Chicago Ethereum Meetup | Options for anything on Ethereum with Pods Finance

oh all right so we're we're we're starting up um welcome everybody to the uh chicago ethereum meetup uh i'm i'm spencer joined by paul um we are two of the the co-organizers of of this meet up and today we are extremely excited to have pods uh finance represented by bobby and rob who are going to talk about their protocol and options on ethereum so without much further ado i'll turn it over to them thank you so much um thank you spencer thank you paul for putting this together and for inviting us it's a great pleasure for us to be here tonight with you guys um and and yeah that's it so i guess the idea here it's like similar to what we do at the five meetup brazil it's just like a general conversation we're gonna present a few slides to to like help us during the talk uh but the idea here is to get like personal and you know and share what our ideas and why we're doing this and i would love to you guys um to like just raise your hand and ask questions at any time uh we would love to like just start talking uh as up from now and also thank you again everyone that is here today um i would love to get you to know all a lot better so by the end of this call if you're interested in joining our community just like please you're super invited and welcome to our discord channel and and yeah shoot your questions feedback suggestions there um so i guess we could i don't know just start sharing your screen rob can you do either i think i need permission i think i just changed it sorry about that so okay so okay are you guys seeing my screen yeah but we're seeing it in like two slides is that a problem ah yeah so right i need to share the other the other monitor okay that's perfect okay so should i start bobby yeah go ahead yeah so guys i think another i think it's always good to remember why we are outbuilding this ecosystem i know like each one of us has like a personal reason to be here i personally want to share why we as a brazilian one of our stronger reasons to be here and i use before diving into the product that i know that that's the main reason that we are here i wanted to tell you a little short story about a personal story that can help bringing you the context why we are building in this defy and how cryptocurrencies is so important for us okay so the year was 1991 they were the year that i was born and my mom like she is like a very hard work person she was the first person in my family to get a university degree and like she worked since the 15 years old and in the year that she was pregnant she was preparing to buy an apartment and she had like a kind of investment that we called in brazil overnight was a kind of special savings account and basically our government like decided to confiscate and freeze all our accounts especially for those who had investments in this kind this overnight type of investment and long story short 30 years later my mom still waiting the money from the government like and like i think in this story and in this like in the right we can see the brazilian inflation rate and like we are not talking here about like poor a very poor country like i don't know in africa or like bolivia we are talking like about brazil that's one of 10 biggest economies in the world since the 50s like we we have a bigger economy than canada than mexico and even though like we had less than 15 years ago 20 years ago inflation's rates higher than 40 percent a month we had a year of in in the 90s we had a month that our inflation rate was 100 percent a month and even though we we are better now like in the last in the past like 15 years we had a good inflation rate of 10 percent a year is still like pretty high so that's one of the reasons so that's for me is the main reason that i joined crypto i have a i am a software engineer a blockchain software engineer nowadays working on smart contracts on material i have a naval engineering background actually where i started to to build like c plus plus for improving ships or halting ships for oil companies here in brazil but then i suddenly became a software developer so i wanted to start this story with this is like what we can take from here yeah that happened to my family as well and i remember my mom told us that she could only remove a certain amount per day that would allow her to buy a pizza or less so that was a moment that all brazilians remember and and i think that it's very important to us and also another thing about brazil is that we cannot hold dollars we cannot hold us dollars in in a bank account for instance so we can only hold a brl that means that like for many years uh we i think that's since that thing started we kind of forgot how it is to actually hold another currency so brazilians only interact with like the real massive brazilians only interact with usd when they're going to travel or something like that or when they want to buy something that is important important that is normally very expensive [Music] so i think that we kind of forget that we can actually have access to something different and and yeah i think that this is one of the reasons why we think that crypto is so in d5 is so powerful um so i'm going to tell a little bit about also my story like what am i doing here and my story is a little different than rob's um because i started my career in traditional finance so i worked in um at barclays at sales and trading desk and then i worked at a hedge fund and then like moody family office and then trading desk at italy which is the largest bank in latin america and i was there at the trading desk of this like super large uh investment bank which is where i wanted to be the most because i like i don't know i just love the craziness the you know the shouting and like the energy and i love economy and like finance and stuff um so it wasn't the job of my dreams and then when i was there i noticed that like people were working there um like the same way for many many years and people that were in traditional finance before like disney and alina they probably can confirm that that people are at least in brazil i i'm not correctly sure about if that's also in the us i have a feeling that it is but in brazil for sure the way that people work at traditional finance is like full of legacy uh systems and you may need like what 10 or 7 to 10 people to just close one ticket of a structured product or a swap um or an option because a bunch of people have to look it again and check it again and so on um