Pricing Risk in Liquid Collateral: LRTs, LSTs & Stablecoins

So this is I uh a couple disclosures. I am um I'm an investor in IEN layer. We're going to talk a little bit about LRT. So I wanted to disclose that. I'm also an investor in Puffer and several others.

Um and I did ask Amir from Puffer for some advice on these questions. Um I wanted to keep it high level and so let's go. We'll start with uh here we go. Circle's IPO showed there's institutional appetite for stable coins. How should that shift in market perception impact how DeFi protocols think about using them as collateral?

Are we underpricing risks? And you know this morning on um I was on a panel with somebody from S&P and they were talking this excellent moderator here and they he they're he was saying that they're going to start um rating morphobs. Um this is S&P, you know, the the rating company. Um so I think this question is very relevant. Um how should we think about this shift in uh perspective you know braiding DeFi protocols and uh are we underpricing the risk?

Uh short answer yes we are um underpricing the risk. I think risk in general in DeFi is fully mispriced right now. uh the fact they have people uh engaging in in USD based uh yield opportunities such as like supplying into lending markets that are paying essentially fairly lower than the actual treasury bill rate uh shows uh the non-logical processes that users are having. Um I think having S&P and other uh rating agencies come in and actually provide this kind of standard view of the market makes a lot of sense. Uh, unfortunately, I think they're all going to come out with a everything's kind of the same and nothing's that great or that horrible.

So, I'm not sure how useful is it was going to be for users that are not sophisticated enough um to actually be able to make like proper let's say better risk adjusted uh decisions. I was not aware of this this earlier. We have to talk more about that later. Sevilla. Yeah, I think uh the risk is always underpriced but uh essentially I mean if you look at USDC it is um fiatbacked stable and uh also because right now with the US there's been many regulations for yield bearing stable coins and it doesn't match that profile.

So uh maybe it can be the first IPO and um I think that uh also it's important uh like the the perspective is important because uh uh like inside crypto we're used to full transparency and uh when we speak about fiatbacked uh cryptocurrencies it's not something where you can fully price the risk on chain and uh you just have lots of uh moving pieces that you don't see and uh that's why I agree that we uh mispriced is the risk in in such cases. Uh and uh but from trefy perspective uh I think that there's more trust to entities who went through IPOs and it's just something natural. So this uh this can just bring more attention to stables to the industry itself and uh I think it also can be compared to the cases where we have let's say lending pools and uh in some cases there are just fundamental oracles and uh in this case uh for some institutional partners uh it's better because they see some things that uh let's say retail or people from crypto don't see for example if there's some deal with market maker who will close the gaps and uh uh and In this case, uh, fundamental oracle is better for them, but it's not better for pricing the risk or working with the with the retail. Okay. Um, taking a little so that was the softball question.

Taking a little a little step further further in here. Um so I kept this one very high level but um the question was with liquid restaking or liquid staking liquid uh restaking and other new stable coin models how has the definition of quote good collateral changed over the last 18 months and I specifically wanted to since we have someone at least uh who uh has some experience with Lido um and on the restaking side um I wanted to ask about um you know Lido is a is a is a trust me bro model right I mean it's perfectly efficient because it's a reputation based I'm serious right I I would challenge that to be honest they don't post collateral I mean light is back to one entirely in the system like it's on chain it's all what what hold on what happens if what happens if a Russ a Russian mobster shows up at you know blanks uh you uh staking providers and says, "Hey, your whole, you know, you've got the keys. You and your boys, give me those ETH." Now, you know, you're going to say, "I I don't know sufficiently enough about the lighter system. There may be No, no.

I I'll put my hand in the fire. They they they can't they can't unless they can forcibly slash themselves. They could do that. So, you could lose money through a Lido, but like they can't extract the ETH that they having because that's controlled by the LO contracts. Okay.

