DeFi: 2021 & Beyond

okay um so i i think we could all agree that probably one of the the most excellent attributes of d5 is the building block um sort of elements the you know the fact that all these things can uh can co-exist and cooperate and build on each other uh the ethereum space has always been one of collaboration rather rather than competition uh it's you know low drama high collaboration high high synergies even though that's kind of a cheesy word to use but it's awesome stuff and i think we've seen the um we've seen this come to fruition with with defy this panel is a perfect example of that we have representatives from all sorts of uh really good uh excellent projects here so uh i think stanley's back and i think we're ready to bounce it back to the panel here with david moderating hi david hi thanks for having me kent thanks for joining us all right we'll get things kicked off here we're talking about the future of d5 we're talking about the d5 today and beyond and we've got the all-stars many of the people leading the top projects in the space i'd like to introduce our panelists so we've got stanley from ave brandon from ample forth robert from compound sergey from one inch aparna from open and bolivia from 0x so they are an extraordinary panel here to talk about a huge topic unfortunately we only have half an hour because i think we should probably have an hour each uh to go into it danny i first got to say thank you for that fantastic presentation there uh there are a few things i'm really excited about and we'll probably cover a little bit on this panel uh but let's start with the basics brandon when you were kind of seating the idea for amp before the very beginning do you have any idea that you'd be building a building block to something so quickly popular um no we had we had no idea when we started so we've been working on this project for a number of years now i think when we started um dfi hadn't even been coined yet before you know we just kind of grew up organically from the cryptocurrency world so it's really really exciting to see the sort of um growth like organic growth and the number of projects in the way that all these projects you know work together in the system today i mean the growth has been meteoric robert we've seen compound really take off first why do you think that we saw some tremendous growth in 2020 you were working on compound previously as well yeah i mean we started compound and launched it in 2018 after beginning in the project in 2017 and it really took years of incremental growth to get to this point um it's a function of a couple things one is that the amount of users in d5 that are comfortable using these products has been increasing significantly over time the second is that there's more and more projects in the ecosystem collaborating building out what we call d5 and the utility increases the more projects there are so d5 has gotten better and better and better and lastly the value of crypto itself has increased substantially out of a bear market into the present and all of these three building blocks have come together for assets and usage and volumes in d5 to scale um we're at the point now where simple project account that in 2018 had 10 million dollars in it has 7.5 billion dollars in it today right and you see these increases not just in um protocols like compound but also in trading um and pretty much every other new market that's coming about they're all increasing um at extreme velocity and so i think we're finally at the point where the world is ready uh for d5 where users are ready for it and there's enough of a critical mass that from here the velocity is not going to slow down so compound of course says has made some high profile integrations and i think you've seen real partnership there sergey one inch of course is really in many ways the accumulation of such integrations what gave you that idea and and do you think that let's call it aggregated finance is something that we're going to see in a lot of other formats going forwards yeah so um so one sec you can hear me right we can loud and clear yeah great great so um this we see that aggregators getting more popular and popular and the features behind the aggregators so i and anton my co-founder and cto of one inch we came to decided just by hacking on ath new york hackathon i was talking with vitalik with the fame as well and we thought yeah we need such a service we need we need aggregation to get the best price so and uh yeah and we just built on top of uh existing components yeah and later we also integrated compound and so on and so on uh to just make the the the space more user-friendly yeah uh i fully agree to robert uh the default space uh had really huge growth and uh we have a lot of people right now we have right now scanning problems here with the block limit you mentioned previously in the last tweets here from our side as well we suggested to increase the block limit um yeah and um yeah well we'll talk a lot about the limitations or at least a little bit about the limitations and where things are going as we kind of talked about the future but i think it's important that we really get a strong understanding of where we are now um standing you actually just gave a presentation where you spoke extensively about what's coming up in v2 of ave and there's some really interesting it's almost mind-blowing types of of opportunities that you've given there are financial instruments that to be honest outside of very very high finance didn't exist in any market that seemed to be available to you know typical crypto assets understanding i'd love to know you know what's what do we have right now in d5 how built out is the infrastructure today uh to build complex financial instruments well if you look at the the kind of like the technology that we have uh in various protocols there's a lot of like like complex engineering uh involved