DeFi Finance's New Frontier

so uh hi everybody i'm mariano conti i'm going to be taking over nc theories um from ken barton who i thank very much for everything he did today and um yeah i have my uh i have my mother here and i want to thank denver for um hosting another great conference uh sad that we can't all be there in person but as always uh it is great to be with everybody and uh you know talk about the things we enjoy the most so um without further ado the next uh presentation is called defy uh financed new frontier and let's see we've got some great speakers anatoly giacovenko from solana uh sam pakmanfried from uh ftx uh andre cronier from yearn and christian stone from balancers so i see anatoli's here welcome hey awesome to be here great can i see kristen hi kristen thank you for being here i believe andre is in by voice only but i'm not 100 yeah i'm around you hear me yes we can i was um when you were having technical problems i actually read a joke the other day that was like um early 1900s seances you know when people gather together to try and summon ghosts it's very the same as how these conferences start because it's always with like hello can you hear me are you out there can can can can you feel me all of that kind of stuff so it's a it's a very interesting fact that 100 years later and we're still starting stuff the same way uh yeah that's what the last year has given us and we still need sbf okay so i guess that means to have sam on stage i need to stop my video and let the four of you uh hash it out and talk about uh defy finances new frontier natalie with us there we go hey hey sam hey how's it going guys cool um so yeah i mean i i thought you know i know totally and i've spent a ton of time talking about uh about you know plans and uh and i guess you know from from my biggest question for you i think is maybe thinking about about solana and and particularly about future scaling what the the biggest things are that that could sort of further increase capacity and where those are um and and yeah maybe we'll start that so have questions for andre as well but yeah so for for us um this is like a fun engineering problem now um and so we have uh our runtime which is berkeley package filter we can take that bpf code it's a byte code it's a virtual machine that looks very much like x86 it's actually a subset of x86 and we can convert it to native machine code on the fly inside the client inside the chain um so commercializing that and getting that out that's maybe like we're at the tail end of that there's maybe like one month of that left but the next step after that and i don't know if we can accomplish this by the end of the year is to take that by code and then run it on gpus which would give us 20x more compute and if we're doing that it means that we've optimized the hell out of everything else and now that's important enough to do and that's basically it means that like i think the amount of bandwidth that we can consume is now like we're measuring it above one gigabit it's like one to twenty gigabits worth of incoming packets that are being swarmed into this thing and maybe it's a racket gpus it doesn't matter but like at that stage like this is kind of a financial switch you can almost call it like it's almost like as if cisco built it and here's like a really boring thing you like carted into like your bank and you plug in a bunch of stuff into it and it you know makes markets happen um like that that's like the engineering path there um obviously like the hard part is always does anybody care can people why even if this is super fast and cheap is anyone gonna use it like how do you find those products where this stuff actually makes a difference and like can go get product market fit that's always the hard problem in any of the stuff i think the tech is you know just enough smart people out there that can they can figure it out cool i i mean i'm certainly super excited for that and and yeah i think like right now salon it's certainly fast enough to run like one big app but i think you know getting that getting another factor of 20 or so will have it you know it'll be able to run you know sort of more of an industrial scale ecosystem as opposed to sort of like mini scale ecosystem or industrial scale app and and get it to the million you know markers which i think is like ballpark where where things need to get to to be uh you know for that not to be sort of the approximate or at least the looming limiting factor um yeah and you know andre what's what's your thought on like you know the the the future of the the you know urine ecosystem and and you know i mean sort of like future spelled out three months is maybe sort of like straightforward in some sense i don't know if it is but i could certainly predict maybe what like you know sort of approximate improvements would be or additions but like how about like three to five years out like what would you be what would really excite you about it well you know what yeah what would be like a real win state um well like it's it's it's definitely a different value proposition depending on on which specific product vertical you're talking about um so starting the conversation sort of just on yearn itself um an analogy i like to use is is con consider a river and consider flowing water now consider there's a bunch of different rocks in this river um and how the water flows changes it pathway based on what rocket hits and how it moves so you've got this water that's constantly streaming past and it's streaming sort of water has a way to find its most optimum route based on the obstacles you put in its path and and i i would like yearn to be that for capital you know so so the capital can just stream in from one situation