And the worst thing they can do is like somehow push a a bug in their code and essentially force slash the entire set which also would affect and that would be a loss for life. So how many individuals I I I'm I'm guessing that it's a security council type setup to be able to move the ether around for the yeah for the the system. And so the the it's the individuals at the particular node operator plus some other how many other people? Not even it's not even node operators. It's this is actually governance.

So this is a LDO uh that needs to fully rug the system and the system still has time logs and other things that yes I do don't so if they did a bit if they did a by bit type of thing it's possible um so by bit got hacked via their uh UI with safe uh no this wouldn't be possible you can't sign a single transaction and rug the entire light system I didn't say a single transaction no like you there this would need to be multiple transactions it would be for sure basically the the most amount of LDO So I would see is extremely rare for that to actually finally happen. So a couple months ago we did have a security issue lighter uh particularly on the um on the module essentially shows how much backing there is uh called the the accounting module um and this was a single ser which is five9 um that got essentially uh rugged um but even if they had gotten let's say this five9 threshold the only thing they grab change is I think it was like an 8 hour lapse of of accounting So you can't wreck the entire principle. You can change. Yes, you can have an impact, but it's say so minimal to the how big the system is. Look, I'm I don't want to take up all the time and and I appreciate the the the details and I would like to know more, but I think the the the short version is is that look, in the age of AI, who knows, right?

Like how how sophisticated these type attacks could be. But Lido is perfectly efficient because there's no collateral behind it, right? At least some of the other staking designs do require node operators to put up slashable collateral, right? And so just the broad question is what how do we think about what is good collateral especially in this kind of emerging institutional era. I'll let the answer on that one.

I can come back fight more on this. Yeah, I think good collateral is one that holds its value under different stress tests, market conditions, um liquidations and uh maybe for the case of LRTs having good liquidity over mainet and layer twos. So that's something that we constantly have to monitor. Um I think the other risk that we're also paying more attention to right now is more on the slashing side of things. So we will be supporting AVS that have slashing within the next month or two.

And uh that's something that we're having a lot of uh debates with with lending markets uh and obviously for ourselves to see like what's our tolerance. Um yeah, I hope that answers the question. Yeah, I also think that uh there's no good and bad collateral. It's different collateralss with the different risk profiles and uh it can be used in different cases. So uh let's say if we speak about restaking then uh it's also the case where like better collaterals usually it's the ones that have some uh yield uh and like stake teeth uh it's one of the most used collaterals right now in in restaking space um and um yeah I think it's uh it's also good to think about composition of multiple collaterals in some cases uh in restaking as well because if you have some governance tokens on restaking side then you would also want to have some stables in composition most likely because in this case you will just get less volatility of your economical security.

Maybe just one more thing that I would add is that um we're sort of I mean like most of our markets right now are with um correlated assets. So with like Lido ETH um mainly Lido ETH there's no rocket pool or anything and um for us over there that's when things get a bit interesting because we have a much higher loan to value than let's let's say with like stable coins. Um so with even for the uh exchange rates right so they don't even take into consideration like with market rates what's the price difference let's say with RS E to ETH because they're basically taking the exchange rate of ETH to the US dollar and then the contract rate which is basically pegged one to one to ETH um so there are some downsides to it um risks to it that are associated but uh also if we were to take the market rate then this is something that fluctuates on a daily basis and uh we would basically have a different risk profile every single day. Well, that actually leads to the next question which is what are the most misunders you know what are the most what is most risk misunderstood from a risk perspective across LSTs LRTs stable coins um so I would actually be interested in some more of these nuances that you were just highlighting yeah so most lending markets right now like a spark morpho um they all take the exchange rate so there's been a large deviation away from market rates so maybe this is something that most people don't know about um and then also for market rates right it's basically um an aggregated mix of the price of your asset across different dexes like unis swap or curve so uh maybe this is something that can be interesting for some people yeah I think yeah I think on the on the risk takingaking side also like something that's uh not well explored yet is slashing risk from the side of censured security networks because like it's not that much systems life with the slashing right now and uh there's not that much uh like it's zero slashing events for now. So nobody knows how to price them and there's just not enough statistics for now for that.

