Decentralized Exchanges: The Road Ahead - TOKEN2049 Singapore 2022

good morning everyone how are we all today I think this is some energy coming back up I hope everyone's had a good conference day my voice kind of giving away and it's on its last legs but I'm glad that it's still intact for today's very exciting panel with our three amazing panelists so um just keep things off I know that we're a slightly behind schedule my name is David I'm a co-founder at drift protocol with a large Solana perpetuals decks right now uh so I'll keep it super short uh let's get this road let's get this panel started and other panelists quickly introduce themselves 20 seconds and then jump straight into it so Victor please uh this is very nice to uh to meet you guys here and uh my honor to to be a panelist right now so my name is Victor I'm one of the co-founders and CEO of carbon networks so kyber network is the Apec OG in the defined space right uh we provide decentralized we provide the cable swap as a decentralized chance we provide operation API for free forever and we have liquidity protocols which is better than uni swap right so yes uh hi everyone my name is Sergey I'm co-founder of one inch Network um actually one inch network was built on a hackathon and actually based on on kyber Union Swap and some other protocols we invented aggregation among these realized exchanges to provide the best rates for the uh for the G5 space due to my personal software engineer for 17 years uh with also some aggregation experience previously awesome hey everyone I'm will corkin I'm one of the co-founders of Mantra which is a D5 ecosystem that's been around for about two years um that encompasses a validator nodes business a cosmos Ketterman evm compatible chain uh as well as a kind of Finance section where we're going for international licensing on different jurisdictions around the world I'm also the co-founder of a company called soma Finance which is a U.S licensed and regulated D5 platform that also includes a multi-asset decks um that you know we'll be talking about as we go on all right thanks everyone and let's dive straight into it I mean the panel topic today is the road ahead for decentralized exchanges and the market has seen quite a lot of activity in the past six 12 months so I'll kick it off by asking the panelists and since the bull market last year have you identified any major changes in the market structure or key players emerging on the on-chain training environment and please anyone feel free to take this to kick it off uh let me go first oh for sure very obviously the bear Market is the is the biggest change right the biomarkers make everyone's more nervous everyone is more careful about deploying all the of the capitals TV house and things like that and also in the space there's so many hacks so many incidents also at the same time there's so many regulations uh incidents right so the the biggest change in in our own Services is we have to refocus on what the retails is looking at right now and what they are doing right now is not really about how to uh relate about how to raise with all the trends and all the market movement not yet but they are trying to stay back and try to spend more time you know to learn more you know to really get back to understand things because like we have been to the past two years with crazy movement and the speed of the whole Space Crazy Fast right so right now the people are staying and so many people is trying to learn more try more that is done is that a sentiment you guys would agree with so for my for my slide I can add uh yeah I agree there's like a lot a lot of people who try to onboard uh right now in crypto um here for example uh in some shops I was talking with some people and they said like I'm I'm looking how to enter crypto uh it's it's a beer market and it's time to build so like it was before like 2019 when we had started with one inch so um regarding like Mark makers and the whole situation in the market on uh on chain liquidity um actually we have still the same liquidity in East yeah I would say if you take a little take a look on the analytics uh it's actually the same liquidity if it's done Bitcoin is down and this is that's why we have lower tvl right now uh of course we had some incidents in the last time winter mute was hacked for example for one one 180 millions of dollars because of the of this tool which generates your nice addresses uh it's really kind of uh yeah insane thing uh I personally also was like I generated also multiple addresses I had the lack that I had no funds on these wallets it was all Need for for deploying smart contracts yeah this um current situation is from my point of view is is a good time to build yeah to innovate so I I mean definitely agree with the last statement I mean bear markets are the time to build you know the people that succeed in the bull markets are the ones that are building in the bear and the ones that survive the bear um but going back to one of Victor's points in terms of the need in the non-fungible bear um but going back to kind of the need and the push for regulation is one of the biggest things we're seeing both on the Mantra side as well as the Soma Finance side um we've always been you know very pro-regulation uh pro-compliance uh and seen a need for it you know even back in 2016 with one of the first projects that I started back then um and kind of one of the USPS that we have with Soma Finance is we actually developed an additional license on top of our broker dealer to be able to work with issue trade in a peer-to-peer Manner and work with digital Securities using any blockchain and any reg filing um you know in the US we've seen so much coming out with the SEC going after different projects um any of these centralized exchanges even that you know there's class action lawsuits