Uniswap v4: The Start of a DeFi Super App

Transcript

[Music] valora is the easiest way to send swap collect and grow your crypto on the cello blockchain download the app and start exploring daps like good dollar today at valoraapp.com forward slash Empire welcome back to uh another Roundup on Empire we've got Santi and two special guests joining this Roundup we have David and ren from the blockworks research team so Santi how you doing Ren David how you guys doing yeah I'm doing good how are you we're we're good we're as good as we can be in this market good Santi how you living doing good you know wow I'm still processing the regulatory pod that we did and there's a lot of thoughts that we came out of that so

that's gonna drop probably later this week so uh yeah it's always really good and encouraging to talk to real experts because there's a lot of fun these days on crypto Twitter it's also maybe it's Twitter feed but my Twitter feeds just gotten really bad as of late you know the foreign a cut like someone who's like whoever is punting AI like my God go look at the For You tab and and really seriously think of this this is the future of AI we're doing folks someone was thinking about writing a script so that we totally like don't see the For You tab and just go to like the the follower tab so anyways if someone out there has

figured this out please I'm in a dire desperate State at the moment we got a lot of messages after last week's Roundup which which was like very seemed like kind of a bearish Roundup we're talking about binance coinbase and I won't say I I don't know how I'm feeling Uber bullish this week about things it feels like um we just hit that part of the market where like anyone who is not completely locked in on crypto is gone at this point there's no one remaining who's like not very very locked in and what that does actually to the market and to startups is focus is at an all-time high so like the way I'm feeling right now prices at an all-time low focus at an all-time

high and it's really cool like prices are not at an all-time low sir I'm just I just need to clarify this because sentiment when eat hit like up like a hundred percent let's just like reframe like it's important to say this because when eth hit a thousand it felt like the sentiment was much more positive than what it is now and I'll tell you why because the market is rallying the broader Market is up and nothing hurts more than seeing this uncorrelation where everything is ripping in Tech land the Market's back up you know fed is supposed to come out in a few hours presumably going to pause the rate hike and so that you know and so but still eth is at holding at 1750 and Bitcoin at 25 and change that's like up 50 65 from

the lows folks I mean let's just like zoom out for a minute because it's important to contextualize that like eth can quickly go back to a thousand and you know Bitcoin could be back at sub 20 easily like this is the nature of the space and so take your wins like when you can get them you know and I suspect there's also a salty crowd that was sitting in cash and nothing hurts more than seeing something rally and you're sitting it trapped in cash and then you play so it's the worst feeling and the you know Wall Street Journal published this like four days ago s p starts a new bull market as big Tech lift stocks so we're back we're back and uh I mean we'll see before I I mean I'm not a Trader I don't ramble about these things but someone

made interesting object I think it was a solid said back when the s p is back to its pre-covet levels in the NASDAQ at that time eth was at 3 000. and Ethan's not at 3 000 folks so that that's why people are hurting and and that's what you know there's a bunch of Traders still that are looming around and it's like people want the market to do something and there's when stuff's not doing something I've seen a lot of the commentators in crypto Twitter just migrate over and say you know what this this Market's too crabby I'm gonna go back to my roots and trade because you see much more activity in in Tech land and so anyways yeah moving on yeah s p is up 30 since pre-covered um Ren David let's talk uni so um Santi you are uh you're biased here so I

think we'll acknowledge the bias because you were Angel and uni I think one of the early you know verify we participate in the round yeah okay so um not seed but like the because it was Paradigm that the seed we did uh do you remember the first time you met Hayden because my understanding of the story of uh of of uniswap is um so vitalik put out like almost this called uh call to action saying hey someone needs to build this thing I've got this idea for how it can be built and Hayden was a developer and and built this so do you remember kind of like the early the Early story there at all I do um Hayden was not technical actually and so he took a vitalik's post and then built on it uh this amm idea and it was pretty fascinating story to hear that I

think it conceptually is really some of the best parts of this ecosystem which is you know anyone can join get trained there's a lot of resources because it's open source people are willing to help you like if you join these communities like everyone has a personal story where we're very lucky and grateful I am that along the way so many people help me and so I pass it Forward right and when someone wants to join the space you know I I take time and I always you know part of Empire is doing that right in at scale and so Hayden like learn solidity built uniswap he was showing up to like meetups and whatnot I think in New York and and then just built it and this sort of really quiet time in the market where you didn't have much volume and default

wasn't even a term but Jesse built it and then uh he's certainly got a lot of help from Paradigm like Dan Robinson there and you know helped him you know I think architect V2 and then V3 and then V4 so you certainly got a lot of help from from Paradigm um but yeah I think it's one of the best stories um in crypto that you know really shatters a lot of Notions that it's really hard to enter the space you need to be super technical and lo and behold I mean uniswap is the most widely used protocol I think in crypto in terms of number of users and volume and um and yeah it's a great success story in my mind yeah and also particularly because the last thing I want to say is I remember looking at the round and there were so there was a cohort of

investors that said amms are never going to work they are fundamentally um not as efficient as order book models no one in the right mind that is sophisticated is going to want to do this the market is really handicapped it's small it's never going to get traction and now you're in a state of the world where uniswap there have been days where it's trade it the volume is higher than centralized exchanges mind you it has a fraction of the workforce it is highly scalable and I think what people realize is sometimes when you come from a fine Financial background yeah like order book models will always be more efficient but you sort of like failed appreciate that there are other things that like

people might provide liquidity and be willing to accept um you know the trade-offs are providing liquidity because they might be indifferent between uscc and eth or whatever the two-pair assets they're supplying it also is a good mechanism to like cost average in or out of a position and so these are kind of the things that a lot of investors like at the time were looking at amms were highly critical of of an amm or even D5 in general um and it's an important reminder when you're comparing like yeah a lot of the things that you're building in D5 are look and feel very similar to what is exists in traditional Finance but there are New Primitives that kind of expand consumer preference that you need to bear in mind that kind

