PANEL: Liquid Restaking, Stablecoin Collateralisation and Risk Dynamics

okay so we're ready to start I hope you guys still have some energy right to listen a bit more about liquid reaking stable coins collateralization risks Associated my name is Marson I'm one of the co-founders of redstone oracles which is the fastest growing Oracle in the market right now we've recently announced our $15 million seriesa building an AVS on top of igen layer and also we specialize in pricing yield in assets such as liquid staking tokens liquid restak tokens stable coins with Native yield built in and so on today we are going to talk with experts on the stable coins and collateralization so I will use the first minutes for everyone to say uh who you are your name and yeah what's what project project you represent yeah 100% thanks for the intro Marson um my name is chunda I'm one of the co-founders of ion protocol um ion is a lending platform in Native yield platform that supports the building of native yield assets for rollups and app chains across the ethereum and uh other ecosystems yeah GM I'm Ethan one of the co-founders of IBU Finance uh we're doing a CDP stable coin collateralized by restake assets So currently evaluating all of the igen lay lrts as well as some of the reaking tokens from other um restak platforms yeah I'm Wormhole I'm the founder of llama risk uh and we're a risk service provider uh many of our clients are decentralized organizations such as curve a um most recently yield Nest which is in a liquid reaking protocol um and we offer transparency reporting uh to help users understand the risks that are involved with interacting uh with uh various types of assets that they're interested in onboarding to their platforms um um and our so our main purpose is to uh increase transparency across uh the ecosystem hey everyone my name is Walter I'm a data scientist at Gauntlet Gauntlet is a cryptoeconomic research firm specializing in quantitative optimization at the Forefront of defi um so we do work in the re in the reaking space doing research on this front assisting with I layer helping out with lrts looking at problems in the space excellent thank you 4 million e this is how much is restak right now with liquid reaking token protocols pretty a lot at current state it's 12 billion I know we wish it was more maybe after ACCC is going to rebound again but not talking about prices talking about the use case uh stable coins have a specific some stable coins have a specific Dynamic which is called uh CDP collateralized debt position where you lock a collateral for example liquid reaking token and then you borrow against a stable coin and you hope that this LRT will acre yield and also if which is underlying we'll rather either stay or appreciate rather than depreciate because if it depreciates then at one point you can get liquidated hitting the liquidation threshold and now as we have experts over here do you believe liquid raking tokens are the perfect collateral for these kind of cdps or maybe it's a mix of like T bills and some real world assets and then lrts what are your thoughts maybe Wormhole maybe you can start as a expert on the risk site so I I think that liquid reaking uh is of particular importance to really elucidate all of the um mechanisms that are behind them because although they they may be a very simple product to interact with it's as simple as taking your eth or your liquid staking token and depositing it into uh the liquid reaking protocol to earn additional yield um really what's underpinning it is is many uh layers of of potential risk um which is analogous in some ways to liquid staking um which we're we're all quite familiar with at this point since the markets had a chance to mature over the past year or so since the Shanghai upgrade last year um but uh because it is such a simple um uh uh product to interact with it's a especially uh High importance that we um that we dig into the underlying uh risk vectors that are involved with them because many of these liquid reaking tokens may have multiple underlying assets that are collateralizing them so you're exposed to a much wider uh risk surface area uh and of course we're going to talk um more about the avss in igen layer which is underpinning these services and all the risks that are involved uh which with these new uh new types of AVS services that are coming online yeah I think like to to add on top of that really what um what you kind of just outline there is the idea that with reaking and with AVS risk uh holistically what we've done is basically created a new type of uh asset class and a new form of risk that really hasn't permeated the crypto ecosystem before um I like to think about it or term it as like infrastructure or network risk effectively risk correlated with um the kind of stability and sanctity of uh a network underlying some kind of micros service or um actually other network and I think the thing that's really interesting here is when we've thought about stable coin design holistically you know since the birth of crypto we've always focused on underwriting Market volatility and Market risk and although you know if you're reaking with eth you do have to uh use those same mechanisms to underpin the stability of stable coins with eth based restak assets if let's say we ignored eth based restake asset assets existed and we focused on USD based uh restak assets really the only thing we would be underwriting is the stability of um kind of