[Music]
hi everyone thank you very much for
joining our session today is Wednesday
and it's a perfect day for discussing
some ston use and risk um so this is
going to be a 55 minute session 45
minutes for panel discussion and then
the last 10 minutes is going to be for
Q&A uh the Q&A is only open to audience
at the venue and I believe you need to
scan the QR code here to submit your
question um so let's get started I am
Tammy um I'm specialized in on chain
research and then I'm passionate about
stable coin and stable coin risk so I
have spent some time on developing um a
St coin risk assessment framework that
Leverage uh data driven metrics and
today I am the moderator of the session
really excited about our panel with the
representatives coming from stable coin
project and onchain liquidity
provider how about we start a session
from you guys introduce a little bit
about yourself
um yeah hi everyone um alesandro I'm the
CD at dialectic um we are a non-chain
liquidity provider um you can think
about us as like institutional grade
yield forming so we provide liquidity to
anything that is on chain and and is
paying incentives so it's kind of
liquidity as a service as well um and
redeploy into stable coins and E and
Bitcoin yield opportunities mainly on
evm chains and uh I'll probably be
talking mainly about risk uh
today um my name is Colin I'm the head
of product for uh liquidy uh we are a
the most uh decentralized immutable
stable coin that exists uh with LUSD uh
and I'm in charge of an upcoming product
called liquidy V2 and we'll have a
stable coin called bold um so we'll help
you with the yield uh part of this
question and I'm Ariah I a co-founder of
gyroscope I also did one of the uh
probably first phds uh looking at uh at
defi uh back in in about like 2018 2019
and gyroscope is a uh a combination of a
decentralized stable coin and a deck so
it's a little uh unique in that regard
it's focused it's a protocol that's
focused on uh risk and liquidity
management uh as well as uh kind of
generating new yield opportunities
around uh specifically decentralized
stable
coins um well for the last 12 months we
have seen the number of new stable coin
project rise
exponentially but however I think around
199 4% of their stable coin market share
are dominated by four top stable coin
project on ethereum so 58% by usdt 27%
by usdc around 5.6% by D and the
rebranded version usds and then around
3% by USD which is just launched last
year so at this point it seems like the
main way for new cicon project to
compete is on yield opportunities so my
first question will be at this point in
the market uh sorry what yield what
yield strategy do new stable coin use to
compete and how do you see this evolve
over
time yeah so um I think that's it's a
really good point um so yield is a big
big aspect so our current LUSD um we
don't compete on yield our yield right
now is is not great it's 2 or 3% where
most other places are paying much more
we're building a new product should be
no surprise there
um it's not the whole story I mean there
there are different risks that come in
the other half of the the yield um so
Athena is is kind of uh mentioned with
USD as being one of the higher yielding
stable coins um but a lot of people are
concerned about the risk U one of the
highest yielding stable coins in the
last cycle of course was us um which no
longer exists um so you can kind of see
and I'm not proposing that Athena is
going to go down that route at any
stretch of the imagination but there are
people that worry about why am I getting
paid more um because you in finance uh
risk and and reward kind of go hand in
hand and if you find a way outside of
that you're either losing or you're
winning um but most people kind of get
it in the middle um but I think you hit
on a really interesting point which is
how do you prod product segment uh using
yield and using your risk profile um and
I think what's really interesting is if
you look in the trafi sector we're just
kind of across other defi things um
everything we label is a stable coin I
mean it's a transferable unit of account
that's generally measured in dollars I
mean it could be another currency um but
your savings account at a bank is as
well as is your investment in a
treasuries um these are all based on
dollars or in bot where in Thailand or
Euros or whatever um but they do
different things and some of them may
require you to lock money up for a
certain time and for different parts of
your portfolio that makes sense and I
think with stable coins we're going to
see nich sh cases usdc usdt work really
well because they're in centralized
exchanges uh they're very good at on-
ramping and off- ramping they don't
provide yields Athena is the polar
opposite so I think that we're going to
see lots of segmentation around that
focusing on yield as well as liquidity
and other
aspects and yeah I would add a little
bit on top of that uh in particular for
like new entrance to the stable coin
space um there is kind of like a
spectrum of course between like uh uh
how much risk are you taking on with
this stable coin design and also like
how how much you have to be compensated
for that risk but at the same time you
also have to compete with the uh the
like existing incumbents mainly like
usdc and usdt who have very entrenched
uh liquidity and the the usefulness of
your stable coin really depends a fair
amount on how easy it is to get in and
out of your stable coin to to actually
use it for what you're intending to use
uh and that depends on like how liquid
your your stable coin can actually be
and kind of like a chicken or the egg
problem even if you're not like
intending to only be focused on yield
you somehow have to like establish your
uh your liquidity and usually you have
to have to pay for it and like compete
with the cost of capital of uh of other
stable coins which actually is like an
advantage of usdc and usdt for them like
they don't have to pay for
it yeah and that maybe also just like
the the fact that like most of the
stable coin liquidity is actually not in
defi I think like all of us here on the
panel at least are like very much
focused on the def use case but most of
