Open Zeppelin,RedStone Oracles, Resolv Labs, Chaos Labs-Financial & Technical Risks in Stablecoins

okay so um uh Dave has uh basically ended his hosting session so I'm taking over um the next panel will be um called Risky Business balancing financial and Technical risks in stable coin protocols um with our moderator Jack Sanford from Sherlock uh followed by our panelist Omar goldber from chaos Labs Ivan coslov resolve Labs maren from Redstone oracles and Michael from open Zeppelin welcome our speakers everyone hey everybody thanks for joining I'm Jack Sanford CEO and co-founder of Sherlock um Sherlock does Smart contract audits smart contract insurance today we've got a great panel we were just talking about yield now we get to talk about the risks of yield and stable coins um we've got a great panel here so let me just pull up some of the questions uh we have Omar Goldberg from chaos Labs founder of chaos Labs with us we have next Marson from Redstone oracles I'm not going to try to pronounce your last name I'm sorry Kazmir Che Kazmir Che okay nice next we have Ivan klov of resolve Labs co-founder of resolve labs and Michael Lin head of solutions architecture at open Zeppelin on the far side of the couch so to kick things off we're going to talk about all different kinds of risks associated with stable coins today from Oracle risk to Smart contract risk to economic risk and we have a great panel to do that so let's kick it off and start all the at the end of the couch with Michael and Michael what do you think about the smart contract related risks associated with stable coin protocols uh what are the main ones what are the gotas what do you see from your Vantage Point uh I think starting out it's usually an underappreciated aspect of stable coins we think of stable coins as being like what should be some of the easiest Primitives because in reality they're usually just a eur20 token um but deceptively there's usually lot of things that any protocol that's listing them whether it's like a defi protocol or even a centralized exchange has to consider uh we've worked with both coinbase and compound Finance I'm like trying to figure out the listing uh risks the first one is just like is it actually erc20 compliant um like one of the most popular stable coins tether is actually not fully rc20 compliant there are some like transfer uh functions that don't actually return values you would otherwise expect so like compounds for example had to do like special custom Integrations just to list it um and then on top of that uh you have like some new stable coin models like Mountain protocol that are rebasing um and I'm I'm sure I think we have later uh discussions in the panel for that but and then you also have cases where uh like a stable coin has just something very weird they've introduced we've actually had like a issue with true USD listed on compound that introduced a double entry point uh and that could have led to an $80 million exploit um and it's something that you know the protocol like look like spent a lot of time when they were first listening to USD looking all the like risks surrounding the liquidity and the uh like the typical Financial risks you would look at but not really technical risks so uh it it's something that we see a lot uh again 90% of the time it's fine but every once in a while you find something that's a little weird and a little unexpected and so it's always something you have to check even if most of the time the answer is hopefully it's a normal year 320 token and something you would expect to behave normally but uh yeah there's something to look out for and I guess the last like thing is hoping that whoever maintains a stable coin whether it's upgrades or blacklisting whatever uh is going to maintain that safely I don't think we've ever seen a major like stable coin provider lose access to their keys used for those sorts of sensitive functions but like that's a Black Swan event that I think we we also kind of underappreciate at times we just trust that the major stable coin providers are going to manage those keys securely they have so far but uh you know at the end of the day we are trusting that they continue to do so awesome awesome Ian I'm going to come to you last since you're the stable coin protocol Builder on this panel and um let's go to Marson next what do you see as the main Oracle related risks that uh associated with stable coin protocols yeah so hope everyone is still alive I know it's very hot outside but we hear thec is working pretty well uh so Marson co-founded Redstone uh we are one of the quickest growing Oracle right now in the market providing both the push and the pull Oracle model across over 60 chains right now in terms of stable coins specifically there are a couple of verticals so first we really need to remind ourselves that there are different types of stable coins like the let's call them regular stable coins so Fiat back like Teter Circle and so on then you have CDP stable coins ceriz de position stable coins like maker dow die or now it's called sky and usds like the big Rebrand or liquid in terms of oracles one is to price the stable coin so some protocols prefer to deem a stable coin is worth $1 so for example I think in compound it's still the case that they deem one usdc $1 which on one only in V2 but it still keeps us up at night yeah I mean like well this is how it is in one of the largest lending protocol out there in the defi sector so one usdc is $1 hardcoded in compound if circle like erupts to tomorrow like collapses then it's going to be a huge problem um we saw uh a small like hiccup about that in March 2023 it was right when sbv Bank collapsed and then usdc