that they're trading on registered Securities um so really the the whole movement in the space is moving towards having a more compliant a more regulated um and just a more trusted system where you know the end of the day Regulators you know they're not bad people they're there to help protect retail people um of course you know at times they can you know stub some of the Innovation and be slow um but at the end of the day you know some of these features and having things like kyc AML um or you know government and federal Insurance backing are there to actually help the users well I'm gonna quickly cut you off there because I think absolutely let's uh turn this to more product conversation to begin with and then end on drugs I mean Rex is something we could talk about for a long time I too am I like that I'm in Love by background so it's something I'm very passionate about but I think in the interest of the road ahead I want to focus on the product and what that means for you know your respective projects so with the change in Mark conditions maybe even change in Market participants you know how does that affect your roadmap if it if at all I know backstage we talked about privacy that's something you guys are able to share but really curious to dive a bit deeper into what that means for you guys as Founders and as project leaders okay so um the whole market movement does change the roadmap I mean before before the before the bear and also or around the world runs like we all think about how we grow the users and how we grow all the TV out and all the issues of the port liquidity protocols and things like that but now since the bear Market is coming in and everyone is focusing on building the user is focusing on learning right and um they also focusing on like how to survive to the bear market so in order for them to survive they actually need to want to learn more know more things understand more about the fundamentals you know to protect themselves from the next bull market because in the bull markets there's so many so much opportunities but also at the same time there's so much risk right so we changed the whole roadmap in order to provide um the place on cable swap for users to come in and then they have a place to learn more about protocols so that is one the second one is the place sustainably and consistently for them to make more money because in the past two years 2022 and 2021 we didn't really deploy that much of liquidity liquidity reward so right now we are using that in order to provide skills or model liquidity mining programs that's gonna last for one and even 1.5 years from now and even more so that is the focus we are focusing on providing a place for users to come in you know to make sustainable money for a long time for them to survive through the brand market so that is the strategy for a very short-term future vocabul got it it's a very economical um so again I know we talked also about all these hacks you mentioned winter mute sandwich attacks happening on um you know Unchained talk us through some of the plans for one inch without you know giving too much away yeah so sandwich attacks so um if someone don't know what it is it's when when you exchange in unusual for example or you use um I don't know other protocols um someone swap before you and swap after you and cut your maximum price impact which you set in the front end of June so for example and actually you lose like up to one percentages depends depends on what you swap which pair you need to try to mitigate its risks and introduce kind of Auto slippage which uh set up the maximal price impact which you can accept the thing is um since its flashbots were introduced um there are like hackers who steal money from people and it's a lot of money so we did an analysis from our site and we found out it's it's a huge problem and like in in a beer market um you need to kind of to to be very efficient you have to became very very efficient to survive yeah um and in our case um we're also looking how to improve the space how to make everything efficient what what we are already doing and what's happening also in the space how to improve it and right now the flashbot is huge problem from one side it's it's illegal from my point of view that hackers monitor the transactions in the mempool and manipulate the liquidity in the terms that the user got less than they actually wanted um and Yeah we actually we are working right now and a solution for this so it should come out in the next I would say month and it should also change the space and make the space more efficient very exciting will yeah so I think um you know in terms of the road map ahead it hasn't necessarily changed too much for us um in terms of the bear market and you know what we're doing in terms of the the decks or amm that we're launching is because you know we're licensed and operational in the US being able to have multi-asset so I think you know a big thing for for people especially in the bear Market as you need to be you know more efficient and smarter with how you're you know reserving your your capital is being able to have multi-asset so have public equities um you know one to one back you still get voting rights you still get dividends but now you can trade against you know different crypto assets um so I think you know whether you're someone that has you know Tesla or Google Shares on your interactive brokerage account and that's just sitting there you know now you can actually move it over to an amm model be a liquidity provider and actually earn fees and generate um you know different profits from people trading within the decks or be able to lend those assets out so you know taking a lot of the you know not just the decks but also just kind of defy ingenuities and being able to utilize them for traditional assets as well as crypto