Yeah. But for the slashing side, I would just add that this risk is basically externalized. Um so we do work with different risk um curators to assess if there is a potential for slashing and then also we can minimize how much collateral we would like to provide for them. I would just highlight you know uh attributable slashing or non-slashing is now live on ien layer right I think this is this is going to open a whole new dimension of of design um I was it was I was curious that it wasn't uh hasn't gotten more attention but you know what one of the first conversations I ever had with Shirro was about this and how we could use this to make almost like hyperefficient uh over collateralized or you know minimally overcalized stable coins but today you were going to add something uh yeah I think the to answer your question precisely I think the issue is uh we are not understanding actual um inner mechanics of these protocols let's say LRGS and LEDs uh what is involved in staking and what's the difference between let's say a node operator with 10 years experience compared to someone that has sp up a node in their house yesterday. Right now we're valuing them essentially the same at the same level.

I'm sorry. Repeat that one more time. That one we're not giving a risk we're not assigning a risk premium to um to operators uh in the market. Um give you example of Lido. Uh, Lido has a whit listed operator set.

So, I think it was like around 20 or 30 note operators. They're considered the same, but they're not. We just by knowing that there's 30 companies running around, there's no way that they're exactly the same how they're operating. There is one that is going to be better than the other. We're not we're not valuing that.

Uh, when it comes to LRTs, we're not valuing the inner operations of that. Also uh if we expect them to do um restaking of financial insurance um financial insurance as as you know more than me is really be difficult uh to actually price correctly. Um if you're comparing in a market where price on itself is uh undervalued um you're essentially going to have to fight and bring it that to that market value to offer your services. Well essentially you're going to be risking you're going to be a negative uh expected return essentially. Look, while we have you and not to make it over lidocentric, but you know, I had this conversation four or five years ago with um Justin Drake actually and you know, one of the things he highlighted to me as a risk was the govern the risk of a governance attack on Lido.

Um yes, that's actually been mitigated with dual governance coming live. I think right either right now and like in the next coming two months it'll be live. So essentially ST users will have the possibility of vetoing any power any sort of decision making from LDO uh which again it's a very um valid concern and when Lo I think it was like year ago reach around like 30% uh market share made a lot of like worried about people which absolutely makes sense. Um with dual governance you have in the position where it's like because there's so much like teeth more compared to uh and you get to have this uh essentially uh you can always like and glad glad to hear that. I know it's uh it's taken a long time.

Um well, it's been like four or five years. Um agree. Um all right, here's one. If you were designing a new protocol today, how would you structure your collateral mix? I heard down here this uh I think it was uh Nick who mentioned a mixture of collateral.

I I think that that's uh uh something worth digging in on. Um how would you design your um or structure your collateral mix between LSTs, LRTs, and stable coins? Yeah, I think uh it's u yeah the thing that I mentioned about the mix uh of assets, it's the case uh for AS or Sense, but I don't think that uh it's uh something universal and it really depends on the product you're building because even if we're speaking about uh such cases, this could be let's say some kind of insurance protocol built uh with a restaking mechanisms. In this case, most likely you want to have the same assets that you will use uh on the side of those who are buying insurance policies. So this uh I don't have a good answer for that because it really depends on the mechanism.

It really depends on the protocol you're building. You don't have universal answer on which collateral you want to use or which set of collaterals you want to use. But uh like generally speaking you want to have uh to lower the volatility of security and also you want to have if you have some mechanisms of uh repays or something like this uh you just want to use the same asset. Yeah maybe more on the lending market side I would add uh more dynamic increases of supply caps right. um that's something that we always have to struggle with like if we hit our caps or like as an example if we want to hire a loan to value that's it's always something that's a bit of a a struggle and uh we can see that for example like with Kelp obviously we have other competitors like Ether and Renzo who might have different LTVs but at the end of the day we should all have the same um so I think this is something that's still complex but I think it should be pretty standard throughout I will run the most boring pro.

