EthCC 2: Gustav Arentoft

ring I figured I could just start a little bit so my name is Gustav Aaron soft and I'm from mega town my position in the company is that I'm responsible for business development in Europe and I also do quite a bit of work in both Asia and Africa so I work on the business side of things but it also gives me some key insights into how we develop nurture and work with partners and partnerships specifically today I'm gonna be doing like kind of like an introduction to kind of the core concepts at megget ow specifically I'll talk about our CDP our collaborize step position which is our CDP portal I'm gonna be talking about how we create die what are like kind of like the benefits and values of time and some of the situations where we use and some of the potential that we see for ty okay great okay so yeah so basically mega-power we create decentralized finance on the blockchain and first off I'm just kind of quickly like talking about about me like my background is I've come from a business and tech background but I think probably like one of my most important insights is that I used to live in Argentina right up until I joined maker actually I lived there for one and a half year and during the the last six seven month of my stay in Argentina I experienced an inflation of over 50% on the Argentine peso so I kind of have like personal experience and some insights into how it is to be living in a country with very high inflation and my salary wasn't pesos so that wasn't too fun there's a lot of things that was fun in Argentina but inflation wasn't not one of them but I am Danish and so upon joining maker I moved back to Copenhagen and right now I'm sitting in our headquarters which is also located in Copenhagen in Acton scene I also I for software company specifically I was a consultant with in financial technology and I work mostly with fin tech and blockchain projects yeah anyways that's a little bit about me so maker so basically what what we are trying to achieve at maker is we're trying to use the blockchain for financial technology we have kind of like we are trying to we're doing in some ways but specifically we're trying to use blockchain for what was meant for create equality and equal access to financial tools and possibilities for people all over the world anyways diving a little bit into to maker as a project we have two sides of it first off I'm going to be talking a bit about our stable coin we have a stable coin called die die has a soft pick to the US dollar and it's a decent device stable point we just had a presentation about stable coins I'm not going to go too much into like why we need stable coins I think most people in this room probably knows why but basically one thing we see a lot this of course as private people who's looking to hedge our self against the volatility in the crypts of market but I think one of the bigger implications of having a stable coin is that you can actually use it for business purposes we see a lot of businesses who's dealing with marginal profits and in general if you have margins then you cannot deal with any kind of volatility you need to have something that's that's stable and a value that you can relate to and that you know you kind of like can predict so I think in terms of like businesses that's probably where we see the the biggest need for stable coins at the moment of course apart from private individuals looking to hedge their risky positions so what kind of like makes dye special and kind of like makes us stand out in regards to the other stable coins is that we are a completely decentralized stable coin we don't have a centralized point of failure and we do not create we don't have I owe you model where you know people send us dollars and then we issue dollars on the blockchain as a response we are completely asset-backed and the way that we back this is by having positions on the blockchain created by individuals or companies where we allow people to lock up their assets and then take out a line of credit and this line of credit is then value created and died and everything is done directly on chain so the properties of die as like a durable stable coin at the moment we are only back by aetherium we currently hold two percent of the total theorem supply and our smart contracts but this has only created market cap for us with around ninety million dollars so this of course not only you know exposes us a lot to the well its price volatility of etherium because even though we held the current stress test of ethereum dropping over ninety percent since launch I think we still would be more comfortable if we weren't only back by etherium so what we're doing later this new year we are launching multicolor all died and basically multicolor real-time means that any kind of eerie c20 token which passes our governance process will be able to be used as collateral and this of course opens up for a variety of different use cases I'll get into some of them a little bit later but let's stick to the basics for now so this this is basically how a CDP looks so it's digitalized collateralized loans so on the left side you can kind of see here that this collateral that's getting locked up in a smart contract and then on the right side that's basically the line of credit or the value that we are creating directly on chain and this is time so every single position is over collateralized currently on ethereum we demand that you can only take out 66% of the theone value in dime and if you drop below that threshold we will liquidate the position or do a margin call so currently the system has an or collateralized station around 320 percent but then again with aetherium this of course hinders