Fireside Chat with Stani Kulechov: Stablecoins and Web3 Payment Layer

baby [Music] thank you well I'm not sure you're going to need all those socks Danny I uh yeah is so did does anyone has any goal who meant it go here oh let's go who else woman did go where oh who else oh we have there a winner oh you get a one yeah for that oh okay the last one okay you have to fight for this one okay here we go my shirt uh thank you awesome um thanks everyone for coming I'm really excited about this too we have no one less than the legend of visionary stani here not only uh co-founder of Ave but also lens and more so first things first huge congratulations I'm not sure if those of you who've been traveling have been under a rock and not on your lens uh feeds on your Twitter crypto Twitter feeds but go is now live on mainnet uh since I think about 24 hours right yeah less than that I think or give or take fantastic congratulations and I think the go curve USD pool is up and running so um go for it as they say so um we're here to talk about um stable coins in the payment the web 3 payment obviously we're going to talk about go and and we really want to dig into you know the mechanics of that what your motivation for that was but let's just contextualize a little bit I mean no one here needs reminding that stable coins are the backbone of defy um and potentially not only I mean there there is also bridges into Trad fire institutional Investments and web 2 um payments infrastructures you know the the global global digital payments Market is estimated to be 20 trillion dollars by 2026 just to give you a sense of the scale of these markets and we all know the inefficiencies in those markets at the moment so this is an incredibly important space thanks also to the sponsors of this conference for for getting us to talk about it um so Stanley I'd like to start with you know your motivation for for go and uh the role of stable coins in the defy ecosystem more broadly yeah I mean um I I do think that what we build in D5 for the past years is quite incredible um mainly because the the reason we in the first place started to build Ave um is that we we wanted to build basic access um access to financial participation um social participation and effectively what's fascinating about blockchain is that it's a neutral technology that allows people to participate and then also govern and coordinate things that are important for them and from that kind of eaters we built the other protocol which became become became quite substantial substantially significant protocols so Ave currently has roughly a six billion worth of assets in the smart contracts that people are actually trusting and it provides might access to that participation now when we're looking at at for example the whole DFI ecosystem so we started to build um with blockchain First Financial Solutions so Bitcoin in the first place wanted to solve peer-to-peer payments so how do we actually settle transactions um in a coffee shop um in a event um or online for example and ironically it never was able to solve that because of of the cost of of transacting that network but with ethereum we actually received uh programmable Finance so we will be able the first time build different kinds of applications Financial applications that anyone has access but also program them in a way that they're very efficient and you don't necessarily need to trust and now looking back in decent as Finance we really have a quite solid backbone infrastructure that many of you here you all here are actually building as well now and and using um I assume you all at least half of you are teachings using D5 so um but regarding to go what's important is that we really think that uh it's a time for having more diversity in the stablecoin ecosystem but also pushing that Vision forward so if we have a way of actually uh borrowing value against your cryptographic um assets that you might have or swap value from one to another in a decentralized way in a nonca custodial way why don't we have ability now to actually settle transactions um and and actually pay with more transparent decentralized currencies and and infrastructure and so the bigger kind of a thing is that go has a lot of uh technical improvements um it has um it has a lot of things that helps the community to grow the other community but what's more important is the the vision so how we actually push push ourselves more towards building new experiences and enabling this exciting infrastructure that we've been building over the years and making it available to wider public so how we can make this public good infrastructure that we built uh usable um on an everyday basis and that's the vision of go so let's dig into that while we're here I'd like to come back on later to a little bit contextualizing how that sits into the broader stablecoin ecosystem but but what are those mechanics and and was it modeled on another kind of stable coin and what are the unique characteristics of go that that we didn't have before and go is now fulfilling yeah we did look the whole Space on what's what's available and um we were in a quite lucky position where we already saw existing infrastructure that we can actually take a lot of inspiration um and it's part of D5 so the idea is that we all build in public and we build open way and we can actually take inspiration and build additional value um something that was very important for forego is that we were able to build an infrastructure which is able to cater different kinds of ways to mind go the most organic and natural way was