The new NFT-based Decentralized Finance

Transcript

thank you everyone for coming to this presentation about the new nft centered defi or how um the new decentralized Finance would be centered around NTS so I'm going to talk about uh NFC renting borrowing the state-ofthe-art uh the technical challenges and what how we do it today um at jix um so as a crypto Community if we agree on one thing is that we want to have an open Financial system and for that to happen uh we would like for most investable assets uh to be tokenized on chain uh so today crypto Market uh cap is about 1 trillion give or take a little bit less a bit more sometimes uh stock market uh market cap is about 69

it's actually 70 trillion but 69 is a funny number um uh the bond market today is at $128 trillion and which gives us a a full set of all investable assets of about $230 trillion um including the real estate and other investable assets and so if we want to tokenize all this on chain certainly today we don't have the infrastructure for that and also there are a lot of techn technological challenges uh with the rent in assets and all of that that we need to tackle on chain and today we have two main standards that we use to tokenize um assets on chain so uh Arc 20s we tokenize table coins uh we tokenize

fractionalized Arts maybe someday fractionalized real estate Commodities already we have pxg for example stocks um and we have this other thing called non-f fundable tokens right erc721 uh we already tokenized a lot of art pieces houses maybe some day cars Sovereign bonds arguably could be rc20 but but yeah so we see that there's a lot of Need for infrastructure of renting borrowing of these non-fungible tokens if we want to tokenize uh a lot more investable assets on chain and so where we are where are we today right like where is the state-of-the-art of this uh this is much needed where we are um I think we the way the reason we don't

hear a lot about like a lot of these um def5 built onts is because we still have all technical challenges to do it in a trustless uh manner so code is low but how do we do it right uh there there's the liquidity liquidations challenge for loans against nfts um how do you manage Liquidations in a trustless and permissionless manner there's a renting challenge of uh with the nft uh standard so there is an owner for the erc721 uh standard but uh how do you manage that the if you rent the nft the person gives you back the nft and all that thing um and then there's a pricing challenge um for um liquidating so even if we manage

to liquidate um ERC 721s on chain where do you get the pricing from how do you manage Rarities for example in nft collections how do you manage price in houses and on all these things and do we even need uh those those Cipher setups and how to think about that so these are the main challenges today generally there are a few Solutions I'll talk about but they're far from perfect and we still need to do a lot of work on on this and so I talk about these houses and all of that and some people argue well there's no infrastructure for rentin and borrowing against NC down chain because there's no use case right like there isn't this big use case you're talking about uh but there is actually today there is gaming where a lot of we need um a general renting market for gaming um to allow these

in-game assets to move from one game to another for new people to be on boarded and to rent uh these assets um there is liquidity problem right like so if you have a big bag of these nfts you want to you want to take a loan against them you need liquidity uh to do other things on chain and there are some Arbitrage opportunities there there's a utility problem where there's there are so many Arbitrage opportunities if you have some nft that gives you um some uh lower fees for example in some uh dealed exchange or some other infrastructure this is uh incredibly important and if we manage to uh get this rent in uh and borrow it uh use case uh figured out we can take advantage of all these use cases and so

let's talk about nft renting for example right um nft R where is it today um so there's this great quote from n says uh God is dead but figure out andiz lending on chain uh we would be okay um well n didn't say that actually but um there's a great quote actually by Yan wah Harari who is um a controversial figure albe in the crypto Community but he said he he made a great point about credit in his book sapiens uh where he said hosts of new and wonderful opportunities open up if we can build things in the present using future income this is something that's important to figure out in collateralized lending so that um we allow us to get um to to use this future

income and this is important also for nfts um and this is why we need to figure out in cized renting for nfts to build for example a ripple Market IEM know maybe someday on chain um and so uh today there's a new standard it's good double protocol um helped uh draft this new standard has been accepted it's called ERC 4907 and this new standard the particularity of it is it's just an nft but has two roles um an owner and a user so you have the owner and you can and the user um can you can change the user and the owner controls um so who the user is you might say okay this is going to be problematic for the user but if

you put the uh nft in the smart contract as the owner then you can manage uh how much time the user has it you can actually burn uh you can actually stop the the user from from using it after like a certain time um that they um that they have the nft to be used and so how we do it jpeg um because there are still problems right the problem is not solved most nfts don't follow the standard and so the way we do is jpex uh you uh bring your nft erc721 old nft classic right and then we can wrap it in a new uh in the new standard ERC 4907 and through that new standard you can lease it to Gamers and that allows