the supply of stable coins is outside of
Defi and it's used in centralized
exchanges it's used for payments um and
there that the existing Network effects
I think are very difficult for
especially like def focused stable coins
to compete with on those use cases so
where the defi stable coins are really
competing at is in the defi um ecosystem
where it's more about using the stable
coins as collateral it's using the
stable coins as pair with other stable
coins and there the yield component
becomes a lot more important being it's
it's the one of the big ways in in which
the different coins try to try to um get
their own share of the market now as
calling very correctly said it's it's
really much about risk adjusted yield um
and for us as like large scale liquidity
providers that's ultimately what we care
about if we can get very high a in a
position that's very risky um then
that's not something that we may do or
we may only do with a very small part of
the portfolio and then most of the
liquidity goes to like lower yield but
also much lower risk stable
coins um so what is the use strategy um
at G scope and liquidy then can you give
us some details on that I know you
mentioned that but like traditionally a
stable coin user can earn use from
providing liquidity and now you have a
Yi bearing uh stable coin which is
liquidity V2 and dry scope has their uh
uh s idea as well can you give us some
more details on
that yeah I can fill in a bit about uh
gyroscope there um so realistically a
lot of the kind of early go to market
for new stable coin does end up focusing
around yield just for this like chicken
or the egg problem of you have to
establish uh enough liquidity that
you're your product is actually uh
useful um and then also like
realistically so a lot of just stable
coins get used in Defi and then like
become ingrained in various yield
strategies and so the actual usage of
stuff at least on chain ends up
revolving quite a lot around uh yield
for gyroscope in particular we have uh I
mentioned we have kind of like the a
unique combination of a a stable coin
that's decentralized and a decentralized
exchange uh we have two main kind of
like yield products that are part of the
the go to market I suppose one is
a yield bearing version of the stable
coin SG for compared to the stable coin
that's non-yielding G and uh the what SG
does is uh kind of similar to some other
yield bearing stable coins it takes the
uh uh the revenues that come in from uh
kind of various aspects of how the
protocol works and forwards them back to
uh to to users who opt to hold sgid
instead of using G somewhere else um and
currently that yield kind of averages
kind of between like 12 and 16% right
now in the the current environment uh
and then we also have uh our
decentralized exchange we have uh what
we consider a more efficient liquidity
pool type that's also more easy for uh
kind of like LPS to use uh it's focused
on what's called asymmetric concentrated
liquidity you can think of it it's kind
of a big word but you you can think of
it as just a way to squeeze more
liquidity out of the same assets that
you're putting into the pool by kind of
strategically choosing which parts of
the pricing region you actually need uh
and tying that in also with like how
this stable coin is actually designed so
why it's why we built it actually for gy
is that uh G has like a minting and
Redemption function and we use that to
basically say hey uh minting and
redeeming uh kind of takes care of most
of the pricing range and you can then
make uh kind of secondary markets
focused on very particular areas and so
that's like a high level idea of why
uh our decentralized exchange is kind of
more more efficient uh but it it's made
specifically for for GD like that that
was one of the reasons why we built it
and so one of the most efficient places
to actually put GID to use is using it
uh in our decentralized exchange which
uh also like ends up grouting quite a
lot of volume these days
too yeah so um I think you made some
really good points in there um kind of
one of the things like when we designed
our product realization and kind of
taking a step back where with our first
um version is there's actually unlimited
demand to create stable coins I mean I
think if I did a survey here and I said
if you could mint a token that was worth
a dollar um would you do it and I think
everybody would say I'll do that in
unlimited size the issue is there's not
unlimited demand to hold your token that
you just Meed um we realized that
actually with V1 um because when you
would mint it you'd pay a half% fee and
that was it it for the rest of your life
um we had some mechanisms in there which
ultimately kind of created an issue with
our V2 um we kind of understood that
everybody would mint uh on an unlimited
amount um but you have to pay this
borrowing rate so we've been talking
about yield um our kind of USP is that
you set the rate you want to pay uh you
decide what interest rate you want to
pay for that stable coin you've minted
now this guy might choose 3% a year you
might choose eight why would you choose
three and you eight um we have a
mechanism called Redemption and
essentially we are a CDP which means you
put in eth or lsts um you paying three
if that somebody can acquire that for
less than a dollar they can turn around
take that stable coin and take your eth
obviously you you probably like eth I
imagine most people at Devcon probably
are constructive on the price um depends
on the talks you went to go see before
this um but if you believe it's going to
go up over time you don't want to lose
that uh and have somebody pay back your
debt so you might say okay well I'm
getting 3% that's a great deal now but
if I see that I'm likely to be redeemed
I'm going to move that up and pay closer
to 8% like this person over here um over
time what that should yield is kind of a
very good rate that is a decentralized
reference rate is what we referred to it
as in trafi we have these reference
rates it's how much does it cost to
borrow a dollar if defi we ask that same
question we'll get like 18 different
answers people might reference trafi
they might reference a they might
reference maker um but there's no one
