A Random Walk Through DeFi with Ribbon Finance

hello everyone thank you for joining us in this meetup for may today's meetup is entitled a random walk through defy with ken chan from ribbon finance for those of you who don't know him he's actually malaysian and he's been a member of ethereum malaysia since a long time ago he then left on his adventures which i'm sure he'll share more about later um and our sponsor for today is ken which is also another malaysian company those of you who might not know and as usual oops we will start with some announcements and monthly roundup so some major announcements that we want to share there are some uh very kind volunteers within the community who've offered to give out uh crypto do it writer uh which is happening next week and uh we were kind of uh inspired by this idea recently by a couple different projects that essentially are paying people to do things so for this etl dwight writer um the details haven't been confirmed yet but basically what we will be giving out are a list of tasks where uh it's either let's say writing down a simple guide on let's say how to set up a metamask wallet or how to farm on an amm so those kinds of tasks possibly in english and malay and for those of you who do it and do it well uh you'll be rewarded with uh some crypto do it right here uh it the the exact details will be announced uh soon uh before rio but yeah so keep an eye out for that and um if you want to share it out to any of your friends uh please share it like if you're already a big enough whale that you don't need the little bit of it right here that we can give you uh please feel free to share with your friends so that they can learn a bit more about uh crypto as well uh second thing is uh there's gonna be an nft art talk uh on the 9th of may it was supposed to be in person but because of the recent mco stuff they decided to make it online they will be giving out a link later but these are the same guys who have been running an nft art exhibition i think somewhere in pj and we're looking to i honestly don't know them uh too well but we're looking to find out a bit more about each other and then maybe eventually uh in the future we can work on some partnerships or some cool activities uh together with them uh the third announcement is that since uh there's a bunch of members of the community who've been very interested in mev recently uh there is this uh eighth global event that's happening starting tonight at 11 30 p.m uh all the way until like early in the morning in our time uh but basically it's about mev and uh l2 or mev and scaling so if you're interested you can sort of uh keep uh up overnight and and watch that okay i'm gonna pass the mic to iman to share on some monthly roundups so thank you hari so some of the monthly roundup that happened this month is well unique vt launch uh with some new mechanics and this is actually a screenshot that i took on twitter about the nft that you will get that represents your lp position and it's actually moving but then it's not in this slide so you see it so it's quite cool um next is there's a down rashi that happened last week which i did participate because i was looking for you know some uh some dogs to join it has ended but they have still but they have still all the details left and you could and you could take a look at all the dogs that have that participated and maybe see any doubt that that you like that you want to contribute or just or just participate in um and then uh hurry maybe i'll let you um explain this one um okay so uh as part of the same uh global there's actually a hackathon going on about uh scaling so there were a test one day test net that was done with a total of seven clients uh three if one client so that would be like your gaff parity nether mind and four clients from um e2 and and so between them there's 12 different combinations and they all ran together a test net that basically uh prepared for the merge when each one is gonna merge into e2 and uh it turned out uh really well uh i think they said that soon they'll do a slightly longer test net maybe like seven days and um the word uh going around is that we are optimistically targeting uh end of the year or early 2022 for the merge to happen so this is when uh proof of work will not be there anymore uh for ethereum and all the sort of if anyone of you are environmentally conscious uh can rest well with your conscience that we're not gonna be with our proof thank you um so next is so the first year one loan is finance on meters so i look this up so um a proposal was passed um on maker where where new silver land can make their own token to be used as one of their collateral in the maker uh download or at least with maker dao and dai are all uh crypto assets but they are now going to be uh taking in all these real world assets so that's like all your your gold your silver your property and that's a big a much bigger market than the crypto asset as a whole so um it's good for uh dye and make a dao and because maker is such a big part of the whole defy space i i it's a big thing for um for d5 as well uh so some local news so sc has brought access to rapidano so for any of our community members that are using tunnel so maybe you should try to settle your business there uh because eventually um the mission government will block me from accessing this website i know some of my friends do use champano uh quite a lot um so next is so as you have given uh bitcoin cash the green light to be listed in malaysia i i don't think it's ministered on the um famous exchanges yet but yeah so um do in mind that you can now also buy bitcoin cash from the uh approved uh exchanges in malaysia and last but not least um one of the news for a population founded um startup or company let's say so so this one is about a crypto worship in a platform that has raised uh 1 million in funding in trying to create likes like a sort of um social media powered by tokens which has smart users i'll post a link for the upload all the articles later in the chat for you to check it out um i think that's it um so back to you yeah so if anyone knows the torum team uh feel free to share uh what you know i think i very briefly messaged one of the members on facebook a long time ago but to be honest i haven't really explored too much about their product so yeah it's always cool to see more malaysians in this space and a quick note on the uni swap uh thing that uh i wanna mention just now uh the nft is actually uh there is an svg image right on the token itself uh it's in base64 which you can um decode or convert into an svg and then you'll be able to see the file so it if for those of you who joined us in the nft talk from a couple months ago it's it doesn't have this sort of vulnerability where the actual image is stored in some potentially centralized website that can go down uh it's the image is literally on the uh the token itself yeah so um without further ado uh we're inviting uh ken ken chan from ribbon finance and um ken maybe you can give like a brief introduction um we can go a bit more when we have the five side check but a very brief one before you go into your your slides hey everyone so i'm ken the co-founder of ribbon so ribbon is a structured product protocol for d5 so previously um before founding ribbon i worked at coinbase as a software engineer and before that i was doing research for silica blockchain so that is like the background there so yeah shall we dive right into the slides yeah man let's go let's go can you guys see this let's just zoom in a bit okay so how do i go full screen you can click on visit yeah okay all right so today we're going to talk about ribbon finance uh we are basically creating crypto focused structured products so we'll talk a bit about what structured products are later on but first i want to walk you through what are yields in crypto first so when when people first join crypto the common question or the common theme is that it's a scam because obviously look at the apy it's 155 per year so obviously it's a ponzi scheme so obviously looking at these numbers we know