foreign
[Music]
guys to join us in Orion
so who in the audience have heard about
uh die
raise your hands
nice so when the audience has heard
about Rye
nice and who has uh
use dry up to now yeah few people we
need to work more on that I guess
so right is a fork of maker Dao dying
so with a bunch of differences
it has eth only has collateral he has a
floating pad so it's not one USD as
back to when USD as dies
it's self-stabilizing with a pi
controller and it has minimal governance
too that's what we call in governance
and we're pretty sure this is the future
of Finance
so here we have a quote by Nikolai he's
the technical co-founder of maker
and the main architect or the main head
behind uh die
and I'll actually read his quote because
it's very relevant to the presentation
until this is in textbooks as a
historical turning point for theory of
Central Banking we're still early
so yeah suffice to say we're
we're still early
so before uh I go into what the system
is and how it works I'll tell you guys
uh
a story more of a personal story
actually
so
let's do the interactive thing again and
please raise your hands if you have
lived in a place with inflation over a
hundred percent a year
yeah there's quite a few it's a lot of
them right so that's great kudos to the
EF for making the event here so keep
your hands up if you've lived through
over a thousand percent a year
so yeah a few of them right two thousand
three thousand Good Times
so
I'm Brazilian and as a kid I remembered
uh when my family got you know their
paycheck we would run to the store and
buy stuff
because if you wait until the weekend
next day you'd pay you know you got less
stuff for your money basically prices
were raising every day
in a big inflation in Brazil we had uh
over three thousand percent yearly
inflation
between 93 and 94 uh the average yearly
inflation was over two thousand percent
so here we have the roller coaster that
it was right it wasn't like really
smooth
uh after the military dictatorship uh in
Brazil uh from the 60s till mid 80s
they left with a really messy economy so
all the leaders that came in they came
in with a plan basically the focus was
you know how do we deal with inflation
some of those plans were disastrous
right they involved freezing prices
freezing wages in this one the color
plan they actually seized people's
savings it never gave it back
this is actually new to me I learned
this while preparing to the presentation
here we have a graph of the number of
people in the monetary Council of Brazil
or the guys you know setting rates
and the inflation in Red so you see how
they correlate right so the less people
you have it seems to be better right so
yes and and this sharp decline in the
inflation was in 94. it was called Plano
it was really interesting I mean they
did some obvious things right cut
government spending uh stop printing
money right and they also did one thing
that was not really obvious they created
another unit of value so things were
priced in this new unit that was called
urv or when he died
or unit of real value but they were
still paid in the currency of the time
that was the
what's it called crusadero
and after a while once people were you
know free from the inflation mindset urv
became the Brazilian Herald that we have
to this day this plan was mostly
successful so we went from over two
thousand percent inflation to mostly
single digits since then
so now we think okay the US is exempt
from this right
so far so good but uh yeah actually they
seem to be losing control there so
during the covet years
they printed 30 percent of the money
supply
and they seem to have underestimated the
resulting inflation from it
so they took long to act and now they
seem to be overreacting throwing the
whole world into a recession right
and now going back to crypto so we have
like a speed run of what we're talking
about right so oops we had here the Luna
UST you know Fiasco graph let let's do
another one raise your hands if you lost
money in Luna UST so yeah lots of people
and yeah please the other ones should
pay a beer you know to those guys so
yeah I know it was painful
so vitalik wrote an article recently
about stable coins just after the Fiasco
right comparing Rye to UST
and the main takeaway for me at least
was that if your stable coin cannot
contract if if it cannot win down
it's likely a Ponzi right
so here we have you know the the graph
showing you know when Luna or UST had to
win down for the first time
it was
ugly
50 million was erased from the market in
a
so that's uh
billion with a B right so lots of money
uh now think about
what happens if the USD has to contract
the USD with a d right
how would it work
so but I'll leave this you know as an
exercise for you guys to think about
this
so here
having lived through hyperinflation
I can't help but wonder you know how do
we get ourselves out of this Dark Age
so these are some of the questions we
were obsessed when building rhyme
so
what if the humans are the actual main
source of instability
what if our currency was honest
waiting for currency was not a Ponzi
what if our money supply automatically
expanded and contracted
what if proper Central Banking has never
been tried
so here's a picture of Milton Friedman
he's a famous economist and we're trying
to achieve you know his his vision here
so back to what is right we will now go
through you know not that you guys know
why I care so much about this thing
uh we will go through and explain each
one of these bullets to you guys
so like die rise over collateralized you
open a collateralize that position by
depositing eth and minty Rai we call it
a safe it's not to be confused with it
knows it's safe you know so the die CDP
is a safe for us
if our collateral Rachel drops below the
minimum 135 percent
your East will go to a liquidation