number uh our goal is to hopefully get
enough liquidity to be part of that
answer uh and in time we hope to be that
answer uh overall medium to longterm
time
frame oh well since you both we
mentioned the you bearing stable coin
which is um it does not only it does not
offer only offer the stable value but
also um it gain Ed based on uh return on
underlying Catal and then it seems like
for the last 12 months real well asset
become a really popular choices what's
your view on
this what's your view on this Mass
adoption of real world asset the pros
and con maybe Colin will be the last one
to answer that I know you have a lot of
opinion I mean um I work in defi um so
real world assets don't exist in my
world um because they're not defi um
it's great if people want to play with
them um go to Goldman Sachs and do
that that's
it um what's your opinion then Alexandro
um I mean like it's for us it's a very
different set of risks where we are very
specialized in understanding and
measuring and mitigating risks of
onchain things that are transparent that
we can audit that we can go deep and
understand like fundamentally how this
mechanisms work we have full onchain
auditability of what the reserves are so
for us that's what we focus on and it's
very not not easy but it's very
intuitive for us to to think about risk
that way as soon as the assets leave the
chains that the set of risks that you
take on are very different you need to
look at counterparties and jurisdictions
and understand what the rights are in
case of bankruptcy of the custodian and
it's it just adds like another dimension
to to the stable coin game and I feel
like over time the decentralized options
should mirror the yields that the rwa
take if not more and and also like the
rwa yield on on T builds which I guess
is the most common asset to back stable
coin Swift these days is is going down
um and and depending on on how the
economy goes in in the next year or so
it's expected to go down even further so
I I think that the rwa push was really
due because the yields were very high
and then it makes sense for defi to tap
into these yields but as they go down I
believe the the decentralized options
that are Crypton native that are built
on Def Primitives will out compete not
just on on the yields but also in terms
of transparency and auditability and
therefore in in in terms of risk as
well so I would put uh real world Assets
in kind of a similar boat to uh to like
usdc so you can do a lot of defi stuff
with usdc and rwas but that doesn't mean
that like a centralized stable coin or
like a an rwa is like itself defi you
can use it and you can do interesting
stuff on top of it um but yeah I mean
I'm pretty sympathetic to uh to what you
what you were saying Colin about like uh
uh I I think something that's like
vastly underappreciated is the just how
much risk there actually is in in rwas
even to the point where like if your
goal is to hold like an rwa uh it
doesn't really make sense for you to
hold it like directly in defi you're
choosing like an inherently riskier way
of holding this this asset um so it
really only makes sense if like it's
useful for something else you want to do
in defi kind of like building on top of
it and and also what I feel like is for
um when sometime when people talk about
tokenized real world assets right they
always mention about the transparency
but it's not necessarily always true and
then for tokenized credit pool if they
went bust the process to recover the
asset underlying it's actually quite
difficult to understand especially for
General
user um we but we know the market is
driven by youth um and most of the you
are motivated by you not all of us want
to talk about the
risk um I once ask a friends about how
he choose a stable coin and then he told
me that he feel pretty comfortable if if
the yield is high and if the market cap
is above uh100 million that sounds like
someone is going to lose their money
during the uh Terra crash so I think
what we need to know is a stable coin
user face different type of risk
depending on how they engage with stable
coin uh whether it's direct holder
whether it's a leverage user lender or
uh whether it's liquidity provider so
one of the most discussed risk is the uh
St coin deping risk where the stab price
is significantly lower than the pet
value or the value they Tred to
stabilize so in your view what factor
may cause the stable coin to become
insolvent or permanently lost part of uh
its
value um I mean there's like many
reasons why stable coins deeg um in
theory if a token is redeemable one to
one against an asset that has a fixed
value and has a lot of liquidity and and
you can like exit a position in some way
it shouldn't now there's there's many
things that go back and it it goes from
like smart contracts getting exploited
and people minting more stable coins
than what the collateral is and and then
it defects for that reason or it is
because cicom Valley Bank is going
bankrupt and then usdc D pegs because
their reserves are not on chain and
people can't verify how much money is
actually exposed um and then in the past
we' have seen like algorithmic stable
coins and people have been trying a lot
of different mechan Mech isms to keep uh
pegs in a way that is under
collateralized and most of those didn't
work um so so I think it really comes
down to like the mechanisms of the
stable coin and and ultimately at least
from from what we've seen in the market
a stable coin that is not fully
collateralized and can be redeemed
against some underlying assets is at
very high risk of of dep pegging and
it's more a matter of how many people do
you need to withdraw in one moment for
there to not be enough liquidity to to
suain the price and then Bank runs start
the the same way that bank runs have
started for hundreds of years um so so
it's it's multifaceted but if if like
the design is solid and and if there is
actual value backing the stable coins
and the mechanism to get the stable
coins um and exchange it for the
underlying value then at least in in
general it it should be pretty
begged I I think that was a pretty
complete yeah there are we've seen lots
of lots of different reasons and I think