of opens the window here for some like unit swap to get scale right and and build a very successful kind of Enterprise so anyways I'll stop rambling yeah I'm gonna put this uh Link in the show notes it's the unit swap unit swap history and it's one of my favorite pieces that exists in crypto because it's just this story of Hayden getting laid off he got his first job out of college he's working at Siemens he gets laid off uh he messages uh his friend Carl who's you know working at the ethereum foundation Carl's like you got to learn how to code a little bit start shame Carl that is now at optimism yeah right exactly exactly so all right let's get into the big news of the week which was uh uniswap announced before and maybe Ren if I could pick on you for

this um the minor like if you I actually want to start with like V2 and V3 for a quick second um to like determine the problem that V4 was trying to solve here so my like left bell curve understanding of this is that unit swap made it so that anyone could be an LP right and anybody could like open any sort of liquidity pool for any token then V2 was like okay uh maybe these pools are like more optimized for like funds to to be an LP and then V3 made some updates and it basically was almost impossible to to make money as an LP and before there's a lot of problems that they're trying to solve uh internalization or like leaky Mev uh leaking value through Mev

um you know the fact that like L is had become very tough for LPS to actually make money um in V3 but maybe Ren you can walk us through and kind of contextualize and set us up for this conversation around before yeah definitely so V1 and V2 of unisoft started off as super Bare Bones amm model where anyone can create a liquidity proof for liquidity providers to come in and provide full range liquidity and so that basically means it supports any files from zero to Infinity obviously most assets don't trade at the price 0 and infinity simultaneously especially for example for a packed assets such as a stablecoin more often than not the chase between say 99 Cents

and one dollar and one cent and so in order to increase sort of like that customizability and improve the liquidity efficiency so to say unisol came out with V3 the big innovation there was concentrated liquidity right now rather than your liquidity being provided in a full range of zero to Infinity you could choose a specific more narrow range and that liquidity is kind of Amplified it moves the entire Reserve curve outwards and provides more liquidity for softs than are being done in that range that does a few things a it provides a much better execution for Traders but at the same time it also vastly increase the amount of impermanent loss that liquidity

providers experience nowadays Improvement analysis termed as loss versus rebalancing and I think as the uni V3 operation continued a lot of people became more aware of sort of Mev leakage from liquidated providers so there are a lot of Mev Bots or arbit charges doing top of Vlog sex the decks arbitrages or just for example back running transactions and the thing is neither the people making the subs or the liquidity providers were basically making any profit or tapping any value from all of these arbitrages so I think a big portion of V4 is sort of tapping that right how to increase profitability back to liquidity providers and

furthermore basically providing more customizability for these liquidity pools so that protocols can sort of own the liquidity we had this big notion of protocol owned liquidity uh when Olympus down came out during the peak of the blue market and I think univ Force kind of a return to that right or going back to sort of that customizability you start off with the bare bones everyone got the building box the way I see it is that uni V2 basically provided two things X and Y uh commonly known within the xyk sort of invariant after that you install V3 gave one more additional layer x y and price granularity and V4 has another dimension on top of that X Y

price scan that granularity and now you get time granularity or free granularity and it's sort of these building blocks that unisoft has been providing um that basically enables all this and I think David would give a great rundown of kind of what the specific features are of unisoft that have enabled this vlora is the ultimate wallet for exploring the cello ecosystem easily explore over 50 crypto assets and 30 different apps for swapping sending and growing your crypto all from your phone if you want to see real world use cases for crypto velora's daps page is the easiest way to access a growing list of the latest refi and defy applications discover new daps like good dollar a web 3 platform that uses crypto to generate

fund and distribute Ubi anyone anywhere with a mobile phone can claim good dollar right now from the Blora app every single day good dollar rewards can then be saved swapped or used to purchase a variety of goods on the good dollar marketplace with the potential to impact millions of people download the app start exploring today it's valoraapp.com forward slash Empire thank you foreign [Music] did a really great great a job explaining exactly like what B4 is um really to think about it is it's essentially V3 which is this contrary liquidity model that they that they created which kind of like mimics like an order books so it's it is an amm uh

by the end of the day it really is really just an order book because if you look at it today um the people that are really predominantly providing liquidity on univ3 that are at least doing well and making money are our professional uh Capital allocators just because of how complex it is um one thing that V4 does is it takes V3 whereas every single liquidity pool in V3 needed its own smart contract it housed B4 houses all liquidity pools in a single contract something that they're calling the Singleton um and my understanding is uh the way balancer works today is every single liquidity pool in balancer is housed inside one contract and this does a couple things um what this what this allows is uh if you're trying to do like multi-hop pools

where I'm trying to transact from ethereum to uh let's say our ARB token um and let's say there's no eth arm pool what happens say is it uh unisoft tries to find the the perfect uh route optimization to go from eth to usdc and then if there's a usdcr pool it goes from eqsdc usdcr to get you that token uh because all these pools are housed in one transaction it's actually drastically reduces the amount of gas costs because every single time you hop between a new pool it requires additional computation and additional gas so what you need V4 does is tries to optimize gas expenditure on the behalf of the user um it vastly improves multi-hop swaps from a gas perspective uh it also decreases the cost to create a new

liquidity pool by like I think I saw 99 um it also all does something that is or it leverages something that is currently not integrated in the ethereum protocol which is called eip115 five three which is supposed to be in Cancun's upgrade sometime this fall and what that is like flash accounting uh the way I think about is like flash memory for your computer um it pretty much is is something where it does calculations uh in in transaction that essentially does not need to be saved to the state of ethereum um after the transactions are done and really what that does is just again optimizes gas uh utilization um to perform like very complex calculations without actually having to uh incur that cost on behalf of the user