there you know there's combination of technical implementations and uh pretty interesting economics there i i think we have pretty good ecosystem at the moment and i i think like we see a lot of uh like what's interesting now is that a lot of developers are building quite a lot of things uh maybe uh a bit too similar kind of like uh we see kind of a lot of similarities but uh once in a while we see kind of like innovation uh in different uh parts of what people have built before and this is pretty cool because you know uh decentralized finance is not just like permissionless opportunity to to participate in this uh protocols but also its permissionless uh access to build things and this is what the denver is all about as well so so practically all the uh protocols that we have here i mean they are open source which practically means that you can look at for example compound you can look at of it you can look at opium and and until fourth and you can practically uh uh make something better and you know and then we we do the same we look what what is the new thing that that actually uh was innovative and we tried to build as well so there's like there's not much of a competitive modes here it's just kind of like all of these protocols are complementing each other all the time constantly and funny thing is that you know uh these teams are getting stronger and stronger and the products are becoming like more and more fascinating so i don't think we have built everything but i think just that next thing requires a bit of more creativity than than before so aparna you know the options market is one that's you know quite complex in any field let alone in crypto um you know sandy mentioned that not everything has been built but it's certainly harder to enter the space now what's your feeling on the matter you know is defy today crowded well i would say it's it's both crowded and not enough the developers are there so it's kind of like both hold true so for example with options there's so much to be built um and we're just getting started so capital efficiency uh like a way to trade options and derivatives i think right now we have amms or like dexes that help trade um products that don't have dk but when you have options you start to see uh decay of tokens or like you start to see this whole other asset class that isn't well supported by current infrastructure so it's all about rebuilding new pieces of infrastructure that support this or modifying existing piece of infrastructure and you know fulvia you know your project has certainly been there for for quite some time uh helping support a lot of developers people have been building on xerox for some time and you've been coming out with some kind of new features quite recently so let's talk a little bit about the development community especially since those the people really here at east denver have you found them to be really supportive how are you uh incentivizing developers to join up yeah for sure that's a great question you as you probably all know uh crx has been around since 2017. um it took a while for and still you know clubs are you know slowly building up to gain traction just because they're a lot more complex um than you know amms which are like the most recent innovation um i think the developer community definitely has been growing uh for us at xerox especially with our product uh for the xerox api we work very closely with developers from you know top d5 teams looking to integrate the exchange functionality into their products or if they need some sort of support for exchange uh not necessarily you know simple swaps but there are changing collaterals in a loan um and allowing users to do that seamlessly uh we help them by um you know partnering with them to for them to build and integrate this exchange functional into their products so the the developer community sorry is is growing and i think it's also getting a lot more sophisticated than in the earlier days of d5 uh when you know even the legos that we had to play with uh were very simply like simple compared to what we have today um specifically xerox um has different programs to support developers most of the community are or developers are already teams that are well established or have already a product and then again are just looking to integrate new functionality into their products but we work with teams like open um as aparna was saying like some of the infrastructure that exists today doesn't work right out of the books for new asset classes so we work closely with teams like open to help them um you know use open order book functionality and the infrastructure that we already have to support these new new products and innovations you know you mentioned something really interesting there which is that the building blocks or the legos are getting essentially more complicated it's harder and harder um to be building this stuff and that's got to be uh challenging for developers brandon i remember you know uh you know years ago our organizations were together and people couldn't get uh couldn't understand the concept of what you were trying to build with ample forth in its previous name um are you seeing that problem today or would you say that the audience uh of participants that they are becoming increasingly educated at uh the same speed as development um yeah i think we're definitely seeing a higher level of sophistication of just audiences across the board you know both inside define and outside international markets um you know just this week we were mentioned by the st louis federal reserve with a very good description and under deep economic understanding of what our project was doing so um yeah so much of our challenges in the beginning of our projects we're just trying to explain the economic fundamentals you know driving our goals and what we're trying to do but now it's becoming i think much much simpler i think part of that is