and it's going to find the most optimum power for that capital based on the obstacles that are presented in its way um so so i i mean i i never envisioned it to be a client-facing solution it's really meant to be a protocol level solution in that you know its job is consolidate all the capital and then deploy that where it creates the most necessary value now now the the reason i like that description specifically is because it's agnostic to the protocols it feeds it's agnostic to the chain it feeds it's agnostic to absolutely everything it is just the storage warehouse of capital where it then flows to um so i'd say that's probably like if we're starting to talk two to three years from now you know it's it's you're you're i hope talking about situations that aren't just you know financial instruments and i i think we're sort of starting to see that it's bridging out slowly um for example what you guys are doing with maps doremi as well um so so you know it it's there's there's more things you can do and when i say capital i that's also got a financial value towards it with i should probably say is digital assets which is more accurate description because that isn't necessarily something you deploy for financial reasons um so so that sort of deployment situation is definitely what i would like to see in the future and i'd like it to be agnostic of um where it goes or even what it is pooling um its job is just to to find the root of least resistance yeah that totally makes sense and so thinking of it as sort of like a switching board almost you know in the middle um and and then i guess there's a ton of flexibility and and you know see where it goes in terms of what happens at the other end and you know adapt to to support that um how much do you see it like long term being on-chain automated investment strategy type things versus like uh you know versus you know having sort of manual manually designed investment strategies with sort of manual iteration um i i think you'll kind of have sort of both i mean if you look at something like set protocol right there they're already walking that way where it's it's it's very manual designed strategies i mean for now you play within the rules that that the set protocol has integrated with and allows you to play in but like those are those are you know traders or or money managers or you know just enthusiasts that set up their own manual rules and strategies and stuff and i think the beauty there is that there's a lot of strength because there's there's only so much data you can use from on chain information that you know it lacks a certain um nuance it lacks a certain like social inflictor like it can't respond on potential external rumors or any of that stuff and like that's where that's where that more traditional manual management comes in now especially again while we're talking about like yield markets and financial markets and especially when you talk about speculation there's there's a very large part of that a sort of social contract base you know and it's not on chain information it's it's what people perceive is going to happen with something that most often becomes the reality thereof um so i i i definitely think it will move to more manual strategies but on-chain codified because i think that on-chain codified part is what gives people comfort you know like it's it's it's really scary transferring money into someone else's bank account because you have no idea if you get to see that again but like it's it's almost less scary to do that into a smart contract if you've read that and understood it and their social consensus on what that smart contract does um because you you know the exact rules under which you can gain it back or anything that might happen with it so so i think the real power is a combination of both um i mean you know it's the same what we're seeing nowadays like it's it's not just like if if there was a magic formula you could apply to the financial markets to make the most upside it would have been invented but it just doesn't exist there's always that human component that has to play part of it so so i think it'll the the on-chain possibility is limited in terms of what it can maximize and then after that you need to start adding that human component but but i don't think it's either or i i think the two live very mutualistically together to create something that that gives more comfort that gives more transparency and at the same time allows that external stimuli to still you know have input into sort of perfecting these strategies yeah it makes a ton of sense of matches a lot of what i sort of felt like you know trading in international finance that you know there's there's a lot you can get from sort of combining together uh automated systems with the things that those automated systems definitely aren't going to get right um yeah what's what's your guys sense of like what's the biggest um you know what are the biggest like medium to long-term risks for d5 like if you had to tell a story where it it it didn't ever get big what what story would would you tell and and what would be like contributing factors or ways to avoid it it's a good way to frame questions sam um it goes off of andre's point which i think is really interesting how much can be like on you you have this limited amount of information it could be on chain and then all of these other human things have to happen off chain and something that i think could be a terrible story of really defy gone wrong is the human element in the human component so like not enough care and attention focused on humans that there's this distrust that all of these incentives are just short-term and there's no motivation there's no connection to the human and so people