Chainlink and DeFi - Johann Eid (Chainlink) - TOKEN2049 London

thank you everyone for coming here so just for a quick intro about myself i joined training around three years ago now and i've been working on integration since i got there right so i had the chance to work with pioneering projects in g5 rv synthetics and many others and for this talk today i wanted to focus really on g5 chaining and g5 what are we doing there how are we helping this ecosystem but also why is efi so key for societies and helping shape the future of tomorrow right hopefully a better future so i think i might have a small issue with uh remote oh perfect okay yes so today i would like to to talk first about what we have in our current societies right the way people work is they get into agreements with each other with companies with governments for anything they do when you go into a bank you deposit your money there you get into an agreement with a bank when you settle into a country and you start paying your taxes there you get into an agreement with the government right now the way these agreements work they're based on trust right they're based on trust where you assume that the other party is not going to break the agreement he has with you it's basically counterparty risk now the way you judge this risk in today's society is really based on brands right so when i start choosing a bank this bank is famous it has a logo i know of it has a reputation it has a history this is a brand based guarantee it's the same when i use apple when i use facebook i use a brand here i trust a brand a logo now the issue with this project it's been useful historically right it's worked it's also extremely opaque meaning you don't really have any guarantees that the party you're entering the agreement with is not going to break it you don't have any way of knowing that he's not going to press the red button and just i don't know freeze your friends in the bank or delete your facebook account or any other things that could basically harm the agreements you entered into right now next to this we have what we've been working on for the last few years for the last decades which is cryptographic based guarantees now these guarantees are much much stronger they cannot be cheated card is low and cryptography so too is a thing that enforces this law okay when you start using bitcoin when you get into the btc network you know the inflation rate you know how new bitcoins are being mined you know everything about it you enter this game knowing every condition out there and knowing that these conditions cannot be changed by any single party this is very key it's the same for a smart contract for g5 when you start using g5 when you start depositing your money on rv on compounds you know the rules you know what you're getting into you have full transparency over the smart contracts and you have a full guarantee that you cannot be cheated out of your agreement this is a high transparency word we're aiming to bring with gfi this is i start using a protocol i start putting my money into it and i can trust this protocol and i can trust that i won't be cheated out of the agreement i entered now this is really cool right like what we were discussing now why doesn't everything run on a blockchain already if it's that great the main reason is you have two trade-offs you have the trustless trade-off where you know you want a system where you have as high transparency as you can and as strong guarantees as you can get which is what blockchain offers but you also want something feature rich right you want something where you can build stuff on top for instance in web 2 you can build anything with apis you can build you know uber uses google maps it uses banking banking apis all of this stuff right composability here is very key now the issue with blockchain is that they're silos a blockchain doesn't know the price of gold doesn't know the price of silver it doesn't know the weather in the u.s today it doesn't know any of these variables right now without these variables you can't build many things on top of a blockchain per se that's why oracles exist and that's why training is working on oracles we want to make the blockchain world feature-rich we want to bring all of this data we want to bring all of this computation to allow the builders of tomorrow to rebuild the new worlds which we have currently in web 2. we want to build it in web three and we want to bring all of these great guarantees i just discussed to web three and to hopefully the future of finance the future of insurance the future of global trade and anything we create going forward so i'll just go over a small example and why this is so key i'm sure you'll remember the robin hood incident people used this platform it was a brokerage firm right so they bought some stocks and they were having fun trading and all the sudden because there was some pressure being applied on decentralized party these people were cheated out of being able to trade on the market that they were offered right suddenly they were stuck in a trade they couldn't go out and this is really what can happen when you start trusting brand-based guarantees instead of the cryptographic ones if there is a red button out there that can be pressed to basically shut down something or to free some accounts is going to get pressed at some points granted if the right pressure is being applied by the right people so that's why d5 is okay g5 you enter into an agreement with a platform with a protocol you