because d5 is growing so more people are playing around with the tools and learning more about markets and financial systems but also just current events if you look at you know the whole phenomenon of gamestop or fiesco depending on where you land um we're seeing um a lot more um understanding of markets you know shorts calls um a month ago no one knew what a gamma track was for example but now i think that's getting close to common knowledge and so you know all these things um are sort of creating a confluence of events i think the paint's a very uh you know bullish or rosy future for diva so robert you know you've built something that i i guess can be quite complicated but in some ways you don't really need to know a whole lot about finance necessarily to be a user of compound do you think there's going to be more and more uh i would say let's call it retail adoption um on on the sir on one end do you think that's going to happen throughout 2021 oh sorry you're currently muted sorry about that good catch so i think there's absolutely going to be more retail adoption of d5 in general throughout 2021 but it's not going to happen in the ways that we anticipate a couple reasons for that are you know retail typically has smaller volumes and balances and transaction sizes and right now you know ethereum one is becoming in a lot of ways unusable for most retail users it's cost prohibitive especially for those who are looking to learn and get involved for the first time so i think what's going to happen is that we're going to start to see this you know scaling in different ways for retail to access d5 so i think it's going to come from d5 getting built in to centralized exchanges and centralized products i think it's inevitable and a lot of you know d5 builders in space won't like this but i think it's one of the ways that um we're going to find it to be cost effective for retail users for an exchange to loop together dozens of customer transactions into you know supplying assets to compound or executing a trade on one inch or open so i i think we're going to start to see the scaling and new users not come directly in the ways that we saw from 2018 to 2020 which is people loading metamask with you know two ether playing around falling in love with d5 and going from there i think what we're going to see is people trying it off chain primarily to start and i think we are going to see record growth across retail users but not through direct um ethereum transactions through eoas on l1 okay so that's pretty much brings up exactly what i wanted to talk about and i think is going to be an important part that i'd love to get all of your reactions on which is how is c5 integrating with d5 because you mentioned something which is essentially channel marketing for d5 you're going to see people maybe working with brick and mortar institutions and then kind of end arounding into d5 danny you talked about this a little bit in your presentation um and the guys at framework asked me to ask you this point blank so how are how is d5 merging with cfi and future or integrating at all yeah i think there are already are using i mean uh practically especially when it comes to lending lending side uh the major lenders in the centralized finance space they're practically using uh d5 so the way that robert actually explained uh how maybe the retail will use dfi in the future in this way uh the practical cfi is now doing it in a block uh kind of like bulk uh deposits and allocation of capital so that's already happening and i think it just uh goes more wider so and i think kind of like i would say like c5 becomes more of a uh front end thing so so default becomes more like a backend of the the finance like of course like for the for the crypto economy now but later for the actually kind of like replacing a bit on the traditional financial functions that we have today and i think that will be the the case and that's that's very good because if a centralized exchange actually doesn't need to build things and they could just rely the infrastructure that all of the geniuses has built it and you know and and it gets uh battle tested that's actually pretty good because it it removes responsibility from there two communities that govern these protocols and i think that's absolutely amazing sergey what do you think i mean right now you're doing something that uh uh people would maybe rather go to one inch and go to a centralized exchange i'm guessing you anticipate more of that in the future how do you see c5 and d5 uh integrating so i i can give you a really great example binance for example uh introduced uh staking in one inch uh on finance platforms so every violence user can just take on vanish tokens and finance do the staking for them on on our smart contracts yeah just a good example how a centralized exchange uh is uh yeah it starts to integrate defy actually yeah so there are a lot of examples i guess uh okay also offer uh learning on our compound i'm not completely sure but more and more um platforms started to to work with d5 because this uh this uh movement this uh kind of uh this d5 boom you know like an animation boom and uh yeah we have a lot of traders who swap on one inch a really huge huge uh amount of money like we had like 500 millions at one swap uh just because uh we uh we have great album which can discover the whole liquidity and find the best routes plus and can do it in one single transaction it's not possible in c5 yeah and they started to use us and maybe also centralized exchange would also maybe a blends on wallets with the d5 space by by using algorithms or aggregators um aparna you know most of the options world of course is with let's call it more tangible assets than digital ones uh of course this is where open started is mostly is in the digital asset space but one has to think and suspect that over time we're gonna see a lot more real world assets brought