DAO First Approach for Protocol Launches

[Music] [Applause] [Music] we have three more incredible people joining and they're going to be covering a doubtful approach to launching a new protocol so this is the gearbox team they'll be covering all this i want to welcome mikhail yvonne and cookies to talk about this and they have a presentation uh prepared for this so without further ado i'll let them turn their cameras on and get started so welcome [Music] oh nice hello everybody hello hi kartik nice to see you you too thank you for having us uh can we jump in right to it or there is something else you'd like to say first no we're all good okay cool well thanks for welcoming us it's exciting to be here and uh we didn't want to have just one panelist from the team because essentially we're building the primitive and the d5 protocol so we felt like everyone who has been mostly contributing to the protocol so far uh can be uh switch can be here to present their part of the vision what they have been working on um actually it's an interesting story because uh gearbox started at east global earlier this year at market made hackathon in january february when mikhail as the founder kickstarted then and then we met again in february so after three quarters of work we excited to present something we've been working on together with other founders uh with the auditors and everybody else who has contributed to contracts and ui um yeah so well do shall we do some brief introductions or just jump right into it anyway okay let's go into it so before we get into the we would like to did you press the share thing let's uh pardon for this yeah yeah so there are a lot of interesting things to discuss today uh it comes of course to the topic of governance and taos there are the concepts of like friends and family owning all the tokens the three riders having a big edge which essentially also comes down to voting powers being unfair the introduction the initial distribution being unfair too uh so what we see as a solution that is the reverse vote in escrow that we will get to later uh just before we get into the governance and doubt questions we just briefly wanted to give viewers an introduction of what gearbox does just to explain what it does is a d5 protocol to then explain what exactly one could do with it from the governor's perspective so mikhail please thanks so much and at first i'm really so happy to be a speaker today because i participated in many s global hackathons and it's a really good honor to talk the protocol which was burned which was created during this hackathon and now we are really happy to talk what we've built for the last seven months so here you can see the architecture of gearbox protocol and as you can see gearbox is two side protocols two side protocol on the left side you can see liquidity or capital providers these people want to provide liquidity to get apy and this part looks similar like any other lending protocols so this is passive investments which generate good apy but what really makes gearbox unique is the right part and here you can see the traders who want to increase capital efficiency to do so traders provide initial funds to credit account this is new the five receive and we strongly believe a lot of new things could be built upon it credit account is an isolated smart contract which allows you to execute different financial orders but do not provide direct access to the funds so to use it the trader provides initial funds on it and credit account immediately takes margin loan to get leverage from the pool so after opening an account trader could send different financial orders we check them to cover the collateral of margin loan and if they are wallet if they have a real smart contract they will be immediately executed on behalf of credit account so briefly you can see that nothing depends on trader and x's and gearbox could be used in more generic ways where you need leverage so in the simplest way we could really enable leverage for any defy protocol and probably there is a good analogy in real life when you can open a credit account once and then you can use in different places and at this space we can talk more than gearbox provide leverage as a service we do not provide for you experience of margin trading or tilt farming with leverage and so on and so on instead of that you can combine gearbox with yodify protocol and leverage user position and these things create a really amazing opportunity to create permission strategies and it's really amazing and in the next slide i will show how it could be beneficial and profitable for you and one more really great advantage of gearbox that there is no funding rates because we take money from money market like any other landing protocol and here what i want to show example what could not be done before gearbox it's really unique you can open a short position so at first you provide your usdc you swap them into ethereum open credit account in s and now you have depth and s and usdc on your credit account and it looks similar for many other solution on the market but then you can put this usdc into vayor to get more apy so you can create a lot of new ideas in the file market and our value is composability i think it's the most significant part of gearbox so we focus only on one things to get leverage and we really take the advantage of connecting different defy protocols it's why i believe so crucial to have a strong doubt to manage so complex system because there are a lot of internal parameters and the ways how we can grow this protocol to connect probably the wool defy marker and here you can see that from gearbox side we provide only new defined primitive which is called credit account and it should be grown followed by dao so let's talk more about dao and governance and here i was i want to continue yeah so everybody allows dallas governments after all that's the topic of today's uh talk in the conference as well um and there is no really doubt that the down governance present a much more transparent and clear way to create let's say collaboration between people but there are still a lot of issues that are untackled that we think we have come to a way to solve essentially uh so at first like what can the dialogue do in the gearbox concepts context well it's very much similar to every other d5 