Drift: Announcing DRIFT - TOKEN2049 Dubai 2024

I feel like we should have swapped it over I mean oh yeah that's not quite right but that'll do nonetheless well thank you all for being here Welcome to our presentation today hope everyone's staying dry before I start can I get a show of who likes filling out kyc absolutely no one no one no one likes kyc who trades on centralized exchanges there's a lot more hands that should be going of who uses defi okay so I'm getting more defi than CI okay so this is a very woke audience I love to see that so a lot of you guys have probably used some of these products and I want to give us some history on why I think this is relevant I feel like a lot of presentations speak to FTX Celsius Voyager blockfi um for these projects or these companies a lot of what they did was built off you know track record trust frankly at some point but at some stage we stopped verifying and we just trusted and Trust only works until it doesn't so what I want to quickly talk about is you know why hasn't Dex volume grown in the way that it has you'd imagine after FTX after all these instances that the chart would go from bottom left to top right so this hasn't taken place and I want to quickly step through why that's the case I mean if we look at 2020 for those who are around during the sort of 2020 defi summer vintage uh this was the original defi summer Unis swop took off introduced the amm something that was quite novel not really yet seen in Define I think that really pushed the volume uh there was usage in compound balancer a lot of protocols that represented what we would call gen one like liquidity mining are probably familiar to some of you as well but eventually we return back to the norm we go below 5% and you know life continues you might wonder okay what's the case you know why is defi not working a lot of it comes on to cost but then you know again in the next one you see that we go up yet again and it feels like okay maybe this time is the time for defa to shine you know during this period we see an alternative chain like salana take off slant hits 260 it's euphoric everyone's thinking kumay it's fantastic but you know yet again this retraces uh again until more recently in 2023 uh can anyone tell me why at this point D5 spiked again very temporarily no no answers this is when binance got served by the SEC uh during this moment a lot of funds moved out of centralized exchanges there there were claims you know Whispers of insolvency from other exchanges but you know ultimately we retraced and went back down even further beyond the previous high so you might start thinking you know at this stage why we keep uh coming and going and the analogy I'm going to use is it's like a toxic relationship you just keep coming back for what doesn't work but somehow it just keeps bringing you back even though you know it's not good for you and we've seen again and again that centralized exchanges centralized platforms have these points of failure that have completely wiped out large chunks of this industry so for the user to keep coming back there must be something seriously wrong with where defi is today and you bow that down to two things the user experience is just not there right now if you are a new user you connect your wallet for the first time and you see these 12 24 words the last thing you want to do is to Pro proceed and go through with it you might wonder why am I doing this it's a lot easier with email patterns of behavior that you know are very forign to a new user that's not fun and then secondarily blockchain infrastructure is just slower at the end of the day there are tradeoffs recently you might hear uh Whispers that transactions don't land even on faster networks like salana and if your orders your transactions aren't failling why use it why use something that is not working the way it should be so no matter how toxic your centralized exchange you know your toxic partner might be you keep going back because they give you what you want um but that said I think this narrative is changing technology is catching up we've moved from a phase where D wasn't able to be supported initially to a time where all of a sudden we can start managing tens hundreds and eventually millions of users and it's our vision to provide every Trader with access to permissionless global access to these markets and I want to let Cindy share a little bit about what that looks like for drift as we move on to this age of defi thank you David for telling us all about why centralized exchange are so really terrible I'm here to paint a slightly more optimistic view on where we're going and what's possible with defi today so let's sh gears a little bit and talk about us you might be wondering why are these guys up here who are they why are we qualified to talk about this we are the founders of drift we're the largest perpetuals exchange on salana and we actually started and um just as Traders like like you guys on centralized exchanges all the way uh in 2018 we started off running a promp fund where we were trading on centralized exchanges running a bunch of bases Arbitrage strategies and we quickly realized as Traders on the centralized exchanges that we didn't like kyc we didn't like how arbitrary a lot of the actions intentional exchanges were for some for some reason you know on on cin or okx back in the day uh on a bad day some sometimes our funds might just be you know Frozen in in in transit and unable to be withdrawn and there was no reason no no understanding of why uh clawbacks were very common back then and understanding of what was going on um underneath these exchanges were just non-existent so we looked around for an alternative and we're looking for a per Dex and and a a DEX with a decentralized back end that we could actually trade on and used as Traders um but it didn't exist so we decided that this was a huge Market opportunity perss are the biggest Market in crypto and derivatives are are a huge in trfi so we decided to to take