It will be the most liquid assets I can liquidate as soon as possible easily as possible. So I would say ST on the side and then the most boring as um stable coins that uh give me yield. So probably as USS um because I think I think something that we keep forgetting is things go wrong all the time. So it's not a matter of like if it's a matter of when. Um, so that actually um couple of comments there lead me to a side question I had.

Um, which is um, you know, LRTs also tend to have longer withdrawal periods. um you know we haven't had this problem yet but I've you know a related problem that the ETF providers are actively working on is how to have fully staked ETFs but also provide sufficient liquidity. Um you could think about that same framework being at play here uh uh from from a stable coin perspective and I'm wondering if any any of you have some uh helpful thoughts here. I think it would even inform the the ETF providers. How do we think about um making sure you have sufficient liquidity for you know unstaking uh delays when the beacon chain you know uh delay period goes up etc.

I think it's kind of a double-edged sword uh because you know in the events of like a black just like a black swan event if everyone wants to withdraw then that can be an issue as well for the um LRT or like for the LST. Um I think on the other side as well um I do see it from a user perspective and uh with RS E actually we're coming out with instantaneous withdrawals um the second week of uh July. So that's something that's coming soon. Sorry. How does that work?

So basically uh it's a taxable event that if somebody wishes to withdraw then they would have to pay a premium and uh it would be facilitated not instantaneously but within 24 hours. Yeah, I think maybe I can add a bit more details on such mechanisms because uh it also can be solved with some kind of intermediary escro contract that can work with let's say market makers that will be someone who are basically crediting LPs who are going to withdraw and who want to get flesh withdrawal and uh there can be also mechanism with mechanisms with like if the assets uh are liquid then it can be something working with cow swap or whatever or pools working with a withdrawal queue on the of the protocol. So there could be multiple solutions in this case. Here's where you value a lot the liquidity of a token. So uh if you compare if you think about ETF provider, you would be pro most likely looking into staking with a institutional uh node operator, they would uh stake 100% of your ETH.

That means that whenever you want to liquidate or essentially you need to unstake, you would be forced to wait for the beacon chain uh with queue essentially. Um and Sophia everyone's trying to unstake then you you're looking at like a two weeks uh kind of delay. Um just tooting my own horn on Lido. The fact that there's a buffer there X amount of ETH is running around the system that need to be to uh meet withdrawals uh at like a pretty big size uh price you a lot of value like if the moment you have to wait for the beacon chain I think that's already too late. either you have to serve yourself because your protocol has that basically that buffer with like of like inactive assets or you have market makers or you can actually withdraw liquidity from um you basically are able to have someone else like a market maker take on the timing risk uh they swap they give you ETH and they they keep the the risk of having to withdraw from the Bitcoin chain.

Okay. Um I think I've got that. Um, you know, this is um this is kind of a side a side topic, but I was approached uh recently by um a group that basically told me that some firms are doing some leveraged Athena trades very highly. I don't know how familiar you guys are with this this and somebody was basically asking me what's the potential kind of tail event scenario of a beacon chain you know delay going up you know in in essence there was this idea that like maybe you could have the opposite of like a traditional move in the basis because um you know you would have such a large uh uh demand to unwind futures and And um look what's taking positions basic basically. Have have any of you been had this conversation?

No. No. I think the as far as I know Athena doesn't necessarily have that much of the collateral on the staking version. It does have hold a big amount of ETH and shorts on ETH. Um but not necessarily on the staking low as far as I know.

