foreign
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folks
my name is I work in Lido
and what I want to talk about today is
what I think will be the future of
liquids taking
I really love the crowd by the way
there's so many of you
a bit about uh last us and about me why
I'm talking about this I'm a depleted
Lido which is a dial that headquartered
on the theme that makes Luke is taking
protocols and it maintains the largest
liquid sticking protocol in existence
right on the denim
which has a bit more than 4 million
Heather in it
currently the number two D5 protocol by
qvl and I'm co-founder Tech lead so I
guess I know a couple of things about
staking so
um
for folks who are not really familiar
with the topic liquids taking is when a
Staker gets transferable voucher when
they look up the stake and has taken
protocol so like uh it's not uh it can
be used in defy it can be transferred
sold both uh collateralized etc etc
um and uh a liquid stake is a small but
growing and pretty significant in size
uh part of state and economy you know
like all the stake in the common area
without 80 billions and liquids taken
protocols that together
are about 8 billions or so and if we add
to the liquid sync protocols also
liquids taken on exchanges which I think
we actually should count among the
consequent options uh it will be closer
to 20 billions I think so
uh Lots but not overwhelming part of
state and economy
um so
um I'm going to like I'm not going to do
any deep insights here like I'm uh don't
pretend there is something I'm going to
say that is not pretty obvious I think
but I'm going to say it anyway
I'm going to make three predictions
basically one is that like protocol
based liquids taken could grow alongside
the fire system uh when the fire system
growth a liquids taken protocols grow
with it when it doesn't grow and
stagnates that like liquid state will
not
uh protocols will not grow like there
will be uh people will use sticky knock
changes instead
um there will be a lot of options for
liquids taking but few of them will be
Witness
and the like who will be the winner who
will be the winners uh will be
determined by stakers they they will be
the the one with who vote with their
money about like what the future would
look like
um
now in a bit of more details area of
this statement I'll talk about it
so our experience at Lido building
liquid taken protocols many chains we
have like one on ethereum one on salana
on
polygon on
polka dot the thing is liquids taking
protocol growth is driven by defy
ecosystem growth whether when there is a
low amount of defy penetration liquid
sinking will also be pretty pretty small
and when there is like a very strong
Academy like an ethereum liquid thinking
would be will be very popular
there are other factors but like that's
primarily I think like when people want
to use the other in defy they will
rather use some kind of second stake and
liquid second token in the file uh when
they don't use uh want to use either and
defy they don't care about State the
rocket pull leather Etc
so
um
and the main competition are the wallet
guns of C5 like exchanges have liquids
taken since forever
uh it works very seamlessly it's very uh
very easy for the user they like just
deposit the uh tokens that they use to
used to if they are working with
exchange and it's automatically sticked
it can be often used as collateral for
margin trading like it has most of the
users that people want liquids taken for
and if you don't care about being in
decentralized finance if you don't care
about like this being not your keys uh
it's perfectly serviceable so
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um
and the product is just better than
regular stake in the
um liquids taken is better for users
than regular stickers the adoption
barriers that like a major problem for
liquids taking protocol growth is smart
contract risk governance risks and
sometimes tax implications
um
the smart contractors can governance
risk on one hand they go down with time
so like with time people start starting
to trust more the protocols for good
measure because they haven't been hacked
they are like less likely to be hugged
in the future
uh same about governance and still uh
it's not worth it like if you're not
using to use the token and defy like if
you if you're not using no not going to
trade it or collateralize it you don't
want to take this additional risk
um and uh there are like a multiple
options for building liquid sticking
protocols uh and like with the chicken
in general not just protocols that are
um uh going like exist already or will
be existing going forward
and
um to talk about them we need to
understand what is liquids taken as a
product like who are the users what do
they want and there are three kind of
users like three kind of stakeholders
for like it's taking one is the stakers
they are most important here and they
once taken Awards they want security
they want liquidity and usability in uh
in finance basically
um protocols Community want the best
solidity set for the protocol that is
decentralized sensorship resistant and
not operators in protocols they want to
run a stable stake in business if they
are professional and if they're
hobbyists they want to be like I don't
know respected they're not rational they
just do it for the fun and for the
feeling of uh contribute contributing to
destroyalization which is great
so
um and the options that are available
will be available in the future are
broadly
um
it's custodial option uh the
exchange-based liquids taken forecast
that you basically sticking
uh it's protocol that are based on risk
