J3 FA 08 Hadrien Charlanes Variabl

Hey my name is Adrian Collins and I'm the founder of variable so I'm gonna talk about stable tokens about margin area but hedging how to find stability on the theorem blockchain so making sure that you can have in smart contracts some stable values and on their values that is the way that we've chosen to reach that so variable is a noncustodial exchange for their values so that means that you can choose your exposure against the price of ether you know this on Treadway meaning nothing to distress way but UK you keep the custody of your funds you don't deposit on an exchange you keep your private keys so derivatives what does it mean the radius our contract between two parties where for instance he here a wants to to lower their exposure to to the risk of the velocity of ether and we want to increase it so maybe you're shot in the wrong and all both of them are in the contract that is the derivative contract so basically Bay B is the volatility of a so our values we've built this infrastructure that is transparent for so we are not completed as entrees but with that in a way that we are transparent and we are provably fair and we allow for traders to use our derivatives to to speculate on the price of ether for instance and also we allow for hedging strategies so you can use our veggies to to stabilize what you what you have so we can say that variable arrow atrium users or depths to manage the exposure can suppress velocity so really if you want to for business reasons or personal reasons if you want to express your risk or lower your risk you can use their values that and variable so actually variables studied as a research project unstable tokens it was called stable at the time and so I guess maybe you were for you were here for the make your presentation with stable token is a token that store is stable value that ties a stable value so two type of stable tokens I use where the token inside in itself is the Sun tries but its value is is relying on the Sun tries body so it's not a great token and the real ones that are relying on a game mechanism to ensure stability of the value so you have two two main kinds of stable tokens you have the seniority shares model that is basically a central bank where the mechanism is around the monetary policy of the stable tokens and basically you issue tokens when the price is too high and you buyback them when it's too low and you have the collateral based model that basically is like what maker is doing a bit and what we are doing it's matching people some that want stability some others that want to to take the other side from starting with distant prized assets tokens so against senora shares basically it's it's a central bank that has shareholders so you have two markets you have the market of shares and the market of stable tokens it's basically a company that sells stable tokens and buy it back them with a target price so they choose to buy back them or to issue new tokens to make sure that the price hits the target and this is a really great theoretical idea but it's really hard to implement because if the market cap of your of your stable token the total amount of table token issued is not very large you can get easily attacked by speculative attacks of people buying and selling your tokens now the collateral based models basically it's the idea where you have two parties here Bob and Alice both have tokens so ether or I don't know ESU 20 and out of these tokens a bomb Bob wants stability so he has one ether that are worse I don't know $400 he wants it it wants to keep the $400 and on the other side you have a lease that is ready to buy the volatility of Bob's assets so here Bob deposit in a contract some tokens at least deposits in a contract some other tokens it creates a pool a pool this amount of tokens is locked and Bob owns a USG stable value from this pool and Alice owns the rest so for instance if the price of ether is $400 Bob deposit any th so $400 and at least three th so the pool is for a th you have 1600 who USGS and Bob horns 400 USD worth of ether and I just owns the rest so for my news 400 divided by the price so you can see that it works as long as not like that as long as the deposit the initial deposit of Alice has not been fully used to cover the loss of the depreciation of the collateral so if did so for instance if the in this case if the price of ether goes from 400 to 100 usgs bob owns the the the hood the whole pool and alice owns nothing and if the price decreases again bob will not be able to have more than four either and so the the the peg is first so in this in these mechanisms the best friend you have is the liquidity so here let's say that the price has decreased by 75% if you can manage to find another person that will take the position of a DS then Bobby's table again and it keeps on and being stable and the worst enemy is the Black Swan events it's when you have fast crashes and that I don't know in a short amount solid amount of time ether loss 95% plus of its value in that case it's really hard to find people that would replace a DS and and it's really hard for collateral based model to survive in this kind of situation so here we didn't really talked about stable tokens we actually have a stable position Bob as a stable position of $400 but you have no tokens yet it just owns something stable but Bob could say so my position is stable it is worth 400 RS I tokenize that and then I can transfer them or something like that so when when when doing that you create one table and liquid stable tokens so from a stable position you tokenize and then you make it liquid if on top of that everybody that wants seed stability were mixed in the same pool a pool of stable positions it creates fungibility so let's say that you have Bob one with Alice one and Bob two is Alice - you can find way so that Bob Wayne and Bob - deposit in the same pool and at least one analyst win the sample and that way the stable tokens of Bob 1 and Bob 2 are the same so they are fungible so it's great shadows for trading for transferring sorry but these properties have cost indeed fungibility the fact that every stable token is the same breaks the contracts between Alice and Bob now it's not between Alice 1 and Bob 1 is between all the releases and all the burbs and so if a bad events happen the stability is broken completely whereas maybe if Alice 1 and Bob Wayne had a different contract that is maybe stronger they could have resisted stuff like that so this is the differentiability part and the liquidity allowing your stable position to be transferable and to to be tokenized that means that if some other depths rely on your stable token and it breaks the the bad thing packets to external things so basically when you think about fungible and liquid tokens it's a bit all-or-nothing bet if it breaks it breaks and it's bad so and on top of that I think that in a lot of use cases where the abs are individual one stability they don't actually want or need tokens they just need a service that is stable they don't need to have a token that it transferable that is tradable so yeah so stable tokens is great because you can use them to store a stable value but you don't need them to have a stable value and chain we proved it before with the simple contract Bob had $400 stable and you didn't need to have stable tokens on top of that you have UX friction the first contract I showed you was pretty simple it was a one step bob contracts with Alice and you has something stable we stable