1 00:00:10,880 --> 00:00:15,320 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:15,400 --> 00:00:20,639 Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. So, Tracy, you know, 3 00:00:20,920 --> 00:00:23,880 Speaker 1: we recently had the coin Base ip Yes, we did 4 00:00:24,000 --> 00:00:27,920 Speaker 1: a big moment for crypto. That was I think the 5 00:00:27,960 --> 00:00:30,240 Speaker 1: analogy I must saw used was that it was like 6 00:00:30,320 --> 00:00:35,080 Speaker 1: crypto's coming out party. Yeah. I think that's uh, that's fair. 7 00:00:35,159 --> 00:00:38,239 Speaker 1: I saw it compared to the Netflix I p O, 8 00:00:39,120 --> 00:00:42,199 Speaker 1: maybe some comparisons to the launch of the CME Bitcoin 9 00:00:42,360 --> 00:00:46,920 Speaker 1: futures in late twenties seventeen, but certainly, uh, certainly quite 10 00:00:46,920 --> 00:00:50,960 Speaker 1: a big moment for the crypto world. Yeah. Um, it's 11 00:00:50,960 --> 00:00:54,360 Speaker 1: sort of. I guess it capped a really big year 12 00:00:54,640 --> 00:00:57,280 Speaker 1: for crypto in the sense that we've seen this massive 13 00:00:58,000 --> 00:01:01,120 Speaker 1: institutional adoption, or at least a lot more than a 14 00:01:01,120 --> 00:01:03,520 Speaker 1: lot of people had expected. We saw PayPal thing that 15 00:01:03,560 --> 00:01:07,640 Speaker 1: it would allow its users to buy and sell crypto. 16 00:01:07,959 --> 00:01:11,160 Speaker 1: We've seen parts of Wall Street start to get more interested. 17 00:01:11,360 --> 00:01:13,440 Speaker 1: We seem to be very very close to getting that 18 00:01:13,520 --> 00:01:17,160 Speaker 1: long awaited Bitcoin e t F and so it really 19 00:01:17,200 --> 00:01:20,720 Speaker 1: feels like all of that momentum sort of built up 20 00:01:20,760 --> 00:01:24,960 Speaker 1: and then exploded in the coin Base IPO. Yeah, that's 21 00:01:24,959 --> 00:01:28,640 Speaker 1: exactly right. But there is an irony with coin base, 22 00:01:29,240 --> 00:01:32,080 Speaker 1: and you mentioned crypto E t F, but there is 23 00:01:32,080 --> 00:01:35,080 Speaker 1: an irony with a coin base, which is that, you know, 24 00:01:35,360 --> 00:01:40,000 Speaker 1: with crypto, it's supposed to be cutting out legacy financial institutions, 25 00:01:40,000 --> 00:01:42,360 Speaker 1: like that's a big part of the sales page, but 26 00:01:43,280 --> 00:01:47,640 Speaker 1: a coin base just went public on legacy exchanges. But 27 00:01:47,760 --> 00:01:51,720 Speaker 1: beyond that, coin base itself is kind of, in a 28 00:01:51,760 --> 00:01:57,680 Speaker 1: weird way, a legacy financial institution itself. It handles fiat currency. 29 00:01:57,760 --> 00:02:01,120 Speaker 1: People send in their dollars or euro or whatever, and 30 00:02:01,160 --> 00:02:06,000 Speaker 1: from there they could trade various digital currencies, but they're 31 00:02:06,000 --> 00:02:09,600 Speaker 1: holding dollars and all kinds of their gatekeeper and they 32 00:02:09,639 --> 00:02:13,360 Speaker 1: have to do uh, you know, anti money laundering regulations 33 00:02:13,400 --> 00:02:15,200 Speaker 1: and knowing your customer, and they have all kinds of 34 00:02:15,200 --> 00:02:17,880 Speaker 1: personal information on their customers and you have to tell 35 00:02:17,919 --> 00:02:20,840 Speaker 1: him your name and uploading idea and everything. So although 36 00:02:20,840 --> 00:02:23,680 Speaker 1: it's like kind of like a crypto exchange, it's very 37 00:02:23,800 --> 00:02:28,120 Speaker 1: much like it is a legacy financial financial institution into 38 