end up going other places that have a lot more personality inside of them and well i don't think that's true right now because crypto has a ton of personality in it i do think there is a world where that personality doesn't actually connect to every individual in squad senses or in an innocence where people feel empowered um and that's probably the story i would tell her the one that i think about most so so so i just want to jump in there because i want to i i want to affirm how important what christian just said was because when sam phrased that question for me i i immediately went to 100 technical components i was like well evm failure maybe consensus failure um maybe some of the big miners that get blocked out geofencing these kinds of things like like like as as someone that lives inside of smart contracts i did not consider the human element for one second so i think what christian just said is probably more important than any technical fault that i could point out because if if if it's just people like me building the the humans are very soon going to start moving away that's that's that's an excellent point that i i wouldn't even have considered so thank you for pointing that out you know there's uh a surprising amount of good actors in this space considering this whole space is based on trustlessness um i think it almost by definition attracts people that are generally good um and you know there's a bunch of stuff that kind of makes crypto twitter news like the bad things that happen but uh in my experience it seems like the vast majority of the things when they go wrong the people do the right thing and try to help each other out which is kind of cool i think we have really good starting conditions yeah the humans the humans are by their nature good right like humans will always make the best available choice on their menu what's really interesting about how organizations have evolved um so i got deep on this this problem over the last two years or so and the human organ like humans have organized and evolved over time in these sort of big stages there are four stages and the newest one being teal and a lot of organizations operate from this orange stage where the metaphor is a machine the goal is to beat competition to achieve profit and growth at all costs which actually comes from a place of distrusting humans so even though individuals like in interconnection are going to be good actors actually at an organizational level we've trained people to distrust and mistrust each other and then you sort of get what's in vogue right now in organizations with green organizations where the metaphor is a family and that's good it focuses on culture and empowerment but there's one that's further to that which actually which is a lot more in line with how crypto is it's used as living entities that are organizing towards their full potential so as i think about dao is getting created if that mindset isn't there if the mindset of a dao is we can't trust anyone else because none of our organizations in the past have ever done that i think we're gonna have a lot of problems um like like like thinking about it not working right is um i i i don't know why but i keep being drawn back to like early internet days um because like one of the first things i want to say is is something like a problem right now high gas everyone's talking about it everyone's complaining about it if one more person mentions it i'm going to block them on twitter um but if we go back you know to the early days of the internet like like the first isdn lines were ridiculously expensive and they were ridiculously slow and you know like that that was your high gas fees and like over time that gets faster and that gets more efficient um i don't know like like i'm normally i'm very pessimistic about what's happening in the space um i i struggle with the statement humans are good um the amount of sheer scams and frauds and people i see on a daily basis coming into the space claiming they've solved stuff that you know the rest of us have been trying to solve for the last five to ten years and they just miraculously now know everything but before they tell you how it's going to work they're just quickly going to do a token sale you know that kind of stuff just rubs me the wrong way so so i'm like very antagonistic and pessimistic about that but i'm struggling to see a disaster level or apocalypse level event that makes this not work like like every comparison i see with it is is you know early internet days early communities organizing like like it's very much the vibes of you know old like irc channels and bulletin boards and stuff like people coming together that that never before were able to communicate or do these things and like organizing themselves in a whole new way if not a new financial paradigm so so i i i think sam you might have found the only area i'm actually optimistic about and that is that i i struggle to see this not surviving interest i i agree the anti-fragility is in the space is high um and you've seen this even like i don't know there's so many people that like to to on maker like during the double black swan event it seemed like everything was gonna like blow up but um my initial like reaction was like oh wow this like rickety d5 project filled with like these this weird language survived the biggest financial meltdown in the world that there's probably something there right most definitely something there right like and i think you you've seen them like kind of come out of it and rebound and um like despite still all the risks and stuff i think like the fact that the space has gone through so many like ups and downs and like it shakes a ton of the the bad ideas out and a ton of the weaker teams out as