Defi Panel | ETHTaipei 2024

hello everyone um so I'm happy to um have all of our panelists join this panel yeah so um yeah that's give a brief introduction for our uh audiences of what you're doing and who you are so let's get started from myself uh so this is June sorry I was just running back it's a little bit um so yeah so this I'm the vice president and Technical partner of uh s Ventures uh but I prefer to call myself as a Define native since uh my first project is also in defi yeah um yeah and I really like new things and I have friends with all the panelists for many years yeah so let's uh move on to Tom yes I'm tomon from Z political yeah actually I joined the group of War maybe more than 10 years yeah maybe uh people in Taiwan may know me and uh we uh we are doing a def5 protocol uh and it's about the option uh the the name is z and before that we have we have a we had a another project is a DX called Jo so thank you hi uh my name is Jerry Lee uh I am the youngest here I'm in the uh in this space for only two years so I used to work in the bank for over 20 years I was doing the uh my my my whole career life is trading trading fix in Comm and currencies in the bank and uh just two years ago I just figured out like like def5 is like so attractive so amazing so I de to retire and resign and jump jump into def5 space and I build ter structure the reason why I I'm doing this is because I do fixed income for my life and I find this is no such things in Divi so this is something I wanted to build up um hi I'm y uh I'm the co-founder of Perpetual poal so we do a Perpetual SWAT on Chan on opon and uh yeah I think that pretty much about it I'm ran a co-founder of orderly Network where a shared order book liquidity uh across different blockchains uh currently volumes about 200 700 million a day on the perpetuals um and uh we cater to all types of D5 Builders out there so if you want to uh plug into our liquidity please uh feel free to pay me yeah hi um I'm lenx I'm c ofix um we are one of the biggest exchanges Central exchanges but we also build our webd wallet and we also have a ZK row up uh PRS and Dex to be to be launch in Str cool so uh it's our pleasure to welcome so many ogs in the space to share their opinion with us uh so let's dive into the panel since we don't have that much time uh so first uh I would like to ask everyone like can you share a little bit more about what's the current barriers and difficulties of working or building onch derivatives nowadays since most of the attentions are around like mean coins or like nmd things like for uh more advanced onch derivatives is usually more difficult to build so yeah I can uh I think we can start from um Yan um um yeah I think that um um okay so let me put it this way um so I'm on derory it's hard now uh I think mostly because of performance of blockchain it's not there yet uh most of the I mean like most of blockchain we use ethereum base L1 L2 scale like you know QPS is like 10 transacation per second around there um so I I mean like a lot of at least if you compare to like Finance I think they can handle maybe a thousand TPS uh right now so that's a gap um uh for for spot Market I think that's probing F because uh uh like actually like like the Baseline guys said that uh um you know the whole like a movement actually uh we can bring liquidity to the retail on a smart Market people can BR their own token project can bring their own token but on derivative it's much harder because um people because you have leverage you want to trade at um you know like um you know the fastest you can you can you can too so I do think that performance definitely uh is the m blocker for the derivative got it like speaking of performance I think like Jerry or Tom could also chime in because like I If I recall correctly um term structures building on like customiz L2 right to basically have cheaper gas and for Zan it's also on ZK sync right um so Jerry would you want to share some like barriers or difficulties that when you're building like um term structure uh yes thanks so I think clearly I agree with what Yan said I think uh just the short answer is a TPS constraint right wherever whatever we do on CH I think this is something that we need to solve but so but uh the term structure want to solve the problem is on uh when we talk about derivatives derivatives basically derived from some other financial instruments right so what are this basic fin financial instruments uh we don't have uh fixed income that's why I wanted to come here to do this and the way we do is that we build because fix income is actually allow the users to put their asset for longer period of time so I think the security is is important uh scalability is important so that's why we build our own DK R up and based on this layer to and uh we trying to create a year curve for E for uh uh for BTC for uh like major stable coins so I think the thing is that uh uh uh without year C the derivatives were limited to what we have today like perets we may trade like a 10 times of the volumes than today on PR protocols like products or like Zas like option products or the swaps right but uh the we still limited to like uh the use case we have today right so we wanted to create a new use case I think that is uh uh the most important things we want is like just like we go into the bank we we we see like hundred different products but