🎤 Built During The Bear: The Story of Synthetix

[Applause] [Music] hey everyone thanks for coming um i hope you guys all had a fun bull market um time to time to switch modes i think right into bear market mode um so what i'm going to try and do in this talk is uh i guess give you like a lit a little bit of a specific overview of what happened with synthetics in the last bear market um how we got into it how we got out of it um some of the things that you know we learned specifically um but i think obviously with every market cycle things change right so um you know some of the things that might have made sense back in 2018 2019 may not make sense today um and there's you know different considerations different things you guys are going to need to um to you know approach i think the other kind of question slash distinction is probably where you're at um in the cycle so i'm assuming if you're here at a hackathon that like maybe your project's a fairly early stage maybe you haven't raised money you've raised a little bit of money obviously that's a bit different in terms of you know the lessons that we can take away if you're if you're still in the process of trying to like raise capital in this market right because that's very challenging um but yeah so synthetic started as a stable coin called haven um it was a crypto collateralized stable coin the purpose of it was to basically allow people to make transfers in nusd which was the stablecoin and you would pay fees right which was a terrible idea um if anyone suggests to you breaking the erc20 standard to do something cool um really consider not doing that because uh it's yeah not not a very effective strategy it turns out um so in 2018 we launched the stable coin we launched the network um we started you know growing the network and at that point it still wasn't 100 clear in march of 2018 that we were in a bear market right the problem with bear markets and bull markets is you don't really know where you're in the market except in hindsight right and so it probably wasn't until like july of uh 2018 before we were like okay the party's definitely over here right like we really need to like knuckle down and figure out how we're going to like work through this stuff um so i think today we're probably at that point like the bear market probably started like maybe six months ago or something like that now that said the 8th d5 bear market if you listen to djinn spartan on twitter i don't know if any of you guys follow um him he's an sog um i think uh by his accounting we're in like month 20 of like the 8th d5 bear market right so there's always going to be you know distinctions in terms of where people are what the what the cycle's up to um but so synthetics we built the stablecoin um we were very happy with it it was really cool um we had a fairly large community back then because we've done a large air drop which i'll get to i'm talking about air drops and token distribution uh later but we were really struggling to get traction and then in like the middle of 2018 uh usdc launched a true usd launch and a bunch of the regulated stable coins launched i say regulated um non-tether stable coins launched right um and up to that point it was basically tether was like the dominant stable coin then dye launched obviously started to get a little bit of traction and as we realized we were in this bear market and as we realized that it was going to be kind of impossible for us to determine when we were going to be in a position to raise capital again we started thinking like okay we need to survive here right like by july we're like all right this is survival mode how do we survive this situation how do we ensure we've got enough runway et cetera now talking about runway for a second um if you have raised capital hopefully and and i think in this cycle maybe this is one of the lessons we learned people have been raising in stables which is good um we raised 30 000 eve at i think uh 950 dollars per each back then by the time we got to the bottom it was 85 so that 30 million dollars roughly that we raised would have been about three million dollars um which you know three million dollars you can do a lot with um unfortunately in that year we'd been spending money the entire time hadn't really hedged our wreath exposure unfortunately i'm underneath maxie so you know here we are um but i think we did definitely learn that lesson the flip side though is that we learn the lesson of not raising eth we learn the lesson of not doing huge crazy icos but what we did do is we started raising smaller rounds so we were doing like 500k seed rounds and like maybe you know like a million dollar seed rounds or like three or five million dollar uh you know series a or like you know follow on rounds the problem with that is there's a lot of projects out there that are actually not even as well funded as synthetics would have been even riding eath all the way down right and so you know it's really critical as we got into this point where like okay everyone it's a bear market to look at what are you going to do to conserve runway and to survive and so one of the interesting stories i think um about about synthetics building a bear market is that there are actually a lot of people around us building in a bear market as well and they were trying to work out like how do i get some funding right um what do i do um there's two really good examples i think that came out of the bear market that were funded uh in i guess you know set kind of non-traditional ways for a startup right um one of them is uni swap obviously getting a grant um you know everyone else is out there raising hundreds of millions of dollars and hayden turns up and like gets you know a couple hundred grand and like goes off and builds one of the most important protocols in the world so it you know you can get away with if you're willing to be lean and have a couple of engineers and like really like tighten up the the org structure you can get away with surviving in a bear market even with not that much money right um you know you're probably surviving on like ramen and