pTokens: Empowering DeFi with Cross-Chain Composability

Transcript

hello everyone my name is Thomas Bertani I'm the CEO of provable and Poseidon and today I'm going to discuss P tokens so some of you may have seen me around during the last few years for other initiatives that I've been leading such as the Oracle eyes Oracle service and da2 wallet today we announce the launch of p tokens which is a new project we have been working on during the past year so the hot topic of the last year mostly has mostly been around decentralized finance right like D Phi and another hot topic that I think is

like greatly underestimated as for the like consequences that it could have for the ecosystem is like cross-chain like how can we have different block chains contribute to you know a theorems defy and how can we have a theorems defy to like interoperate with other blockchain tools so if you look at like statistics around defy you will see that like the vast majority of D Phi platforms such as like the first 15 are hidden based so out of the first 15 14 are protocols based on a theorem so I think this is

quite impressive as a statistic and the only thing you see there which is not even based is the Lightning Network which if I remember correctly from something I've read yesterday has now been as well as now went down actually in this list since the WBT C is getting more traction than lightning Bitcoin itself which is a bit weird I mean I've been following the developments around lightning Network and all the different cross chain efforts for a while now and you know lighting Network was supposed to become huge in different ways it's slowly growing but not it

doesn't really keep up with the growth of defy tools we see that are being built on a theorem so the main factor here to take home is that a theorem is where most of the defi action is currently happening I don't think this means it will always be like like that as I see some activity for example also Neos like corneas there are some tools that are being built there not as much as a theorem but I think there are there is like a trend that should be watched right so I think different chains can actually contribute and the main reason to that I think we should like keep in mind is that if you look on a coin

market cap at where the D volume is it's not all on a theorem right like if you look at the actual volume like what is happening in the ecosystem as for trading activity you see it's mostly on a centralized token which is data USD and the second one is Bitcoin so a theorem is third and if you look at the numbers the volume is like relatively low compared to a Bitcoin and also compared to total USD so it doesn't mean it will always be like this but I think this this is telling us something which is that one of the main drivers of this ecosystem is the speculation why because

there are there are a lot of of expectations right I mean we know that you know the different tools that are being built on the different proteins can have like implications that are huge so people speculate on those assets and the main ones are the biggest ones such as Bitcoin theta is on top of the list because it's just a USD equivalent that is used on a variety of exchanges but what tells me that the this metric shouldn't be ignored is the fact that that our USD is not just the most widely traded asset is also the main use case of Atheneum like if you

look at the etherium gas cost like how much smart contracts are spending on gas which is like the main metric to monitor the ATM usage you will see that the very first is marked contract that uses a theorem today is that er USD so it's a centralized token which is sort of strange right so since we are building all these defy tools and the growth is like astonishing I think this will like take over Teta very soon but still we should aknowledge in my opinion the you know the blockchain is still being used a lot for for trading and for moving you know volumes around so theta is the main

gas eater on a theorem just because it's used a lot for trading activities to move liquidity from oneexchange to the other so that's an important use case and if you look at the size of D Phi it's 1 billion which is a great milestone right that we had reached but it's still really small not compared to you know the wider financial market which is much bigger but even just to the cryptocurrencies 1 which is very small today so if we compare a small market with D Phi D Phi looks minuscule minuscule today it could be much bigger though so what should we do to make D Phi grow beyond the first billion which has been

like the first milestone after basically one year and a half of very fast development in this space well I think that one of the things we need to overcome indeed is the limitations of like the blocks in itself because all defy tools today live on the same block chain so on a theorem meaning that we have sort of a capping do - well first the user base if you look at the users that hold the bitcoins for example it's a much bigger audience than the users that's all the theorem if you look the oldest of material and people that all died for instance you will see that the dye holders is

like various mourning number compared to the Tea Room holders why because the big numbers are therefore you know speculation like the main holders of Bitcoin on it of aetherium all this kind of tokens are there because they are they are not inside us right they are just people that hold some Bitcoin for the long term or they also Bitcoin did some material they don't even know that defy exists yet because nobody told them and because it's too complicated I mean if we look when we look at the Dubs like decentralized applications and the interfaces I mean we are making improvements really quickly and I think the usability is going up at a fast pace yet it's really complex for an outsider for someone who doesn't know what you