management it's protocol that are based
on uh bonds for security
they're hyper-compliant protocols and
Marketplace types type protocols
um so Castor yeah I'm listing them in
the order of adoption
custodial liquids they can like a change
liquids taken is uh like the largest one
uh if you combine like even on ethereum
but if you combine together all the uh
exchange section options it's like a lot
of uh market share
they
um uh exchange for custody based very
simple to use for users because like
centralized solution are like very good
for you for user experience usually you
can do a lot to make it simpler uh they
have no additional risk if you already
draw The Exchange in question with with
your capital
um often have included uh
the options for margin training Landing
money markets Etc
um and because the operator of custodial
could take like a change or something
they are double dipping so they they're
getting staking rewards and like fiance
taking rewards and they are also getting
fion trading on maybe custody fees or
something like that
um they can offer very competitive rates
compared to others like the the this
option will likely win on profit
liability going forward it's not the
case right now because like coinbase
takes a lot of
um a lot of fees but they have much more
uh
options to go all over on fees because
they can double dip in vertical
Integrations
um they have usually subver value data
sets so like the don't provide a like
that much value for like as much value
as it could for the protocol uh because
they select few operators
uh with little diversity in
jurisdiction's physical locations etc
etc
um and it's not transparent and they are
susceptible to regulatory capture
because like C5 solution uh like
extremely regulated
um
risk management based protocols they are
non-custodial they manage slation risks
protocol wide by creating creative value
data sets that like minimize risks
they therefore they are usually Capital
efficient so they're easy to grow
they're easier to uh to accept stake
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and for like
um for the
um competitive advantage on user side
they rely on the fire system so like
when the fire system is better than uh
any any single wallet Garden of of a
change they can
uh offer a good uh
uh that alternative to centralized
exchanges uh valid data set they have
are like very different in in uh in
design because uh and in quality they
can be big they can be small they can be
like consist of one operator which is
like uh the same the protocol operators
basically
um
and they
um that's because like the managed
protocol set is the valid data set is
basically the major part of the product
here and that's where they give her very
much
um it can be good it can be bad it like
depends on the protocol
uh bonded protocol uh also non-custodial
they manage slash the risk by acquiring
validator bonds
uh that makes them Capital efficient
because validators like the good value
like the uh not operators Community they
don't usually have a lot of money and
when they are required to provide bonds
this is limited by basically the amount
of capital of operators or the amount of
debt they are willing to take from
outside sources
um
and uh the value data set management is
left to the market like basically if you
have Capital uh you can participate as
an uh operator you can provide your own
validation and that's the only thing
that's required which I think at scale
delivers centralized for later sets
because capital is centralized
uh like if you take a look at uh Genie
coefficient of ethereum for example
which is like one of the best ones it's
it's really high like most of the wells
have worldwide like
a few dozens of whales
um at when the protocol is at scale that
they are either providing a loan or
their operating cells at scale and uh
take the majority of the what is data
set
um this option of hyper compliant one is
not uh
um very different than Tech side from
risk management it's different approach
because like it's uh seven point and
Main feature is that the valid data set
is extensively vacated and
um certified and
regulated and they are likely to not
deliver well it just said that the
protocol Community want
um and I don't think there will be much
liquid usable because like usability and
defy requires uh like they they made
clients are people who I have like very
scary or regulations I think that's like
selling for lawyers type of things
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that are averse to participate in much
of the device so
and the last type is Marketplace is when
there is there are multiple options for
staking in one place uh different risk
profiles features and costs
and when they do a liquid stake in token
they have to fund it in some way like uh
risk either they do risk management on
options like total to to make a fungible
basket of different uh options in the
marketplace or do the bond type or just
do a naive like assuming every race
profile is the same
um current state on ethereum is that
risk management
is the largest protocol like it's Lido
it's risk management type
the second by size is custodial but it
will very quickly jump to one by one
when withdrawals are possible and every
other on every any exchange can be
staked more safely than right now
and the third type is bonded it's rocket
pole it's a third third position
uh and by growth speeds right now
coinbase uh liquids taken token grows
the fastest
um lidoor has the second place and uh
rocket pole is the third so this is the
current trend
um I think that the only non-custodial
trust minimized options can be designed