well yeah and i mean that's that's also a lot like like that's that's the good and the bad that i also like to tell people often is you know because of the sheer transparent nature of the space when something goes wrong it's a lot more public it's a lot more everyone knows about it everyone hears about it everyone talks about it you know when when things go wrong in traditional markets or traditional organizations or closed corporations it it still goes wrong it's just behind closed doors you just don't hear about it so so like it's it's very often easy to think things happening here are so much worse than they actually are and that's just because we're all aware of what's happening but but like every time something bad has happened i've seen people you know get back up and be stronger than than before that event occurred and like those are those are such invaluable lessons learned because like thanks to the nature of the space you know i've been able to learn from mistakes that other teams have made and like seeing how they respond and how i should have done it differently but you know coming from a traditional finance background i i can promise you when stuff used to go wrong at the bank or the insurance or whatever no one knew about that stuff and we just figured out ways to brush it underneath the the carpet as quickly as possible um so like i i every every potential failure i can think of is something that ends up making the space stronger as long as i guess people see value here and keep holding but just just unless it's like pure mass hysteria and everyone is sharing the same delusion you know there's there's definitely something here and like there's there's definitely more coming um because you know i mean most of the people that are even on this call or that i talk to on a daily basis i've been here since you know pre-2017 pre-2018 bear markets and stuff now like if you could survive that and you're still here like you know what what's what's what's going to be the thing that chases you away if through all of that negativity and depression and everything else you still decided no this is where i want to be um damn i'm gonna have to think more on this but yeah okay thank you sam i think you turned me into an optimist not what i intended um sam i've got a question for you if that's all right yeah go for it uh and i love that i love that uh explanation andre around just how visible and how transparent everything is in the space and so therefore how how much more we feel it as consumers on the other end um so my question for you is that and really it's for everyone or anyone who's interested in answering but in the last cycle ethereum really seemed to be used as this financing machine right but in this cycle it's more about financial services and i totally mentioned that finding product market fit is hard right the tech can be easy simple anyone can do that maybe not simple probably not easy but there are lots of people out there so my curiosity is what is the next product market fit like really zooming way out of this cycle we're still figuring out where consumers are here and how big we'll be what consumers stick around for but you mentioned a touring complete network in ethereum so we're obviously getting bigger than financial services but what's the next one what's looking like it might be on the horizon yeah so i think what i'd say is probably two things um the first is mass user apps we haven't seen if i get into that largely because of gas cost among other things but that's where a huge amount of the upside is um and and there are real tech problems there as well as marketing and and adoption ones um i think the other side of this is um is that you know it doesn't all have to be finance you can decentralize things other than finance you can decentralize social networks um you could have on-chain twitter um you could have on-chain encrypted messaging you know and i think that's something which is it's technologically not that difficult and i think could be super uh super cool and and something that you know some people started to work on but there hasn't been a ton there um so you know i would guess we'll see more of that over the next you know year or two as well well and and and also to to feed onto that like like i've always had this this ideology slash vision that you know like five ten years whatever it is in the future people people aren't going to be talking about the blockchain you know just like nowadays you don't talk about your your fiber line or your asdl line or any of that stuff you don't know it's sitting on in in what you know switch is the stuff operating on but but you know 40 years ago we did know that stuff and we were aware of that because you had to be to build this stuff so you know where we're where i hope ending up in a position where the the apps you use the things you use you don't even realize they're running on chain on chain just facilitates that it's open trustless permissionless and and and one thing we haven't even tapped into yet is is like the the real decentralized nature of blockchain you know when you can start having a light client on a phone that can just directly connect on chain without needing to go through some kind of centralized api and stuff you start cutting out that that middle layer communication that's already big as well and a bunch of advancements there um the encryption technology itself obviously fantastic that in itself can be leveraged as a tool so so like there's everything you see today that exists on the internet can exist on chain it's just like but at the same time everything you see today on the internet couldn't exist 40 years ago on the internet it just wasn't possible you didn't have the scale the technology