For this one, I'd like to bring on Misha to talk to you about collateral markets and how do we get trillions of dollars on chain for everybody to use. So, please give him a big round of applause. Hey everyone. Yeah, my name is Misha. I'm co-founder of Symbiotic.
Uh and I'm on this stage to talk about how we uh see today and tomorrow of our industry and what problems we see and how we are planning on fixing them and helping fix them. Uh So, yeah. Uh Our industry is around 18 years old, uh which is kind of strange to say because it seems like a really long time. But for uh actual financial system, it's just in in its infancy. And for the basically the entire time, uh our focus was in building infrastructure.
So, we were build like the first blockchains that we built uh were really slow uh and really expensive and not that secure. Uh so, basically the use cases were limited to people that were trying to roll play the cyber the cyberpunk or uh just uh speculate. Uh and that's it. In 18 years, we've built a lot. So, basically like uh you can you can see the funding routes to analyze uh what was uh the most influential and the most focused ones.
So, the biggest ICOs, the biggest funding routes, the biggest impact protocols were always uh and chains were always uh infrastructure. So, L1, L2, data availability, whatever. Right? And it it resulted in that we now have blockchains that are not bandwidth bound anymore. They actually have enough block space and enough bandwidth to well, to be to most perform most of the blocks to not be full.
Uh and we have strong bridging infrastructure, oracles that let blockchains see outside of um to the outside world. I and yeah, so basically we we we we did good. Uh and like what what's we were trying to focus on this is retail, right? Like how we how can we get another like million users to our industry? Um The the other part of finance was not well, was not present at all almost, right?
We knew they knew about us. Uh we knew about them, but we are not like communicating in any significant way. So, they had like proof of concepts like quorum uh and other chains that were not blockchains at all. They were just like run by one validator and not not never like actually doing a lot in relation to us. Uh but I guess we were so successful that we kind of reached the point where um environment changed and the traditional finance are actually interested in what we do and actually want to on be on boarded, be on chain.
Um Yeah. So, why is this even important? Uh yeah, we have traditional finance, they finally are interested like why do you care? Like they were kind of hostile to us before. Uh, why is it important?
Because they have money. Like a lot of that. Like way more than we ever got on our own. And why it's important? Because they represent every basically the the entire economic engine of our civilization.
So, we can basically like try and on board another million people. And it's going to take us like a few decades maybe, maybe like a few years depending on how optimistic you are. Or we can on board one bank. Or like half a bank and like we'll get the same. Right?
So, we've been preparing for this mass adoption for a really long time. Like are we ready? Like are we do we actually have like do did we build anything that we need for this? Uh, well, the yes and no. Uh, yes.
Uh, like we we we kind of have two options as we see. So, the first one is uh yeah, it's kind of like on boarding in a really wide sense of the word. Uh, so you basically have uh like tokenized funds. Uh, and you have like RWA's as a just the receipt. So, they're using the the blockchain part as mostly a database.
Right? You just like get yourself some uh receipt issued and uh it's kind of in your wallet. It's not self custody anymore because you can't actually do anything with that. It's uses blockchain, but if it's get hacked or like transferred anywhere, it doesn't matter because you can just call and say like guys, I am KYC'd entity that you sold this this receipt to. I like I kind of lost my wallet.
Can you just like send me another receipt to something else? So, it's not like in this way it's not composable with DeFi. It's not like it's not taking advantage of the things that we built just beyond pure L1s. It's not connected. It can't be used in lending protocols.
It can't be used in CDP. It can't be used in AMM. It's just like it will have kind of decentralized exchange that you can trade it on and that's it. Uh scenario two, which I find like a way more interesting, is where it's composable. It can be liquidated.
It can have the same uh rails that we use for DeFi. Um And it it it can actually be like self-custody. It can actually be somewhat ungated. And uh the things that we've done, the flash loans, the looping, the other things that are kind of unique to us, uh can be performed with that. So, yeah.
Uh I'm not going to cover here like the entire problem set that we have here, right? Uh I'm just going to cover the things that we at Symbiotic are actively working and deploying for this. It's going to cover around like 60-70% of the entire pie. So, I'm like honorable mention, right? We need a stronger DID system just to make onboarding easier, right?
Like how can I like feed the entire KYC set of my 20 million users to DeFi without like opening anything up. So, like the case We kind of have every pre-primitive. We're just not focusing on that on Symbiotic right now. Uh but like we might So, yeah. Like first one, uh private credit.
This is kind of the big word lately, but uh for it was powering the entire economic agent for last like 10 15 years. Basically, like everything is handled by the companies that issue credit. And we didn't have that. Aave can be like another lending markets can be used like taken as a really narrow use case of like credit facilities. They're not like they they're not in in in the usual sense.
Uh because like they can't issue financial guarantees, they can't do a lot of things that actual banks can. So, a few months ago uh we as a symbiotic helped launched the Cap protocol. Uh they're basically providing financial guarantees and three market three side marketplace for private credit. They currently as far as I yield is always going around, but they provide the highest yield for if derivatives if you don't Right now, they received through us 220 something million USD delegations. Uh and they're growing for a small for a new financial primitive and a new protocol, it's kind of amazing what the what's accomplished.
But without private credit, yeah, if you only can use your money on chain, that's going to hinder the deploy like the the amount of funds that you like in strategies that you can use is severely uh severely hindered because without private credit, actual like traditional finance is not possible. Uh yeah. The other thing and like we talked about this a lot. Uh like every conference that I attend to attend, everything is so optimistic. Everyone is like discussing ideas and uh feel it feels like you can do what anything, but you we always have as an industry the dark content tones undertones.