you know something like that but but you can get through it um the other example uh which i think is is pretty pertinent for this room is one inch so one inch turned up in the d5 community the two guys anton and sergey probably like early 2019 um they did a couple of hackathons but they won the new york hackathon right they built this really cool aggregator it was you know kind of a simple starting point of what one inch would become um but basically it just was finding a way to aggregate liquidity right um we now had like on-chain dexes you know there was kyber those uni swap there are a bunch of things and so there's this opportunity to like put them together so there's two lessons from that one i think synthetics paid them because they would go around to like individual projects and be like hey we're really great engineers do you need anything to be done right and we were like well our contracts are like the least gas efficient on ethereum so like what do you think you can do there um an anton in like the space of i think like 72 hours uh reduced the gas cost of like uh almost all of our contracts by like 60 and we were like oh [ __ ] we really could have probably done a better job of doing at least one optimization run um ourselves before we handed it over to you but um you know it was it was it did two things one it demonstrated to us the synthetics community that anton was an exceptional engineer and so that in the future when he kind of turned up and asked you know for us to do things or they wanted to work with us we're like this guy's amazing like whatever he's doing is going to be good and so we supported one inch and you know supported them through the bear market so they got i think um i think they got a 10 000 snx grant when snx was like five cents or something like that and they actually didn't sell much of it so that kind of kept them funded for a while as well and they were able to just keep chipping away just two people working grinding grinding for like six or seven months and i don't think they even did their first raise until like maybe early 2020 right so like you absolutely can survive in this environment if you're willing to be lean and there are other sources of funding there are still grants out there there are a lot of dows who are actively deploying capital and if you can come to them and give them a good idea you it's not just that you get capital you actually also get kind of connectivity because that connectivity that anton and sergey from one inch had into the synthetics community allowed them to like leverage that reputationally to like really grow much faster than they might have otherwise the final thing that anton did is he built the staking rewards contract so we started yield farming in uh in 2019 where we would pay people to put liquidity in uni swap and the way that we did it is we would go at the end of the week work out um who had like run a little script work out who had had uh liquidity in uni swap put it into a spreadsheet and then garth would literally manually send the transactions out to everyone and um anton came up to us he's like this is insane what are you guys doing like we can build a contract that just does this like you know distributes it in continuous time so he built that that contract i think has now probably become like one of the most four contracts in ethereum it's had more tvl than like almost anything and again it's just a demonstration of there are a lot of things that projects in a bear market may not have the like time or energy or resources to do and so if you're a really good engineer and you come into those projects and you start participating in discord you'll see what those problems are and you can be like hey i can help you with this like i see a problem i understand the solution to this and a they'll be very happy for you to help them and b they'll most likely pay you for it and so the projects that are still around the large you know og d5 projects the rvs compounds whatever they're still very well capitalized and you can leverage that to like get capital get grants get bounties keep yourself going keep building um and you know kind of make it through um that point so um back to synthetics quickly um so we got to the end of 2018 we realized stable coins were not going to work in that form and we started looking around and we said okay um you know what are what what can we do here right like what are our what are our uh you know options because the stable coin thing's not going to scale fast enough we're not going to be able to survive with the runway that we have um and we basically looked at all of the aspects of the things that we had done in the bull market right and this is kind of the critical thing in a bull market because attention is so scarce because there's so much chaos and so much going on you're almost it's a very powerful forcing function to get people to do like the dumbest thing as quickly as possible right you just want to replicate whatever the narrative is and you want to do it as quickly as you can you don't want to think about it you don't want to deviate you just go and so if everyone's doing an air drop you do an air drop if everyone's doing you know 100 million tokens in their token supply you do 100 million tokens you just it just it's how the will markets work right you don't have a choice because if you do 85 million tokens and someone turns up and they're like oh this is weird 85 i'm out sorry 85 million tokens even if it has no relevance whatsoever to the project and what you're doing you just don't have the opportunity to deviate from the playbook right the bull market playbook really kind of solidifies and and you know you end up uh you end up in a situation where you're forced to do maybe not the optimal thing so the nice thing is that in a bear market um you can really like stop and go wait a second what were the things that we did that were really dumb and so in synthetics one of the things that we found that was really dumb and there were a number probably i mean too many for a half hour talk definitely but um you know there's there's probably