was first to Mint go against the Ave the assets that users are supplying into the oven Market um first of all because that's the basis of the Ave ecosystem the the main um protocol and and then have flexibility to actually add different kinds of ways to Mint go for future use cases um and we call those facilitators so facilitators are effectively policies that can mint go up to certain bucket size and the first facilitator the main thing go into the other protocol is up to 100 million cap and then there's another facilitator to flash mint go as well which helps Arbitrage and so forth but that's just basically the step one and the next steps is to figure out how else you can go in a safe resilient um way where you don't damage the infrastructure so that flexibility is what what we wanted to do there and obviously for user perspective um what's interesting about the first facilitator is that you can earn on the collaterals that you're supplying into the other protocol and mean to go so you can reduce the actual net borrowing rate that you might have but it's one thing I want to mention is that because of a protocol is quite big at this point it also kind of limits how much you can innovate and I like what italic said actually last year's ECC is that when you are thinking about Innovation on ethereum you know you have to kind of like go slowly and and ethereum should be the boring Network and then all the Innovation should happen in l2s so kind of have a similar feeling about Ave where there's so much you can actually innovate and you you have to scope it down to the main chord thing that that is applicable scalable and also somehow battle tested I think that's the thing is sort of goes slowly but very fast so uh and and the key point there is is is resilience right so maybe you can tell us a little more as I understand it those of us who've been staking in the of a safety module hands up who's doing that those are like real chats um there are some special features for those do you have more socks exactly soaks you've got you're going to be staking so tell us about the special features of those of us who are staking in the in the safety module yeah I mean one interesting thing is that obviously with the safety module the idea has been that it's a way to backstop the risk as a community member of the other protocol um if there's some sort of a shortfall event something we wanted to test out is that you have a discount rate when you actually mint go so when you're borrowing from the armor protocol if you have already a staking position that's actually some Innovation that we wanted to try out and see how does the pricing actually work when you start staking Ave and mint go it's basically a little experimentation we we created and we're just like um interested in interest interested to see like how we it will affect actually the net rates of mint and go I think that's a really interesting Innovation and again I think that lends towards it incentivizes the resilience of the overall protocol right so I think that's um I think that's very exciting I think it's quite a lot about the the feedback loop so in the other protocol um back when we're thinking about urbanomics and and what are the feedback loops that we want to have um you know one of the things is that came to our minds constantly is that how we can decrease um or increase the security and decrease the risk of the protocol or transfer the risk and as early as D5 was back in those days maybe tens of millions the the biggest protocols is very small compared to today's numbers but we wanted to create a feedback loop where as more as the protocol grows there is more kind of tendency to actually stake and um in a backstop the protocol and you can innovate from there as well so it's it's a basis and one of the most beautiful things about the Ave protocol in our community is that it's governed by the other Dao so whatever we have created um and and to what scope that can be extended or Changed by the other community and we actually want that to happen so we want Innovation to come as well from the community as well and I think that's the the power of having a public good that is governed by the community so and who who are the potential users I mean are you targeting institutional users for this yeah it's I think um I think the user base of um go is very similar to the user base of DFI we have different kind of perception how a D5 user looks like for some it might be a um Twitter or lens account with a uh you know Pepe frog and and in the um as a profile picture but you know there are actually a lot of people who are involved in finance um on a day-to-day basis but they might be um might be enthusiastic about decent as finance and and using it because it is the future um I mean it's it's fair to say it's the future because even it works better and I usually try to say to everyone that um it's not about only default but we're just building better faster stronger finance and eventually it's just going to be fi finance and um I I see like defy being a bit of a mixed breed of um of of different users it's kind of like a jungle at this point um and probably it will be for a while but moreover time we see more and more institutional uh involvement we we already see some institutions um being involved in DFI Supply and liquidity meeting other stable coins so over time that just will expand and even last year we did a a very big experimentation with JP Morgan uh in the project guardian where first time ever they deployed the other protocol the other Arc the permission version into