and so when i was there um i got very frustrated about this and i was like you know what i think this is going to change i think there is technology available out there to change this and i want to be part of that so i left the bank in order to pursue whatever would be the technology that would change that so i did that and i ended up finding blockchain um in 2017 to start late 2017. well so so then like long story short um i started working with rob and and gee and willian um in a in american company called mainframe they were open in office in brazil and they hired me to do that to start the office um in sao paulo so then we started working working there and and essentially in this timeline uh they changed they pivoted to d5 in in early 2019 and that's when all of us that we were in a very small office in sao paulo with a whiteboard we had to understand and go over every other d5 protocol that was coming out there so we started everything we checked all the codes understood things like as it was me as a finance background and the boys with like a super strong um engineering background in this little room we could like just have a really amazing learning curve so we ended up like super excited for doing things so we started doing hackathons and like side projects so that's when we did like uh the first hackathon that we participated in brazil uh we ended up doing some sort of issuing a zero coupon bond using sto of the company as collateral which was interesting and then right after that was when we did oh my die which is what john asked us about in the beginning um so essentially like in november last year i don't know if you guys remember but it was right before the multicollateral diet update so that the community was super divided between like is that going to keep the bag or not um and we were like you know what we could build something to allow them to just you know uh bet against it each other so um so we built this really cool uh first implementations of options in in ethereum that is what we call the omadai which was like american good options for that usdc and it was very fun to be honest it was really fun uh project we loved doing it um turns out that it it was a lot harder to find users for a project that in in the d5 world where no one was talking about options yet to actually like you know do the options there it wasn't not audited as well it was just like us doing something and putting it out live on mainnet which looking back now i'm glad no one used it i'm glad nothing happened like i think that was maybe a blessing and then well i'm grateful for it for that um so we kind of left it aside for a while and then we looked at it again during east denver uh did anyone hear you went to denver as well last this year yeah oh yeah you're right you were there i didn't see you there paul oh but it's good to see that you were there um did you remember us presenting on the main stage by any chance yeah yeah oh really cool okay so um so it was super fun uh we went to if denver we expanded oh my die uh use case to oh my d5 which was not only put options but also call options um and it was just super fun we loved it and we want to go back to the next december when the world is back for sure um so after december we were just super sure that we wanted to keep working on this and so um we found our way out of the company we were working for and we started parts right so box is also kind of an extension from oh my dfi where we're focusing a lot of put options so we can build structure products on top of it and we're gonna um explain a little more about what that means i think rob i think you can change the slide um so so here's what we're doing right um we we know that our code works very well for put options because uh we don't have admin keys we don't have price oracles and we don't have liquidation systems and when you do a put option of like um and you let's say that you're going to do a bit option of btc rapid btc right so a person is gonna have to the option seller is gonna have to lock collateral and it's gonna wrap this thing i'm gonna show it later again but uh on this case of the the price oracle it doesn't make sense for the option buyer to exercise the option in case the price doesn't make sense for them to actually profit for it so it's okay to not have a price oracle there and it keeps being safe for both the option seller especially in the option buyer so this is what we're doing like we found a really interesting way of doing a code for a pit option and we're making it better we're trying our best making it make it better by the way i would love to talk to all the options traders here later at some point to know your insights about what do you think that makes uh options protocol better than i don't know maybe trading in traditional finance i know that at this point it's hard to find uh a reason why you would think that defy options are better than traditional offers maybe the i don't know a different asset that you wouldn't be able to do it in traditional finance i know that that's not a very good barrier for interest but i would love to know more about other features as well so rob i think you can change now so one thing that is interesting when you're looking at specifically defy options and let's leave uh traditional options aside a little bit is the cash flow so um when you're like let's say that you are an option seller and you're put option sellers so that means that you are interested in getting an entry getting a premium for selling an option on a certain underlying asset that also means that you should be aware and you should be interested in maybe buying the underlying asset at the strike price because it could happen so it's not the same as providing liquidity in compound or avid because when you provide the quality there you just won't end up with the acid right it's just like with another acid it's not going to happen so when you're selling an option it's different because you might really take on the risk of that other asset um but the interesting thing around when you're comparing the two and if you are interested in in having exposure to buying the underlying asset um is that you could use your funds to sell options and get the entire premium upfront when you compare it to like um providing liquidity on a lending platform that you would get like a variable interest rate with some maybe liquidity mining tokens in the middle so one thing that we thought of in uh in a way that how we could make defy options more attractive