everything else you have so so i think one one thing i i struggle with a lot when i talk to people in any kind of public forum is you know there's there's this expectation of everything has to be ready everything has to be done where we're already supposed to be at adoption and all of this stuff and like i keep telling people you know like we're we're we're still building these things and like i i know a price goes up really quickly and it goes down really fast but technology doesn't build out just at the same speed so you know there's there's this constant sort of tension in terms of how long things take versus how long the people funding these things expect them to take um but but but i definitely think the the end result is you know a a decentralized internet i'm i'm more pessimistic it's just funny usually i'm very i i think like the really hard part here is that the advantage of these things are to like consumers are like really small like you don't notice your atm fee you don't notice you're like 10 bucks a month bank account charge you don't notice the attention that like an advertisement grabs from you and if you like could replace all of that stuff at once you would you would probably tell the difference then like maybe you'd have like a day like whoa something's different right but you might not even be able to put your finger on it it's really tough to like to make that be the thing that attracts users so like like kind of our my best hope for this is that like there's idealistic founders that like believe that that is more important than anything else and then that's the constraint they're working with and they try to find products it's possible they probably could have succeeded without those constraints but they keep trying until they actually find something then it blows up so like like this is where like i think like like it it's just a much harder problem than than it seems um and it's going to take a lot of effort so so so maybe to add some qualifications and to see if i can i can change your pessimism a little bit you know like the the the reason the reason blockchain in its current iteration is a financial instrument is is it evolved out of a a need there was a necessity we had the financial crisis people weren't in control of their funds they they couldn't be in control of their funds and and this while not necessarily built for it even though you know sort of it was it it facilitated people to be able to to fix the problems they saw in that area so that's why it's very financial focused currently but like if you look at the current landscape and the current like social economic markets and all of these things people are becoming more and more aware of their privacy and what's being done with their information so you know that's that's already sort of another cataclysmic event that if it breaks and it's going to break will again cause people to sort of migrate to this side where they're in control of their data they're in control of their privacy and all of these different things so so while i don't i agree with you like like the the the barrier to entry and the friction right now is so small that people aren't going to shift but i think that you know when you talk about privacy you talk about data ship ownership you talk about accessibility i i think these things with with censorship the way it's happening is is primed to sort of collapse in a similar like 2008 finance apocalypse level event and when that happens it causes that shift in mentality yeah and oh this is the end i've got such a good question for sam to finish us but go ahead merritt i don't know no no no um if you have a final question please uh go for it well it's a it's it's on the andre side of optimism here for totally which is around further than just a decentralized internet wondering if we'll start to have decentralized organizations of people so as people start to organize they realize the importance of organizing a decentralized manner and that that is a potential use case that the consumers will and do care about and what it brings up in my mind is everything we've seen with wall street bets and i was curious sam's narrative around wall street beds kind of what is the synopsis story he tells and how he sees about future interactions with blockchain yeah i mean it's like blockchain is the obvious it's the obvious outlet for you know a lot of what we're seeing and i think it shocked literally no one in the world when uh you know when robin hood banned buying of gamestop um uh you know people put their money into dogecoin instead that was it was sort of the obvious financial transition and who knows what happens like you know probably things calm down but uh but i know you can certainly tell a narrative here where the floodgates are starting to crack open and and you know there is uh the overturn window has shifted quite a bit on this in the last month even and and and you know like like would you be shocked now if like if you you know members of the house of representatives on the floor said like in an angry rant against robin hood like crypto fixes this like i wouldn't at this point you know i would have been shocked two months ago but at this point sort of like like no chance of not reading people should post it about dogecoin and uh and i mean it's it's amazing how quickly and unpredictably some things can can shift and and uh and i mean yeah i i don't know what happened but it's i it wouldn't shock me if there's significant influence in crypto from that well this was extremely interesting i uh want to thank the four of you for participating in this panel for me it was the sam made the android an optimist uh panel so i'm glad i didn't miss it thank you anatoly kristen andrew sam for being here