Drift: Solana's Capital Efficient DeFi Platform - TOKEN2049 Singapore 2024

good morning everyone how are we today Quiet Energy can I get a Hello thank you gentlemen the crowd uh it's always good to be back here today we're obviously juggling some logistical issues my co-founder Cindy will hopefully be here very shortly but uh talk to you a little bit about what we have in mind today uh why we believe uh the most Capital efficient platform is going to be on salana and what that means for for defi moving forward so I guess to start there's been a huge debate on where the best D5 platform is going to be built is it going to be an L1 is it going to be an app chain is it going to be its own ecosystem and I think for us we hold this thesis that drift protocol uh that the most successful derivatives X has to be built on an L1 and there's many reasons for why this is the case we think that the app chain narrative is not going to work because they're never going to be as performant as a centralized exchange compared the most performant def5 platform versus binance by bit or even okx and already there's there's a magnitude of difference so why why would you select a worse experience uh on a def platform versus us a centralized platform it's not exactly decentralized uh and further more they suffer from a lack of composability meaning they're unable to interact between uh other other projects if you are on your own AB chain you're almost on your own Island everything has to be done on that alone and I'll touch on this later Beyond this to get any asset onto an app chain requires a form of bridging again consider the fact that you're an L2 or even an L3 you have to bridge assets from the base chain to your app chain whether that's moving usdc know any type of assets there needs to be that sort of uh there needs to be that movement it's difficult because more often than not there's going to be a wallet that's required a bridge that's required and beyond that when you do move the market for liquidity on those platforms is potentially quite limited so again a centralized point of failure in terms of both the wallet the bridge and finally more often than not worse ux given the thinner liquidity of that platform so for a user using an app chain the app chain has to consider a lot of things to onboard that user it has to a make the user feel comfortable around bridging over to the app chain B provide that liquidity that is native to the app chain and then finally find the right Partners to support that for instance circle is not supported on was not supported on Cosmos for many many years and recently they only just supported sui so if you're an abent on sui it's going to take a lot of time to get that liquidity on that platform so in future we have this thesis that everything's going to be tokenized and I'm going to let that stick in for a second we're seeing parts of this already treasuries moving onchain already that is significant lower cost of doing business when you're able to settle treasuries without the t plus 2 days without the clearing house and all that's required in the traditional markets so beyond that we can take that a step further Commodities being oil gas gold real estate property commercial development and then beyond that deep in assets such as as helium render for mobile networks and why I talk about these things and why this is important is that in the future there is going to be one centralized place for all these assets to be transacted to be traded to be moved and to also just generate Returns on imagine you are a helium mobile hotspot operator you're receiving your rewards in the form of helium as a result you need to find a way to either hedge that move that into fiat currency or essentially or even find a place to hold it and I guess this brings me to why we believe salana is going to be the home for tokenization again this conversation today is not a pitch on salant it's a pitch on Drift But also it's important to respect why we have chosen salana as that destination sana's obviously seen a fantastic amount of growth over the past year year and a half going from what was as low as 300 million assets under under TBL to over 4.5 billion and it's become a a household for a lot of strong D5 platforms Vito Jupiter Cino all of which top uh 4.4 million $4 billion in tvl each hosting more than 1 billion each so walking through this we think that this infrastructure has to operate in a composable manner where if you are a user or if you're a participant in the network you can enjoy the usage of reaking you can use uh swaps borrow land as well as uh earn products and all these three for instance refer to J Camino and Jupiter respectively uh but beyond that there needs to be I think a centralized Marketplace and a centralized infrastructure for this to operate so let me give you a quick example of why we think drift falls into this I talked a little bit about onchain composability and what that refers to the composability piece is really important in that you want everything to be done under one platform it's always baffled me why you go to one platform for your borrow lead needs you go to another platform to do your swaps and you might go somewhere else to do your leverage trading why is it that this is not all Under One Roof and it's very antical to what we believe given the experiences with Finance centralized platforms where it is really all Under One Roof there's no need to move collateral in and out and I think drift embodies that moment and we call this the finance moment for defi on drift already we are the largest Perpetual stacks on salana where you can trade perss and and uh trade derivatives that's been at bread and butter for the past 3 years but beyond that we've also emerged to become the second biggest borrow L market in terms of earn and then finally we introduced the first capital division betting Market on salana again this is our response to poly Market on polygon it allows users to essentially take a position on Trump Camala and has even extended Beyond political markets to talk about F1 fed Fed rate cuts and even more recently voting on an outcome of what a debate could look like so for instance celebrity debates between Iggy and Eric at breakpoint is also going to be a prediction Market that we can support So this refers to our bet product and if you're taking a bet for instance you can do that all Under One Roof you can perhaps long spot but then hedge that against a short Trump per why this is really interesting is you can you can essentially hedge that position out if you believe that Trump is going to win and you have a thesis that Bitcoin will do very very well well perhaps you might want to hedge that out or perhaps you want to Arbitrage that against other prediction markets but you can all do this on one platform you can deposit your collateral own spot BTC that is used in a cross collateral system it then allows you to take a corresponding