Beyond DEX Aggregation - Mounir Benchemled (ParaSwap) - TOKEN2049 London

okay thanks for for coming i'm munir founder of our swap a decentralized exchange aggregator before we start how many of you guys have used that dex before or a decentralized exchange okay well so you have some good adoption here um so what i want to talk about is what's happening beyond the segregation and what's happening also behind the scenes and the exaggeration we started in layer one two years ago actually in the first announcement of paraswap the version we know right now happened also in london two years ago it wasn't a conference uh it looks like that i think the screen is not really really visible but what you can see here is a large amount it's multi-million dollars amount that's going to be splitted across multiple exchanges happening in one transaction and using the properties of the blockchain that gives a user a guarantee that they're not going to receive something less than what is displayed minus the slippage tolerance or the transaction is going to be reverted like nothing is going to be spent although the complexity of this transaction here we may be using one exchange or maybe 10 or maybe 20 exchanges at the same time but also we did something uh special that we saw other projects doing doing the same thing is what we called otc trading or on chain otc trading and that's using professional market makers uh they are feeding us with the stream of prices and that's given an interesting property to the users and this can be users of this ui or users of the api like a metamask or ledger for instance and here this number is guaranteed like the rates are fixed as in otc trading and that's something very different to what you can see in a unesco for instance where there are front running issues there are mev there is slippage and here there is literally zero slippage the market makers will commit as if they were to commit on a normal otc desk but this is happening on chain so the settlement happens immediately right after the trade with the same properties as any trade happening on the blockchain it works like this so suppose a user will want to sell e for usdt behind the scenes and that's happening on the api side on the server side where we are continuously sourcing prices from public exchanges or taxes and at the same time getting prices from professional market makers it works more or less like a dark pool pretty much but it's all obviously visible in in public and running some magic with some clever architecture and algorithms optimization algorithms to return an optimized price to the user with maybe one market maker multiple market makers or a combination of market makers plus decentralized exchanges and what's interesting is that we use a multi-commit system where users have to commit and commit for users as kind of a soft commit where they just need to connect their wallets and push this call to our api where we are able to check their balances and so on like check if they can make this trade and but we ask for a hard commitment from market makers where they should guarantee us this price and it will last for two minutes so as long as this is filled within two minutes the price is guaranteed and that's an unchain or like an evm uh guarantee that we have and then the users are free to put this transaction on chain of course we have no control over that we also since earlier this year we launched multiple chains so aggregation became different one lesson we have learned is with ethereum we were targeting only i would say defy or crypto native people and that worked very well uh we didn't even have to explain what is a dax or as an aggregator it was like this ui straightforward brutal and people just get it and just use it but once we launched polygon it was completely different it became like a retail product where people are doing uh one two three ten dollars trades and paying almost zero like virtually zero dollars and that was a big paradigm shift for us in our reasoning and the way we approach building the product and that's that's we found it very very interesting uh and we see that of course with bsc and avalanche so i would say uh side chains or those scaling solutions shifted i would say the way we built aggregators we don't build aggregators as before but now uh i'm one of these guys that think that polygon and bsc are not layer twos they are side chains they are layer ones with helping on scaling ethereum but the real layer truth are layers in a liter literature point of view where they are based on the security of ethereum like hacking one of those is equally equivalent to hacking ethereum itself so here there are some similarities some similarities with polygon and with other chains because simply it's just cheap i mean it doesn't cost anything to do a trade on a starkware for instance when they launched the starknets very similar with zika sync and others so i would say the paradigm shifts is very similar to the one we see in ethereum uh in sorry in in sidechains although we think they are much better because they rely on the security of ethereum um one now this is i was what i was talking about is how we approach aggregation how we approach product building and users but now here we had one of the first non-trading use cases applied to an aggregator which is interest rate swaps that we did with ave where anyone can go from an asset that's making one api to another asset that's making another api in one transaction using power swap smart contracts and api so that's one of the new use cases we're doing with we did with ave and among others that are that are coming so that's also a new perspective on seeing dex aggregation is not only i'm trading a to b but i also can swap from one interest rate to another using power swap and the thing is the benefit here is obviously it's happening in one swap so it's a good ux but also i'm maybe getting slightly more api because i'm getting anyways more dye with usdc if i get an aggregate using aggregator than if i use a uniswap for instance um and last thing i would like to to talk about is how about institutions that's the thing that we've been talking about in crypto since maybe 2016 or 19 or 17. um we think that sparser pool is a very good fit for institutions because it has everything that institutions wants well first of all uh association today they want to get into defy and have defy prices in tokens and many of them they just can't for regulatory issues and the thing is with biosap pool those are professional market makers that all of them are already kyc that was one of the process and um institutions they won't get in if the kyc process doesn't exist so powersup pro api the next iteration of aggregation protocol that we are building will be enabled these guys that are maybe not even in crypto would be able to get into crypto and if they are only in bitcoin or ethereum in highly centralized exchanges now they can use defi tech as a tech as a pure tech without really being in d5 so they have access to to defy without being ready and defy and obviously we hope if they want at some point and at some day to finally be connected to defy and connect to balancer unit swap cow swap and other other i would say public blockchains that with public taxes that we think are the most efficient and are the future thank you very much so do you plan on doing cross-chain aggregation as well or you know layer to aggregation as well in the world where there's liquidity and optimism arbitrarily etc etc it's definitely on the roadmap but it's not going to be us who's going to do the cross chain because in a single chain we can give this evm guarantees where at the end of the transaction there are smart contract checks to see if the amount you're expecting correspond to the amount that is returned which is something that cannot be done today at least with the current tech in a cross-chain environment because if you think about it you do a swap on a single chain then you do a transfer to the other chain then you do the other swap or nuts and if a reverse happen on the other chain there is no way to revert in a deterministic way so you may be a market change in the price may result in you losing money and maybe losing a significant amount so there is no way to do it what we're doing right now is working with projects who are doing cross chain they are using power swap in this context and using for instance derivatives in order to cover for this kind of scenario so that if a rollback is happening well there is a cover with derivative so that we have a certainty that you're getting back the initial amount that you have that you won't be spending why i can just yeah yeah exactly yeah this looks a lot like what you see in finance in traditional finance with the brokers doing this kind of hedging when doing this kind of trades yeah