us to have uh a global um Ren in market for for example in-game assets but someday hopefully it's going to be for houses or any other tokenized um assets on chain and this is something that's very important to figure out and this is the way um we are doing it um at jpix and so let's talk about borrowing against nfts too right so where it is today um a lot of people are not aware of of the amount of um adoption that happened in borrowing against nfts uh for example nft 5 which is one of the biggest protocols for borrowing against nfts today uh had almost more than hundred million uh in loans uh mostly

against Bard apes and cryptopunks but few other collections too uh it's interesting to see the the amount of of interest that that there is in this uh in these protocols and they're mostly done peer-to-peer at this point not at the protocol level uh there's arcade XYZ too uh OTC desk uh for mainly for institutions and they offer loans against nfts uh peer-to-peer uh from maybe institution to institution or institution to individual and and and they still don't don't have a at least as far as I know uh don't have um a permission list on chain infrastructure but they're working on it and again

there are technical challenges at least today there's a new standard but um before we didn't have so um so yeah so this is borrowing against nfts um we at jpex believe additionally to that in in Cross chain infrastructure and I know you shouldn't say the c-word in an ethereum conference not the real c word but the cross chain word uh but hear me out um so there is a a great case I think for cross chain especially for renting nfts right like these games want to onboard collections that have the most engagement the most volume that exists where on ethereum layer one these connections these collections do not want to leave ethereum layer one we saw

lately with Bard ape with the last vote and the ape Dow uh people refuse to leave ether L one so how do you do that if you want to uh allow for example um a certain certain holders of a certain nft collection to uh come to your game so uh you want some sort of cross-chain infrastructure because most games are based on other blockchains or even layer twos uh that are that offer more scalability uh more uh transactions more throughput and so this is a I I think this is the biggest case for cross chain and yes there are security tradeoffs um we will ALS I'll show you in the next slide how we do it in in in jpix to reduce those security trade-offs uh but

but it's you know life is trade-offs right um and then there's the second um the second Isel is aggregated liquidity right if you have this high volume nft uh or this valuable nft on one chain you don't want to sacrifice the security by bridg in or whatever but you want to keep it and get liquidity on the different chain directly you can the the case for cross chain there is is very important and so uh this is why in jpig we are building on axlr axlr is a relay chain for different blockchains uh and uh it allows General message pass in and so it has this model of of a home chain and and satellite chains and the you don't have to deploy multi-chain

infrastructure uh different instances on different uh blockchains um all you have to do is have home chain that has uh State Storage uh some transaction routing a lot of like the treasury aspects of it and a registry to keep track of which nft is wrapped with which other nft and then you have different satellite chains where you have the market the renting the minting of each nft and then fee collection user interface uh and users really interacting with any chain and all of this is done in the background where the user doesn't really see much because there's this General message passing uh phenomenal in in addition to that we are building on um highly interoperable

blockchains like um moon beam with polka dot and which allows us which gives us access to this ecosystem we're building Aurora which is a layer two and near so it gives us access to the near ecosystem and this is very complicated infrastructure to handle uh from a products point of view but from for a user point of view it just gives them much better experience uh alog together without you know doing five six steps uh to bridge through uh different uh blockchains so uh This Is It this is the state-of-the-art today in the nft center defi uh Renton has a new standard since June uh borrowing is uh growing in value volume but there's still the liquidation and pricing

problem to tackle and uh we think that cross chain is essential especially for the rent in use case um yeah so I still have a few minutes uh if you guys want to discover uh more about jpix uh you can go to our website or our Twitter or chat with me after this talk and um in the few minutes that are left if you guys have any questions I'll be happy to take them thank [Applause] you uh thank you for your talk um we've been working on those subjects and on

those challenges I just want to have your General Vision a particular issue you mentioned uh cost chain technology and also wrapping nfts uh to allow for renting how do you see it um the standardization problem and maybe uh is it hard to integrate uh in other protocols or in other uis and uh other application do you think we need standardization do you think uh we need the developers of other platforms to make an effort or yeah what is your approach I think we need take and um we I think standardization is coming at least with the renting aspect um at least when we can wrap an nft and convince other games to integrate this

new standard as a user and just like a new contract address and when they have a registry that they can take from either manually or in some automatic way I think that solves a lot of problems obviously there needs to be more coordination today uh everyone kind of like develops in their own little space um I'll be happy to talk to you later maybe if we can you know you know bring something up some sort of Alliance where games and U renting infrastructure and all of this are get together to to have some some sort of meaningful integration but from our side what we try to do is make it the mo the easiest possible for games and other ecosystems to integrate and if that is the case they have little friction although you know even most games today are are early stage so uh

there's still to be decided yeah I agree thanks oh good thanks a lot thank you