a permissionless network and for them that was huge because they were they were never using a permissionless network before so there's the these steps that are happening over time and waves where more institution institutional excitement will pile up but I think for now it's it's quite a lot the the common user but um nevertheless I think what we're envisioning and going after more is closing the loop so if um if we have this interesting infrastructure how do we get the everyday users um how do we build experiences where stable coins become a norm and just to give an example um online payments wasn't a thing until there was something to buy online right so the thing about internet is that it gave access to information you didn't need to go to your parents or your friends or to school or to library remember when you had to walk into your library to understand and learn something so that's not a reality anymore and the second thing is that when you're able to start a Bookshop and sell your books across globally you know you have access to new audience and then we started to see credit card providers online we started to see stripe and you know there was a time when people were afraid to put their credit card details um in an online form um and stripe made that easier PayPal as well um so we need that kind of a moment for go and and D5 as well where it becomes a norm and Easy in terms of the experience to actually do that and one of the challenges is that we don't really have all the talent we need to build some of these experiences a lot of the D5 ecosystem and I kind of fell into the Trap as well is that we build a lot of infrastructure and the back ends and we build a lot of good technology but it requires good designers good product people to come and also build that um that kind of like a gap into more consumer yeah totally agree and I think that the UI ux is famously difficult and you know maybe some of the recent Innovations and things like account abstraction may help with some of that but but just yeah to go back actually I was just looking one of the allegedly the first digital payment you know non-web three obviously was in 1994 which apparently was a pizza from Pizza Hut I bet nobody knew that um and that's obviously funny because the price of the Bitcoin Pizza is now 300 million dollars today just so you know 19 million dollars a slice so but let's just go back to contextualizing that in the context of where we've come from from the traditional digital payments infrastructure towards web 3 payment right and and how stable coins fit into that ecosystem because there's kind of a spectrum of staple coins right depending on how you define it and obviously at one end there's a very decentralized one night go and at the other end we have you know potentially cbdc's increasingly people are talking about tokenized deposits uh as in Bank deposits and there's quite a lot of movement in that space as well as as you say some kind of cross-trad uh web 3 infrastructure experiments you may also know that sap for example is testing usdc on Gurley at the moment so you know there's there's quite a lot of interaction that I don't think we should be afraid of but if we can if we can design the right kind of decentralized infrastructure that is uh delivering the things that web2 couldn't do composability programmability as well as decentralization then I think we're on to something but so how do you see that fitting into the Trad fire infrastructure in the longer term that's it's a good question because um there is different kinds of takes of of like how the technology gets adopted but I I personally think it's always um it it pretty much always it it will be true to people um and you know it's um I don't think like it's not only about like let's say um about stable coins or or the blockchain or um AI or any other technology I I think once you build something very valuable that people want I mean everyone keeps hearing it everyone who is a Founder probably thinks a lot about like how to build things that people want but that's how simple it is so if there's enough actual demand for something things will radically change around that so let's take an example of Huber in many of the countries where Uber came including Finland where I'm from um there was a lot of legislation or ruling about that you know Huber should be forbidden but there's so much demand and that's became a social behavior um so if using something like stable coins that are some way providing you a better optionality better choice um and and better access and they work better than the current system um there's going to be demand and there's that's going to become a social behavior and when that happens then the infrastructures will change and things have to adopt um the most scariest part is when you are still in the Verge with many of the current Technologies with the blockchain and with the AI as well um is that if it doesn't have the full penetration yet you have a lot of regulatory discussions of whether this should be whether this is good or evil um and and what what is technology that we're dealing with and everyone who is an innovator and a technologist knows pretty well is that if you're working on technology in most cases it produces more uh benefit than harm and if that that difference is significant it means then that it's viable technology to use it goes same goes to Cars airplanes um internet pretty much everything that we've built and in my opinion um when we go towards that Direction Where We build something um fascinating and useful then we have