was trading at 91 cents or even less at some point so oracles for example we update price feeds of usdc and we did report 91 cents or 92 cents so there was no way to Arbitrage with our price feeds when the protocol was using gas when uh like let's say compound over the weekend because that was happening over the weekend that was also very I was up that whole weekend yeah yeah I was up the whole weekend as well like part of our treasure was in the US so I was like also like wow this sh is hitting the fan so um that was an interesting one so one is pricing how much of a stable coin is worth this is the Oracle job the other one is to price the collateral of CDP stable coin so if you have for example maker Dow there there's collateral against which is the saon borrowed so Oracle is usually updating the protocol about the current price of all of that collateral assets that are present out there and the third one that also is uh commonly used is proove of reserves so sometimes you have stable coins that have reserves in various places and not necessarily it's transparent so Oracle can work as a kind of like a watchdog or uh call IT Auditor or whatever that attests how much reserves there are for a specific uh stable coin and in each three of those aspects there are like risks involved but yeah just wanted to uh print the landscape awesome thank you so we talked about smart contract risks Oracle risks now Omar what are your thoughts on the economic risk related to stable coin protocols so I'll Echo with the the great panel that said so far so just like a little bit context from our Vantage Point uh of the landscape here and the risks um chaos Labs is the leading risk platform uh for onchain finance as an extension of that we launch Edge protocol uh and Edge protocol has risk oracles proof oracles and and price oracles and really I think what's come up from the first two panelists is that smart contract risk Oracle risk and economic risk they're all connected right so you can't kind of look at them in Silo you need to look at them holistically and that's a perspective that we're coming in with um yeah and just like kind of to recap the kind of stable coins that exist today like in the industry or at least what's become really prevalent over the past years we said it really quickly here we had we used to have algorithmic stable coins rip Luna I don't think that that's coming back for a little while we have the CDP stable coins which are kind of they have an upper bound to how big they can get uh because they require onchain liquidity so I think D Sky whatever the latest rerent is a good one um but then you have the rwa back stable coins now I think one Trend that's really interesting is that when chaos got started 3 years ago really most of the risks that we were doing uh for all of these assets were really looking at Crypton native uh assets on chain primarily focusing on liquidity and volatility and for Sables like usdt and usdc besides the I guess like quarterly fud that they weren't back there wasn't much to do or at least that's how it felt across the industry so if an issuer came and said hey I have this back office operation we're minting uh stable coins and there's one to one uh at least one to one in terms of the offchain reserve and what we have on chain uh people kind of took them face value maybe unless like Justin sun was involved and then they got kind of nervous um but today actually you see people pushing back on that um and people want that offchain kind of clarity and they don't want to just deal with IO use so one of the big things that we're pushing for with Edge is proof of Reserve oracles uh and this actually integrates uh with their offchain banking system where Edge will have uh read access uh to their State Street account or whoever their custodian is and we can in real time verify that the the offchain reserve matches at least the amount of circulating Supply onchain which therefore also helps us price uh the different stable coins and this is I think really when you speak about the the big category which is rwa back stable coins that is the worst nightmare that someday you might discover that you just have all of these tokens floating on chain that you cannot redeem and that are not worth a dollar and every single application or user is left holding the bag so for us that's the biggest economic risk and I think it's a big design space um because there does doesn't really exist a methodology for how do you um like properly vet uh proof of reserves nothing is really standardized you see all of the largest issuers have their own kind of of operation uh in best practices so I think this is an area where things are going to grow significantly awesome awesome thank you uh so we talked about smart contract risks Oracle risks a little bit about economic risks now Ivan why don't you tell us a little bit about what you're building and what the industry the stable coin industry has learned over the past few years in terms of some notable failures we've obviously had as well as some of the big successes sure GL to be here to today glad to be seeing everyone uh even though it's a bit hot outside so what we do we basically enable scalable Crypton native yield generation and the obvious medium for convening this is a stable coin which got a great pmf and has proven that um so speaking of stable coins and what they what we have learned over the past last few years well it's obvious the stable coin is stable only until it's not that's basically what we've learned it may sound strange but we've seen maybe like more than 20 or 30 projects failing at the peg if you take a look at like 23 I think there are actually more and the fun