our scalability a little bit but we currently have I think it's around 320 percent yeah localization but anyways so this this is a permissionless lending protocol so the only thing that we look at when you supply assets or collateral to the system we only look at that assets value and kind of like the parameters to set for the specific asset type so when we dive into multi-level die every single asset and every single collateral type will have different properties based on the underlying risks of that acid so of course if you look at some more stable assets you would be able to have a higher conversation ratio you'll be able to take a more credit against that asset in comparison to for example etherium and you will also see the stability fee which is the fee that you pay to the mkr token holders for taking out a ton of credit you'll also see that vary from asset to acid so one of the reasons why that we are decent price again we are aiming and striving to be a town that's the fact that our system is governed by another token and that's a token kind of like see on the bottom of the CDP it's called the MKR or the mega token and and this token it basically not only reaps the benefits of the system by accumulating those stability fees and then using those four pi packs or you know as we probably call it in in crypto world by burning tokens and thereby increasing the value of MKR but they also the ones whose underwriting the entire system so in case that you know we set some parameters for collateral that aren't optimal and doesn't work out so we end up having positions that are under collateralized then car token holders also the ones who needs to repay this under collateralization and thereby you know ensure the stability in the pic of time and this is specifically done by printing new tokens selling those tokens in the market to make up for the difference in the undeclared ization so the way that it would look like if you look in the the left here the caudal arrow like drop below the amount of spiders been taking out against it and then we simply need to go in and like repay the difference to make sure that I will maintain stability so in terms of like dye I mean dye on its own hold some of the same properties the other stable coins hold I mean they can be used full of the same things we however do see a pretty big trend that you know dye is deemed as you know more suitable for especially decent last applications so within the the DEP space we are quite popular and a lot of people use an integrate dime on that dabs but apart from that I mean people also use it for remittance this is probably what you know one of the biggest and easiest use cases for for dye at the moment and stable coins in general and also just in terms of like escaping local volatility so for example actually one of the places where we have a pretty big traction in regards to this is an Argentine so it's a market uhnope pretty well and the circumstance is there at the moment is simply that you know when you get paid you're looking to change your money to something else like on the day you get paid because if if you wait you can end up getting hit by you know for example as I experienced quite a few times 10% inflation in one day and if 10% inflation happens in one day I mean that just you know cuts 10% of your paycheck and you know no one is really interested in that so if you can you know provide people with like an easy access to instantly convert their their feared when they get paid into died for example and then they can just you know change back whenever they need the money because I mean unfortunate at the moment you can't really pay with the Crypt so a lot of places right but allowing for this smooth transitions actually something that's you know a pretty big use case at the moment as well we also having several partners in north south or the northern part of South America and Central America specifically in Venezuela and Panama who again is allowing the people there to you know switch in and out of time seamlessly from from my my perspective I like where I work I'm based in Europe now so I also tend to stay within my own time zone but we do have a very big continent right below Europe you know which where we have a lot of use cases as well so in the African region we actually getting more traction and one of the things that I've been working on quite a lot is by improving the infrastructure of going in and out of tie in the African region the if you can allow people to go from fear to crypto and then again from crypto to fear then you can actually no push these benefits on to the people right because at this moment as as good it is that you can use all the benefits of the blockchain you also need to you know at the end of the day get the money back to fear so you can actually like spend the money so all the benefits you doing can have the economic benefits of going to the party in the first place will be directly translated back when you switch in to feel again so this is one part of it right because we really do have like a two sided project so we have the diadem and which is very important because when people create these big CDP's and they lock up the assets take out a line of credit they also need to be able to again go back to feared so we need to have a diadem and so when people create CDP's and they want to sell off that die we need to make sure that we have you know a title meant for them so the other side of it is is the collateralized their positions so locking up assets on chain and allowing for finance against them so within these things we have some some quite interesting use cases for example right now we are having a partner called trade shift they're one