these networks that we're underwriting I think the biggest question for us is uh thinking about this kind of alternative risk clask as um whether or not this is something that we'd want to diversify into um in terms of uh divesting away from Market risk uh in traditional ways of underwriting Market risk um and whether or not um the kind of uh risk profile is similar to uh the market risk that other asset uh based stable coins are usually derived from and I think my personal opinion is that uh I think infrastructure risk is a lot lot lower in in uh financial markets around infrastructure risk and network sanctity or one going to be one of the largest and most prominent crypto native markets um going into the future yeah maybe I can speak like at a little higher level why lrts would be interesting as collateral for like a CDP state coin um the general the general hope is that um in many of the CDP designs overcollateralization is like the one of the biggest barriers to stable coin issuance because like you it's relatively less Capital efficient than issuing something oneto one like how usdc does it um with their reserves so the potential for like a yield bearing collateral where that yield is derived from like a per fully onchain permissionless source is really attractive to like stable coin Builders um in a sense if you're familiar with like models like liquidy it would be like like where the yield is helping to repay the Deb position consistently or in liquidity V2 it would be helping to offset the user interest rate that they pay when they take an outstanding loan um but to answer the question whether it is like the ideal collateral I think right now it's like much too nent of uh um asset class to tell like um us as a LRT back CDP stable coin um like Wormhole alluded to are PR focused on underwriting the specific risks associated with each LRT and that risk reward ratio is like not clear right right now whatsoever um it relies on the reaking platforms enabling mechanisms like slashing and payments which are like the the biggest risk and then the biggest driver for like rewards um as well as like quantifying those risks and rewards and determining like um what are safe parameters to onboard this collateral for stable coins like collateral ratio like deposit caps per LRT because like yeah one slashing goes live essentially once slashing goes live we're trying to compare is like the is the rewards from the payments worth taking on that incremental risk and um by how much so yeah that's at least how we're thinking about it yeah I'd like to add on to what um chuno and Ethan have mentioned um there is a Time Dimension aspect to lrts right because like the other panelists I mentioned the slashing payments mechanisms have not gotten live yet so currently lrts are basically essentially lsts right um we all we're all familiar with LST risk or hopefully we are familiar with LST risk at this at this point there have been no major slashing events with lsts can we quantify the Delta of LRT risk with respect to LS2 risk and given the number of ab's life um it'll be hard to say right now right we can also factor in a bunch of correlations within the slashing risk as well although a lot of this is still like fairly undetermined we need to see like the actual data nonetheless these sort of unknown manifestations of these risks can still happen um that's one aspect of it the second aspect of it is of course the you know the the natural like Market liquidity for these tokens as well um if you consider like a hierarchy naturally eth has the you know most liquid most liquidity whether it's centralized or whether it's decentralized the next level down is lsts and the next level down is lrts with a large number of lrts coming onto the market you can imagine the you know the the main players to capture a large portion the liquidity on the market and you know the tail line of the lrts will have a you know a tougher time attracting this liquidity as well um of course they can pull different levers to make sure they have that ample liquidity but time will tell um I'd like to just bounce off of something you said uh early on in what you're were saying um that that lrts are are essentially like lsts at this point and I just want to be very clear about the the limitation of of where we are with the the LRT ecosystem igen layer is essentially in beta testing right now so there are no slashing conditions uh and and therefore if you are an LRT protocol and you're thinking about your risk exposure to uh the various avss that are available you don't you don't really have any risk at this point um which doesn't mean that the LRT protocol should just uh not worry about it and um and you know just yellow into into every AVS available uh we still need to be diligently thinking about uh when slashing conditions are going live we need to be prepared for that and we need to understand what um what specific uh slashing conditions does the AVS introduce um and whether those are favorable to the resters and fortunately uh node operators and resters are aligned in their incentive to to understand what those are um and you know we we do the best that we can to to try to understand uh uh what are the idiosyncrasies of the avss what are the centralization vectors that could potentially lead to um uh accidental uh slashing to occur um but ultimately we have to be clear that that lrts are very limited in um what kind of underlying uh service that they're that they're actually