know smart contract is or why you know he should you know double check the bytecode and the verification of this mark contra because before interacting with adapt and all this kind of stuff I think it's really complicated and it shouldn't like be like that in the long run yet we want to give guarantees to those users right because defy is like the centralized finest so we want to to show to everyone why did the centralization aspect is important so let's come to pit tokens now Peter cancer were basically designed to solve this problem like the problem of different block chains not being able to communicate one with the other it's

quite obvious I guess on why we decided to focus on this we have been working since 2015 on the Oracle problem so on community on connecting the internet with blockchain to feed in external data but today the main use case on the blockchain are still around our financial so there are around moving volume around moving liquidity so how do we facilitate the like moving the liquidity around between one blockchain and the other well peter has do exactly that they enable tokens or crypto assets in general that live on one blockchain to move on a different blockchain so the logo is the one of a palette not

by chance because the parrot can fly right and the parrot is like you can mimic what you say so this is exactly the concept of P tokens like you have a token on a blockchain let's say Bitcoin on the Bitcoin blockchain and you want to use it for maybe a defy you know as a collateral for a device platform on a theorem so what you need is a token on a theorem where that contains your Bitcoin you don't want like complex systems you don't want you just want to move it quickly from one blockchain to the other and back why is speed such important and I will come back to this later well because if it's not a quick conversion so if you

cannot if you if it's not possible to quickly go from one block to the other with your crypto assets then market makers will like find it very complicated to to interact with this and to provide liquidity like market make a set of critical component you know in decentralized exchanges in centralized exchanges like in all contexts --is and the reason why it's important to make it quick is because you don't want them to you know stay exposed to the volatility of those assets and you don't want them to basically have to pay high fees or to keep a lot of liquidity in different places just to balance for the this low speed of the system so actually this

came by coincidence but like a couple of weeks ago Vitalik posted this in a thread around cross-chain defi and he basically described the way p tokens work without knowing because this wasn't really public yet so he says here that basically interoperability can p can be done in a very simple way which is by using light clients and merkel proofs so basically you just need like a system where you have a client for one blockchain like let's say you have a light client for Bitcoin a light client for a helium and then you need some proofs that show inclusion of a transaction on the two respective proxies

the moment you have that you can verify everything you need for the peg in and peg out process so the peg in process is what we call like the P tokenization of an asset so let's say you have Bitcoin if you do a peg in from off bitcoins from Bitcoin blockchain to a theorem you will receive p bt c on a theorem so p bt c will be the pit organization of bitcoin so you did a peg in of bitcoin on to a theorem and this p bt c on in the theorem context is an EFC 20 token so it's compatible well technically speaking is an ESC 7 7 7 but if compatible with ESC 20 so if it is fully compatible with all systems

built around ESC 20 and actually it's indeed it's quite astonishing that that there was still no good implementation of this bridge because this was like theoretically discussed and solved back in the days I remember like what was in a bit easy relay which was a system to do that in that was built in 2015 so this was like when the Bitcoin when the etherion blockchain went live like on the like few months after the etherium blockchain went on main net there were already systems trying to solve this problem the reason

why they don't exist anymore today is that there was no use case there was no good reason to a Bitcoin on a theorem so those projects pretty much died today this is a project that where we could count more than 10 projects working on this same problem of moving Bitcoin on a theorem why because now there is a strong need which is in defy basically so the way we are building P tokens is like you will see how it works in a second but we are trying to provide tools that make it simple for all projects to integrate so providing the ESC 20 on a serum as like the form that of a P tokenized foreign asset is quite

an obvious choice in that direction but since P tokens enable depakene and p'golf to be done by anyone automatically we provide probably decided to provide this Pittacus j/s library which just basically hides the complexity of the system and enables like adapt to integrate with the pig in and pack out what doesn't mean let's say you have a wallet objects or any defi tool you want to integrate with P tokens what you do is you use this library P tokens GS and you could do things I mean this is too small to read probably I