auction
just like die we have no Ascend there so
you haven't one time one hour time delay
to react in sharp you know price changes
and like mkr we have flx so that works
as a domain backstop if liquidations
fail and Rye is
backed by eth only
this is very very important because
centralized collaterals have a way of
taking over if you're not careful
dye is now generated from around 80
percent centralized collateral the vast
majority being usdc
so we all know after the tornado cash
events recently that you know they can
freeze any holder including you know
pools and systems if that happens you
know die holders will suffer die will
lose most of the value
by only backing Rye with eth we want
right to inherit the money-ness that eth
has earned
we also made the decision you know to
prevent sort of like this actually
prevents Rye from really scaling
Rye can only grow so much you know and
we expect that it will grow as it grows
in in value too I'll get back to this uh
towards the end of the
the presentation
so people often ask us you know how is
it stable if it's not one USD
so the way we see this it's more like
like a foreign exchange foreign currency
right so here we have the exchange rates
of several currencies the largest ones
against USD
and the Rye Redemption price is the
smoother line in green there
so as you can see it's not much
different than well foreign exchange
we're doing about as good as China there
so
bagged stable coins have a big problem
also highlighted by vitalik
they're either pegged
when everything is okay you know or
they're off bag and everyone is freaking
out you know what the is going on
so right has one mode it's always off
pack you know that's business as usual
it's a matter of degree
so we're not getting out of bed because
it's soft pack right see how cozy it is
Pepe is and here we go to the pi
controller that's the heart of the
system the coolest part too so we have a
graph here the market price from uniswap
curve is the red line over there
Redemption price is the smoother line in
Gray
so when the market price goes above the
Redemption price or Redemption price is
basically the internal system Peg right
when the market price goes above the
Redemption price the Redemption rate
goes down and starts pushing the
Redemption price down
the opposite is also true so if the
Redemption price or if the market price
goes below the Redemption price the
Redemption rate will go up
and here below we have actually the
rates the Redemption rate is formed like
two rates we have the P rate in blue and
The Irate in Orange
the period in blue is instantaneous so
when the price market price crosses the
Redemption price it will immediately
cross to the other side we can see
recently in the recent days it's been
the first time in a while where the
market price went below the Redemption
price and the period immediately goes
positive there
the eye rate starts the error of the
last 30 days so it's like a memory it
makes the controller stickier this is
why it's not yet positive right The
Irate is a lot higher than the or a lot
higher to the negative side than the
period there stability for right means
balancing rise supply and demand and not
begging it to one USD
so with Rye you know where the yield is
coming from when rates are negative
right holders are paying right borrowers
when rates are positive right borrowers
are paying right holders this value
transfer between right holders and
Borrowers is mediated by the pi
controller we saw previously
and they the controller actually
incentivizes the balancing the supply
and demand for Rye so we have a saying
that the money God
always wins
so we say this because it's pointless to
fight against the money gun
push against the controller the rates
increases potentially against you and
you burn money basically you don't want
the angry money God against you so you
want to keep him happy if you help him
work though you can make money out of it
now on to ungovernance that's what we
call you know minimal governance
so the system has been controlled by the
community since July this year when we
started we started with the usual team
multisig and we completely transitioned
to the Dow now so the team multi-sig is
no longer active and has no control of
the system but before doing that we
actually locked down pretty much
everything you know to prevent
governance from being used as an attack
Factor so unlike him die where the
governance can do whatever it pleases in
right governance cannot print right
cannot print flx cannot steal collateral
and so on
so the only things it does right now or
it can do right now is govern
external dependencies like oracles like
saviors and some of the parameters the
system has I mean some parameters we
felt we were not ready to set in stone
like the pi controller parameters
everyone's still learning so the
community can't govern them through a
vote so we believe Rye represents the
future of Finance
central banks in the future will be open
source programs the cost of operating a
central bank will drop by a thousand
times even more you know
they were run transparently and
autonomously
so the way the Fed works today
is like maker down they get together in
meetings and they decide on rates
as autistic people
we know you don't need meetings to set
rates
one day everyone else will learn this
too
you know today we treat currency
management as a holy art that only some
Arcane Wizards can perform in truth the
more we can demonstrate Simplicity the
more we can dispel the Illusions around
how money should work
we believe in a future where communities
can take ownership of their own money
where the cost of deploying and
maintaining a currency is as easy as the
deploying you know some open source code
so as ameen said there we can stay
autistic longer that they can stay