so there's a lot of gas optimizations I think that V4 focuses on that V3 uh lacked especially with its additional complexity um and really like I think the the main thing to take away from B4 uh v4's announcement is this idea of hooks um pretty much what that is is it allows customization at the pool level and really just gives complete customization like friend was saying especially with protocol and liquidity it gives complete customization into the hands of the the pool owner to do literally whatever they want um one of the interesting things is around Mev internalization so I know um we've seen um apps app chains like osmosis and the cosmos ecosystem try to leverage its app

chain architecture to actually be State aware so it is aware of in Block like what the ordering their transactions are and then based on the ordering of transactions it's able to actually calculate like how much Mev opportunity is there and then capture that Mev opportunity for itself like Arbitrage or background it's it's users not front run it's users background users and then provide that protocol Revenue back to its uh osmo token holders what Hooks are able to do is actually somewhat internalize Mev um and allows like some type of transaction ordering preference I think one of the shortcomings is because the hooks are smart smart contracts and are not baked into the protocol layer like osmosis is an app chain so it's Mev preferences are baked into the chain

because unisop is sitting above ethereum and doesn't actually own the block space there are some limitations about like what Mev ordering uh and preferences that that unit swap can have um it's not fully understood honestly like what those limitations are yet so I was speaking to some people in like the skip team which is one of like the leading Mev research and researchers in Cosmos and a couple other Mev researchers and the understanding today is that uniswap can be like uh can be begin block aware but not end-of-block aware so what that means is that it can know like the first it'll be able to timestamp like the first X transactions in a block but it doesn't know like the last transaction in the block and when

that last transaction is and because of that it can't actually optimize Med Revenue if you don't know exactly what's in a block like the full contents so um I mean I said a lot right there but I think there's a lot of improvements that V4 made over V3 it allows a lot more customizability on behalf of like the liquidity Pool owners but I think with that additional customizability comes a lot of complexity that we don't really know like with the long-term effects of that are I remember looking at V3 and I said it's it's incredible you can limit kind of where you want to participate in the curve but then I funded like two startups that like mellow in another that would allow like for this essentially for liquidity providers most liquidity providers are not active and

don't have the complexity and don't want to do it and so there are services that my bet at the time was that there would be these Services would be built on top of uni it feels like there's now an expanded possibilities uh with V4 to do all kinds of different strategies like t-wopping and a bunch of other things I am curious what you think would be the what are kind of the kit for people that are using uniswap right like concretely like where do you see the killer use cases that are going to get the most amount of tracking with this greater flexibility and customization I think this is a I mean there's a couple things I think in general this just kind of gives the tool we believe in obviously open source Innovation that like will lead to like ideally the most

Capital efficient Financial systems over time and really what this does just put tools in the hands of the developers and the Pool owners or the liquidity owners to decide like how do you want to leverage your liquidity provision um I don't know exactly like where this is going to lead to I think one interesting thing is that this could actually have some detriment effects where um you might end up actually having like uh segmentation of liquidity so you might actually end up seeing like kyc pools versus not you know not permissionless pools and like hooks are going to be related to it's like oh if you're not a kyc participant on chain then you can't have access to this specific liquidity and especially today when a majority of uh liquidity providers that are profitable on uniswap are like I think I saw something like

less than 10 LPS on uniswap make up like 80 liquidity and I think one issue of that is like a lot of permission liquidity could be like or I'm sorry a lot of liquidity on unit swap can be in these permission pools and you might actually see this this fragmentation of liquidity um but I think like those are major Innovations and one other thing that I thought was really interesting is that um Ren talked about out of range liquidity uh specifically with contrary liquidity today there's a lot of liquidity that sits in unit swap at a stale and not being used and it's just idle Capital one interesting thing that my understanding is hooks can do is actually leverage that out of range liquidity to um to be used in like lending markets so what unisot V4 may do is not only just become making yourself a platform for

exchanges it could actually make unisoft like a D5 super app whereas like all this greater utilize but I thought that was possible to be three of them you could like you take that idle liquidity and use it in other places and if you get called like if it hits a range then it you know it gets ported back up but maybe that was a misunderstanding but I thought V3 allowed some of that but maybe there's greater flexibility here yeah I think that's really what it is so because like I think uh infinity pools like a lot of other teams that are building on top of we're building on top of unity V3 I think you planned on using some of this out of range liquidity to create new Financial Primitives and my understanding is that unity4 just puts I think more uh Tools in their hands to

build like additional Primitives and they can maybe simplify like how they actually build those Primitives on top um so it really could kind of make the unit Swap this not just a DEX but like this entire super app of applications built on top of the liquidity layer that that it houses yeah just to add on to what David say there are like a decent number of protocols these days are building on top of uni VG for example panoptic gamma swap infinity pools I think previously what you would have had to do was provide liquidity into unisoft take that nft and then basically pass it along to the protocol and perhaps deposit that into one of their contracts or for example deposit your liquidity through the contract but what Unity V4 does is allow you to sort of like abstract and

simplify that process right now rather than doing all those complex actions you can just deposit into an liquidity pool that was for example designed by one of these protocols building on top of unisoft and that's it all of the other sort of logical uh execution is handled by the hook that the spoke that sort of like points to the smart contract that handles everything else for you it feels like happens go ahead I was just curious like um with greater customization flexibility You could argue does this increase the surface area of potential things that could backfire like if you build a faulty hook um what's the worst that can happen I'm curious like yeah people can build on top of this but like who's vetting and can you create like these if a hook were