uh introducing today that's a really good point and also representing here and an AVS so Redstone is building an AVS you have a Marketplace so igen layer Marketplace on one side you have people who throw in e or LSD and uh count on the highest yield possible naturally and on the other hand you have avss that take this restake security and we have to pay for all the ristic security that they are using right so from my perspective an AVS is important how much I have to pay and also the slashing conditions so for people that are not familiar igen layer is releasing updates in milestones and the Milestone with slashing introduce introduction is not live yet I'm not sure what's the latest timeline but naturally it's also not a trivial concept to implement like mathematically determine like when a note or like an actor should be slashed so it's not easy and now to a bit um also engage in the conversation have you heard of a company or entity called alamida research raise your hand fantastic so for those who don't know uh these were uh people that really liked to play with fire and turned out they are no not like fireproof and talking about the risk with avss do you imagine there is a scenario where there is like an alamida research of avss that is taking all the risk all the craz staff just to get all lrts to restake with them to get the highest yield and in the event of the Black Swan then they are going to collapse and take maybe not the whole RIS taking sector but a part of it down with itself with the Fallout and thoughts about that and if if there is such a case what would they be doing like these abss to truly like increase the risk that is out there yeah I think it's something that doesn't exist yet in ABS that is positioned to do so um but I definitely think it's an inevitability that um it will exist in the future so to think about like why is there not an ABS that currently exists that focuses on that could introduce this type of risk um so most abss today are infrastructure projects that focus on uh what we call objectively attributable uh kind of faults right which means that these are Services where you can point to some onchain or some verifiable action um and then objectively attribute to whether or not you should be slashed via looking at some piece of like objectively verifiable data when you look at these types of systems you effectively have full transparency on what are the conditions that could lead to slashing um these are objectively attributable faults that's what we call them and then the the problem is is when you introduce uh subjectivity to these faults uh so let's say um you are subjectively attributing to the outcome of a decision in a a prediction market now you introduce um a kind of position where if other abss are sharing security with uh this subjective outcome you run into a situation where bribery can occur where malicious node operators um who may have some kind of vested interest could circumvent or subvert the system um and it's really important to one like I think have a lot more literature and conversation around what are these it's kind of like a taboo topic to talk about this idea of avss that could undermine reaking platforms especially restak platforms that focus on shared security I think it's another thing as well to push a lot of responsibility onto restating platforms to actually impose constraints on where people can actually source security and how they can source security or at least clearly delineate to their end users the lrts and all the other stakeholders in the ecosystem the difference between these two types of faults um and what uh how they can actually Source Capital from these reaking platforms yeah like I think this this question is kind of getting at the risk profile of lrts so um aside from like liquidity the smart contract implementation of lrts one of the main vectors we're looking at is like what avss they're securing uh different than lsts when um reaking platforms are matured lrts are kind of acting as Risk Managers they're the ones choosing where to delegate their users eth um uh which operators to delegate them too and which avss those operators operators are securing so in the case um described in the example like um for the LRT to have motivation to secure this Alam like ABS um there there would have to be like substantial yield payout in order for them to justify that and the more e that's delegated to this ABS the more diluted that yield get so just some details about like yeah how how that would actually work and um yeah I think that's why when evaluating lrts collateral it's it's it's a little bit harder than LST because you have to look at the idos syres idos I differences between each AVS um what are like the objective slash faults that each of these avss is requiring uh is imposing and like um yeah I I I'm not sure if that case would play out um like I think that ABS at its core has to use the reaking platform to generate some sort of outsized value like they're renting Economic Security um ideally like cheaper than they could get elsewhere and they should be using that to like provide a service to the market that um creates outside outside value if they do do so they'll make they'll be profitable and they can use that profit to incentivize more security if they need it but um yeah I think hard to imagine like what kind of an AVS would require so much security and be so profitable that it would be able to pay out so much and then go on to be