here uh in defi we don't have that many and this is uh because we don't have year curve that's why I think this is important uh to me this is the obstacles and uh on un defi got it uh I totally uh I totally agree's uh point of view and uh but because for myself and actually I trade almost maybe millions of dollars on stxs uh every day for the Perpetual future and the options and uh in my experience uh is uh the user experience is not good as as sex now for unchain derivatives uh uh because uh actually uh if I use the uh unch unch derivativ is maybe I I I will use my core wallet to sign and is it's not a good experience actually and is a lot time and the actually uh the user experien is not not good and also there are other uh cost uh maybe for the gas and uh and the conver conver conver time is uh very long so it's not easy to use actually and also it it has another cost for the it's not easy to deposit us uh uh money from uh our daily life to unch uh is also a big problem got it and besides performance to um Rand or lanx has other opinion since you guys are Al um building things on on on chain like okay X so expand into onchain things um or at least has already building like sh liquidity book order books on chain yeah yeah I think uh one of our key challenge currently is uh we you want to make sure the mechanism of a centralized system mechanism is I mean the rules and mechanism is on a centralized system is exactly the same as ckp proof system uh whenever there's a mismatch so which mean that even even the orders being matched on Central matching engine can got rejected when we when we when we upload on chank so um yeah aside for performance this is something that uh we're still trying to figure out what's the best best way to do that's very good yeah uh how about rain yeah so there's many uh real life like many many obstacles like from the uh onboarding part which I think okx wallet and other gateways are trying to solve to fragmented liquidity that's one of the issues that we're solving H shared liquidity between the chains um to many like idiosyncratic issues with like outages of blockchains uh you know optimism we have a vault there they were down for you know a bit of time and then outages with Bridges right like we're integrated with layer zero layer zero is sometimes there's blockages um and then like our users are cross chain messaging between layer zero and our own chain which settles all the all the trades and um sometimes there's blockages there and then users can't withdraw assets that's a big problem um and then when gas prices go up a lot right on different change then we have to I mean users are withdrawing deposits that's Crossing messages with us and then are we have our own chain so then the all the prices go up we might have to increase withdrawal fees things like that but with the the latest upgrade that's that's gone down quite a bit so there's all types of issues and that deals with performance cost and user experience I think the user experience like Tom said is is quite it's not there right we're trying to make the experience on orderly like that of binance where users are depositing from one chain a native asset withdraw from another chain also the native asset let's say native usdc and they don't have to deal with wrapped tokens due to any sort of bridging risk right I think the eventual goal is to have a DEX that looks like okx right uh and feels like okx but uh it's fully transparent it's Defi and it has even the the web three tokenomics that we love about defi yeah yeah thanks for sharing actually I have some like secret alha I will share with you about like the infinite uh liquidity for CR trending uh but by the way um so yeah so thank you for sharing so many like different like uh practical and theoretical barriers and OB obstacles around building things um the followup question is there are so many barriers so what's the singular points uh that you see to solve this issue like from your perspective also from uh yeah it could be either from your perspective or your prodal perspective or in general from the Divi perspective yeah anyone want to start with us uh actually Roma has lunch on ZK sync and uh you know everybody know zync is a new ZK L2 and it support a AA account and also pay master I think it's a big change and the uh in the TR in the traditional way we have to uh prepare is for for the guest every time you trade you have to sign and uh uh and but in uh the the cas syc you can pay with any tokens you want and I think is a big progress and also uh AA account also suppose uh suppose um not only not only the private the traditional priv private key it also U maybe you can use uh your Google account to uh to generate uh uh account on ZK sync and I think is a big Pro progress uh the user experience uh uh improves a lot and uh maybe it will be like the web to and everybody used it to use it web to uh Finance I think is a big bigger improve got it so uh so for uh user experience perspective it has already has like some progress right and then to basically approach the mass adoption Okay cool so besides like uh user experience and then like uh most of you are uh talked about like the performance barrier like the difficulties right um so after d d can upgrade do you see like there's um some improvement right now or like in the near future what do you see that could also help the performance things