00:02:28,120 --> 00:02:31,160 Speaker 1: a very real way. Well, it's also a centralized order book, 39 00:02:31,160 --> 00:02:34,120 Speaker 1: which kind of flies in the face of um a 40 00:02:34,160 --> 00:02:38,440 Speaker 1: lot of crypto ethos about decentralization, and you know, trading 41 00:02:38,480 --> 00:02:42,320 Speaker 1: between parties without a third party in between them. Yeah, 42 00:02:42,400 --> 00:02:46,720 Speaker 1: exactly right, Like it bears many resemblances to a traditional 43 00:02:46,720 --> 00:02:50,480 Speaker 1: exchange or traditional prime brokerage for its institutional customer, or 44 00:02:50,639 --> 00:02:54,720 Speaker 1: traditional online brokerage like maybe a Schwab for retail traders. 45 00:02:54,760 --> 00:02:58,519 Speaker 1: So it's only like partially new. But that being said, 46 00:02:59,320 --> 00:03:02,360 Speaker 1: there is a phenomenon that's growing in the crypto world 47 00:03:02,440 --> 00:03:04,400 Speaker 1: and I don't think we've talked about it yet, but 48 00:03:04,440 --> 00:03:06,720 Speaker 1: it's been growing for the last couple of years, and 49 00:03:06,800 --> 00:03:12,520 Speaker 1: that is attempts at creating markets that are truly truly decentralized, 50 00:03:12,520 --> 00:03:17,480 Speaker 1: so no no company handling the trade, right. And so 51 00:03:17,560 --> 00:03:21,200 Speaker 1: this is a really interesting project from a market structure 52 00:03:21,480 --> 00:03:25,600 Speaker 1: perspective because normally you would have a third party who's 53 00:03:25,600 --> 00:03:29,560 Speaker 1: stepping in to provide liquidity as needed. But if you 54 00:03:29,680 --> 00:03:33,119 Speaker 1: just have market participants who are trading with each other 55 00:03:33,320 --> 00:03:37,120 Speaker 1: in a truly decentralized environment, then you have to figure 56 00:03:37,120 --> 00:03:41,320 Speaker 1: out other ways to encourage liquidity. And I think that's 57 00:03:41,400 --> 00:03:45,920 Speaker 1: where this aspect of crypto actually becomes very very creative. 58 00:03:46,040 --> 00:03:49,640 Speaker 1: It's also where weird stuff tends to happen, and I 59 00:03:49,640 --> 00:03:52,240 Speaker 1: think we're going to get into that it's super weird. 60 00:03:52,360 --> 00:03:55,760 Speaker 1: It's super different. It's a very different structure. Obviously, if 61 00:03:55,760 --> 00:03:58,640 Speaker 1: there's no company, there's no one to send your cash to. 62 00:03:59,480 --> 00:04:02,160 Speaker 1: But that so that also is its own weird thing. 63 00:04:02,520 --> 00:04:05,200 Speaker 1: How you solve that. But there's also no gatekeepers, there's 64 00:04:05,240 --> 00:04:08,160 Speaker 1: no setting up accounts. It's just a very different thing. 65 00:04:08,560 --> 00:04:11,400 Speaker 1: But there is an argument to be made that a 66 00:04:11,480 --> 00:04:16,120 Speaker 1: sort of decentralized trading environment is much more true to 67 00:04:16,320 --> 00:04:20,839 Speaker 1: the to the crypto ethos. All right, let's get into it. Yeah, 68 00:04:20,839 --> 00:04:23,880 Speaker 1: I'm super excited to talk about this, to talk about 69 00:04:23,920 --> 00:04:27,800 Speaker 1: defy how decentralized trading works. We are going to be 70 00:04:27,880 --> 00:04:31,839 Speaker 1: speaking with um Hayden Adams. He is the founder and 71 00:04:32,040 --> 00:04:36,080 Speaker 1: CEO of unice Swap Labs. Here's the inventor of the 72 00:04:36,200 --> 00:04:40,640 Speaker 1: unit swap protocol and uh this is basically a trading 73 00:04:40,720 --> 00:04:45,400 Speaker 1: system that runs on top of the