Everyone Kevin Rose here. Welcome to another episode of Modern Finance. This is the
show that covers all the latest Financial products. That means cryptocurrency in a fifties defy Robo investing and even some traditional Financial hacks as well. Very exciting news to kick things off of this episode. We have a brand new website. Last website was very much hack together. Apologies, the design was a little
subpar because it's a good chunk of it was mine, which I'm definitely more of a creative director of, she will not really a designer. So yeah, brand new site done by my buddy. Justin big shout out to him all. Definitely tweet out his name along with the launch details, if you're looking for a good designer Justin's, one of the best in the business and a big thanks to Matt mullenweg over WordPress. They are hosting this. So we are in a really stable back end as well. Head on over to the site, check it out all the show.
Nose detailed bios just complete rethinking of the entire site and of course you can sign up for a newsletter there. So if you want to get all the latest stuff that I'm reading, whether it be around in of T's defy or all things cryptocurrency, sign up for our newsletter. We send it once every two weeks. Alright, so in the world of decentralized Finance lending, the largest protocol on Earth is Ave Ave has around 11 billion dollars in assets, locked in the protocol.
All so with Ave, you can take your existing cryptocurrency and lend it out to earn interest on it or you can borrow cryptocurrency against your existing assets. It's a really cool product and it was such a great honor and pleasure to have obvious, founder and CEO stand equal achieve on the show today. In this episode, we cover the origin story of Ave, how he built and fostered, a community in the very early days, the role of dows and tokens in Project governance, smart, contract security. How Ava is
Scaling with layer 2 Solutions. He's upcoming in Ft project. That lets you use entities as collateral that you can borrow against which is so cool. And even his ambitious project to build a decentralized Twitter which is officially in the works. And of course we're going to cover his favorite projects as well. This was a great episode packed with tons of quality info. The show notes are going to be just completely filled with all kinds of links and good data. So make sure to check those out as well. I hope you enjoy it.
Kevin Rose.
His guests are not registered investment, advisors all opinions are Kevin's and his guests alone. Nothing discussed. Today should be relied upon for investment decisions. Nor is it investment advice? This show is solely for information and entertainment purposes. Only, please work directly with an investment professional.
Stay. Thank you so much for being on the Show. Thanksgiving for having me here. Yeah, sure. It's an honor to have you. I've been an admirer for a long time from the outside and I would just love to start off talking about Eastland like the very beginning. The first of the first name you had for the project. I mean take me back to the chaos of what that was like and what why did you decide to go out and build this?
Yeah, I mean, Eastland was was pretty much a defy ogier project. I mean, the back in 2016, when we started to bit like develop it land, there wasn't much of a decentralized finance. There was one decentralized exchange so that you can, you know, permissionless fashion interact with. So, most of the exchanges out there are exchanges where you kind of like deposit your funds and you give up custody of someone. And what the theory embroiled in is pretty much like a kind of like a platform where you
You can build applications and interact directly without giving up the costing and there was one of these intersections then and what we were building was very very premature application of what like defies today and landing and we wanted to pretty much create a landing protocol where you could just put something as a collateral and borrow funds out as a user and have still incentives to be payback by using this, like cryptographic collaterals that was very early.
Eggs and pretty much that wasn't success at all. Mainly, because probably there was like five users in the file back in those days. So right that's very early. Yeah, I was going to say like, how did, you know, there was even going to be a market here. What had anyone asked you? And said like, hey, I would be really great if I could borrow eith or you know was it just one of those things where you looked at traditional finance and said you know this kind of type of Market as it matures is going to be required like four different instruments and things like that. So we might as well apply it to crypto as well.
Yeah, kind of kind of like a boat because like I mean it was, it was very obvious that, you know, this is, for example, try to apply traditional Finance where you have various type of activities going on. You have asset-based, lending borrowing and all this infrastructure but but more like a paper based models and more kind of like a server client infrastructure from technical perspective. So, what I was thinking about is that why don't we put all of this thing that exists in traditional?
As in paper Health, paper Harold servers a health, so long settlement times and using kind of like an old banking grades into something that executes a smart contract level basis, where the contracts are self-executing, so you don't kind of need paper agreements there. And I was thinking that, you know, if it's exists, it should exist here, especially if you can make it more efficient, right. But I guess like the challenge was more of a at some early points. Maybe one year, two years in Atlanta kind of
We started to question ourselves. Like why isn't this working and playing out? I mean exist in traditional finance that was the kind of like only mode where we started to actually tell a bit ourselves. Like why isn't this that getting adopted at all? Hmm, what was that? Like is a Founder. A, you know, I've been through this myself where you create something and you kind of sit around and you're like, well I think this is going to be pretty cool and then like you know, some people use it and you're waiting for that Tipping Point. You know, was that was that all kind of a hard journey to go through
And then what were the first signals that something was actually starting to work. I guess like mint in many ways, you know, even when the idea on a paper and Theory works, well getting it into. Practice is very difficult, especially when you get a lot of challenges and those days you kind of didn't have many users but also because you didn't have much of assets on ethereum, I mean, there wasn't any stable coins in. Ethereum better back, then was on Omni public separate box chain and very early and, and
Then I would say that getting it, right? And user experience and everything. There's just so many components that you have to get fried and it just doesn't work in a like, very first iterations, and buildingsmart project-based or protocols is very difficult because IQ have think of everything. Pretty much on Smart contact level and still understand how it plays out on design perspective. All the way to the end user and getting it right. It's very challenging and I don't know I would say like astral
Couple of years, we started to get it right. And when this pooled models came with Eunice fob with balancer, kind of like where you will Khyber actually where you can get liquidity in a for fashion and have like passive income, you started to get more more funds and more assets into the whole like etherium ecosystem. And eventually this sparked an idea that okay, you could do actually the very same in lending and that is where like always today with this pulled model, Landing systems cashier and
So what was that transition? Like, when did you move from the name? Ethan Dover to Ave? I think probably seems like we decided that you know, maybe what we're doing, actually something that we want to do for long term because in the beginning if plant was more far I wanted maybe say well I could use the word mean project but many mainly as a Community Driven project where you know II never wanted you to be any kind of like a startup
I think like that just build it once and see how people react and maybe have a little fun. I mean I was still studying in University back in Finland where I'm originally come from and you know, I wanted to finish school and then you know maybe enter into like a career path. I started law. So I was actually thinking maybe I'll become a lawyer or something and just stick with that. But it'll and started to pick off like as a community more than we had way more community members and actual users. And almost like
And 17 and that's somehow like escalated from there. It's interesting to think about, you know, when I look at the rise of so many projects and I track a handful of things across defy and also in the nft world as well and and you know, even in some of the meme coins, and it's just so much of this is driven by Community Support, which is great, you know. But it's I wonder like, what is it? Do you, how did you Foster that collaboration?