to fail or just backfire or like what does that actually like what kind of risk does that introduce the broader kind of ecosystem of liquidity pools Within uniswap yeah I think there are a few immediate risks that come to mind the first of all is like a rugging this I'm not sure if this is possible but for example you could deploy a liquidity proof with like a hook that points to a certain smart contract and then after a while you ask you to point to another smart contract and that's my contract has a withdrawal fee that's for example a hundred percent rather than zero percent and suddenly everyone wants it withdraw the liquidity gets involved I think another sort of attack Vector is you're asking a protocol to develop a lot of custom blue

sets and sort of logic within that smart contract for the Hulk and for example if you're asking some random protocol to build their own contract for internalization of MV for example they want to run an Mev auction for the first transaction within their pool I feel like not a lot of teams have expertise on that and perhaps there's going to be a new type of business that provides a service a sort of like hook templates out there right for these people to build on I think those are a few risks that come to mind but yeah at the end of the day it is an additional sort of attack vector and additional layer of complexity yeah Ren is it fair to say that uni V1 V2 and V3 was really all about like look just liquidity and trading and

now this is what we are seeing here is unit swap making a push into developer tooling and because like the way that you guys are describing this is it's not just I mean funds building on top of uniswap now and like playing around with it but really this is going to be a developer platform it's it's infrastructure for other people trying to build trading infrastructure yeah I definitely agree with that take I think one of sort of like the common takeaways from the web 2 world was that everything either becomes a platform or it became a Marketplace in the end and I think we're kind of seeing that similar Trend as device slowly matures Unison V Force now acting as a platform in the past rather than uh sorry currently rather than sort of like building your own decks building

all of that smart contract architecture you basically just plug and play a super easy hook contract to point towards and I think that's something that will or perhaps would change like a lot of VC investment pieces right um now rather than building your own like super cool amm you're going to build your own like custom volatility fees or sort of like custom order models unisop provides all of that tooling you can build Dynamic fees if you want based on volatility you can build internal volatility oracles you can build like an internalized Mev amm you can build your own custom orders with these Hooks and like David mentioned you can provide out of range liquidity into lending protocols and there's not much reason to go build your

own decks and sort of have to regain all of the liquidity that liquidity that unisoft already has and these days I think developers would much prefer to just go build on the set of tutoring provided by unisoft does this kill the idea that anyone can be an LP in uniswap though like it it feels like these hooks are a really interesting idea and the Very Innovative but now um like liquidity provisioning is just it seems like incredibly tough it's just not tough but complicated right and so it seems like professional liquidity provision sorry this was a left list the left curve take which is you think that V2 was the best uh version of a uniswap because I've seen that Meme like guys like Unity was the best

which is a fair statement I guess well I mean it's the best for what what are you trying to optimize for here right and I think uniswap is is opt you just want the the first unit swap was optimizing for like this open platform that anyone could provide liquidity individuals loved it retail loved it this is moving uniswap into a open platform that developers can build on top of but on the liquidity provisioning side like you need to be a professional uh you need to be a professional fund to get involved here that is that is my understanding I'm curious if you guys I mean like that's the it's a great point because the the when I talked to traditional people in finance I would say uniswap allows anyone to be a market maker that the question is like should anyone should everyone be a market maker

like I I I I would say most people would say uni B2 is great like you know super simple it still is my understanding it's still easy to deploy and provide liquidity it will actually be easier in V4 primarily because you the gas fees are much lower and so that from a from a user standpoint I think most people people would look back and say oh it's just way cheaper to provide liquidity and so it opens up the possibility if you want to provide less than 100 bucks of liquidity you can do that the question becomes much more new one sorry what was that no go for it yeah the the last one I want to say is I want to hear your thoughts David Wren is I think most people like Improvement loss is an opportunity cost and it is harder to

conceptualize and track um for most people and it has been the case since day one for amms and I don't think any of this changes to be fair but uh you know that's that's more of a per user kind of consideration some people feel it and are more sensitive to it others are not but David run you know jump in yeah I was gonna say one interesting thing that we haven't confirmed yet but if you read the documentation for uh Unity for one of the things that hooks say they can do is um it can allow liquidity being provided across invariance and it's plural um and what that potentially means and

we don't know exactly what the implications are of that yet like maybe unisoft governance will have say over what type of uh amm invariants are going to be allowed on the platform it could be using hooks so one of the interesting things like I agree univ3 today is extremely hard to become uh a good LP and maybe not everyone should become uh no maybe not everyone is a market maker but you actually see two different approaches today where um unisoft kind of obviously created its uh its toolkit or its liquidity provision system in the univ3 specifically for sophisticated market makers and then curve V2 took a completely different approach where they had like passive cop trade liquidity where liquidity in every single time um a new transaction happens um a user wants to do a transaction on

curve has to pay extra gas cost for the liquidity in the pool to follow wherever the Oracle prices of the pool and it kind of moves it shifts the liquidity for the user on behalf of them and one of the interesting things is like Ken hooks potentially allow passive contrary liquidity pools on uni V4 my my gut says yes so that allows it actually serves all users professional market makers for like the institutional maybe kyc pools and for the non-kyc pools if that's even going to be a thing for past trade uh passive contrary liquidity it really is allow it democratizes Market making pretty much for all depending on what your skill set is that's a great Point David I I just want to conceptualize this for a lot of listeners that may not understand kind of the invariant that they was talking about so basically you

know you have a constant price kind of relationship X and Y uh you know when you try to trade an asset what these amms have kind of innovated like uniswab created this like invariant XY that is basically think of it like a law curve like it just basically looks like this so it creates just like if you're it depends on what however amount you want to trade it creates sort of like these ranges right um and that was kind of Highly Innovative right when you want to trade basically it allows to trade a tail end of assets and you could buy liquidity on uh then you had ins different kind of so you think about the slope of the curve that's kind of the invariant and for instance curve which was an innovation of a type of amm it just created like a like the stable swap invariant was just

like flatter within a particular more concentrated range why because when you're trading a stable coin like you know a type of stable coin if it's dollar denominated shouldn't fluctuate usually the ball is much reduced so you can feel comfortable creating a flatter curve within a concentrated range where you're going to be trading like usdc or for with usdt usdt as an example and unit swap I think V3 allowed for this Con like creating kind of like the range where you want to provide but it was still the same kind of curve the slope was the same but you could just say I just want to provide liquidity I guess my hand for people like on this range of the of the slope what you're saying now and correct me if I'm wrong is it V4 adds more flexibility because you can change the slope of the curve or