fact is that they failed for different reasons there are now Frameworks for evaluating stable coin stability sorry for the pun S&P for example standard po has one moodies more Crypton native uh companies have those and they basically look at different layers of risk and different angles of it and they different for different stable coin designs as highlighted so for example the reason for us creating what we do was the USD CD pack similar case right because you didn't feel the security of like we I'm going to stay to keep the value but that's just one example when the web 2 or trfi to be more specific infrastructure failed at that time but if take a look I can just name four or five other cases where for example for uh basis cache the regulatory issue was the key to kind the the failure of the project for teror Luna okay or the open or for other algorithmic stable coins there was a concern without the robustness of the design itself say for uxd which was the first kind of delta neutral implementation the counterparty risk in form of a kind of uh web free specific risk being a risk on a DEX was the reason for this um for for example um usdr and that's why we didn't call our stable coin usdr that was a stable coin backed by real estate the failure was because of the quality of the backing and so you can find a reason or you can find a lot of cases uh where different reasons led to the demand of a specific design and it's really hard to evaluate basically that's what led us to create a situation or create a product we've been discuss on this in the previous session to channel the risks outside of the stable coin to basically segregate them away into a separate marketable and Market driven instrument to protect the stable coin holders so that they don't have to kind of bother about all these layers and all this Sten of risks and how it's been actually created and what is the most important one is it like the backing is it like the market risk is it like the anything which is there um and I think that's what we basically need uh it's still hard to tell what specific risks are there but definitely no one wants to be the victim of the actual de awesome awesome thanks Ivan um in terms of progress we've made over the last two years uh be interested to hear from any you who who want to talk about this what do you think we've kind of changed in terms of areas we've drisk like have we drisk on the Oracle side but increased risks on the smart contract side how do you think risk profiles of stable coins in general have changed over the last two years um I'll add a bit here that uh it's interesting to take a look at the statistics of rwa backed stable coins versus the non rwa backed ones well if you take a look at 20 2021 or early 2022 I believe the non rwa backed ones were maybe 30% of the market with the tvl of maybe 40 billion 30 of that something similar was Terra Luna unfortunately now if you take a look out of maybe 180 billion on tvl in stable coins only 12 billion are non rwa backed or basically backed by crypto and that's quite telling and you might say that the market is trying to get this kind of easiest path to kind of how to back it because this risk is kind of a little bit better understandable at least for traditional Capital allocators but I'd say that it's an important highlight that we're seeing different use cases for the rwa back stable coins like usdt and usdc it's mostly the transactional nature of it and for some others and mostly for the crypto-backed ones it's the case of enabling Crypton native investment instruments and investment products and I believe that's what we see in more and the yield bearing stable coins definitely we see the increase in usage increase in importance uh and kind of the shift into this investment instrument narrative in general yeah I'll just add uh add on to what Ian said that I think it's just like the like what's the topology like of risk and how are we looking at different things so for anything that CDP backed I think the main factor when you're thinking about listing a stable coin uh allowing it to be used as collateral or a borrowable asset is just looking at liquidity and volatility right so at any given moment you you want to make sure that in case like price action go sideways or downwards uh you can facilitate liquidations with slippage that's lower than the liquidation bonus and that's what kind of V1 of defi look like um but at the same time I think it's like very clear to everyone that you know even though we love uh decentralized stable coins oura back stable coins have found their product Market fit I think we recently saw it uh with stripes uh 1.1 billion acquisition of bridge uh and this category is just exploding it's going way way way way faster um than CDP back stable coins that are bound by uh liquidity that you find on chain uh here I think go to go back to the previous Point almost all of the risk they're they're all using kind of standard hopefully erc20 contracts uh when they're minting and issuing and all of the risk is in the back office operation we work with stable coins that are minted and issued in different jurisdictions and the processes the guarantees that you have are they bankruptcy remote or not they're completely completely different um and most people are just not not aware of them right and in order to kind of audit it uh in a way that's meaningful there's a ton of infrastructure and Integrations that need to be built across the bank so I think to kind of come back to the earlier Point uh the the whole idea of being a web 3 at least for us is that we have access to transparent instruments where we can understand the risk the counterparty risk the smart