EN | DeFi 2.0: The Next Wave of Decentralized Financial Products | MERGE Madrid 2025

So shave is coming if anyone can please go him because we are already ready to start. So if we can start maybe with a little introduction of everybody so the audience can know what you all do and what you are focus at at your companies. So

yeah I'm Marco head of sales for me at Kon um and we do staking and onchain yields. So we built a platform for our enterprise customers for them to stake. Uh but now we're also moving to more I would say yield different yield strategies that allow our customers to also monetize on stable coins. Good morning. My name is Charles.

I'm the CEO of the DYDX Foundation. DYDX is an OG project. We focus on crypto derivatives uh since 2018. Historically we recorded $ 1.5 trillion dollars of trading volume on DYDX.

Those days these days we move about a billion dollar per week. and uh at the foundation I take care of all the grants programs, the governance as well as the token uh token holders relationships. My name is Adam Simmons. I'm the chief strategy officer at the Radex Foundation. Radex is a layer 1 blockchain with a novel consensus and virtual machine environment that is asset orientated.

So all of our focus is around decentralized finance and ensuring that the security movement and use of digital assets uh can be done at a global scale. I'm Brandon Wolf. I'm proud to represent the Lace team who should all be here. These guys are uh I brought a a complete uh multinational crew with us. If you come see us in the booth, uh the lace wallet I'm the general manager of.

Uh we uh are a wallet and but we are moving to more than a wallet. So, we're introducing things like identity as well as Bitcoin DeFi and we're also going to be supporting Midnight. Uh come see us in the booth. Our mobile launch is imminent. So, you can get a preview of what's coming in the uh mobile wallet that we're going to be launching.

We'd love to be your new favorite wallet. Uh well, I'm Horge, co-founder and CEO in Lind. We are basically building your D5 ro advisor where you can put your crypto to work in Solana Defi. What we will do is aggregate different strategies from different protocols and make you earn as much as possible with an investment strategy adapted to each one's uh risk profile. And yeah, we are also here in in Merch Madrid with a both.

So come visit us.

Perfect. So now that the presenters are made, anybody know what you all do? I'm gonna leave my chair to Savia who's here. Thank you so much.

Nice. All right.

All right. First of all, my apologies. I was in an interview, but I couldn't and I didn't want to miss this this panel where we're going to be talking about DeFi 2.0. Now that you've done the presentations, I would go I would like to go straight to the point and start with you, Adam, asking you a little bit.

Um, after all, Radics puts a lot of emphasis on customer developer developer experience, I would say. Which mistakes have you learned from the past, what we could call the last wave, the last DeFi wave, and how are you solving this new one? Yeah. So I think it's it's very easy to look in hindsight at how things were built and and done and ultimately those those innovations were incredible. So the way I describe things like the Ethereum virtual machine as an example is like the Wright brothers first flight.

Before then it was impossible. It's an entirely new principle. And if you look at today, most of us have traveled here via a jet. That was not a single iteration between flying from the US to Europe on a Wright brothers plane to a modern day Airbus or or Boeing jet. There's many many things that have to come in to make that work.

So the approach that we took with Radex was not launching because changing an engine of a plane mid-flight is extremely hard. uh but instead looking at what actually is needed for blockchain and specifically kind of like asset movements to work at scale. And it's not just a case of you've got to be extremely scalable. Of course you do. You've got to have a developer experience that people are confident using.

You've got to be able to have a UX that both institutionals and end users are able to use confidently no matter who they are. And if you miss any of those pieces or like identity and regulatory um primitives that you need there, any of those bits missing are a deal breaker long term. So what we looked at is how some other industries have developed and from a devx side specifically is going similar to things like the game engine for game development. Prior to that you would start by building the physics engine of a game. The rendering engine, the physics, the shadows, everything else.

But every game did that and spent 80% of their time building that same engine until things like Unreal and Unity started coming to market. And with that, they're still very adaptable and flexible. But the primitives that you need are in there because 90% of products need those things. And that's what we built directly into the protocol level.