to option sellers is to actually put them together and bundle them in one thing so this is what we call smart collateral so when you're actually selling options uh and you have to lock your funds as collateral you have to lock 100 of your funds because you know we still don't have a decentralized way of identity or um we're still getting better in undercollateralized things but right now the way it works is 100 and if you're going to have 100 let's at least make this 100 very smart right so that would mean that you could use your funds from ave or from compound or from another lending platform in our protocol as providing collateral for issuing and selling your option and in fact you could even use this to like mine other um liquidity mining tokens you know so when avi has theirs running you would be able to redeem them after selling the option so that would also mean that you're gonna get your uh your underlying asset if you end up being exercised at a bigger discount than you would otherwise so um imagine that when you're selling an option i think that this might be in the next slide rob can you go another one no it's not maybe another one okay yeah so this is the um user flow of selling an option right um so you're going to lock your stable assets as collateral and then you mint your pot puts in and then with those tokenized erc20 options you can just sell them anywhere right now i know it's not very good we're selling them in uni-swap and in father sir uh cool and we're going to change that for the future love to hear your ideas uh but we tokenize the seller position and then we sell it somewhere and then whoever buys that token can just go back to our contract with that token plus the underlying asset and redeem the collateral that is inside but now if you think of that collateral that it's inside and that collateral is a smart collateral we can say that this collateral is like generating interest that that is additional to the premium remember that the premium was paid up front so this collateral generating interest plus maybe a little yield from a liquidity mining program in all those they are entitled to the option seller not to the option buyer because the option buyer is just going to get what is what was agreed upon like in the beginning right which is what he should be gaining um so if the exercise happens what is going to happen is that the option seller is going to get back the underlying asset amount that is just what was agreed in the beginning plus the interest that was gained over the period and maybe the liquidity mining tokens and if you add those things to the price of your underlying asset you're it's like you're getting your underlying asset as in you're buying your underlying asset at a bigger discount than you would if it was just a premium um so i think that that was the option seller flow if anyone has questions just please um you can just jump in i think rob you can go to the next slide and here is our sample right the option buyer side you just go to the to the to the website or to another platform that you could find your options um choose what is the option you want and pay the premium then you receive the option tokens uh hold it until maturity and then decide or you could decide at any moment because at this point we're doing european sorry american uh looking into doing european in the future would love to hear your thoughts and and then well essentially that's it like you can decide to exercise or to let the option expire and and i think that was that was mainly for the flow of of the entire thing so yeah this is our if if um don't be shy you're super nice come on um so sorry i have a question so the strike price on the premium uh is that you guys are defining these contracts that people participated in terms of the strike price or how does that work um so you're asking if we are putting the price in each strike price no so like would are you coming up with the contracts or like a user is doing like i i want to participate in the 300 strike for ether i'll anticipate in the 400 strike for you where does the strike come from how uh okay so right now the way that we're doing is that we we put strikes that could be similar to derivative so that users have some sort of comparison in prices um but it could be a pool uh in our discord asking it's just that we're not live on mainnet yet so anything that we're doing is just valid for covent testnet um but i think that in the future when we're getting ready to go live on meena it could definitely be asking to our our community and checking what they want um but i'm curious why do you ask it basically if you have a limited set of strikes uh i guess what i want to know is like can i can i cover any strike i want or there's only certain strikes that you're going to have available like i might have an interest in say teeny puts or i may have an interest in something that's closer to at the money i understand what you're saying um in fact we did a one thing that we call option builder for east denver but we we decided not to do the option builder again for uh for pods because we thought that that could narrow the liquidity too much for each option siri so that if we were to at least try to focus the initial it into some certain uh option series then that would would work better yeah at least like the contracts is going to be permissionless like you can interact with our factory directly if you want and build your own series but on our front end we are going to narrow the liquidity okay yeah um okay so that was it like for now uh this is what our um our kevin testnet is looking like we already changed a few things from from this initial design but the idea here is to try to abstract the idea of a put option so you can either invest by selling an option or hedge by buying options we're not sure if that's the best approach and and i also would love to hear your guys thoughts around um should do you guys think that option sellers will be more comfortable with their pro trading view with more i don't know features um and whereas um maybe the option buyer is is not so interested in in having this pro view um and and yeah i think that i think that's it rob do you want to add something to to this part of the talk i muted yes do you think i should talk about the contract's design now yeah you could definitely um if you are if you could if you want to also add something to what i said before it's just for free yeah yeah maybe we can try to show the demo later and by the way guys like we