thanks so much

yeah this is supposed to making the ethereum network more secure and ethereum loves to present and yeah it's just fascinating to me from across the global practice the connection is unstable so i hope you guys can still hear me hello okay i just had to turn the video off for a moment because because i think it's choppy so ilia the next question is dedicated to you because you integrated maker compound and unit swap into the lending platform into uhuddler and what is the biggest

learning through this journey um i guess uh whether you would learn users are beyond happy about this so curious to to hear your thoughts yeah uh definitely so the main learning is that defy funds are different to other crypto adopters and uh this is actually very interesting so we've got a lot of interesting learnings about d5 fans so first uh the five fans are mostly millennials or even younger so second uh they're two times more active with uh conversions from one crypto asset to another crypto asset third they're more active traders and

they have more appetite to the risk then they prefer mobile versus web and they're more frequently within the up on average uh two times more and they prefer long positions over short positions uh you know in simple terms they're more open to new products and services and they're much more active in trading and they believe in the future growth so uh again my personal learning was that uh defy uh traders the fire holders are really very different to to the majority of crypto adopters so this is really very

interesting excellent so the next question is uh going to be let's let's try with the video [Music] with let me know if it's choppy again so the next question is um to the muzzle and because uh of course uh this also changes with the huge volume coming to the space from peer to peer we are going more to liquidity pause so curious cures we're curious to hear your thoughts the muzzle uh you're a mute sorry thanks emmy so uh what's the question exactly so we're

moving from uh centralized exchanges to decentralized exchanges and um kind of my thoughts on that or or what or what's the question sorry i didn't um hear that part kind of chopped out is my connection bad or i'm not hearing emmy is anyone hearing me uh i i'm here and i can hear you well so yeah we've lost amy well i i'm not sure what the question was but i'll just comment that

i really appreciate that there's no kyc aml on decentralized finance so you're back welcome back hi everyone good morning did you get the question the muzzle sorry no okay so the question again so through the rise of d5 because so much volume came into the space we seen so like as we grow maybe new government governance models make sense and and i'm curious to hear if you if you have any toy merge a lot of uh protocols are coming out with v2

and or these three even and just curious um if you have specific thoughts on this well i i think this goes back to that debate you had on communism which was just fantastic it's like who makes the decisions at the end of the day and who's responsible if things go wrong um i've seen a lot of you know i live in a monarchy you know i live in liechtenstein and i really like this monarchy and you know i came from a democracy or a represented democracy in um usa and i don't i don't i haven't liked the way that's been going for like uh last 70 years or so

so um but then of course there's dictatorships that have been you know horrible which are you know kind of similar to monarchy so you know i think you have to have really talented people i think you know competence and iq and natural talent and drive you know motivation to succeed um motivation to to keep fixing it you know it's it's about individual people that really run the show at the end of the day and um yeah it's good to have like voting you know participation uh governance tokens and then you can vote and you can share your thoughts but you can't have too many you know bosses running around and nobody doing the the actual work uh either so um i i i'm not sure about governance models

you know overall what's the best one there's tons of research on on how to organize social systems which is is you know i'm not an expert on and i think you know different cultures in different times require different solutions i'm not sure there is a universal one but i do think it's great that the market will um you know allow these different governance experiments to compete and we will vote with our our digital assets so to speak on on which on which governance models we prefer so you know i i do think it's it's

um yeah it's it's open to the market to to reveal kind of which ones work the most in in the highest probabilities so so yeah thank you so much dimaso my fiber nut is is not it seems to be something else today it's definitely not a fiberglass i'm sorry for uh for being choppy so the next question is to gas part and we briefly talked about yield farming because this is what the ep one is addressing so can you tell us about the current challenges of field farming and how how um are you seeing uh the challenges disappear or how are we finding remedies to these challenges

um so in no particular order uh well it was mentioned but security is some kind of issue where we it's a gold russian as in every gold rush people want to be the first putting their phones on new protocols but uh so protocols want to be the first uh to be on mainnet and so we have a lot of protocols that are not mature enough and not edited not well edited sometimes um and i'm just not ready to to have a very large amount of funds locked in them and so we yet we see protocols that are built extremely appropriately and not edited and we have in like 24 hours of a billion dollar of funds

locked there so of course um i think we need to to to to definitely it's a definitely a a challenge and something that we need to look at and we need the more time for our protocol to become more mature uh we also have the issue of volatility a bit linked to this uh these particular times um and the fact that uh that yeah new protocols are coming every day and and then people are moving their phone from one to another just to have the the bigger rates the bigger uh returns on the investment and uh so extremely volatile so for one that is not very um let's say always connected and checking all this return it might be

an issue a challenge and i mean there is also the usability part for for example for gas price so for transaction cost uh as it was mentioned we we it's quite costly depending on the day the hour or just when you're interacting with some protocol sometimes it's cost a lot and so it makes define not usable by some category of user that does not necessarily have the amount of funds necessary for them for this interaction to still be profitable so there we need to to look at the scalability solutions and and then we'll have to to see how we can still uh have the composibility of the defy ecosystem with all this project and bring scalability to them