if Lords you guys should join us right
if you have eth as a collateral in a
system that has risk from centralized
uh collaterals you should move right
deposit is like borrow rise spend it you
know long Rye short Rye do basically
work with the money God this is a tweet
interesting one from cure and uh it
talks about a position vitalik has in
the system so vitalik in the recent
months with the negative rates he made
75 000 by shorting right so he's helping
the money God and making money
you guys should maybe try it too you
know
uh also join us on Discord meme the
dream right help us write explainer
content uh there's a really interesting
research Channel where people discuss
monetary policy control theory and
whatnot
uh at least also in our Dev Reserve
Force we're building right now and there
are plenty of bounties available there
also at not only technical you know the
response is for everyone so uh check it
out
and lastly we're also building the money
God League
so what what do we call the money God
League basically we know Rye won't scale
so instead of envisioning one huge
stable coin to rule them all we envision
a future with thousands of Rye like
systems
so as you can see over here let me get a
front makers discussing becoming a
ride-like system now right
abandoning the bag so they can get rid
of usdc so maybe they join us in the
future you know
by getting back to the original Nikolai
Vision there
uh there's also H2O from Ocean protocol
it's a fork of ride that is
collateralized by their data tokens
there's also a group working on Thai
which is a multi-collateral version
and maybe you should join us too you
know if you have a good idea you want to
build another flavor of the system come
talk to me
join our Discord we're happy to help you
know the more systems out there the
better right sort of like the Hydra
vision of the thing we don't need a huge
stable coin we need several smaller ones
to contain failures too you know and
allow for experimentation
so this meme was made by Charlie Noe
from Paradigm it's some true VC value
add here
so I'll leave this running here while I
take any questions from you guys we
still have eight minutes left so
um so good morning Fabricio
two questions uh could it be like a PID
controller instead of just Pi controller
and other could it be
checking the price of it corrected by
inflation or that's like impossible to
do yeah uh interesting questions I mean
we started with a p only controller
actually now it's a pi I don't see why
not could be a PID too so in its
experimentation right there's still room
for a lot of experimentation
with Rye we try to make it like as pure
as possible so only if minimal
governance now with the forks you know I
mean there's a ton of possibilities we
see like Thai for example the guys
explained that for a multi-collateral
version you need more governance right
to onboard new collaterals and their
goal is of course to try to keep it to
decentralized collaterals uh onto the
other question I forgot what was the
second one please remind me
at that price could be checked by
corrected by inflation not just USD yeah
so pegging is a true challenge right by
having Notepad
I mean uh uh I went through the like the
advantages of it so if you're pegging to
an inflation index for example you have
the same problems of a packed currency I
mean it could be done
but then the negative rates could not be
applied to price as we do right they
could maybe be applied to the stability
fees right or the borrow fees people pay
you know on their borrowed amount so
yeah I guess it could you know if you
feel this is a nice idea I guess you
know come join the money God league and
yeah good it working to help so
hmm
hi thank you since there is no Peg when
does right fail
and under what scenarios
yeah that's what has happened what are
the 30 modes yeah that's uh hard to say
I mean uh there's no Peg and and
I mean the
there are a bunch of failure scenarios
too right I mean we could as in the
black Thursday you know maker failed to
liquidate cdps this could happen uh
regarding the controller you know there
are some cases in control theory where
the controllers go crazy too right
you've seen like robots going out of
control and spinning like crazy and then
destroying yeah that's a PID controller
failing
that happens we would need to Global
settle the system as maker did with Psy
we had a proto-ri before right to be
Global settled so if the system becomes
unsustainable it can still be closed
down and that everyone both uh
safeholders safe owners and Rye holders
can go back there and and get their East
back so it's not a complete loss but we
have to keep an eye on this this is also
an experiment right so we're trying to
be conservative but I don't know in
future iterations it could be that not
on rye rice pretty much closed down but
I mean on other many God League members
this could happen I don't know we just
have to keep an eye to see if you know
controller is not going crazy on us
thank you yep
um
this summer during the uh
over here in front of you dear right
hello okay
this summer when it was when the market
and Redemption price were different for
like months and we were seeing like 30
different rates it I mean
um it kind of struck me that
um why can't the system tolerate some
sort of steady state error where market
and Redemption price are just like
different for a while instead of the eye
just punishing us more and more and more
yeah that that's actually a good point
uh this happened at the time we're not
sure why you know like Nikolai claimed
we were being attacked by some actor you
know trying to prove us wrong uh some
people think you know because of the UST
Fiasco then because of the tornado cash
thing you know a bunch of people Market
bought right and then the money God got
mad you know and punished everyone and