of the biggest supply chain platforms in the world with 1.5 million companies and basically with them we are exploring and we have collaborations with them about being able to choke in eyes and collateralize unpaid invoices so basically being able to open up for a decent revised version of trade finance and of course in like the western world in the developed countries trade finance is something that's available but this is something we also look at to scale into you know even in Europe there's a lot of countries where trade finance for is amis just isn't possible at the moment and when you have a protocol that's permission this we don't care where you're based away from what your local financial infrastructure system looks like we just care about the value that you can put on chain and then we allow you to take out a line of credit against those based on the conditions that they have so basically this is something that we're looking to scale and we're looking to especially be able to help people who don't have access to you know proper financial tools because the local financial system just is suitable for dealing with them and then of course there's also the the other part of it so something that we will see in the Western world and then we have a very big interest in it as well is to be able to tokenize and grata lies bonds and stocks first off we just give an instant diversification of the collateral types the backs time but another thing is also you can actually create like very very smooth leveraging tools for the user where the users can spread their risk based on you know leveraging the assets they have so to give you like an example if we have enough tied a man to keep the interest rates low on dime then you can for example take bonds and you can actually end up at like taking out a positive difference on what you're receiving from the bond and what you have to pay instability fee so a good example for example is South African national bond government bond pays 7% a year but if we have enough demand we can actually offer credit against that bond to 4% a year so that means that if you lock that up in a CDP you take out dye against it then you have to pay 4% for the dye but you receive in 7% a year for the bond then you can take that value take out you can invest that into another bond that has the same properties that's then spreads your risk and still gives you a positive return on both bonds and this is a way for you to like after you so actually like start like leveraging your position but in a quite a lot more healthy weight and we you know current see a lot of leverage being used another thing is also we're looking in so you know with in terms of like Africa specifically you can also actually also torgan eyes depth obligation because this is value right so you can actually without them having any assets but if they have a credit history you can't organize a depth application and use that as collateral and then allow them to take out die against a collateral so this this is another another thing that's like quite interesting from our perspective you know again providing financial services to people who previously just didn't have the possibility to get them right yeah so so this is this is one of the things that I'm actually very focused on right now that's in terms of like Financial Inclusion because the the way that I see the space today and you know I mean we have a tremendous amount of respect for taps and the entire space in general but with the current user numbers on them this is probably not where we're gonna find you know the biggest boost of diet option at I usage because we are still a pretty pretty small space and and we're not that many people in it yet so actually like using dive for financial inclusion is something that of course is an investment from our side but it's probably also one of the places where we can get the biggest payoff in terms of having dye adoption and dye usage because we can actually go in and compete with some of the the local financial systems and conditions and I'm talking specifically about there's a few countries in the Balkan region but apart from that the SCN region the South American region and of course also the African region so over the next month and a half I'm actually going twice to South Africa to meet up with the partners down there and we are looking to really really heavily invest like time and energy and resources into getting some of these projects up and running and we do already have quite a few partners down there already yeah so and another thing that's about our protocol right is we're completely transparent so if you don't trust us you can check it yourself you could at any given moment in time go into the web page called MK art about tools and there you can see the dye supply you can see the price of MKR so how much money is underwriting the system at any given moment you can see the collaboration and then you can also see the CDP interactions and there's also a lot of other things you can see we are you know constantly figuring out like what other kinds of data would be you know usable for or interesting for the users to see and we also have like it's like historical chart of like all the CDP interactions and stuff I think you should check it out yourself it's it's it's a pretty cool place yeah so so we also have this is just like some general numbers except before we have around 90 million dollars and I of time circulation but this is of course a number that we expect or we know will will be rapidly increasing when we launch multiple at all but then again this number is heavily depending on dye demand so we we are pretty sure that we can supply as much dye as needed but