tokens you always have to buy them and then to set them in this kind of thing it could create you extraction or at least you can't customize the user experience to really feel the use case so for instance I need app that need that needs an escrow for a limited duration let's say that I mean I see oh I want you to be sure that 10% of my current USD value is locked for three years I don't I could buy stable tokens I could sell my ether that I've raised to have stable tokens and then lock demeanors contract but I don't need it I I could use the kind of contract that I showed you before you have also a lot of use cases you can think about supply chains that are using interim for the transparency for the for the reliability the the fact that it's hard to corrupt and they use bad contract as cross to store USD values and then they need to have a way to store USD on the blockchain but they don't really need to have stable tokens either so taking this all in account during the research we've realized that what is really important is the liquidity so this is something that the molecule DT you have the the better you will be able to create great products great hedging products and so that's wise we and and we realize that a stable token is actually just a specific Dairy values as I showed you it could be seen as a contract between 2% and and stable token is a special contract where when want stability and the other wants too long a bit but you can generalize this kind of approach to trade their edges where people can really choose the exposure so they can they can long and short choosing the leverage and stuff like that and by seeing a stable token just as a specific they're ready you actually increase the liquidity because you will you will attract also more traditional traders that want to speculate you they can use your derivatives not only to have stable tokens or to be collateral insurers of the stable tokens but they can also use them to speculate basically to they can use your derivatives as they would use margin trading on unsanitized exchanges so yeah it is I would say our focus we want to build great dairy values so that we can have liquidity and we want to be sure to fill the needs of the Sandra's applications and III 'im individuals that want stability so that is really our focus and we are both the protocol and in exchange so we are the protocol that make sure that the ratchets work but we are also in exchange because as I said liquidity is so important that we needed to have an efficient exchange so so if if you think really long-term if you want this to succeed you need to be able to compete with sunrise exchanges like crackin like bit max likes eme this kind of service providers that allows you to to to control your risk we need to get liquidity from them and we need to understand better the ecosystem and really what are the use cases so this is our focus we've been working on that for the last two years really working on so on watch exactly if you want to to compete with some trade exchanges one thing that is super important is that you need to create a web through experience that is as easy to use as a Kraken you need to be compliant or so if you're thinking long term you need to do things properly and you need to make sure that you are the blockchain is sold as something more secure that's entres infrastructure but that is not very very true so you need to make sure that the way you implement your des entrees application is really secure and on top of that you need it to be scalable if you want to compete with Kraken again you don't want an ETA Delta you want just the same the same kind of efficiency and on the project side and the financial product side you need your financial products to be as good as as as well as margin trading or as what traders are used to so and you excited we've been running in alpha for more than 10 months it's a run really simple derivatives it was a 24 hour contract like a bit like the one I showed you before with a peer-to-peer contract where one long and the other short on the legal side we've been in discussion with regulators for for a long time now under scalability the great research team and there is Vincent in the room I think has been working on an implementation of full stage channel that allows you to have really cheap transaction and scallop and any high throughput so and realized recently that it's really pretty close to what plasma is doing so at launch we will be really scalable on the finance side there have been some challenges to to be able to do derivatives on chain because you don't have access to to depth for instance or you cannot margin curl traders or stuff like that so there has been a lot of research on that side too so now the researchers as as it has the it at a point where prototype is working everything is set up so that we can implement it and then really compete with some trade exchanges we still have to know better how to use these derivatives the so basically the core component is allowing traders or individuals to long and short with the leverage but what we want to do is really satisfy the demands of the apps and individuals so we we are working on how to make sure that our derivatives can be used easily by depth so let's say you are crowdfunding up and you are raising a crowdfunding campaign for us residents we need to make sure that so a cross money gap is you open a campaign and you say if you treat cheese I don't know 100k dollars then the company is successful and and where the company is open you put the funds in an escrow and so for instance what we are what we are developing is the way so that as the sunglass app can easily through a solid ETL pie for instance say okay I receive ether I want to put it in a stable escrow or I want to open a stable escrow for one year I want these kind of things on top of that we also want to build the the fungible and and and liquid stable tokens but the first step will be to have USD stable tokens within variable and then maybe let it be more liquid so this is really that the our aim is not really to go to stable toka is stable tokens is a great tool but what we want to achieve is real you are Deb you have different currencies coming into your contract you have different flows of assets and we want you to be able to control that so yeah again as I said we we have a great research and and now we have to implement it this is the this is the challenge of 2018 making sure that we do it the right way so we are really excited because this year we are going to see the surprise an unconsidered exchange really fast and scalable so excited about that and we are finalizing the discussion with regulators so that we can be sure to be compliant and the other side of it is that we are interviewing a lot of the apps a lot of a tharam users to understand what are the need when thinking about stability when do they want stability is it for long-term for short-term what is the latins they want I just kind of think so if you think that within your dab you may need to store some USG but not necessary with stable tokens or with stable tokens please come talk to us we're really interested to understand how we could integrate in your flow how we can help you with your financial flows so yeah by the way we are still building keep we're still continuing to build the project team and we are looking for security profiles and architect profiles to be sure that what we built is 100% secure and match the quality of the research we've done so yeah that's it thank you very much