Unity where there certain things that you did proactively to engage with and create a healthy environment where, you know, ideally you want this, there be the ice like type of network effect where someone gets really excited about it. They tell their friends, they bring a more community members and then but at the same time you know, you get so many people in the sandbox and not everyone can play well together and there's in her fighting. And and so was was there was that Justin something where the idea itself was large enough and exciting enough to bring in people
who, or what did you do, anything special to kind of work on building that community? In the early days? I think two components probably were most relevant for us. I mean I guess like first is that we interacted a lot with the community so there is this kind of form of sharing. I mean actually I posted the idea of it land very very first time into Reddit back in August like 2017 beginning or 2016 and the day I think this this could be coping to
What do you all think about this? And this is was the item subreddit and the idea itself was completely killed like completely killed. Like, I think, like most of the comments were like, like why would you put an asset as a collateral and and borrow when you can sell, like there was this kind of like a, you know, the vision of like, economical economics understanding and, you know developer. So it was very difficult in the beginning and we started form like our own community and we didn't read it actually. And also in Telegram
And what happened is that we people who actually liked what we're saying joint and started to like have discussions with us and we tried to share a lot of content, like what the, what we're thinking to build, how how it looks likes, what kind of features to this very transparent basically. Very very and it's very beneficial because somehow you know it won't weigh like you can build in stealth. You know, that's very interesting. But then again like you you introduce less kind of like, you know, playing power to what your bill.
And it being able to present it in an open fashion in open community, that helped us quite a lot to also, like, kind of like have the, this this community evolved. And especially the second component, is the time that it just takes a lot of time to build a communities. And I spent just countless of hours on a daily basis, like, interacting talking to people and not just only like complex things, like how what we could build and what we're building and kind of explain that. But also simple things like, you know, what is a wallet like
How we Therian works and all that kind of like process. They're so so engagement and sharing has been like the most beneficial to kind of like cultivate the community. Yeah I would imagine that's pretty hard to given that you know these things are. So technically complex that the development Cycles are you no longer. So if if you're sitting there and you're like, okay stay engaged but it's going to take us six months to get something out. You know? That's like that's it with people's attention spans.
These days I feel like that's a hard thing to do. Yeah. And this is interesting because we still have a lot of community members that are have been following since the beginning and they just periodically. Come in update themselves. What's going on, sharing, latest thoughts. So even though, like, I think, like it's not about entertaining the the community necessarily with with updates, but but kind of like a letting know that what's going on, what do you think's are doing? And I think many of the new defy projects and
But three project projects in general. They're taking too much kind of like a pressure of wanting to constantly feed the community and I think that's not necessarily needed because like you can have your own face depending on what the size of the team and also the project you are building. So like you can definitely like go like on your own face and just like build it over a period of time and there's no rush end of the day. You know, default will be here tomorrow and the community will be here tomorrow and people will follow you. Yeah.
What are your thoughts on how you take a community and get the best out of them? Like I'll give you an example. I'm torn on this one, you know, because I look at all these projects and a lot of them are moving to dowse and you know, they're talking about, we're going to give up complete control. And, you know, I talked to Maki over at Sushi and he's like, hey, you know, ideally I would like to kind of step out of the picture and let everybody else run things and I think of modern-day more centralized technology companies that I grew up with.
And I look at the Steve Jobs of the world. I'm like, okay, if you had said, hey all Apple Fans come together and let's vote on the next version of the phone. We're going to build, it would have looked nothing like the iPhone, right? It would just you know you need you sometimes you need a Visionary to sit at the top and say no that actually it sucks. Like we're going to make it simple and clean and there's there's something to be said about having a creative at the top kind of come in, you know, if it's the right person and make these tough calls and
I'm curious like you know we've seen many of projects where people have tried to move this fully decentralized kind of Dow like structure and some have pulled back a little bit. Some have said okay well it's only good for servicing ideas and then we get to pick which ideas like where do you land on that are? Is this just a big distraction right now? Or is it the future of the way projects will be managed
I think I think the concept of thousands and I mean they're really depend on the Hughes case we're like what you actually need. I mean, like, for example, the other protocol is a good example because it's it's it's a protocol that is covered by Dow which, which means the orbital, which means that any change into the protocol can be made arbitrarily by the other team, but actually needs to go to this like formalized on chain like smart, project-based, governance process essentially, meaning that changes.