because like if there's that like different LTS even if they can improve the performance there will probably be some like liquidity fragmentation issue as well um so yeah anyone want to like CH in on this topic um yeah I can Ching on the performance um I actually don't think that we will have Cai change or like traditional Finance performance anyway I mean like it's not about like uh uh you know our technology not Advanced enough you just if you want to be you know like uh decentralized it's just hard um so I think like uh So currently I think people are trying different ways like olderly like um uh like hyper liquid AO they uh they want to build like really efficient ofch old book and then populate the data on chain uh that's one of way I think that's uh that's really efficient um yeah so and the other I think like P is like like us like p po we want to build everything on Chen so it will be like a making Market maker in I mean like just a different design like we just try different design of the O making Market maker I think just um personally I think that this two approach will cois it for sometime uh just like y Swap and Cai change they coist because they have different needs and uh yeah but uh that's just yeah in short I think performance cannot be achieved and then people just need to get yeah a little bit like side notes cuz um yeah I totally agree with that cuz like amm and Order books will be coexist forever because like there are in my opinion they are like serving different question like serving different problems so uh there will always be different Target audiences will use this type of like two types of things because like when n was uh firstly introduced it was supposed to solve the loone tail asset issue for the liquid liquidity because like usually in a traditional Finance if it's a order based uh there's no stupid uh market makers want like come in and actually take the counterparty risk of like tokens yeah um so yeah agree with that um probably like uh I'm also curious about like what's rain's um Point uh point of view on this because like it's like share liquidity book that order is currently building and but it's on chain and then it has to solve the performance issue right now right it will definitely be like less efficient of like beaing a centralized order book and I know like your teams also have the background of like traditional finance and then do like high frequency Market making for and also do like Asset Management so what's your point of view like doing a sh liquidity order books or what's the point of that and then um how the performance issue affect um your strategy or the Roat of uh orderly yeah I think we're trying to be as like it's all about users at the end of the day right so we have two types of users one are the protocols building on top of us whether the amm or centralized exchanges or whatever um and then it's their users so then that experience has to be good right for them to even want to use it and it's got to be good or as good or even better than centralized exchanges for that shift um from CI to Defi and that there's there's so many components that that that come from that it's not even just about us it's about the unboarding it's the Fiat un rails into defi I mean a lot of missing pieces s about kyc or ZK kyc so we're just solving for the the liquidity and chain abstraction component of this equation and we're um uh and we're trying to do it as in as decentralized and robust as possible Right But at the end of the day if the performance sucks um the users are not going to use it right so we have to consider that first um so our solution currently is an offchain order book um so kind of similar to DX uh V2 um and then it settles on chain our own orderly chain via op Stacks so all the balances And Trades are pretty printed P by block onto the chain which links via layer zero to all the other chains that we have our custody vaults so then if our centralized order book shuts down for any uh for any reason then users can withdraw their assets if they want based on this the data on on the Chain right um so there's no Asset Risk but eventually we do want to put the whole order book on chain I mean DX is a way of doing it right that seems to be working for them um so I mean there's different possibilities and I think the the technology is upgrading at a speed that will allow us to to achieve this in in near in the near future I mean I don't think it's going to be um it's going to take forever it's going to take many years to do this right uh and that so so point of Singularity I think is still that the experience has to be the same if not better than centralizing ex changes and then defi has lower cost right less less people needed and utilizes the community um versus like 4,000 uh person centralized exchange uh so then there's a big cost of AG here right and then uh the tokenomics are such that everyone is rewarded or I mean that that's the way it should be is for their contributions right whether they're token holder or they're Trader or whatever and that's also non-existent or barely existing in centralized exchanges so I think it has all the elements there the performance and the liquidity um and there's permissionless listings in defi which I think is key right so once that's all in place I don't see any reason that why the volume would not shift towards Defi and eventually even from