that crypto has high yields and these numbers here are from badger finance so first we have to understand why these high yields exist in the first place so there are three broad categories where these yields come from so first is the demand for leverage so when a trader wants to make a margin trade leverage trade they would basically borrow crypto assets and and um invest into the market so there is a very huge demand for this so this is what's driving a lot of stable coin apis the yields on stable coins because people are boring stable coins to essentially buy these crypto assets like bitcoin and ethereum so that's what drive drives a lot of value there then the next is providing a service so this is providing liquidity on a union swap for example or it could be staking on live peer for example so anytime you provide a service you get a return back at you so and the final one is slightly more controversial but relatively new it's with equity like tokens or governance tokens where uh for example you would have compound tokens that gives you rights to governance in the system for major upgrades right on top of these yields what happens is that in d5 what we have right now is yields on yields so for example you would land assets on compound to earn comp they are native token and if you lp on sushi swap you'll earn sushi as well so you can see that you are earning yield on both lending and also their equity tokens so is is this a ponzi scheme no i argue no because uh essentially they are rewarding you to participate in the system and you get to have a say on what the system decides on so i wouldn't relegate it to that but what's more um controversial here is you sort of have these ponzi nomics games in uh unisop or sushi swap where it's like um 155 uh a year return on yield and you can see the tooltip there it says eighty percent of it comes from dick rewards itself so a large chunk of that reward is sorry [Music] yeah a large chunk of that reward actually comes from lping dig and earning dick on top of it so it's a bit it's a bit like ponzi nomics where it's like oh i have to buy big token to lp dick to earn dick so it's very recursive and there is this ponzi ponzinomics-like dynamic to it so the argument here is that it's not really sustainable at all so we see this breaking in a few protocols this is her hedgic for example so he this core death of hedgic recently created this blog post saying that oh we need to rebuild our incentives program we've been paying out two people too many hedged tokens that's why the hectic price has been going down a lot so the quote here is we cannot spend our ammo in the first two years i thought that was really interesting because governance tokens are essentially uh incentives for people to use the network in the first place and they are scarce so you have to use them very cognizantly so um ribbon here is sort of trying trying to create this new path or new category of yields so we are trying to explore how we can create yields from exchanging risk so this isn't really a new concept at all it might sound like we are inventing something completely new but no but in track phi this has been done a lot already and this is normally done with the help of derivatives derivatives and um options so what is the opportunity size here for ribbon so structured products are pretty well known [Music] sorry one second let me just off my phone yeah okay so yeah structured products are quite a huge thing globally seven trillion dollar market it's fairly highly regulated so it's not me these investment banks that are creating these products for large asset management firms hedge funds and then it's sold that way so we think that it's pretty right for disruption here so and here we also see that there is a lot of new derivative products that are coming up every day so we have a lot of options protocols to choose from you have open you have hedgic for example so a lot of these popping up every day how can we compose these things into user friendly products in the first place because options are really hard to use and then the four circles at the bottom there are the broad categories that structured products are tackling so volatility yield enhancement principal protection accumulation so right now we are mostly focused on yield enhancement prior to this we launched the first multi-protocol strangle option what that means is that it's a combination of a put option and a call option so you would buy these things in a bundle and then we manage that position for you so we recently moved away from this direction to uh creating an options vault what this is is that users deposit assets into users deposit assets into the tata vault and on a weekly basis it would create call options that it would sell off to market makers so on a weekly basis run these strategies right so the option strategy that we are running is the covered call strategy very simply put it it on a weekly basis would say okay let's bet on bitcoin and say that if bitcoin is more than 64 000 this week we lose money but if it stays below 54 000 we make money for free so that is a huge driver of yields there so you're you're essentially capping your upside in return for yields okay this is an example of a recent trade for the wbtc tata vault so we are short call at 64 000 so if bitcoin goes up above 64 000 this week we lose money if it stays below we make money so you see those two lines there so contracts those are essentially the vaults revenues so this is sort of what our roadmap would look like it's a universe of options for so we started with eve covered call vaults wbtc covered call vaults and we are going to move on to put selling vaults which essentially let users bet that it won't go below a certain price so for example the vault would bet that bitcoin will won't will not go below 45 000 you'll make that bet on a weekly basis that's what a put selling strategy is so moving forward we want to explore things like user generated strategies as well cool thanks that's pretty much it so let me read the comments actually let's see no real questions there okay all right so yep okay i think i can walk through the site to demo for you guys uh how it looks like so this is what it looks like for the cold one side here we can see the projected apy for bdc and eve so let's select if so it is basically showing that it has been losing money because eve has been pumping too hard so that is the vat so this is a crucial part here it's not like some weird scheme where it's guaranteed money you are taking on some risk here so these are the activities that i mentioned before we bet that uh ether will stay below one eight four zero for example and then we'll we sold these contracts so here it's pretty straightforward what you can do is you can deposit some ether into vault get a deposit preview and then you're in yep so deposit successful then you can see that your position has been up to date right here um pretty rich and kovan so um here you can actually see your balances what vaults that you're in and the past transactions yeah this is essentially it we plan to launch a lot of these vaults which allows users to deposit and make money on each side of the market whether you're betting on whether whether you're betting on the upset upside or downside we allow users to pick whichever sides they want to be on and earn yield for that thank you right uh thanks ken um there's a bunch of questions now uh after you mentioned questions but i think before we get into um sort of questions uh from everyone uh i like to always get people to kind of give their story uh a bit more before uh we get into the details so we get to know you a little bit more um so do you mind like just sharing your kind of your backstory into how you uh your adventure into crypto and how you enter the space and then uh up to coinbase and then um founding uh ribbon finance like what was the what's what's ken's story yep so i was always interested in programming uh started programming since i was 16 17. um was mostly focused on uh the tech startup scene before that so i was working on like says startups before so