Bridging the Gap Between Institutions and DeFi - Gustav Arentoft

hello everyone um yeah my name is gustav and today i'm going to talk a little bit about the the kind of like current landscape of d5 institutions as well as the work that we have been doing at one inch um so so first off you know like my my background is i spent three and a half years at maker dao especially like the last year i was working a lot on the institutional onboarding so some of the big projects we we had coming out for example the the project with society general who applied to be a collateral maker was one of the things that that i was working on and then in december i moved over and joined as a contributor to to one inch to help them with the new product which is called one inch pro on the institutional onboarding for defined you know basically like the mantra is that we we have a lot of institutions who's kind of like want to use the technology and the the promise of the permissionless protocols uh the efficiency gains we have using permissionless defy but they want to do it in an environment where they can participate so so yeah like today i'll be going over of course like where where we currently stand at one inch some of the problems we have for institutional players the current landscape for institutional d5 what this whole movement means and like can mean for for the space and then also you know where where are we going from from here on on and out um so you know for those of you who aren't familiar with with one inch you know it's really especially in terms of like useful numbers grown into uh probably one of the biggest if not the biggest d5 protocol uh we have like an insane amount of users it's live right now on seven different networks um we have a lot of different products um you know the the one-inch product suite kind of like started out with with the aggregator but today it also counts over things it's like the liquidity protocol it has its dow out we have our own wallet as well we have a limit order protocol which is also super cool we have a lot of really exciting things on the pipeline and i think you know in general like what one inch is really like all about is trying to build products that makes it very easy for you know like the average user to access the best possible scenarios in in d5 right and and that of course started with like the the aggregator and then the product that i'm i'm working a lot on uh actually it's my my only focus with them which is the the pro product so how how do we use the technology that we have created now to basically uh access the liquidity that institutional players are sitting with kind of like sitting and waiting waiting on the sideline so for like a lot of the institutional players right they they kind of like are in a situation where they have some regulatory or compliance requirements that makes it very difficult for them to interact with defender permission as way for example for for like a lot of them you know they would have to basically if they were participating in a general amm pool they would have to scan every single participant in the pool and if it's just one you know red or yellow flag pops up they're not able to to trade in that pool and for other players you know they really need to know everyone who is participating in the pool not just from any male perspective but from a kyc perspective so basically you know we are not you know building the tech for them to to you know interact with these types of of technologies uh they basically would never really be able to come in right um and you know i i spent a long time at maker and i'm of course like a super big believer in d5 but at the same time we also just have to recognize the opportunity that is kind of like in front of us from us to basically target like very big portions and amounts of liquidity that would just further be able to enhance our like market position especially from you know like the the viewpoint of the public right the more big players we get coming in would also be able to unlock more retail accessibility for us right it kind of like helps uh increase our stance from like the the general public um so yeah like right now you know d5 is just filled with unknown participants you know and in almost every major d5 protocol and and this was like one of the things that were like quite easy for us at maker because we don't take user deposits but today you know like the vast majority of projects they take user deposits so if you have like d5 pools that is filled with you know unknown participants it just creates like a barrier that is like quite difficult for them to overcome if even possible right so like a lot of the feedback we also got from the market is based you know like if you can create this product where we wouldn't have to you know scan the pools or you know even try to avoid the pools at all then you know they would they would you know happily participate alongside us um and i know there's also you know like a little bit of you know like the philosophical standpoint you know that you know d5 is supposed to be for everybody and like the access is supposed to be permissionless and like i totally agree but at the same time we also just have to like recognize that you know both of these products can kind of like coexist alongside each other and just because we create uh you know an access point for institutional players to come in doesn't mean that this is something that would need to be applied on the permission side of things so they'll basically just be like two options available i think like another really good example of you know like a protocol that has been taking like the probably like first really big active steps is the other arc deployment under fire blocks where you know anyone can participate in the permission as other products but they just have this deployment which is sitting you know under like a setup that that allows you know the the customers of fire block to participate in it right now it's still quite small in terms of like monetary value but we truly believe that this is like something that we can scale up a lot right i think all of us have experienced you know like the benefits of using financial protocols built with smart contracts um and and you know we believe that this this like the next step is then to to target this this segment with