I I thought I thought it was all states. No, I I don't know enough in this position to actually tell you on this. I think the biggest concern with the Tina was always which they've been able to show that they're able to always meet redemptions and always unwind those positions which again we I think I put myself in this category that um I was always concerned their connection between like onchain and offchain would at some point break or at least like uh disengage enough for there to be a gap of like value. And even in the worst case scenarios that we had in the last few years, they've been able to meet with redemptions, even with biit uh at that point, their model of having their funds on a at a custodial level rather than with them meant that the principal was not at risk, but the P&L was. Um so that didn't that didn't impact this situation, right, that I'm talking about.

But uh no, no, exactly. Um for your case again, it's similar to any sort of like mass, let's say. mass withdrawal event with everyone. Um that if if happen uh again as long as you have enough people take being willing to take on the timing risk uh people get to get off with just like a simple haircut. Um but it when it comes to uh leverage positions if this people are are using mark uh lending markets so for example take market market rate rather than fundamental rate or exchange rate uh then yeah those people will be sadly liquidated uh for that momentary uh process again for stake mostly all lending markets are on the fundament fundamental oracle therefore they wouldn't uh suffer okay um so maybe there's not a lot of visibility with these delta neutral strategies.

I mean, uh I would kind of argue that I would also be very interested to know actually. Yeah. I mean, I I haven't spoken to a guy in a while. He's he's very smart guy, very sharp, and they've executed, you know, extremely well. But on the earlier panel today, you know, I I noted that I think about it as it's like a high yield bond really.

I don't think about it as a stable coin. um because the risks as far as I can tell appear to be, you know, cascade risks of the exchange pos of the exchanges that exceeds the um you know, uh insurance funds and operational risks. You know, this thing is getting so big, you would assume that there's like a massive team of like 50 people, but apparently it's still just like a handful, which is which is amazing. Um but yeah I mean but uh I I I would probably argue because uh if we speak about uh exchange risk it's there's no counterparty risk in this case if we speak about those neutral in most cases just because there's uh of exchange solution uh in the middle like uh copper with or fire blocks and uh in this case uh like nothing is transferred into exchange and if uh something will break on the side of exchange and there will be not enough liquidity or something only some small portion of yield will be lost. So if the entire if um I don't know darabit I mean derabit has it's it's arguably a different principle will be lost in this case.

Okay. Um I'll take your word for it. Um so you're just saying you're just saying that uh that that uh Athena does not have any collateral at risk for its positions. it doesn't have principle at risk on on centralized exchanges. There is only the risk for the yield for uh some uh small period of time.

So again just to clarify if all of BitMEX went to zero, Darab went to zero um and Athena was on the winning side of a trade, right? there and there was no there was no other side to pay out who who is eating that so uh in this case there's intermediary solution with MPC which uh holds the principle and uh basically the the trader is getting credit line on the side of exchange so the right just to clarify this yes they will lose the profit you don't lose the principle cuz that's on copper but you lo the piano the piano is going to be somebody is going to come suing them saying hey like you you owe us money because we didn't get paid out, right? Or you so but again, you're fighting on the PN on the profit, not on the principal, which a different discussion, I would say. And the the settlement usually it's every less than every 24 hours, right? Okay.

Um, I have to think about that. But, um, I mean, I think what you're saying is like, you know, in the event of large I still I still find it hard to believe that in the event of a large cascade. Um, so you always lose some money. And by the way, even if you say like even if you say like that they don't make money on the on the or don't make the profit, that that is a that is a meaningful loss, right? I mean because their profit would be their short that means the price of ETH would have or Bitcoin would have collapsed and the other side of the trade which is the hedge went to zero right and so it's hard to say that that's not or to gloss over that because that means that the entire system is basically collapsed yeah but it's it's different type of risk when we speak about exchange collapse and principal protection then principal is still protected but it it can no I specifically said that you So that it's cascade risk, right?

That that's what we're talking about. So it's cascade risk and operational risk on from from Guy and his team's perspective like uh so you mean what will happen if let's say ETH price in this case will go down or what's yeah most people don't realize this but Darabit has I was the first institutional person on Darabit. It has been bailed out five times more than they ever admitted. I know about 70 to 80% of them. So, it could have been even more than that.