on beta testing on coven you you can subscribe on our landing page and then we are going to send you an email so you can try and give your feedbacks on the on the beta so you can like use the platform and i i just made this slide because like i think it is good to also understand the big picture of our contract if you are interesting it's kind of not it's very it's kind of it's not complicated like we have like a pod put contract that's basically the financial instrument where you could mint and wind exercise and withdraw the for operations that you can do with options you we also have the w w and a port put that's basically the same for operations but dealing with if and dealing with other tokens for now we are only doing with ave because different from erc20 there is a standard there is a pattern interest beer tokens we don't have yet like a erc i don't know 70 that represents the interest we are talking so in order to implement an options beer in colero we started with ave because the architecture was easier so that's the pod put you have the factory contract that deploys a new output maybe in the future the governance will decide so the the the protocol can be like fully decentralized and and then we have the exchange that's the it's kind of a wrapper where we can connect a provider basically where you can buy and sell options and under the hood the exchange is connected to the provider that could be for now we have used swap and balancer but we are planning to the future having zero x another like kyber i don't know other weaving or even one inch but is the way that we did like connectors with our exchange so is very like flexible to like increase our contract size so that's our contract design if you have any questions you can try to it's fully collateralized that's how it works from the short side meaning lock up as if it went to zero in terms of the amount of or the amount of collateral that you're using so it's fully collateralized based on on the amount of um the the entire option so like if you want to do one wrapped ptc you have to block let's say i don't know what btc is now it's like 10 000. so you have to lock 10 000 worth of like a usdc in order to you know mint and sell a one option of wrapped btc [Music] um i think i think we're approaching like the end of the contact content that we prepared but we're like super up for for questions and and have a more open discussions um if you rob if you want to get more into the details of the call this also like i think would be fine if people are interested in seeing that as well um if it's easy to show the code that'd be awesome so no worries if that's complicated you could always throw out a github link or something i can walk through yeah that's the that's the chicago ethereum way we want to we want to see the code yeah funky street okay so that's our ripple well we can't see anything where is where is it i think you're sharing in a different screen oh no true how many people have that same background on their mac right now i know i do yep okay so this is our repo we by the way we use it build layer one in our stack and in the contract ah by the way if you guys want to have like a good inspiration of building scripts like tasks on google we we build like very good tasks here for balancer unit swap v1 like deploying a new series they plug a new exchange like this is all tasks on bundler so basically uh we split it we split it in tasks like add the liquidity create exchange finalizing the pool balance there is very easy if you want to learn from from here but going to the contracts um so as i said we have the pod put a put put in double put put basically is the financial instrument that you can mean to exchange if draw and exercise so our contracts is also we have like a very we have a data communication on the website and then the code is very documented also so explaining exactly what what is happening does the a stand for american uh no a is the ave ah got it as collateral yeah yeah so basically uh in order so the hard thing about a pod put for example it's how to track the interest that the option the optional salaries is earning when he is locking the collateral so in order to do that we did like a similar way that uniswap did like you like kind of take a snapshot in time and we start instead of the story like the locket balance we start like the locket weighted balance like so taking account how how part of the you want basically basically taking account how much interest you wanted so in that way we can like if you are going if you are since the beginning of the pool we are going to earn more interest in in that way we can avoid like a person going the last day before the option expiration joins the pool and earns proportional to the others okay so here you can also you can mint an option in behalf of someone so i can meet options for bobby so that way it's more flexible our contract and you call this this function saying home how many options you want to mint and then we calculated this strike to transfer like basically i'm just calculating this track price and here we calculated the our weighted balance and star so here's the how i said that what unwind function if i am an option seller and i want to leave my position before the expiration i call this function saying how many options i want to unwind for sure like you cannot unwind more than you minted in the beginning here we have the withdrawal and that's basically the same as ah that's i think worth mentioning uh for example imagine that i'm an option seller i look at my collateral and we different from for example open uh they're like you exercise individually like you actually when you exercise you need to choose which vault are you exercising in our case we split it among all the option sellers so by the time that you want to withdraw your funds like after the expiration date when you withdraw the fund you're going to withdraw if the pool have like half of underlying asset and half of the strike a asset that was not exercised the optional seller is going to withdraw proportionally underlying and and strike and that was a an approach to avoid like race conditions and favor like option sellers that went first and i removed like all the strikeouts in the beginning and for the latest like only rest the underlying asset yeah that's um that's really interesting because i know that with with open there's this interesting dynamic where like if if the price uh so for a pro leaf they're they're eat options which they don't have anymore