it um another kind of like pretty big benefit of doing this is that like right now is i'm sure that you guys have felt this as well especially people who have been through several cycles of of the market is that like right now like the only way for us to really grow the space is by getting more retail coming in but to get more retail coming in that would typically mean that we would need the prices to increase um and you know being dependent on like the market conditions for like your product to be striving it's never really a situation you want to put yourself in from like a business standpoint right you want to make sure that you have like you know other alternatives to attract capital from rather than just be dependent on like the market fluctuations you know whether you know we have a couple of months where the prices go up and all of a sudden you know we on bought a million new users or like the market stagnates and you know like some might be leaving of the ones who came in you know we really want to make sure that we have like the best uh terms for like you know succeeding just from like a general standpoint in the entire space so like right now you know we basically have this like really big portion of capital which is already allocated in digital assets or you know who's waiting to potentially be allocated in digital assets if we give them products that they they could use who's kind of just sitting and waiting on the sideline for us to basically you know open the floodgates and create products that is able you know that enables them to participate in a compliant way uh you know with with us um so basically you know from like the one inch side you know where we're really looking to to go from here is that you know we have like three main things that you know or like two main products that we want to push out to basically facilitate the institutional onboarding um we have a wide label product where we are basically you know helping uh like certain companies institutions trading desks exchanges um to you know deploy a white label amm product the the you know like the liquidity product from one inch under like their own setups you know for example they could be like on their own chain it could be under their own custody solution but basically creating a pool where they're able to completely control the participation in this pool um so there's like the first which is like the white label product this is something that you know we we know that there's several of like the d5 protocols working on these types of solutions so you know like going forward i believe that we will see a lot of similar type deployments to other arc where you know different types of entities uh will deploy their own kind of like you know the their own product d5 protocol where they can kind of like control what is happening with it the next one is our one inch pro general suite and this will then be you know the the aggregator that is able to check for example kyc directly in the aggregator and only route you into pools where you would be able to trade and in this aggregator product you know we are currently experimenting with creating you know zero knowledge proof kyc checks so you know you can basically have like nodes that submit to like the network you know whether you are compliant under like a certain level of kyc that can for example be as like a certain jurisdiction because of course like kyc is still quite regional um but basically no that would allow you to come in as like a player and basically still get like the best price execution that you know one inch is is you know known and appreciated for but under like but under like uh you know regulated uh pools under like compliant pools um and this is something that you know because we we also uh you know have this um of course like pretty strong idea and also something we saw with other arc now is that of course like at least in the beginning when you limit the participants in the pools you would also inherently not have like the same level of liquidity in there so until you know the institutional onboarding is really a bit more advanced we would also expect that there would be you know like quite a big like opportunity for like having uh you know arbitrage like different types of aggregation methods and basically you know still allowing people to get like the best price because of course like the less liquidity you have in a pool uh you know the worse the trade potentially would be if you have like bigger trades so that is of course like one of the things that one inch does quite well that you you could basically have like five different pools and execute a trade going through all of them to end up with like the best price execution um and in regards to to like this like institutional onboarding that we we envision and that we want to have going forward um we also closed a pretty big serious b round i don't know if any of you guys saw that but we basically had more than 50 investors a lot of also very big traditional investors such as jane street it was led by amber and this is you know again from like this standpoint that you know we really want to be working with these types of institutions uh so since we closed that round uh a couple of months back we have been you know sparing a lot with these different types of of players and you know has been getting like a lot of feedback on the product um and like right now we're basically in like the situation where we have the first couple of pilots lined up so we already have the first players we will be pushing this out with and are also increasing in in talk with with a pretty large portion and it's really a very differentiated [Music] yeah like interest we have in the product it's really a lot of different types of companies which also kind of like further like verified uh our commitment to building this out is that there's a lot a lot of the market demand from a lot of different types of players in it um so yeah you know like right now we are of course like still like very interested in you know talking with with more teams and more players so you know if if anyone is interested in learning more about this then of course feel free to to to reach out to us um and yeah that was basically it for me today thank you everyone for coming out and i hope you will continue to enjoy denmark [Applause]