And they would always the founders would just top it up. The the uh the treasur the uh the insurance fund, they would not always disclose it. By the way, I liked I liked those guys, but they wouldn't always disclose it. But if you notice, it never really ever grew. You know, it never got really big like the BitX one did.

And the reason why is because it was they basically set the liquidation parameters too loose. they were they were it was trying to be the kinder gentler BitMax and it was like basically too kind and so they had to bail it out many times and the last time I don't know if this is out in the public but it was you know it was like it was like 80 million I think right and um so I think you know to write off cascade risk entirely maybe in the case of Bitfinex you know this is a a moot point if you believe that you know, under no scenario are the founders just going to walk off with that treasure with that insurance fund, which has always been a question I've asked and have never gotten any hard answer of. Right. If there was a collapse of BitMX, why would they why would they just like walk off with the with the insurance fund? But, um, yeah.

So, I mean, like the the cascade risk is much more material, I think, than is probably fully appreciated. And I've um you know I it's it's it's it's easy to not worry about these things when things are great but the market freaked out when for a very short amount of time circle lost access to its transaction accounts right um for what was less than 15% of the overall I mean people were losing their minds right and a you know the the narrative was for a year after like oh people are going Tether because they don't trust Circle, right? And that was not really a big deal in my opinion. I I was kind of like laughing that whole night frankly. Um but that people were so mind-b blown by that makes me worry that you know and this is kind of leads to the last question which is you know there's a growing assumption especially from institutions that liquidity begets liquidity.

Do we agree? And if higher yields accelerate those network effects, are we just setting ourselves up for more boom and bust collateral cycles? I would say yes. I would say I agree with the statement of liquidity begets liquidity. Uh at the end of the day, DeFi just for the extension of being in crypto um provides a I think quite an unparalleled uh distribution channel for capital.

Um but it also means that you have winner take all situations and if that winner that is taking it all is doing it on an unstable um proposition or just like unsustainable unsustainable business model they will eventually collapse and we will have a bust uh because again we don't price risk correctly and we're going to go chasing the highest yield. Let me just say as the com as the you know the trifi guy who was at Bear Sterns you know Wall Street gets this wrong too right you know the the you know Mel Leman Bear etc had their their balance sheets levered up 50 to1 because home prices never go down so what could go wrong with having 50 to1 of your balance sheet in and in and you know Fanny and Freddy MBS Nick Nick made a comment earlier and so I've been waiting for this question because you made this comment earlier that on the what makes good collateral you said interestbearing or high yield bearing collateral so I was curious to to get your take on this yeah I think it's uh it's not always the case when like liquidity gets liquidity because right now I think the market is changing a lot uh with institutions coming because distribution channels they start making much more sense than before and uh like we we see examples when models like morph for any curated model starts getting more attention and I think longer term with the curated models when let's say let's imagine that revolute is building something and I think it's it's already building something uh with with crypto I think they will not care about existing distribution channels in crypto and they will have their own distribution channel so uh in this case they will basically have the full vertical working with most likely some existing protocols because I don't think that it makes sense to build everything from scratch because of the time to market uh in the first place and I think there will be just multiple ecosystems with multiple assets and uh with a separate kind of silo distribution channels. So in this case it's not a situation where like winner takes it all. It will be multiple entities with their existing ecosystems and with different sorts of assets uh different sorts of assets both under the hood and for the clients. And uh in this case I think that it will start top down with uh wallets first.

Then the next step it's uh lending markets and stables that will be issued with maybe some local currencies or something like that. And uh like end of the day there will be uh roll-ups uh with uh different ecosystems because it's uh probably one of the best ways to work with the regulations because you want to control the sequencer to work with compliance. So end of the day I think there will be multiple ecosystems with within multiple jurisdictions with semi- siloed uh EVMs and uh L2s and with their own sets of protocols and assets. Yeah, I think from my perspective it's kind of a multi-layered question. So like we're seeing a lot of different stables right now, algorithmic stables, fiat, bond, uh over collateralized, but uh much more yield bearing stable coins.