it upon us to to build it up before we talk about drift I want to quickly touch on the history of decentralized exchanges and and derivatives and um quickly speed through what has existed obviously the founding uh the founding members of perss Vitex started in 2017 which uh was a pretty Monumental moment for crypto as it allowed people to trade uh crypto Assets Now with leverage under a single instrument so instead of Futures where you have you know five different expires and Traders didn't understand what's going on um Perpetual Futures actually combin liquidity for all um strikes in the Futures chain into a single asset and that was very Monumental for for crypto volumes but unfortunately a lot of these early contracts were margin in the crypto asset itself uh there were not many markets available due to lack of liquidity and so the next generation of exchanges um built uh products that were more suitable for the Trader audience so enable flexible margin uh and enable a lot of new markets to to pop up so this was during the altcoin creas in 2019 where markets were were popping up left and right now where we're going from here is that we want to build a decentralized exchange that has all of these features in uh centralized exchange flexible margin Central uh not centralization decentralization uh with the flexibility of allowing as many markets as you want to trade but why didn't this exist before a lot of the reason and the history of uh decentralized exchanges started off U with Simplicity because the underlying technology and L1 was simply too inflexible to allow for high frequency trading and Traders to to actually bring prices and assets in line and uh back in 20 2018 for instance all you saw were P2P exchanges that um could not support anything more than a swap with one single counterparty in in the 2018s we saw amm start popping up due with Unis swap where you had more pure to pool structures and you can trade against a pool of liquidity and but the but this still wasn't comparable to a centralized exchange um experience because what people really want was to trade against an order book that could allow you to settle at a price um specific city that you want but this has changed a lot in the last two years have you seen more l2s pop up all L ones such as salana and today we're actually very happy to say that the technology to scale the centralization ches is here and for the first time in the history of blockchain we can actually build a lot of the features that you loved on centralized exchanges on a decentralized exchange we call this the the Golden Age of defi We Believe that a lot of the features uh are not here and users don't need to use centralized exchanges anymore so drift is now the largest Perpetual exchange um on salana you might be wondering what is what's the philosophy and why we built drift the way we did one we wanted all assets to settle on a layer one because ultimately we don't believe in um nl2 that has a single centralized sequencer and that has a very centralized data sets we wanted to to essentially inherit the security of an L1 with all the assets that are there we wanted a fully permissionless setup that enables anyone to allow assets to be traded this is something that you cannot do on centralized exchange today if you want a memec coin to be added uh to an exchange uh you go through numerous rounds of listings with uh drifts and some announcements that are coming up next this is actually going to be very possible to get derivatives on day one and we wanted to build something that was ultimately sensorship resistant no one can tell you that uh these that you know suddenly your your your funds are gone uh they're always on open sourced audited um blockchain with a smart contract underlying and given the hype around salana this year you might be wondering uh why did we bet on salana and why did we choose to continue with salana even throughout the bare Market of 2022 2023 there are couple core pillars uh that we care about one as we mentioned is asset availability salana is home to nfts to deepen assets AI assets gaming assets and we want to be the home and the CME for all of these assets that are natively onchain uh this isn't this isn't really possible now on an isolated app chain which is why we care a lot about being uh native to an ecosystem that cares a lot about its users secondly the developer ecosystem in salana has evolved to enable anybody to be able to deploy smart contracts and we want to be a part of an ecosystem that is thriving and growing now let's take a quick look at uh how we've grown um if you look at the period between July to October of last year we're pretty much around uh the the same range you know we're growing but it doesn't look that explosive we Frost work to October last year it's been insane amount of growth couple of reasons why this happened one is that appetite for trading has started to come back volatility has come back um The Narrative around salana has come back and now we've grown to be the biggest derivative stacks on salana and one of the biggest in in crypto to gloss over the numbers a little bit we just hit uh 30b in total volume traded with our first 500 mil a day yesterday uh which is proof that there is growing demand for people to start moving over centralized trading activities over to to defi we now also serve over 180,000 users um which you know to us 5 years ago uh joining crypto we could never have imagined that a decentralized exchange could actually support this amount of users trading against each other but this is this is not this is not where it ends this is uh still very far from the ultimate vision of us taking over centralized exchanges we are you know about 50 times away from being as as big as the largest centralized exchanges today so there's a lot of growth left and I want to talk a little bit about again the philosophy around um where we're going and why we manag to grow to this extent a lot of the reason is thinking about it not as a single