start choosing it you know the rules you can't pitch it out and that's what we want to build now d5 runs on many different autonomous services it runs on blockchain obviously but it also runs on many services that chaining has been providing throughout the years it's grown from being a few million i remember giving a talk about g5 two years ago and it was probably 10 million right and we were discussing oh great 10 million that's awesome now it's 200 billion right and it keeps growing it's exponential so g5 is not going away it's still a very small part of the global value around the world it's still a very small part of cryptocurrency value even more so for the real world where you have derivatives real estate stock markets which are much much higher than anything you said defy can be right right now it's just a blip on the map at this moment but given everything we discussed and giving the potential that g5 has we believe it will grow exponentially and we believe this blip will become a huge huge square on this diagram i'm showing you here now let's talk a bit more about how g5 applications work you have an enchant part you have enough chain part the ancient part is a smart contract enforcing is a business logic right so liquidations borrowing in the case of money markets in the case of synthetic assets it's basically i'm into an asset that's all happening on chain right now the afghan part is a very key part which is going to provide all the data inputs to allow the business logic to work correctly let's give an example let's say a user deposits some funds on ave some if and he wants to borrow some usd this trade right here couldn't work if they have a protocol didn't know the price of if and did not know its value compared to usg right so how much do i know like how can i value the collateral if i don't know this price well i can't that's why prices and price feeds are so key so i'm going to go very quickly on the different service services we've been providing to defy in the last few years and what we've built for this ecosystem the main one is price feeds price feeds are basically a way to get data from the real world to the blockchain okay assets as like ethereum like bitcoin like god like silver are 95 of them traded on off-chain markets exchanges otc all of this stuff right so you need to be able to get this data onto the blockchain and that's what price feeds do price feeds are smart contracts deployed on ethereum on avalanche on many different blockchains and this controller gets fed info from what we call chaining nodes now some of the operators are people like swisscom dutch telecom so big telecommunication companies other addressable operators who've been staking and validating on provost tech networks like state pool and many others these channeling nodes get data from data providers you probably know a lot of them kind market cap coin gecko they are the guys who aggregate all of the data from decentralized exchanges and centralized exchanges to offer a full market coverage on any asset example if you want the price of bitcoin you don't want to get the price of bitcoin only from finance because binance could go down or binance could have some kind of crazy week you want to get the full market coverage across every platform that's what you get with price feeds very high reliability full market coverage and that's what currently powers defy we have around 700 prices deployed around nine blockchains and they're currently securing over 50 billion dollars in value across 300 users as of today now price fees are very key and the manifest like the the thing i love about price fields right is they scale with the more users you get you get more fees right so every user is paying a small fee to the network and these fees get aggregated across every user to pay for more security to pay for more node operators to pay for more data providers better data providers so as we grow the number of users using price feeds you start growing the security also and you start making these feeds a fully independent and autonomous system which can expand and improve as the user fees get aggregated between them so yeah price feeds are great they scale with economies of scales and in my view they're really one of the huge pillars in d5 they are as key as a blockchain on which everything gets executed because if you have the wrong inputs in your gpa application you will get the wrong outputs and people will either get liquidated or they will lose a lot of money yes so we need price things now next one is proof of reserve profile reserve is a very interesting product we've been rolling out and the main problem we were trying to solve is how can we get more assets from the offchain world to d5 to the d5 ecosystem in a trustless way i'm sure you've all heard of wbtc and of all the stable coins you have around like packs and uh you know tusd all of these stable coins now the way these stable coins and these assets work is they have some backing which is generally either on another chain in the case of wbtc it's on bitcoin or in bank accounts in the case of stable coins now what we want to do is bring the proof of reserves that these assets are fully backed fully collateralized directly on chain we want defy smart contracts to be able to query the collateralization of each asset and assets okay i'm going to use let's say pax is this asset properly collateralized and the way it works right now is chaining nodes are able to get data directly from an auditor into the chain to say