should have made it bigger but this is just a simple example here with one line basically you get the deposit address on Bitcoin where to deposit your bitcoins so that they can be converted into P BTC only theorem so the deposit address you are given is not just a random address this is not a custodial system this is a system where the deposit address is transparently and provably controlled by a network that basically commits this deposit to the owner of the newly minted p BTC tokens so what it means is that you need to specify in advance where you want to receive your bit organized

assets like p bt c on a theorem when you say the address the system will generate a Bitcoin deposit address that is linked to dat room 1 this is necessary because you need a proof that the deposit is actually asking for a very specific issues which is the issuance of the PBGC tokens on a theorem to a specific address you don't want to deposit bitcoins and then maybe someone has received your PBGC right the library then facilitates all the communication with like different components so for example you can check the Bitcoin deposit and see when it's confirmed if the network has a knowledge D deposit and if the issuer has successfully been

completed so all the steps so what we foresee is different adapts to integrate so that they show the different steps and within there you know interface they can just show deposit BTC and what happens is that you receive PBT see straight from their platform so you don't need to go via third-party drops or anything that anyone can basically give you a deposit address that is probably tied to your ATM address and they could integrate it in the platform and the same thing is for the way out so even if you want to redeem let's say you have P BTC you are given P BTC or by the defy platform by a friend of yours whatever you can just go back to normal bitcoins via a very simple you know request to the dub or to

the library so the deed app is actually provided anyway so this is like dub dot P tokens dot IO and if you go there you can right now you can test it and both on minute or on test net it's on Robson Ani theorem and and you can try to issue some new PB TC by depositing Bitcoin or you can try to redeem them you redeem PBGC so those get burned and you get Bitcoin back on the address you specify so this process is transparent and Kim can be independently verified by anyone I will come down to the security

implications and technical details in a second it's actually secured by something that we will release more details on in a few days which is called the P network so this is our plan towards decentralization and I will show in the last slide briefly how it will work so on Testament we have currently released p bt c on aetherium but we have already released also just don't estimate p litecoin on a theorem which is the same process of course they are pretty much compatible right is very little difference between bitcoin and litecoin so that was an easy implementation not as easy not and what wasn't easy is p us on a theorem so this

is like having an ESS token on a theorem but we are working also on the opposite like having I don't know Pete died for example years or PII on the liquid side chain all these kind of connections are possible thanks to p tokens p tokens are actually based to be flexible so in the case of bitcoin is not possible to issue tokens on Bitcoin right so it's not possible to ask the way back so it's possible to a bit kinder nitiram as a token but not to have a theorem on Bitcoin on ears it's possible to do both like to have both ears or ears tokens on a theorem in a P tokenized form or to have like us sorry or to have the opposite so Bitcoin or sorry a theorem

or a tinium based tokens on ears as a new token so this is the comparison with the like major competitors let's say they are different there are different approaches I think some of those could coexist actually this chart this comparison table is also an our website if you are interested and on the website you actually find the comparison table also with other projects there are many others so we don't list all of them but if you have questions around specific ones please let me know and we can discuss the similarities and differences so the the ones I have actually put in this slide are lean on like the non

synthetic ones let's say so they are the ones that are actually backed by real bitcoins actually tea BTC is sorting in between but so as you can see like there are different fronts on which we could compare them like the backing mechanism the governance the speed which again is critical for liquidity to come to etherium without the liquidity this is completely useless like it doesn't make any sense to have bacon on Atheneum if there is no liquidity because it's it's not like those bridges will be pretty much useless it means there is no need for it right I guess like having that many projects focusing on Bitcoin on a theorem means that those projects

believe and time will tell but I think we are right that there is a strong Yusuke for Bitcoin atheneum and that there is a strong need for it something else is like the cost depakene pig-out cost let's keep in mind that on a theorem every operation cost gas so if the Pegeen cost or the peg out cost a significant amount of gas this has to be taken into account for market makers very operational costs or for other reasons so we try to minimize that for instance we try to keep it as low as possible and this is possible by basically keeping the architecture simple and by moving most of the complexity of chain while keeping just the verification chain so here indeed in