vitalik made a bunch of money that's the
so yeah we're still discussing this
there's actually there will be a
proposal to tweak this we do feel the
item right now is too strong maybe it
could be punishing less you know they
make it less sticky so yeah please join
the discussion you'll like it uh there
will be a discussion in the Forum soon
and until the end of the year we will
tweak the perms we try not to tweak him
really like with a lot of with uh
I mean too quickly so we see the results
you know we see the thing how it plays
out
but yeah there will be one change in
this year uh it's been like that for
over six months now so and it I mean it
withstanded some pretty big shocks in
between you know which was we switched
from uh Raging Bull Run to a bear market
right and then things collapsed and that
there were I mean people tried started
valuing decentralization more so uh yeah
I guess let's see if next year is more
stable too with new params and we will
see the idea is to tweak less and less
and and on a smoother way you know like
uh
until we can set the programs in stone
and just ungovern the controller too so
what are the incentives for executing
liquidations and maintaining the the
system Health
um like for example like maker has this
decaying uh you know auction where like
Ave you can have you'll find out there's
a lot of a lot of people that should be
liquidated that are not liquidated but
maker everybody eventually gets
liquidated so what's the incentives and
how is that maintained and so what
Telemetry do you have into to see what
needs to be liquidated so when we
started the collateral auction house was
a fixed discount collateral auction
house so it provided a fixed discount on
it you know against the market price
then after six months or so even before
maker liquidations 2.0
we started with an increasing discount
auction so it's pretty similar to maker
I mean the implementation is completely
different but the the mechanism is the
same and we're decentralization freaks
too so every call for Keepers in the
system is incentivized somehow uh
actually the system right now for the
keepers out there is grossly overpaying
calls so you can make a lot of money by
helping the system uh there will be a
proposal soon to lower the rewards
because they were adjusted for gas
prices from the bull run too and now the
network is you know a lot I mean block
space is cheaper so we can lower the
rewards and you know the system can save
money until it's needed to raise them
again for other things I mean for
everything there's an incentive there I
mean uh it depends on the call and on
the on the on what you're doing so
hello um what's the point of using a rye
instead of straight eat
if it's free floating and it's just
backed by eth yeah Rye is supposed to I
mean it's free-floating but it's uh way
less volatile than eth
so
while it's it is free-floating it is a
stable coin right it's kind of like the
Euro against the USD you know of course
it's gonna oscillate right tomorrow it's
gonna have a different price but it's
not going to go crazy on you and crash
50 from today to tomorrow right so right
is a very dampened version of eth
basically and we early on it's actually
quite interesting because we had like we
didn't want to call it a stable coin
because everyone called stable coins you
know the one USD thing
and now we sort of we're sort of
reclaiming the name so we feel right is
the only true stable coin and all the
other ones are what we call peggies or
pegged coins you know so yeah that's it
so if you need a stable client that
retains you know the moneyness of it
that's right that's the goal of it
yep as the money God grows and
adoption grows as a currency
what do you see or what do you expect
from central banks and other
institutions trying to corrupt or crack
down on coins like right uh so yeah the
more decentralized you are the harder it
is for them right so we're taking our
precautions from day one uh the idea is
to have it you know almost trustless in
the future so yeah they can try to stop
ethereum I mean it's gonna be hard right
and
yeah our main goal is actually you know
uh some Central Banking Bankers are
actually noticing this so we feel that
Central Bankers should not be setting
rates right because they're people and
they're like subject to politicians you
know making pressure and influencing
them so in the future as we see you know
they need to be very predictable on
setting rates so in the future as we see
they will have a software right might
not be ours might be theirs but you know
they will have a set of you know an
algorithm setting rates and then Central
Bankers instead of monthly setting rates
they will just tweak the parameters you
know until they perfect that their their
own controller right yeah isn't there a
danger though in where
there will be Crackdown let's say on the
use case and then the attention towards
stable coins like rise will just yeah I
mean there is I mean everyone is
noticing this right uh we feel rise last
in line though uh the risk is there I
mean I agree with you but for example if
if you look at die they have usdc inside
so you know they're one action from
circle from being frozen
uh they also have you know a huge
governance thing going with lots of
people uh that can tweak and that can do
many things in the system we prevented
that
so we try to close these doors there's
also another thing right when you look
at stablecoin regulation we're lucky
that Regulators think stable coins are
all packed to one
so I think they're overlooking still you
know like all right works and how stable
it is so yeah I guess this is going to
happen eventually but we feel rise the
most resistant of all you know and we're
keen to improve it too you know with new
designs new iterations of it so that's
amazing