okay this is how much packs has been reserved and they're properly backed or if a stablecoin wasn't properly backed then a defy app could know directly and have some kind of circuit breaker to make sure this asset is not used in its application anymore you see so that's that's what you're trying to bring here trying to bring more trustlessness around custodial assets of chain assets and this way bring more of them into the g5 ecosystem in a more secure more trustless way so and obviously you have a good example of why this can be so key we always need to have audits and we need transparency around it otherwise you can find some incredible loophole in the systems we use in our everyday lives um i'll go over quickly also another use case which is very dear to us it's insurance a lot of people today don't really have insurance um around the globe right so for instance we work to in kenya with ether risk to provide insurance for weather data where farmers are able to get insurance on their crops based on the weather in kenya at any point in time insurance is very key and training today is able to get this data from multiple data sources to say okay this is the weather in a certain in a certain place this is you know how much rain is going to pour and this can be very key to tomorrow have some insurance systems fully built on blockchains and able to independently have payouts based on the input that channing provides there are so many use cases i wouldn't be able to cover even half of them in the time we have we have an on-chain marketplace which is giving data for any custom data points people want going from prediction data on presidential election to sports data to esports to anything so yes we have this marketplace it's been deployed and people use it today in production for prediction markets like auger and other things like this another thing which is very important is trust minimize computation right so we had to talk about nfts just now nfts rely very heavily on randomness there is no good way today natively on blockchain to generate randomness that's why chenning launched its vrf product what vrf does it provides a cryptographic proof that the random number we generated the generic node generated has been generated in an honest manner and then these random numbers can be used to create some nfts right so aviguchi for instance has been using vrf has made a few tens of thousands transactions on vrf to get new nfts minted on their platform right so you you you basically ensure that every asset that gets mentored is minted in an honest way thanks to vrf the randomness cannot be cheated here and this is very key in the vrf ecosystem we have today i'm sure you've all heard of board a mutant which also happened recently they used vrf to generate the mutants they they had so yeah i'm let's just just go over what i just said um now another trust minimize computation we've been providing to the ecosystem is called keepers keepers is a way to automate smart contract execution with what you could call bots i guess we we call them keepers which are basically able to distribute three words automatically to do liquidations to do anything that requires a bot to trigger a transaction on chain right so smart contracts cannot trigger transactions by themselves you need a trigger that pulls it and that's what keepers do it's basically smart contract maintenance and it's used by more than 50 users today on mainnet and many more incoming and yeah obviously expanded computation is another huge use case providing index data to g5 so let's say d5 pulse index or sd5 we've been providing for synthetics for years at this point and that can be done with scenic node and is being done today in production so look i went over all the use cases i went over everything we're trying to do for this ecosystem in the end we believe g5 is a future g5 is going to change the world we want to support it and we're extremely excited about it this photo is a bit old now training is a lot more people but if you want to join us please let me know i'm available at this conference and yeah we'd love to have a talk thank you very much for aiming out thank you johan so sorry about the noise pollution actually good i'm used to it that's all right you work in crypto so you can roll with it anybody have one or two questions for chain link an absolutely awesome protocol doing amazing work if you have a question to johan or the space in general raise your hand this is your time now is it time to happen johann thanks very much really appreciate all the work but hold on let me get this after let me get this young gentleman here um i was just gonna ask when can we sort of expect more decentralization around your staking mechanisms yeah so staking is still in the research phase and obviously we're working very hard on it right there are many different components to take into account with staking with oracles oracles are not like it's not like validators right where all the data is on chain and so you have some very defined conditions to slash someone who's acting in a malicious way with oracles you need to define the source of truth to be able to to slash an oracle or a bad participant right and this is something we're searching very heavily and we're progressing quickly but yeah it's not as straightforward as most blockchains where the source of truth is directly the chain and you can just look it up to slash someone basically awesome a big round of applause for johan thank you thank you guys for chain link thank you