the Ethereum blockchain, 74 00:04:45,800 --> 00:04:48,960 Speaker 1: and it is a very big deal. As of right 75 00:04:49,000 --> 00:04:52,839 Speaker 1: now we are recording this April. Over the last twenty 76 00:04:52,880 --> 00:04:56,120 Speaker 1: four hours, one and a half billion dollars of trading 77 00:04:56,200 --> 00:05:01,040 Speaker 1: volume has been done over unite swap. That's about half 78 00:05:01,080 --> 00:05:04,479 Speaker 1: of coin based. So here's this decentralized exchange that's half 79 00:05:04,520 --> 00:05:10,040 Speaker 1: as big already as the pre eminent crypto exchange. It's 80 00:05:10,040 --> 00:05:13,880 Speaker 1: a very big deal, growing extremely fast. But I don't 81 00:05:13,880 --> 00:05:16,440 Speaker 1: think most people have any understanding about how this all works. 82 00:05:16,480 --> 00:05:18,920 Speaker 1: And I would include myself and that. And so we're 83 00:05:18,960 --> 00:05:21,920 Speaker 1: going to learn about you just swap and decentralized trading 84 00:05:22,279 --> 00:05:27,200 Speaker 1: and what decentralized finance is with Hayden. So, Hayden, thank 85 00:05:27,240 --> 00:05:29,640 Speaker 1: you very much, thanks for joining coming on odd lot, 86 00:05:29,800 --> 00:05:31,919 Speaker 1: Thank you for having me on. I'm really excited to 87 00:05:31,920 --> 00:05:37,160 Speaker 1: be here. How did we do in that introduction? Fantastic? Actually, 88 00:05:37,320 --> 00:05:41,520 Speaker 1: I'm extremely impressive. Okay, okay that I it's all downhill 89 00:05:41,560 --> 00:05:45,000 Speaker 1: from here, I promised. But if you're impressed with the introduction, 90 00:05:45,120 --> 00:05:47,760 Speaker 1: then that I'm happy. But you know, let's just start 91 00:05:47,880 --> 00:05:51,039 Speaker 1: really big picture. It's like defy. I see that all 92 00:05:51,040 --> 00:05:53,360 Speaker 1: over the place. It's a super popular buzz word. I'm 93 00:05:53,360 --> 00:05:55,200 Speaker 1: sure if I look to Google trends would be a 94 00:05:55,240 --> 00:05:58,920 Speaker 1: straight lineup. How would you describe what is what is 95 00:05:59,000 --> 00:06:02,839 Speaker 1: DeFi yeah, I think a good place for starting talking 96 00:06:02,839 --> 00:06:07,920 Speaker 1: about defies. Bitcoin. You know, Bitcoin is this decentralized system 97 00:06:07,960 --> 00:06:11,280 Speaker 1: for storing and transferring value right over the Internet. So 98 00:06:11,320 --> 00:06:12,840 Speaker 1: it's you know, you can think about it as magic 99 00:06:12,880 --> 00:06:15,559 Speaker 1: internet money um, and it has these properties that people 100 00:06:15,600 --> 00:06:17,600 Speaker 1: care about and people like about it. You know, it's 101 00:06:17,600 --> 00:06:21,960 Speaker 1: provably fair, it's secure. You know, there's no single centralized 102 00:06:22,000 --> 00:06:26,120 Speaker 1: party that controls it, and it's this global system right 103 00:06:26,120 --> 00:06:28,320 Speaker 1: that can be accessed from anywhere in the world. But 104 00:06:28,560 --> 00:06:31,320 Speaker 1: you know, it's also still limited in being money, right, 105 00:06:31,360 --> 00:06:35,560 Speaker 1: it's limited to storing and transferring value. And early on 106 00:06:35,720 --> 00:06:39,440 Speaker 1: in the blockchain days, you know, people start to think 107 00:06:39,440 --> 00:06:43,200 Speaker 1: about what are other applications of blockchain, and so ethereum 108 00:06:43,279 --> 00:06:47,400 Speaker 1: was born, and Ethereum makes it easier to build various 109 00:06:47,440 --> 00:06:50,520 Speaker 1: other applications that have some of these properties people care 110 00:06:50,520 --> 00:06:53,560 Speaker 1: about about Bitcoin that you know, it's probably fair that 111 00:06:53,600 --> 00:06:56,960 Speaker 1: anyone can you know, audit its entire history, that no 112 00:06:57,000 --> 00:07:01,200 Speaker 1: one controls it and apply that to other to applications. 