Like another protocol just got hacked. Like every conference, like I I can't remember any conferences that we didn't experience that. And it's always on the back of the mind of people. And uh in DeFi people kind of are way risky like way more uh uh comfortable with onboarding risk. In TradFi, yeah, like again, option one, option two, right?
We want the second one. And for the second one, smart contracts are really important. Not the only mint and burn one, right? But like the actual smart contract that that that complex their architecture really uh uh significant uh smart contracts. Three-way marketplaces, uh collateral market platforms like ourselves.
Uh and it's not possible for us to onboard the next wave of TradFi if there is no cover for the risk. So, this is the second punch that we're working on. We're working on this with Nexus Mutual. Basically, the first uh coverage protocol in uh the entire industry. Uh and we uh same as Cap, we will be helping them to get uh the the second loss coverage for uh well, hopefully the entire new DeFi RWA and both RWA and like native.
Uh And like again, same with with Cap, uh the the the our the role that we play in this is uh try to uh decrease the gap a little bit between capital providers and get for the capital and collateral. How we do it? It's through really flexible, capital efficient to deployment methods. That's hence the collateral market. So, in terms of why insurance is not here, why why we don't have like a really low TVL securing like for our way it was like 20 200 million securing 20 something billion, right?
The the the situation is like this because again, you need a really high capital efficiency. Either really high capital efficiency either smart contracts that cannot be hacked. In the absence of the second one, we need to figure out the first. The other part, right? And this this is like the the the thing that people don't talk enough about, but like reporting.
Traditional finance requires sophisticated reporting. Like you need to be able to do apple-to-apple analysis, right? And if you have like a the the normal person like a can go to a website of any DeFi protocol that we have and just like see, okay, like I invested like or I deposited one 10 10k and now I have 10,000 and $100, right? So, that's my profit basically. And like the yield, yeah, on one's website it's like seven-day yield, on the other website it's yield that actually accounts the growth of the asset the underlying asset.
So, like Bitcoin grew by 10% and that like the protocol gave you two, so the API is actually 12, right? It's it's sometimes misleading, sometimes just inaccurate. Uh so, yeah, like and this is the part we actually can do way better than traditional finance because we want we have one source of truth. We have on-chain data, right? But it's need still needs to be combined in a way that's sustainable, that can be done on mass, that has like the methodology that can be audited and implemented in a way that you can actually do things uh that are automatic as well.
So, we we we are currently helping Hive to build a reporting system that has actionable elements like real-time liquidation triggers, uh automated audits, uh like the the entire data is on chain, of course. Again, guys, it goes option one, option two, right? We can do it the stupid way or we can do it the native way. So, Hive is is with us working on on doing delivering the option two here. And this is the big one, right?
RWAs are not liquid. Like they they cannot be integrated in the current DeFi because they're not liquid. Like 90 to 100 days sometimes for the redemption. Like you can't can't liquidate them. Net asset value is updated sometimes daily, sometimes weekly, right?
How if you if you have like this um really really uh slow pace of updates for prices and you have really uh long redemption windows, how they can be integrated in DeFi in a safe way? They can't. Uh so, uh we at Symbiotic are working on a liquidity solution uh that will make any RWA uh immediately liquid. Uh so, why us, right? Again, we are like kind of like that's what we do, right?
And why like why us and why it's haven't been done before, the the answer is the same, right? Uh we currently have RWA protocols solving this because this is the biggest problem there is. We have tokenizing pro platforms trying to solve that in basically like you can uh group that in two ways, right? Uh, so first one is they straight up uh don't deploy half of your funds. Uh, they just like deploy only half of it and then uh because now no like not everyone is going to withdraw immediately, they kind of have a buffer.
And uh this buffer it's not getting the yield from the RWAs. So you basically like sacrifice half of your yield just to have like early redemption for the half of the the funds that you have there, right? So like still not solving the bank run scenario, but like gives you some like some portion of the users some way to get out early. The second group is that uh like we used our own money as a platform, right? Like we go like we are to- token issuer, we raise some seed funding and we get like and we handle again only the portion of the funds, but we have we give you some daily liquidity for the people who want to get out.
Uh, the why they're using their own funds? Because nobody will supply them with with if they're not taking the funds from the investors, nobody will actually be interested in supplying that. Because we have a chicken and the egg problem here. Uh, RWAs are not as prevalent and they don't have enough flow. Uh, so a lot of people are not depositing their funds into RWAs because they're not liquid.
And because they're not liquid, they like they don't provide a flow and they're like really small volume. So, it cannot be solved like in my view, it cannot be solved from the platform side. So, that's where we come in. We combine the flow from the from every tokenized platform, so it becomes way more capital efficient to hold these funds and provide it to multiple demand side protocols and RWA protocols. Moreover, in curve we do we have updates that are enable multiple to deploy capital to multiple sources.
So, with that this instant liquidity will become available to to people. Um Yeah. So, instant liquidity is launching Q2, early Q2. Nexus is launching early Q2 as well. Everything else is live.
So, yeah. I think if we solve this the the this four problems, it at least will enable us to speed the adoption time at least like five times and like to to onboard a significantly more funds this year that we did last year. And yeah, it's our pie to to eat. Thank you.
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