And and furthermore, I think it's also um crucial and even the the ecosystem demands safer products. We could say, not just UIUX, but also to make them more accessible, but also to to make them feel more safe for the final user. I'd like to know a little bit in from here we can open questions. Feel free to to ask answer. How are you making safer the products in DeFi?

So there is a demand uh ready to catch that. Branson, if you wanna

could you say the last part of that question again?

Um, how are you making your product more safer in this next wave D5 2.0?

Sure. So, uh, for us, it's about, um, modular security. So, we're we're building things in a modular way that's going to allow, um, all of our, you know, security is one one of the third rail items in any wallet. If you lose the trust of the user, that's it. You're you're dead.

Uh, so we never compromised on security. As we move to mobile, uh we'll be exploring things like uh building into biometrics and how we're going to leverage biometrics. That's going to feed into the lace ID component. Um that ident the identity piece I think is going to be a big piece as well because uh your identity should be something that you own. So I mean you talk about security, it's it's controlling the consentbased mechanisms that that identity brings.

So when you're interacting with any type of DeFi layer, whether it's a DAP or any type of application to do whatever it is that you're doing, you should be able to control the KYC element of that so that you're pushing that data and you're controlling that, you're allowing that to happen. So that's I think I think giving the control back to the user would be one of those things.

And also wallets after all are the entry point of the ecosystem. Um I'm sure everyone has heard about um account abstractions and this new way to to onboard users. What would you say is a new thing that we need to put focus on which is in which isn't anything that we have heard yet about

boarding? Yeah.

Yeah. I think progressive learning as the you know we want to meet the users where they are. So I think people are realizing with wallets now that you know the the original vision of becoming your own bank.

It's a pretty daunting target to have. You know uh it is a lot to manage but we also want to be more than just the people who sign things. the the more than just having you maintain a pneummonic phrase and a passphrase. We want the onboarding experience to be not only uh for new users to be very welcoming. It it encourages them to to move along and and it leads them in a way that is not jargon filled.

We're not talking about UTXOs and collateral and things like that. We're talking about, you know, um you know, investment. We're talking about where your you know, your crypto is going to lie. We we we can take away the chain abstraction uh from it entirely from them. So, and as you move up the ch up the leveling of intermediate user to expert users, the wallet should meet you where you are.

And I think there's a there's a bit of a risk that comes with that too. Uh, in that if you make it too simple for the users, you could in inadvertently high risk that uh that they wouldn't be able to see uh like if you had an auto approve uh mechanism in the wallet that could be exploited very easily. So, we have to like balance that equation with the onboarding side so that it meets them there wherever they are. Um, again, we want them quickly to open up their wallet, recover their um their their their wallets within the application itself, either decentralized or uh adding something new, but jump directly into it.

I want to talk a bit more also about liquidity models, right? Um, after entering through a wallet like um the one you told us, we find different DeFi opportunities. Um, and one that and I want to also congrat Charles for for becoming fully V4, fully decentralized DYDX. I'd like to know also what lessons have you learned Charles from this um new release that is correct me if I'm wrong has more emphasis on decentralized

absolutely so ju just for context for everyone dydx exist since 2018 and we've been leveraging every iterations and progress of the technology to essentially upgrade the experience for for traders on dydx some time ago we were on Ethereum on a layer 2 called starkware and about two years ago we decided to essentially migrate to our own chain. So there is a dydx chain now uh which is essentially a formula one dedicated only to the use case of dydx which is trading perpetuals. We could do that because we we reach a sizable uh business as a as a protocol and we could essentially afford to have our own infrastructure and not depending on someone else infrastructure. Uh so the lessons we learned from that was that uh it basically accelerated uh by an order of magnitude the experience for users because we were able to fine-tune everything from the chain level to the order book to the user interface essentially twist things perfectly to to the experience we wanted to deliver to the to the users. So we are much more in control.

This control comes also with responsibility. Suddenly you are very much involved with the validators and the blockchain you are running. So it comes with a lot of extra work. Uh so it comes with pros and cons but overall it's it's a good decision. I think the the the community of DYDX has been voting for this and keep building on that and this has allowed us to essentially accelerate.