um i think in 2017 i was introduced uh to crypto by a friend of mine so we don't really deep into crypto but then we at that point in time we didn't really have any ideas on what to work on or what to build so uh we just explored the space a lot until maybe in 2019 i joined coinbase and in coinbase it was fun you make good money obviously like they are paid well and you work on fun projects but i felt that uh it wasn't really for me wanted to work on startups so i thought that ribbon was a really good fit for that okay um i i think on topic uh nicholas asks um what was it like uh working in coinbase like are you able to share a little bit more detail yeah coinbase is pretty fun so uh they move quite nimbly so uh it really the experience there differs a lot team by team so if you're working on a crypto team for example you would be working like really deep crypto native stuff you would work on blockchain integrations that's like a fun team to be on whereas like if you're working on like the institutional side of things which is what i did you're just working with like web apis all that really boring stuff that's been done and you're tired of it okay and um if you mind sharing like what was your sort of like but it was quite fun for me yeah cool but what was your like um kind of co-curricular activities if any that you did that led you to this like aha moment of of coming out with ribbon finance co-curricular activities so in coinbase what i did was a lot of mev stuff so i did a lot of botting as well so i wrote stuff like liquidation bots front running bots so from there wanted to work on something more sustainable something more long-term so yeah we um my co-founder and i we basically were exploring the space and uh thought that this was a good fit um like looking into the past porting over things from track 5 normally works quite well and we felt that structured products are quite underexplored okay cool um yeah i guess while we're on the topic of the backstory adora asked what was your education background i studied computer science in sunway so so uh do you know if like sunway kind of students or alumni have been exploring crypto more would you be able to know that i i don't think anything's really driven from the top so it's mostly like bottom up and there are no clubs for blockchain for example but actually i feel like sunway has a lot of good crypto alumni like examples are like daryl lau darren lau they are like huge in the crypto space if you guys know them so uh who else there are a few that i cannot think of but they are they are in the crypto space okay uh and lawrence asked you to share your linkedin to for them to for people to stop you uh but i guess that can be related yeah it's just like can change eh if you want just just spell out my phone name yeah i'll get ken to share his uh links like relevant links later um yep so if anyone wants to be one of ken's girlfriends uh they can look out for that so we already have a lot of calls just now right yes yeah okay so um so i think i'll just start from the top now uh for four questions um uh win sq um asks uh if there are any plans that ribbon has for the multi-chain sort of reality yeah multi-chain is hard because we essentially compose with these options and derivatives protocols so they have to be live on a certain chain before we use them so you can imagine we are solved like urine so uh urine uses protocols like curve unisop to actually yield form so urine actually needs these protocols that exist in the first place so uni swap and sushi subs those are really low hanging fruits that will be deployed but like for things like options and derivatives that actually really need some time before they are live on like bse or solana for example so will be a while until we do that yeah and um on that topic right so uh as i understand it there is some similarity between uh urine and ribbon in the in the sense that like a lot of people use things like curve and iron because you save on costs right like you don't have to make all these like transactions many times uh is it is it similar with with ribbon in the sense that you bought transact um i think there are some similarities but i would just put it at like okay we are vaults and then we are doing things in a pool manner and we are composing these different protocols but that's basically it how urine generates yields are quite different okay which actually brings me to a good point also i guess related to a question that will be coming right after this is so how does how does ribbon finance make money as a platform right now we don't make any money but what what would happen is that uh right now we we actually do charge a withdrawal fee and that withdrawal fee just goes to protocol and we don't really do anything with it so in the future when governance tokens are online people can govern where the treasury goes to so do things like performance fees management fees sort of like how yearn is so uh these are the way to go for uh ribbon as well okay so i think that answers the question already from jaylee2215 why have why didn't you integrate a token for the project so i guess the question would be why haven't you uh integrated a token yeah um i think we want to um prove product market fit first because a token is not sort of like pandora's box where it's like once it's released you have to maintain it people will about how the price is going down all the time so you cannot focus on the actual product so just want to focus on getting high yields for people first before integrating a token okay uh so so does that mean like we should uh use a ribbon just for that uh air drop potential i won't say anything to that okay okay cool so ash asks what's the minimum if you recommend to deposit in the vault oh there are no minimums at all you can put in however much you want but obviously your deposits have to justify the gas price you use so it costs like 20 to 30 dollars to deposit into ribbon so you best be depositing more than 30 dollars for sure um and and and maybe this is also a good time to ask about how what your strategies are with regards to creating new vaults or like increasing the the ceiling to your current world yep so um a few considerations we are going to be focused on them two big assets first so eve wbtc so nailing down the basic strategies like call selling put selling first that is fundamental and we're going to be focusing on that the next two to three months beyond that i think we would be exploring things like a uni vault for example the uni tokens or com vaults because if you look at compound finance right now you can see that uni unis apys are like sub 1 so there is zero um borrow demand for for uni so essentially having uni tater vaults would create these uh alternative yield market for uni so that is quite crucial i think and then raising the ceiling that is mostly dependent on how height it would get so um uh we we basically see see how much formal there is and then we just raise like a certain amount that we judge to be uh well that will be filled to capacity so yeah we will increase it incrementally okay um i i imagine it was related to like making sure you know the the product is is relatively small so you you can see any issues you can you can handle them before you just explode and go big yeah at this point uh the first four weeks we have already gone through a few audits so i feel quite safe to increase the cap by a huge margin because previously it's pretty incremental right like from one million to five million for example uh it's because we needed more confidence and audits but right now we have them and will continually increase it and so you mentioned uni right so is have you guys had any kind of like a process for like figuring out which tokens you want to have added to the platform after the first two or is that something that maybe you you let governance decide in the future do you have any thoughts on how you want to add more tokens yeah the uni idea is because uni is basically the largest erc20 market cap so it's the easiest to lean into as for methodology uh we don't really have a plan around