you you highlighted a lot of them I mean
the one I'd add is poor mechanism design
um is a common thing um people building
stable coins that they need to can have
humans that are throwing money in to to
keep interest in it that wasn't designed
inside the mechanism um you know that
runs for a while um eventually people
realize that they're throwing a lot of
money in to pay to keep it token stable
uh and you can only do that for so long
like we hear in trfi about a lender of
Last Resort essentially in a lot of
these tokens we have you know uh a bag
holder of Last Resort uh and that's when
we dpeg um you know we need to find an
equilibrium and that needs to be
designed in the mechanism um obviously
when you know we have backings uh they
should be redeemable for something
whether it's a decentralized asset or a
non- decentralized asset um and those
are pretty good ways but I guess uh when
those break uh that becomes a problem um
but just functionally um designing your
token a way that can be sustainable I
think is a prerequisite regardless of
all the other questions so I know arah
actually predicted the crash of Tera
even when Tera is at is a pick so I
think one fun fact about him is like a
Doan K you what a cockroach yeah so do
you think we have learned from the teror
crush like the
market I hope that uh that there are
some lessons that uh are learned uh by
most people uh and I hope that one of
them is like kind of being cautious of
what's what we've called like endogenous
collateral something where uh the value
of where a stable coin is backed by some
other token but where the value of that
token is like circular with the with
with the stable coin itself so like
terara uh was backed by Luna well sort
of backed uh but like Luna really only
has value because people think terara
has value and so like there's just like
a spiral to zero that's that's possible
there um and if you kind of disentangle
the how all of that works I mean it's
basically equivalent to a Ponzi scheme
and so it shouldn't be too surprising
that it just uh blows up will we have
another one this
cycle well that's what I hope we don't
well as a general stable coin user I
found it I sometime do find it very
difficult to understand because stable
coin normally rep especially the
decentralized one rep underneath like
very complex design so I come up with a
one if statement to help people to to
try to identify whether that's a Ponzi
scheme like if if the St con is back
significant amount of the significant
part of the St con is back by a asset
create from nothing create from with no
economic value and no other use cases
that is a Ponzi scheme am I is it fair
to say that I mean the US dollar would
be a Ponzi by that definition it has
other
usage
um
so apart from the deping RIS there'll be
what are the other risk that are often
overlooked and stable coin user may not
realize that they two will incur
loss um yeah so like we break down risk
into different categories um the big one
for us and also I guess historically
where most money was lost in defi is
smart contract exploits um so that is
all about like is it possible for
someone to use the smart contracts in a
way that the developer didn't intend and
through this unintended use take out a
lot of the value that is backing the
stable coins that would then lead the
stable coins to to dpeg um dead risk is
kind of always there like even protocols
who have done many many security audits
who have some of the smartest people
behind they still get exploited it's
it's just the trade-off that that you
need to do if you want to be in Defi and
if you want to use protocols that are
built on Smart contracts and give you
all of the um trust minimization
guarantees and security guarantees um so
so so that's I I think the biggest one
in in our view there's many others
there's things like governance risk so
like who can update the smart contracts
that the stable coin is is running on
there is some like considerations around
centralization around there and and even
if it's not um necessarily malicious
upgrades of the contracts you're still
relying on the operational security of a
small group of people who have access to
the smart contract and we've just seen a
couple of weeks ago with with the
exploit on radiant that um that that can
happen like it's very sophisticated
players doing these attacks but it can
happen that the group of people who has
right to upgrade the smart contracts get
compromised and then that leads to to
the smart contracts being changed in a
malicious way and a lot of money being
lost so and and then I guess the the the
other thing is mainly around like
economic mechanisms so many of the
stable coins all have different ways to
to manage the peg um and these
mechanisms need to be
solid and should have been simulated in
different environments and in different
market conditions with volatility and
other assets being liquidation Cascades
and and things like this so I I I think
it's really like a multi-dimensional um
risk assessment that one needs to do and
the the the nice thing is that all of
the information is there it's more a
question of going through all of the
documentation going through the smart
contracts if needed um getting in touch
with the team getting a very deep
understanding of what the trust
assumptions are what the security
assumptions are and then coming to a
conclusion whether or not that makes
sense for the yield that that is being
offered by the protocols or if the the
the unique selling points of the stable
coin in terms of network effects and
liquidity are worth taking the risks
that that come with
that well um since you just like to
mention the government risk I would like
to um go deeper into into the government
risk
so what are the common types maybe for
Colin what are the common types of uh
governance mechanism that have been
adopted by most of the stable coin
project nowadays yeah I mean I I'll kick
that off by saying I agree governance is
bad and stable coins should have minimal
governance whenever possible um I mean
the big risk is things can be changed
parameters can be changed um a lot of
people buy into stable coins because
they fit into a product and and