protocol like other maker compound and so on you have collateral onboarding meaning the assets you can boot as collateral you have liquidation thresholds which are defined by credit accounts when the position is liquidated you have a loud token uh slash protocol list uh and those are to see where the leverage can be deployed so those are the only boundaries created by gearbox in that sense uh as the protocol then there is the protocol fee model which could be there would not be there the protocol governance can decide not to have it for the first year two three maybe never maybe they decide to have it right away and tdl caps referring to the fact that from our perspective it makes sense to start protocols based with tdl caps because it allows the bug bounties and other security issues to be found in open source way while not risking the user funds to an extreme level so essentially dow utility of gear token which is what we're presenting here is similar to anything you see in d5 protocols um so the usual approach to launching an e5 protocol that is very much straightforward like um a team gets together builds something for a few months deploys it tries to find tries to find emf test different strategies and once they have found something team launches a token and they do a doll and progressively get the decentralization where the token is there there is a multi-six and snapshot or whatever else it is and this is totally okay so this model everybody is familiar with and it's fine but there are a few caveats in here relating to the centralization and how the imagination is cut because if the way where people have to go and establish it it's difficult to find another path there and that is what we think where the loot approach is actually interesting so um jumping away from d5 for a second loot is the nft project by dehoff who is the ex-founder of wine i think many a million this space has been like last month or so what it really created is that it made the distribution and the distribution really of ideas in such a way where the assets were spread out through communities of different stages and communities of different interests without telling them what has to be done with them and that's very interesting because it doesn't cap the imagination of developers of the people involved they can really think more broadly and that of course also has another point from the context of a regulatory standpoint in g5 protocols where team owned admin signatures it often becomes a problem that the team has control over it and therefore they can be forced to regain control of it sorry to give away that control which is another point that has to be fixed and we will address that in the next slides so loot inspired launch of gearbox is basically initial distribution of gear tokens to a very wide community base at that point there is no protocol yet it's just distribution of token distribution of assets then governance decides to deploy the protocol so of course the code has to be presented and governor decides to deploy in the late fashion dc so team doesn't have admin signature at all whatsoever not even on day zero we remove every control before we even deploy because it's not asking before and then of course governance decides protocol parameters pools assets everything that comes with the protocol because those are all modular kind of things that can be done and after that as you can imagine deployed parameters figured out by the dao they can of course be changed by the dao at any point and then builders can do different things with it so essentially the reverse model of trying to have protocol deployed by team and find dmf to first deployed by the core by the let's say community and then decide whether the dmf and what the protocol will do but sounds very nice right sounds easy but there are still some credits with it um what that was around today and i think quite often people agree on these things is the token distribution where core team has too much or investors have too much well somebody has too much um well that is not an issue at hand per se because we don't have ubi yet and these economic things of wales are hard to let's say argue upon um it still leads to vote when you as a small holder or user see that there are two people who essentially are those who were involved before the distribution that happened they controlled the entire protocol you don't have the reason to engage with it and it's hard to argue with it and that is the case for electoral systems around the world this day so this is this is are very known issues and while we don't try to fix with how distribution is done per se because there will always be whales they will always be people with more resources whether it's information capital or something else we believe that governance can be done in a more fair way so well and that is how we get to this reverse crv model that we can jump in later so let's just recap initial distribution issues friends and family basically your close friends get their locations for no reason no we don't want that essentially as i mentioned free riders we just get tokens for no reason also not cool everybody has to be a contributor so anybody that correspondent define knowledge who contributes or helps who does something gets to be a gearbox dial member so essentially you search any one of you and on or not alone um so jumping back to this how do you ensure a distribution in a cool way before the protocol isn't in there it's easy to the distribution once you have users right but here you go to make up users you have nothing it's like blank sheet of paper so what mikhail mentioned previously those credit accounts which are the actual core primitive of gearbox they are isolated smart contracts that users essentially take from the protocol borrow it and use them and once they close them or replay or liquidate it they come back to the product that is cool in two ways first of all because you don't deploy it every time the gas costs are much lower because deployment of smart contracts as you know is not cheap second it's more interesting from the ethereum green point of view because we don't just deploy constructs every time and just leave them hanging somewhere it's like an uber model where people bore an account and then give it back it's really cool right so then the question how does