ETHKL24 | Panel | Beyond The Ouroboros: Can DeFi do Better?

okay so we're jumping from one panel right to the second one ladies and gentlemen this will be the last panel before the break uh please put your hands together for TN Lee from pendo uh Scoopy tupes from alchemix Ben Le from Jupiter and our moderator jool Lee from defi dive to talk about beyond the UR can defi do better ladies and gentlemen a round of applause please [Music] get the mic please hold on Joe you can take take take mine again hello no I think it's working now thank you very much good okay thank you very much so uh first off I'd like to thank everyone involved in uh the setup of ethereum 2024 KL it's been an incredible journey to get to this stage I remember meeting the organizing team Skyla there Danny uh I believe in Amsterdam we met and yeah to see the ethereum conference come to to KL is quite special but without further Ado we've got an expert panel here that's ready to talk to us about you know the alphas in Defi and the benefits of using Defi and why as a field it's just exploded in the last couple of years so I'm excited to get into that so let me introduce myself my name is Joe I run a project called defi dive but my original interaction with cryptocurrency came in 2011 uh I remember meeting vitalic before he launched ethereum I remember thinking I've got to back this guy and the rest we shall say is history so should we go tenen first hello yeah um yeah I'm Tien uh CEO co-founder of Pendle um we're a protocol for the tokenization and the training of yield so been around for a couple of years now um more recently we started to get involved in the points trading sector um and that was when we started to see more serious traction but generally people use Pendle um uh firstly to speculate on points so if they want to have like Leverage exposure on points given out by protocols as part of their predeposit campaigns um pendal is a very good venue for for that purpose um and then of course like for the other group of users who want Ain fixed yield on eth bitcoin or Stables Pendle is also a very good venue for that all right can you share little bit of a brief history as to how you got into crypto and why Pendle came about I started out um like in crypto professionally through kyber so I used to work with ly um back in 2017 um but yeah fast forward a couple of years later was really just farming a lot of shitcoins in 2020 um realized that there wasn't an Avenue for users to lock in the very attractive apy so that kind of Kickstart um the Journey of of building Pendle fantastic how about Mr Scoopy how how does your journey into crypto like um I think it was back in 2013 I read an article about the Silk Road and that's when I first learned about Bitcoin and I was this close to clicking that button to buy some and then I was just like this looks like a scam and I promply forgot about it until a few years later I I was like what this Bitcoin thing is still around and that was like 2016 so I I learned more about it and then I got really interested in it started investing in Bitcoin and then ethereum and icos and then in late 2017 I started playing around with daps after metamask was released and uh with uh and I was just like totally enamored by them I thought they were really cool I was seeing experiments with programmable money and I was like this is what I want to do and so at that point I uh started learning blockchain development and uh in that journey of learning um I met a bunch of people and uh we were all together in this kind of like tight-nit group um and during defi summer we're like wow these yields are insane like you were getting like 50% on stable coins like 30% on eth and we were thinking what can we do with this because I think this is actually a really powerful primitive and um so through number of iterations we finally came up with the idea for alchemic which is a way for you to deposit your yield tokens and then you can borrow off of them essentially getting um an advance on your future yield and then the way the protocol works is that the yield that your uh your collateral is earning then repays your debt over time so you have a self- repaying loan protocol fantastic and Ben yeah um so I started my crypto Journey like a lot of people just buying meme coins I think uh started off with like Dogecoin Shiba youu um and then I met song who is one of a co-founder of Jupiter back then it was Mercurio Finance um and then he was just telling me about like salana ecosystem that's where I think it was like less than $10 and then we just like like like a lot of people just farming around like like the hundreds of apis right and then six months later when he started Jupiter I I I joined like when Jupiter was 1 month old and um yeah uh a little bit about Jupiter I guess um so Jupiter we are an aggregator in salana um doing spot spot I think right now it's more than 300 billion in total trading volume and then we have perpet as well which started like a year ago right now I think it's more than 100 billion trading volume and then um we have a lot of like a suite of product as well um we have Launchpad which uh currently on pause rating for like V2 and then uh there's going to be a mobile app happening next week so yeah I'd like to get everyone to share about um the journey into defi so every one of these products which you you guys run started out as a