trafi given all the you know cust all the custody Solutions and the regulations and the kyc all that stuff is in place right so I think that's kind of the point of Singularity I don't think it's going to take 10 years for that to happen I think it might be five or or even less yeah cool uh Jerry also come from like if I Rec correctly also confr trii from Dash bank right um so like from the traditional fin uh like Financial person perspective uh yeah what's the different uh yeah what's the singularity point for for you because like you have like both experience and C5 and D5 yeah all right uh I think these are from uh fix income perspective right because I think this is uh the big difference between this staps or these uh uh futures or per futures or uh fixed income it's just the big difference is like the fixed income in uh in real life we actually uh like I think the most of retailers they don't do fix income directly with the uh with the interbank market the wholesale Market because there is always like intermediary so that uh we go through like the banks or security house or insurance companies or a managers to purchase the fix income related products right but here uh in uh in defa is different so uh we actually have a direct access we allowed like permissioning from retailers and also institutions so I think the big difference is like we need to create something uh actually easy uh uh for uh retailers to understand and to use but uh uh at the end of the day I think for fixed income uh because of nature of the product still need uh like institutions to help to push like all for example like ETF right so we have to have a institution help to push to get the different level so s fix income right if we can like extend the year curve like you can get the year curve up to like uh six months 12 months or or one to three years of like interest rate on East on BTC then you will have a different scope of D5 markets right so I think this is something that we uh wanted to build and also the key difference is uh is like the fixing account uh we have to go to peer-to-peer or the book or the auction process because it's not like a swaps or PR that for example uh if you think of the uh the bank's savings account you put the your money into the pool right and then some people have OD account like overdraft to borrow from the bank right the bid off is wide or if you can think of like you put like 4 billion in RV and somebody borrow 1 billion from a what does that mean that means that uh the interest rate they paid by a for the 1 billion let's say for example is 4% right the depositor only get 1% right the the capital inefficiency on the pool actually make this uh the fix income is very difficult to work so it has to be the peer-to-peer for fixate borrowing and lending so I think that's the fundamental uh the characteristic of the uh the the instrument uh like uh make it like a uh a a the peer-to-peer efficiency much easier to understand against the the swaps or or Futures got it got it yeah thanks for sharing um since we are all talking about like barriers and difficulties to that um let's talk about like more uh much happier stuff like so what what do you guys see as the most interesting part coming to defi in the near future or at least in the foreseeable Futures within just like five years um yeah let's uh started from from th since uh you like yeah since option is like more complicated or more complex than build on top of uh on in defi space instead of like lower handing fruit like uh Dax or money market right so yeah what do you see as very interesting in the future uh like what I said uh before uh I I think uh the impr Improvement of the L2 and the the speed of the uh the enhan uh actually uh I think there is a big a big Improvement uh from in in L2 uh for the gas uh after then then then can upgrades I and I think Le Improvement and uh will uh decrease the barrier for the users uh to use L2 uh from the very beginning we use uh L1 L1 CH and uh if if you sign a a a transaction in zoma maybe it cost maybe $20 and but but it only cost maybe point one cent now so I think it's it's very good and and also as I mentioned the if the if the A and T and pan Master you don't have to uh prepare is for the gas and I think the user experience uh improves and which will attract more people to use the D5 and that's that that will happen in the new future got it how about lanux cuz like uh oks is probably uh the newest compared with others like you recently just like started tapping into defy and want to expand more so you probably be more optimistic about the space and how to see the space and then what's interesting that thing or next things that will be integrated into okx as well yeah I think uh the best the best role for oix to play is to sit between uh Central exchanges and vers and versus define decentralized space um we are I think we reaching a massive scale and scale that whether or not we can somehow Brides uh in regulat manner that in some portion of some components of Dex or or or decentralized space defined that can somehow be introduced to under regular space uh so we can tell you that uh we can tell you that's that that's uh regulation is always coming uh and I'm sure I'm I'm sure that's a You Can't Hide forever that's because permissionless it's decentralized so just no no there's no Regulators coming in place no uh the question is