but uh what they used to have before they had their their issues um would always if if these price dropped below the strike price at any point you would sort like if you were an option seller you sort of just like hoping that whoever might be exercising the options like wasn't going to choose your vault and it's like introducing this weird uncertainty that like in in a sense like is kind of good in in the way that maybe your your yours won't get get exercise but could then introduce like other strange incentives or just stuff that you like wouldn't normally think about in in a protocol like that um yeah so i think it's kind of nice that you sort of just avoid that extra layer of uncertainty yeah exactly so i in our mind like becomes more fair for the optional sellers yeah yeah and in that sense also i think is important ah by the way like as i said here that's the financial instrument and then we have the optional exchange and the exchange providers as we said like the action that we are connecting to in order to buy and sell so here we have windows update one and balancer still working progress in the others and also security uh is one top priority so if you want to take a look also in our test scenarios like we have more like than 200 with unit testing like stressing and fusing all the scenarios so i think if you have too much a good expiration test like we basically test scenarios like wbtc ytc with usbc different numbers of decimals different numbers of strike price decimals this kind of stuff and basically basically i think is that i don't know if you guys want more deeply something more deeply than that i can keep going you you can ask something i think there is something in the chat so i have one go ahead sorry i'd be curious to see the uh the factory so that we could set our own strikes for example ah yes sorry that was your initial question and i forgot to show the factory okay uh yeah so factory one is important is you have two different factories one for interest bearing tokens the a option factory and one for normal tokens so here inside the factory you have so i no sorry i entered the exchange here inside the factory you have two functions one is create option and then other one is create if options so if you if you are underlying us it's going to be if you have to call this function otherwise you you can call this function and basically we have these six parameters the name of the option the symbol the option type zero for put one for calls the address of the under underlying asset for example wbtc the address of the strike assets for example usdc this strike price in units of the strike assets so strike price is the same numbers of decimals of the strike assets it's an example here in the documentation or you can find us on the discord and the expiration date in block numbers so we are not doing inspiration dating timestamp for now it's on the roadmap so here you need to do like a little of calculation and basically that's the parameters to build to deploy a new part put contract and then we we you have four variations the pot boot the double point the a output and the wa output and what is the w pi point this is the same yeah is that is it wrap teeth okay wrap do we yeah it's our yeah we work with wife in order to avoid so we use this different approach so we can instead of like in the same contract if if do something we have like a with approach here so the create option is just wrapping the east first and then using the same internal [Music] basically actually yes let me show you in our what we do in the w but put we subscribe we have like a exercise if and then we overwrite it withdraw and then we do what we said like basically before withdrawing we call the wbs function and here before exercising we called it deposit function yeah okay cool yeah for the end user he he don't need to have with like he can call the contract only if we and we do the operation if you call that factory for a call and let's say you're you're selling the option what do you lock for collateral on a short call yeah for now we are not we are not doing calls we don't recommend because it's not like uh capital efficient because we are doing the opposite with calls like instead of locking the strike asset like for instance usdc you are going to lock like wbtc or if like things they are they call is the option to buy so you you are going to store the underlying like you're going to start wbtc or if in our contract and in order the someone in the future going to buy and as you can imagine it's not very interesting to do call options in that situation without a price oracle in the middle because someone could just go and you know buy options there and exercise even though the price is not um you know so that would that that would require from us a change in the in the smart contract to add the press circle yeah or we can believe like if we believe in market forces the price the premium paid for the the option in the the pool in the market is going to be like at least the difference and always at least should be it should at least always be the difference between spot price and strike price thanks we had a couple questions in the chat um tessa asked why are you using ave it's pretty expensive gas-wise and there's no token urn like on compound do you want to go one or should i go go ahead yeah so we actually to be honest we started with javi first reason is because what's easier as i said like interest bearing tokens we don't have a standard yet like ufc 20. so the way that compound the the way that javi returns interests is easier to handle and so technical reason was the first one second reason when we started was before was before comp and we also at least we are going to be the first ones when ave launched the liquidity mining program and the another reason was we were in the hackathon and avi have had a grant and we just applied for the other grant with this so three reasons but we plan to have like actually one of the plans is to have like a much uh approach for the collateral so it could be as a stable asset could be i don't know curve like pull something like that also are you white listed on balance search one word reward not yet like we are working on that we are talking by the way the balancer founder fernando he's also brazilian so we have good contact with him so you mentioned a couple times um like liquidity mining and sort of the idea of so i guess you could sort of earn or interest with with ave or you could also have liquidity mining as as like a