Inc or just shift it is it changing the slope um or also just kind of Shifting the curve or it feels like I just want users to kind of appreciate what you just said but let me know if I got it wrong no I what you said is 100 correct it it sounds like and we don't know for sure but it in the uni document univ4 documents it pretty much said that you can have multiple invariants so that tells me it's not just x times y equals K it's not just the normal constant product Mark uh amm invariant it potentially can start whitelisting or maybe it's gonna be permissionless it's going to allow different invariants that are allowed whereas again like curve V2 uh and state like stable swap pools that curve invented uh for exactly what you

said before where you have two different pairs assets that don't have high uh volatility to one another uh they stay relatively fluctuate within one-to-one uh price variance um if you're allowed to have multiple different types of variants depending on the pool that obviously opens up the the floodgates for Passive retail users like myself let's say to provide liquidity and maybe one of the pools just moves my liquid automatically moves my liquidity around wherever the the mid price is the given asset so if that's true like honestly you're really like what Ren said you're really not going to see you're not going to need new amms to be built anymore you can just literally create a hook that creates a liquidity pool that mimics whatever new functionality that the the latest amm to

get a seed round um is claiming is like their their secret sauce like unit swap V4 pretty much allows any pool to be its own secret sauce and you create whatever you want and I am curious uh you know for instance when V3 launch a lot of people saying well what does that actually mean for curve and will liquidity migrate from curve to UNI swap that hasn't been the case like I think still stable coin swaps people go to curve or like for like swaps you go to curve uh it has incentives and you could argue that's you know without incentives maybe the game the game would be different but you know lo and behold hasn't been the case what does this mean for a curve like now that we have V4 like what would you say would happen to curve and maybe other amms but I'm interested particularly in

current because curve is just such an important piece of the ecosystem that I'm curious to get your thoughts on on what this means for them I want to say that curve still has its role within D5 obviously it has this whole sort of an ecosystem with VG curve convex and everything that's happening around it especially with the recent launch of curve USD and sort of like the lab this is their stable coin for folks that don't know right yep then you say about a coin and then llama is they're basically borrowing a lending protocol for that stablecoin and also the curve has recently undergone a slew of updates right curve launched their sort of new uh V2 proves and that greatly decrease the gas cost that it

needed for these pools to be balanced based on the oracles but now unisoft has also come in with their sort of like gas efficiency Improvement right with these Singleton contracts the cost to deploy a pool is going to decrease by 99 with a Singleton contract multi-hop transactions will likely be cheaper to and so I think curve is still going to be able to compete maybe a lot of the investment pieces behind curve and sort of their new like V2 pools curved USD and lava especially if unisoft goes out and like goes their own bong lending Market may be gone but I think curve is still the de facto home for you know stable softs and the curve USD seems to be doing pretty well so far there's

probably around I want to say 20 25 million of curve USD minted so far and the Llama is a very Innovative model that people are picking on you know soft liquidations perform very differently to uh hard liquidations and for now it just seems like a better borrowing Landing mechanism for both sides of the trade yeah I think ultimately though like the only I want to say the only thing but what curve has going for it is that a lot of Protocols are dependent on curve success a lot of protocols own the curve token they need carbs liquidity and unless unit swap somehow starts catering to individual protocols and offering some type of liquidity mining program which I

don't think is going to happen like curve is still going to have its use case for those specific protocols and if those protocols end up doing well in finding product Market fit you can see curve kind of not piggybacking off like their success but curve is still like having a dominant market share in the industry obviously unit stops a lot has 80 plus market share today but I think outside of curve I don't see any other decks in the at least in the ethereum ecosystem really doing well what what's happening right now is unisop started with a consumer-facing application and it's starting to build deeper into the uh the protocol layer and obviously offering these two tool sets and becoming more infrastructure at this point I feel like the next obvious step for uni V5 is to own an app chain like I

don't understand how that isn't the next logical step because they can pretty much do anything that an app chain can except they are not fully stayed aware from like an Mev perspective um and to do like full full customization so I feel like that has to be the next step for univ4 or I mean I I can't imagine yeah rv5 is yeah yeah David I'm shocked we made it uh 35 minutes into this before you brought up uh I was going to say I mean it sounds like we talk about app change more and more and uh you know yeah I agree with you Jason it's David maybe can you lay out this afternoon thesis a little more and uh tell us tell us why this makes sense for you as well yeah I think ultimately the the app chain thesis is um

when you have developers or you have a community owning the entire stack from the the blocks to the consumer facing application to maybe even some of the middleware not only can you potentially monetize at every layer of the stack but because you own that full stack you're actually able to have like full full customization of your application your application and your chain are actually aware of each other so there's application specific logic that you can bake into how your chain actually comes to consensus a really good example as to why like I think this makes sense is going back to eip1153 I want to make sure I say it right uh which is the transient storage uh that is potentially going into Cancun for uniswap so for uniswap Singleton