traditional Financial product perhaps you could share with the audience what that traditional Financial products was and is and why your defi equivalent is the future of that yeah so um pendle's design is actually very much inspired by coupon stripping so um in in in t five bonds can be stripped into like the coupon itself as well as the zero coupon um but defi sorry like contracts just makes it a lot more composable um like in this case we take a yield bearing asset and strip into PTT effectively one represents uh zero coupon the other one represents the coupon which they're basically equivalents uh but in the defi sense um and by splitting up the GUI bearing asset into these two components we allow them we allow these two different parts to be traded independently of each other and as a result of that more different types of use cases could be enabled um like for example if a user just wants to increase leverage on YT they could just they could do that there could be a letting market for pts as well um so yeah these are just like um option alties that we see happen and could only be made possible because of um yeah just smart contracts yeah for us I don't think there's anything that's like a onetoone equivalent of alchemics in trafi but I think the closest analog to it would be something like a home equity line of credit where you have an asset that is um earning yield so imagine you're renting out a property and then you're using that income in order to pay down your debt so I guess like a home equity line of credit is something similar to it but unlike that you have to find tenants and you don't have to maintain a house so it's a it's a lot easier to run have you seen people use your products in a way of a in the way that people use mortgages um yeah yeah I've I've seen uh there's been a lot of testimonials from our community um somebody's used it to buy a boat because his dad's boat sunk in a storm like the year before so he used it to buy a boat there's another person who used it to pay for their grad school another person use it to pay for their child's birth which was really heartwarming um cars and other things like that as well so I actually like it when I see people use it to finance real things in their lives instead of just speculating with the the tokens or trying to maximize yield farming opportunities which are valid use cases but I it definitely is more heartwarming to see people use it for real Financial use cases a fantastic story right there Ben how about Jupiter how did that evolve into the tradition from the traditional world into what it does now I think for Jupiter um I mean the the the classic example like when I was telling like what what does Jupiter does in real life it's like it's like Google Flex right like it Aggregates different airlines different routes for you and then on on the same time on the tread five site it's like the stock exchange where you know you can buy stocks right so I think combining those two together where you can buy literally every token in salana right now um and yeah gives you the best price yeah I guess that's a compros it so I mean back back in the day we always used to log into this Bitcoin exchange called Mount gox that evolved into you know your coin bases and your binance but in reality when people are looking to exchange one token for another why are you why do you see people choose choosing Jupiter over say binance um I would say yeah I mean binance you need to get listed right and then and you can do a lot of shitcoin trading on Jupiter that's that's right actually I was going to say like like right now we are actually also routing through pump fund or like moonshot those kind of like you know I think people's favorite meme coin trading platform um so like like TN say is like right now you can literally buy any tokens like even pump fund token that just created few seconds ago you can actually buy it on Jupiter as well and can't actually do that on coinbase or bance I want to get a real dialog going here about trafy or uh centralized exchanges versus decentralized cuz you guys represent the very best of decentralized trading you know what would you say are the other reasons why people go towards the Dey equivalent well there's one thing that's I think really interesting about defi is that no matter what the uh macro environment is is that there is going to be some type of yield in defi so right now we're in a high interest rate environment because of inflation and what did defi do we started integrating real world assets so we still were able to import that yield into Defi and then once the yield rates have been dropped and T trafi doesn't have a lot of yield defi is going to be a little bit more risk on so borrowers are going to be juicing The Lending market and uh kind of um tokenomics are are like kind of like a you know like yield farming projects their tokens will probably go up in price too so those yields will go up as well so it's anti cyclical in that regard so I think that makes us very attractive regardless the environment the uh the macroeconomy is going through I guess for me as a as a defi and crypto native the the fact that I can go straight from one token to another essentially atomically within my own wallet is hugely advantageous over thinking oh can I trust this third counterparty here Finance you know has that been your your your experience as