To how the protocol will be evolve in the future or let's say risk parameters. What kind of assets could be listed use as a collateral or to get drowned out of the system? So they're like as a kind of like a financial protocol, it makes sense that you have you have wide enough consensus to support. What what what's the direction is going towards to? But at the same time, governance brings also of this as a mechanism mechanism, very much clunkiness, you know, it's bird.
Some process if you want to innovate very quickly, very fastly, you know, the more you decent wise decision, making the slower, you will get towards the the aim and then, at the same time, there might be governance models that are less decentralized or somehow more robust or not decent was. Yes, that you're competing at the same time as a community. So what I think is that maybe the way in the future to do is that you have this wide consensus, still in place.
If you want to make big decisions, you need to have consensus of the whole other governance but then the other Governors can actually delegate their decision-making. Two groups of people or particular Visionaries that can actually continue on visioning. So let's say, what about? If having just one Steve Jobs will have five different, Steve Jobs and let them compete. What could be the vision they want to do. And also, those Steve Jobs has could actually at the same time, participate, not just bringing
Into the orbit Community, but maybe other communities out there, so kind of like, let everything competing with each other. So the community the state, the orbital wants to compete that they have the keep the good patients, like the Steve Jobs in their protocol and at the same time, you know, there's Steve Jobs as they want to actually bring the best kind of occasion for that community. So, interesting hitting with others. Okay, so it's not a matter. Well, I guess it's twofold, then it's like one deciding the decision. We're going to go build X and then once
You've decided we're going to go build X. You're saying, okay. Well, now let's let you know, 10 product Visionaries just Duke out, which one is going to lead that project and carry that Vision through to completion. Is that more or less? What you're saying? Yeah, correct and of course there's always like Social Capital involved. So let's say, even if a protocol founder steps out of the protocol, kind of like development process or governance process, there's always kind of like, Social Capital involved, what you might say, survey,
Example, when bit Telugu touring, tweets about something or post a blog post about something, which is let's say opinionated has some sort of a conclusion that's already direct State the decision-making. So even if you're not directly involved participating, you always have a voice in the community and that affects quite a lot. Especially if you are early in the team as a founding member of the protocol, that definitely will still carry the social capital and that's something that it's relatively more difficult.
Get rid of right, gotcha. I'm curious in their early days, the tooling, I would imagine really wasn't where it is today. In terms of on the security side, do you feel that add option for some of the defy stuff, at least initially was out of just sheer fear. Like, this is, you know, I remember when I first started learning about defy and I was like, okay, wait a second, I'm going to go and interact with the smart contract. I don't know if it's going to be hacked. Like, you know, I there's I mean,
We're still seeing hacks. I mean just the torch. And last week, you know, there's there's that are happening all the time. How do you all Embrace and and that risk and and what do you do? What did you do back then? And then what do you do today to ensure Security on your network?
Yeah, the I think like establishing security within the development process and the community is, is quite a lot, a cultural thing. So like, if you are able to embrace a culture where whatever you're deploying or whatever changes, they Community, for example, might made our community developer, has certain structure in the process on how that particular change goes into the own chain, kind of like a governance and then the implementation into the protocol if they're sick.
Process in there like very structured process. And that process includes pretty much kind of like a third party audits code reviews and also kind of like a mathematical tools that help you to verify the implementation that you have from from what you designed and basically that it's that is accurate. Those definitely helps quite a lot, but it's also like a messaging thing. So if there is some sort of an incident it's very important to kind of like be very transparent and say what happened happened actually and not kind of like try to
You know, make it sound less, less of an issue that it actually was because people need to know so you can actually understand yourself as a team how you could actually do better for avoid those kind of scenarios. And for us I think the most biggest thing that actually made us to put more more kind of like a procedures in place is actually that we started to see that the file is growing and quite a lot. So all the protocol last year's 2020, we launched in January 8th.
And pretty much from zero liquidity. And now there is over 11 billion. Just value walked into smart contracts and place. The the borrowing accounting side which fluctuates from 16 to 21 billion. That's just showcases kind of like how high the stakes are going all the time and the more effort you need to build so building Defy is more way more difficult than building. Let's say traditional Financial platforms because those systems
Ghost nature or let's say building rockets that are going towards space. Let's say you have a cargo rocket explodes. You lose 10 million if the large default protocol gets hacked, you lose ten billion. So the stakes are very very high. That must be so stressful. I don't know how you can sleep at night, man. Like I would I think about these protocols. I'm like how could these Founders sleep? Like I just is it stress you out?