that yet but uh we'll keep you guys updated on that yeah okay um eiman asks um what what derivative or option protocol does ribbon use for your vault yeah we just use open so we use open to create these option tokens which essentially represents a single option contract uh when you buy an o token it gives you one call or token for example so you're not using hedging yeah we we were using hedgic for the strangles product that was our first iteration so but for tata vaults itself is just open okay is that is there like a particular reason why one or the other for different products yeah right now there isn't a good way to sell hedging uh options uh in haitic what how it works is that you basically deposit your eve into the hedgic pool and then whenever someone uh once buy an option they'll buy from the pool sorry not buy from the pool they would deposit into deposit their premiums into the pool and then say okay if if hits uh 4000 i get paid out so the pool will basically accommodate every single price out there and will take like the worst we'll take like the worst risk there and they'll get wrecked all the time whereas like tata vaults we are just focused on getting one single strike price okay um but but in in future you might um have some products that would use that would make sense to use hedging right yep so products that are mostly focused on buying buying options because right now tater boss is just selling options hedging makes more the most sense for buying options okay okay and um so so i reacted to this uh win sq asks um if you have any plans for exploring other options protocols for example siren and office i think these protocols are pretty hard to integrate because siren for example is very focused on niche um coin chicken options so like sushi sushi no offense to sushi but um yeah so your eve and btc options market isn't really that great so rather just default to hedgic at this point okay so if at any uh at a time in the future when you want to expand your sort of token um tokens that you provide then maybe you might explore these more uh altcoin friendly protocols um okay caleb asks which i i think it's kind of a financial advice question but uh the question is how do we use calls and puts to hedge our portfolio yeah it's breaking out right yeah it's not only me right sorry can you guys hear me now maybe you're on triathlon turning off your uh can you guys hear me now let's take this thing again can you hear me better yeah yes okay cool yeah i'm gonna turn off my face now um well uh so caleb's question was uh how do we use calls and puts to hedge our portfolios what was the question uh sorry um caleb asks how do we use calls and puts to hedge our portfolio oh okay hedging is mostly by using puts so you buy puts at a really bad like a really low strike price so if it goes below that you'll essentially um be safe for anything below that so for calls what it does is that you can buy really out the money calls what that will do is that in the event that it comes really hard you make a lot of money because uh how options work is that you pay a very small premium to buy these options to buy at that price so uh that that is a lot of money to be made if it pumps that hard okay so uh basically uh limited downside uh unlimited upside essentially correct yeah um i think uh i you guys even created a meme uh from the uh the the big short right of uh basically the the guy who is selling uh all these uh options products and making a lot of money eating sushi uh that's that's what ribbon's uh role is in in defy is that is that a correct way of describing it okay uh but you do realize that that guy's like wasn't there's a meme but uh yeah um okay diaz asks hi testing hello yeah you're breaking off uh okay now works hello okay um okay uh diaz asks when token and when cap i think you already asked answer the first question um when cap i i guess when the vault cap is removed unlimited no i think hiri is referring to our cap meme so if you go to discord ribbon discord right now you can see a bunch of people wearing a ribbon cap and then so it's a bit of a meme created by community saying that they want the actual physical cap ribbon cap and that it's more valuable than the tokens itself so i soon actually we are doing like sample testing on the physical cap so we'll send it out to people will we see a cap token the way there is a socks token maybe possibly okay um thomas asks um let's see uh ken i've heard many protocols discuss the issue that they do not have a sustainable yield and revenue mechanism when emissions don't make sense this is some of the main pain points what's your solution for this oh you're breaking off oh crap sorry guys but it's okay i i saw the question so let me just read it so i have heard many pro calls discuss the issue that they do not have a sustainable yield so emissions don't make sense anymore and that's a pain point do you see a solution for this so in short um wi-fi has sort of seen this problem as well so they have some admission of wi-fi and then because it's scarce they have to resort to minting it so obviously if you uh just have continuously me if you're continuously minting your tokens your tokens don't really uh make that much sense financially to hold so i don't see a good uh way around this i think what's cool is that sushi for example makes sense as a token to hope because these are actual revenues generated by trading so i think sushi for example is a decent token whereas for for compound i don't know how it will work because holding comm doesn't entitle you to any cash flows for example so uh it's going to be a valueless token for now yeah maybe you can use it on the new chain and np for for guest day um someone said and you say not financial advice don't buy sushi you can farm sushi um so aiman asks if you have bots doing trades or traders deciding the options to enter yeah right now it's free manual so what it does is that on a weekly basis we will mint uh sorry we will use the vaults funds 90 of it to mean these option tokens and then we work with market makers to sell this option to pay we want to move forward to decentralize it is to have some sort of auction system so anybody can bid on these option tokens and then buy them okay um so so you mentioned uh you use uh open and use uh hedging right so uh you're essentially one layer on top of some of these d5 legos does that sort of is there any difference for you to be a product that is one layer above like because there is this reliance on the underlying protocols like for example if they get hacked or they make upgrades like is there a difference between doing a d5 project at this layer versus the layer below yeah there is definitely a lot more protocol risk where we depend a lot and there are no upgrades for security we are screwed uh yeah that's basically it we just have to live with that and i guess what would be the uh the way around it or like the ways you can mitigate that that risk and working it on it ourselves but that that isn't a great option okay uh let's see so sam is asking a or actually a question as a sunway alumni um without knowledge in coding or finance how can he progress his crypto knowledge and i think i think i mentioned the question about the from sam okay oh yeah so as a somewhere alumni without knowledge in coding how would i progress my crypto knowledge so really controversial but i'll just say actually try coding um a lot of resources out there if need be go for coding bootcamp i think that's the highest leverage thing you can do know that it's really hard but i think if you really work through it it it's really great or or it and i won't say coding is the only one like just diving deep into finance is also a huge leverage as well so try your hands at trading um yeah think would think it would be really good instance yeah i'm i'm helping out here so um the next question is actually from me um how how do you because you've been in this space for a while right um find or discover product market fit in an industry where everything is like isn't it yeah a lot of the community and the people that we've talked to