One kind of more philosophical aspect of the decision was in this industry where a lot of crypto has been alive in a centralized manner. uh think of Binance and and other centralized exchanges

um and DeFi starting as a as another part of the industry to grow very strongly. You need to decide and to be very opinionated on where you belong. You cannot operate a D5 protocol with an order book on AWS. Very quickly the market will essentially come to you and tell you like this is wrong. We don't understand your story.

You need to be either black or white or you need to be clear about who you are. And I think uh over the years the DYDX uh teams have basically decided like we don't want to be somehow DeFi. We want to be pure D5 player and that's really drove the decision to go into a purely decentralized infrastructure with our own chain decentralized order book and so on. And this brings this will be my last point this bring also a clearer identity but also a clearer value proposition. uh if you trade on a centralized exchange, you essentially trade on a order book which is on AWS and it's a black box.

What's happening on the order book? I have no idea. No one knows unless you are the administrator of this database which is centralized. So having a clearer identity and a clearer product allows us to essentially have our own chain, our own infrastructure and now all the experience is totally defy. what this means for high frequency traders, for hedge funds, uh for very sophisticated traders, they can really understand how the flow of liquidity happen on the order book and they can fine-tune algos and and AI agents or whatever they trade with u having like firsthand information about the market opinion in order to trade better and that's really I think the vision of DYDX is not decentralizing for the the sake of decentralizing the reality if users don't really care and will never care about decentralization much, but really thinking how this decentralization brings you a very unique and unfair advantage as a pure DeFi operator.

Absolutely. And and I want to go to that point that you mentioned super interesting and and I want to ask Marco um with with clean institutions demand that decentralization that DeFi users like us probably admire or or they don't. And as well, how does the DeFi ecosystem change when new institutions access through staking products into this ecosystem?

Yeah, like there are like many differences. Uh I've been in in this industry since like early 2017 and a lot of things have changed. Um if you think about the D5 summer 2020, like D5 was very different like compared to today. Um I would say one of the main differences um is like the compliance framework and regulatory framework of D5 but also staking. So on the staking side of things, K allow it customer to essentially stake on different validators and delegate into different validators.

On the DeFi side of things, we are creating and we are collaborating with creators in order to essentially create vaults that allow them to deposit um to deposit um stable coins and earn a yield on these stable coins. Um what we've seen is as long as everything is done in a safely manner in a regulatory manner uh the yield that is generated is good enough for even institutions to deposit stable coins into these vaults. Um I would say back in the days if I remember like DeFi summer as I said before 2020 you could see like yields of 30 40 100% uh 200% like crazy crazy type of yields. Now that institutions are getting in uh they're more used to have yields around like five four to 8% uh for their stable coins which is very similar I would say to the bond market what we we can see in the bond market. So uh definitely

they are open to I would say depositing to these vaults as long as the the framework is safe and also there is a compliance aspect into it. There are also there are always like I would say options to have higher yields but of course with that there's like higher risk and I would say institutions even more financial institution understand that very well because it's very in line with the I would say the ethos of finance right uh the more rewards the more risk you have to take uh that's as simple as that

so you think that's their option rather than lend liquidity providing

uh yeah I think that's an option I think an option there is just for them to deposit but also to become a curator long term which is similar to what asset managers are doing in the traditional finance world. Um but everything's going to happen on chain at some point. Uh I think I'm I'm fairly positive about it. Um I would say a few years ago would have been a little bit less positive about it. I think right now that's really going to be the future.

uh we're seeing uh even yesterday like people like um I see like uh essentially getting um a stake into one of the biggest prediction uh market platforms. So that really means that even institutions are getting into crypto more and more. So I really believe even exchanges, traditional exchanges, New York Stock Exchange and others like they're going to be starting to move onchain and with that they need to also create vaults or like even other solutions directly on chain to allow their customers to uh either have a yield out of stable coins or even a yield out of their um stocks uh and other stuff that that could happen. I

I want to ask an open question to all of you. Please feel free to answer. Um and I personally love DeFi. very much into it and I I wonder if as we welcome more players there's more mass adoption we have more ETFs coming more vaults of stable coins for institutions are we giving away decentralization so my my opinion on that is somewhat but it is about choice so as a as a end user the market will ultimately decide what they want to do. So if you look at something like the internet as a a good example of this, we all use centralized services on the internet.

