Hacking with V3 - Steve, Ilija Bryliov

wow somebody was tall all right uh what's going on everybody thank you for coming out uh my name is stephen valeri and i am a developer at the ave companies and emilia also a developer at ava companies um so today we're going to just hopefully go through some of the really cool new features of ave v3 that we're super excited about and i hope some of the builders come up with some cool stuff at the hackathon this week just kind of a quick run through of what ave is in case somebody needs to set the context a little bit ave is a liquidity protocol currently we have about 21 billion ltv across five different markets and three different chains so we're on ethereum polygon and avalanche right now kind of quick 101 on how it works so suppliers can bring crypto assets to an ave protocol and deposit it in order to earn interest also if you have deposited these assets you can use them as collateral to borrow against so you can take out collateralized positions all given that all of these positions are collateralized the value of your collateral needs to be more than the value of the assets that you've borrowed and to maintain that position we introduce a role called liquidators and they're responsible for monitoring the network seeing when a collateralized position the value of that collateral starts to drop if it drops too much they have the ability to pay back someone else's debt and then claim their collateral at a discounted price to avoid this this potential for the positions not being over collateralized crap let's see here one second oh all right sweet [Applause] so steven had introduced introduced pretty well the basics of the ave and the v2 uh of the other protocol but now up to the exciting stuff the v3 uh that is uh currently approved by the governance to be launched on seven networks and so still the same ethereum a polygon avalanche but here you can kind of see hopefully the preview of the ui is still gonna expecting some tweaks to it of course so in addition to the chains that are we use for v2 uh also the layer twos are coming off of domestic roll-ups arbitrary optimism as well as also harmony and phantom are coming as well so you can kind of generally generally see the theme of going multi-chain and reducing the friction of being able to be active on multiple chains uh using our protocol and of course another big large focus as always is safety and the security of the protocol so with that said um the three kind of key features that we want to highlight today uh first of all uh first one is the portals so that's the one which really kind of facilitates the multi-chain activity and then efficiency mode uh which kind of utilizes your capital efficiency in much better way and the isolation mode of making the entire protocol more nimble but also adding new assets in a more secure way so for the portals um so now that we have multiple chains and as we know that sometimes uh when especially transition and move assets from layer one to layer two specifically and back to layer 1 that can take sometimes days and that's a lot of friction so portals are a good it's a huge feature to help out with that friction as now we're going to be working the protocol is going to be kind of integrated with the bridges and um the bridges have to be approved by the governance uh because there's some element of risk but that's sort of mitigated by the governance approval and uh some more technical uh aspects that stephen uh will kind of help cover yeah so for these portals to the end user it will pretty much be you know instantly tran moving your liquidity from one chain to another but if you take a look under the hood how it works to start first you kind of have to understand what an a token is so when you supply assets to an ave pool you get in return a tokens so a tokens are kind of one to one backed with this underlying asset so if you think about that in a multi-chain world you might be on an l2 like arbitrum and want to bridge to ethereum in that case you would burn the a tokens and start moving the underlying tokens to the destination chain which in this case is ethereum in this case also that would take about seven days because of the challenge period but we would expect that the bridge protocol could instead run their own validator and have a oracle on the destination chain as well so they would instantly know and be able to trust that their bridge transaction for the underlying tokens has happened already given that the bridge protocol can now mint uh quote unquote unbacked a tokens in the destination chain um so they're not really unbacked they're just unbacked on the ethereum chain and the underlying tokens will follow uh in about seven days um so at that point uh once the a tokens are on the destination chain um you can exchange those for uh the actual underlying tokens from the liquidity pool uh in the destination chain and give it back to the end user and then in seven days when the underlying tokens arrive the bridge would uh protocol would fulfill the ave liquidity pool um so obviously this introduces a pretty significant amount of risk um so bridge protocols would have to be you know highly scrutinized before being added and given this privilege um there are also mint limits that governance will set so that you know only a certain amount of a tokens can be minted at a time without the underlying and finally there are also fees associated with this service yeah i'm personally super excited to use this feature uh from my activities multi-chain so the next uh next feature is efficiency mode and this one is also very useful for certain strategies that are relying on uh sort of supplying and borrowing liquidity from the same asset category specifically for the correlated assets so of course stable coins is a big piece of it as well as the different variants um so wrapped eth uh and then bitcoin variants of arab btc run btc so they're all correlated so in a way where i could recognize that there is less risk involved if uh only assets