malicious and and cause like a Black Swan event it's a possibility but yeah just interesting to think about what that would actually look like yeah sorry um you can also spin it on its head as well like Marson you're the um you guys are building an ABS right naturally you can select select which operators you want to help secure your AVS as well um building off of what shund and Ethan said um from an lrts perspective there's not really a reason well like there can be sorry there there can be many reasons but these are things lrts think about when they choose which ABS is to secure if an AVS is mindful or like you know sophisticated about which operator set it's going to use to help secure it naturally also consider hey which other abss are these operators securing um do I want operators that have higher likelihoods of getting slashed to be securing my own network how does that impact my own security so from an av's perspective they probably want to be as cautious as diligent as possible when choosing these operator sets so I'll just take a a step back um and look at sort of the the big picture of the the trajectory of um the liquid staking uh ecosystem which which really has been uh more or less fully Dev veloped since uh last year Springtime and uh over the course of the past year we've seen uh a number of uh new upand cominging uh liquid staking protocols and more recently obviously uh liquid reaking has has uh has really uh had its time to shine um and uh over the course of this past uh year or we could even go back further than that uh we've seen a trajectory where um if you look at the amount of eth staked in the network it's it's up and to the right we we're essentially in a two-year-long uh bull market of of ethereum staking and and liquid uh staking which which people might not um it might be easy to overlook that because it doesn't have a speculative number attached to it um and there may be less uh uh direct sort of euphoria that you experience about that but we we should understand that that we've been moving further and further across the risk curve as we introduce uh more exotic products with more composability risk attached to them um and so when you going back to what you're talking about how could an Alam or an FTX uh kind of occur in the space and it's just that you know we are all victims of the behavior of of of everyone and even the builders in the space when when uh when the consensus of of speculators and just the environment that you're working in uh becomes much more aggressive and further on the risk curve uh you have to keep up and um so so it's it's something that we always have to uh keep ourselves in check about especially uh in this uh ethereum staking Market because we're all um unified by uh perhaps some kind of bias uh in favor of ethereum um and uh and so that that makes it even more important that we're always checking our biases um and uh and making sure that we we aren't going allowing ourselves to go too far down the risk curve right yeah in my opinion the main reason we are talking so much about risk when talking about lrts versus lsts is the complexity because lsts is nothing else as ethereum there's staking you create a liquid staking on top of that and it has to be e at least for now and it has to be staking ethereum like protecting ethereum itself so to me like for example Lio is could be like a spe right now actually is like a specific specific use case on top of igen layer like people just throw in if and they get like a restake token that actually right now at least protects a lot uh the ethereum itself and now comes the complexity so one you can have different assets than if to restake with so first are lsds so you already add like another layer of uh risk associated because it's already like inheriting the risk of the liquid staking protocol that you are throwing in like Lio rocket pool whatsoever then you can have a different asset like usdc Bitcoin rap Bitcoin and so on so then the complexity goes even further because you also have like the not denominated in USD anymore like the ratio between e and Bitcoin can matter over than a lot and then you throw in the AVS so it's not only ethereum there are plenty of avss like oracles it can be a bridge it can be a ZK prover or something else then you add operators of course this is actually pretty similar to liquid staking and now imagine the 5D because you are adding many RIS taking platforms so we have igen layer that started but we also have carak we have symbiotic we have nectar we have probably a couple of others that I'm not that much familiar with so maybe now a question to the panelists as you're like day toay operating in this maze let's call it what would you suggest to users like people that restake their e or any other asset but also the protocols like how to navigate that because to the best to my knowledge like symbiotic and I carak they don't communicate with each other in sense of like the platforms like they're pretty like isolated from each other so do you have any like tips like how to navigate that space yeah it's pretty difficult I say I mean just look at 2024 like the points meta has been you know the main C I'm sure we'll talk about more about the points stuff later on um but everyone has a points issuance curve a lot of it is you know like a Time integral of things um I think sybi and they have a fairly similar points points emissions curve as well um if you look at how like these points this implied yeld has been