with the condo evil principle in mind so
liquid sticking protocols that
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um
are sufficiently limited uh in what they
can do though like those tax or valid
data set selection to uh
uh to force or like uh entice operators
to operate in certain way when they are
limited in that uh they can be entirely
harmless for the protocol and not a
threat uh custodial Solutions can do
that because like they can act like with
the values but
they are extremely susceptible to uh to
regulations
which can be not aligned with companies
value
I think that only risk management based
protocols can deliver good value data
set at scale because at scale the like
the main thing that you deliver for a
protocol is a good valid data set and if
you don't have an opinionated uh uh
selection algorithm that says that like
the good wallet data set should be
defined like survey diverse should be
diverse in jurisdiction in
um
should be pretty flat and distribution
of stake should be diverse
geographically and like
um in in cloud and on-premise operations
etc etc
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that's that's essentially what like Risk
Management is your monetary for the
protocol as well
um so I think there are two possible
outcomes for the future of idiom is one
is that like most of the stake is in the
risk management protocol that provides a
good quality asset
um minority isn't custodial and one that
is like the uh on the third place and
the beta outcome is vice versa when most
of the stake is custodial and the rest
is in protocols
um
um so anyway whatever I think on that uh
it doesn't matter much because I'm not
the one who decides who will win and
like who who will lose and like what
will be the best uh the the the largest
options it's a stakers who decide that
outcome
um like not not operators uh they are
agents uh they operate like either very
small amounts of their own stake or like
large amounts of other people's money
they do not decide like who who is going
to be
the winner it's not stake aggregators
like protocols or custodies because
users stakers actually decide which uh
which aggregated to use
uh it's not protocol researchers or
developers because they design like a
neutral protocol that can be used by
other people which has takers to to have
the desired outcome it's not uh voices
on crypto krita Twitter or like protocol
governance it's it's going to be less
takers
Uh current state of ethereum stake
increase the direct result of stakes
making the choice in the past like they
why is lighter big because people sticks
with lighter why is like a coinbase big
because people decide to stick with
coinbase
uh the future will be a result of
stakers making the decision going
forward
so
what I'm asking you folks is to select
the best state based on your ethos your
needs your capabilities like if you can
if you want and you can run your own
order on your own node if you see a good
option for staking the protocol like
stick with the protocol or with the not
operator you trust or something like
that
um
because like status will be deciding the
future of uh validator set on the
theorem like how the uh ethereum will be
operating in the future
um
at the bonus thing I uh like I I made a
few predictions but there are a few
curveballs that can invalidate all of
that uh very like very unexpectedly
um one thing that like is obviously can
be can change the cables very much is uh
regulations uh like Regulators can force
most of them stakers and most of like a
lot of ethereum is like in regulated uh
jurisdictions
a lot of ADA is uh holders are in
regulated addictions to comply to local
Rex and if vocal Rex say them to stake
in a specific way they will likely to
comply
uh the funds the like the cost studies
etc etc they will have to
um
the second curveball is uh risk taken uh
shout out to Angela
um it's basically using the same stake
on multiple protocols
um
the the main idea is like you can stake
either in uh
in the living room protocol and then can
use the vowel chat of the text Data like
stacked at the token or like a error is
token or something
as a stake in a different protocol
uh that does something different and
it's subject to to additional slashings
if something goes wrong
that leads to a combinator explosion in
potential risk and rewards profiles so
right now it's pretty easily it's pretty
easy to funch than fungible the staking
positions like you manage the risk and
rewards and that you get can get liquid
token out of it like oh make it bonded
or something when there is a lot of
options for getting additional rewards
for taking additional risks which is
going to happen if any glass takes off
uh that makes uh the the space very very
diverse and for possibilities uh of
using your other in different ways and
it's become we're becoming much harder
to funch than fungible
um and it makes risk management based
protocol harder to design and
Marketplace is uh more uh more suitable
to the to the state when there is a lot
of differentiation in different options
for staking marketplaces are better
suited to that than
uh risk management
and the Elephant of the room in the room
is a second order effects of Mev uh
because like that's a very uh it filled
with emergent rules uh we like we don't
understand how it works until it works
in specific way usually we can predict
some things but not all things
uh and it's hard to see the future
clearly and it clearly has a lot of
requirement for latency and benefits a
lot from ecls which can force
centralization somewhere in some place
and it can happen that it will force
centralization like on protocol