contracts for them to actually have like the most optimal gas efficient routing uh and pool creation for Singleton to really be the best product it can be it needs transient storage to be baked into ethereum the problem is that not maybe uh there's some political side to this where like maybe it doesn't make sense for ethereum to be catering to a specific protocol because then it starts losing its credible neutrality I'm not sure exactly what the potential cons are of including transient storage but a few months ago when this was brought up in conversation there were a lot of takes on why ethereum should not be like kind of bending the knee to unisop as the most powerful D5 primitive on its ecosystem to like change its roadmap and maybe prioritize one or the other if

unit swap was an app chain and its Community was like well we want to just build the best product I don't necessarily care uh that um or I don't necessarily like I want to prioritize this specific thing and I want to be built into now because I want to make sure I'm building the best product for my users if you own your own full stack you can do that you're not you don't have to start like politicizing or lobbying for a reason why your specific uh op code that you want in ethereum uh needs to go ahead of others um so I think that kind of owning the full stack from a monetization perspective from building the most mature product I personally Envision that the future of all of crypto is going to be an app chain model because it really gives the community ownership

of the of the application whereas like right now everything that's built on ethereum is really at the mercy of ethereum I'm gonna come in with a slightly heartache here actually I think the V4 to me kind of signifies that unisoft may not go to an app chain model the reason I say this is because a lot of the reason why a D5 product will move to action model is bad you capture right that value capture happens through two ways one either the internalization of Mev or two kind of turning on the feed switch um from softies that LP is currently gather and with univ4 you're kind of allowing these protocols when creating your

liquidity proofs and setting these hooks to internalize the mov to some extent right um and that's being like publicly pushed as a narrative by unisoft themselves by Dan Robinson saying hey go and internalize the Mev build interesting solutions to do that and if that happens then maybe there's not so much need for a nap chain itself sure there's certain problems with trying to like internalize any video to how ethereum is built right now but that's like partially being self I think another thing is from a value capture perspective right definitely if UNICEF wanted to capture more value they would want to move to an FG model but a lot of what univ4 was about was China provide more fees to these liquidity through uh sort of protocols

right these people that are launching these liquidated posts now you have withdrawal fees now you have swap fees and the protocol that's launching the hook can capture that um withdrawal fee the protocol that's launching the hook for that liquidity boot can also capture a portion of the soft fees right if UNICEF is allowing all of these liquidity proof launchers to do that then perhaps maybe they aren't that concerned about value capture and sort of like the whole app chain thesis Ryan how does this inform uh your your thoughts on what they should do with the fee switch I think it makes it an even harder discussion for them because previously the only entities to decide between was LPS and uni token holders right right now you're

adding an additional layer of complexity to that I think for now it doesn't matter that much because for example 50 of units of volume is if usdc and No One's Gonna sort of like get that Visa assuming because no protocol like launches the unique the uscc Poo um but I definitely think that basically products coming in turning on their own pieces are going to have to compete with uni and the LPS and it's hard to say maybe there's an argument here for protocol or liquidity right for example rather than having to pay liquidity providers which is something that you can do these days with univ for hooks you might as well just say all right

screw it it's not worth paying you need liquidity providers or anything I'm just gonna do photo on liquidity I don't have to tip them I don't have to donate to them I don't need to think about this entire like fee switch to LPS to UNI token Horrors I'm just going to take everything for myself I kind of struggle with this idea because I think at this point like uniswap has such a commanding lead in in the entire D5 space not even just Dex like they could easily create a lending market tomorrow and I guarantee you it's probably going to take 75 market share um I very much think that crypto is really going to create like digital monopolies over time just because they're uh they can really just expand indefinitely um with really no limited limited to no friction uh because they're still Lindy in their brands

um I think that eventually a fee switch will happen for you to swap I honestly at this point don't see the need for them to do it um I like this there's a piece that um I could share with you guys call I'm sure you've read it the hyperstructure piece that pretty much you keep building until like you grow so much that the entire economy is dependent on you and just the very nature that unique token holders could potentially eventually like hold a v-switch uh just having that power alone makes the uni token valuable and you can think about like Amazon shareholders Amazon still to my knowledge is not distribute dividends but the entire you know World economy is pretty much dependent on Amazon and their supply chain their Logistics so like I mean certainly like Amazon Amazon wasn't profitable until AWS came into

the right well yeah but even without that right like they kind of just took this approach and a lot of uh tech companies did this where it's like growth at any means necessary and I think with crypto protocols you can even take that's like the nth degree you can kick out uh cash flow as long as possible because these pretty much these things can essentially like eat all of the financial world over time as long as they could scale with their users um so I think you know short end of it is I don't think this necessarily uh has any impact on whether or not unit swap is going to add a piece which or not but I do like the idea that it kind of puts the ownership in the liquidity Pool owners like it gives them the flexibility to decide whether or not

they want to add a fee switch at the middle level um run and David how do you guys think about uh I saw some push here's the counter argument to all of this um actually there's a couple pieces I want to start getting into that maybe a little bit um one of them was I'm just going to read this tweet from Xerox relativity uh they said crypto and Twitter has the most literal Psychopaths I've ever witnessed uniswob literally just looked at Croc swabs white paper and medium blog posts and was like all right I'm gonna control C control V that that looks good with no credit to Croc swab I've seen some other pushback that like they basically just took the balancer V2 model copied it but they've got uniswap's brand um what's your thought on this I think that's the power and authority

that unisoft does have I mean if you're the market leader and other people have better features than you yeah you bet your ass I'm gonna copy them and integrate them into my protocol and then sort of launch it as a platform model so that I don't need to do any work other people will launch sort of cruise on unisop that mimic your protocol and Tada suddenly I own everything they were on the other side of the stick uh with sushi and basically every other right I mean and you could argue that everyone copied vitalik's post and God knows where Patel got it from so you know Turtles all the way down but uh I think what was the the concern was this idea that it's like the licensing component and whether you want to adhere to the