something they like and they may find
that you know they do this and somewhere
down the line somebody puts rwas in the
back or or puts other things and it
functionally becomes a very different
thing than what they expected um
effectively just become sometimes a
rapper for a stable coin another stable
coin like usdc um you know that is
useful for a lot of people they like to
have whatever but uh if you're a
long-term holder and some of these need
to be kept longterm because maybe
they're backing another immutable smart
contract it's very hard to build your
business uh focused on decentralization
if somebody's able to change this
Downstream and and we find with our
users um because we have no governance
and we don't have proxies um that's not
the main concern people have it's smart
contract risk based or liquidity based
in case these guys don't show up um but
if if you're trying to build something
that should be able to stand the test of
time you need to build it on top of
components that will remain in a
predictable Manner and some of the
biggest uh entities out there that's
what they're concerned with it's not
just eth Maxis that say we love
decentralization it's some of the
biggest balance sheets in defi do not
like governance behind stable coins and
I think that that's something that's not
fully appreciated um because governance
is a risk not just for the average user
who goes oh yeah my money might get
censored that is a huge risk um you know
usdc can white Blacklist your
address some of these stable coins have
that as governance but that's not only
thing that can happen they can also
decide um we're going to completely
knock out some of these positions we're
going to add weird things into it we're
going to change it and make it
unrecognizable in some cases they can
through governance parameters shut it
down and withdraw collateral they tell
us it's for safety but what happens if
they're asked to do that by a
government is that still
defi what's your view on that
arah I find it kind of ironic that most
people don't care about governance risk
when we have a space that has so much
like a uh rug poles in it which is
governance risk or like one major form
of it um and uh I think we most of us
probably on the stage here agree that
like governance minimization is probably
a good thing if not just because it like
helps to minimize governance risk but
also like anytime you have like
something like a dow running something
it's like incredibly inefficient and uh
a bit scary uh so the is where you can
minimize that and make it less scary I
think that makes a lot of sense and
that's kind of the approach we also took
with h with with gyroscope uh although I
would I would say we took a more
pragmatic approach we don't think you
can actually like remove governance
entirely at least for what we want to
build which is a bit different than what
liquidy is building too so fair enough
um but for what we want to build that
you you can't there are some things you
can't really predict how it should
change in the future in particular how
like the defi space will evolve and how
the asset space in defi will evolve and
we see that like you basically have to
have something that does some sort of
governance at least for what we're
building to to be able to adapt to that
but in our view that is a very uh that
that's very good to be a ve a
particularly slow process and we don't
need like Fast governance to to do that
nor do we want fast governance to do
that because fast governance is a lot
riskier than than slow governance if you
have slow governance uh and you're a
user of the protocol you have time to
see is something risky coming up and am
I still happy using this or do I want to
move to to something else that uh that
isn't uh is isn't doing something this
risky and to the extent that like fast
things need to happen in the protocol
that that we built we automated it so
that that should happen automatically by
the protocol we don't have to wait for
governance to come in and do a quick
action and instead governance can
specialize in what it should be doing
which is just slow things about how the
space uh should
evolve do you think you guys can come up
with a example that laws has incurred
because because the governance process
is not optimal in the past um I mean yes
the as as I just mentioned there was a
there was an exploit on on a protocol
called radiant um where the full
protocol was upgradable by a multisig
wallet with three out of 11 signers
required to to approve any transactions
and those three signers got compromis on
their computers um and and someone was
able to trick them into approving a
transaction that they didn't intend and
this malicious transaction ended up
introducing a back door into the
protocol and around $50 million of of
liquidity was stolen so um I think this
is just like the type of exploits that
that can happen um and that that's the
things that we need to protect against
even though we may trust that the the
the team and if it's publicly known
people there's some level of reputation
in that but I I think what the Rya says
is is really really important where it's
about how quickly can bad decisions be
implemented so any changes to a protocol
should go through a time lock they
should be publicly visible for some
period of time before they go into into
effect so that first of all users can
make their own decision whether they are
still fine in holding the exposure to
the asset um after the things change or
um even if it is some malicious upgrade
these these changes can be blocked
before they affect everyone's uh
everyone's
assets awesome um after the terror crash
many entities have published their own
risk assessment framework like you have
your risk ass framework within dialectic
um some of them even go further to
public the final risk rating for stable
coin like SNP or uh other agency what is
the best practice to assess stable coin
risk and do you like the idea of having
a final risk
rating uh yeah I think it's a really
hard question to answer um people need
to spend time in kind of understanding
the risk they're taking unfortunately um
that's kind of one of the downsides of
being
decentralized um I think a lot of people