an option so we're kind of in a in a silly way um in probably like 90s of the internet where we were still building infrastructure you know the ability to connect into the internet um and um do first things uh first and the app economy came later with for example more infrastructure so for example iPhone and App Store provided the infrastructure to build experiences so you have this app economy that you have Facebooks and Ubers and whatnot so it's it's more about now that we built all this infrastructure it's available go is on mainnet for example um how we can actually build the experiences and as you said that's the hardest part because in my opinion it's relatively safe to build infrastructure sure like it can go wrong maybe there's better ways to build a better infrastructure but if something is missing and you build a bridge you know it's it's a bridge it can be a you know better or worse but they're actually building something that people really want get engaged and find it very valuable that's the hardest part but also the exciting part so this is why I say always that I'm more excited excited about these interests finance that that I'm ever before because finally we have the infrastructure to to to build all those experiences and it's going to be your brands that you're going to create that the consumers will see they will probably see necessarily like other protocol that can be like back-end infrastructure but you know the the consumer facing applications are going to be very interesting yeah absolutely and I mean but I guess so if people want it if you build it then you know it they will come right so if it's useful people will use it I there's a little bit of a break on that though right because the Regulatory and the legal infrastructure is let's say emergent at best um and obviously that's geographically uh Divergent do you think you know Mika is providing a particular environment in which that kind of innovation can Thrive and other markets Us in particular are a hindrance to that kind of development I mean even if people want it even if we can build it and innovate that that we are handicapped in some way against the other kind of varieties of centralized stable coins going as far as you know uh state issued cbdc's and so on how how do we think about that well I first and foremost believe always that users should have a choice um so in my opinion there should be decentralized stable coins um there should be something that is less decentralized more decentralized um some versions of stable coins and cbdcs I think there should be that choice but like when it comes to what gets most adopted I think in a free world where you actually have this choice because now we don't really have a choice for money right so if if we want to go and pay we have to use a dollar or Euro here or pounds in in UK where I'm living now so there isn't much a choice to to to choose your money and and what what you wanted to sell transactions and it didn't wasn't this way I mean hundreds of years ago you had more choice you could use salt you could use gold you could you have all these different items but it made the trade more complex obviously um so I do think that everything should exist and giving the choice for the for the users and by giving that choice they will select the uh the experiences or um uh or or the infrastructure that is allowing you whether their value um and then um I do think that it's um quite um challenging at this point from regulatory perspective obviously but also I I do see that there's a lot of um uh positive effects as well I I see makeup for example as a positive um evolvement for for crypto I think it's nice if there's regulation maybe because more people will be building um maybe there's less risk risk for developers to innovate so I do see a lot of value if there's clarity um but when it comes to like what people will actually use I think if there is the the the the freedom of choice um I I think just something that is decentralized will will always win because it just has so many upside well people care about decentralization no but will they care about that you can actually move your assets very quickly you have transparency um and you have other programmable benefits and and openness so so I think even like that maybe the biggest thing out of the whole uh DFI kind of like a culture um is is the movement of Open Source that we've been able to create an um like an ecosystem where everyone is building openly and because of that and no one is holding patents over their inventions we're able to build faster and innovate faster and that results into just uh better finance and and better whatever blockchain is used for and I think that might be the actual game changer is that because we are able to freely build uh we're able to actually build better things than as we will be if we will build in a traditional way yeah yeah and building in an open source environment is obviously combat active right so you know that also increases resilience but but also I mean that you know go is obviously over collateralized right is there any future for algo stable coins I think it's yeah it's kind of challenging because um I think it's boils down to economical design and um the name I'll go stablecoin is kind of like ruined because I could imagine that like you know we always subscribe to some sort of algorithms um all the time and they can be good and bad um but it seems that the the algorithmic stable coins or whatever was created let's say the example of Thera um that wasn't a good algorithm it was a bad one and I