Yeah, I mean it's very stressful to be honest, especially if you're doing with a smaller team, what I think is helpful for us. I mean, we don't sleep much, but maybe now a bit more than we used to. But I would say that kind of like your part always like a bigger team and a bigger community. So the more supportive, the humidity is, let's say the default Community. When something happens or it's very common that if it gets hacked very quickly, the founders and the team of
Protocol will get help from other experienced developers, just dissolve like the issue, what happened? How to mitigate that risk and what to do next next and how this affects other protocols? And I think that's very important because it shows that everyone is kind of like aiming towards same gold. Just building more transparent user own Community owned accessible Financial system which benefits like everyone and everyone, when everyone has the kind of like a similar goal and work
Works together like we can mitigate issues and react very quickly. And I think this is the, the, the way like the fight has to exceed now because a lot of things are a bit like self-governed in the sense that if there is a hack. For example, there has been different procedures. How the depositors, for example, could be made whole again, with with different kinds of issues models, and those kind of things. And I think, like, that's the way to move forward, like working together closer as a community, that will
Mitigate this kind of events and, and the consequence is actually even more. He had, it seems like I do love that as well. Their entire Community comes together, whether you're on a competing protocol or not and even sometimes the hackers raise their hand and say, will return, you know, part of the funds or a lot of the funds for a big bug Bounty fee. You know, which I think is, you know, obviously they should have done in the first place but it's better than nothing. Yeah, yeah, I agree. I mean we've seen him two of those and it just shows that
It's not kind of like there's not like evil that much of a evil in the like the community. It's just pretty much kind of like a there was a gap in the system and someone are because that Gap and of course it shouldn't have exist in the first place. It's tricky because D Phi is like so why concept you have protocols that are built for like in the hope of wider adoption? Then there is lot of things that are very very much experimental and just kind of like they're all in the same network.
Accessible by anyone. So, it's quite a tricky combination. Yeah. Agreed, one of the things I'm curious about is
where
I love for you to explain where this yield comes from to the average consumer because one of the things that, you know, the kind of traditional sitting down having a beer with a friend that is not involved in this world and you know, you tell them like hey there's these crazy yield, my interest rates you can get if you would just
Interact with these defy protocols. And they're like well my bank is, you know, giving me nothing. Because, you know, that's what banks do these days, you get absolutely nothing. Why are you able to pass that yield on to the user and Banks can't compete? Is it just a sheer efficiency thing? Is it? The fact that banks are so bloated and have so much head count? Or is it something where you think things are just behind the times. And eventually, all the underpinnings of their yield will be powered by defy in the long.
Run like it. What how do you see it?
I would say maybe they main thing is that there's just so much efficiency and they sent us Finance. Because, effectively, we, what these include Finance is it's a it's like a Marketplace or a notion of equity and algorithms matching together and in the sense that that's say if you have an algorithm that yields more like it's a more efficient and has better effect. It attracts more liquidity and this kind of like a brings a lot of demand but also
Why don't more vital business perspective. They're just slightly more on something demand in defy that there is of say like is Supply in the sense that there's constant Innovation going on. So because it's an open open source system, all the major protocols that quarter public. Anyone can just Fork improve them and redeploy and you have essentially a better algorithm and so called automatic Market, make so-called AMS but basically constant price markets where you can see
Fly liquidity. What's their idea? Is that, you know, you can count all the time, periodically improve those algorithms and it's when you improve the algorithm, what it means that the better algorithm captures more liquidity. And this just showcases that more and more, protocols and products are being built in the like defy ecosystem, which means that more stable coined the mat. There's more stable coin, the man and that keeps rates higher. So we have a kind of like an Arbitrage
At the moment between traditional finance and decent-sized finance. And, at some point, maybe when Defy is more in adoption, maybe that Arbitrage opportunity Narrows down a bit, especially as protocols, get more mature, there's risk less risk involved. So the risk factor also plays some role in the sense that, you know, these are relatively like experimental protocols and maybe they don't attract the same liquidity as let's say, traditional
it will attract that attracts these days and do you feel that, you know, five years from now or maybe it'll take longer because the traditional Finance. But is there a world where, you know, a Credit Suisse or Wells Fargo? They eventually have a product in a centralized fashion where I log in and I open a of a savings account and it's just I as a consumer don't have to think about smart contracts at all. And you know, maybe they Shield the
They take a little slice of the yield off the top for the overall management and maybe some insurance on top of it. But it, do you believe that Trad Phi will eventually adopt these protocols as the kind of underpinnings of their, their
yield?
I would say that's, I see these interests find as a software. So kind of like something that actually could replace the way we interact with find us today and, and the financials potential product that we are using, and I would say, like, I don't see that like, defy will replace try to fly. I mainly see that defies the software will replace the softer Financial software or software that is used in finance industry. That is outdated. And that is what essentially, this interest Finance is a
Out and because it has this big Community Network because of the fact that Protocols are governed by the communities. And as you provide liquidity, let's say to the other protocol, you're getting every second governance power in form of Ava token, which means that you can participate in the governance, essentially being part of owning the protocol, so they have more cultural movement. So they have more culture to have more Community aspects in there, but essentially it's software now I think what happens.
Is that defy will slip in as kind of like, a base layer for the whole, like, Finance, finance, software and replace it to make it more efficient, especially when it's like, you know, like two networks and you can easily move liquidity from one network to another. And I would say, like all the kind of like a coin basis of the world and the let's save him like thanks of the world and the institutional markets, they become kind of like a gateways for the Phi and this is the way we could think about that. Defy is like a
Ocean. So all this, like what if they protocols there on outer numerously? It's a bit of like a no man's land. And then, you know, then you have those words that connect, you know, the ocean to to what other people. And that's kind of like how see that if I just kind of like become software for all Finance. Right? So it's basically the more centralized organizations like a coin based in some sense would just be a more elegant on-ramp to defy then then using meta mask and having to figure out mattock and
Things of that nature, right? Yeah, and I guess like the the main part about this interest Finance is that everyone still has this direct ability to interact with the protocol which always keeps the centralized service providers in more urge of making sure that they are actually competing on getting better user experience that the users will get when they interact directly. So, kind of like defy, creates Finance, as a kind of like a human, right? With the accessibility and permissions.