contract risk and so on but with these roua back stable coins which are here to stay and are going to grow we're really just dealing with IUS on chain uh so I think it's you know it's it's our responsibility everyone who's on this panel and in the industry to really push against that grain it doesn't mean that we can't have them it just means that we need to demand more transparency and and have a better kind of better control over what we're letting into the protocols and uh usdc was a great example of what we don't understand right because only 7% of USC's backing was an svb so if we had a proof of reserves Oracle we'd probably you know it wouldn't make sense to price it less than 93 cents because that's what was potentially gone um but during that weekend at least with the chain link Oracle that a was using it went down to 88 cents right which meant at the time we were just um besides all of our company's treasury also being an svb we were looking at a and about two cents away from just going under complete insolvency uh with that price and the question is did it need to be like that right and I think that is another interesting design space besides the bank integration is how does proof of reserves and price oracles interplay together so if you have in real time uh sufficient guarantees to the backing of the stable coin do you always want to use the secondary Market liquidity do you always want to do that in the case also where it can mean the insolvency of the protocol even though you're fully backed we think to that the answer is no uh that it's also kind of a big question and you need to understand what kind of risks uh as a manager you're willing to underwrite and the protocol is willing to take on but that's also something I think that we're going to see changing over time um and the last last thing here is martian mentioned you're on 60 chains 60 chains the chain space is just growing and exploding and I think one of the downstream effects of that is fragmentation of liquidity um so let say you have a stable coin like PUSD which is regulated by the New York financial department Services everything is uh above board and being done well um but now you have kind of liquidity fragmented across all these change which can cause secondary uh Market deegs really easily is there a reason to kind of liquidate all of the users because a whale came in and did a curve swap also probably not so we're still like there's it's clear I think to summarize that uh stable coins rwa back stable coins a product Market fit um but we're only still touching the surface of what's possible in terms of offering good ux and capital efficient to users and protocols alike um does anyone from the audience know Nasim talb raise your hand okay so here we go crypto know him I believe right so the Black Swan and this is what happened essentially with sbv right like going under and uh just specifically to that event should an oracle price like 88 cents or 90 cents this is like a very interesting question but it's not a question rather to the Oracle itself only but also to the users like how they are going to respond to that and if they have like any circuit breaker because on a face you right now see that AA was very close to going under but on the flip side if there was something worse happening with circle and usdc at that time like in the hint side everyone is super smart right so in my view there shouldn't be an answer like either we use only market price or we use only approval reserve price we should probably create like circuit breakers that are adjusted to the consumers and then as a you should articulate it very well so hey in the moment of the Black Swan happening this is how our system is going to behave and you should adjust yours according to that right so that everyone knows what happens with hit the fan you're on Saturday afternoon like with your friends and you need to go run to your computer and like uh you know make make the system work and respond as you as you would like to one thing I would like to click double click over here I'm not sure everyone heard 90% of stable coins over 90% of stable coins right now are still Fiat backed so it's mainly tet and usdc then I think the number three it's like d right now or usds itina is a very interesting design as well that is tapping into the funding grade uh so basically they're just uh looking at the funding grade on uh state if or BTC depending on which module uh they're using at the moment and how to price that as well like we were the first Oracle that created the price sheet for usde and SD like both stable coins uh from etina and over then we had a massive discussions like which one should be like the um proof of Reserve like here also it's not that easy to create a proof of Reserve right because they are keeping these um reserves on centralized exchanges so you in a sense should also um either believe the custodian if you're getting all the access to custodians because they are not so willing to give that as well or you're believing etina itself like etina team that is going to create an API or something like um in that matter what has improved in my opinion a lot is the discussion because stable coins is super are super important for the crypto industry because Bitcoin ether and all other coins are very fluctuating right like it can go down 70% even because like the value behind it are not like dollars right like the amount of dollars in crypto and defi in my opinion is the minimum that crypto at the moment is worth right because Bitcoin is very like it's a mem coin in a sense right like there's no like no it is it is like there is no like backing of Bitcoin it's just the distribution