will look at things like usdc as being
kind of a flag bear of what's good
because they trust that there's a big
company behind it that has lots of rules
with coinbase and circle notably um but
that is you know brings inherent risks
inside of it so if you're looking beyond
that the one we hear a lot when we talk
to our users is a lindin of how long a
token's been around and and proven
itself how big it is um but that's kind
of just an effect because Tera was very
big and and was around for a while so it
would wouldn't pass on that
understanding some of the economics and
and having people that can evaluate that
is important you mentioned kind of the
modeling um there are companies out
there that are trying to do some of
these risk weightings and I'm I'm a big
fan of it personally um because I don't
know that everybody has uh the time or
uh the interest to go through and dig
through that they just say I want
something that that's a dollar and I
want it to be a dollar today and a
dollar in the future um so giving them
tools I think is is a great thing and I
would challenge the community uh to come
up with more Frameworks that we can look
at uh and hopefully one of those itself
will become Lindy so people can look at
it uh and say you know these are some of
the Frameworks that we like best and
hopefully those don't become corrupted
um as we've seen with other ratings
agencies I thought AR want to add on
something I definitely think risk
Frameworks are like a net positive the
one beef I would have is that uh in
terms of like giving One summary stat uh
it is usually just like a big
oversimplification because there's so
many different risks and it really
depends on who you are and what you're
using the asset for in terms of uh what
the risks mean to you and what the like
best uh solution is actually actually
for you um and depending on uh on what
your preferences are you might prefer
usdc it's a it's extremely liquid it has
a a relatively trusted company behind it
uh I mean it had ran into issues of
course so that's probably shouldn't have
happened but it did uh uh but they they
got past it uh it works fairly well uh
but for other people uh they may like
liquidy for instance uh but liquidy also
has its own risks one of them being it's
much more price volatile uh and
inherently not as liquid too because you
have to uh you have to over such a wider
wider region um but it like is better
when it comes to to other risk factors
like like using purely decentralized
collateral um and there there's more
than just this too there's like many
many different reasons you might even
prefer other stable coins than than
these two um this was part of also the
motivation for why we built gyroscope
because we wanted to make something that
was easier for for most people to use or
what we think like most users of stable
coins are that can just handle the risks
for you and kind of like uh balance the
the various different risks but still
you might prefer kind of like taking on
more of one risk than a gyroscope would
take on for you and less of of another
you might not want the balanced approach
but it sounds like you don't like giving
users the information of why they should
trust you they should just do their own
research and figure that out you're
against the
simplification
um I
would I I think having the information
out there definitely net good or all
good um but it feels like there should
be maybe something more connected with
like uh what your use case is I guess in
terms of like helping you figure out
what the grade is for for different
stable
coins I think I can add on to that as a
user and then I'm coming from a credit R
background to me a b c and d has its own
meaning probability of default but what
does AB C and D represent in stable
coin's term so that's the confusing part
quality Trend how safe it is it's just
unclear so to me the my best practice
will be like the user has to do its
homework right and then you look at risk
in different category and based on their
own risk appetite they look into the
risk rating or risk score for each
category but not have a final risk
rating been given too handy for everyone
and as I say it's kind of confusing I
think we have do you want to add yeah
just also just like um like for some
users the biggest risk is still self-
custody um and and so like even if the
stable coin and everything is is very
safe um there's like a whole giant group
of users for which just the fact that to
hold a stable coin you need to have your
own Keys is already like a bis big risk
factor so I I think it really depends on
on the user as as as you said as well um
well like different users are fine with
taking different security assumptions
and different users are fine with um
exposing themselves to different risks
and and in the end everything is risky
to some extent and it's just different
types of risks and and it's up to the
user to kind of understand them and
decide what they feel comfortable with
and what
not well we'll have five minutes left in
the panel so um to wrap up what's next
with you or with your project and then
do you have any advice for any potential
state Co users
here uh yeah so we're launching V2 soon
um we know what that means it will be
soon though um uh would welcome all of
you checking it out uh liquid. org uh
we'll be releasing a lot more
information here extremely soon
including test Nets uh very very soon
I'm using soon a lot so just to
reinforce this um without giving any
numbers but uh would love if you could
check it out um on the yield front uh
borrow pay money in 100% of that's
passed back out it looks closer to a
public good than some other things um so
we're very excited about it um it is
true Innovation and and it's truly defi
uh and we feel very strongly on it and
would love to hear from you um so hit us
up on Twitter uh hit us up in our
Discord and everywhere else um hopefully
everybody in this room will be a user
plus the people listening
online for gyroscope uh we've had our
main product this the stable coin out
for coming up on almost a year now about
about 11 months uh the it this will be
followed pretty soon now by the like
actual like governance token launch so