on blockchain is that what you build open for so i think the long-term goal is when we're able to get these physical assets on the chain we will be able to use like open for something like that i think that's like a 20-year goal because we first need to figure out how to get these assets on chain i think the more realistic short-term goal is um allowing so if you look at c fight there's a lot of liquidity around a couple of different markets so if you if you look at crypto you have options liquidity around bitcoin and ethereum but you don't really have that liquidity around like um say if if i wanted to sell coptions or like uh any any other defy token options um and i think what we're very excited about at open is to bring liquidity for those markets well you opened it up to a conversation about the future maybe if not 20 years from now let's say five years from now brandon what do you think five years from now where are we going to be in d5 what's going to be the hot trend um i don't know if anyone can predict five years let alone you know three months right things have changed so much um so quickly in the last year it's hard enough just to keep up with the current events um but i think if if we want to look at the blueprint for where d5 should be going i think you don't have to look any further than you know the last month or so of traditional markets right so i think um you know just over the last month with um the sort of friends we've seen around certain kinds of stocks i think it's uncovered a real sentiment in people that the system that we have now is puts average people at a disadvantage right maybe system isn't necessarily rigged but it's not necessarily what we would call fair right um i think we've also seen a brick sort of technical breakdown right of uh the stock system where like uh when you trade a stock often times people don't always know this but it takes you know two days for it to settle goes through a complex you know series of handoffs through greenhouses and we saw a breakdown of the collateral requirements of those greenhouses actually shutting down markets right um we're also seeing an increase in sophistication of average investors who are you know looking for access to the same tools um the traditionally only you know special classes that people have access to um and then also you know the increase of interests of institutions of digital assets um you know all come together to sort of normalize all the key underlying motivations of defy which makes makes it i think very clear that d5 is here to stay and so you know what we should be focusing on is um you know increasing access and community ownership reducing mechanical complexity um and you know really taking a sharp eye on the governance of these systems and how they're managed well let's let's talk about governance a little bit um standing why don't we get your take on it how is governance evolving in d5 you know it's gone from pretty simple and in some way semi-centralized control to now rather complex taos love your take on where governance goes from here um yeah what's interesting now i think the governance in dfi starts to beat maturing to some extent i mean there's there is now uh many protocols that are governed by by uh decentralized governance uh instead of the uh dictatorship of the uh founding theme which is uh pretty nice now and i think it just takes a bit quite a lot of time uh to to like build this uh uh strong governance or functional governance this is something i was actually uh talking with robert a couple of days ago that you know once once the the protocols are maturing governance are maturing it just takes takes a bit time i personally like uh what i think could be interesting to see is that uh some of the pro protocols and communities uh work together in some certain uh things you know and and they govern uh together some part of the parts of the protocols it could be oracles it could be uh it could be just some additional uh value for the the underlying protocols and and this this could be pretty cool to see like how uh it could be even like a consortium of multiple governance uh communities just participating together and i think this is something we might see uh uh this year and i i where i'm actually hopeful and we'll see like a lot of collaboration that's that's kind of like strength and stigma i would say uh folvia there has been some conversation that defy is in many ways although it seems fair and brandon mentioned that and he couldn't be more right that that's what the world is crying out for right now but that there the whales control a lot that they are influencing policy on some of these proposals uh that they're uh the often the liquidity providers do you think that this is a real problem or is this a perception issue i think maybe it's a combination of both i mean today definitely and i think uh robert mentioned this earlier whales have a lot of power also because the cost of smaller transactions for the majority of people are pretty prohibitive so like you know the larger traders or the larger holders end up controlling a lot of what happens today i think uh we will see an evolution in governance models to try to make things more accurate like equitative for everyone and prevent this from happening so at 0x we are about to launch uh unchained binding governance which is a new thing for us um and we are doing it in a way that we want to make sure that everyone in the community participates but i think yeah it's a little bit about today yes it's it's probably true that wales control uh a lot of decisions in the protocols but teams are also putting in place and evolving their governance models to make sure that that doesn't happen in the future and that everyone has you know more equal governance models all right well we don't have that much time left so i want to ask uh some questions for all of you um robert what outside of what you're