is mostly from twitter so having a twitter reach was actually really good for us like uh co-founder has like 5 000 followers it's not much but like it helps us reach a lot of people and talk to them so that is what bootstrapped our discord community as for like product market fit i don't think i can answer that before actually achieving it so we've seen like basic signs of it but i wouldn't say that we fit product market fit um so um um uh like do you see that um in the future say that women finance uh choose the road in in issuing governance token for example do you think that its governance is a route for for a product like yours because not everyone knows how to trade right yeah not everyone knows how to trade so i think what could work is like you delegate your vote to someone who would manage the vault so it has to be someone reputable you have to trust them based on their reputation if anyone have any questions you guys can uh drop me the chat and uh pass it on so yeah so there is question for a question from sam so sam uh how do you gauge fundamentals of coins and determine which to invest oh they sound like a street like a financial advice so maybe um uh can maybe you can share what's your usual process in evaluating a project evaluating a token economic like does it make sense to hold maybe you can share a little bit about your thought process in integrating honestly i'm not so much of a shitcoin trader but uh i'm pretty conservative like i hold bitcoin eater basically like the blue chips at this point so have uh really tiny holdings in like other crypto tokens so don't have good advice there i'm like really i'm like a boomer in terms of a crypto where i don't really farm that much in the first place okay um so uh next question is from our host harif one difference we've tried to find that derivatives are typically over collateralized in d5 do you have any parts on this difference yeah so um over collateralization is actually fine for options for example you put in 100 if you min 100 option tokens that is fine that that just means you are not over leveraged and selling call options which are horrible so these risk parameters are okay in crypto uh derivatives but not so much for landing like you would want to have as much capital efficiency as you can for lending thanks ken um so uh so i think has a follow-up question another source of yield that is sometimes mentioned are third world users getting access to financial services so do you think this is um real or just virtue signaling don't really understand the question like are we getting yields from third world users uh yeah i'm sorry maybe you can clarify the question in the chat um if you guys can hear me yeah okay you know okay i'm just gonna try try and uh say this while i'm not cut off um so like basically what uh what is often said is that people in say venezuela or argentina or korea are able to get access to financial services such as loans or options where they would get it very difficult in a difficult way in their own traditional financial services with their own national banks and so on do you know if there are these kinds of people that are actually um like using uh the the d5 products in this way or is it more of just kind of like nice stories that we we like to tell each other i i think it's controversial but like i think it's probably the latter right now in ethereum it's mostly people that have at least like fifty thousand dollars to their name and are using the chain because you need 50 dollars to transact in the first place so obviously there's a very obvious minimum threshold that you need to have in the first place to use this product so think think dsc is probably the chain for them so which is why it's getting more popular than ethereum right now rightfully so all right the next question is from uh uh from sam is the ribbon team looking to expand yes we are looking for solitude engineers so if you know solidity please come forward would love to talk to you what's the experience level that uh you guys are looking at what sorry what's this the experience level of 40 70 engineers that you guys are looking at just one to two years yeah like someone's senior preferably um thanks again the next question is from aaron um do you see yourself deploying an application specific change on let's say parity substrate yeah just to rehash what i mentioned before we actually need to compose with these different derivatives and options protocols so need them to exist in the first place before creating like an app chain thanks again so next question is from johnson is gas fee a concern for designing ribbon finance yeah that's like top of mind because right now we are aiming to have as low as possible um for the gas fees and right now it's lower than unisop transaction which is why we are pretty proud of it um yeah that's like top of mind for us um a follow-up question on that right would you say a guest view and interacting with your contract would be a competitive advantage compared to other products if you can make it lower or do you think people will just ignore that i think i think there's a cut off point where it's like oh if it's above 50 i won't ever transact with the protocol so i think anything below 50 is like oh it's decent i'll use it so i think there's a clear cut off point um so another question from from our host harif other than speculating or gambling is there a practical reason to buy an option for example air asia would buy derivatives to hatch the fuel prices so maybe if possible maybe you can include some example how one could use this in defiance yeah the asia example is quite good so i think what they would use is a futures product but options aren't really applicable i think i think i think for example commodities people they would want to buy puts so that uh the price when the when the price of commodity they are selling is nose diving they are at least protected so that there is some hedging there so that is one use case of options but right now obviously crypto options are people speculating and trading so it's mostly a tool for speculation at this point i guess miners can actually use actually miners are huge users of covered calls now that now that i think of it so they want to essentially uh have some yield on their bitcoin they don't they don't need so much upside in the first place yeah so miners use covered calls a lot okay see um do you have any um do you have any personal interest to see uh what uh to see which d5 verticals to grow for example insurance prediction markets other than derivatives that you can see there's a lot of potential in the next few years or probably even months yeah i continue to be a lot more bullish about derivatives because looking at trap 5 looking at crypt crypto markets right now derivatives have traditionally been larger than the actual sport market so i think the perpetual protocols the the river vexes they will actually get quite large and hopefully larger than uni swap which is very hard to imagine right now but it's fairly possible in my mind so there is a lot of room for growth there and then um i don't know as like a defy thing insurance doesn't really work in my mind so uh what else what other areas are there yeah i mean it's played all lending yeah landing is pretty cool uh maybe like new kinds of decentralized exchanges um or just just um other things maybe not even a specific field but like kind of niche ideas that you've heard of that you find personally interested in which may not be what you working on with ribbon i really like the nft stuff so i i have mostly been speculating on them but i see a huge reason for people to collect them in the first place so things like hash mask i really like that one like the art and everything so and yeah just just nfts in general i think i'm quite bullish um maybe another another way of asking or a related question to ask is um do you see like other platforms other kinds of products that if were built out very well would help ribbon in delivering your services like a new lego to to build on yeah so one lego that we have been considering and thinking about is