from each kind of category are involved in on the supply and the border borrowing side so we are able to provide kind of less friction as well as um better ability to leverage up uh and that opens up sort of uh like new new strategies as well as makes uh certain current strategies better uh in yield farming yeah that that's a super interesting feature and excited to see um how people use it and i think also even in the stable coin market it could have a pretty large impact on stabilizing some of those uh different coins because you can borrow them at such high efficiency so isolation mode is another feature that's introduced with v3 this allows you to or governance to introduce new tokens that can be used as collateral in the market in an isolated way and in a risk-reduced way so what does that mean so in this example we have token two and governance can vote to add that token to the ave market and allow it to be used as collateral in isolation mode so if you're in isolation mode that means that you can only borrow in stable coins and there's a protocol limit to the amount that can be borrowed from for that uh asset that's being used as collateral so that means for token 2 you might set a mint limit for the protocol at 100 million so the total exposure for the protocol uh can be managed through governance uh and this allows a lot of flexibility in figuring out what assets you want to list in canada while reducing risk to the total market because currently as soon as you add an asset as collateral there's no way to manage the exposure so that really increases and has a high ceiling of quality and low risk for this token whereas in isolation mode we can probably start introducing uh tokens earlier that we're maybe less confident in um but are still excited about and just have it in this isolation mode and over time potentially increase that ceiling for debt um yeah so it should be very exciting and and i think this almost introduces the potential for somewhat permissionless listing where you can almost have like a curve of uh the total debt you'd allow uh and over time that could potentially increase or something like that uh so additional features uh we went through three of uh the main ones but a white paper was released around some of these features and there's a ton packed into what we released here so some additional ones are supply and borrow caps this additional additionally allows for more fine-grained risk management for the protocol and how they want to manage different assets risk admins so right now every single configuration update is going through the entire governance process which is a pretty significant amount of overhead with risk admins we introduce the ability to elect someone more or less as a risk admin and they can make these market configuration updates um price oracle sentinel so this is an interesting l2 feature um where if the uh sentinel is down you can kind of check to make sure that or the sequencer essentially you check to make sure that the sequencer is still up which in case the sequencer happens to go down in these earlier days you essentially get a bit of a buffer just some other ones to highlight here we don't need to go through all of them the permit function so i'm sure everyone's used to approve and transfer two functions and and two transactions a bit of a pain we're introducing the eip2612 where you can sign and transfer so it's only one transaction and one signed message which when you combine that with l2s is like a totally different ui experience and super nice and i think something that the the dev team is pretty proud of is gas reduction so despite all these new features i think it's about 15 to 20 percent less gas consumption and there's also some cool l2 uh gas optimizations coming out which is pretty bleeding edge so shout out to emilio and lasse on the the smart contracts team um crushing it there all right uh so prizes um there are prizes for the irl hackathon as well as the online hackathon you can see the amounts here we're obviously looking forward and hoping to see some of the devs building on these cool new v3 features some of the things that we might look for would be highly leveraged tokenized positions so that would use the high efficiency mode something else that you could build would be a bridge protocol using the portals feature let's see what are some of the other ideas that we had here uh protocol credit delegation based on credit scores um that would be nice uh super interesting maybe you look at the reputation of a certain address or something to that extent automated market management so maybe you look at the state of the chain certain volume or volatility metrics for a certain asset and based on that maybe have a bot running that would serve as a risk admin and make configuration updates i think there's also room in our governance where the aip process you could essentially if you wanted to list a new asset or change a market configuration have a nice ui where rather than having to kind of hard code all the proposal you could just kind of nicely through this ui select and create a proposal yeah so let's see one or two other ones monitoring assets that could potentially be listed in ave so there's a few things that we generally look for and that includes it needing a chain link oracle it should probably have certain volatility metrics as well as volume metrics to make it a good candidate so having something to highlight those candidates um could be pretty cool and yeah i think that's that's it if you guys have any um questions or want to uh talk more in more detail uh about any hackathon ideas or just generally v3 or what's going on at the ave companies um come by the booth and uh if we i don't know do we have any time for questions yeah i think we have about four minutes if anyone has any questions the booth is on the second floor of the sports castle uh if you go up the first ramp it's the fourth booth on the left cool um let's see maybe there's one or two other features we could go through here