trading on Pendle I think back in January the stuff was like 30 40% implied for lrts and now if you look at Melo it's like 15 to 20% so yeah I mean it's a little sad because you know um I guess with every single iteration that comes up the expectation for future Awards comes a little down of course like while we all want to grow reaking it's still like a fairly competitive arena in the sense that like we for a lot of these reaking platforms your main objective is to still like acquire the main market share ideally to develop the space um there is like a you know an overarching like guidance at the very front like hopefully everyone can like work together to like you know be able to like partition security appropriately be able to like design the appr for abs is what aspects of the collaboration I mean are the most healthy I think these things can be further discussed down the line but yeah I mean points are driving everything right now um everyone needs to find their own issuance curve it's pretty hard to find that issuance curve yeah I think from my perspective um with the presence of multiple reaking platforms that don't really communicate with each other I think the the advice I would give to to protocols um more spe specifically I think abss is uh inherently you know reaking platforms are permissionless in the sense that you can effectively list any asset on any reaking platform now they may not host it on the front end but it's completely feasible to do so um and with that in mind the idea is that we have to be very conscientious about uh kind of double counting security especially when we use we may multiple reaking platforms there's nothing inherently within reaking platforms that constrains that and so the importance will be with avss and being very conscientious about what assets they decide to support um with lrts with uh communicating directly with users and with abss and node operators how they want to partition assets uh like you were mentioning um and then on users to keep uh all of these actors accountable uh for uh making sure that they partition these assets cuz a worst case scenario is you know we end up in a situation where uh a service that a lot of counterparties really depend on um ends up having a lot less security than uh we implicitly thought um and could cause some kind of uh secondary uh failure in some other part of the ecosystem um I think there's also a lot of um open room as well for um kind of third party innovators to come into this kind of sector of the space uh building out dashboard you know we've seen this already with like one and and a couple other stakeholders uh building out dashboards for visibility on stake allocation and uh where exactly capital is being delegated I think that will only become more prient and uh more and more important as time goes on uh in these um restate platforms not only um grow out their user base when it comes to abss uh but also start to overlap in abss that use multiple restating platforms at the same time so until very recently uh igen layer was the only reaking Marketplace that has been on our radar but more re more recently we've had to uh you know confront the reality that there are going to be competitors um the most prominent that's on our radar right now is symbiotic and it's still very early so it's it's hard to know how that ecosystem is going to develop but in the context of the work that we do with uh with yield Nest we're we're starting to uh do more research into the variations that uh that you might experience between different staking marketplaces because liquid reaking tokens will likely span the the variety of options that out there that are out there and it is going to put a lot more pressure on us I can tell you that to to understand um what the what the uh differentiation differentiating factors um are going to be uh there is room for competitors to come in because um igen layer and to its credit it's been very uh um forward about um that it is in development that there are limitations that they're they're working on uh that also that also leaves room for competitors like symbiotic to to offer a diversified option um which I I believe that their their uh their stance is to try to create a more um open ecosystem that has less uh less less checks less guard rails um Igan La has uh certain guard rails for example uh the um uh the the slashing um I'm blanking on the name of it the the slashing intervention uh Council something like that um and uh and there are centralized uh committees that are in place to prevent um to prevent some sort of negative uh accidental kind of slashing to occur for for example um and other other marketplaces May forego um um some kind of guard rails like that yeah like how we're thinking about the emergence of multiple reaking platforms at Abu is like um restak is a like a two-sided Marketplace there's Supply looking to seek incremental yield on their on staking their asset and then there's demand which is like the whole the demand side is the avss and that's where the Innovation is um ABS is like a huge design space that us as industry still learning like what can we how what apps can we better build using um shared security and I think that is like the key part um to determine which reaking platforms uh quote unquote win like there's differentiators between the platforms um like the the slash assets or like implementations of how different implementations of how to make avss but at its core I think they'll