the last line I just sounded up for the market making a liquidity appeal to understand the implications better so let's start with W BTC w BTC is a project which is quite I mean is the major one is that it is the market leader at the moment is the one that started earlier and it's mostly trusted I mean you need to trust the Federation of merchants that enable and basically what we call the pack in and pick out it's it's this is one of the ones with most of the friction unfortunately the good part of WBT see is that it's supported by many protocols it's supported by many lending protocols by

defy other defy platforms and there are many holders the bad part is the unit kyc to do the piggy MPEG out which is not ideal for many of also for some use cases and it's it's not automated so when you convert bitcoins to WBT see the process is somehow manual so it take it was it can take up to 48 hours or something like that so it's quite small quite slow so it doesn't really work well for market making and as I said it's not really decentralized there are like trustworthy parties involved into the process yet it's it's not centralized in any way so what we do

with P tokens instead is having a network of validators secured by trusted computing so I will dive into this shortly but in the first phase we like we we have started with a single node so in the first version it's not really decentralized it will be decentralized once we introduce the network in the coming months but all the pieces we need to get in at working place and to get the guarantees and the incentives in place we want are already there just on one node so we are trying trying to make everything stable enough for it to become a network right now there is just one node because it you get much more complexity the moment you introduce other nodes I will show this shortly with P tokens actually the beginning tag

outspeed are like pretty much instant after you get enough confirmations you get it tokens on the other chain that's another competitor like T BTC t BTC is very interesting I personally like the technical construction of it unfortunately for the way it's built it has several limitations so some limitations are for example the gas costs are not trivial the speed is controversial for example when you do the peg out you need to wait some months after you have done the peg in you know when you plug in systems into T BTC if I'm not wrong you need to wait six

months in order to to go out so it means that you can go out immediately if you are given someone else's t BTC or if someone buys yours but it's not something where you can unwrap your wrapped token at any time it's quite there is friction because of that reason and also it's sort of dependent still by by a theorem as a collateral and it's like tied to you TX o so that's an advantage because it's the verificar bility of the system is possible thanks to this yet it becomes like it doesn't really apply to all chains for example let's say i don't know let's make a prediction which I hope is wrong which

is that the telegram blockchain will take over everything and the tone will be there and it will bring a tones of users I don't know if this will happen I personally open a hope hope not to but who knows so in that case and you know P tokens will still apply for the architecture because it's very agnostic to the blockchain we already made an integration with us which is completely different from a UTX own model and this one will need probably we're not even possible to verify but it will be very complex will need to be pretty much entirely redesigned so it's not blocking agnostic in any way which sort of makes it a standard which doesn't scale depending on the use cases like we don't

know what are the use cases I don't know the use cases I don't think the use cases will just be Bitcoin on a theorem I think it's much wider today we need Bitcoin on a theorem but tomorrow we may need the PDI or liquid or we may need I don't know POS DT which is like a news token or PS on tone or whatever I don't know so Ren BTC is another project the is similar to P tokens because of its design it's actually the closest I would say to P tokens it has some limitations though because basically the Ren system

for the way it's built is really complicated like it has several components in like the nvm for example our like the the algorithms they use that are still undisclosed so it's really hard to do the Scrat to to analyze it in deep because some of the details many details of their system are not public yet and what I can say is that our aim with P tokens is the one to design a system which is safe meaning that it's as simple as possible so it doesn't aim to do everything well it aims to you know move liquidity quickly in the safest way so it tries to be very thin having a teen system like a system

that is simple is the best way to have a system that is transparent and solid while R and V M is like very complex so I think complexity and security I've never like gone well together I'm a bit late so I will skip some slides I think there is no need to dive much deeper into the ecosystem potential we notify is growing 20,000 users is it a big number well it's much bigger than the like 2000 we were at one year ago but I think we can do much better and to do that we need to bring defi tools to a wider community so if we give utility to

clip to us as they already have I think that's a way a great way to do that so with I've already explained the way the peg in and tagout works so I will not spend time on this it's currently live on the tino minute since this morning pretty much so the you can test it but I would advise you to test it on test net so if you go on the dub you can like test on testing it you can test it on the minute as well and actually we have integrations already that I will show you shortly and our aim again is to keep a very simple design so that's why we could you know move quickly with the design of this like in one year we could

go from 0 to may not basically because the design is really simple and it doesn't need to do any fancy stuff or to create obstructions layer or anything like that like for example Ryan VM has so many layers in between that it's really complicated to analyze everything while here the design is really simple because the aim again is to focus on having a simple system to analyze and to keep safe so that you know everyone can quickly move liquidity and things and that so the token as I said well it's mostly based on an open Zeppelin contract because on chain there is not much happening really so it's an ESC 777 there are some small additions for dear a team but this Marc contract on chain that differs from open