we need to make sure it's needed right so that's the current current goal and the current things that I'm working with is to make sure that you know when we can get these very big cordero types such as bond stocks a real estate for example into the pool we need to make sure that people on the other end will be will be accepting the dye yeah so I think one of the things that we have done very very successfully here at mega Dow is that we have an extremely good ecosystem we have a massive community to support and we also looking to pave the way for anyone who wants to build on top of our ecosystem so if any of you are in projects or dealing with projects or know of projects that could use dye or CDP's in any way of fashion I mean feel free to reach out we really support we want to supply as much support as we can both in terms of like integration or support but also marketing and awareness and I'm working closely with with a lot of partners that we have we also have some of them in this room at this moment actually so thank you guys for coming up yeah and and and basically this is one of the key things right because if our system needs to be scalable we need to have as many people that thought the technology as possible so that also means that we and if in the future we also already started on it we're doing what's called like legal ice breaking where we basically will go out into specific jurisdictions and kind of like show how you need to deal with legislation and this is being done because we do know this is a space that's heavy heavily regulated and will continue to be so in the future and we do know that you know if you're one or two people or a small team and you're looking to build an application or front and it's actually our smart contracts it can be very very difficult for you to you know start going in and interacting with the local FSA or try to deal with legislation in your jurisdiction so this is something we want to do for you so that then we spend the communities I mean we get funded by the community right so we spent the money coming in from the we need to be spent this on improving the the concepts and the possibilities for the community yeah so this is just a few websites we have a very active rocket chat and you can always reach out to to any of us there specifically our developers are very active there so you have any technical questions they'll be happy to answer them for you we also have a very active reddit where even our a lot of our executives are very very active in responding and then yeah follow us on Twitter okay that was it thank you any questions thanks for the talk and that is really really amazing we're looking forward implementing it ourselves in our system but when you talk about getting those collateralized debt positions in there and talking about over collateralization ratio you're probably gonna need some Oracle's feeding in price and if you have more multi assets collateral pools you can have more Oracle's required to get stable price points right I know it's a bit technical but how do you protect those Oracle's to influence the system yeah so so right now we have we've been working on creating as like a system to deal with this exact problem right because I mean if you have Oracle's and someone can cover up those Oracle's then you can go and influence the price feed and if you influence the price feed then you can go in and influence the value that is displayed in the CDP and thereby you can you know allow for miss usage of the CDP's so so basically the way that we do it now is we have like a system where we have like a number of Oracle's and then we have like an algorithm that's based on game theory so basically the way that it does because this is a pretty special case right because you need to go in and value if something that should always be truthful whether that is actually truthful or not and something that you should be able to count on whether that actually is to be counted on so the way that works now is that we have the system where I can actually like filter like if there is like a price change that like is ops obscure in it so for example right now if there is like nine Oracle's even as fortum gets corrupted we will still have the correct price because the algorithm will be able to detect that this is for oh and another thing is also so in in terms of like liquidations we have found out that it's actually better for us to have an hour delay on the oracle price feed that goes through the CD piece rather than having the potential for someone to be able to corrupt them and we also deal with for example there's some some of the collateral types that we're looking to implement into this where it simply like will be very very difficult to have a price feed on that so that's for example at depth obligation or you know having something as you know if you tokenize your own house and take out a loan against your own house this is very difficult to have a price feed on so we have risk models that are being developed that can kind of like put this into the equation and then calculate the risk based on that so it is definitely something that we're working with a lot and if you have any like in depth questions because you're looking to get some answers for your own project our ORAC is also open source but I would be happy to connect you with someone from the team Thanks thank you for the amazing talk I have two questions first is what kind of asset do you use on the blockchain to do the Contra part with the dye and to how you tackle the AML regulation when you give you a token do you actually get into this qyc part or is it totally anonymous yeah so I mean so right now the the braided ok so just take the