well and I'd like to get into the Crux of you know we're talking about barriers to entry here I'm looking for the path of lease resistance to get my say ethereum into say usdt so I can spend that a vendor or whoever will accept my usdt um and you know can you speak into what's required to lower these barriers for entry into the defi space because I think you know the next couple of years worth of growth into defi is going to look like making things easier faster you know why are people still using binance when there are so many cheap quick and easy defi equivalents yeah um so so for Jupiter um one of our effort is actually um our our co-founder likes to put it put up fancy names right we call it like Great Migration one of the effort is actually um onboard more users right like you say like make it more easier friction list to actually get people on on chain or like on board um the mobile is mobile app is actually one of them right um the idea is to actually get from downloading a new app and on ramping and and actually buying any of the coins or like sorry meme coins on on the salana market it's is is in less than like a minute right um that's that's what sort of like the jupyter mobile app is going to come next uh next next week going to do yeah so that's that's one of the effort that we are trying to do like get people to easily you know just put money credit card in and then just buy coins and start trading so you say for you guys it's the user experience which you're focusing on right now yeah I honestly think the biggest hurdle for dex's versus Sexes is mostly the off- ramping uh of funds that's the only reason why I use coinbase is so I can get funds into a bank account so I could spend it in real life and if I could do that you know very easily from aex or from my own wallet or if Merchants accepted stable coins and things like that then I don't think I would need I don't think I would use a bank account or a centralized exchange at all that's the last hurdle I think there really is Tien nothing to add I guess I'd like to go into a time of asking you specifically a bit more about your projects so perhaps we can kick off with you at pendel TN so you know you're in a market of you know yield tokenization essentially how has the market for y tokenization changed from the moment you stepped into it or the moment that say staking was offered in ethereum to right up until now because you know we're essentially talking a multi-billion dollar industry has essentially just sprung up in just a really short matter of two three years so I think um with regards to yield tokenization I don't think a lot has change um if anything the awareness of yield tokenization has improved what change um or or maybe like an an offshoot of like yield tokenization was actually points tokenization which happened more recently in the earlier part of this year um points is not a New Concept but it got popularized by igon layer and then there were several other lrts that were building on top of IG layer and they were also issuing points and then as a sector that was uh strong demand so relative to um like just couple of months ago points trading has become a lot more efficient um I think back in q1 Q2 this year because none of the points realized into tokens so there was a lot of inefficiency there in regards to the price discovery of points a lot of users overvalued points um and for for for the ones that that bought points um when the points were still relatively cheap they made pretty healthy money for those who came in later then they became the exit liquidity um so I think I think uh with more data points now U the community is wising up the price discovery of points just has gotten a lot more efficient um and I think right now the premium for points has eroded so what that means is like basically the perception for points will normalize to the view of the project like as an example right in q1 if you're a shitcoin you're a really really lousy team but if you have like a very creative mechanics on points you can probably do quite well when it comes to liquidity bootstrapping but right now if you're a project with really lousy traction and then you issue point it probably wouldn't change a lot of things but on in contrast I think um if you're a good project and you use points it can actually have very very good effect because points are actually a tried and test the model in aggregating um early traction it's it's real money because like this is this is a different kind of goto Market strategy compared to like say test net uh back in the days like you could like in order to show traction I think a lot of early projects uh sorry projects in their early stages would would launch maybe um test net campaigns and then usually it gets spotted because it doesn't cost anything right um but with points campaign actually it will because like the points will realized into tokens and these are actual money um there is an incentive for actual participation in the protocol so I think that's my view and I think it will likely stay relatively consistent moving forward feel like I want to ask on behalf of the audience what have been the most successful investment strategies on pendo bean asking for a friend you mean me or just Alpha for people I think the early participants of YT like the early YT buyers of ethena um set points they are probably the biggest winners of