be competing for like um the reaking platforms will be competing for the best avss teams that will demand a lot of security and ideally be profitable to pay rewards because that's what's going to incentivize the supply to be uh retained on the platform um and there's like slight differences between reaking platforms we've talked like Soul layer they're doing like Soul staking there's like a parisel doing I filecoin reaking so there's some interesting things out there that cater towards different kinds of avss but at large like when we're looking at supporting liquid reaking as collateral um let's say we look at Melo on symbiotic the main question is like where in the long run where will the yield from Melo lrts come from it will come from avss and which avss are choosing to build on symbiotic that's like the key thing we're underwriting um and I think it's interesting to like look at symbiotic how they're front running IG layer in the sense of offering um ERC 20 tokens as SL security versus I there just focusing on Ethan lsts for now because like like for example um Athena is now trying to use symbiotic for like um staking the Athena governance token um as slal security for like their cross chain product and I think that's interesting because it highlights a need it highlights symbiotic serving a need of ABS better than igen layer like Athena has this governance token they want use case for it and symbiotics offering them a solution so this is just like one example of how um the reaking Wars quote unquote will play out where like platforms will cater towards different avss to try to win them over I think this question also ties very well with the other topics that we talked about previously right I mean the first thing we talked about was uh the idea of lrts being collateral and the second thing we talked about was the idea of super risky aps's um the sixth Dimension that we could probably add to the 5Ds here are you know how do we integrate lrts with the the what we St in general with like money markets in general right obviously someone has to be guiding these money markets as well otherwise from a money markets perspective from L markets perspective they'll be incentivized um to grow their lending Market as fast as possible that necessarily takes a lot of risk and of course if they're not very scrupulous about that that may cause the Alam event that you mentioned earlier as well um so a lot of these things you know I think that's probably just one of the trade-offs of decentralization in general right along the way we'll have a lot of hiccups and hopefully the industry figures out the best way to solve them a question to panelists how much of USD value has been slashed from Lio since the Inception you can be wrong by $1 million I'm doing the ma USD today's prices what's 900 time 4,000 or wait is it 4,000 eth right now uh it's 32 times about 300 validators or like 280 I think last time I checked and I think most of them were Lio um and then I don't know what the 300 times the 3600 is what carry the zeros 10K e yeah something around that ballpark that's very okay answers I mean I don't I don't know I I didn't know it was 280 validators but I mean I'm not going to be doing there 280 validators in all ethereum by the way not Lio I don't know the L of specific number okay guys give me numbers because we talk about risk of slashing four e we have four I feel like 1 million is a very small buffer here right 1 million you have a buffer tell me the number 10K times what 3K which is what like I like 30 mil time 50% like 15 15 mil 15 mil 20 mil 20 mil all right yeah go go ahead yeah uh I'll do I'll do halfway or you did what 50% of 280 oh yeah I'm trying to think how many is Lio I don't remember um I'll I'll do 25% uh somewhere closer 10 8 to 10 million okay you can probably write like a program to calculate whatsoever the reason I'm asking this this question is because I was running very similar panel at token 249 in Dubai and there was Marine from Lio and he told me that the amount that has been slashed since the very beginning is like below half million so that's the reason I gave you a margin of 1 million because everything below is actually a correct answer so congrats Wormhole you are winning like a a redstone socks as like a small gift over here congrats and now as for the panel don't you think this was like the one of the most fundamental questions to begin with like how much like was slashed with the biggest liquid staking protocol out there right so this is probably the first proxy we should look from at lrts and we know this is like already 6D and probably you can plot like 7D 8D in lrts so now it is a teis no the hypothesis that lrts are way more risky than liquid staking tokens and in any Market when there is a risk higher risk there is a natural product to cover that which is called an insurance so how would you guys talk about underwriting the risks of avss and liquid raking do you think these kind of products could make sense are we going to see like Nexus Mutual of like liquid reaking uh as or reaking as the whole any thoughts about that I think I have a specific take here so when when most people build products around lrts I think inherently um or protocols not not products um most people build protocols around lrts I think inherently one of the implicit responsibility of the protocol is to kind of assume uh some kind of default risk uh and then to build into their fee model uh a way to kind of you know create a