first question the counterpart to die I you talked about like the collateral that's the CDP yeah so the collateral in the CDP at the moment is aetherium so we also we have some pretty funny like graphs actually of like how the CDP evolution has been over time because this of course has been you know quite a few liquidations due to you know if they were dropping a lot so right now it's only a theorem but that's also bad when we launch multi-level die the first asset types will be focused on will be bonds and stocks because it just gives us like an innocent diversification of the collateral back in time because you know as durable and and as we have been so far even with such a massive price drop we just you know it just makes no sense to only be backed by one asset even if you believe in that asset type and then the second question in regards to regulation right yeah so the way that the way that the protocol works now and the way that will work in the future as well is that the protocol itself isn't possible to be regulated right because right now it actually isn't possible to like regulate just code and it's just going to be like open source core just like running by itself but every single front-end that then interacts with the smart contracts and we allow people to you know build fun dance we actually help people to build fun dance that can you know open up CDP's so for example right now I'm helping a project in Nigeria to where they're building a front-end to the CDP portal so they can allow to do micro find something in financing and micro lending to people in Nigeria by them locking up aetherium in this CDP right so so then that specific front-end needs to comply with local regulation and that's also why we want to do this like legal ice breaking right so we will go into like jurisdictions so for example right now the main one we're focusing on is the main ones is Europe and America so what we're going to do is we're gonna make an entity like a walled garden we'll call it and this entity will then go in and and show exactly how it's it's dealing with regulation and it's got a peep and then afterwards we're gonna be providing a guide we like we can show you this is profitable this is how we did it this is how to you know till regulation this is the the feedback we have from regulators this is the legal opinions that we have got drafted and then everyone will actually be able to take that and if you just you know stay within that guide and like within that toolbox that we provide them then anyone can actually open up a front end and and interact with our CDP's and smart contracts thank you thank you for your talk and I think you already mentioned something about nature and trying to answer his question but I if you wouldn't mind I would like you to go maybe mine in little more detail about your operations in Africa and how exactly you're trying to walk and Financial Inclusion when you give me a talk he talked about only South Africa and I know that back in Africa Kenya is doing well when it comes to crypto Nigeria is doing trying to train - when it comes to stuff from South Africa do you have any operations going high and what exactly trying to walk up in that space okay sure yeah so I mean this is this is you know one of the things that I love to talk about and this is one of the biggest personal interest of mine as well so I'm just so happy I'm at a company what makes total sense to do but but for example so this the the in the following week we are getting integrated on a company called coin direct so specifically they are providing us with on an off ramp solutions in Ghana Kenya and Nigeria South Africa via Mobile Money mobile transfers and as well as being able to do on and off ramps we are bank transfers in the rest of the region but of course Mobile Money transfers is you know the optimal solution and they're going to be scaling up the on and off ramps throughout the year and a goal is that it will hit around 20 within two years so that basically means that now we have the possibility to go in an hour of Fiat and Cripps alright so now we can actually go to some of the projects and and deal with you know specific types of you know yes specific types of like Financial Inclusion so for example right now we're working with a few companies in the region for example Jamie pay they are going into Ethiopian and then they are having like agents who will allow people to pay the bills be died and then when their bills get paid they actually get a credit history and that credit history will in the beginning we used to give them financed via banks but later on became we can use that at maker to create a depth application and thereby we can actually you know create financing for people via them having a payment history on die then we can create a dip obligation and use that as collateral and then give them a loan in time and this is going to be used to finance for example like if they need to own real estate which is you know a very good way to escape poverty is owning something but also you know just if they need to start a business or something like that and another another pretty interesting thing I think that recently over the recent years we had some some technological breakthroughs that you know allows for some of these things to be implemented more easily and especially regards to crypto I think it's very exciting so for example one thing that we exploring right now is to take ATMs and set them up as like mini banks in local communities so we're working we are talking with one of the the biggest remittance companies in the region and basically they already have a lot of these like small kiosks where I can go in and receive or send cash but then