license you know big if but that was I think where people saying they are painting this narrative that is open source but when you actually look at the license it is not there are degrees and types of licenses and this is more on the restrictive side so so that is I think where the criticism came about I don't know if you guys would agree with that I no I I was literally gonna say the same thing I think unfortunate I mean fortunately unfortunately there's it's a double-edged sword with this open source Innovation it's incredible you know you you speed run all of Financial and technology technology history like with everything everyone innovating out in the open but at the same time it allows yourself to kind of do the great work and then I'm not saying you know it's

all ripped off them or not but rip off great work paste it as your own the problem though is well now you're putting a license on it saying I can't actually use this Innovation for four years so um yeah I mean unlimited like ultimately that's why I think crypto is going to create monopolies over time is because it really comes down to brand and first mover Advantage if you could just take an innovation from someone and just put it onto the uniswap brand it's immediately going to be a 10x better product not just because it's technically better but because it comes with the brand and the um the overall power and clout that that brand has yeah I mean so it's Lindy right I mean you talk about like sushi like who's Sushi I mean Maki left and then you know it's kind of like been a they haven't

innovate it and you know these guys have and I think they're always at The Cutting Edge of of trying to innovate new kind of New Primitives and expand on what they have already which is a lot of liquidity a lot of brand recognition and the users and so you know it's it's hard to to just create a fork and then I think countless Forks like people try to occur Fork curve a number of times it just failed and so I guess uh more of a question to you David because you spend so much time the cosmos ecosystem like how do you envision the world like with in a multi-chain thesis if you believe that to be true like you have like unit swap is deployed and like you're gonna have base so you have l2s right in ethereum but you also have different evm compatible chains non-evm chains like

what is the role of uniswap here um and and how does that world look like from a connectivity standpoint um and and bridging liquidity and whatnot I'm curious to get your thoughts on that yeah I've done a lot about this I think I think ultimately um it really I honestly don't think Atomic composability is that big of a deal I think a lot of people thought ethereums in like one of its main Innovations was like all the time of Cabo's ability you can like borrow from something and then buy something in the same transaction you're guaranteed uh transaction inclusion I actually think asynchronous

composability is is probably good enough for like 99.9 of use cases and eventually we'll kind of get to Atomic opposed Billy with like 2K Roblox yeah right it's it I honestly don't see the Allure like who cares about Flash loans like that's great that uh arbitrager can Flash on 200 million dollars and get a three dollar arm but like is that really Financial Innovation not really just got like a cool feature um so I think in the in the short term really what you're gonna see is uniswap is obviously deploying across all these l2s um I think ultimately the entire Innovation the entire crypto space needs to converge on one interoperability standard I think that is probably the major thing that's holding the L2 roadmap back and obviously I'm a cosmos

Maxi so I'm going to talk my book but I think the Innovation uh the main Innovation for Cosmos and that uh entire ecosystem was IBC once you uh have a set standard on interoperating interoperating with one another um you kind of remove trust assumptions um or at least you make it as trustless as possible and I think what the there's a lot there's gonna be a lot of developments I think over the next year or two that the ethereum L2 space is going to battle with and they're going to be kind of going back to Lessons Learned From The Cosmos ecosystem and I think one of my issues or one of my concerns is that the L2 spaces you get more fragmented more PVP and really look ultimately like what the cosmos ecosystem does today I mean people

should go back and listen to the episode we recorded with Jack and Zaki from the cosmos ecosystem and one of the things this is right around where they were announcing IBC or and some other features and I asked I can and he said something and David correct me here if or you believe differently which is ultimately IBC is going to be helpful even for the ethereum ecosystem to as a communication between l2s and so that Tech can be used within ethereum but also to communicate with Cosmos chains and so maybe that is the standard right I yeah I fully believe in I know Ren and like the analyst team in the research side probably sick of me saying this but there the industry has to converge on an interoperability standard and today there is no better interoperability standard that's more battle tested than

IBC um and it has like the lead trust assumption as possible and there's already a lot of great teams like polymer and a couple I think ethereum research is actually funding some zkibc work like I there's already a lot of work that's being done to make a lot of the l2s IBC compatible so I'm really excited to see that happen because then we actually have like a real super chain where like everything talks to one another I fully believe in the multi-chain thesis I also think like a lot of communities are never going to leave their ecosystem so on an ecosystem it's probably going to say Solana until uh it's actually proven whether or not Solana is like a viable product or not same thing with Avalanche same thing with Cosmos so instead of hoping that all your users and liquidity come to you you've got to kind of Bridge to them and

I think like having interoperability standards the way to do that and I ultimately think what's going to happen is and you're already seeing this like unisoft is just gonna have like outposts they're gonna have official front ends on every single L2 they could be able to talk to each other asynchronously but ultimately all that multi-chain world has to be abstracted away and I think IBC is the best way to do that you can actually abstract away like the multi-chain thesis so that there's one front end and the user doesn't even realize that when they do a swap it's routing liquidity across all these different Roll-Ups and app genes if you're the uniswa BD team growth team then it sounds to me that what you're saying is the go to market should be dominate the front end dominate the user like brand and then just plug in with