the protocol get a factory of them let's say we envision 3000 users in the first x month for instance how do we how does the protocol guess that right here's the cool part so we call it credit account mining it's the initial distribution stage that really lets people be a part of the community and get stolen and get tokens for work without first so active default governance addresses are snapshotted as eligible for participation uh meaning that if you participated with let's say uh compound our wifey and a few other governors participants a few other government systems previously your wallet should be eligible to mine one or two that depends later of those credit accounts and because you pay deployment costs for those isolated smart contracts being credit accounts you get gear tokens so that way in a good case scenario there should be a few hundred people who know g5 who have interacted with d5 before and who engaged in a more profound way rather than just getting an edge everybody loves that right they never say no to them but they don't entail one to really have any knowledge of the product or do any work and at that point you're essentially the same as the free rider who is an investor right so if you remove free riders from investors you should remove them at every stage to really try to balance the level as much as possible so this still gets to an issue of let's say the distribution is done right but as mentioned before we don't have that case where we can really have community owned at the first week the same amount of tokens that team or contributors simply not the case right you need stages of liquidity money for that awesome odd engagement so then you have the issues that i think yogis wants to present on this topic yeah so uh the next open question is how to find a good balance between community and team in terms of watching power so what kind of options we have in our industry next slide please first one uh first one when only liquid tokens can vote and team which has of course uh log tokens can any voting power is it good uh we guess no uh next one because any bad actor can uh [Music] make a proposal vote for it and do something bad for protocol and actually kills it so what's next option we have team can vote by its log tokens is it good of course no because team voting power is much much more than community have in the initial stages what's next next option is when community one when team can delegate their locked token voting power to someone else but the question is to whom how to choose this person uh and how how uh to make it transparent and uh yeah how to make this process transparent uh it's not very very easy way to do it and we see other protocols who did this before and it's very hard for them to make transparent process of how they choose person how they vote to whom delegated so [Music] our idea is to create something else so we invented reverse voting scroll model first of all uh what's watching scroll uh it was invaded by a curved team when you can lock your liquid tokens and get more voting power uh in the dow it's very very good way to increase to boost voting power but in our case we need opposites when you have much more less voting power if your tokens is locked so we implemented each by creating some multipliers for the team tokens and so initial contributors tokens so that yeah they have a lot of tokens they are locked but their voting power is not so huge so now we get a fair distribution of voting power next slide please where community holds more than 50 percent of voting power so actually community owns the protocol community can decide to watch the best but team also has uh a high percent of uh voting power but of course not majority of it so a team can be some kind of leader type of organization when team can be responsible responsible for uh [Music] for making fair decisions more failure next one yeah so just to recap the things we just addressed uh the issues that we think are addressed with this model where you have the reverse vote in escrow is that we expect a lower level of voting apathy um it's voting apathy is still the case in every protocol and it actually diminishes not because of the mathematical question just because community loses interest and let's say the product was not as hyped anymore and there are no new things really happening but those are the things that are more like dynamic than teams contributors everybody else can address to make them interesting again but really the reverse rates make it such as a level playing field and as you see in the previous slide while team and initial contributors might own more in the first week every protocol at this point has like 30 to 50 reserved in the dow right it's really the question of how you get that to people and if for the first year the entire dow is literally three people for the first year people just don't have any interest in gauge and this reverse model essentially as we believe fixes it because then people understand that from day one despite not having 10 percent of the supply they have as much voting power and as log tokens let's say previous contributors unlock which is totally normal to see right you wouldn't expect the person working on this day and night for two years to not have anything to have the same as a person who joined discord yesterday that just doesn't make sense right but then as those unlock or become liquid all become less diminished by this multiply that we're talking about and the vote in escrow the community distribution of the tao also releases more in stages over a few engagement programs liquidity or whatever it is so then it balances it out so it's really about the first initial boost to let people really participate in cabinets that is first point another point that taos come across is the admin key distrust where a protocol is launched in d5 protocol having a few let's say dozens of millions of tdl and then teams still calls the signature it's not safe from the user perspective but it's also not safe from the team perspective because of the regulatory reasons you as a team member these days i doubt anybody actually wants to call an admin signature and why would you in this case the models today present you an opportunity to not have it in the first place so we won't have the team multis we won't have a team admin signature at all