Yield Futurization: Unlocking Tomorrow's Production, Today

Transcript

okay and our talks continue welcome to the forest stage at east barcelona so i wanted to introduce to you euless from ap1 come on up [Applause] hello everyone is that working well can you hear me all correctly awesome cool uh yeah just wanna go back on this moment actually let's make a moment together because that sounds fun and so we can all be together in the same picture i'm just gonna take a little selfie here hey barcelona thank you everyone all right um

my name is euless i'm one of the co-founders of ap wine finance and today i'm going to be introducing how to unlock tomorrow's production today we're going to be talking about d5 of course and just as a temperature check i would like to i can't see much with the lights but i would like to know in the room how many of you have ever tried d5 you know if you're still discovering um and how many of you have tried the yield generating platform like have a wire uh you know balancer can you raise your hands if you tried it before okay that's that's very good okay basically 50 of people here tried it so please hang on um the traditional d5 farming flow is

more or less like this you take your die or your asset stable coin anything and you deposit it on the platform that generates yield so in that case it can be ave and you're gonna be getting what one to ten percent on stable coins right uh and you're getting this yield so this interest rate throughout the year so very very progressively blocked by block now this has a big problem the problem is that you're exposed to the volatility of interest rates so if the interest rate goes down you're also losing yield in the future there is also a big risk of the apy so the annual percentage yield just going

down to zero and this is what we saw in the d5 summer of 2020 for those who witnesses it was not uncommon to see three-digit apis that were just not sustainable right so that's an interesting problem now imagine for a second what if there was a way to get your d5 interest in advance ahead of time this is what we do at apy this is the entire idea behind the project the d5 farming with ap1 just adds one simple step once you've deposited on your platform of choice for example ave you're just going to deposit that again on ap1

and what we're going to do is give you your yield in advance i'm going to explain how this works now how is that possible it works with two main components in the project and i'm going to explain all these uh you know in detail so that it's easy to understand the first component is going to be yield tokenization the second one is yield marketplace and we're going to see this one later first let's dive into yield tokenization yield tokenization basically takes as input a token that generates yield so in that case it can be a die it's called an interest bearing token because it generates yield over time it takes this as input and outputs two

different tokens the first one is the principal token this is representing the initial value of your deposit the second one is the yield generated and this is called the future yield token so imagine for a second if you deposit one die on ave and then you deposit that on ep one you're going to get two different tokens the pt is going to be always worth 100 die it's kind of like a picture of what you deposited and then this is where it gets interesting the fyt is going to contain whatever has been generated throughout the year so at the beginning of course it's going to be worth zero at the beginning of the year because nothing has been generated yet

and at the end of the year it's going to contain whatever has been generated throughout the year now we can kind of start to imagine how useful this process can be and it totally makes sense to couple it with the yield marketplace we're going to see how this works now that we understand yield tokenization better let's dive into the marketplace all right um forget about all that i said and let's just simple uh focus on a very simple analogy imagine that there exists a platform like ebay right you use ebay maybe on a regular basis you know how it looks like it's very simple to use now imagine if this ebay was allowing you to sell your salary in advance

let's say for example uh you earn 70k a year but you're willing to sell your salary one year in advance for 60k well there's going to be someone else you know if you're running low on cash you may want to ask someone else hey do you want to buy my salary for discounts and this person is going to say yeah sure because i'm going to make a profit of 10k if i wait till the end of the year of course this is obviously if you don't quit your job before the end of the year but in practice this is also the risk that the buyer is taking so let's say this person buys a salary you get your money in advance you you get you know 10k less but you still get it in advance and the person on the buying side is

going to make a profit almost guaranteed so it's really a win-win situation and this is more or less what we do at ap1 just replace the word salary with yield and you get the kind of traditional finance to decentralized finance analogy where here on ap1 you can sell your yield in advance at a certain rate so if you want if you're earning eight percent on fa you may want to sell it for five percent um and then the future yield tokens come here into place because this represents what can be bought um in terms of yield so this is how the entire buying yield functionality works

it's all around future yield tokens now in practice we don't use ebay for ap wine we wouldn't even be allowed to do so we use what is called an automated market maker and you have all more or less used it before if you ever use uni-swap balancer sushi swap or anything in the in the same sense so on on ap wine this basically simplifies the process of trading tokens on the blockchain because it else it would be very inconvenient so the experience that you get on ap1 selling your yield in advance is more or less what you would get on unisworth and the good news is you can actually try this marketplace right now so it's open to all it's on mainnet on

polygon and you can try it right now on app.ap1.fine and to give you an example if you're holding any if usdc die any stablecoin any assets supported by the platform you can go ahead on ap1 and get your salary your yield in advance this is of course only the first step and there are many many more aspects to explore uh in yield derivatives this is a huge market with trillions of potential you know touch but this is only the first step so there's a lot of things to build and explore um yeah that's an overview of ap1 i want to thank you all for joining this talk um i'm really happy that you know i got to

introduce the project to so many people today and i hope that you will try the platform uh come to me for any questions uh i would love to explain more in depth but i hope this was you know a clear first overview of the platform and last but not least please get in touch because we're hiring we're looking to expand the team whether you're you know passionate about d5 already or simply looking to discover and explore what's possible in the space please get in touch we're looking for developers and designers please follow me on twitter to get in touch and make sure to scan this qr code to get more information about ap wine the twitter the website the application you name it

and one last thing we're going to be at ecc in paris this year later later this month and we will be hosting a very very nice party called la dejen so please check it on twitter it's all in the link awesome thank you very much for joining and now it's time for questions yes please i think uh you are first hey um so i have a quick question so what happens if someone withdrew withdraw their deposit absolutely and that's a very good question and the the simple answer is that to make it

