The Future of Finance is Decentralized - Stanislav Kulechov

next we're going to hear uh we're going to welcome back stani from ave um he's going to talk about a bit of that vision stuff welcome back thanks kent um do you hear me well right yep okay cool so i will start so so definitely uh we're going to talk about the uh the future of finance and and part of the future of finance is the uh our protocol and and uh i'm going to share a bit more like how it protocol works and and how you could use it during this hackathon and and also uh how the protocol is governed and how you can uh participate and if someone wants to come afterwards to discuss about anything uh this is my handle here on the slide on telegram as well uh so if you look traditionally how uh learning has been in in traditional sense you know we have a some sort of uh market place where we have uh uh borrowers and lenders and and they're matched together so practically this is the model of uh how the the landing marketplaces work such as for example uh peer-to-peer lending and this is how actually ava got started so so it was around four and a half years when uh practically we created the the first one chain lending protocol and uh the idea was there to practically match uh borrowers and and depositors uh depending what what kind of fields they wanted over and and and and what kind of maturity for the loans uh they were interested in in in funding and borrowers for needed for finance uh now kind of the model is more uh liquidity pool based and liquidity protocol in the sense that uh we kind of separated the depositors and borrowers and uh in the sense that depositors just can't deposit them and they they start to earn uh right away and at the same time you know as there's liquidity available borrowers can come there and just draw the quality so what this allows uh the the market participants to do is that you earn right away the interest and also you have ready available liquidity and this is now possible to do especially because when you deposit into the protocol your deposit becomes the collateral for your borrowings if you decide to borrow and since those collaterals are becoming fairly liquid you can actually pull those collaterals together and have the systemic risk approach which actually allows the dipolin model to to work pretty well these days and as a protocol it practically means that in in our protocol uh you can deploy uh new markets and and to deal to this state we we have deployed uh practically the main market that we have so each market is practically a market of various assets that could be deposited uh so so asset reserves and which asset could be used for example as a collateral to borrow against uh uh currently we have the main market we where we have roughly um two dozens of different kind of uh assets there and and mainly the main main main idea is that depositors are providing liquidity in in form of stable coins so so practically stable points could be uh di uh usdc uh usdt and then borrowers are usually supplying uh collaterals such as ethereum of a link uh recently we added for example balancer so there was a governance law to add a new asset and of course like uh interesting part is that uh not all of the funds are borrowed out so so because they are reserves it actually means that uh that other portion of the reserve is borrowed out which is pretty cool in the sense that you have constant liquidity so you can deposit uh let's say die and then we draw it let's say five minutes or tomorrow or you could even swap the die into usdc and withdraw usdc from the usdc reserve and the rest of the funds that is is in the reserve of course they're not uh practically sleeping there in the sense uh because we have this uh feature called flash loans which which allows to borrow all that liquidity for one ethereum transaction for uh one particular uh kind of like one block execution and i will go a bit later to to what what flashlight practically is and explain a bit uh further and uh d5 in in general has been growing uh quite a lot so um uh like i would say like most of the d5 stuff is happening on ethereum and it doesn't come as a surprise because ethereum has very developer-centric community uh this is why we're all here in a hackathon or uh in general uh building different kinds of things and what's what's cool about diva is that you know anyone can build the next arbi or or practically new protocols product services and on top of the the other protocol or in general on top of d5 by consuming all of the the protocols that that there are in deepa at the moment and also d5 is just one part of ethereum there's plenty of other things happening this is actually suggest the nfd economy in in in gaming and and ava has been growing as as uh d5 has been growing as well and uh probably mostly because we are tapping with different kinds of uh uh communities that that uh were a bit underserved so uh there weren't many choices where you could use some particular governance token as a uh collateral import against and and ave was practically uh kind of like a empowering those communities with the uh protocol and currently the uh liquidating that we have and and the we're basically talking about the uh market size it's roughly on five billion and the total of outlook value what we have in the whole protocol including the safety module is of somewhere between five five and a half billion worth of value so practically the version one started uh last year 2020 january and and we started from zero so the load has been quite exponential and i think most of the growth started to happen uh during last year's so-called d5 summer where d5 became uh the epicenter of uh crypto bit and and uh kind of not only ethereum's uh from d5 but also also we saw like a lot of interest from from outside ethereum that's that