whether or not The Regulators have um the the r not the sufficient understanding of which element that's defin to be regulated and okay happen to pay a road that we got the license all the places and rather now we can introdu at least some portion of the Define to regular space that I think that's massive that could be massive to to bring in uh uh regular Capital into this space got it yeah regulation is another things that would be like the the next very important things in the space and everyone will face that um yeah do you want to comment on the the news yesterday last night about like okay it's removing to uh uh yeah gonna remove the all the Indian users no just kidding um no um yeah um so what's um yeah what's all like Reigns or like temples or jarett's views on the interesting part cuz like from my perspective let me get uh also share a little bit of about like my opinions on this because like it seems like it's been a while after D5 2.0 there's no new breakthrough in the space like oh yeah every you will probably see a lot of like new per Stacks every day and using a little bit different uh mechanism but most of them are just like competing the same liquidity basically right um or there will be uh projects like okay saying that okay I'm doing like option uh uh options related stuff like options vs or options am like there are more and more of that and then but eventually they will pavot themselves into like options perve or something right so yeah I'm just curious because like I still don't have an answer right now because like um what's the next Innovation that or what's the next experiment that we can do on Cham from the derivatives perspective probably like 0.5 options something like that or what pric is actually exploring right now um yeah do you guys have the any opinions or any idea thoughts that could share uh with with us um actually yeah you're right uh I think like most of the per gxs right now we compete on points or air drop so like just depends on the air drob like you know you can attract people definitely um but that uh will not last long and the um to me I you know like they are like many new projects like really interesting like infinity pool they have this like uh you know you can leverage up but you can you will not be liquidated I think that's that's you know different design and um and like Baseline the same you can leverage up you will not get liquidated um I think like a a lot of this concept actually you know like kind evolve from unisoft V3 the I mean like the XK model I do think that um that's probably like one of the Breakthrough that if we only look at on CH like uh I do think that uh uh someone can make it Pak also a good example someone can make it I mean like um really working for the retail I think that's the key so there new mechanism just like uh it's just too hard to understand just they are like certain you know you have to like um use it in certain situation but uh you know once you know like we have enough teolog that we can solve that then I think that will be a BL got it yeah how about how about Jerry because like you're building F fix right think um like you're you're also like exploring this field with uh like bringing a traditional finance things on on chain right and then it's uh from reclam it's still like lack in the space and not so many competitors so you definitely will have a very like U great thoughts that could share with us yeah I think uh definitely increasing the uh the new use case is the most important things I think we are expect uh the D5 space to expand right so right now we've seen uh even like the just like I mentioned earlier the volumes traded like a double triple even 10 times but what is the use use cases right so and then uh of course if we just uh take one step back and then look around like what do we want uh our like descendant to use the blockchain and what do we want them to uh uh to find this to to live with that right so we want some uh we want them to have a uh like a real estate uh also un estate at the same time so everyone on street they have a real estate they have un estate right they manage ex liability they match their duration of all this their own balance sheet for the corpor for the institutions or even for individuals right so I think this is the the key thing how do we get there right we get we needed to get there with the uh of course the most important is the fundamental infrastructure technology on this the the broad chain we are all mentioned about right this all like uiux or TPS or this uh all the different the process that we can L1 or L2 or even L3 right so we know that we it's not going to compete with the uh the TR fice uh efficiency but uh it has to be somewhere that we can uh we can reach reach out so I think uh this is something that I believe that this is uh the most interesting part to we see in the future is that uh you're getting more like mix adoption on this the unage to everyone got it and what okay so how about lenux and Rain uh and Tom do you do you think like what's the next interesting or derivatives that you see in the space and probably yeah probably could just be like theoretical or something like Ru R A based like Yas tokens or Baseline things like yeah sounds like yeah probably crazy or probably just there yeah yeah uh from my perspective I've been in trafi for 10 plus 10 years or so before going getting into