how much people believe in the value of it and how much they're going to trade and so on it's true for the dollar though right no no gold standard either well there's no gold standard but I believe u there's also a critical mass point that you go through and uh in Bitcoin the biggest problem in my opinion from that perspective is that there's if things go bananas there is literally no one you can go to if things go bananas with the US government like USD like dollar you go to the US government and then you can start you know and they've got an army rightor and they've got an army to handle that okay yeah true um but the bottom line is more discussion has been held and one thing I will leave with one question that maybe you can also address is uh I was pretty excited about uh liquid V2 that is approaching right now and you know uh raft um Prisma there a couple of stable coins CDP stable coins that were tapping into specifically liquid staking tokens and liquid reaking tokens and in my opinion the idea made a lot of sense but all of them got hacked or didn't get like apprpriate traction and I I believe it's still a very Sound Idea like this kind of stable coins that are backed by a collateral that has onchain yield Source but with proper like Risk mitigation and Analysis but I don't know whether you agree with that yeah it makes sense to me I think I think it's just the implementation and and really thinking through it and we haven't seen that done well yet yeah we um we worked for months with liquidity and on the V2 mechanism design and and um really use kind of our simulation platform to help kind of that design it's super interesting but I think it it goes back to the challenges of like die that at the end of the day there's just an upper bound uh to the supply that a truly decentralized stable coin can get to um so there are use cases in which it works and if you're like an individual User it's probably good enough if you're an institution uh seeking kind of larger positions uh this is where the discussion gets different and you probably need to maybe you can have like a different portfolio like of stable coins but you're going to need to sit in rwa backstab coins as well so I think that that when when we speak about decentralized stable coin because there's no doubt for the E eths of the space that it's better it's just the the liquidity is the issue there and then we have not defi rather onchain Finance right because like it doesn't I don't even say defi anymore I just uh onchain Finance yeah it is well I think the one risk that has changed a lot over both the last three years and the last week is the regulatory risk which is like at first it was like our stable coin is going to be allowed or we're going to have to worry about the government like telling you to Blacklist everyone in a certain jurisdiction I think we're mostly past that um we'll have to see but like now like usdc is like M approved in in Europe and there's going to be competition around who's regulatory compliant but we know that it's no longer a question of like will stable coins exist or not now they will exist it just depends on like what framework are they going to get to exist in um and on top of that you also get to see some interesting models for like how or how is this going to be similar to Euro dollars where at first the US government's like we hate Euro dollars like let's the dirty communties to get access to Dollar funding and now and then eventually in a couple of decades they were like actually we're going to go and extend credit lines from the Federal Reserve to euro dollar Banks and I would be curious to see like in the future if there's ever a liquidity crisis on chain with stable coins if they become so critical that the FED is like somehow extending some sort of oning credit line that will be an interesting uh like turning point I I think we're we're there right because uh tether what are they the 18th largest holder of short-term treasury bills in the world and that number is only growing and we have a a new president who literally forked a uh so I think uh we have some kind of early signals to what the new administration's approach is um and I think just one thing that's like really interesting about stable coins that maybe is is lesser discussed is in the macro view um very early on you had like a lot of these uh anti- crypto legislators like Elizabeth Warren um who are very much against everything that's happening in the space But at the end of the day there's um this really interesting thesis of stable coins is Def Tech you guys familiar with that one I heard it yeah so I mean the idea here is that um like US dollar dominance globally is is is at stake with uh we have trillions of dollars rising in debt and and the dollar is getting weaker um and actually stable coins and with kind of dollar pegged stable coins being the main one are a way for us to kind of vampire attack other economies and strengthen the prevalence of the US dollar uh in global economy so I think the new Administration understands that they seem like really friend to it and I think also with more regulation like we'll be able to kind of manage these things better because until now everything is just best effort right like you work with responsible oracles or Risk Managers new stable coins and everybody's just trying to do what they think makes the most sense and we're going to get kind of better guidelines and Clarity from the regulator as well yeah I I that a bit here uh maybe like a hot take or whatever Devil's Advocate we often talk about us DCd Peg that happens right and how it affected everyone basically we started because of this but if you think of it the