assets um so I think you know education is still one of the big things you know showing people that just holding ethereum and Bitcoin in your wallet yes it's smart and it diversifies your portfolio or even any public equity but you know you could actually have that work um you know that's in the past been reserved for people with you know a certain level of capital or shares or things like this but now you know if you have a hundred dollars of ethereum or Tesla you know you can put it into the amm and earn trading fees or you can lend it out to other people um so I think this is you know definitely one of the big things to educate people within the bear Market to be able to learn that you know passive income is something you can do whether it's with crypto or traditional equities and Dex is and amms are something that can help to you know financially include people that you know otherwise it used to just go to centralize exchanges got it so I mean in terms of the structural barriers reducing the structural barriers to adoption education is obviously one of them um what are your thoughts on the user experience I mean for a lot of people who might not be crypto native even interacting from a wallet to a blockchain can be quite quite scary so how do we think about that um yeah um before I get into that question I want to collaborate a little bit more on the attack surface because I think the main message for everyone now participate in defy and trading is be safe and survive right that is the that is the uh for the bear market and on the attack the circus is mentioned about uh sandwich attack issues on ticker size which is the trader right but on the liquidity protocol side liquidity provided side there's also an attack for example you put liquidities there waiting for the fees uh to be generated but then before before the trade happens someone just like jumping before and put all the liquidities there in order to steal all the fees and before that they can they was able to hatch it as well so that is one of the attack we just launched um cable swap elastic the protocols you know to prevent that so that so that is when the collaboration um regarding the questions like what is the things that stopped or or make it a little bit harder for people to really adopt more on the centralized change right um I think it's uh itself we have many the internal infrastructures right now right um right now users have to have a wallet they have to wait for the transaction to be mine so the user experience is not that fast this is not that good and also they have and also the the users they are exposed to so many risks the hacking raised the risk of being exposed to the data like they don't have the Privacy um like you keep the wallets like everyone knows how much money you have one everyone knows like what which tokens you are going to buy you're buying right now and at what price right that is that is also one of the things that I think it stopped people from using it so right now everyone is using decent Generations is because they find a lot of opportunities in order to make money this is not really about strategically trading this is about making more money obvious money like real liquidity mining with all the marketings and budget and things like that and so all the boom run but then now the bear Market is different so that is with the infrastructure the second one is with the protection because they they're exposed to so many risks but they don't really have any guarantees protection right for example if they participate in a protocol and that protocol get hacked um and then the users they have no idea what is going on and they they have no idea if they are going to be compensated after right and when you get into the bear Market you have to survive you get to be so careful right that's gonna be a huge barrier so I think the next big thing is maybe the insurance things for D5 so the protocols they have to get like some of the Chelsea they have to get some of the uh tokenomic you know in order to get into insurance so that uses retails user especially they can get more guarantee and get more safety so that is from my standpoint so I think I mean two points on that so one on the kind of the security and and insurance you know one of the benefits of of being licensed under a federal body is having Federal Insurance backing up um so you know again if there are hacks one with you know with public equities and things like this when they're on chain um in order to be compliant especially in the US you need to have positive and burn functionality so if someone does get hacked with their you know 100 uh Tesla shares you can actually burn those and then reissue them to the hackers uh the the person who is hacks wallet um so having like this kind of backing as well as you know Federal like sipc insurance which comes with you know Federal licenses definitely helps um and you know gives it some sort of level of comfort for for users but I think you know yes it is daunting for people to open up a web 3 wallet um of course there are things coming out in terms of you know social logins and having kind of shorted Keys um so that you know people can actually set up with a Gmail or you know one of their socials um but again this goes back to to education I mean there is really a strong move to be non-custodial you know having people control their own assets um we've seen time and time again I mean you know even most recently with with Celsius you know they claim that the user is capital and the user's money was theirs but you know when when uh kind of stuff hit the fan it ended up being you know once you deposit into the centralized system it's actually ours we control it um so you know one of the things that you know users really need to learn is that yes it is daunting um but you know educate yourself a little bit