Stani Kulechov ~ Leaping Decentralised Finance to Mainstream

[Music] thank you for the introductions and everyone welcome to it Denver it's pretty fun to be here especially flying from Finland where we have equally cold temperatures so I'm pretty pretty excited to be here yeah today we're going to talk about decentralized finance and basically how we could get decent response which is getting more and more popular in the etherium ecosystem basically to the mainstream and what kind of tools we need to use to achieve this goal now to basically start with the small presentation for some of you guys of it might not be that familiar as a name but basically always behind Oh always behind yes all right we're back on track so basically always behind of a decentralized landing platform called eteland which derives from a theory on lending and basically we started to build decentralized finance in 2016 so basically kind of early stage of this centralized finance and and and actually in the apps as well so what Edlund is all about it's basically allowing our users to get loans against their cryptocurrency collaterals so basically our users are holding for example etherium here c 20 tokens for example all michigo 0x or today for example even bitcoin and these four words are actually taking loans to avoid actually selling assets so there might be for example users that are participating in different kind of protocols but actually do you know what to sell these tokens or they need more liquidity and for example to trade we call this this this kind of a lending model as over collateralized lending and today we have a lot of different kinds of types of over collateralized debt positions for example there is there's maker Dow with CDP's our platform then there's also over claire Ellis lending in margin and there's for example even lenders who could give cash loans against cryptocurrencies such as for example salt we may launched main net in 2017 and last year we were able to gain 20 million lending volume in our platform which is pretty awesome because the whole platform that we have is based on smart contracts so kind of it has its difficulties in the mainstream adoption and today we're going to talk about how we at Ave are trying to tackle these challenges to get defi more mainstream now here's a quick overview of the platform just to choose to give you more black background details on what we are doing and and and and what kind of users we are survey servicing so what's interesting in our platform is that we are though we have a direct-to-consumer approach and basically it's a simple bulletin board which is based on smart contracts and we connect lenders and borrowers together where they can make transactions trusts with transactions based on smart contracts so for example we have in the in the board user who pledges 0 X tokens the basic borodai and that's one of the popular things to do now for example we have also user there who is borrowing ptc sorry too pledging BTC to borrow die as well and today one of the interesting parts why we're here is to talk about the deaf eye itself so death is decent to as finance and one of the important things do you understand this is how we can recognize this and toys finance because there's different kinds of applications out there so I think one of the most important things is that we are providing equal access to finance which basically means having a trust list open finance system where everyone can participate it's basically it's censorship resistant system where all the users are controlling their own funds their own personal data and basically this means that if we have a borrower for example from India we could have a lender from Finland or we can have a borrower from us and lender from for example France and our kind of goal is in this and trans finance to create something new and break barriers and and basically provide more transparency so basically transparency aspect is very important because you are not trusting third party on information that that it gives instead everything is audible on the blockchain and of course one of the interesting parts is the counterparty risk mitigation that we're trying to achieve by using smart contracts so for example if I take a loan from a platform which is based on smart contracts whether it's eat land maker Dow for example or any kind of marching lending platform I kind of trust that the smart contracts execute in a way that it's pre-programmed and I think that's one very valuable point of this and so as finance and including the reduction of costs so basically if you have programmatic transactions based on smart contracts we could actually reduce cost compared to for example cost involved in labor or paperwork but of course today it's kind of like a challenging to argue with this aspect mainly because the users are paying for each transactions in blockchain fees but we'll get back to this point a bit later a few examples of Delphi we have khyber network for this and towards fobs maker dowse stable coin bxe for decentralized margin lending and basically Atlanta's wall which is our peer-to-peer crypto back loan marketplace they whole roads to the decentralized Finance has been kind of like pretty novel so I think the whole idea of actually creating applications financial applications that or trustless and and based on open finance is a concept that has been around for a few years now but the adoption wise basically the Devoy is still some in some aspects pretty challenging so we could call the whole path to defy kind of like a silent path because before 2016 and and during that year it's kind of like something where the centralized finance be gone and what happened during that day we basically had first interesting applications we had for example disinterest exchanges eater Delta We Trust which is basically social lending eater risk which is more of a Insurance smart contract based insurance provider and I still remember in 2016 there