We could choose to go direct if we wanted to. So if you go to the most extreme version, most of us will type in a URL in normal normal things we recognize and use a standard DNS. You could choose to go and use a a different DNS with different privacy or different resolver or you could just go to raw IPs if you wanted to. But the convenience of most users is they are happy that that is a compromise and that decentralization to do that. Now from a finance perspective and specifically DeFi most consumer deposits don't want to be managing ex exotic option trading or perpetual trading.

It's not something people do dayto-day. Most people want to put some money somewhere. They want to get paid, pay things, get a mortgage, get a loan for a car or something like that. I think if you stopped most people on the street and asked what are financial services today, few would even say insurance was one of them. It wouldn't like click in their head.

And there's this entire backend system. And I think what we'll see is that you will still be able to access that decentralized marketplace if you wish. But we will see somewhat centralized frontends that are probably still non-custodial that provide access to that in a semi-wled garden that make the end user feel comfortable. So I can see FinTech doing this extensively of going we've we've checked these products. We've checked these DAPs.

We you can swap here. You can deposit into this vault. You can earn yield here. You still have custody, but we've kind of given it a a gold star. But the difference from Trady today is where you have to use a centralized broker or a bank.

You are forced to use things that they want you to use. And you can't easily go well actually I want to use that for my day-to-day banking, but I'd like to go and do this other random thing. You're restricted. Whereas in DeFi, you can still choose to go, well, I'm doing most of my stuff here, but hey, there's this cool new product, this new high-risisk, high yield thing. I'm going to go and connect to that as well with my self-custody wallet.

So, I think they can coexist basically.

Yeah, I would agree with that. I think it it's decentralization and compliancy can coexist because like I talked about earlier, the consentbased part of that, like you are in control of that. So, freedom is choice, choice is freedom. you have the ability to say I either want to do this and if I'm having to relegate any type of personal data or information to that I should be the one to control that. So as long as that piece is there, I think those two can coexist.

And and how far away do you guys think we are from reaching that point that the the audience demands which is full accessibility? Um what you just said don't matter that much about the centralization but I matter about easy one click one button financing my mobile phone.

I I feel like it's all about UX. It's in the end it's about the user experience and you will have users wanting to have full ownership. uh like and control everything on the end and we'll go full defi and full like you know with their own course to the end and stuff but in the end most of us end up using simple apps when you just need to click something and something happens so I think like regarding the last questions also it's like you will have institutions and centralized apps running on chain so they will be like yes providing a centralized UX which is probably mostly uh you know easier for this kind like for the whole public but you will still have also like people like us probably that go to our own wallet and manage everything directly uh you know interacting on chain so in my opinion it's all about UX and you will have both sides uh like ongoing one thing I'd add to that as well is that I think the big shift as well as choice is it's meaning that financial intermediaries have to be value add rather than value extract because people can choose not to use them. So a really good example of this is something like an index fund. There is nothing stopping anyone in the audience today managing their own index fund and not paying Vanguard or Fidelity uh like.

3% annual fee. But most of us unless some of you are managing tens of millions of dollars probably are like that's a tiny amount of money to not spend a weekend a month rebalancing my portfolio. I'm willing to pay that for convenience. And I think we'll see the market evolve that way that you have to provide the value for the fee you extract rather than saying you have to use me because of regulation or because of centralization. I think there is three things which really are accelerating this mass adoption and it's happening before our eyes and I bet in two years time we will not talk about adoption anymore but like other other topics.

Today we are close to $300 billion in stable coins in the market. Next stop is $1 trillion. This next stop is probably Q1 next year. It's going to go extremely extremely fast. So we're all going to get branded US dollars from different issuers in in all places.

What we see also is the distribution of crypto is accelerating massively. One example dydx we integrate with crypto.com a centralized exchange. So centralized exchanges users can use noncustodial wallet and connect to dydx. People think we are competitor but we find ways to work together.

This distribution acceleration of DeFi is basically an boarding millions of users which would have never been able to be achieved by operators of DeFi only. So I think we see the the the DeFi meme. I I know you like memes. You know this guy with a like a long mulette at the back and a mustache and it says fintech in the front, DeFi at the back. This is happening just this week, next month and next quarter.