to see how it actually works with setting up you know metamask or web3 wallet but at the end of the day actually having control of your assets is one of the most important things um and that's I mean again even with the eso ethos of blockchain you know not really trusting some of the centralized Banks or centralized institutions you know this even goes now into you know different web 3 companies um that you know you should really have control of your assets and non-custodial is you know one of the best ways to to actually be running a platform and that's why you know what we're building on on both sides um is decentralized in the terms that it's still non-custodial you know users have access to everything um at any point and we don't touch anything we just provide you know the smart contracts the licensing and um you know kind of the kyc AML and making sure that we're above board I would like to add regarding web 3 ux UI my first touch points with Mira mask it was horrible um I I am software engineer for like 17 years I I'm full full stack I call it I I I developed front-end side of all I was a designer like uux designer as well in previous time back on software engineer and I didn't get it how it works you know like this onboarding is horrible and um what I can share right now um from our side we have we have we have built two wallets IOS and Android wallet and to to improve the space to import more people so you for example you can get such um uh such a cheap on our booth uh with a real real airdrop kind of of our tokens to play around with that and um the pro the problem is with apple uh store Apple Store doesn't allow us to release any new version anymore because they see like Europe you are like doing transactions crypto transactions in the app and you should maybe use the in-app purchase to sell nfts because you have nfts in your app and if if the people didn't buy the nft on your app you have to uh hide it from like remove it from from the wallet you shouldn't show it in the app so they they actually like they don't understand anything about that and so they're like kind of barriers which we have right now in the real world this is like apple who like control the App Store you there's no additional app stores which you can use um and in terms of Google they're better they understand it much much better so for example we had like with my co-founder Anton we had some presentation on Google teams and Facebook teams they understand it very well but uh yeah we have not only to teach the uh like retail people how to use non-custodian wallets and how they that they also should understand that they own the keys if they lost the key it's a high risk as well but we have also to teach tech companies like just big companies like apple yeah that we are here we are here to stay and we are we we need the support of these big guys because they control like app stores uh yeah no I agree I think the application layer is super important and right now it's being gay Captain I think thinking about dap store which I think is what Slaughter is doing makes a lot of sense um for the you know a couple of friends of mine a step and they're actually listed as a fitness app not a wallet even though it's play to earn right so I think it's so important that people I mean it's so important that these people embrace it otherwise you know you're getting really creative around how to get around it I do want to touch on institutions as well we've talked about big Tech Giants but let's move to institutions what stopping institutions from partaking in you know trading in a decentralized non-conserable manner it's something that you know we've struggled with they typically want custodians obviously the smart contractors what we've talked a lot about but how do we get these bigger players on board to platforms like yours so I think institution is way different from the retails right so for retailers they are focusing on uh opportunities learnings right and kind of like make more money and things like that but for institutions they are really looking at optimizations efficiency and also protection right which is protection is one of the biggest one right now um decentralized chains and also like in general they Define unchain Define um the protection for institution is not there like when you get introducing normally that goes with like high capitals capacity when you get when you get all the capacity of the money going in DFI and then you're exposed to the same risk with those guys retail guys right it doesn't make any sense so you have to have more protections there you know to get more institutions the second important one is actually the efficiency right efficiency right now it can comes with uh liquidity protocols we can come with different protocol in general but sometimes it has to come with infrastructure so for infrastructure you how to have um like blockchains or layer 2 layer 3 whatever it is you have to support on like very fast and efficient way for a day to participate in the in the finance space so that is one the second one is they they help to um they help to help that privacy protection right still again privacy like just imagine if you have like a billions of dollar energy deploy is on D5 and this is exposed to everyone like everyone knows that you are moving uh a billion of dollars from one ruler to another wallet for example you're buying some token right and then suddenly that is can can be seen as a as a price manipulation or something like that right it can be used that way so I think um in order to get more institution to define space we have to unlock that infrastructure barriers uh with uh which is with layer two or three and um and even more like application focused layers yeah and then we have to have more protections right privacy and then insurance as I said before yeah I would like