uh perpetual protocols so not referring to perpetual protocol itself but uh perpetual swaps so if you have perpetual swaps that basically unlocks a new stream of yields for you so right now if you go to binance you would have to when you open a perpetual position you have to pay something called a funding rate so the funding rate is what creates this uh perpetual contract itself so that is a huge source of yield and traders use that to create a lot of yield so if you basically move that on chain and have that on chain you can harvest that yield so that is like a potential avenue okay and let me see bill asks what you think is your economic mode compared to competitors but actually do you have competitors i guess it's another question to ask no i think i i still maintain like the position that structured products are still quite underexplored but i think right now our code is open anybody they can copy it but i think our mode here is that we actually have connections to market makers and our liquidity theater so we can get the best prices we can get the highest yields for tater vault users okay uh do you do you see um like someone forking that code running it on bsc and then just because it's cheap they get to you know flipping ribbon finance it's possible but they also have to fork open so good luck to them doing that okay and make sure when they fork they they don't uh do it wrongly and have it hacked like a couple other platforms every okay um let's see uh win um asks um what about fixed interest rate protocols have you heard of them do you have any thoughts yeah i think they're pretty cool so like element for example uh wait is win sq windra now that you mention it yeah i i i'm guessing that's the case maybe yeah so element is pretty cool yield is also pretty cool yeah 88 mph is also pretty cool but i i personally have not used any of them so um can't really speak towards my personal experience but i think they're solving a quite core problem yeah okay this uh pendle as well yeah they've recently did like an lbp or something okay so um earlier in in the monthly roundup i might mention this real world assets by maker dow right do you see that um impacting the derivatives market that there are these real world assets that potentially could be collateralized or could be used in in other ways you know i'm sort of in the cam where if it's not digital it doesn't really fit on the blockchain so i'm in that camp whereas like the maker down people obviously they're pursuing the whole path of like let's let's lock up your house as a collateral and then men die with that but i don't know i don't really buy it because there are no guarantees of that happening on the blockchain you cannot guarantee that you're not selling off your house to someone else for example yeah or the transaction is complete so would you say ribbon will not uh use um these as you know at any part of the platform any of these real world assets no we are focused on crypto crypto okay wow that's a strong statement to make um yeah uh okay so kind of related are the fact that or well the rumor uh out there is that institutions are coming in uh you know they've seen that ethereum's um at least right now is is uh giving a potentially higher return than bitcoin and um the rumor is you know they're all just like accumulating before they announce like one or two months later that they have like billions of uh of worth um do you what what are what what's your take on them joining the crypto space in general and then after that how would that impact ribbon finance and what you guys are doing um institutions uh i think i think they are just warming up on things like futures and like crypto options so don't think they will be exploring d5 anytime soon so what would happen i think is a c5 exchange would integrate d5 capabilities you've seen that with binance for example or coinbase in some instances they would basically access d5 through a c5 exchange so one hop there uh so don't see them doing that anytime soon will take a while um but but there there have been instances of some firms doing like covered call options for miners quite successfully like they're doing billions in volume per year that kind of thing but they haven't really been public with all that could you expand a bit more about how miners are using covered calls why is it such a in in demand for them yeah so what they would do is that uh covered calls are basically saying oh um if bitcoin goes above this price i'll just sell it anyway and miners are okay with that risk like they don't they don't really care if bitcoin pumps like 70k they're okay with selling it at 60k for example so uh they want the extra yield on top on top of their bitcoin and and possibly selling off some of their bitcoin if needed for usd so uh that is used to fund their actual operations okay and it's like uh yeah it's very great it's like a good fit for their mining operations that way yeah because basically it's kind of like the ah thing where it helps them plan out their kind of revenues versus uh costs better do you see this happening in ethereum especially with you know the merge happening soon like is there demand for from ethereum miners um yeah i don't see why not sure yeah even validators would probably use something like that okay that's something i haven't thought about before well actually but if it's validated then it's probably something that ribbon finance can directly do right because it's all on chain there's no you know there's no off chain element to yeah we've been we've been thinking of uh just using steve if anybody knows about it so sde is like this token that's issued by lydo finance which represents a claim on uh your eve that is staked into the e2 system so if you use that for collateral that will basically um mean that you are both staking eve and earning interest on it and writing covered calls so it's like a combo product that that would be quite interesting for people oh nice um okay so i i feel like i want to go back to uh what you mentioned with like um front running uh running bots and things like that right like maybe away from ribbon finance for a short while but um i'm personally very curious how how it works uh like to run this pga or priority guest auction bots or front running bots i'm sure uh at least some of the community members are as well especially with the interest in mev recently um so like would you be able to share like how that kind of kind of life works like how you search for opportunities how you uh at least back when you were doing it um like sort of risks that you had to to uh take into account uh and just yeah the the day-to-day life of a front runner yep so to give you more color on that i was basically doing liquidations on dydx so how dydx works is they have this margin system where you basically collateralize your position and then for example you would collateralize your position with eve and then borrow usdc to buy more eve so if the collateralization of of your eav is down by let's say 10 you'll get liquidated so how we do what we do is we have bots that are looking at the mempool all the time to see whether uh someone is actually liquidating initiating a liquidation on a particular account what we do then is that we replace that we replace that transaction with a higher gas price so that we end up high in a block than them so our liquidation will get executed but ds will fail because the account already has been liquidated so that is like what front running is so we mostly rely on uh what we call primary liquidators which look at these opportunities scan for these liquidation opportunities and we just front run them so that is what we do for front running so how do you yeah sorry i think i'll lie you finish first no i don't have anything to say go on i was gonna say like how do you look for these uh liquidations like how do you know uh they are happening like you run like a kind of like a bot that monitors the uh pending transaction pool or how does that work yeah we just we just watch the mempool and then front run them so um uh yeah they they basically will call a function and