was uh pretty fascinating uh so yeah we we have so so-called uh staking module as well and it has pretty much now 1.5 billion worth of value staked and the staking module is practically a way to transfer risk from the protocol to the uh of the token holders that are staking to the safety module against other rewards and they're practically backstopping the risk of the protocol so if there is some sort of uh shortfall event such as fair declaration exploit those funds could be slashed up to 30 to cover that deficit so it's kind of like a way to give back uh to the protocol by making risk-based decisions so we we have in a protocol uh various proposals of getting new assets listed and every asset that is listed into the protocol is additional risk and and uh since the other community members are voting for these uh proposals the the uh safety module is a way to transfer the risk to the uh uh back to the community member members yeah so so main features i think uh what we will cover is is the the uh ability to earn from the protocol by the depositing so uh pretty much if you're building some sort of uh yield aggregator or working with yields probably the air functionality is very interesting for you and and then of course there's the borrowing and related to the borrowing against your plateau there's the rate switching functionality so we have different kind of uh interest rate formulas uh in the protocol and then we have of course other interesting features such as the credit delegation uh which i come a bit later flash loans and and also collateral swaps uh as well so there's a quite a lot of interesting functions in the version two of ave which was launched a couple of months ago so uh uh since the launch we have had quite substantial traction i mean it indeed was a improvement not just uh uh making it more efficient gas wise and and the architecture more uh simplified but also kind of like uh there's interesting innovation uh within the version two and uh one of the innovations that i pretty much uh enjoyed using is is actually the collateral and deposit swap so so practically when you deposit into the other protocol uh let's say uh usdc and you see that there is a higher yield on for example die a stable coin you can actually swap your deposit into from usdc into die and same way if if you deposited let's say eat and and you have borrowed something against uh eat let's say stable coins and uh you want to change your collateral from e to ave or to to pal or something else or partially uh you can actually do that with the collateral uh stop functionality and related to the same functionality uh you also have ability to close your loan position with your cloud and that's pretty neat because uh if you if you borrowed some funds and you went went to consume those funds maybe you you you built you you made an investment or you just spent those funds in for example real life um you're able to still close your loan position with the value of the collateral and practically the collateral swap closing along with the collateral uh they're they're behind the scenes working with the uh flash loans and uh of course we also uh tokenize the depth position so so uh previously uh we had tokenized deposits so when you deposit into the protocol let's say usdc you get in return ausdc which is practically a certificate of of what you deposited into the protocol and and uh those eight tokens then increasing uh balance uh in in their practically algorithmic interest bearing uh stable coins and if you send let's say ausdc or italki someone else they still continue increasing in balance so that's a very interesting payment currency and especially if you're hacking something related to payments this uh these eight tokens could be very uh good inspiration for you or even you could integrate them somehow and of course the depth position is now talking as well uh they're currently non-transferable but there might be some interesting use cases that you could actually build upon and of course we have now the the flashlights in patched functions as well so when you taking flashlights you could actually flash borrow multiple currencies at the same time and we upgraded the the governance as well so uh what's interesting is that if you're building governance functionality in dashboards during the hackathon uh you could actually take inspiration for from the v2 governance you can fork it create something better something cooler or just use whatever you want to govern uh or you could actually they built something interesting for the current the avida uh governance and and also what's interesting about the avi uh v2 governance is that uh the the delegations of the delegations are separated so so you can delegate separately voting power to protocol politicians and separately to uh the proposition poverty for example uh developers who could actually are technically able to put a proposal on chain that's pretty uh fascinating yeah and of course we have the a token support for uh single approve and transfer and uh so the main feature what you probably will be building uh the futures finance is is pretty much with the air functionality so you can let others borrow funds from the protocol i'm sorry you can you can actually er not borrow but you're gonna earn uh uh earn funds when you're depositing to the protocol and you're earning practically immediately and this is where the atoc is coming in place so when you deposit into the protocol you get you get a token so let's say if you deposit usdc you get ausdc and since it increases in balance it it becomes this permissionless global savings account and that's pretty interesting perspective because uh you don't probably have yields to usd nominated yields especially this high uh available globally so there's some interesting things that could be built and this