our of across all our campaigns thanks for sharing that uh Scoopy I want to ask you for your thoughts on what Tien just uh shared but I also want to ask you your thoughts about what it takes for your project to attract liquidity yeah um I'm not so positive on points as Tien is here next to me um I I think the my main issue with them is that you're you're getting something but you don't really know what it is it's sort of like a mystery box like um the protocol can you know resend your points from you they could you know devalue everyone's points they can you know arbitrarily decide how many percentage of the float these points are going to be so you don't really know what you're getting into before you get into it with points and that lack of transparency is my biggest issue with it I do agree with theen that it is a very good bootstrapping very effective bootstrapping model I just don't really agree with it especially when we have other Primitives like yield farming that do the same thing but with more certainty and guarantees and transparency um but to uh to add on to that like it it's it's very hard to attract liquidity so alchemics is a synthetics asset issuer and so for our synthetics to have any value we need to have another side matching with them right and so the primary way that you that protocols do this is they incentivized liquidity whether that's through a backro deal with some whales that you know or some market makers that you know and or doing yield farming programs uh where LPS can earn the the Project's token for supplying liquidity on dexes and doing that is a major impediment for stable coin issuers or synthetic issuers to scale to the billions in tvl and stuff like that and so at alchemics we we've kind of hit this barrier uh and that our token price is our kind of scaling limit and that has informed our design for our next version which hopefully can get over that barrier of having to require token incentivization for uh for liquidity can you talk a little bit more into that that's to economics in particular um it's a little bit close to the Chester at this at this point but essentially it has a to do with the peg stability module um right now with alchemics uh V2 the the peg can or the supply would have to contract if the peg goes down right so the peg you know Falls you need to reduce the amount of tokens out on the market in order for the peg to go back up and the current system we have in alchemics is too slow for that to be effective in the face of Black Swan events um so with a V3 if we need to contract from a billion down to 100 million uh we can have certainty for how long that will take and processes that are fair for that to happen in the system as well and I think that is our you know our main Innovation that we're going to be driving forward when we release our next version can I ask what you credit the success of platforms like RVA or makad out down to because they've attracted huge amounts of T very very quickly so for um these are different things uh so maker is the original like kind of CDP and stable coin issuer or decentralized stable coin issuer and they had a lot of first mover advantages and probably one of the things that really benefited them more than anyone else was being included in curves 3 curve pool which was paired with usdc usdt and die and then this pool was attracting billions in tvl at points and that was one of the reasons why you know and that was also incentivized by curve so they were getting these incentives for free without having to pay anything in return for it and because of that like you know D got Lindy it got this economic value or people have consensus that D is worth a dollar so then people started treating it like that and using it you know as LPS for different things like that so D had that first mover Advantage uh whereas a is running into similar problems with its ghost um go stable coin that's not scaling nearly as large as some of the other stable coins I think it's less than a 100 million in circulating Supply still and that's from a giant of a that has the resources for the you know incentive proog programs so I think a lot of it is you know Market consensus and finding that Lindy of having that trust that your stable coin has been performant for a long time so I guess I'd like to jump to Ben at this point you know there's been a lot shared about success in Defi and whether it depends on toonomic design uh reward incentives but Jupiter seems to have gone from nothing to literally billions traded Millions per day at the very minimum you know what would you say say was the secret to Jupiter's success and perhaps you can share what's coming up next for Jupiter because that's the most exciting part yeah um let me just talk about like like some of the upcoming products first right so I think two weeks ago during in Singapore in brecko um we we have a lot of like product release or like announcements right like like PS our PS it's the largest run right right now in salana um going to have a V2 uh V2 is going to have limit order going to be fees lless um and and and there's a new Oracle as well so it's it's way performant than before and then mobile we is one and then we have a new API and um oh um there's also our intern actually built like a prediction Market as well so just just you know follow the trend right now um also for mem coins trading we have also