a couple of key ones one of them was this fixed token supply right so we had a fixed token supply because of course you know fabian says like when you start an erc20 token you put in a number that says how many tokens and then you click the button and that's how many there are right and we kind of looked and we said this is a bit weird right like why do we have a fixed supply token like what is it that's you know like we've distributed all the tokens the tokens are all out there there's no way to like incentivize people to use this thing and so it was actually live pier who had kind of started this like i can't remember they had a weird name for it but basically they needed you to run this software and they would pay you tokens to do it and in a bull market noticing what live pier was doing was kind of impossible right like i you know like i kind of heard the name but like i never even read what they were doing or even looked at it or whatever and then in a bear market i was like let's look around and like see what's happening one of the things was live here and i was like holy [ __ ] this is really cool like they're getting traction they're incentivizing people to do what they need to do what if we were to change the monetary policy go from a fixed supply token to like an inflationary token and pay people to stake right so that was one of the key things and again like you are kind of not able to do that in a bull market right if we tried to do that in the bull market it would not have worked people would have been super skeptical of that they wouldn't have paid attention to it but in a bear market we can make it work um i think a second thing uh that maybe in in this environment there's it's probably worth question there's probably two two things that are worth questioning one is air drops right that's been part of the playbook for the last like you know three or four years right but particularly when it came to like d5 summer air like compound started deep by summer with like this you know compound token distribution yield farming distribution right then uni swap really jacked it up by doing an air drop on top of it i actually think at this point and i've been talking to some of the the projects that i work with that we might have gotten airdrops wrong like airdrops actually may not be a thing that we should be doing right and that we maybe should go back to first principles and say wait a second we want to get tokens in people's hands but a bull market is able to kind of fool you sometimes into thinking that you're doing a good thing when you're actually doing a really dumb thing right and so um i i kind of have this sense that that if you are looking to do a token distribution right now we've kind of got this like pie chart that everyone's agreed on right and it's like you can tweak the numbers a little bit but like it's pretty much you're kind of locked in right like there's a certain amount for the contributors there's a certain amount for investors there's a certain amount for yield farming a certain amount for an air drop etc etc i actually don't know about the yield farming and air drop side anymore i kind of feel like we might be in a position where there are going to be some people and some opportunities in the next like six to 12 months where you haven't launched a token yet right and so cuento i actually had a conversation with the the cuenta team this morning and i was like i know you guys want to do an airdrop and i know your community is very excited about it but like we've seen how air drops can go wrong especially in a bear market right because if you give people free money they're just going to dump it they don't value it so there's i think some things that we could potentially tweak and and you know really the key thing in a bear market is to stop and look at what has happened over the last 18 months let's say and i guarantee there's no one in this room every person that i've spoken to in the last two weeks has brought up something that i've never heard of they're like oh what about this thing and i'm like never heard of it no like and they're like how could you have not heard of that i'm like i just there's no like there's absolutely no way and i had a conversation there was i think um there were four or five of us who were like uh in yams i don't know if any of you guys remember yams but um every single one of us was like oh i'm so excited about this new thing that like launched a few months ago and the five of us none of us knew what the other people were talking about right like that's how chaotic it is so there's an opportunity now for you to do two things to kind of slow down go back do the primary research see what's existed in the same way that we saw that life here had launched and they were doing this interesting thing and we obviously tweaked it a little bit but we had we not done that had we not gone back and said okay like wait you know what's going on like with this live thing why is it working why is it getting traction we wouldn't have changed our monetary policy we would probably be dead to be honest right like synthetics if we don't start that like staking reward system i'm not standing here today or i'm probably doing something else i'm a different project but like synthetics just wouldn't have survived right so yeah i think i think going back doing as much research as you can finding out what's launched looking at things that are interesting or different or novel or whatever and working out how to combine those things or how to like take them and tweak them is a really really powerful thing that you can do in a bear market which in a bull market you can't do for two reasons one if you do something weird no one will pay attention and you can't almost do anything weird because it's impossible to actually see what's going on because there's so much noise right and if you're on crypto twitter i think one of the best indicators of this is that like the narrative and the conversation has kind of condensed over the last month or two where we're actually all talking about the same thing for the first time in like