was a huge big post when eater Delta came up that why people aren't using eater Delta and we have different kinds of conclusions on that but I think it was six months after that post on Reddit what we actually noticed that eater Delta got more and more mainstream about adoption not maybe mainstream but more in crypto mainstream and basically so we could see that this is the kind of starting pad for the ascent was financed and during 2017 that was actually interesting year because more and more projects were looking into traditional finance and thinking what kind of things we could actually take to the decentralized finance and trying to create an ecosystem so during 2017 when we we also released on may net there was interesting projects as well there was landing projects there with these projects there was basically a stable coin project died and kind of like a start for the ecosystem and during last year I think was one of the most kind of like fascinating years because we started to actually form an ecosystem for the dissenters finance now basically in a larger scale that was interesting projects for example Al Gore busy acts dy/dx and coiba Mellon port and if you think about it these are small all projects here and there but in terms of mainstream adoption they play actually a very very important role which we come back in a moment so what we can conclude until this point for the past years the least interest finance and we could even say that's in general basically you haven't gotten a significant adoption so even though we have more people working in Morgan different port projects we have more more developers here we have more tools available we have even specifically these that are interested in these interest finance and and basically into this field so there's kind of like some kind of expectation of scalability and of course we have more PR and base to integrate with Delphi we have grab process for example and different ways that the users can actually reach us more in our products but still the we're not there yet in in in kind of like a mainstream adoption path but I think in one way we're getting there we're getting really close closely to that path and the reason is basically because we are building a lot of things we have different approaches so in Edlund for example we are trying to think because we're consumer oriented how we can get people to use our products and we have basically for the past years kind of trying to understand more like what how do we reach more people and and like what could be the solutions to get more mainstream adoption and next we'll check some of these things and thoughts that basically we have come up with and and look how this could be actually implemented in your Delphi projects or your ideas that you're building here or elsewhere so one of the most interesting approach that we noticed that basically they fight to get more mainstream we actually need to approach the adoption as a ecosystem perspective so for example let's take a look look up on petland we too have a valid system valid decentralized landing market we that that actually normal mainstream users could use there's certain parts elements that has been missing previous years for example stable currency if the borrower borrows let's say 1,000 well let's say for example 100 teeter and returns 100 Eater after six months so if that person will use those funds in the real life for example paying bills expenses holidays and repays that loan the ETA value might be different so that's kind of like a challenging point in terms of lending and of course liquid after after market for assets in ednan basically because it's collateral back bones we also need to have a valid system that we can liquidate declare rules in case of a defaults or margin calls and also interoperability with other chains we know that most of the assets are hold in other chains for example bit point light coin and so forth so there's kind of like lot of users that we are not accessing at the moment and that is bit of a challenging for for us and of course risk management for example in our case how we get correct data true oracles and entry or smart contracts terms of assets that we are using in the platform and of course user accessibility how the users can actually access the the smart contracts and the application so if you look at the whole if we if you look at the whole ecosystem two years ago and look today basically today we have a stable currency available today for example died liquid markets you can use fiber to convert currencies after default scenario or margin calls we have made ourselves in other a inter ability interoperability solution for between bitcoin and ethereal smart contracts we have WBT see we have different Oracle's that we can use in in more decentralized manner such as the maker dowse USD oracle we have more accessibility i mean we have that browsers there's so many that process today that actually users are they can easier access the distant was financed now this is very interesting approach because like here what we what is happening is is basically we are drawing our adoption in a way that in an ecosystem manner when everyone else is building something so you might be building here some sort of like a project that really relates to decent was financed and even though it might have a nice use case but if we can connect all these different data applications if we can integrate with with for example Kuyper we can integrate with with die for example or we can integrate with other projects we form an ecosystem where we are actually bringing together more users to the decent was financed so basically we are sharing the user base which is very cool thing to do and secondly we are helping each other to get adoption so I think what events like it Denver and and and hackathons are about for exam in terms of deaf I is also to connect people to build more ecosystem and get more adoption so I think this is one of the kind of