Japanese like 100 lines of code so it's really small the rest of the system so the system of chain that keeps the system safe has been audited by crypt onyx will have also other other audits being released but this is the first one we have wave work on and there is a pack again which is one-to-one so this is not a synthetic asset you can just get your normal bitcoins convert them to BTC and back we are live from today on banker as well so you can use it on Bank or network directly and same thing with Khyber so if you have like a defy platform that is integrated with Khyber

or with banker that's integrated with both already so you can use it with now without any extra friction which is great for the integration of systems that are already using those networks so there are many use cases I don't have much time to dive into all of them but ask me later if you're interested so some integrations that are going live shortly or already live for example integration with DMX like DMX is like a derivatives platform where basically they have integrated via DP token CGS library the entire peg in and peg out process so you can go on the a tearoom platform on their top you can just do

deposit Bitcoin they give you a deposit address from P tokens and you receive the PBGC talking directly so that you can start trading on their platform and way back is the same basically so it's the same experience people normally see on centralized exchanges but decentralized so you don't need to confuse them with you know a completely different approach which is the one that we are following on dubs today you can give them an experience they're familiar with but with much greater security a do is like a mobile wallet that has integrated it already so actually the sorry they have integrated the trading for from banker and tybor

as that that was already integrated pretty much but they are integrating straight into the wallet also the peg in and peg out so basically you can just deposit bitcoins on an ax theorem wallet so think of the applicability of that like you have I don't know meta mask that's a plug-in we are making for we are building for meta masks like you go in meta mask which is basically any funeral and you do deposit Bitcoin you are given DP tokens deposit address and you receive BTC directly or opposite you have P BTC you go back you withdraw a theorem from meta mask like the user experience is the same you will have on a different tool basically you can make all the theorem tools you know chin agnostic and just support with robust

and deposits from exchanges from anything directly on any chain this is useful of course also for lending derivatives there is no need to say that right so I just have a couple of minutes so I will now dive a little bit with a little anticipation of the governance network and I will explain you technically how the system works so basically well this is a tweet from few days ago ago from Chris which is an influencer in the D Phi I guess and something he said which is a very hot topic is that you know we shouldn't really upset any D Phi tool which is centralized a today if they don't

provide a clear roadmap towards the centralization which makes sense right I mean this is a great point I think on the fact that you know we don't want projects that are undercover centralized in D Phi because otherwise everything blows up so for example we have been running an Oracle service for five years that is centralized I'm not scared to say that because I think there is a sound like a strong argument in favor of those kind of approaches but I don't say it's a defy or a code because it is not yet there are many projects that today live in defy that have many points of failure that are centralized and they don't disclose them so what we want to do is make it very clear on where

decentralization points are and show our path towards the centralization like how do we achieve the centralization what's the time frame and and why so for example now we are starting with a single node and providing guarantees of trusted computing meaning that like the machine where this is running can be shut down so if we shut it down you will not be able to redeem the tokens in this phase II you don't find this acceptable test it on testing it and maybe jump in later once did you don't this problem doesn't exist anymore but keep in mind that most of the alternatives well all the alternatives on maintenance today don't provide additional guarantees they actually provide lower guarantees so this is something you are already

accepting as a compromise with existing alternatives so it's better and it will be much better best game so in phase zero we just have one node with guarantees of trusted computing meaning that if something goes wrong there is the possibility actually here in this phase we have enabled something we called debug function to have the possibility to recover funds why because the system is thin much thinner than alternatives that are coming up yet it's very complicated many things could break so we want to stay on may not for like some weeks and see how the system works with one node but all the pieces we need for like going towards a network like