a long time like you go on crypto twitter and like your whole feed is like all talking about the same thing whereas it used to just be like people screaming nonsense constantly about like whatever but now like we can actually sit down and have a conversation which is what used to happen like we'd be like hey you know compound just launched their token what do we think about this like what are the bad things what are the good things and we would talk about it for like three days on crypto twitter it'd be like a whole conversation like you in you know for the last 12 months that's just been impossible right it's too much noise so go back look at everything that's happened take the good examples the bad examples the weird things the things that you don't quite understand how they work or that don't make sense look at them and try and work out like how can i apply this to my project what you know how could i take this and tweak it um i was just talking to someone here just before i started that was talking about like structured products and derivatives um there are multiple different uh examples that people have built of uh like structured products especially tranching like setting up like junior and senior tranches of things no one's using them like no like there's not a single person i mean they might be i haven't gone back and done the research yet who knows there could be 50 people that are doing this but like as far as i can tell no one has taken any of these like structured products and combine them with something like an ave or a compound or whatever to try and like create some like novel composable you know solution so even that like and there's i'm like myriad examples of this so benefits of building a bear market things slow down you can take your time you can you know go back do research you can slow down and you can also explain things to people right like a lot of the things that we're doing in d5 are pretty complex right and if you have to dumb everything down to like the absolute lowest common denominator like most crazy dj and speculator on twitter it's extremely hard to like actually explain what's happening right and synthetics had this problem for a long time as well you couldn't get someone to pay attention long enough like tell them what we were actually doing in the bear market we were able to through 2019 as more people came into the community they were like wait okay so how does this work and you would go through and you'd like build like a very like comprehensive explainer of like this is how staking works and this is why it works and this is the depth pool and these are all these things and you can really get people who have some you know specific interest and and want to be engaged and like bring them into the community and that for us has been you know the thing that i think has kind of allowed us to keep going this long is that our community is very open we have a bunch of different things that people can be interested in talking about we give them in discord um you know an individual channel if they want to talk about mechanism design there's a place to talk about mechanism design they want to talk about [ __ ] coin trading there's a place to do that they want to talk about price as a place to do that so like we give people a a place to kind of have that conversation and bring because now is the time when you can foster it like previously it was really hard but i think over the next like six to 12 months it'll be possible to start a dialogue and start a conversation with people let's see here so just talking about synthetics a little bit and what we are planning to do for this bear market how we're approaching the bear market um so one thing that we're going to do is rebuild um the protocol from scratch right so again this is kind of one of the things that happens in the last four years um you know we launched synthetics uh the current contracts in december of 2018. um we've been iterating on those contracts over the last you know three or four years but we've never been able to kind of stop slow down rebuild them from scratch right because it's just impossible everyone wants like the next shiny thing like immediately right they want like more sense more this this functionality that functionality and so you're forced to just race as fast as you can to kind of keep up with the market um in a bear market we can now stop and this is what this is one of the conversations we've been having internally is like we can stop and spend six months redoing the platform building v3 like there's huge opportunities to to you know not be racing and not like do the expedient thing um and so for us what what we're doing is we're rebuilding um the entire architecture um we're also rebuilding the perpetual futures product um we are um uh we're spinning out more projects so things like winter thales etc and those projects now are kind of independent on their own having a chance to kind of scale out themselves um and then i think the um the the other interesting thing that we're trying to do is um and this is probably in my mind the biggest gap that we had like the the biggest thing that was thrown out through this um bull market was governance right because governance doesn't really pay right governance theater is very easy to do and it's fun and it makes it look like you're doing the right thing but really a lot of the stuff that's happened in this bull market is utter [ __ ] when it comes to governance unfortunately um and so synthetics even though we've been decentralizing and you know we've gone through and we've like removed our foundation dumb thing don't do a swiss foundation i think we all understand that now but like back then it wasn't that clear don't do a foundation get rid of any entities go pure dow work on your governance but in spite of that in spite of all that progress that we've made it's still a [ __ ] multi-stick at the bottom right and even though we've got like a lot of structure around who's on that multisig how they get on how they get off or whatever it's still a multi-sig and if you look at the kind of state of the