aoo um it's it's a second version of our ape uh token uh trading terminal and um yeah so all this if you look at it um PBS is obviously a product of its own but there's a lot of uh Improvement or like um I guess uh innovations that that we are trying to do on like the meme coins trading part because um everyone knows this right like pum fund numbers or like fonton numbers in salana or like even recently I heard like Moon pay one of the on Ram uh have sort of like break their new records of like a single day of like most on- Ram because of meme coins as well right so so meme coins for us is here to stay and and it's it's a lot of like entry for a lot of like new users normies as well so we are we are doing a lot of things to like say Empower like like meme coins trading right our mobile app is one a proo is one and I think um listening to our our community right um we have this um Jupiter have this like a weekly Community call like we call it planetary call every Wednesday where we talk to the community and and share some of like the updates that we have and then get feedback um from from the community of like what they want right like along the line of like um developing or like improving the product we work very closely with the community right there's also a process where we have like before we release it into production we have like this uh h.j. which is sort of like a preport kind of site that we push it out and users like hey this is sort of like a new features that we're experimenting take a look try it out and see how it goes right and and obviously there's going to be buck that we're going to be fixing before we actually push it over to prod so I guess U The Way Jupiter does it is it's worked very closely with the community we have we have pretty good numbers of users that actually give uh good feedback and also stress test the system before it actually goes too I think the one thing that stands out for me with the Way Jupiter approaches its task is to just smash the the ball out of the park in terms of nailing product delivery if you just give the right product to the right to the consumer that they after quickly and in a way that's very cheap then a product has uh no it's just going to succeed um so to close that out we're all here to hear bit more about Defi and you can't separate defi from tokenomics each of your projects you know is essentially tokenized or um is in a to is is in a is in a is in a field of you know uh trading trading a lot of tokens but what is uh perhaps you could close out and teach your audience about the sustainability of tokenomics you know what what you credit each of your projects success to when it comes to toonomic design can you take away a minute each I think ultimately the protocol has to generate Revenue um and then figuring out way to ACR value to the tokens um is I think the only sustainable way of ensuring that the token is relevant next up yeah likewise I I think the the protocol underlying the token needs to be successful in generating Revenue uh without that then you're you're basically vaporware or you know you're a company that doesn't make Revenue so yeah I think that's the key to it and don't have much to add I think pretty similar right but but one thing I want to add is that like um so Jupiter we we launched token in in January this year uh but recently we have this D proposal that we just passed is that we going to cut our supply by 30% um again stay very closely with the community because there's been sort of like talks and says that Jupiter token fdv is a bit too high and yeah so so just just sort of like stay close to community and then you know because essentially it's a dow vote right like so all of these are like dup voters that actually you know have their say of like how how do we sort of like handle a token A J token fantastic yeah transparency I think is really key in that process as well yeah for sure if you're going to make any changes everybody needs to be on board and what would you say about managing risk in defi oh man it's a Minefield um so there there's risks in every front alchemics we uh we have to vet which assets we accept so we're very conservative with the stable coins we have we they had to have a long track record of being you know good and St solid and stable and then the strategies that we pick we want to pick protocols that have been around for a while that have been audited and things like that for our yield strategies so that's why we have like uran and a as our Premier you know yield providers because we know those are like stalwart super safe protocols um and then you know even sometimes you think you're super safe and then the decks that you're using has a re-entrancy bug at the compiler level so you know you you never know there there's always unknown unknowns in defi so you know try to spread your risk around don't be all in one place because if you get got then then it's game over so yeah s advice and uh yeah where can people find you guys perhaps you can uh show your projects one last time or share your social medias website address your handle p. sorry yeah pen. finance and then alchemics ju.

a okay could we get a big round of applause for our expert panelist here thank you very much for sharing your expertise thank you Jo for moderating thank you to our panelists yep ladies and gentlemen now Round of Applause for our panelist please