then we just look at like the function signature to see if it matches uh liquid liquidation okay so so there's some would it be correct to say that there's some sort of uh guessing that you are putting in there with maybe some parameters that you have to just bet on or is it super clear yeah sometimes it's quite hard because they sometimes use like some custom contract to do to do liquidation so that's something you have to figure out as well uh it's it's a bit murky sometimes where it's like you see liquidations happening before you because they have like a special way of doing liquidations it's every single liquidator that you're trying to front run it's almost a mystery by itself you have to figure out for example how they encrypt their liquidation into the transaction like had really fun days trying to figure out how they hide their liquidations yeah and there's also probably at least like a dozen other people that's doing the same thing that you're doing right that you're competing with yeah i've been front run by some a front runner as well okay and and like um so this i think relatively recently i don't know if it happened uh back in the day but uh like recently we hear stories about how like there are these big or like trap uh kind of uh traps set for front runners where like you front run and then um like the the funds kind of like get immediately taken from you or there's some poison involved did you have any kind of experience with those kinds of things no those developments are actually quite new like i i when i did front running it's like 2020 and there's so many things happening right now in the mev space that are quite new yeah it's like a decade ago yeah uh so i i once asking um so can you elaborate what happens uh when a liquidation uh executes um is there a market for these liquidated assets to be auctioned how does that work yeah so when when i say liquidation it's mostly um the liquidator paying down the account's debt so using dydo dydx as an example um what would happen is that uh they have a eve debt that you they have to pay down so we would pay eve and earn some percentage on the usdc that's an example so there is no auctioning here i think that refers mostly to maker but most of these liquidation systems they are in the similar concept where it's like you pay down the eve you earn some usdc back in return so compound is the same rv is also the same and um so now that we have a lot of different blockchains out there whether you know different l1 or different l2s uh do you see like new experiments or new uh methods that could be used for arbitraging between different blockchains or you know even mev between i think i think mev would be quite hard between between blockchains because you need to have some confirmation times between each so don't think it's that possible but within the l2 chain it's fairly possible to do so can do that on optimism you can really do that on phantom for example yeah and um like so on the arbitrage part do you see that that kind of market growing like is there any opportunities for anyone here who might be interested to uh to leverage on that oh it's very competitive like be prepared to lose money [Laughter] yeah yeah um and but like th there would be some fret running involved right because i imagine let's say pancake swaps price is um kind of a certain price and then uni swap is let's say lower and like for you to arbitrage the difference between uni swap and pancake there would still be um kind of front running or that you have to be concerned about but like you say it's still within the ethereum blockchain yeah so how you would close the arbitrage there is you deposit your asset into binance you have them convert between bsc and erc20 right so that whole process itself will just take so much time uh so not sure if that sort of arbitrage is worth it yeah unless you hold balances on both sides and then you kind of execute immediately yeah okay cool uh okay i just noticed there are some questions above it's not related to front running and we should ask that uh because um this might be related for ribbon finance as well um uh win sq asks uh your thoughts on alchemics alcomix is a good coin no i i think it's a very interesting concept like self paying loans essentially having your collateral as an interest bearing asset in the first place you can earn back your loan of course you have to wait like two years but yeah you can earn back your loan so in the vein of that idea like what would be cool is like self-paying call options as well so if you have your collateral for uh the vault as like yearn as a yearn vault token you can essentially pay back your premiums that you paid for buying an option so i think we are going to keep exploring this idea of paying for things with interest and i think the alchemics idea is super cool i feel like it gets a bit convoluted though like you you you earn interest you pay back on some other uh interest and you know there might be like some in some inception of interest there uh yeah i don't know how that how that would pan out it's very recursive yeah uh yes yes recursives right you cannot refer to the same uh asset if not it's just like circular yeah well the thing is even if you refer to different assets then it can still be kind of circular because they refer to each other kind of at least at a very high level what i'm imagining that it might happen um so so uh i i guess related to all this is uh like recently we've heard about people that want to do like uh credit scores uh on the blockchain so for example like your history with a certain let's say lending platform or with a certain robot advisor kind of lets you build up a certain credit score have you heard about these things and like have you thought about how that could be relevant to ribbon no i don't think it's relevant at all like we accept everyone's money but like this i i like how urine puts it they are like the swiss bank like ribbon ribbon is a swiss bank we'll just accept money from anywhere not financial advice okay well but any general thoughts then on on having a credit score um like is it a kind of kind of an intrusion into your your privacy or identity or is that something uh cool like what's what's your take i think it's cool it's sort of like building an anonymous identity online it's like running a twitter and on account um people basically look at your track record and say okay i'll offer you this loan or i'll offer you this trade based on your reputation and we've seen like the ins the beginning of that with like zapper dashboards where you're just flexing your nfts and the loans that you've done so i think we're just going to keep going further into that direction okay uh again this one might be a bit more of a stretch i want to see what your take is on this uh what about using nfps as part of the credit score or as directly as collateral for a loan i don't see how it will work but i think there is a niche market for people doing that uh i think what's that called i think it's this company started by alex also yeah likes mass match that that you mentioned just now i think it's called rocket nfts where it's like you can use your nft as a loan but she started it probably too early there weren't any nfts at that point so could work for like niche markets yeah personally i don't see it myself but yeah he did it before the bull run like the huge bubble in nfps so yeah probably if you did it a few months later that would probably work better uh okay i think we're coming up to the last ten minutes uh there's a couple questions here um i want to make sure we do go through um yolo asks and actually i don't know if you mentioned this but okay yolo's question is if you consider uni as a coin what about pancake in bsc is pancake on ethereum i mean no no oh it's not so yeah that would be a bit hard because like i mentioned it's very hard to port what we have into a different chain we need open to exist in the first place uh and it takes a while to support new vaults yeah okay and uh bill asks uh what happens to ribbon during a bear market when yields are being super low uh we we are