we won't get keep anything that comes to the code that will be also open source and the community multisig won't include only investors or only team those will be the minority in the motorcycle plus there will be a time walk as everybody is used these days in case the mountains misbehave for some reason and another point is the no early insider dumping or any non-community unlocked tokens being thrown into the market so that is something that we believe many protocols already address these days but that is something that we want to reiterate that there is no let's say downside in the potential way that somebody inside it will dump on you or something like this because at first nobody has to liquid anyway so there is no like how products how protocols like to not protocols icos like to call them in 2018 i think many would know is some marketing and partners tokens right or market making tokens which essentially gets released into the market and nobody knows what that happens to them so we are glad that this standard has stopped working yeah so those are the things addressed but we are not being naive here we are not saying those are the future dreams unicorns rainbows everything there are still issues that happen today and those are the ones that actually are still being the pain points so many protocols even decentralized ones first of all is the sensor ui so ui is the access to the protocol and while protocols are not influenced by teams directly with admin signature anything the uis are the main gateway to them so unit swap open source and the ui is actually a good way to do it and many protocols do it as well for example incentivizing other ui's to be created like liquidity um the reason why we are not doing it in the first week is simply to prevent malicious actors either forkers or fishers from making something with the uis it's not supposed to happen well the community is still new while the community still doesn't understand what's happening so at first we believe that to protect from those it's okay for ui to the center but that has to be stopped in a matter of weeks a month after that once the community is there one cdl is there if it is there at all then the ui should be open source and should be given to community to run with it locally or anything like that in that case you really decentralized all the components of the product um while you do that technically if you take all of this into account you still have the operational overhead as in like people involved let's say like us right we just know a bit more about gearbox now and it's not really a hard issue to fix as long as the communication is transparent and every stage of the product called dao life is communicated really well which what why iron has been doing from day zero everybody knows enough about the protocol and its operations that they can actually step into a role if they wish to and that's very important because if you don't start doing it early you will always remain like a company who nobody trusts in a great way right you could be talking about trust and not trust anyone but that's really the way to change that perspective is that everybody feel like they are part of it and then centralized voltage concept uh so we all know that many protocols start early on with the snapshot last multisig model right it's the most dynamic if you launch something early enough and you still want the doubt to tweak things around here and there to have the emergency let's say signature and something like this it's not bad conceptually but it's still not something that should remain there for long because multi-sig in concept and then doesn't actually have any liability towards a snapshot yes we can talk about economic reasons right if they do something bad they actually reach something else so that's another point but it's not hard defined so there are things like uh safe snap right what's it called absolutely snap diagnosis which essentially introduces an extra signature i believe into making the snapshot vote be very important the outcome to executing the multi-stake signature and that's something that could be added we are not 100 sure that is the way to go because snapshot part is still essentially on the ui and being managed by admins so it doesn't really fix that much so it's better to really migrate to governments like compound at that point so these are the things that we think are addressed the votes in apathy you know admin kid distress and we are doing everything to ensure that from literally not d0 but b minus one sensordio centralized ui will take a few weeks to be there operational overhead is just something we've been already doing slowly educating users giving people the opportunity to engage in different ways uh so that is something later and then the vote in snapshot is of course another thing that also takes a few months to get to but that is essentially what we see every protocol realizing so those is not rocket science people understand at hand have seen this thing so yeah we just wanted to reiterate on that um now to recap because we've said a lot hopefully it made sense but basically community ownership of gearbox becomes from day minus one and if we are talking a bit in a more general way it's really about shipping the code and making it available to the community to run with from day minus one to then figure out what they do with it again four team members core contributors will understand a bit more of what can happen with it but it's really about giving people the opportunity to figure out for themselves what they can do with it um and that's what we think is important and that's what loot has inspired um then it's the fair digital distribution and the fair governance like let's be honest we are not as altruistic as angry crony we are not saying we're not going to have any tokens at all community looks at everything we don't think that's really realistic because people who work on it again day and night they can't continue doing so if they own as much as the person who joined this quarterback that just doesn't make sense um and i think with wiring later on printing not in a bad way in a good way show that and send your sign warning so it's really about the governance being fair in the first few months where this is where people are most excited about protocol this is where the hard