is how kind of like uh d5 changes uh quite a lot on how we uh how we see finance today in in in traffic traditional finance uh so pretty much uh there's not that much of time to go all the functionality but the the the uh the functionality is very simple so uh you practically are selecting which uh poll you want to deposit in this case there's a dipole uh the amount you want to deposit and and of course uh we have this function called balance off so uh oh sorry on behalf of and and this means that you can actually also deposit behalf of someone else so this might be quite interesting if you're building something uh yeah and with the same way you you actually we the the uh liquidity and since there's usually uh excess liquidity you can do it fairly uh at any any point unless there is a so-called bankrupt scenario and then we have the the the borrow function so so you can you can basically convert your deposit into a collateral so let's say you deposit one asset and you borrow another asset so typical typical scenario is when you are long on particular particular uh cryptographic asset but you you might need liquidity uh which which basically means that you want to you want to borrow against that collateral so this is a fairly simple functional idea as well uh yeah and here what's interesting about the borrow functionality is that you also can set the interest rate that you want to use and in this case we're basically using the uh stable rate which is which is uh practically a stable rate which isn't variable rate so so your rate is locked and there is only uh one particular condition that your current stable rate might be rebalanced to a new market stable rate which is practically if the whole pool is utilized and across the whole uh stable life borrows in the protocol is approved 25 in interest rate and this is interesting in the sense that uh there's also the on behalf of function so this allows you also to delegate the credit to someone else so if you don't want to borrow yourself which which uh 70 of the protocol depositors aren't doing uh you could actually delegate to your friend that could borrow behalf of you you might have some sort of uh off chain agreement or offline agreement on uh you know how additional interest interest rates could be paid or you might be you might just have some sort of uh smart contract vault that can collect delegations and and then that vault could do some sort of functionality uh and and earn more funds in dfi and then repay to the credit delegators yeah and yeah so this is uh quite quite fascinating so why credit delegation is is super cool and something i'm very exciting and i believe that uh we'll see a lot of products out of this this is because like uh one way you could create this kind of like closed loop systems so if if you delegate credit to a smartphone jack that let's say uh has just certain type of pre-defined functionality let's say that smart contract can only supply liquidity to uniform or balancer and and then uh especially in balance's case kind of like uh provide fees uh and also the uh liquidity mining reports and then re repaying back to the delegators kind of you don't have this this uh particular credit risk there and also the second thing why i'm interested in this is that uh it's a kind of like a way for traditional finance to source liquidity from d5 so you can imagine at some point in the future maybe the other though the governance actually could white list certain powers that can borrow under collateralized it could be individuals it could be for example deified ad or or it could be uh you know institution from traditional finance or uh you know otc uh borrower and that would be under colorado's loan and you could add their different kinds of uh you know underwriting mechanisms uh different credit ratings or just connected to the to the traditional finance so that's why i'm very uh interested on seeing this this functionality even in this hackathon but also in in the future yeah so um flashlights uh i think what's interesting about flashlights i think some of you probably already know they're quite uh quite popular these days because what flashlights are what we may need to do is that you could actually borrow large amount of liquidity practically the whole pool and then use that liquidity to uh to whatever you want to do and some of the applications of flash loans are are quite uh fascinating uh let me show you so so this is just a collateral swap one on maker vault so it's a practical maker you need to create a vault uh that you collateralize and then you can uh mint uh stable points and then you need to close that vault yourself if you want to change the collateral type and cell in between but with flashlights you could actually create this whole circle and do all those functionalities uh uh without actually returning the loan and also you could do arbitrage so without any capital you could buy an asset from one exchange and sell it higher price on another one and keep uh profits and yeah so one last thing about the governance uh so so practically obvi has decentralized governance and and pretty much means that all the token orders can vote what kind of changes there will be in the protocol new assets contract upgradability and so forth but uh yeah nothing much uh in terms of what i have today for you guys there's a couple of examples uh you can share also later in in discord on what has been built previously uh and and that's about it and here's some resources for you if you want to build on ava the future of finance thank you stan yeah great to uh get the latest and greatest on what you guys are iterating on quite a lot it looks like and it looks like you'll be right back for a panel i think we just need to get you out of the virtual chat and then right back in uh for the following panel sounds good