art of where governance is up to you basically just have a bunch of multi-sigs spread everywhere across almost every protocol you've got a couple of protocols that have um you know things like the compound governance module right where it is fully on chain but the actual governance input is really poor because they use a weird delegation model where it's hard to get people to kind of engage so synthetics is working on building a new governance module which is um v3 gm and that governance module will be fully on chain but it will also be delegated right so this is i think one of the critical things especially if you're early stage you cannot expect your entire community to engage in every decision it's not possible right um but you need to be able to continue to iterate you need to be able to make decisions quickly you need informed people in charge and so our delegation model what we do is we basically have eight people on a council those eight people are like senior leaders they're not necessarily you know contributors to the project but they're senior leaders within the community and those eight people sit on a council and they make the decisions about what the protocol will do the problem is that there's this discretionary element where they decide something and then they go to this other you know shadow organization right and say like hey can you actually execute this on chain and so what v3 gm does is actually remove that so it says you can have a council of eight people and those people will actually be able to make the changes on chain that are needed to happen with the protocol but you will have a veto power by token holders you'll have a whole bunch of functionality these and there's other people working on governance as well right um you know there's there's a number of different platforms that are going to emerge but one of the things in a in a bear market that i think you have the opportunity to do is get your governance right and we did this throughout the bear market we invested in decentralization we invested in like better governance we invested in all of these things which in a bull market there's no payoff there's no payoff for investing in governance but in a bear market there is because when you come out the other side if your governance structure is working if you've got you know the right uh level of decentralization plus good decision making it's extremely powerful and now synthetics as we've you know kind of come through into the bull market in the last 12 months was able to lean on all of that investment that we made during the bear market and be able to really out execute a lot of people that were kind of stuck with like their old governance processes that didn't really invest in it um and you know didn't really uh didn't really know how to like navigate this process um so again it it really comes down to i think two key things take your time and make sure you survive right if you slow down slow down decision making think things through you'll be in a much better place don't rush things but then you need to survive right and there's a whole bunch of things you can do to survive balance your bounties grants you know all kinds of stuff um but uh those are the two key things for the next like six to 12 months i'm not going to predict the price of eth or how long this bear market's going to last or whatever if you want those predictions you can follow me on twitter but but i do think that we're in for like at least another six to 12 months of this and you need to be preparing for that so you know if you've raised money look at your runway check to see where you're up to um you know cut things back be a little bit leaner if you haven't raised money yet it is still possible to get money it's just harder to go out and like raise you know equity capital or money for tokens or whatever like look for the alternative funding mechanisms look for you know ef i think there's someone from the ef coming after i like the ef is actually paying out grants now again which is amazing um so take advantage of that look around be you know uh be hungry and you know just grind it out and hustle and you know the fact that you're still here today is a pretty good sign because i think a lot of people a lot of the tourists have already left the building but you guys are still here which is you know a pretty positive sign um so yeah hopefully hopefully we can all make it and uh and get through to the other side of this market where wherever that is um and hopefully we can do so really improving the overall state of the ecosystem by like thinking clearly thinking through what we're doing um you know looking at whatever innovations have happened and kind of combining it all to get a much better ecosystem at the end and also final final point just to chill this i'm not going to show a specific l2 but do not even consider deploying on l1 we all need to get our heads around the fact that l2s are ethereum now right by the time we get out of this bear market deploying on l1 will just not be a thing right like there's no way that a new project will be deploying on l1 you have to deploy on an l2 now which one you choose comes down to your own calls or whatever um but we really all as the ethereum community as an ecosystem need to get our head around that the future is deploying on l2's all of the transaction activity will happen on l2s and the sooner we can all kind of collectively get that belief in our heads that this is where the thing is going the better off we'll be and i honestly think that it might be that consolidation around l2s that is like d5 summer you know uh the impetus for kind of taking us out of this market and kind of getting some momentum back um so yeah hopefully that was helpful um i don't know if i've got time for questions or anything or if we want to do questions but um is yeah so the question was um you know obviously crypto's 24 7 trading right like our markets are always open um whereas like fx commodities equities things like that uh are you know on like a monday to friday schedule the nice thing about fx is the windows actually kind