But then, you know, if you want better service you basically do it from a bank because today if you look at kind of like the traditional Finance the service providers and I mean they do very very horrible job not just in like user experience but also in the offerings are very bad and support this very bad like across everywhere. And you know that I seen a survey where for example SCH BC a big Bank in UK made a poll on what how good they are in their customers.
Support user experience and they rated very low in their own, kind of like a whole. So that's that's just showcases like if you can turn it out of the system in a way where, you know, all the finest already exist in a decentralized network and then the front ends are actually competing of creating better experiences and and showing maybe better way to data that is on chain. That is already like transparent. There is actually very big value proposition for them as well to grow in a new way. Yeah, hundred percent
I'm actually excited for that. I think that's really going to unlock a lot of the potential because you know there's this people like us that you know, we have no problem doing crazy things and many masks and jumping through 10 different Hoops. But I think the average consumer needs that soft on ramp and getting these kind of front ends to compete with each other. It's going to be just best for the consumer in the end. How do you see the landscape? When you look at all the different kind of defy protocols that are out there. And I think even more
Italy. You know do you think other chains? Well I'll just give you a great example. I know that you had commented on was which is a Jack, Dorsey mentioned, bringing defy Ave like functionality to bitcoin. What are your thoughts on that and other kind of similar protocols in the space?
Yeah, I think like, in terms of like, decent as finest, very kind of like excited to see that how like the main bigger like protocols have been evolved over the past two years and their communities. I'm more excited. How the communities has been evolved especially like older project that'll be following and and kind of like how they manage risk within like Risk as a community like when their list different kinds of assets and they create new Falls to to update the
The protocol. I'm very excited to see like, how far the space is moving, and also seeing that some of these Protocols are becoming a sustainable. I think the, for example, the are ba Dow itself is currently it it collects part of the interest rate as a reserve factor into the towel and I think there's like over 10 million worth of kind of like a cash flow collected as a reserve factor into the dial, which indicates that the avocado is self.
Sustainable. So, if David team doesn't continue or community members do not continue building the protocol further, they can they have the funds to actually hiring it grants. And recently, there was an initiative where we saw this formation of all the grand style, which actually see if they larger Grant from the oven now. And then they distribute for smaller groans. So we will see kind of like subtitles emerge in the, like, a bigger towel under this big towel umbrella. And I would say that the, the hole
Now, space itself will probably emerge even more because like, there's so many fascinating things like that could evolve and interesting to see like how does this The Narrative of decision-making continues and regarding to the water question about the like decentralisation of like other the projects, like Twitter, social media, I think that is something just just will happen. Because in the current state, for example, many of the three companies, they pretty much owned the user data and they dictate how the
Form will be evolved in the future. And what decentralization allows you to do is that you can actually create a were actually you own your own network and then, you can pretty much anyone can build better user experiences to what you have between you as a Creator and your audience, your followers. So definitely, I think like we are very beginning of this whole that feature knee in general. Yeah, I agree. It's Tricky though. In some sense, you know, when I think about what three the
Foreman side of things is is seems one of the like the kind of getting factors here and adoption, like I feel any of the things that I've, you know, they at the consumer applications that have interact with not defy related, but like just consumer web three apps like they're not as performant as you would want them to be as a centralized run organization. You know, I can't imagine how that could be pulled off at scale. Do you see that those those pieces coming into place? And and, you know, that kind of becoming more of a reality over the next few.
Years. Yeah I think one of the challenges that's when we look at these intros Technologies is that like we tend to try to think like how we could put everything on chain but right that is not the case. For example even in defy you don't need to kind of like have everything on a complex Mark contract based system and even it when it comes to social media you don't need to have every day, don't change usable. I mean what would it matter is? Mostly is kind of like their relationship between the users itself and the followers and the the the creator of
Or example. And also the fact that there is the provenance and and that creates this wider on chain social graph, that thing can be used in many ways and new applications could be built in open permissionless fashion. So like anyone can build just continue building that social graph and network to think that's the kind of like a point there in what we need for, like a larger scale, will definitely be ability to transact in a lower cost which means that you have to
This kind of like a layer ization of blockchain so where you have let's say the main layer, the ethereum network where you kind of like settle your store of value and then you have like a more lower secured Network which you actually transact more. But then you said, oh, periodically to the higher layer one network, this idiom Network. And that way you can get a bit more scalability. And then, at the same time, you're using the ethereum network to store the state of that, more scalable Network.
Fork. And then the second thing is that how we get people to actually and like wallets more usable in the way? Yes, you don't have to store those seeds and everything or maybe there will be service providers like that will store for you and we will see like custodial Facebook's and Instagrams Twitter's instead, but also kind of like still competing of giving better user experience on opportunities and flies once, I'm not sure what will be the direction but that could be a way to move forward.