fantastic and i have the chance now to ask [Music] [Music] okay i see i'm breaking again so gustav could you tell us about maker that was new quality relating to real world assets and uh what do you see in the short run and for okay so yeah so um so basically

the community has been working on okay i'm going to repeat can you hear me now i i did hear the question too can you hear me [Music] yes i did hear your question as well um okay excellent and then please go okay okay yeah so so basically the the community has um been working quite a lot um the last 12 months on kind of like the initial vision that was mentioned in the white paper back in all the way that was written all the way back in 2015 which is to to not only be able to use crypto native assets

but also to be able to use kind of like what we we call real world assets escalating the protocol so in december we actually go like the protocol is going live with the first couple of them so basically financing more traditional companies with the assets that they have on their balance sheet but using d5 to do so um so this is like a really really big milestone i think for like the entire d5 community because kind of like one of the things that we see holding holding back the deeper community now is that we only have the assets that kind of like are available in the blockchain now i mean we could potentially get like new projects

you know we could also get like a big influx of capital from like reach to investors that would make the current assets go up in value but in general we're like pretty limited to the current section of assets and it is still a pretty limited space but to be able to tap into the traditional markets and use that as collateral that really improves the scalability of the d5 use case right and and one of the key things that maker is really looking to do is to be able to improve uh the lives for people all around the world who needs uh you know a decent life stable asset because you know there's a lot of people around the world that that lives in environments where the local financial system you know isn't reliable it doesn't really work

i lived in argentina myself for a year and a half and in these places they really really need an asset like die however with the current market cap of die we still don't have enough supply to service all of these people so we really need d5 to scale and and uh you know i think also personally that one of the great opportunities for device to scale is to become something that people you know ordinary people uses ordinary businesses use and not just people who hold crypto native assets so this is kind of like the path that like the community uh you know has been been pushing quite a lot and and the you know i'm personally very excited about it so you know in the next 12 months you know i'm really looking forward to see a lot of

these types of assets coming into the protocol and then being used um in a bigger way and another positive thing about whenever people they then you know oh like take a loan up with died they will basically also sell die in the market immediately um they will you know generate positive fees for the system they will help with with you know maintaining the pack and you know it's also you know a dream that you know potentially that will enable us to put the dsr back on the table again so people again will be able to natively earn an interest rate for for holding die excellent thank you i hope you guys can hear me now so people are going to just dow it i guess um hopefully you went into the predictions for 2021

which is the closing question because we are running out of time so a quick 30 seconds for everyone last question what is your prediction for d5 for 2021 is defy going to eat up the volume of c5 or what is going to happen uh ilia let's go uh okay uh so i'm excited about combination of c5 and d5 and of course i'm excited about fixing the responsibility issues uh on d5 so i believe in 2021 will have a great progress and we will have a lot of fun a lot of fun as always with crypto so that's it thank you

who goes next the sure i'm trying to think of who said it now it was a good quote um i think it might have been uh michael from framework ventures i can't remember but somebody said you know we still need c5 because we need a gateway into d5 like we have all this fiat and we need to like get rid of it somehow so um i do think you know both are going to be big and you know as different countries you know kind of put pressure on the gateways to do more and more regulation and and more centralization and um i do think d5 is going to grow

and continue to grow and and eventually will be a parallel financial system where we're going to have half the world you know basically or more than half operating and in the traditional monetary system and having their currencies debased and then we're going to have a group of people that are living in a parallel financial system in in d5 so i i do think that'll that'll happen and um and we're just going to continue to get more and more uh value locked and assets under management in in this ecosystem fantastic thank you so much caspar or gustav you're gonna doubt we everyone will doubt it um i think i think we're gonna continue

to see kind of like the trend where the decentralized applications as they have solved a lot of the user experience issues will continue to grow in in a really really big way i don't think we'll see quite the same boom as we saw um in um like over the summer but you know i think it kind of speaks a little bit for itself that you know uni swap now does more volume than coinbase and and you know maker and you know ave and compound uh has you know at least two to my knowledge a lot more capital than than the retail c5 platforms and i think we will continue to see this i think you know people get more educated they get more responsible and of course they want to stay non-custodial cheers cheers to that kasparon

uh and i think for the new year um two different thing i definitely think there is a space for the for the volume to grow um and then new new actors to to get on board on this trend uh but i'm looking forward and i think we need definitely to see protocol matures and and yeah to make this ecosystem more usable as well thank you very much we are going to be here and we will be following what's happening in different we would like to have you all back uh sometime next year for for another discussion uh on the phi of course and uh i'm putting my hands together to all of you thank you the malazar gustav got

aspired ilya and stunning and and bye for now and thank you very much on behalf of the cda