part of the as a part of the underlying asset i i guess one thing i'm sorry i'm i don't know if i follow you said um security money as part of the underlying assets that's probably the wrong phrasing so you you can support so with ave you can support earning interest um and you i think you've also mentioned maybe i misheard but you've also mentioned the ability to also earn liquidity mining liquidity mining tokens on um uh on the collateral asset right how do you um how do you figure out how much of that like if you're well so you're the collateral that you that you have is in your own is it's in your own vault is that right like in a vaulted like dedicated to you yes okay so i guess i've answered my own question so the the that vault is the one that earns the liquidity mining and then you have full control over that for that okay yeah and we keep tracking of the we just need to keep track like in the moment in time that the user joined how like how much of for instance are they token the user like joined so we can do like the math to by the moment that the user is withdrawing we can calculate how like how tokens liquidity tokens he deserves actually can you talk a little bit more about about that um how are you how are you doing that calculation i'm curious to know [Music] yeah so what we are doing is like similar to uni swap when you like enjoying napo and you like kind of earns some part of the pool and then when the next person joins the pool he he like do the calculation with like how much do you earn of that pool is the similar approach so let me show you basically you can check later here the math inside the mint function on the a put pad put this is as an example so basically what i do is checking the like the contract is the owner right so basically the contract is going to earn either interest from our tokens or the liquidity mining mining tokens so by the moment that a user is joining the pool i can check how much tokens the contract have owned it and then i can give the like fair share for that new user by the moment that he joined them okay so basically the math like here's the numerator and denominator what i do is checking the underlying reserves or in the case of liquid liquidity tokens i'm going to check the liquidity tokens reserves and then doing like uh actually i think i have also a better explanation yeah there is that presentation that we used um remember yeah i just as weird a super remote team as well um like we use powerpoint presentations to sometimes uh enlighten each other's ideas so rob did once this math and a powerpoint for us explaining each step and i was just thinking about that um i think no it's going to be very clear how we calculate okay so uh i will simulate like a user flow here and it's going to be i think very clear how we do the calculations so basically i am the uh alice this address i want to mint one pad put and okay i transfer me the equilateral you need to approve the the the contract first and then we are going to have like 200 as reserves in our option contract and then the user gets one part put one pod token and then they can sell in one of our exchange like unisa balancer or 0x so that's what we store in the contract the this is kind of the snapshot like the sender like the weighted balancer the total locket this total normalize it is basically the sum of our all weighted balances and this is the reserved in this moment of time of a usdc so okay so imagine now a second user is going to mint another option but now what happened similar to liquidity tokens what happened to a usdc is the contract itself earned 10 dollars in interest so now instead of when a user is going to mint a new option i need to calculate how much he deserves but the like the the pi increased the size so what i do i do this math here normalized balancer that here's the magic in order to start how much the user deserves basically is like a weighted math considering the the reserve in the moment right now so for instance if a user wants to meet 0.4 pod puts and i he wants to lock eight a usdc i'm not i'm not i do not store like the 80 similar to what i did for the first user i'm going to start 76.

1 something in that way i can it's kind of the share of the pool that these guys the this guy earned comparing to the full reserves in the moment so now instead of storing 80 i'm starting 76 and that's the new total locket normalize it okay so by the moment that you the user is going to withdraw imagine these 290 went to 315 like earned interest or liquidity tokens now to to see how much the user deserves i do like basically the weighted average so i get the weighted balance that i started for the user i multiplied rob but there is someone asking so they send you 80 but you keep the difference between 80 and 6 75 so i don't know if it was clear at the weighted um so yeah so they say but you keep the difference no i don't keep the difference i keep the the 76 is what i started my contract you only transfer the 76 even though they said originally they would transfer 80. yeah like they they send me 80. the contracts is the contract reserve is going to increase by 80 so in order if i want to check how much like the contract have is like his balance i just like say like balance off the erc20 so i have tracked the full amount of the contract but also i track the weighted balance of the user so i'm tracking two different balances here [Music] so by the moment that the user is going to withdraw imagine that 290 became 315 more interest accrued then what what i was saying is you do the maps with the weighted average so 76 times the full results of the contract divided by the total lockheed and then this user remembered he that he deposits like 80 and now he's he like get 80 back plus 6.8 that's the interest that he deserves so that same logic is works for liquidity tokens but instead of reserves of ausdc you just like chained here for reserves of the liquidity token or whatever so basically is that and then we have like a scenario this is a scenario that no you don't have like exercise in the middle we can like go further and analyze like a scenario where you have like two different reserves so imagine what i was saying about hoping that is different here like we we need to do the maps by the time that the user withdraw so we get a share of the collateral and our share of the underlying asset in is basically the same logic one question i have is are your users mostly developers or other smart contracts or people using a web app or bots or or