isolated decentralized app but as a part of a bigger ecosystem we see ourselves as uh the core infrastructure in a financial ecosystem that's ultimately open to to everyone to participate in um with an underlying infrastructure layer that helps support fast trading on chain and an app layer on top of it that creates alternative access to front ends um for instance a light mode um a an app for normies to to be able to tra like a Robin Hood but everything settles back to the drift exchange layer and yeah if you if you look at our focus on user experience and product this this is actually number one in in our priorities we want to make experiences magical and by magical we really mean you don't know that it's C in crypto so a lot of things like account abstraction uh Simplicity of putting trades on having Advanced limit orders uh these things just weren't available in defi prior to this other than that as we talk about the app layer we believe that there's multiple distribution channels using product as the the first step and mobile is a is a very huge Cornerstone in in you know where we are today we believe that anybody should be able to trade decentralized perss on their phones uh in the Subways everywhere and we should also have alternative mechanisms to allow people who just want a stake um to participate and with that I will transition it back to David to tell us and drop some Alpha around what's next for us so if you're still listening intently at this day AG we think you deserve something because it's been a pretty miserable few days and for all you hardcore attendees let's share something fun so this is very fresh of the press we're announcing our token uh this governance token is to empower the Traders ultimately it's the trader that we think should be the owners of The Exchange it's the trader that knows best what they want the trader should be able to determine what fees what types of liquidation know what types of margin ratio that make the most sense in times of changing markets so let's break this down a little bit what does governance actually mean is one of those terms that are just thrown around very empty but I want to spend a bit of time talking about how we think about it I mean governance is not too disimilar from corporate governance the world I used to come from as a lawyer you know we think about it in very similar ways where you know certain functions should be delegated to certain groups for instance a security Council represents essentially management the team that governs the protocol upgrades the implementation of parameters you know we have a realm sty which think of it as shareholders where people are essentially able to vote on the security Council determine who management the board look like and then govern the day-to-day and something new Innovative that hasn't been seen before in web 3 and that's introduction of da where you're essentially incentivizing members to make the correct financial decisions in Bedding on certain products and that already has attracted 50 or so developers to our ecosystem speaking on allocation at the end of the day this is a Community First project it's all about everyone else us as contributors uh play the role of a steward in this ecosystem so when we think about it we're air dropping 10% to our community the rest for future ecosystem development we then think about protocol development uh funding as well as well as rewarding strategic participants that have engaged for over the years uh there's total billion in Supply uh 1 150 mil so 15% on distribution I think it's really important that we step away from the previous Narrative of of salant coins with very low float High FTV I think that's not a narrative that we're looking to embrace it's something we want to rewrite and speaking on the road map to decentralization there are two core players in this soon to be many first is the the role of labs and Labs is something that everyone is familiar with here it's essentially the company as you know it the core unit that develops the technology the infrastructure but I think more importantly there's this other role that Foundation plays the role of foundation is not to be that of a HQ it's not a secondary HQ that covers items outside of the purview of the first Labs company we like to think of the foundation as a city a city with citizens who essentially power up this organization they evangelize and they bring to the table things that they would like to see and own in this ecosystem so when we think about Labs going back to the previous discussion of Cindy's diagram The perpetuals Exchange is core to everything we have the keeper Network that supports it we have a validator that ensures that the uh stake weighted quality of service uh is high meaning that we can land more transactions than any of our competitors but then on the consumer layer on the app layer thinking about spot trading thinking about borrow L we are the only protocol that offers cross collateral no other perpetuals decks offers this today and this just goes to show what's possible now that wasn't possible 5 years ago and finally the consumer experience to be that Robin Hood but you'll also notice that there are three boxes that are grade out from labs and we think that these are functions that Foundation should look after so Foundation is essentially bringing teams products to the drift ecosystem and we've already seen this take place we've seen teams build Structured Products off basis from uh uh Structured Products on basis basis is trading very high and this team came to us and have built that independently of drift it is very separate it's one thing that works very well within the drift ecosystem but more importantly has a life outside of drift on other dexs we are thinking about defi wallets and have a team building custom RPC infrastructure there is frankly a lot that can and needs to be innovated on at this stage so then this brings me to probably the most exciting announcement of how we're thinking about better