cushion there Lio does that with their Insurance Fund um I does that with the safety module etc etc maker I think has a proxy um so I think for pretty much anyone who's underwriting these lrts the the question is on kind of how they should parameterize that um the way I think about it and the way um I hope like most uh LRT and D5 protocols think about it is um um taking into account this idea of not trying to underwrite these assets on the same ways that we underwrite uh traditional Financial products so taking into consideration that this is a new class of assets this is a new class of risk um and going to speak with the stakeholders who are most familiar with this uh type of risk and these types of assets the people who understand consensus protocol architecture at a low level and understand and know how to model out collusion of risk on for da system right who understand and and know how to model out collusion risks and proof of stake systems um and dpos systems because these types of questions and these types of uh uh kind of Discovery around system design um is what's going to be required in order to actually build comprehensive uh modeling and and mechanisms that can actually counteract and build a sort of cushion for customers when it comes to uh these types of assets I think you know Insurance might actually be a good use case for an ABS itself right I mean you and then you have this Spider-Man that is pointing on each other right like Spider-Man pointing on Spider-Man um but to go back to the to the to your original question General I feel like in the end I asked a similar question yesterday actually um for like Moro and a whether or not this was actually necessary to use an insurance layer within the protocol itself um this is actually probably a competitive Point lrts can you know sort of compete on one LRT can be like hey we have the best Risk Management Services we're not going to get slashed we actually don't need Insurance Fund because theoretically to maintain the Insurance Fund you have to consistently pay out right which naturally dilutes your yield um others might feel like hey we want to gamble as much with our selection here's an insurance ABS people stake in here you can collect a lot of but you'll get like really hit when we get slashed as well so I feel like the marketplace in general would be quite efficient on this matter so it's an interesting question at least for like CDP stable coin protocol the way it's not it's not insurance but the way the mechanism that uh is baked into the stable coin that adjusts for the risk of like LRT slashing or lrtd pegs is like over collateralization so when we look at um cdp's coll ized by less risky assets like ether lsts the minimum collateralization ratio per debt position is lower but to account for that um the incremental risk of AVS slashing and lrts smart contracts risk liquidity risk Etc the MCR has to be much higher for um loans against liquid reaking tokens so I guess that's um not really insurance but it's how uh us as a CDP protocol is trying to account for that incremental risk and um that should be at least for us like um vot uh editable via governance that parameter should be able to change as we get more information about the risk profile of these lrts yeah and and from my perspective I'm I kind of come from the same place where I I'm interested in understanding uh from The Lending platform or the stable coin platform's perspective uh when they're considering assets for onboarding and how to uh properly mitigate risks related to those assets there's a lot of proactive measures that need to be taken and there's there's a certain treatment in um in in how liquid staking tokens have been treated in uh in lending platforms that Marson I I I kind of wanted to um to share with you and and maybe get your perspective on it uh it's it's become um pretty pretty common for many of the major platforms to to use the internal rate of uh of the liquid staking token as the Oracle instead of using the external Marketplace and the uh the rationale is that because the the liquid staking protocol is the primary uh uh Market that um there's as long as it maintains its solvency you can have a certain guarantee that it should uh have the value to be able to um to to pay out ultimately so you you may have situations where uh the The Lending platform takes on bad debt but um as long as the solvency is uh is maintained um you the the protocol ends up earning fees off of off of its uh um willingness to to take on that temporary uh bad debt or that temporary risk uh but with uh lrts they may have different properties that we can't uh treat them in a similar way um for instance there is a mandatory 7-Day withdraw period from igen layer and uh that may um interfere with the lt's uh ability to keep its Peg at all times and that that may introduce more instability that that requires the lending platform to treat it differently in in its boarding but I'm I'm kind of curious I mean since you you are from Redstone and you you're an oracle provider um how you see the the treatment of of uh lsts and lrts and uh not to put you not to put you on the spot as the moderator but putting you on the spot okay wait uh let me put my panelist cap on okay now I can talk as a panelist uh talking quickly because I'm not the one that should speak on that uh in lsts and lrts you have two major approaches of pricing the restak or staked asset either you can look into the smart contract where people put