113 00:07:01,279 --> 00:07:04,200 Speaker 1: And it does this with what are called smart contracts. 114 00:07:04,480 --> 00:07:07,640 Speaker 1: And smart contracts is essentially code that is run on 115 00:07:07,680 --> 00:07:10,040 Speaker 1: a blockchain. And so the same way that you know, 116 00:07:10,120 --> 00:07:14,480 Speaker 1: every Bitcoin node verifies every transaction on Bitcoin, every Ethereum 117 00:07:14,520 --> 00:07:18,760 Speaker 1: node verifies the execution of every program running on ethereum, 118 00:07:18,800 --> 00:07:23,160 Speaker 1: and so defy is essentially the idea that finance goes 119 00:07:23,240 --> 00:07:26,080 Speaker 1: far beyond just money and storing and transferring value. There's 120 00:07:26,040 --> 00:07:31,880 Speaker 1: an entire other world of lending, borrowing, exchange, insurance, synthetics, 121 00:07:31,960 --> 00:07:34,760 Speaker 1: and options and other types of derivatives. There's an entire 122 00:07:35,000 --> 00:07:38,840 Speaker 1: financial system, and we can take some of what we've 123 00:07:38,920 --> 00:07:42,200 Speaker 1: learned from bitcoin and apply, you know, and and build 124 00:07:42,240 --> 00:07:44,520 Speaker 1: systems that have some of the properties that we care 125 00:07:44,520 --> 00:07:48,200 Speaker 1: about in bitcoin to this broader class of financial use cases. 126 00:07:48,880 --> 00:07:52,400 Speaker 1: That's essentially defy. Unit swap is an Apple defy application 127 00:07:52,560 --> 00:07:55,680 Speaker 1: living on ethereum. It's the most popular application, and it 128 00:07:56,040 --> 00:08:01,000 Speaker 1: applies basically this to decentralized exchange. So I'm going to 129 00:08:01,160 --> 00:08:04,480 Speaker 1: jump right into something that you guys do that's different 130 00:08:04,600 --> 00:08:09,400 Speaker 1: to some other exchanges. But you have basically every coin 131 00:08:09,640 --> 00:08:13,880 Speaker 1: in existence able to trade through your platform, including like 132 00:08:14,240 --> 00:08:18,600 Speaker 1: ones that I think are probably jokes or scams. I 133 00:08:18,600 --> 00:08:21,400 Speaker 1: think that's fair to say, why did you decide to 134 00:08:21,480 --> 00:08:24,480 Speaker 1: do that, and how does that differ from some other 135 00:08:24,520 --> 00:08:28,800 Speaker 1: competing platforms. Yeah, so I think that what's really interesting 136 00:08:28,840 --> 00:08:31,320 Speaker 1: about unit spop is it makes it incredibly easy to 137 00:08:31,400 --> 00:08:34,320 Speaker 1: create new markets um and and trade on markets, and 138 00:08:34,360 --> 00:08:36,680 Speaker 1: so it ends up being extremely good for the long 139 00:08:36,679 --> 00:08:39,599 Speaker 1: tail of assets, and that gets into this kind of 140 00:08:39,679 --> 00:08:43,360 Speaker 1: unique infrastructure that unit spop. So you know, UNI spop 141 00:08:43,360 --> 00:08:46,920 Speaker 1: is not a traditional order book exchange. Unit spop is 142 00:08:47,200 --> 00:08:50,480 Speaker 1: a what's called an automated market maker or it uses 143 00:08:50,480 --> 00:08:53,200 Speaker 1: automated market making, and what that means is it essentially 144 00:08:53,240 --> 00:08:56,320 Speaker 1: allows anyone to spin up their own market. And so 145 00:08:56,400 --> 00:08:59,840 Speaker 1: in a traditional exchange essentially have two main types of participants. 