boost happens right and that's where we think the fair governance must be in place not one year later because one year later people buy sell people change hands people forget their wallets people become disinterested it's totally fine that the governance will be in the hands of a few people then you can introduce more delegation you can introduce dcrv model which we think is cool and we also plan that it's just that about the reverse dcre for those that are vested um essentially community owns the protocol in in fact and technically so essentially have all of that and then team can act as one of the governance when filing the bmf instead of just dictating what it is so let's jump into the opportunities so what can you do with gearbox today uh the code is not yet open we are going through politics a few of them and again defines all insecurity is all risky you can get wrecked wrapped at any point so again don't treat it as some promise of safety uh but we are doing the audits and those should be back in about two weeks from now which then i guess that is essentially the announcement that is when the government is supposed to launch through that credit account idea so the great account mining if you have been active in governance before likely one of your wallets should be eligible for it pretty pretty easy you then read the article understand how it works and engage in the program um running decoration bots so if you haven't run into addition boss before liquidation is a core feature gearbox that nobody promises that will work well that is the case for maker ava compound and so on so if you have around liquidation boss come join the building on discord because that's where you can actually build a regulation button there are economic incentives to do so uh as you know if he goes the product quality goes to the degradation bot runner has to say and they will be an incentivized extra gear tokens program to make sure that the first month people really make those liquidation bots because let's be honest if liquidation was not work it's all right that's the case for any product already so use the protocol help test it very simple that should be live in about one week unless michael uh disappears somewhere in the dodging that doesn't give us the new ux the new ui um then get get into governance build permission strategies as in gearbox doesn't define what you can do the governance for the sake of safety of assets just defines what you cannot do so it's not doesn't define it in the box it gives you a big box to work with them um and then take part in bug bounties and also we are hiring so if you are a smart project developer especially right yeah and also if you are a good friend and uh developers who know how to work with web3 standard please contact us we are really excited to work together so that wraps up our presentation really uh hopefully it made sense we hope we also have shown that this is a more decentralized way of launching a protocol and the new way of doing it while both been being more reactive for the teams when it comes to regulatory standpoint because in this case there is no ownership of everything from the first second and also it's one cruiser for the community and create account money to get some gear tokens is a fun way to do it but it won't be the only stage where you will be able to engage in governance so yeah looking forward yeah i think it's awesome [Music] amazing oh thank you so much for that uh like incredible sort of presentation and sort of presenting that framework uh i'm looking at all of our chats and people are super impressed by how forward-thinking this is and how this is adjacent and actually addresses a handful of problems that we have already seen and you pointed out we don't have time for too many questions so i'll kind of pose the questions we have from the chat and feel free to address them at our high level or go back into and log in and answer them directly in writing but um one question is like in the model you're proposing what is considered what will be considered the quorum for uh a vote here if uh there's like sort of no initial sort of group um and the second one is like do you have any concerns about the privacy of participants in this model um so when it comes to the quorum i assume as any other protocol has it there are different quarters for different decisions for example something as risky as the liquidation threshold some requires a much higher quality correctly there uh something like let's say operational decisions on the sp so in multisigs you have a thing where depending on the level you have a different uh way of doing it um so miguel on the privacy level i'm not sure what exactly is referred to privacy here because it's a snapshot of wallets that have participated at the governance rate and they are on chain and we don't tyc look at them ask them who they are they just essentially participate so i'm not sure if i understand the privacy aspects here i think probably the same things which happens in uh compound dao probably the same risk in the same privacy because we do not ask people much more information about them but by the way they could water i think this model looks pretty interesting speaking of privacy actually just to add there that's why there are a few different distribution stages defined before the protocol even launches because then there will be a few distinct distinct different groups of people who participated before and so on so that will be possible to engage through different user bases and then it's not defined but a few of them so then you have a mix-up essentially a mixer i'm not sure if it's the right word but you get what i mean yeah absolutely uh yeah hopefully uh that's enough for for you isaac if there's any more follow-up questions on that feel free to comment more but in the meantime i want to thank all of you for doing this presentation and it's just super exciting for me to see the whole full circle of kind of starting a hackathon coming up with this launching the project project and now proposing something that um from what i understand like fundamentally can change how we operate at scale and this is to me super exciting so thanks again and congrats on everything that you've accomplished so far thank you thanks so much it was really nice session amazing [Music] [Applause] [Music]