Revolute, Coinbase, everyone is starting to mix all kind of access to DeFi. So, it makes the numbers of of users of Defi just growing exponentially and they don't even realize what's what's happening and they don't really need and maybe they don't want they're busy with their life and we should respect that. We give them optionality and they pick what they what they like. And probably the next phase which will actually put the asset of those users to work is a big problem we have in finance in general um it's basically undecisive money. How much of your uh wealth is actually invested today.

If I ask some friends which are in DeFi, maybe they just put money to work always, right? But for the vast majority of users of Coinbase, centralized exchanges or my mom or my cousins, they don't know what to do. Taking a decision is a is a big is a big is a big hassle, right? Uh so I think what we what we work a lot at at DDX right now is to try to analyze the portfolios of users even though we don't know them. they are just wallets on on the protocol and understanding why these people are not taking decision and I think where AI as a buzz word is coming in all ears.

What AI will bring uh a new wave of value for D5 protocols first, maybe CFI later on, but D5 first will be essentially to put to work this money which is uh standing still on centralized exchanges on wallets and saying like okay we can put this money to work into a very safe uh type of strategy just to earn you some some money here and there. So I think this stable coin distribution a little bit later Q2 next year starting to see area agents which will come and say hey Charles you've got like $5,000 like sleeping why don't you put them at 4% and you can withdraw them anytime but helping me to take a decision. I think this will be a very big transformation and this will move the needle massively for for D5 protocols in general because basically most of the asset will be put to work and today too much of the asset are standing still in trfy this is a bread and butter of a bank because you don't take decision they can put take your money and put it to work and put the the the profit the profit in their pocket in defy is totally changing and inflation the central banks printing like no tomorrow's are basically the best marketing for DeFi.

And Marco, here comes a difficult question. I'd like to I'd like to ask you if you can finish the sentence. An institution and a a bank that does not consider entering into these opportunities, entering into this market is going to

Oh. Um should I say no? Like

speak with your heart.

With my heart. say the first thing that came to mind.

So like what I can say is like I've been as I said I've been in the industry for a long time. Before this I used to work for another company mainly on the compliance side of things. Uh one thing that I I believe like banks in general but like they're aware of this like they need to move a little bit faster because like things are evolving. Uh we are seeing previous non-competitors of banks now getting IPOed at 80 100 150 billion in the stock market. like that's not the valuation of majority of the European banks nowadays.

So that means at some point new pe like 20 30 years old like people in general like they would just start moving their money there. They will not use a bank anymore. What's really missing for this type of company that that's what the bank is really strong on is they can give out mortgages, they can give out loans and they have like cash accounts since you you were born. So like I I really truly believe like banks need to accelerate on this because otherwise I mean like technology has always won right like if you if you don't if you don't evolve you're just going to die. uh that that's the reality of this and I think that's the reality even more in crypto because like that also applies to everything in crypto like majority of the companies some years ago I can well FTX but like many other companies back in the days were like very successful and in like four or five years they just go bust because they can't really accelerate and they can't really keep the pace of the innovation very briefly what's happening in the US will come in the Europe in 12 months in the US the banks start to understand that the genius act and the stable coin issuance in massive quantities will essentially challenge their P&L and probably seen some fiat money moving away from like the fiat uh back end of the bank into stable coins

and this is going to hit really hard this going to be very painful that's that's the way you understand the lessons very quickly later on one year later the Europeans will start to understand like why are people basically putting their money on those wallets because you give them 025 and they can get 8% somewhere else and their inflence is very painful in their in their everyday life. So I think they will have no choice. Some of them will be kind of running on at the front of the park. Some others will will kind of drag their feet. Uh but it's it's futile to to fight this.