to make the the ecosystem uh like the platform neutral of course one pt is always linked to one fyt so if you want to withdraw your initial deposit you're also going to need the future yield token associated to it which means that if you sell your salary in advance you're not allowed to quit your job right so you need to keep your capital down there thank you for the for the question that's that's yeah that's great any other yeah yeah would you consider elementfly your main competitor and if that's the case what makes you know what are the differences between you and them um key advantages or whatever that makes you different thank you yeah absolutely i could name you know element tempus

pendle there's a lot of competitors out there um but you know in the end we're all working on um you know yield tokenization as a primary aspect and then the global vision is to offer a suit of derivatives for ap wine so we're working on options we're working on different amms for different types of tokens this is not something i can talk about yet but please stay tuned for what's coming i would say for the v1 that we have right now the main difference would be that the trading experience on ap wine features the fyts whereas element took the decision to focus only on pts so they focus on fixed rates whereas we also offer yield in advance and this is why i'm doing this talk today because yield in advance is in my opinion a very interesting feature that lets you

build very complex strategies on top of fixed rates because fixed rates is one thing but yield in advance opens so many other doors and this is something you can do on api right now thank you for the question hi here yes please hi you're so from sixth and my question is how do you make sure that the pt token stays like one to one because we thought let's take talking from like a state teeth only from little just like one to one and then we realized that there was no mechanism keeping it at par so ah that's a very good point yeah okay there needs to be a little bit of clarification here ap1 you can deposit ibts so interest bearing tokens

so if is not an ibt it's a it's a you know it's not even a token in fact but staked eth is a yield generating token because your balance increases in value over time now to answer your question you can make sure that one pt is always associated to fyt to one fyt because that's just how it was in the smart contract so there is a piece of code that ensures that if you want to destroy one pt you also need to destroy one fyt and this is what i was saying before that one pt is always associated to one fit because if not the system would not be neutral to to generate one dollar of yield throughout an entire year you need that capital so it needs to stay in the contract

as soon as there is a withdrawal it always needs to be in the same amount so let's say you deposit on ap wine you're never locked so you deposit on ap one and then you figure wait actually i don't want to use it so you just deposit get your 100 pt 100 fit for example and then you would withdraw the same amount to get your initial deposit back so you're never really locked in fact even if you sell your fyt you can still get out by selling your pt at a discount but this gets a little bit more technical i hope this was a good overview yeah thank you thank you right another question nice yeah hi i would like your opinion about

the similar kind of way of using your interest in advance that would be a project like alchemics that you uh take a loan uh against the deposit that you make and the yield is being used to repay your loan so in a sense would be like using it in advance yeah that's a very good point um i think you know alchemix is a great platform but in the core of the of the protocol itself we work in very different ways so alchemix works with as you said a depth based position so basically you're taking a loan and you hope that it's going to repay itself

um now yeah it that that works but in practice you're also relying on the interest rates and you're also exposed to probably you know if the bur market really comes and hit you you might be stuck there ap wine doesn't work with any kind of depth position or any liquidation or anything like this so the only way that you could get out would be just buying back the yield and getting out so you're it's really two different mechanisms now to answer uh another part of your question which was what do you do basically what strategies can you do with future yield in advance well i can think of a few examples that we could all do on a daily basis imagine uh

you know you have some capital that you're putting on ave and you're getting this in advance thanks to ap1 you can then pay for your gym subscription your netflix subscription you can pay for some lunches ahead of time before it's before you even have the capital uh in regular d5 so this opens up you know this is just a little part but this opens up the way to daily usage as well other applications could be for enterprises dows who want to manage their risk on their treasury and imagine if they have millions of dollars and they need to pay employees what if they just used ap wine got their yield in advance and paid employees with this so that they don't even need to touch their treasury that

would be awesome and this is definitely possible with api today that's just one of the few uses but there are so many strategies that we can we can think of we're also sponsoring hackathons and we're amazed to see every time uh you know how many people work on new strategies using ap1 one of them for example is the yield section so you've all seen the movie inception where there's like a dream and then another dream and then it gets pretty crazy you could do the same with ap wine so getting your yield in advance and then reinvesting this into yield again get it in advance and then do kind of a loop until it's not profitable anymore i hope that was a that answer your question sure thanks thank you sir

yes please i think this gentleman needs a mic so i wanted to ask because my concerns what about uh you're giving the yield uh in advance yes so uh if you're using those mamm that they basically uh depend on the volume on the tvl how you can estimate that rewards that in that yields did you yeah that's a very good point we all got very nice questions today that's amazing thank you um yeah tbl is you know liquidity is is crucial for any d5 protocol if there is no liquidity on on uniscope on some token that you want to trade you're not going to be able to do anything because there's going to be a huge price impact well unfortunately this is a this is

something that hasn't really been solved yet in d5 so it's more or less the same on ap wine you know we have liquidity mining bootstrapping to make sure that there is enough liquidity to use the platform but in reality uh right now you can swap for you know 1 million dollars worth of yield on ap1 but then if you go above this there might be price impact and this is where it could get more complicated but this is definitely a an issue in in many defined protocols and you know we're still early right awesome thanks i hope there was a maybe if there was other parts of the question i missed let me know yeah it was fine thank you thank you awesome is there any uh other questions

so far all right then i guess it's uh it's clear so i'm happy that there was a a lot of interesting questions i want to thank you again for for joining this talk today it was very interesting to um you know explain the project as much as i can to you and please give me feedback please you know get in touch on twitter again follow me get in touch we can discuss and if there's anything that was unclear and i would love to give you a demo of ap1 whenever you want so thank you very much have a great conference see you barcelona um [Music]

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