building at compound and what you're seeing developers build on compound what are you most excited about right now in d5 well i'm excited about a lot um so personally i'm actually most excited about the community exploring an entirely new asset class in d5 which is non-fungible assets um the last couple years have been dominated by the exploration of fungible assets mainly tokens where they all look and feel the same and their use in d5 fungible assets are great um to borrow against they're great to trade it's obviously the first stage or the first step um of assets and deficit i think the second phase entirely are assets that are unique assets that are unique borrow against trade to structure and i think there's a huge opportunity here that we're just starting to explore as a community so i think 2021 in my mind is going to be dominated by non-fungible assets it doesn't always mean collectibles or art but unique assets and their role in the financial eco system that we're all building fascinating brandon what do you think what's the most exciting thing in d5 so i think right now it's as a developer it's really easy to build something that you can already see that exists right um and so a lot of you know finance and indeed fight as well is sort of a recreation of what we've already seen in centralized finance but with this new technology we have a new set of tools it allows us to potentially explore different solutions to old problems and so i don't know if i can point anything specific but it does i think underlies some of the work that we do on our project is i think it's gonna be really exciting to see how people come up with uh new ways of structuring uh these systems and new ways of organizing that we haven't yet seen before on centralized finance sergei what are you most excited about right now in d5 uh actually about two things so the first thing that uh everyone who's watching right now this uh this stream every one of you of you hackers you can build something on a hackathon and grow um to to to great project with a great uh um investors behind you or great community as well and uh just like this dot com boom time you know like similar i call it defy boom and um the second thing is we see more and more liquidity in in the different space and decentralized exchanges um in the liquidity protocols it is more distributed than one or two years before but uh for that case we are here the aggregators um and we can maybe beat very soon uh centralized exchange uh we can already compete by having curve for stable talking swaps and combination of maybe uni swap balancer pools in between uh you you get really great uh great results uh better than on centralized exchange uh of course scalability is the program right now but we are going to solve that soon i hope fantastic philia what are you most excited about right now in d5 well i'll i'll build on what uh surgeon was mentioning i i'm excited to see how texas you know continue to siphon liquidity from centralized exchanges but at the same time i'm also excited about where these two worlds uh will meet right like at zerex uh we've had days already where we you know in a period of 24 hours we'll very process more volume that will establish uh centralized exchanges like gemini and others so really excited about that road uh and again really excited about where these two worlds will meet because as you were mentioning earlier i think the centralized exchanges are are coming uh in the you know c5 or what they were calling it earlier um it's going to start using uh the d5 infrastructure more and more and we're already seeing that right like not just on like the landing side of things but also on the liquidity side of things so really excited about that as well great uh aparna i just want to get your take on what you think is the biggest thing in d5 today uh yeah i think what's very exciting right now is um like capital efficiency and also seeing how a lot of existing building blocks are going to change to adapt as derivatives and like more complex asset classes get built okay and then you're last but not least tell me what are you most excited about that you're not currently building in ave um i really like what's happening in the creator community so it's a practical you know because we always think about that you you can enter into the d5 space or or just in ethereum space uh practically with you know fiat gateways that you can refill into uh you know ethereum and stable coins but imagine like you could just create something very very creative uh it could be crypto art it could be uh anything that is expressional it could be a moment and you can practically uh sell that uh piece you know and that's that's very fascinating because that's a way to onboard people into the ecosystem and and i i kind of see it it's very cool it also boils down a bit to the uh in the peace and the ownership but especially like how it could empower uh creator community is it's just like very fascinating it's just it's way more interesting that they fight to be honest well i i think uh what's next for me and for probably many of the listeners here or watchers here today is that we probably want to go and buy nft options through decks and then probably lend those out and have some and maybe have a stake in the governance of the platform setting the rates for all that that's i think what i'm going to be doing after this thank you everyone of this all-star panel this has been outstanding uh i think we've learned a lot today and we're with every reason to be excited that uh the best is yet to come when it comes to d5 thank you thanks bye i love it david it's like a d5 all the way down defy ception that's right yeah thank you esteemed panelist and thanks dave for moderating a great a great conversation i would love to reconvene this thing in like a year it'd be fascinating to see how much has evolved for sure i can't wait thanks ken take care