IBC and then just wherever they are whatever liquidity is just route it in the most efficient way in an asynchronous manner for 99 of use cases um and so I guess um you know from an IBC standpoint like how far because I remember like looking at Cosmos 2018 and it was like I'll be going to like the the Berkeley conferences and it's like ibc's around the corner and then of course they had some like internal like splits and whatnot that probably delayed the road map but like how real is it like is it ready to go like is it battle tested enough um and an important distinction I think it's not the same as a bridge because Bridges have gotten a lot of criticism rightfully so because there's been a lot of hacks and user you know funds have been lost but you know where is IBC in

your mind in terms of Readiness and like prove like building Lindy so that more and more protocols and more and more kind of chains are comfortable using it yeah I think it's probably um I think it's good enough today um I don't think it's obviously ready for like mainstream uh adoption yet I would say honestly within the next 12 months though you're going to see a lot of interesting developments of IBC they're going to really make the entire cross chain experience at least in the cosmos ecosystem and other IBC compatible chains like completely seamless so one uh there's a couple teams that are like doing a lot of great work like Strange Love which is Jack samplin's team um The Stride team which is like the major liquid staking provider in the cosmos ecosystem they've done a lot of

great work so that you can actually do like cross chain swaps uh with like one click you can move tokens or you can move like Adam let's say from one chain to the other uh liquid stake it deposit it back uh back to the cosmos Hub in like one-click transactions so there's a lot of um IBC abstraction they'll say in Cross chain of production that has been done over the past like three to six months and I think we're probably another like six months away until you actually see app chains deploy official front ends on individual dual like generalized smart contract Platforms in the cosmos and having that entire experience be abstracted away to be like just one front end that the user is is going to be interacting with um I think it's like I think everyone

outside the cosmos ecosystem is completely I won't say ignorant but has no idea like how far IVC has come over the past six months well I mean Cosmos like like no BD team and Zaki would say like no we're just yeah pure Tech Guys and you're like Fair but uh yeah yeah it's a sort of interesting state where like we are in crypto which is people have an opinion on like VHS versus betamax it's like no guys like no one had an opinion on https and some of these standards in the stack like you you I mean you you it's it sort of like reflects the state of the industry which is it's it's these hobbyists and you know Tech enthusiasts that have a very strong opinion and affiliation to a chain and has sort of missing the broader picture which is you know as these use

cases get built out the real users are not going to care have any affiliation to ethereum or Solana or Cosmos um all they will have a uh they will care about you know the user experience right and if you're playing a game and if that requires making multiple Hops and interacting multiple chains will so be it as long as the game is fun to play um you know so not a lot of games in crypto today are fun to play but you know we'll get there hopefully 100 . well this this has been a very thorough discussion on uniswap and and of course that took us into a a tangent here but I'm curious if there's anything else you guys were at or things that you're looking for like what is the timing what does uni V4 come out how are people going to notice it and and how

does the phasing out of like I guess because technically you can still use V3 or you're still going to be able to use it right so what does that look like for users like what's the timeline here I want to say it's going to be a slow migration like univ V2 to V3 that was a slow migration I suspect that V3 to V4 will actually be an even slower migration because deploying concentrated liquidity pools where that complexity is just sort of left to the user to choose the range is very different from having to buy the entire new smart contract auditing that making sure it's battle tested making sure your thought to the entire mechanism design right and I think one interesting thing that I would look forward to is were the protocols

are going to build their own smart contracts for these hooks to point to or these are going to come as like hooks as a service right I think not every protocol wants to spend their time thinking through all of these mechanisms providing that additional complexity for the liquidity boost and yeah we'll be very interested I haven't checked the governance form but will there be incentives like you know could they could you create a incentive where you get uni um if you migrate I don't think so as of yet but actually interestingly I think around two weeks ago gone that put out and liquidity mining stash incentive study that they were doing with unisoft on optimism if I'm not wrong and they

basically did a super quantitative analysis it showed that liquidity mining does work in some X to some extent and in some cases it was fairly sticky they did like the whole like statistical regression and Analysis and from what I've heard Unison has been sort of doing these experiments so maybe that's turning off something that they may be considering to do for V4 episode for more migration because what you don't want is for users to forget about it don't migrate and you know look at Ave for instance different experience but obviously I was planning on liquidity on V2 within V3 you know what I mean like I think it's V2 V3 V1 still so like if the curry is sticky and users like sometimes are not as active so you need to incentivize them to kind of migrate over so uh Gauntlet is my understanding is

one of the top delegates in the uni uh governance committee and so yeah I mean they carry a lot of weight certainly yeah I think uh one last thing that I want to sort of look forward to is how photographers will think about donating to liquidity providers and incentivizing liquidity because now you can directly do so through these hooks so maybe they'll think about donating to very specific in range liquidity providers and it'll be interesting to see how they sort of structure those incentives awesome guys hey well it's really nice having you both on I mean uh David I think we're due for a much deeper discussion on Cosmos at some point and uh yeah so maybe you are the de facto business you know BD head of unofficial BD head of Cosmos yeah I was looking at

your profile by the way thank you you know I told Jason wow I so clearly haven't made it because you don't follow me so it's great um go and follow David he's a way better fall than me and um I just followed him and so yeah I followed you back okay all right great awesome sorry not that we care about followers here folks I've been basically stuck in like the same number four we're battling you know that do you know that we are I think tied right now uh so when Mike and I were working pretty closely with Pomp and you say you unfalled me come on man guys please I'll make the Jason you always do go to purple I'm like guys go follow me right

now okay I don't care just go follow me outside the overall okay and then there'll be I don't know wink wake maybe an air drop no I'm kidding no airdrop that's it that's the app that's it that's the app guys We're not gonna talk about anything else other than next time when we tune in we're gonna start who has more followers maybe this just could become a thing Whoever has more followers between now and permissionless whoever wins I'm calling it now Jason if you want to meet me in this kind of competition let's see who gets more followers between now and permissionless and then at permissionless whoever loses we've got to have to do something like sponsor like yeah shave your head I'll shave my beards much more about his hair than anyone

does I haven't shaved my beard in like 15 years since I was at JP Morgan yes guys I'm that old um so why don't uh why don't we do that whoever has the least amount of followers you shave your head I shave my beard that's a horrible bet it says no one said this was an equal playing field all right we'll give it a week we'll come back I'm down to make this bet but we'll uh we'll think of the bet in the next week thanks for listening folks foreign [Music]