think that's what kind of like creates a bit of stigma but I could imagine there's different ways of um creating and if you have that safe space to innovate in that sandbox in my opinion should be like a girly test net I think that's the best way to try and and test uh different things um I think it's definitely another time to testing production because um the stakes are very high you know and you know protecting the fire reputation and The Innovation culture also requires that we're um uh we're innovating in a very responsible uh way and and that's what's very important well and May thank you so much we're out of time actually but congratulations on go are very excited to to do some minting thank you later and I only just discovered by the way that Ave actually means ghost in Finnish is that right yeah yeah okay well now I know um and now you all know um thank you so much stani um fantastic to have a chat I think we have a few minutes for questions yeah if you have a question raise your hand hello um yeah so this is a question about the decks you plan to deploy the liquidity for GH show because we already all know that curve is a very good place for stubble coin and there is already a CRV USD dho pool that has been created but we all we also know that balancer is a very friendly space for Ave with the boosted pool program and stuff like that so don't you feel like it will be more natural for RV to deploy gho liquidity on balancer curve well it's an interesting question because [Music] um and end of the day like like like who is our end of the day like the way I see it is that because it's a Dao um anyone can go and propose these different kinds of pulls into the Dow um and also um create some sort of incentives but also my understanding is that these pulls are permissionless so probably people would create them and liquidity goes where um that's the thing about open systems the the liquidity goes where it's more efficient um or incentive wise or um there's some sort of innovation there so I I don't know what what will be the best answer for that question but I will say that's um it's interesting to see what people will create in terms of pools and where where the liquidity goes I don't have any preference I I it's um I personally try to stay out of the the governance and and focus on innovation any more questions yes in three points uh compared to make a doll die or curve USD how do you position a goal yeah the way I see it is go is uh more of a native stable coin into the um within the other ecosystem um and it's more kind of oriented to the user behavior and and bringing some benefits there um which is basically the the fact that you can earn on your collaterals and use your whole um kind of like positions that you have to to Mint go but also the structure is is quite interesting because with the facilitators you can pretty much um onboard different kinds of ways to Mint go um but it's fascinating because what differences differentiates go quite a lot is that with the first facilitator you can go directly to the uh of a pool so traditionally we've always seen that there is um kind of like a stable coin protocol that meant stable coins and then they're supplied into these secondary markets more recently even like with the atrium that we created with work together with the maker dial Community Eventing it against the a tokens so that's a kind of interesting uh part uh but down the line where like this is like I want to highlight that this is like a Genesis so whatever you know go goes it's it's up to you and up to the community where to build and what kind of facilitators do bring I know there's already a couple of people approached about facilitators so like I I think that's an exciting thing to to to follow and in terms of vision we really really want to push uh forward getting actually going to exciting experiences um so that's that's something we're we're hoping quite a lot to happen any more questions do we have time for more one more uh you you implied that there is still a place for algorithmic stable coins good ones not the ones that don't work uh what do you see as a troll to play or the advantage they would have over or to complement uh existing stable coins or collateralized stable coins you mean like under collateralized or biograsmic underculturalized or non-classicalized what was the question I couldn't hear in the beginning so you implied that there's still a place for algorithmic stable coins assuming that the algorithm actually works uh where do you think they would add value to complement or add to the current ecosystem yeah so by algorithm I mean like more of like every stablecoin has a policy how a stable coin is minted so that policy can be anything right um and some of these policies can be very good some of them are very bad so them those that are bad they will not go anywhere um but in terms of like end of the day I I think there's room for innovate obviously um and and if if there's something that improves the ecosystem it's exciting I I personally think like if if there is stablecoin innovation it has to be um also slightly a bit more radical and experimentational with with in a safe sandbox um that could help actually users um eventually so I mean it's all about Innovation and and you know the theory has to work I think we're out of time thank you so much Danny great to chat we could talk and stick around for the last talk which is a panel Bianca is going to be moderating it's about censorship resistance and we've got folks from a bunch of awesome protocols including liquidy frax and Cheeto