what do you envision most of your users will be on mainnet i guess yeah i think like i think like we are going to have like multiple uh strategies but for for instance for example like i we need to connect the channel of this distribution for new users probably is going to be argent pillar like a lot of wallets that the users can interact easily but also we want to be very developer approach so other protocols can easily build on top of us so i think maybe yeah i agree um i think that i i would i would say that there could be more than one uh approach to each side so like optional sellers are uh 80 80 different from option buyers like buyers are generally uh at least in d5 buyers of options and buyers have good options in dfi i feel that are very different um and also from the users that i've been talking to right now and so i think that it's it's going to be totally fine to to have a different approach to to serve each one of them in the best way that we could for each one so probably the buyer of good options will try to interact with that like buying hedge for their position in the wallet for instance directly in connections such as those but as as far as selling options go it could be another type of user some someone more sophisticated that understands that selling an option is different than providing liquidity and so on and so forth so we're gonna have like do our best to do all the integrations that we can and as we would also love to to hear from you guys where would you like to see us if you were to be a user um and and i think we still have our front end where people can just go and interact with with the contracts right from there um yeah i got a question so so you're are you are you gaining interest um depending on how many shares you've already put in is that is that kind of how this works or you're you're getting your your total values there's like a it's like there's like a little bit of money tacked on for every time you put in more money yeah that's that's the gist of it yeah it's like it is like a measure of the not only the amount but also the the time that the amount like was waiting okay okay do you want to sure better yeah no no well just if you guys like as i said before like if you want to interact with our better he is here's the optional sellers the screen where in the right you can check the options informations like the type of the option the expiration date the collateral the underlying the apr is kovan so it's fakie and the market's premium by the moment so here you just choose how many strike assets are you willing to lock we show you we like we make clear how how much like an underlying you are willing to buy in case you are exercising and then you can choose in which currency you want to receive your premium upfront premium then you just click sell options and that's that's that's here yeah first you need it to approve okay and if you don't have faucet yet you can just click on um get faucet so you can interact with the things easier yeah true true you in order to test uncover like here you get like a little bit of each token have it talking by talking and then after meeting so i went to the invest page i selected the option series that i wanted to mean to lock and sell and get the premium upfront after that i can check my position in my dashboard screen so we're still working on that but basically you can see how like which series how many lockets and i can click here and but if the options expired i can withdraw with not i can unwind certain position we only have like with drawing options here and that's the invest page we also have like the hedging page where you can buy exercise or resell your options here is even easier like you just choose the option series that you want to hatch the premium that you are going to pay [Music] the currency that you want to pay with and then you choose like which which one you want to sell and you need to approve first and sell after so if you want to try that you can go to other.finance and sign in for the data here and we are going to send some instructions and we will really want to hear your feedbacks about the ux about the pricing about the the option series that you are most willing to have um i'm running it in firefox and if you go directly to the invest page it just kind of hangs it says it has the alt options and then it just has this like bar that's going across the stream screen i'm running did you connect with metamask are you in convo network oh is that a vpn yeah well i'm just gonna say you have to you have to log in to get a session state first or is it just kind of handy yeah we're still working on that okay so i have one one question but i'll hold hold myself off for for a second if anybody has any other thoughts or or questions um before i i go um please speak up if you have one i would like to ask alex and and elena um about like your ideas or perceptions and and from also your previous experience like what do you think that would be most appealing to uh defy options and how could we improve well i think uh the one of the hardest things about options in general is education so you kind of have a choice to uh i don't want to speak too strongly or confidently but i would suggest that you have a choice to target um smart money or retail money no not not to be uh too derogatory towards uh retail money but uh the more uh institutional style players well like john was mentioning earlier want to have uh very sophisticated capabilities to uh create very educated hedges with very tailored strike prices which may not be best for the retail front end for example unless unless you have a way to educate uh more um less institutional totally great question around the institution institutional is that do you see any institutional using v5 options at this point and if you do like how how do you think that they are doing it like um so far the conversations i had was around like oh we can't really touch defy yet as far as a regulation perspective go yeah i think a large portion and this has been true for a while of institutions are intimidated or or their legal departments are intimidated by uh d5 in general uh because they don't like the idea of um being tied potentially to money that they can't guarantee was uh not you know sent in by terrorists uh you know aml money basically uh i know that this is somewhat anecdotal because i don't i'm not really in contact with a ton of institutions but i know some people who work in the space and there is an increasing interest in d5 for