crypto um but a lot of the Innovation can just happen from utilizing what's worked in trafi uh and adopting it to crypto right some of the uh and adding in a few components right like um the decentralization or the the user participation of it like amm right or um or like Perpetual or GMX right like the the user participation of it uh into the product right uh using the blockchain instead of uh centralized databases right like I mean in our case we have a chain just to settle trades like why can't that replace CME clearing say why why is Cle our Clearing House Is Not Just on the blockchain right it should um uh and I mean it's it becomes somewhat obvious for some of these like what we call Innovations in in in in crypto um that came from uh trafy but there's has to be adoption right and really leveraging the blockchain um so I think a lot of that is interesting and I mean options is a small space is huge in in trafi like fixed income right all all of this stuff uh and I think it's all coming right and and even the r rwa stuff so uh like I think there's I mean there's a ton of uh it's just like so basically I think my formula is the trafi concepts and markets uh reshaping that demand and product to Ci or defi fully utilizing the blockchain uh figuring out how to get users to participate in everything instead of a US selling product to users kind of uh goal right and also adding in tokenomics that really reward all the contributors which is what web 3 is supposed to be about and there's going to be very interesting stuff uh that gets built so yeah that's my perspective yeah I think I don't see why the traditional EXA class in finance that cannot be tokenized I think everything can be tokenized especially if ex inle so if think about that if uh think about let's say 30% or 50% of current crypto assets is actually we have the underlying of a based on underlying of traditional asset class like church bonds and dig and and and and and different kind of debt instruments uh I think that substantially increase or uh the peral of the entire define space and because of Define uh the accessibility of those kind of accx will be substantially uh increased and massive adopted by in global scale so everyone can everyone can just have a little piece tiny piece of treasury bills even the fact that without the minimum months of of of of of holding at the moment so I think that's what we call the real Financial inclusion uh right now the current obstacle for tokenization of the these kind of access proper is only related to uh regulation and right now the regulation is keying different kind of road block by Road Blocks so we I think the that that's must must be got got to be most one of more exciting much more exciting the current Trend got it so do you see that if the regulation gets clearer and clearer and being more surge so do you see the situation will be better very easy so the very first road block that we caar in terms of Regulation is what what is bitcoin right what is ethereum and how to trade whether let's trade on lak or trade on Central exchange or how to custody this kind of wallet uh this crypto assets the next step of crypto regulation got to be related to tokenization of US dollar tokenization of Treasury bonds tokenization of I don't know what kind of natural deaths and and that if that's can t noise so why not put in Unis swap amm water on trade in global scale so so probably in in less than two or three years um somebody from India can have a crypto wallet okay wallet and and buying a 80% foral holding treasure bills in US yeah that's a really great Point how about Tom because like options definitely in the frontier of advanced derivatives uh I'm very I'm very happy to see there are so many Innovative and uh interesting projects uh uh on Broad chain such as best line yes token but but uh and also there there were many stable coins uh calculation stable coins but they fail so in my in in R's point of view we may not uh uh think a new idea and just uh uh write it to the smart contract and release to the public because uh some someone may uh lose money in inside and I I'm not happy to see that so but but we will um we will see the uh successful experience from other projects and uh uh take the good good path and uh and to to our to our new project so uh I think that's that's what I think got it yeah thanks thanks everyone for sharing uh this idea that let me conclude this so it seems like uh like for building onent deror still uh having a lot of Hope right um and uh we definitely see there will be so many like uh like coming difficulties and barriers and um it seems like from the infrastructure perspective yeah the performance part right we are waiting for the performance to catchup um like for application Level we can also see that um uh there are a lot of progress around probably intent or AA actually uh making like more abstract the blockchain part more and um we we also see that like from after regulation got clearer probably like uh the regulated liquidities will come in and actually can solve like most of the problem since like liquidity is always the problem um so yeah it seems like still having a lot of Hope and then hope uh our audience also enjoying this panel and yeah thank thank thank thanks everyone for like joining this panel and then let's give all the panelists a great applaud yeah thank you June and thank you speakers