what we're gonna do is we're gonna take like an ATM we can get them down all the costs you know cheapest ones around $2,000 then you can make this not only a place where you can send or receive money but you can also make it a place where you can do on and off ramps then you can buy these smart phones from a company called onyx that cost $30 each you can pre install wallet with die on them a die occasion that then can be used to receive send and pay with dime so that means that then we can implement you know a small payment system in like a community like on border and a whole community relatively cheap so this for example also something that we're exploring specifically in countries with very high inflation this could be for example Zimbabwe because right now actually most banks they freeze dollar accounts down there and the only way to get does the countries by flying planes of cash in this is something we know from our partners because that's what they do which is you know completely ridiculous I mean imagine flying planes of cash in like several times a week that means you know if we can just go in and take like 30 percent of that cash that would save them like a lot of a transport course cost so it would just it just like makes sense it'd be a really good good business model so this is just like a few things and I mean if you have any particular you want to talk about in regards to Financial Inclusion I'll be happy to take a chair hi just a question regarding the multi collateral die will you create two tokens like die and multilateral die on you'll or you will stay in one token as die and then create that die with the multi collateral assets Thanks yes so the weight will work when we launch particular all time is that people that will have to like upgrade that die it's with a new version of tie and it also have to upgrade the CD piece to the new version but it will basically just be like I mean we used one of the tools that we have for emergencies but but it'll basically just be like a settlement of everything in the system and then everyone will just need to you know like click like a button and they were like upgrade you've to the to the next system and regards to die I mean if you're not having a CDP and you're just having died because you know a lot of people use die without ever needing to think about CD piece and I think this is a very important thing right you can just use die without ever thinking about what is the CDP a CDP is more for like the advanced user so so basically like then you would just you know have to like like go in and then you would have to click a button and that button would then send the die to a smart contract again like repay you with the new version of die so just one token will be yeah we will just have one type of type but actually we're launching multi currency die via something called synthetic assets and we're planning to launch like all the major currencies in the world so euro die South African Rand I Singaporean dollar so on so forth Great British Pound and also looking to you actually like do dice to pick to like a basket of assets and another thing that's really exciting as well as we implementing an interest rate on PI so for example the travel time will be 2% per year but will be paid out hourly and I think this is probably another thing where we really distinguish ourselves from the other stable current projects because Carly that business model is built upon this interest rate that they receive for having the money in the bank but we don't depend on that so we can actually we have a way where we implement an interest rate on time so everyone holding a using die yeah will receive an interest rate and this is also one of the things that I be able to be very very crucial for the adoption in emerging markets because if you can you know have a wallet on your phone where you know every hour you get a little bit more it might not be a whole lot but it's still a little bit more compared to the cash that you have lying on the table will just remain the same so I think this is kind of like you know a psychological trick for people to you know you know actually like really really want to hold die rather than holding cash and of course it's not only a trick probably a bad word to use because it's actually like a very beneficial thing and and something that we are very very excited about yes over here I have a question regarding also the music collateral die do you think die will also be used as a collateral for die and if so does that mean die becomes a fractional reserve bank yeah so I mean in terms of diving uses cut off a die I don't think the dollar die will be used as collateral for the dollar die but I think I mean it would only make sense to use for example the euro die as collateral for the dollar time because this will you know allow you for extremely efficient arbitrage in market making and that will basically you know allow you to you know whether you hold euros or dollars you'll be able to supply any currency in the world in an instant and and another thing is actually also working and talking with most of the other big stable current projects about you know implementing their stable coins as collateral of a die because then this again will just you know make a lot of sense for us because then again you know it just opens up for like very efficient arbitrage and market making and like really unlocks the quiddity which is you know again you know actually one of the big problems we have in the crypto space in general so but but in terms of like us being like doing fractional reserve banking know we will always be over collateralized at least the way the things look now all right thank you [Applause]