Yes, I agree. That's it seems that there's a handful of pieces that just need some time. You know? These, these are a lot of the tooling and developments happening right now, but it's, I feel like we need another cycle of development. You know, look, another crypto winner to see some of these these emerge. Is it. Something where you would ever consider going out and building some of these things? Like would you ever build a decentralized Twitter or is it you just going to stay in kind of your lane and only focus on on device? The
Sibley. Yeah, well, I think all they see is more for like, a web tree. Build a group in the sense that we don't want only focus on defy, because like, we definitely understand like the meaning of like, decent as Finance inventory, because that's kind of like very much infrastructure whatever else you can build. So, whether it's social media, or e-commerce and essentially, like, whatever you can decentralize, some part of the current tiptree economy in 2003, where use blockchain is sort of
You and it brings like a lot of value to the users itself. And like, where, you know, you have, for example, in defy like the boxing part brings transparency, it brings efficiency if we can get those kind of like a things into other parts of the web, three, for example, whether it's social media or e-commerce, that would be something that we're very, very much interested in and now we're all excited. Yeah, now we're looking into, like, if we will build a decent Choice Twitter, how
The gate will look like on a protocol level, and mainly maybe not even like build a most functional Twitter, but build the most functional protocol, that you can move all different. Twitter's, and you have like competing user interfaces on providing better accessibility. So, when you tweeted about potentially building a decentralized where that wasn't a joke, you weren't just messing around like you're seriously thinking about doing this at the protocol level. Yeah, I mean, we don't, we don't mess around. I mean, if you want, if you need to build something, we definitely will
And I think like we have good ability to do it. Now as more people are onboarding into the web three economy and with the nft is not fungible tokens, we see more craters coming in into the space, we see more wider adoption question raised about the blockchain. That is very important for the larger audience, like the, the kind of like ecological aspects of proof of work, for example, like this just showcases that, you know, more people are coming into the space now and and it's
If we're in a state, we're actually building something like this. Could make a lot of sense for the whole economy. One of the things that I'm really curious about is just databases in general, and I think a blockchain, I think about you know, in some sense it is a new style of database and when I think about it aetherium, you know, there's obviously limitations and there are L to scaling solutions that are sitting on top of them, trying to ease some of the congestion that has,
Thing multiple competing Solutions their varying levels of difficulty on how to interact and move assets between main chain and L2 scaling Solutions. It seems like in and I love your professional take here because I'm just an amateur commenting on the hard work that you all are doing. But when I look at this I think gosh it just seems like more and more bloat. That is occurring is, is this going to be something where etherium eventually becomes just too bloated and we need to choose a new chain.
Or is is it something where you believe these L2? Scaling Solutions will mature and they will skills over the next decade.
Yeah, I think like
the fun things, like all the transaction that is happening, like in real economy, it will definitely not fit anything. You like you. It's just like it's just, it will be very, very costly and high and demanding and like the notes. So food become too big to even like, run them and that creates a more like centralization Risk. I would say that what could
Is that ethereum becomes more of a network where you store the hashes of those layer 2 networks. And how she's pretty much like a like a it will it represents the state of that particular Block Chain? So what will happen is that the thing will become a place to store those hashes which means that you are applying the highest Security on those. Let's say they theorem level security and then you have maybe less Security on on transaction occurring. On let's say layer choose but
As you're settling the state of that Network today, later one, you actually use the security of the etherium on on those networks. And this is a solution is very interesting because you get more transaction to places where you can compute. And then you just use kind of like the higher cost of the security when you need to store those States, it kind of makes sense. You know, it you can compare to Something in algae that you might want to store something very, very valuable in a bank vault, but maybe you want to carry your cash in your pocket.
It's like the comparison here and I would say that. Also the issue is that especially what I think. Like some of the side chains will have. For example, Matic polygon rename these days is that there's so much transactional. Like, if you allow developers to create applications that transaction more, they will use that transaction in space. It's kind of the same thing as you create, a more powerful. Like Hardware, let's say computer you know then you have developers building just more products that
Have more higher requirements for the hardware and use more computing power. So I think that's the kind of like a thing and where the space is going that these LTS, it might be in will become very usable. Yeah, that makes sense or me, we're already starting to see a pretty decent adoption of the LTS. Do you have a preference here? I mean I know that you've supported polygon and in matok, but are you looking at other l2s? Is it is, are we going to live in a world where, you know, as a protocol, you're going to
Have to embrace multiple l2s.
I think so. I mean, that's the approach that the AMA has as a community because we also know that all of this like other networks polygon or let's say ovm optimistic Roll-Ups a baby all and polka dot. They will all have their own like communities and we as a community want to be very inclusive from on how we kind of like participate. So if there is a community and there's some sort of like a financial activity, let's say there's a mom's, there are other things there like we could actually deploy there.
As a community of or anyone from the community, can deploy whatever they want to at the same time. So we try to be as inclusive as possible. And we always say that like our head on chain headquarters is in ethereum, but we would definitely like want to explore and Empower other community standing Therian. Community is what we saw in polygon is that actually there's more users on polygon Market than than in the layer 1. If you do market and the transaction is very interesting because we see a smaller deposits of
50 die, 100 die like frequent deposits because of the smaller transaction fees and I think I don't think like there's ever going to be like a winner, takes it all. I'm very curious to see like how optimistic Roll-Ups are going to work our way through my even polkadot and I'm just like super happy that there's so many solutions out there and people are just trying to solve this problem and and it's good that there's multiple Solutions and variations because that gives more kind of like
Okay, our opportunity to innovate even further from from there. Yeah, it's almost like your point about multiple Steve Jobs earlier, right? It's just like people are going on and competing and that's always a good thing. I'm, yeah, I love that that you said that those smaller deposits because defy, the promise, you know, had always been that it was going to be this fantastic protocol to the masses could use and the fees got to the point where it was just you know all of a sudden became something for the kind of not ultra wealthy.
He but for the wealthy because you'd have to take you a while to even recoup, the fees that you were spending on gas. You know, if you were going to interact with the protocol, so that's cool to see those smaller deposits happening on Matic. I'm curious other chains. Like, you know, the one that is been getting a lot of attention and my listeners will know that I'm a fanboy, but your thoughts on
Solana.