And and maybe just like one more thing like on the Genius Act and the stable coin, what we're really missing is a Euro stable coin. And if that doesn't happen, there's nothing is going to be successful and I don't think the digital euro is going to be like the successful one. I think you really need something which is more not not issued by a central bank. But like apart from that, if that is not successful, it means that this is going to be the Germany of the

I think Christine Lagard should hurry up. Yeah, I agree on that. Um, let me not forget about the other side of the coin because we're talking about institution banks, but many of us here are retails are are DeFi users and when we try to find DeFi opportunities, um, services like the ones that offers Lind, I think, Lyn, it's it's super interesting. Could you tell us a little bit more what do you offer to those users that are looking for DeFi opportunities and briefly what lessons or what demands those type of users? Yeah, it's all about what Adam said.

It's like you can make it your own and spend hours checking different protocols, different opportunities, rebalancing yourself, whatever or you can decide uh to delegate it to a platform like Lyn where you can just like deposit and forget. So what we will do is like basically uh you rely on our or smart contract which is fully audited for sure and we will just handle all the hassle for you. So you just deposit and forget. The good thing or the main like uh point of difference from us to other gel aggregators is that we bet on your risk profile. So basically when you enter in lens uh you will say how much risk you want to afford, how much exposure to the market you want to afford and then we will just handle that hassles for you.

So you don't need like to check uh XYZ protocols that are one giving 10% another eight other six and then they will move again. So you need to you miss opportunities and you are not optimizing because or you are 247 in the market or you are losing opportunities. So we basically want to like yeah we are in the middle of the protocols offering nice deals and the user the retail user also treasuries management uh that we do uh to make them to make them earn as much as possible.

Unfortunately we have to wrap up this this great panel. I want to ask a question to each of you which is what excites you the most about what's coming in DeFi. Two years ago you said it Charles I agree with you. It was something different. The topic was different.

I mean this this ecosystem moves super fast. We all agree on that. And I want to listen to the opinion of key players like you who are building. What is what most excites you of what's coming? Who wants to start?

I will start. Uh for me what will make the difference is AI. I mean I imagine a future in defi in like three four years well it's plenty of different players like really a segmented market where each one will have like its own aa a aent uh making his thing in defi. uh so it will be some sort of competition on which have the best fine-tuned AI uh that have that can leverage on the different opportunities uh in DeFi in order to you know offer each different retail user or institution to make them earn uh as much as they can because in the end is that that's the the value prop on DeFi like you have a decentralized way to make money and you have nice deals to to hunt let's say uh so you got to you know uh make it that way with AI that will take over DeFi in my opinion.

Yeah, I would say AI is definitely one of those, you know, Marco mentioned real world assets too. I think that's going to be a huge player. But agent AI and we see that in the wallet you know that's where something where the wallet is an orchestration layer controlling the how the user wants to know what um and that's that's where I think AI agent AI gave a speech on this in um in Buenoserius at the last merge and uh it was really wellreceived but I think that's going to be a key uh for the next five years and I I would hope in the next 5 to 10 years that what's exciting is that DeFi just becomes finance at some point. So that that would be my my prediction. Adam,

simple one is that back in the kind of DeFi summer of of 2020 2021, it was a great proof of concept that blockchain technology and DeFi is going to be the future, but everyone was trading random food coins that most people don't want to touch even if they got 10,000% APY. first with stable coins, then with RWA, I think we're going to see more assets and including assets we wouldn't consider even in today's markets like warehousing or commercial equipment and stuff being tokenized and being traded in DeFi, which will massively expand the liquidity in the market.

Charles,

what's exciting exciting to me is distribution. I haven't seen groundbreaking innovation in the past 18 months in in crypto, but I've seen groundbreaking distribution deals in crypto. I've seen many projects some of our peers DYDX included reaching new uh new audience and and just growing in terms of business growing in terms of number of users. So distribution maybe some of you in the audience are fintech operators or or traditional finance operators and I think this this kind of merge between uh defy and uh and uh and traditional finance just bring access to something which is very close to our heart and we are all building here together. So distribution is boring but is very impactful and moves the needles.

And Marco,

yeah. Well, AI has been mentioned already. So I would say curators from traditional finance like we're seeing right now curators like Angle or Steakhouse and others. Um maybe at some point we will be able to see like people like the Black Rockck or the PIMCO or I don't know anyone else that is doing asset management at the moment in in finance just going to move on chain.

Thank you so much guys. It was a pleasure. Let's give them a big round of applause.

Thank you.