that we call the P Network and is like they are already in place we just don't feel confident yet to push it out so this is why we're targeting quarter 2 and quarter 3 is actually where we plan to provide a voting system so that people from the community where we will have a very minority stake like a very small part of control will be able to choose what they want to do with the you know with the system if they want to upgrade or not what kind of bridges they support what what the peg in and peg outfit should be or things like that and they will be able to collect the fees directly with knows the you know support the system so this is basically a system

which is in between purely like decentralized systems that use MPC only that use multi-party computation so those systems typically need each node to put enough money at stake so that the total value they are securing doesn't go beyond the total value at stake this is its main limitation because it is based on the wrong assumption in my opinion that like those governance tokens because they are governance tokens in the end should keep rising in value if you need to secure more which don't think it's a healthy as an assumption while our system basically says okay we use pure governance system so people vote they can use it they can

be / in some circumstances but normally we make much harder for single nodes to do something else like to attack because there is a variety of tes technique that are used to secure their execution so anyone can challenge at any time and not in the network to see if the attestation is passing so if according to the T they are operating normally so how do you break the network well you can break the network if you break basically the t's from ledger Intel and Google to start with at the same time in a control way in a way that is undetectable and in the majority of the network so I think it's

possible in principle from a theoretical point of view but I think it's much easier to just a dump a small token on an exchange and make the like Network incentive of the other systems go down to a lower level so what I'm saying is that practically speaking I think this system is much safer than the alternatives and it provides no capping based on the value locked in this taking of the token so that's great for scalability so there will be like some token orders that we just keep the token for their own reasons maybe because they want to benefit from peg in peg out fees or thing said that there will be some like they were some that just bought for

governess and the side if the enclaved code that every validator mr. on needs to like be updated or if the fee is need to change and then there will be some validators it is a subset of all of this and those bodied eaters will keep the system safe with their specific machines providing some guarantees which is better than no guarantee and will have to secure the network so basically just to make this clear we are not raising funds this is not a new token we don't plan to do any of that and we will not be in control of the majority of the tokens so I think this is quite rare because we don't plan to you know hide that the company behind the initial design controls the network as many

tokens do because they keep the majority of the tokens and this is like a system which can solve the cross chain composability problem for defy it can do it today in a very simple fashion without you know bad words without extra complexity it's something that everyone can understand so if you're interested the our telegram channel is just called P tokens and the details around the governance system will be available shortly or P dot Network and yeah did app is available on the website and you find all the details on github or if you want to reach out to me come talk to me in person even if I'm Italian I've never

I've not been in Italy for the last two months so don't worry about coronavirus and that email address you can use to a remotely reach out to us thank you the next conference has been consult so if you want we have time for questions from maybe from the ethnic guys so if I have a wedded why should I use P token rather than just a PBGC rather than BTC is there any financial incentive for me to implement this that's a very good

question because one of the like competing projects that is called IM BTC is actually paying users to with the DD holders of the of the token they have which is good I am BTC and get a share of the fees of beginner pig-out I think that's great but I mean and it doesn't make any sense from an incentive perspective in my opinion and so no you don't get paid for for moving your Bitcoin or a different chain you may make money if I don't know you lend it maybe you get your business you convert it

to be BTC and then I don't know you go on compound or on Avon other platforms and you'll end it so maybe you will get some interest back and so this is something that is enabled by a system like that so you get the guarantee the transparency guarantees of the defy tools on assets that you may want to hold in the long run maybe you don't want to put there some you know die you won't actually to keep your bitcoins and say I don't plan to sell them in the next years I would just put them in lending in a defy a platform money theorem so is there any other advantage well as I said an advantage is that well this is the wallet so you see here there is both Bitcoin and PBT see that's just because the ATM wallet supports both the

etherium chain and the Bitcoin one many wallets such as metal masks they don't support Nichkhun so in that case you may have some bitcoins on an exchange maybe you want to go to you know non-custodial one so you want to withdraw the bitcoins from the exchange you don't have a Bitcoin wallet you have all your crypto assets or a theorem already with P BTC you can just withdraw to your deposit address of P tokens and you receive directly PBGC that's non-custodial and you're safe it's better than keeping them on the exchange yet you didn't have to install a Bitcoin wallet any other question thank you

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