Yeah. So what is probably one of those that I haven't been much yet exposed to mainly because of the devil
Embedded developer resources. So when we are looking at a protocol a table, a network, we usually try to investigate a bit further, how the protocol works from a technical standpoint. What are the differentiators, how those differentiators kind of like affect our infrastructure or smart contract based infrastructure. When we when we deploy within Community but I've seen like lot of attempts to build the fight there. And I really think that would be the fires wall. And of course, like the most challenging part, usually
We if a network doesn't have a thinner virtual machine. So kind of like similar capability that ethereum has, it's always means for us that we need to build something close to scratch, or in that case, I think there is now attempts to build a, a VM in Seattle Vivian's coming. Yeah, yeah. So that's, that's, that's very nice because we try to avoid building from scratch because that would be so costly to go all the same kind of like a diligence process or building smart contract based systems keeping
Secure than everything. So, like EDM is something that kind of, like, both strips a lot of, a lot of adoption. I would say in these networks and I really hope that it comes quite soon. Yeah, your thoughts on, in FTS, like, what role do they play in lending? Is it something? I know you all have talked about working on, something in the space. Can you bring us up to speed on your current thinking? Yeah, so I mean, I
I've been following a nasty since the standards of your C7 T1 0 times of punk. By the way, I actually I don't. That's what I do. Actually I do, are you I don't feel crypto punks but I bought them a few years ago saying, it sounds like either way. Yeah, there's so much there in some old laptop, somewhere. You gotta find those. Do you even know which ones you have? I don't, I'd I may I'd you might have some amazing ones. Usually. Yeah. Usually, I have bad luck. So might not be the most most
Tactic ones. So but yeah, we were in the same boat. I lost my my keys because I can't remember what wallet I was using back then, because it was like, oh, you know what? It was, it was, it was that wallet that parody parody wallet way back in the day and I had to go out and dig out and eventually like you like an old laptop type scenario and thankfully, I recovered all 10 of mine. But yeah, I mean, I think anyone that was messing with them back in that time, we just forgot about them, right? Like you just didn't think
About it and then all of a sudden, they pop back up on the radar. So be curious to see if you could eventually find years but, but yeah. Sorry continue on. No, yeah, I mean, the thing, you know, like, you never know what's like, I remember the same thing with men caps and, you know, I was just like, pretty much like that was one Community member that introduced me to project then I was just like risking cats and I thought it was funny like then and now it became more kind of like a Revisited project and that's the beauty of like in fda's like this.
Not only the ability that the the store of value is there for as long as CMS for Gaston but also the kind of like a metal versus and Compass ability aspect. So for example, nothing stop for every like anyone to just drop, you know, sunglasses for every crypto pump holder, you know? And it's the same sunglasses. Or for example, we saw a recent project with the crypto bodies where if you had a punk you could claim encrypt the body, you know, and just like extend this metaverse further and I think like one of the
Things will happen. Now in the next two to three years is triple gaming. So, Beauchamp based gaming is going to be very well. Big thing, especially because of the fact that once, we realize how important it is that the users owned assets, you know? Whatever you gain. You're playing your own the assets and, you know, you can transfer them. Over fitting Network, for example, how big thing it is, that will kind of like change the things. And also, when you have game economics, where you pretty much like participate in the game,
And you could constantly some sort of rewards that you can change in various different assets and also like as a developer any part, any part of the world, I could just create a game and invite all of those assets to participate in my game. So the network effect is take things. So you don't need to be a big game Publishing House to actually build something. Very cool and get a very good Network effect from from that, it's just a changes, the game, a lot. Yeah. And in some sense, the indie game developers are actually have
It'll be, it'll traditional gaming will take a while to Embraces, they have such cash cows. Now, selling objects that cannot be moved right. They want you to buy the latest and greatest skins and everything in that moved them from game to game because that cuts into their revenue. So in some sense, the IND, any I think any developers who are going to thrive, which is pretty exciting. Yeah, I think they even like the narrative is like, you can create games that are kind of like endless but also like you have the provenance on chain when you play it in, what so you can even like it.
Early Access to users that were playing games way more earlier or, you know, you can randomize things. It's very, it's going to be interesting to see like how creative we will be on this. Now, there is news that you're going to be accepting any of these as clatter. All coming to Ave is that correct? That is correct. So that's that's an interesting concept because and I see is a collateral is completely different. Kind of an animal compared to having just something like, which is fungible when it comes to liquidation. So liquidation is
Practically when you deposit into the other protocol, your jaw of an acid. So you borrow another asset and collateral value decreases while you have this portal position open, and you don't refill by supplying more collateral. You get liquid, which means that your your collateral is changed to the depth and the depth is repaid. So you kind of like are left with the amount you borrowed from protocol with the same value of your collateral at the moment. And with NF dies it's a kind of like a different system because you don't have this kind of like a constant Market. I mean,
You could take something that like the ponds where you can establish that sale price for for all the ranks based on some segments of Critter punks and there's no guarantee that you can liquidate still or if you liquidate you might have to sell way more in this kind of value. So it's going to be very different kind of lending market and collateral than we have seen before. It's so in existing in Ft kind of collateral markets that I've seen out there like a Nifty FX, you kind of deposit of let's say a
Honk into a pool and then you have no guarantee that you're going to get your punk back out. People can come in and redeem and take your point out and you would lose it. Is it something where I'm going to be able to lock up an individual asset and keep that with you in and hold it in the borrow against that? One it at the kind of floor value because I have never be able to say, okay, I have a really rare crypto Ponca. So you're going to give me more for that because you can't be in the game of kind of like figuring out attribute value, right? You have to kind of
Blanket floor, price. Something to derive value? Is that correct? Yeah, honestly, I'm not super kind of like a eager about the projects where you kind of like try to make the not fungible tokens like liquid because like in one way, like the non liquidity of non-functional tokens, is what attracts me in the first place. So, let's say, if I buy an annuity somewhere and go to a platform where you can show your NFC, for example, in, it's a platform where you can just pretty much like, show. What?