of short that it's closed it's not that bad um but obviously for equities you know it's it's definitely um it's closed more than it's open right um i think in the short term uh how we manage that is we with synthetics we have oracles right so we need a price from an external market right now the liquidity is coming from the external market you know for equities it's the nasdaq or you know whatever the new york stock exchange um we therefore are bringing an oracle price in only when the market's open right but there have already been people um some people who are doing better than others but uma for example who've tried to like create these markets even while other markets are closed and synthetics has looked at this as well um i think there is a pathway to getting um representations let's say of things like commodities so we have synthetic gold um or you know forex currencies or whatever getting them to a point where like there's sufficient liquidity on chain where when the primary market shuts down and the oracle is off you can actually go to like a bilateral trading mode and allow for you know people to actually get price discovery just like after hours trading right there's less liquidity but like it can work you just go like after after hours trading the other option is that like spf might just like take over all of trad fi and you know make it run on ftx and the model will go 24 7 anyway so that's a backup plan i guess so one of the interesting things about a bear market if you haven't launched a token yet you're lucky nice job if you have launched a token and it's out there and it's circulating there's this like kind of bizarre effect where most of the people in the market um have kind of disappeared right they're not actively managing their portfolios they're not looking at what tokens they have they might just have like you know 10 15 different tokens sitting on finance and in a bear market getting attention can actually be problematic because someone you know there's some big announcement everyone starts talking about synthetics someone's like oh yeah i've got synthetic sitting in my binance account and then they go and just dump it right and so we actually had this really hilarious chart uh where we basically tracked every single major announcement that synthetics did throughout 2018 or haven back then but you know the pro every single project announcement and it's like absolutely like ridiculous like every single one it's like red candle red candle red candle because as soon as you say something people like oh yeah i can dump that thing so in terms of dealing with fud the only thing you have is conviction right you need to have a community you need to have you know core contributors who have high conviction that you're going to be able to make it through and that's again why i say like go back to first principles like really think like is this the right thing you know did we do this for the right reasons you know did we make the right decision for you know whatever reason and if we you know if we didn't then change it right which gives you an opportunity to kind of recover um but then fundamentally you just need to be in the community building confidence building convictions so that inevitably when the fudd comes you can get through it i think the other thing as well and you know this is hard but i've always taken the approach of being as transparent as possible right so if someone's you know like what is fun right like sometimes fudd's true sometimes it's not true right like but you know it's anything that's kind of negative against the project but a lot of times in with synthetics like people would come out and they're like this thing doesn't work and you'd be like yeah it actually doesn't work but you know we're working on it and there is a way to kind of diffuse that where you're like yes we get it it's not optimal i mean we had fud for a long time in synthetics around like the way that we distributed rewards and people were like it's gameable you can you know snapshot and there are all these things and we're like yes absolutely like this is not the optimal design we are working on it we will get there so just being transparent and not trying to deflect or like you know obfuscate what's going on like being as transparent as possible and admitting the things that don't work but also committing to fixing them is like one of the best ways to get people to feel like okay like we get it it's not perfect we're working on this vision that's gonna you know come down the road yeah so uh synthetics accrues uh transaction value right and this started from haven so haven there were fees when you transferred the rc20 again reminder don't do that it's a really bad idea but those fees went into a fee pool and were distributed to all the token holders right now that was one of probably the few things that i think we did in the bull market that was not really acceptable to do right and there were a couple reasons why one everyone was worried if you're paying a dividend or you're paying fees or whatever that's going to look like a security i will say this very frankly if you're doing things and making design decisions and technical decisions because you're worried about regulatory stuff you are going to [ __ ] yourself like you need to have the guts to just be like this is the right call i'm not going to you know not do this because i'm worried about like a regulator coming and saying you know this is a bad thing or whatever so look at the actual design that you need to make and if it's something that's like really problematic maybe consider tweaking it a little bit or maybe consider how you like explain it but if you need to do that thing and you're not willing to do it because you're concerned about like some regulatory interference i would say first of all decentralize your governance a little bit better right and then second of all like you just need to make the call that like if you're doing something and it's in good faith that you're probably going to be okay um and so i think that when we looked around at all the tokens uh that were being