Introducing Tracer DAO The Future of Derivatives Ray Mogg

yeah morning everyone and great to see a few a few tracer hoodies getting around in here uh my name's ray i'm one of the co-founders and core developers on tracerdow and yeah today i'm here to give you a bit of an introduction to what we're doing and what we're looking to build into the future so tracer we're building permissionless base layer derivatives infrastructure now what i mean by this is we're not building a single derivatives protocol but instead we're building an ecosystem of derivatives uh our mission here is to is it not close enough worries all righty yeah so our mission at tracer is to democratize access to financial markets and also give risk management tools to everyday people um and before we dive into what tracer is actually doing i sort of want to sit on that point a little bit and highlight why it's actually really important that everyday people have access to risk management tools so i'd like everyone to just think about gas for a little bit and not ethereum gas for once but irl gas so for most of us fluctuating gas prices can be annoying but take your uber driver who actually relies on gas to generate a stable income so if an uber driver could easily hedge their exposure to gas over the next six months it would mean their income is more stable and then they can continue providing the great service that they do so obviously derivatives are a really important tool and we can see this in traditional financial markets so the the global derivatives market is over one quadrillion dollars which is absolutely massive um and then compared to d5 which is only 100 billion all of d5 yeah it defies tiny comparatively and within d5 derivatives still only form a tiny portion of that total market cap so there's a massive opportunity here for an ecosystem of derivatives to sort of take some of that value from the traditional derivatives market and bring it into our d5 ecosystem there are a few really big things that tracer is trying to solve that are massive problems in traditional derivatives first of all there's a major lack of transparency it's very difficult to figure out what's going on in the traditional derivatives market uh by building on top of ethereum and open open ecosystems this transparency is there by nature the second big point for us is it's very hard to measure counterparty risk this is why you have a lot of third parties involved in traditional finance brokers clearing houses again utilizing smart contracts we can mitigate counterparty risk significantly simply by baking all the rules into contracts thirdly which is one of the big points there's a high barrier to entry so that uber driver i mentioned before he can't easily access these tools they're usually left to major traditional institutions and finally and i think most importantly traditional derivatives aren't programmable and there's a few reasons why this is very important firstly everyone knows in d5 composability is massive so having programmable derivatives means that we can take these derivatives and use them across the board and d5 but even more importantly is these can then be plugged back into the traditional world so with our uber driver example now imagine that instead of having to log onto a site he simply uses the uber app clicks hedge now and he's hedged for the next six months so i've sort of talked a lot at high level but what have we actually done so far with tracer so in september last year we released our first derivatives product which was tracer perpetual pools perpetual pools is a new d5 primitive and it provides a few really nice things that are super helpful for users so first of all it's fully tokenized leverage so when you mint a perpetual pool you actually get the token in your wallet which again allows us to plug into d5 so you could mint a 3x long eth token you could take it over to rari you could deposit it as collateral and take a loan against it secondly because of the mechanisms behind the scenes there's actually no liquidations required which makes it super simple for anyone to get involved in this you don't have to worry about a margin account you don't have to be watching the eth price as it's crashing and making sure you're not going to get liquidated it's buy the token put it in your wallet so perpetual pools v1 was our validation of this new primitive um we deployed on arbitram back in september and since then have done over 400 million in primary volume so that's volume going directly through the tracer contracts we've done over 100 million in secondary volume so that's going through balancer and then we've had at the peak over 50 million in tvl the other point which i think is really important we've had no hacks no exploits and luckily no wrecked articles or sam messages um for us we actually think this is a really big point to grow the d5 ecosystem we need to continue to build safe systems otherwise no one's going to come and join us so yeah we've worked with some really great teams here rajiv from securium the sigma prime guys spear bit runtime code arena and we're super passionate about this being a wider ecosystem problem so if you do want to come talk security to us yeah we're more than happy to so how did this perpetual paul's v1 product actually work again we've leaned into simplicity so there's four steps if you want to use it step one is simply select your market step two pick if you're going long or short step three choose your leverage and then step four pick your collateral and that's it you can mint long or short token now the the thing we're really excited to be talking about at east denver is our v2 of perpetual pools so v2 is the next iteration as we grow into this wider ecosystem uh and we've fixed a few things that make it a much more usable product so first of all we've significantly reduced volatility decay so for those that don't know volatility decay is actually a common problem across leveraged products basically as you hold these tokens over time their value decays due to volatility in the asset that you're tracking what we've done here is basically we're using simple moving average oracles now which will smooth out the the asset you're tracking and it allows you to hold these tokens for longer the other thing which is yeah a really massive point for us is we're enabling fully permissionless deployments so we've seen this across the board in d5 but we haven't seen it too often in the derivative space but basically what this will allow is you can come along you can pick your own oracle you can pick your own leverage you can pick your own settlement token and then deploy your very own market without writing a single line of code so actually i'll hold on this a little bit some of the some of the things that this actually enables for communities out there if you are interested in leveraging derivatives to build something else that's more interesting you can come along and use this platform so we're building this infrastructure to enable communities to enable dows to access the power of derivatives and take it and do whatever they want with it the one big thing that i haven't touched on yet that if you've followed the derivative space for a while is actually really important is data so one of the other things that we're really excited to come out with is the tracer data layer so what we're doing here is we're building the infrastructure to be able to deploy entirely new markets backed by chain link um we think that in order to get to this derivatives future that we want to see we're going to need to have a lot of new data feeds and a lot more innovative markets um so yeah i've got some of the things listed up here that we're excited to sort of bring to the forefront and i'll touch on one that we're releasing very soon later um the other thing with the tracer data layer that we're interested to see happen is you have all these oracle feeds and you have different price fees that exist we've come up with a solution that basically allows anyone to aggregate these into a single index and then use it in a perpetual pool so for example if you have five tokens that you really love you want to make an index you can go 3x long you can come to the tracer data layer you can combine them deploy your own feed that not only you can use but anyone else can use and then you can deploy a perpetual pool from that so the first thing that we're using to sort of test out this new tracer data layer is we're releasing a punk's market so we've worked with a group of chain-link node operators we have our own adapters and yeah we're really excited to be pushing this out quite soon what this will allow is if you own a punk you can hedge your downside risk so if you're worried that the punk floor is going to keep dropping you can come along take a short you're less exposed if you really love nfts and you want to get exposure to punks you can come along and take a long position without having to afford to buy an entire punk so yeah i've i've covered quite a lot here in in different places of the tracer ecosystem so i sort of want to take a step back and just highlight why this this play of having multiple pieces that all linked together is very powerful so i've talked about perpetual pools v2 and some of the efficiencies it provides i've talked about permissionless deployment and how anyone can now deploy a market without writing a single line of code i've covered the tracer data layer which actually enables these oracle price feeds to come along and be deployed in a safe and secure way so if we put these all together what this sort of enables is if you're a stable coin community and you want to see a new a new use case for your stablecoin you can come along and deploy a new market maybe you're a dow and you want more use cases for your governance token you can deploy a market that allows people to get exposure to eath without having to sell your governance token or without them having to lose exposure to your governance token the opportunities are kind of endless here for what you can deploy but the point is that anyone can do this and it's accessible to everyone so yeah i hope this is sort of given a good introduction to tracer what we're building and where we're going um i just have one ask from everyone head over to pools.trace.finance try out the app and yeah let us know what you think thank you