Own. In, in this case, for example, like me having that like a say, 101 NFD, like that, that makes it very attractive that it doesn't have necessarily constant price and and it's not liquid in that sense. So one else has it like the ownership. And I think like approaching like the honesty as a collateral. Like it's more of an approach where, you know, you accept that these assets are not fungible. It means that, you know, if you liquidate you you're going long
I need to like have a liquidation strategy or you're just kind of like providing a option to buy them in case someone doesn't repay but that's the kind of like beauty of the system. So it's not instead of like buying an SDS, your optional, implying them and that's not far away from what could be actually even scalable, right?
When do you plan to enter into this Marcus is something that's being actively developed. As it is, is just on the road map, at this point, like, how far along is, is your enough to project? We're ready on this Mark, will check sides. No, everything has been reviewed audits are kind of like a now. Focus point is like how we make the user experience very intuitive because this is something completely new. Like you're not staring numbers anymore, but you're staring when you Underside those n FD is and you are praised them. You're actually
She is staring also like the visuals, the actual NFD content, so it might be a picture. It might be busy, it might be some other metadata. So getting that correctly in a user interface, or maybe another user interface, that's something that we are solving at the moment. Gotcha, is this going to be governed by the same governance token? Or will there be issued a new
token?
Honestly, we tend to
build products first, and I think kind of like, I definitely believe in the future where Carlos, like, communities are multi-asset communities. So kind of like you have different properties on depending on the token economics. But it's something that we haven't thought about much. We understand, definitely that, you know, you could incentivize some sort of behavior and attract liquidity, but we are in a no rush of thinking of that and maybe
This is something that we will leave for the community decide upon that's fair. One of the things I always like to buy ask my guests and this is by no way an endorsement of any of these projects to buy them but I'm really curious as someone as influential as yourself other projects outside of your own that you either respect or that you track or that you think has great founding teams more that you're seeing some adoption or Traction in. That's interesting. Are there other things out there in the landscape that that if caught your attention, only defy, I
I follow very closely balancer because I think they innovate quite a lot and they have that approach of like doing things their own way. I really respect him that are kind of like trying to find their own path and just like believing that and just like building towards that direction because we see quite a lot of like Innovation like this remix culture going on, which is fascinating. Of course where you know you have someone Builds on am am so many proves it a bit and but like where bouncer has been too.
Doing is what they have been doing is that they kind of like try to actually, you know, make things more efficient in a completely from different perspective. For example, where units of has been, which I love a lot, I respect a lot, they've been focusing on concentrating. Liquidity to attract higher heels for market makers and like making the product maybe list like retail friendly, but more is to kind of like professional Market maker. Friendlier, and attractive bouncer has been focusing on the capital
See, from the standpoint of actually looking where the value is stored. So, instead of when you deposit funds, into the balancer version to pull, instead of them sleeping in that amm pool to actually go in the background, certain parts will go depending on the this called asset manager feature into the other protocol or various other, protocols, how they evolve the the product in the protocol in the future and that creates killed, and that yields goes to those Balance our depositors. So it's a very interesting kind of like model.
Out there and it's kind of like a different approach. So I very much like when people are trying to do we're all things that you know, and you know kind of like break the pattern and yeah. Silly. Those say, those kind of things, they inspire a lot of other developers. Ya know. They'll typically hit on something eventually, right. They try enough weird stuff and you know, there's some novel thinking there. Yeah, I think so great. Anything else that we would that your building right now that you would like to cover
What currently we're
building a new version of office. So that's on the second audit already. And there's a lot of improvements in terms of like the risk management, there is Supply cab where cab exposure cap and this risk management feature, which can be said to kind of like I risk sub down in the future. So that's something we're working on now. And I think like there's going to be a lot of interesting things over the years and I'm very excited about the orbit Grand style, how it's been going further and that's like
Since a initiative that has been going by its own and decorating now a developer style, they are the community where this developers thou will actually continue building further the other protocol after the next version. So, that's something I'm very excited. Fun. That's great. If people are new to this and they want to get involved in Ovid, they want to see this awesome Community. They want to interact is Discord, the best place to go.
Yeah, I'll say this court is very, very good place, you know, interacting and just researching out personal like like try defy once, you know, more like why why D Phi is important and, you know, just finding what's attracting to you and just kind of like to learn anything because I think it is location is big part of what we're doing and important to understand why the f I so important. Yeah absolutely. Yeah I always encourage people to go in and try these protocols themselves even with a
Small amount of money just to kick the tires and learn more, you know, will study. Thank you so much for being on the show. This has been such a great overview of all the great Innovation that you've created over the years and big fan of everything you've done and look forward to tracking all this in, especially the NFC stuff that's going to be really cool. I'm a big fan of that space as well. So I'll be tracking that closely. Yeah, I'm super excited. What's going on now in like the three space and super excited to see how much we can innovate?
I heard it from this. Awesome. Well, thank you for being on the show.
Thank you, Kevin. All right. That is it for this episode quick. Reminder, brand new website. Modern dot Finance. Head on over there, sign up for the newsletter, we send it every two weeks. It is my favorite news articles and all things in Ft. I think I'll enjoy it. That's it for now. Take care.