designed and that you know there were buyback and burn schemes and all these convoluted schemes that people had come up with in 2017 to try and avoid paying dividends we just said this is ridiculous like let's just pay the dividend and see what happens right i mean i'm still here i'm in new york and no one's locked me up yet so you know most of the time i think people are a little bit overly concerned about that sort of thing um and so yeah like you can there's absolutely things right now that a lot of people are doing um that don't make sense that you could potentially do and in terms of value accrual i think you know the thing that got us out of uh the the bear market last time was like d5 pulse right d5 pulse um you know so okay to take a step back for a second so 2018 there's a bunch of people building things finally we actually have contracts on ethereum that are doing stuff which is pretty impressive and i mean other than just raising ico funds right like we had like functional smart contract suites which is great and then we all looked around and we were like wait a second all of these things are kind of in the same category right and we got to the end of 2018 and i think um set protocol and a couple of other people like dahmer um we're like wait we need a term for this right like we need to like find a way to like create a narrative so that we can like get momentum from all of this activity and so they thankfully came up with d5 d5 was the thing that kind of crystallized everything for us and like showed us that this is you know what was going to uh i guess be the thing that was going to take us out of you know the bear market um and i think that that process of um kind of coining d5 coin in that narrative um was extremely powerful when we got to like early 2019 there were enough people in d5 that we needed to scoreboard and thankfully d5 pulse came up with a scoreboard the scoring mechanism may be not the best scoring mechanism ever tvl but like hey it's still a scoreboard right and so we all of a sudden had a game that all these d5 projects could play and it was like how do you optimize for as much tbl as possible and it worked like synthetics crept up the leaderboard people started paying more attention that was the place where people went i think this cycle is going to be crypto fees so you go and look at crypto fees and like that's the thing that people are talking about they're like oh okay wait a second so uni swap delivers five times more fee revenue than bitcoin like something's going on there right and like eight trillion times more than ripple like why is ripple still worth 30 billion dollars and you know markets take a while sometimes to like gain efficiency but my guess is honestly like if you want to play a game that's going to be the game for the next 12 months is like crypto fees now crypto fees it's again not a perfect metric like tbl because what it doesn't do is say what amount of those fees that are generated are paid to who right so in the case of uni swap they generate a lot of fees but they're paid all the way back to you know lps basically right like so there's no actual accrual to the token so i think crypto fees they are getting more sophisticated i think they will improve this and they will get to a point where they show like okay what's the percentage that's like retained by participants what's the percentage that goes to token holders but this will be the game because fundamentally if you're not generating revenue and you're not actually you know providing a service to people willing to pay for and paying the people who provide that service and you're not capturing that value somehow in the token then long term is just not sustainable um so i do like my say my hunch is my intuition is that crypto fees is the game that we're going to be playing for the next like 12 months um which is certainly a better game than tbl um not perfect but you know we're finally slowly learning things i think we got a couple more minutes this will be fun okay yeah so this is an interesting one this is actually a pretty uh this yeah there's vigorous debate right now in the community so the actual collateralization ratio right now unless they rug me again overnight um is 350 right so we've dropped that over time so the question was okay um we are already capital inefficient in d5 which i think is fair compared to triad five we don't have the ability to do like under collateralized lending although it turns out maybe we do um there's a couple of funds that have been getting away with it somehow um and so uh you know we we have this situation where we're really capital and efficient um and we've got highly volatile collateral most of the time in things like ave and you know even maker right ethan is pretty volatile it turns out how do we try and uh determine i guess the the risk parameters around what those collateralization ratios look like in our case we started at 750 we went as high as a thousand percent and now we've come down to like 300 and i think you know ultimately what it comes down to is you need a governance process uh where you're like assessing the risk of all of the various components we use gauntlet as well which is very helpful like all it does like you know uh agent-based modeling and a whole bunch of like simulations to work out these things um but you know ultimately d5 for the foreseeable future again unless there's someone who's done something cool that i haven't heard of um potentially is probably going to be less capital efficient than tradify it's just the reality unfortunately um but i you know i think if you look at some of the protocols like liquidy is not too bad it's like you know 150 is kind of the threshold and you can go down to like as low as 110 or 120 so there definitely are things that are more capital efficient um but under collateralized or uncollateralized lending i think is a huge opportunity for this bear market like if people start to iterate on that and work out a mechanism that allows for higher capital efficiency i think that'll be very powerful all good cool all right okay thanks everyone you