serving all of our ecosystem and our users and without further Ado Cindy I'll let you share what the future of drift layer looks like this is very early in the game and I'm glad that you guys are all here today because we haven't revealed this anywhere else we are interested in building uh infrastructure that truly works at scale for D5 and that means that one we do want to stay on an an L1 like salana how do we manage um congestion issues how do we manage to ensure that our operations as an exchange can stay uh can stay the same even throughout um Network volatility as for us hyper performance is extremely important so one idea and the road the road be wearing down is thinking about it as has having restake drift and rake drift Soul uh to essentially validate parts of our current order book and that keeping an an order book completely onchain while having it as a layer actually on top of the exchange and on top of the L1 uh rather than building an nl2 ourselves so we are doing uh active Research into how we can continue to essentially leverage the um Security benefits of reaking and having our keeper network uh that hosts our order book to to to be held on a way that is contined to be performance for our exchange and we want to quickly touch on you know the the future and coming back to where we started which was we don't want uh centralized exchanges to continue to be dominating uh you know five years from now we think that the direction that we're going down is a very important and Monumental path for crypto because we care a lot about building products that everyone here can use that no one can be censored from and that the world can continue to use without needing to kyc themselves or asking for a permission so without further Ado I put up some hands people said that there were more defi uses and centralized exchange uses I'm glad that this is a case and if this is a reflection of what's to come this is a very positive sign uh I think ultimately there is still a lot more that needs to take place for frankly moms and dads to end up using platforms like drift functions like connect well and need to go and I think with where infrastructure is going we can soon get to the stage in supporting that so for those who like kyc welcome to the new future thank you [Applause] Cindy David thank you so much for that honestly congratulations on all of the traction that you've gotten so far oh sure yeah absolutely all right so I think we got called back on on call uh apparently we have time for Q&A so if anyone is interested in any of what was covered please feel free to raise hands or or not uh wow oh yes question at the back sir it's going to run a mic to him hello uh thank you for the presentation it was really uh awesome um I'm actually a salana user and I've been waiting for uh drift for couple of months now um I know uh that you guys have um a point system I saw that in the uh in one of the application or one of of the slides that you showed um is there an air drop com in soon I mean again cannot confirm or deny but I hope sharing this here today should give you enough excitement and conviction so I'm glad that someone is like a loyal use it's good to see uh gentlemen in the back so what's the prevention me mechanism if I open like a position of 10x leverage and uh so there must be a backing collateral if people keep opening 10x position leverage position again and again again again so what what what will the backing collector because they there's basically a pool right who is backing these Tok cons and all so how you guys are countering that most of the Perpetual decks like GMX uh then gain Network and all all of these networks on evm chain has their particular backing mechanism are you guys doing with the same thing where people will come and put a backing collateral when people are opening a lot of Leverage position cuz the my main point is basically when you are opening a leverage position in centralized exchange most of this decentralized exchange which are PBS if you keept opening like uh leverage position like again and again again and if they are taking too much profit then that there's a protocol which will charge them fees if they are keep going to the market side but if you are going against the market then then they will provide a particular fee for backing that leverage right so how you guys are countering that you guys doing the same if you guys are doing the same then it's not exactly will give the experience as centralized exchange but if you guys are doing something different or do you have any counter for that yeah we're I'm glad you asked this question and this might bore a lot of people but we have a very interesting uh liquidity mechanism um it's three PRS so we have a p Topol model similar to um GMX where anyone can stake tokens into a pool to support counterparty positions so if I'm long and there's a pool um you guys will essentially go short and uh provide liquidity for that leverage um but secondly we also have an order book which we talked about a lot of the hyper performance and having market makers provide specific liquidity um to supplement that that liquidity and on top of that we have a liquidation mechanism that actually allows anybody to run a liquidator bot to take over a user's position when they're about to get liquidated so if a person has 10x leverage a price moves you know 10% essentially you're you're liquidated um what happens is that we have an open source liquidation system where anyone can come in provide collateral for that particular position and take over the position and sell it themselves so because Traders are providing extra collateral um to support that liquidation you have a buffer before the The Exchange um has to liquidate users and and has to socialize losses so this has kept our system very safe through uh the last two three years of operations no more questions um but we can chat off to thank you everyone so much thank you very much for your question we'll find you afterwards thank you all