selling both sides so uh we we're selling downside we're selling the upside as well so we think that the yields for right thing calls you know it will probably be lower but it's actually it would be more consistent so like 10 for example that sounds like a pretty decent number in a bear market for example like you cannot get that in um from compound by supplying your bitcoin so i think i think there will still be an opportunity there uh people will still want to buy options people will still want to sell options so the yields will be somewhat consistent okay um you see uh i lost the questions uh and i was gonna say and um because you don't you don't have any kind of like capital risk involved right like you're not like a um let's say like a like recently we had uh robin hood like having all these liquidity problems because uh they had to rely on on other service providers like in in defy's case typically everything's over collateralized so there's no real risk on your team uh directly right like even if people get liquidated it's the assets out there that get liquidated yeah we have no excuse me we have no risk of liquidations at this point and um yeah everything everything is collateralized in open is 100 collateralized you deposit one ether you mint one o token yeah okay um rajesh asks i feel like you answered this question already but um rajesh asks who would you say are ribbons direct competitors and maybe maybe to add on a little bit would be like if there aren't any right now uh what kind of uh projects out there do you think might come up and and just because of different directions different kind of like strategies or principles would naturally come up as a as a competitor yeah i think uh our indirect competitor that's uh not really in the category of structured products or like financial risk exchange is basically farm and dumps so badger for example offers 130 on your bitcoin so how would we compete with that that's like really hard to complete so they are they're very obvious competitors because yields in this space are people looking for the highest yields all the time so money will slosh there when times are good and will slosh away when times are bad so the yield space in general is competing for the highest yields so we are in direct competition with things like urine in that sense and and i guess uh would it be correct to say that like someone like yuri might like maybe not right now but might eventually uh kind of pivot or start a new you know another new subsidiary that that focuses on just options and then there will be a because they have more capital like there can be a kind of a competitive threat as well yeah urine i i wouldn't say yearn is exploring it but andrei has been exploring like dairy swap for example yeah if you google dairy swap andre some results will come up so i think he's been exploring like using options using derivatives to do things but i think yearn as a product is fairly decent actually as long as there are new farms and as long as there are new tokens in the market that they have these farming schemes they will exist and i think that's a good bet to take but not on like individual farms like badger um or sushi salt yeah these farming schemes will stop and then iron will move away from them because they are an aggregator yeah okay um ayman asks what happens when actually i didn't maybe you might have answered this already uh what happens when liquidation happens is there a market for this liquidated assets to be auctioned oh yeah answer this so yeah okay okay yeah doesn't get auctioned um lawrence asks which is the best pair to avoid liquidations i think that's the question uh that's perfect yeah liquidations i think probably like yeah landing stables boring stables that's like there's no way to go wrong with that yeah yeah if that's is that if that's your question yeah yeah if you're thinking of like unisop kind of trading pairs that's there's no liquidation really involved because there's no like landing or or or things like that you're just providing a pool of liquidity for people to trade against um let's see so sam is asking are earnings from any covered call deposits uh covered calls are deposited back into the vault so i guess the question is is it like automatically reinvesting yeah it's compounded yeah it's reinvested back do you see a a scenario or a product without reinvesting like what would be the advantages or disadvantages of that i think without compounding the apis will be quite low so don't know why protocols would do that in the first place uh yeah yeah i i don't think people would be would there be a guest element involved at all don't think so because if you're doing it on like a poor or vault uh basis and not like per transaction it'll be really cheap on gas anyway okay uh and yolo asks uh what where is the best place if i want to learn deeper about uh bitcoin options yeah i i say there are bit itself like try trading some with really small size read their blog posts they are pretty decent and then um robin hood also has a few good blog posts on just options not bitcoin options they basically explore like really fundamental stuff about options um the option greets for example yeah they are really good resource yeah yeah i guess there's a whole like kind of technical rabbit hole we can go if we ask about all these different greeks and the different like exotic options and so on but i guess that probably would be better for for for a different time um i i do want to mention though uh for some of the muslims here that generally derivatives are not considered share compliant so just you know keep that in mind if you want to explore there is an argument sorry can you hear me now yeah better okay i was just going on a mini rant about uh like derivatives are not share compliant so if as a muslim you want to go in keep that in mind [Music] there is an element of these derivatives are backed by collateral um so in a way that's different than traditional finance um but yeah that's something to note and okay uh adora is asking a question that i was thinking of to ask to close off the conversation um basically what would your advice be for someone new especially if you're not a technical person into the industry um i think i think crypto also needs like operations people so i wouldn't sell yourself short uh or like any other skills really like marketing operations like these are also valuable skills and like best way to join the industry is to join a startup that's in the space so yeah i i think just join one of these startups i think it'll be really exciting and you'll learn a lot yeah and i think one cool thing about a lot of d5 projects are like pretty much everyone has a discord uh server so you can kind of just join and start contributing already like it's not like you have to apply for a job to to contribute you can just like even create a meme right and then the community will like you for it sometimes you can get rewarded yeah so yeah maybe design a cap for for ribbon and then potentially have your design uh get printed and maybe we can would reward you for that um yeah so i i think we're here at uh 9 30 which is when we typically end our uh meet up if anyone has any final questions feel free to put in the uh in the chat box we can probably ask that one uh last one but if not i guess one thing um can uh is for anyone who's listening whether live or watching a recording later how can uh they participate uh with ribbon how can they kind of join a community how can they help you grow yeah so to join discord you can go to discord dot ribbon finance let me just type that in and then you can go to ribbon.finance to look and see what's it all about what what kind of um support are you looking for right now like um someone already asked like what whether you're hiring uh but maybe from like a community point of view from a user point of view like what would you appreciate from from the community listening yeah just try out the product give feedback wherever possible and then just just create some chatter and discord that's like always appreciated all right okay thanks a lot ken