position on the betting market so this all comes together very seamlessly I want to now zoom out and talk a little b a little bit about how this relates the entire ecosystem this is very much unchain composability within just the drift platform but beyond that when we think about offchain composability how does drift interact with everything around us when you're a new user joining any ecosystem the first way you enter is you need to find a wallet and that wallet better be a damn good experience otherwise you're not going to try and use it so you start off with a wallet whether it's Phantom tip link know a low friction cost of onboarding use that to send money to a platform the onboarded user is then able to do a lot of things they can perhaps spin up a helium hotspot your mobile provider now and you're earning yield in your helium tokens and that's you're doing work for that but with that yield what do you do you want to swap that out fine you go to Jupiter and you swap it to usdc you want to hedge that very similar to Corn markets back in the 1960s you can essentially take a short position on derivatives lock in that profit and then continue earning that that continue earning those tokens and then beyond that you take the rewards you can even deposit that into drift put that as collateral and start taking positions on bedding markets the thesis here is that everything happens all under one platform there should not be a segregation of what this all looks like so moving beyond this I want to talk a little bit about this decentralized financial infrastructure stack as you can see we've broken this down into consumer Primitives and then collateral type so I'll go bottom up collateral type refers to what I was describing earlier as stable assets collateral assets any asset that can be used on the platform historically everybody here is probably familiar with PUSD usdc but even more recently we've seen the development of very clever investment instruments such as usde Athena where you are earning yield based on a funding rate to note this is not a stable coin this is an investment product almost like an onchain hedge fund and you've seen similar representations in usdy which is an investment in black rocks tokenized treasuries fund and usdm yet again another similar repres all of these stable assets investment products should be able to use seamlessly as collateral across platforms so why is it that on def5 platforms you can only deposit usdc or just usct in reality you should be able to deposit everything now going up the stack we think about perpetuals we think about options these are very common financial instruments that have been around in the real world for many many years and it should be a no-brainer that there should be a thesis where you can trade anything with anything and that's something that we embody going beyond that to the consumer level your average consumer might not be a heavy Trader they're not trading millions of dollars of volume or putting on options positions heck they don't even know what convexity is so for those users we want to wrap these products up in a very transparent and immutable way cast your mind back to 2021 2022 where we had all these products be locked behind black boxes we're talking about Voyager Celsius where you would promise to yield Without Really knowing what back that again on drift you can see this you can create an aggregated product you can create a vault product and from that you're able to figure out well this is where my assets are being held this is what's being used with my assets and as a result this is how I'm generating any corresponding yield on it and to talk through what this is look like for us we've enjoyed a fantastic growth trajectory over the past year and a half there was a time where salana was in a very difficult place across the entire ecosystem there was less than 300 mil in tvl today drift alone holds 500 million TV half a billion dollars and it's really come a long way and it really shows that this adoption this growth is being well received by people that are using the product the cost of having all of this on L1 is truly powerful but this isn't without Challenge and I think this might be a fantastic point me to perhaps pause and welcome my co-founder Cindy onto the stage to talk through what the challenges might be thank you so much for the intro on drift um I think one of the key things and one thing that we're looking to announce today is a solution to the challenges of being an exchange on an L1 um as we know David's talked through fantastically a lot of the opportunities of being on an L1 where you have a major Capital base to work with uh huge ecosystem Partners however the problem of lcy in getting to centralized level speed is still a 10x Improvement away so how do we get around this without compromising the fact that we are on an L1 and we don't want to build our own na chain and essentially how do we solve the problem of being natively integrated on the L1 while still scaling forward we have thought a long time about this solution and people have asked us is drift ever going to build its own L2 given the scale of where things are at now you guys are a defi ecosystem and you're more than a single prod product however we we wanted to build a novel solution that has never been seen before directly on the L1 itself um using an intent-based gaset method to essentially scale the liquidity that users can get on the L1 itself so you can buy and sell um directly to market makers in a gasless way on the L1 itself and this is how it works so on drift you will essentially sign a message to confirm the transaction that you're entering uh whether you want to go long one or 100 Bitcoin and instead of going to the salana network and paying the gas fee to essentially say that you're taking this trade which creates another layer of obstruction from the transaction itself you're going to this Swift server in 10B server that's built on top of drift broadcast the intent straight to market makers these market makers can confirm your transaction to to fill or kill and then place that on chain after they've confirmed the price this does two things one is that it confirms the price that you're going to be entering it so you never feel surprised by slippage again and two you get to fill in much larger orders because market makers are now filling directly against you instead of competing with other me Bots and um other agents on the blockchain so this is going to be launching very very soon in beta we're very excited to add this to our suite of liquidity tools to help Traders get better price discovery on chain and that takes us to the very end I think we've managed to condense quite a lot into the 12 minutes if anyone's interested to learn more uh please come reach out to us uh we'll be hanging around for a little bit longer and again appreciate everyone for listening and tuning in today thank you very much