And I'm just going to go back to my original point which is that we have very little visibility onto these different strategies as you mentioned uh as an example with Athena. Um and the yield might be enticing right now but I think there should be more awareness as to where this yield is also coming from. Um yeah that's my perspective. I are the algo sto coins still out there. Do we still have those?

What? What? What? They pivoted. They pivoted.

What's that? They pivoted. They changed their models. What are they now? Over collateralized.

Oh, I see. Okay. So, we're safe. Okay, we have a few minutes left. What I mean, by the way, when I started uh working on these questions, I realized it's a it's a it's a large can of worms, right?

Um, and I didn't I didn't feel like I did a sufficient job. So, I'd encourage we have some extra time and encourage all of you to kind of tell us more because I've learned just being here. Sure. I told you he's a great moderate. Yeah.

I have a question regarding the because we are talking about risk and I think Sophia talked about uh one of the risks that hasn't been mentioned. It's the oracle risk uh which has been quite hectic in the in the past few months because we have seen oracles which teg for a short amount of time which then cause liquidations and then on the other hand we are seeing protocols which hardcode onetoone uh various assets which also can be a risk especially for example if one protocol collapses. So how do you deal with uh oracle risk and how do you deal with the hardpegged assets that some protocols use? So we basically support market feeds um across mainnet layer 2s but when it comes to for example lending markets um it's not up to us to choose uh which type that we would like it's mainly um exchange rates so I think this is more of a good question for lending markets for us I would say it's convenient right because then we don't have to face uh everyday sort of daily fluctuations and maybe we have some questions about that uh but I do see your point that at any given point in time even with like LSTs and LRTs it's never one to one pegged um at any single given point in time uh but it's a risk right that we have to mitigate with the LTV and etc. So um in the case of a jeep, so with kelp, we've never had one.

Um our competitor Renzo has back in last May. So uh it's something that can happen and uh yeah like as you mentioned like these things do tend to have a cascading effect but um the more your TVL grows the the more that becomes a higher concern. So I think for us what we do make sure of is that we always have good onchain liquidity across unis swap curve balancer to support lending activities and looping. So that's my answer. Yeah, I think it's it's pretty similar on our end and uh it's mostly about working with the secondary market and also implementing the mechanisms with for faster withdrawals or flesh withdrawals and uh I think this is also something that supports uh the lining markets in terms of liquidations and uh this is something that uh we also have in uh in the protocol.

Let let me just go over time to talk about this. Um the big issue has been the trust me bro situation that we've had uh protocols uh doing the trust me pro on the oracle provider and then we also have users doing the trust me pro on wherever uh vault they actually uh deposit into money. Um I do get your point of oracle that is giving the incorrect price again that is if you sat down and looked at that chain link oracle and knowing that it looked at like two pools in arbitum then you're like okay that's going to bound to happen. Um but at the same time it's from the user perspective where they go onto vaults that get spun out immediately because a new asset came out into the market. Uh where the creator did a hardcode of one uh which again I think that's sloppy work on one side.

It's also sloppy work on the user to accept that. Uh we can claim that before it was difficult for a user to see this on a visual UI. Nowadays you have like breakdowns of this information. Uh so there's really no excuse like you're taking that risk. you should kind of we have this issue where like we kind of push all the responsibility to the user which maybe is not the best.

Um but again nowadays you have a certain level of like let's say human level of auditability where I can go into Chronicle I can look at the website I can look at their their Oracle price feed and I can see who's buying data from where is everyone going to do this? Probably not. Um, but I think that the biggest issues be more like this idea of Oracle misconfiguration rather than the Oracle failing where it's supposed to. It did what it was supposed to, simply not what you expected to do. I think that's it.

Thank you. Thank you. Thank you.