to add um so from my point of view uh we need to compliant and regulate the environment for institutionals so right now we have couple of projects for example wasis Pro in us they're regulated they try also to build such an environment where everyone can deploy and I like this idea because Defy is about conversibility so um for example like we built one inch on top of existing protocols and this also need to have such an environment where everyone can deploy curve unit swap balancer kyber um and we can benefit from each other and provide great infrastructure yeah and fully in fully compliant regulated manner for this we need to introduce kycml yeah at least for institutions and I see also in the future that it's possible to introduce also kyc ml in in a normal define space it's kind of and then it's permission yeah but I guess everyone is qyc it on coinbase binance and other centralized exchanges right why not to be a kyc on G5 space with an nft yeah um privacy is very important uh so for institutions I agree um yeah they need to to hide what they do yeah we are also kind of uh I'm waiting for for the new product for kyber I heard yeah they're working on very nice um kind of private solution for trading uh what would be great to see that from our side so we are working on vanish Pro and we try to build such an environment it's not that easy it's really not easy um but uh I I think it's possible uh so we are also kind of far enough so we are going to release next year uh such a solution where everyone can just base a past kyc KYB and ML and participate in this uh compliant environment yeah and benefits from defy technology yeah no I agree I think for In traditional Finance so I was a Trader in a past life they have dark poles which essentially mask your size and that allows you to move large amounts of money without the rest of the market knowing or even front running that information and similarly for a lot of Institutions they want to see that there are kyc pools they don't want to be trading with funds that are sanctioned or touch something that they shouldn't have been touched um so the definite of challenges well I know that's something that you're quite a big answer of positive to you absolutely um and I'll be conscious of the time so I know we're running out but Sergey absolutely I mean hit the nail on the head it's legal and compliance um at the end of the day if you're a listed company if you're an institution you can't ever really go on a you know a fully decentralized exchange something like uniswap because there's just too much counterparty risk you have no idea who you're trading against um you know having licenses and kyc and AML and everyone coming on allows institutions to to actually come on board and participate within the D5 ecosystem that's been you know developed over the last two years um you know we're working with with a number of Institutions and you know kind of bigger listed companies whether it's either on the decks and trading side or even on the issuing side you know the first question that ever comes up is is it legal and is it compliant um and if you're able to to show that you know hey you know we have this licensing everything's kycaml you know on the issue inside doing private placements through things like reg CF reg D reg s reg a plus um allows it to actually you know compliantly issue tokens to you know us and international retail accredited institutions um so that's really been the biggest missing piece is institutions they want to come into D5 they want to be able to participate and they want to be able to you know take advantage of a lot of the the rewards that are happening um with indexes and amm But ultimately if they don't know who they're trading against it's impossible for them to do such so licensing kyc AML and you know having kind of the traditional checks in place is uh crucial for kind of the next wave of institutional onboarding great so I mean I know out of time uh and that's not on a high note because I mean love to get your thoughts on what you guys are most excited about in the next six to 12 months whether it be product or something else happening because I I just said before right like in the next in the next one year maybe even one of uh 1.5 years whereas Focus focusing on deploying um the money for user to have like sustainably um a place to to make more money um enough to survive to the bear market so that is the focus on the for the next one year but um let me take a little bit of time zero to uh one minute yeah sure um so from my site um I'm very excited about the merge yeah so we are green now with ethereum and uh in the next 12 12 months I would say we have we have to innovate we need to to make everything more efficient and then we will everyone survive um it's not about I'm not I'm not talking about no money I'm talking about dictator technology itself defined different technology itself and I'm pretty sure this is the Future Finance digitalized finances and um so on the summer Finance side we're actually gearing up to launch um we'll be doing a reg CF uh issue and switch will actually be the first ever um compliant U.S token offering to us retail people um within the next two months and then you know towards the end of this year launching the decks that'll include both crypto assets as well as public equities you know one-to-one backed and then having things like earn and yield type products but actually having them legal and compliant in the US um so it's really exciting to actually start to be able to provide products to us people where they don't have to worry about um you know the SEC or Regulators or um you know any of kind of the Watchdogs uh touching down on them all right guys I'm gonna have to cut the panel off right now everyone in the audience please give our three panelists a big one Applause thank you