management like on Pro non-stake
Management level or like on stake and
layer or um like wherever we don't know
yet like at least I don't know I'm uh I
I I I don't I don't quite understand how
it will end up and I think that we we
will see it when we'll see it not before
um I think the best way to counter that
on staking level will be to transform
validators and protocol to thumb pipes
that don't make any decisions basically
or make as as like uh
can opt out of making decisions at least
something like PBS design VCR lists for
example
but like as I said it's curable I I'm
not completely sure with how it's going
to play out
um so that's it thank you for coming I
like I'm really hyped with scenes that's
such a good crowd
hello are you sorry you mentioned in
light offs there is a reference of
elastis how is this related to the
insurance of Lido in relation to the TBL
um I don't quite get the question uh I'm
going to answer as best as I can so uh
Lido is a protocol that
takes uh stake as ever and it
distributes to a valid data set in a
specific way this Valley data set is
selected in a way to the risk the stake
that holders so like are you slashing
risks and to make the validator set of
ethereum beta as well so like we try to
deceive it in a way that will be
increase the diversity of validators and
like the stake distribution make better
stack distribution
uh we don't require operators to bond
the capital to to operate and that makes
uh scaling for lighter really easy
because all the operators need to do is
to upload some more keys into lidoor and
like accept mistake
and that's why when there was a lot of
demand was taken uh in in the ecosystem
it went to Lido and not say to coinbase
when the growth is limited by by not
operators having enough capital
or having enough like cheap launch
options or something like that uh it's
not like it's not being able to uh to
ride these waves of like staking demands
uh so I guess like the tvl of Lido is a
direct uh results of the design
okay I was wondering
um like one of the curveballs that maybe
could happen is what if it becomes
dramatically easier to operate notes
like it's pretty complex to like spin up
your own like Beacon currently but what
if it was much much easier how would
that impact the overall Market
um so I think that
um
it's not going to become dramatically
easy for a long time the reason is like
before protocol classification it's
really hard to maintain the the notes in
like in a good State because there are a
lot of grades and like hot fixes and
stuff
but imagine it it is becoming
dramatically easier then
um on like on liquid stake and I think
it will result will be that there will
be more solo operators in it like every
product like every protocol will uh that
that will be a big enough will
conversion like on some hybrid model of
having most of the stake and risk
management and less taken bonded
solution for permission separatus uh
just to promote the uh solo stickers and
um the removing of barriers will lead to
more solo stickers and like a bit more
importance for uh door to hand this
feature uh that's my guess
hello it's really nice to meet you I
have two questions why actually first of
all first one I would like to understand
what you see as the biggest risk for the
legalist taking industry are they is
taking industry as a whole right now and
second one what do you see as the
biggest risk for later right now
um I think the answer to both smart
contract risk
uh like defy protocols uh are like very
robust I think it's the most like the
most box free for code in the world like
right now like better than Aerospace
better than medical code etc etc
but it's like existing in a very toxic
environment where any like any mistakes
gets exploited like very fast
um so smart contract risk is probably
them they're like the the major risk and
uh on a more like economical side I
think
uh like I'm really
um thinking that uh exchanges wallet got
lack of sify are really a like a very
strong competitor to uh protocol based
liquids taken
because centralization is uh more like
it's cheaper
and people care a lot about APR so
so I have some statistics
um on the library tokens emission is
kind of like outdated but it's um
something to me nice so the token
incentives that the emissions in the
last seven days is five millions in
terms of tvl while the rifle news is
only 600k do you think it's
that people actually value the
governance of Lido itself as a electric
sticker or it's kind of like being
overvalued do you see any attack factors
or governance if it referred to like
it's if it kind of like go down if
people don't value it as much as right
now
um or let me rephrase and say if I
understood it right so you're saying
that uh we have a lot of incentives and
Lidos tvl is probably because of
incentives and not because of like
people because of the fact that people
wants it right
okay why would the token incentive is
five minutes
uh so the incentives are not that Beacon
uh in the overall uh protocol
um like compared to overall protocol
Revenue
and they are needed to maintain a good
liquid
pools for liquidations to happen
that's the only reason they exist the
staking rewards are the main reason
people people have sticked it there is
like
uh of over like four million of weather
in Lido I think about
between two hundred thousand and six
hundred thousand obsteta is locked in uh
maybe 700 I don't know it's locked in in
in into in centralized pools uh so
I think that when I was wrong side like
are in uh that will be completely
unnecessary and uh will change
everything like uh the incentives will
be slow but the protocol will be just as
useful