reason for the fact that it happened was because of the well not as much of the regulation per se but of the approach because basically Circle had no way to serve in a decent way fully the full backing as far as I know at least so they had to go and use basically second tier Banks which were not that well backed in general if basically they had the full support of the larger banks at the time that concerned wouldn't have happened because they' be bailout etc etc so in a sense the regulatory approach to the stable coins at that point in time created the effect which led to a deack it was not actually because of the kind of ill will on the side of the circle it was kind of the objective reality they lived in and that might change with the current approach and having said that it's basically again about the transparency nobody thought about what's back in the usdc rate and how actually the assets been allocated and how SPV has been around it's been like ring fanc or whatever but nobody knew about it nobody thought about it and hopefully we'll see better cases now with a better regulation and there is a take that the main benefactor of the Trump regime is actually usdt that's the opinion which I've heard a while so interesting take maybe all right so we've established that Bitcoin is a meme coin the president for dve and uh decentralized finances dead as we know it uh speaking of usdt I'm going to put the panelists on the spot here if you had to choose three stable coins to hold which ones would you hold and why I'd say uh usdc usdt and then uh usdm for Mountain protocol if I was not a US citizen which unfortunately I am and how much of which uh checking account uh USD for checking account because that is probably the widest Acceptance in like internationally usdc for savings like roughly as in I'm not getting a lot of yield but it's fairly safe and then usdm for like basically short-term treasuries which would be like the majority of my savings if I'm not investing in anything else I would say one thing that we didn't touch upon at all in this panel and is going to be fundamental for the coming years are yield burying Sable coins because what usdt is actually doing is kind of like robbing the users of it uh to just put the uh cash into bonds or other like yeld generating products and getting I think USD like Teter has higher profit than Black Rock right now I think it's the most cash generating company in the whole crypto industry by far so this is like crazy how much money the guys are generating but the sole reason for that is people and crypto for very long time weren't like asking for the yield on top of stable coins and I would say right now there's like a proliferation of a lot of companies that are doing just that and usdm is one of the examples but there are many others uh personally I I hold and I believe it's also very interesting idea like Thea stable coin like USD it has a variable yield H we're going to see how the funding rate is going to behave in stressful environment but I believe this is a stable coin that is uh worth experimenting with I'm not saying that to put all the money over there but I in the long term also believe s sourcing more interesting yield generation aspect is what we should look for because if you're are going to put the whole stable coin industry only on t-s then like there's not that much Innovation that we are bringing to the table the other stable coin is for sure uh USD s usds right now which used to be called s die uh from uh maker down of sky and Spark protocol because it's a very robust system that has been live for many years and is also generating a pretty decent amount of yield I think right now it's 6.5 5 and it's also available like on many chains and of course usdc which in my opinion is the most like secure run in terms of like a stable coin with no yield so that would probably my free composition yeah I I'll add that definitely uh this yield generation stable coins narrative is huge potentially and specifically the fact that we need more Crypt native yield sources because you can go and buy a t Bill basically that's okay the fact is that crypto has become a new type of alternative asset for traditional or conservative Capital allocators like thread five funds Etc and they want a new type of exposure and you want to provide that type of exposure that's basically a replacement of lowrisk yielding instruments which are uncorrelated with the rates and with the yields in the General market basically it's taking it's the funding rates like similar design in Delta neutrals um Solutions um raking and other Crypton native sources of yield and I believe that will become more and more and more prominent but we haven't seen that yet because historically the only way to scale that was through our wa's backing but yeah sorry answering the initial question I'd say 80% well again not speaking about my stable coin obviously like because it's going to be a bias though I have like almost everything in there and Stables uh I'd say now after the Trump case 70% usdc % die and 10% usdt something like this I think for me it's just a question of um who's managing the portfolio and what the size is uh so if you're like an A nonan versus a like a black rock that the profile changes maybe if you're a non you can use liquid ev2 uh D ortha and if you need size and you're a regulated entity then you're going to need to sit in some rwa back stable coins and uh also like agree that it's an interesting Trend with the yield bearing uh Sable coins and I think leaders there that are basically proving the thesis out in real time are Agora uh and m0 and a few others that are showing uh I mean it's a pretty obvious play but