like main things that we have found in our research like how we can get projects out there if you start using more at land we start using more die khyber work together more and in basic build more projects upon these protocols then we can expand the user base and expand actually the the benefits and share those benefits and of course second interesting thing is the educative approach so when we started our first MVP main it release pretty much there were so many things that the user need to know before you actually can use it up or especially like a financial DAP and and there's so many things involved there and kind of like if we think about the extra user like why would a user use decentralized finance I mean when we build things we tend to find like very cool things to do I mean whether it's like marching lending or related to to to any kind of data project like do we actually ask ourselves like does the user need to is this something that a user could use and why would the user use it I mean what are the benefits of using these endless finance and if there's easier ways to participate in centralized finance would you actually care about these and toys finance and there's a couple of examples for example in lending we have Edlund which is smart contract based marketplace and for example we have salt lending which is a lender who gives cash loans against cryptocurrencies so there might be questions what is the easiest way to get a loan it might be a centralized provider because it might be more regional there is more support for you but uh should we actually ask their user questions that do you actually care about the things that are important for example open finance that basically we have permissionless and and the financial model where you are controlling the the keys transparent and if these values are actually important to the user he might choose to decentralize finance over decentralized and I think it's all about educating the usual the the the benefits and I think you know one way when we look at all the defi that is around there we do pretty good work but still I think we could do better in terms of actually educating the users like what are you getting for participating to defy another example could be dye us DC and dye you can basically see everything on the blockchain what's happening there terms of US DC for example you're trusting a centralized party and and kind of like you need to think about and asking the user like is it okay I mean basically are you sure you can redeem your currency back so I think we could teach more the differences to the user and and by that way kind of expand the whole user group of decentralized users and one interesting thing before actually we're designing the products that we are building for users we could actually ask ourselves first that what are we actually fixing like what therefore I could fix so basically there might be something around there that Center and Finance cannot handle cannot basically serve and we could ask could actually these interest finance solve this issue is it related for example fraud bank down banked or basically granting loans without credits pouring and they could be different kind of things that you can actually solve with the file and one of interesting projects is bloom from San Francisco so basically one of the issues of data that relates to credits pouring is stored on centralized servers and and basically there was a big hack on Equifax I think it was 2017 if I if I remember collect correctly so kind of like what boom tries to do is basically take take out the data storage from the centralized providers and if the data of credit scoring to the user the full control so there are things you can actually fix with Delphi I think we're just touching the tip of the iceberg so I'm so happy to to see what everyone is building this weekend here because there's so many things out there and if you find a solution I think defi basically becomes a solution to a problem now this is pretty interesting one because we all know about the UX problem right so basically I mean using these Android applications it's kind of like pain in the ass I would say part of my French but we've we've instant to be a bit direct so and what I could say is that if you look at decentralized finance or Central's Ward it's actually as painful as it is I mean to make a transaction you need to have a bank account to have a bank account you need to go all the process to open it and and there's different kinds of processes out there and basically these interest finance it's kind of the same thing so you have a lot of things you have to do before you can make the transaction right so what we could actually think about is is basically not looking how things are done in in the centralized word because I think we could basically streamline a lot of things and we need to basically streamline the learning curve for newcomers and think about like how we could get the accessibility for the users much easier so that's one of the things and I think we pretty much know this but it's it's kind of like we know it we know our UX sucks but kind of like we need to work very hard on it so I think when we basically hire themes I think we need also to have very extensive UX team UX developers and and and not solely blockchain developers is there anyone by the way working on on UX so there's there's a couple of guys so if someone is hacking I I think you guys need to talk talk with these guys because UX is very very important and I think it's a big big thing this year so I mean the whole process of using your application opening I made a mask and connected to the web tree provider getting gas and initiating the transactions and like we need to think how we can streamline these procedures and for example what we did in Edlund we have used for two years for example made a mask because it's a easy easy way to store your keys inside the browser but one of the feedbacks that we are getting for