that's something exciting to to look
forward to um we're also uh I'll be
talking actually on Friday about what we
think will be the next like actual
innovation in uh in in gyroscope what we
think will be the next like basically
70% Improvement on how you can get uh
liquidity cheaper for in particular
decentralized stable coins why I think
it's pretty exciting is that like uh we
have uh usdc and USD it has very
entrenched liquidity it's very hard to
compete with that but there are some
ways which I'll be talking about on
Friday that decentralized stable coins
in particular have a unique advantage
that just hasn't really been exploited
yet and well we want to build the thing
that uh that will exploit it so uh come
check that out if you're around
cool yeah and I mean on my side we are
mainly like liquidity providers so we
get excited whenever these guys build
some New Primitives um that that we can
play with um and generally like I think
that defi is is ready for like a another
summer moment um so much has been built
and in the last two three years so many
of The Primitives has taken so many
steps forward and so it's just like very
exciting time for for us to be in the
market and be working with all of these
people and and helping them along the
way to to bootstrap their liquidity and
to to get a product to to more users um
on the dialectic side we also starting
to think about how we can offer some of
our yield strategies to more of a public
audience um because right now we're just
a a private fund and um yep stay tuned
for
that well I think we have two minutes I
think we're on time you're going to tell
us what you're excited about oh mine
um I as I I saw one question actually
from the audience talk about the what is
the best way to measure risk as I
mentioned I'm working on a risk
assessment framework for stable coin and
then my goal is to identify metrics that
can be deriv from publicly available
data so it will be like a a method that
combine uh fundamental analysis and
quantitative analysis to try to be as
biased as Fair as POS unbiased as fair
and fair as possible so maybe follow my
Twitter account and then I'll have my
research paper published uh become
available soon and and can I ask one
more question as we still have a minute
and 36 seconds do you this is a question
back to the moderator because you don't
get to talk it off um as you represent a
centralized exchange do you think that
we'll see much more stable coin listing
on centralized exchanges and if if so
why if not why not
um yes or no yes for custodial stable
cor I think I not representing anyone
here but this is what I understand we've
seen more custodia stable coin become
available in the space and then they can
become regulated or even been used in uh
for payment especially in Europe but for
decentralized stable coin I think it's
quite difficult though if you look at
the latest uh regulatory framework by
Mika I think they will restrict
centralized exchange to list
decentralized St con so which means that
it will be quite difficult for you to be
listed but at the same time your
regulator risk should be lower though
because um they don't really have a lot
of requirement on checking your reserve
for example or monitoring your issurance
or Redemption so it really depends on
what you value the most and do you
really need to be listed on centralized
exchange though we don't necessarily but
some people want that um and one way is
like they use decentralized St coin on
chain and then if they want to cash out
on centralized exchange right they can
do the swap on tax and then from there
you get something else and then you send
the the crypto asset to centralized
exchange for
fat Q&A
time I don't know if you can see this
but they have little Billboards that
they hold up the say Q&A time for the
Q&A either you do the or I up to you oh
okay this
here the first one what's the stable
coin decide you are most bullish about
right now and why liquidy
V2 uh
gyroscope um liquid TV2 and
gyroscope
yes um why do protocols with Y bearing
stable coin also have a governance
token um because they can raise money
with uh governance tokens and attract
people uh it's a great bootstrapping
mechanism or it has been um because
there is a cost of capital starting a
stable coin um people will buy volatile
tokens because they think the price is
going to go up uh with a stable coin
generally people don't expect the price
to go up um so you got to give them
something and if you don't have a lot of
money raised from a VC um a governance
token solves
that well the second one four part Tessa
gets shut down by
us now after after last week very low
very low I mean it's not even based in
us it's packed to US dollar right is it
like the common is in Cayman Island or
nobody knows Bahama Switzerland
Switzerland
oh what's the next one I mean there are
ways that they go government could try
to shut it down I wouldn't say there's
no risk but it does seem like
less next one what do you think of EA is
it
sustainable um I mean I think it's I
think it's a really interesting idea um
I'd say assuming they do what they claim
to do it is sustainable because they're
essentially doing a strategy that is a
trading strategy and they're making that
tokenized um so assuming that's all
they're doing and I have no reason to
believe that they're doing anything else
um yeah that's sustainable as long as
people are trading
perss yeah I think it's uh it makes like
economic sense uh there's probably two
things to think about about like
sustainable though I guess uh it it has
positive rates in some environments and
probably negative rates in other
environments and if you have a sustained
negative rate environment in particular
when people don't want to take a lot of
Leverage uh which happens during like
deep bare markets you may just have a
natural unwinding of the system at least
how how it's set up right now and maybe
even
disappear anything um no I mean like as
all trading strategy there is some
limitations on capacity so you you can't
run the same strategy with 10 or 100
times the the the capital so like it can
scale forever but at the size it's now
and and as the Market is is is right now
it's it it should be