again the the main thing is liquidity and just also the Redemption uh style uh so for the rwa back stable coins like if you're willing if you want kind of uh Clarity on the Redemption process and guarantees and potentially insurance and you're willing to wait a day or two in the case that you want to uh redeem on the weekend when the banks are closed and offchain data is limited um then you can use a usdc or usdt versus a crypto stable coin which is hopefully going to be an atomic redemption or near real time awesome awesome so in terms of yield bearing stable coins this is something kind of new kind of exciting this is a panel on risk so let's say you know my sister is excited about moving her usdt into one of these yield bearing stable coins like usde from Athena or another one how should someone like that think about the risks that they're taking and the differences in risks uh yeah if I may since we build a similar idea but we segregated the risks that's the point that again it's hard to fully understand especially for like a Layman or like an average person who is not like kind of trading perose every day and doesn't know what the funding rates are are how they settle and what is the counterparty risk and how custody works and all that stuff like you basically you need some sort of providing uh the protection and the usual case is that everyone is relying on the basically internalized Insurance Fund right if things go sour the people will go there and grab it and basically we'll be saved but the point is that with these types of solutions and I'd say we raised the topic of what are the main concerns currently maybe one of the main concerns is transparency I absolutely agree here because uh transparency limits especially in these kind of hybrid Solutions like Athena or us for example when we can use onchain offchain elements to generate yield that's where basically it comes to to understanding how well you are covered what risks you are carrying what's going to happen if hits the fan pardon my French here um so transparency becomes the key characteristic because basic Bally I can say hey you know what I provide 20% yield and it's stable guess what it's actually like 10x leverage D trading on the back end uh and kind of saying that it's stable and you don't know if it's actually true or not you can stack as much as you wish so transparency and reasonable uh risk management on that front and well in our case the risk segregation at a separate instrument uh are the potential solutions to address that I would probably go to the most uh regulated one as possible like you know maybe Biddle of Black Rock and security tize or another product that has a very much uh legal backing as om mentioned like if that person is not Crypton native like she's not going to get etina or any primitive like that anyway so she can either put money on etina and like assume it's gun in a sense like she's not probably capable of comprehend like what the risk involved because we are not fully probably like fully fully uh so then probably throwing the money into someone who if there's like a bailout or like any problem is anyhow tied to regulator regulators and can redeem the cash would be probably uh what I would go for but one thing I also want to touch up you said is new yield uh Primitives and I believe staking has proven to be already Like A Primitive like a proper Prive for generating yield and now it's a question of the depth like how much of yield it can generate and for how much of the liquidity as om mentioned and I would really like to deepen that with the raking meta over here right now especially with usdc because right now if you do staking you have to go with e which is like exposed to e fluctuations as well on ethereum at least but then if you could tap into the yield coming from staking with usdc for example then it can be like a very interesting depth of the uh yield generating Source yeah I'll just end and say that we talk about mainstream adoption and I think that uh while we want everything to be transparent and accessible to whoever wants to take the Deep dive and understand how the risk is being uh Quantified and underd it's not realistic right so just like in the same way in traditional Finance where most people don't understand the difference between different tranches and AAA bonds and doublea bonds um I think your sister is probably really smart and can understand a lot but you shouldn't need to so it's the onus and the responsibility on it is uh on the applications and the Risk Managers to work together uh make this uh accessible but also build kind of a like a brand of reputation um in trust because users won't understand this and I think that is um that is the truth and yeah we need to kind of build towards that yeah sorry I'll just add quickly that basically in try this is being solved by risk profiling so you basically understand what is the level of proficiency of investor how much is okay to lose and then you risk profile the products we haven't seen that in defi yet not I I huge prop proponent of that basically and that's basically why we again do this what we do kind of the risky part the non-risky part we'll see more of that and I believe that's also what was highlighted on the previous discussion it's it's it's super important and what's cool in crypto and onchain you can trace the users history you can understand the level of sophistication you can understand types of instruments he used to basically better fit the products that you're offering and not kind of pushing him into this junior tranch as was stated before right awesome all right I think we're out of time so everyone please give a big hand to the panelists