example for users is that they need to install mega mosque which is a third-party plug-in and and kind of like it requires a bit more effort in the learning curve so we provided an option for the user to actually generate a wallet and encrypt that wallet into their browser and with that wallet you can actually control your aetherium based address and keys and then basically a Bitcoin keys as well and this is pretty cool because we have options to basically get the users quicker to the our application and the more we have three inline solutions the cheaper or user acquisition cost is because if you have 100 people landing your application and they went alone but only 10 understands what is a made a mask or third-party plugin and maybe five of them has that kind of like extension it might be pretty difficult but however I think there's there needs to be options as well I mean that you can use different kinds of wallets that you are accustomed to whether is it's ledger made a mask or any other one interesting question that we have talked previously and and also last last yesterday in our meet up with with maker Dow we basically discussed with some of the audience about whether we should actually go for mainstream I mean do we actually need to serve do we actually need to serve everyone and get box chain technology everywhere I mean these centralized finance to all the financial applications that that that are out there and it's kind of like depends because we could think about whether actually a decentralization is a choice so basically if you think that decentralization is a choice maybe it might be good idea to actually focus on the segment of these Android users who are privacy concern want to basically promote open finance and basically want to hold their own funds and of course one thing to consider as well whether or not this will work for you is do you have enough users to actually support your protocol or your your application so it's it's kind of like a question that depends and and requires a lot of thinking from from your side but I it's it's pretty interesting to think before you start a JP project so I would say if you need to take something home from this this particular talk I would say we need to understand our audience like who we are building for for I mean there are so many cool things things that you can build I mean there's in all that we have a huge huge long pipeline of so amazing things but we always need to ask like who are we building for and what's the future will be like so let's say if you are building for users who care about decentralization so you you want to serve a a demographic that already exists about like what's important for them like what are the things that actually are important and how you can reinforce those things on the other hand if you are actually trying to get these into as finance and kind of like compete on centralized providers you need to also understand that basically you're not only competing on the security which these centers finance provides and smart contracts but you're also competing with the UX so you need to be equally good and actually better than the centralized providers and also how do you support your users because in one way we could say that these centralized finance and apps all they are all about open access permissionless but what happens is something goes wrong where the user gets support and those are very very important things we have had our application running two years now and we feel that there's so much work involved into the customer support and especially because there's there's so many things involved in the process of getting a decentralized loan so that's something yet that you guys need to take into mind when you're building a theme so I think the main thing is to decide who you're building for so happy building guys if you have any questions I I can basically answer them do you have a microphone here maybe we can get our microphone hi I just want to know how do you determine the credit work how do you determine the credit worthiness of people that want to get a loan I think in our current phase we're servicing users with basically over collateralized loans so in Edlund basically you might have you might be a user who is holding 10000 USD worth of Bitcoin and basically you don't want to sell let's say you bought the Bitcoin at 20,000 and it's 3 and a 3600 per Bitcoin but you might have a situation where you need some funds to basically operate pay pay pay bills or basically other expenses so it's over collateralized so you basically pledged ten thousand worth of Bitcoin and you can borrow for example five thousand worth of die or etherium let's do a couple more questions while our next speaker comes up and gets set presumably you use Oracle's to determine when the prices fluctuate of the oh you guys presumably use Oracle's to determine when the price fluctuates how do you incentivize those Oracle's to kind of report the right prices so was the question related to basically how we used Oracle's to get the prices for the assets right how do you incentivize those Oracle's oh that's a good question so basically currently currently we're hosting the Oracles ourselves but basically what we're trying to now do is create a or network of Oracle's but basic you are running a software which handles our Oracle's and handles also the interoperability between Bitcoin and our theory of smart contracts and basically our idea is to in save and incentivize these kind of like helpers with the own thank you with our own native land token but what we are actually looking beyond this is basically to participate or create an ecosystem where we have Oracle's for example with other decentralized finance projects out there that are already facing the similar issue that they basically need some way to decentralize their Oracle network share costs and so forth you you okay thank you guys and happy bidding all right I'm gonna introduce our next speaker but