good well the LA the next one will be
why don't protocols use vaults ERC 4626
instead of a stable coin don't they
serve the same purpose without the RIS
of maintaining a stable
coin uh I think most people like
tokens that's my my short answer
Humanity I mean if you get a token
something that's just like oh yeah I'll
be able to put this in and get a dollar
is worth out of let's say eth a dollar
in today a dollar out later uh sure why
not um but I think most people like to
do stuff with that dollar value like
yield Farm or whatever um so that's I
think generally why users have not been
overly interested but maybe I'm missing
something yeah I mean I guess to some
extent 4626 is also tokenized um but uh
I guess there just like some
composability that comes with just
having a token that you can use as
collateral that you can pair with the
tokens to provide liquidity and pools
and it's just like the mental model that
people have is still very much token
focused and not like Vault account
obstruction
focused well the next question will be
is there decentralized stable coin that
can take over the
usdc in defi ours yeah I I mean it's uh
I think it's like we were saying like
tokens will address different things and
a big use case of of stable coins is on
R and off ramp um as long as coinbase is
is a big way to get in and out I think
usdc and tether uh as well will be very
important um basically both of those
coins extend US dollar banking to
unbankable uh offshore exchanges as well
um so you see some of the the biggest
exchanges you're not able to trade in
dollars but you can trade against a usdt
pair um as long as that is still exist
uh it's hard to say if we just
restricted to defi I personally would
love to see decentralized stable coins
become the main things to do it in uh
there are tax incentives at least within
Europe of why that might be better maybe
that will drive some things but again
we're Europeans we're we're poor so
maybe
not another thing is that uh
historically at least decentralized
stable coins have suffered like
liquidity challenges compared to
centralized stable coins um but I mean
there are actually some ways to turn
this around which is what I'm planning
to talk about on on Friday and some
advantages that uh I mean decentralized
stable coins have some flexibilities
that centralized stable coins don't that
you can actually potentially make them
actually much more efficient when it
comes to uh to to
liquidity yeah I agree I mean there's
some advantages in having like instant
anatomic redemptions in stable coin for
example for for people doing like
Arbitrage and and doing those sorts of
strategies um it I I think to some
extent it comes down to network if
effects and and usdc especially and defi
has just huge Network effects it's the
most it's the most liquid asset to swap
against eth and Bitcoin and against many
of the other assets it's the cheapest
one to bridge it's the um quickest one
to bridge to a centralized exchange and
I feel those Network effects are very
strong and and there needs to be
something that is given by the
decentralized versions like yield
bearing um that that usdc doesn't have
that really like a strong use case to to
win the users
over I think we we should have a
healthier competition in the sector I
like 94% dominated by four stable coin
is just way too high and doesn't sound
very healthy so as user that we should
just actively explore what are the
options there as like you guys have
mentioned centralized stable coin and
decentralized B they offer different
sets of benefits um the next one will be
do you think will ever get a world where
there are no stable coin back by the USD
instead there is single Global
inflationary
currency I do hope that we get to see
that I do hope that we get to see stable
coins that are backed by all sorts of
assets um because that's just
diversification and it reduces the risk
on the space and on defi in general um
I'd love to see more stable coins be
backed by by assets that are not USD
about a single Global inflation ER Rec
currency I I think that's what we got
with the USD um and yeah and we should
use eth as collateral more yeah I I
agree eth is a pretty good like non USD
back stable coin it's one eth Bitcoin as
well Bitcoin is one
Bitcoin yeah uh I think the reality is
today everybody wants to use like
dollars for most things but that may not
always be the case and uh uh defi should
be ready and prepared to do other things
than just dollars at some point
too oh this question is to
Colin will bold be you bearing also
immutable like liquid liquid liquid V1
uh
yes so we have room for one more
question ultimately are stable coin use
in the crypto Market simply a game of
musical
chair um there's kind of two types of
yields that that you can get on stable
coins one is what we would call organic
yields so that's anything that's
interested you're on Ling markets
because people are actually borrowing
your stable coins um there's things like
trading fees if you're deploying stable
coins into a stable coin pair on Deck so
those I think will always be there
that's just like the cost of the
protocols and the cost of liquidity um
but well what like most of the yield in
defi is is is protocol incentives and
and I don't know if that is something
that will be going on forever but the
same way that web 2 companies have huge
us acquisition costs I think um
liquidity incentives are like a very
similar parallel for defi where any new
protocol needs to solve the chicken and
neck problem um and and just paying
yield and and governance token is a
great mechanism to do that to add a
little more to that there we have some
liquidity pools that uh
from organic yields earn like 10 to 15%
so they do exist uh but yeah a lot of
defi yields end up also coming from like
token incentives there's many different
flavors I guess you guys said everything
so I'm going to skip to the last
question that's what we build is
immutable contracts uh it's Frontier but
everybody should do it that
way well the music is up so I think
we've got to go thank you very much for
joining the
panel yeah thank you so much Alexandro
Aria colen and Tommy for this very
insightful panel um I learned a lot