institutions but there are still the vast majority are avoiding it i think it's mostly the smaller groups um and also uh entities that have been created specifically to trade defy or or as crypto funds those are the entities that are going to be the most interested in trading options okay thank you we've got another question from from tessa can you create combination orders like call put spreads or strangles or something else um we were doing that in eve denver um we did a um straddle for ease and essentially it was just a very simple combination of buying calls and buying inputs um [Music] but at this point we are not doing it but uh this is something super interesting that we would definitely look look into in the future like for sure if you could share what you would um like to use it would it would be fun so the question i had is um i'm not sure if you're familiar with potions finance yeah yeah i am a journey is great yeah so i i certainly do not understand all of what they're doing but my my understanding and tell me if i'm if i'm off base here but my understanding is that they are attempting to create sort of a a single liquidity pool version uh that will like create what has that has the ability to create sort of the like any any series of options that you may want i understood that too and i i think it's like a super interesting approach or or at least sort of uh objective i think the the there's always a trade-off in everything and i think the trade-off that they're facing is that they're like there's more uncertainty up front in the price you're going to pay at the end for your option because they i think what they're doing is they're trying to calculate the black trolls price over the course of the life of the option that you have and then you pay the price at the end um i am very much an amateur understander of options so if anybody has a better understanding of what they're what they're doing please please correct me but i think that's it like so i guess my question is a very open-ended one or a general one of how should we be thinking or how should you be thinking or anybody thinking about the the trade-off between sort of this like concrete understanding of what you're going to be paying upfront versus less understanding or less certainty and like a broader broader range of possibilities um of what you can do or the type of series you can create by yourself yeah um of course so to be honest i i don't i don't know how how the projects changed over over the the time from hack money to now and i i am certain that it did um because jordy told me that some something's changed but what i remember from hack money was that um they were creating something that resembled an option but is so very different because you don't pay the premium upfront you instead put pay the premium um in the expiry date and with that they would be able to calculate the correct amount of premium for each side both the option seller and the buyer um in uh and so and back then during uh hack money i i questioned them as well like um i don't really know how users would use this instrument like um because i don't remember an instrument that is like that in traditional finance like whereas both of the the option seller and the option buyer has to provide collateral because you don't really know how much is going to be the the premium um so i don't know um i think i would love to hear more about other folks that were in traditional finance as well to to know if they remember something that would be interest interesting around this this new version of uh using options i think it's always valid to honestly like try using options in different ways that were used before so i i'm curious to see um how are they using it and how option sellers and and also buyers are are using it my understanding of options trading was that um risk is there and risk is a volatility is an asset class so people actually want to you know sell options because they want to get in the volatility of a certain asset because they have a certain belief around this volatility and they priced that up front so um so i think i think i would i would love to know more about the use case of the user that would be interested in pricing it uh afterwards and i i asked them that same thing you guys have any other comments and in fact i think uh maybe spencer we could do one day a panel talking about defy options that would be really interesting yeah if we could get and i guess this is not a note for paul if we can get uh uh potions and and and open and uh bring back pods i mean that'd be fun to have a like a full full panel spanning the whole the whole range of option protocols that'd be that'd be pretty cool yeah yeah yeah it would be really fun and also if we could get more um i don't know maybe uh conversation mona is really really smart and she worked in many years in traditional finance um so it would be really nice to like i don't know have her independent maybe as well to get her perspective on especially on market making for options so i think it would be great i'd be a great candidate for so a couple months ago we had a joint joint meet up with the buenos cyrus um ethereum community and we had both balancer and uniswap and we did kind of they each presented and we had a panel sort of competing visions maybe of automated market making so maybe we could do a similar type of thing we could partner with somebody else another another uh geographical community and bring in a few uh a few different different teams i think that'd be great okay it would be great but let's not do it in a competition it could be leveraging i chose the wrong word but but uh differing ideas about how to do the same or a similar thing how about that of course yeah that's great um okay so typically what we what we like to do is uh take a bit like a brief break and then everybody can go get a drink of their choice whether that's alcoholic or non-alcoholic and and come back and just hang out and we can sort of open open the um open things up to whatever topics we we want to talk about it could we could go even deeper on options on pods on whatever or you know any any other kind of kind of topic so whoever would uh like to to stick around for that you are absolutely more than welcome um this is one of my favorite parts of of our meetups is just shooting shooting the ship so maybe we'll take a five five minute break and then we'll come back uh to do that yeah that was super interesting thanks so much for the presentation yeah thank you so much