in the Stak asset let's take Lio you put if you get stake you can then wrap it for WRA stake Def and in the contract you can see the exact exchange rate between stake def that should keep the peg of uh if and WRA Stak if and there's also like information of how much if is staked so you can kind of like derive the price from how much assets are deposited into Lio smart contract or you can look look on the market price so you look on dexes and centralized exchanges and you see how the market prices this particular asset because in the event of a Black Swan event imagine I don't know half of Lio blows up then probably the price derived from the contract can be fraudulent because I don't know it can report that there's still 100% of assets and let's imagine 20% of assets is gone because of whatever H or whatever situation then the market price will probably reflect that because people will realize and will trade this asset at a discount right so there's always a tradeoff but then you have to keep a very high liquidity of this asset on dexes and cise exchanges volume let's say to make sure like when there is a huge Liquidation on a lending Market or CDP stable coin you can also liquidate that without getting like enormous slippage right because if you have for example one Dex pool with I don't know 3 million um of liquidity and you get a liquidation of $10 million and how are we going to sell it on on that Dex without like a enormous slipage so there is no like Silver Bullet over here our approach is to mix both our approach is depending like in the end it's the landing Market or the CDP stable coin that should understand like how our price feed works right because they are the one that create their protocol and it's not that all lending markets all CDP stable coins are the same like they have a lot of like differences between each other and they are ve very much different in liquidations whether they are actually running 90% of liquidation Bots or they try to like democratize liquid BS how they're operating and so on so my take if you ask Redstone would be you should get both and you could create like conditions depending on how big of a liquidation it is what the protocol is what's important for the protocol is it like that the uh LR loan to value ratio can be like lowest or highest right depending like how calculate that or would you like to be protected against the black SW event so if everything blows up you're the one that is standing still and saying hey I survived right so yeah yeah to add on to that uh we are a lending platform that does use the exchange rate Oracle and also uses Redstone to use price oracles at the same time and we actually built a hybrid model for it that we're the only lending platform that does this so specifically what we did was we use we only liquidate on the basis of the underlying eth backing any one asset right um because we're focused on only e to eth to eth derivative based loans so we don't do any kind of we don't internalize any type of Market risk right there's no eusd or any type of internalization of alternative assets that's the constraint we impose and so what we do is we price everything on the basis of liquid uh on the basis of this idea of solvency um and in portions of time where uh markets are volatile and you'll see prices move a lot let's say the Renzo dpeg um what we do is we limit the amount of debt new debt people can issue um with a price Oracle basically limiting the ability to effectively ARB out the uh like ARB out the lending liquidity in the pool and basically block out new users from using the the platform uh kind of dampening the volatility in the system and so what this does is you get the security guarantees of you're not going to get Mass liquidated on the basis of an event like Renzo where they were perfectly solvent there was just some Market turmoil about you know their airdrop which had nothing to do with the actual asset um and then two uh you're able to also make sure that the people who are using the platform uh can kind of trust in the platform stability even in the case of those uh Market turmoil events and what we do is kind of focus on this idea of pricing duration risk right and we have mechanisms inbuilt to the system such as the protocol can effectively internalize um a liquidation by directly withdrawing through the beacon chain um and then paying back lenders uh the kind of full price if uh the the market price goes down and you can't exit through a DEX and we also have like a counterparty system where we can route liqu to uh solvers like these large market makers and offchain liquidity providers who are willing to take on this kind of duration risk and these duration bonds as a new source of order flow um and are willing to kind of underwrite this these uh different kind of like duration risks that doesn't really exists with traditional assets unfortunately I Got a notification that unless we leave the stage in a minute there's going to be a trap opening beneath us and we are going to you know go to the sellers or whatever so um over here we have to stop whoever wants to talk deeper about LRT stable coins risk associated please catch all the panelists after the session outside of the room because there's going to be the next one I want to say very thank thank you very much for joining the panel super interesting stuff and also thank you the audience for being interactive it always helps and with that yeah I would like to finish thank you very much