146 00:08:59,840 --> 00:09:03,480 Speaker 1: You have professional market makers who are constantly putting up 147 00:09:03,520 --> 00:09:05,520 Speaker 1: buy and sell orders, and then you have you know, 148 00:09:05,960 --> 00:09:09,840 Speaker 1: retail traders or takers who are executing against those orders, 149 00:09:09,920 --> 00:09:12,800 Speaker 1: and it can be extremely hard to create liquidity and 150 00:09:12,800 --> 00:09:17,520 Speaker 1: the long tail of assets because the professional market makers 151 00:09:17,600 --> 00:09:20,960 Speaker 1: that are necessary to the function of order books, you know, 152 00:09:21,000 --> 00:09:23,920 Speaker 1: they don't necessarily it's not worth it for them to 153 00:09:24,240 --> 00:09:29,600 Speaker 1: maintain inventory or to yah bootstrap longer tail markets because 154 00:09:30,280 --> 00:09:31,800 Speaker 1: one way that they think about it, right, it's, you know, 155 00:09:32,600 --> 00:09:34,160 Speaker 1: it's only really worth it for them to kind of 156 00:09:34,200 --> 00:09:37,240 Speaker 1: market make on the largest, most popular assets. And so 157 00:09:37,640 --> 00:09:40,400 Speaker 1: with unit swap, it adds what's called automated market making, 158 00:09:40,440 --> 00:09:43,240 Speaker 1: which allows basically anyone who wants to create these markets 159 00:09:43,280 --> 00:09:46,760 Speaker 1: and deposit assets into a smart contract, and that smart 160 00:09:46,760 --> 00:09:49,160 Speaker 1: contract will automate the process of market making for them 161 00:09:49,440 --> 00:09:52,440 Speaker 1: such that for them it's basically a passive experience. And 162 00:09:52,480 --> 00:09:56,080 Speaker 1: so in two minutes, someone can spin up a new market, 163 00:09:56,559 --> 00:09:59,720 Speaker 1: create liquidity in it, and they don't need to be 164 00:10:00,200 --> 00:10:02,280 Speaker 1: you know, they don't need to be extremely sophisticated, they 165 00:10:02,280 --> 00:10:05,040 Speaker 1: don't need to have this uh, you know, market making background, 166 00:10:05,080 --> 00:10:07,960 Speaker 1: they don't need to work with other professional market makers, 167 00:10:08,080 --> 00:10:10,600 Speaker 1: and so it kind of removes this gatekeeper in the 168 00:10:10,640 --> 00:10:14,320 Speaker 1: creation of liquidity. So let's talk about how automated market 169 00:10:14,360 --> 00:10:17,680 Speaker 1: makers work. As you pointed out, in a traditional market, 170 00:10:17,760 --> 00:10:20,760 Speaker 1: there's someone in the middle. They always are posting a 171 00:10:20,880 --> 00:10:24,160 Speaker 1: bid and an ask, and there's a little gap between 172 00:10:24,240 --> 00:10:27,240 Speaker 1: them and that anyone can come and take either side 173 00:10:27,240 --> 00:10:30,000 Speaker 1: of it. It works very different in the sort of 174 00:10:30,280 --> 00:10:35,320 Speaker 1: liquidity pools of an automated market maker. Explained the basic 175 00:10:35,360 --> 00:10:39,280 Speaker 1: functioning of it. Essentially, you know, each market on units 176 00:10:39,280 --> 00:10:42,040 Speaker 1: flow is a smart contract on ethereum. What that means 177 00:10:42,120 --> 00:10:44,400 Speaker 1: is it's a it's a little program it runs on ethereum. 178 00:10:44,440 --> 00:10:47,240 Speaker 1: And something that's really interesting about smart contracts is it's 179 00:10:47,280 --> 00:10:50,520 Speaker 1: code that can hold funds and and it's code so 180 00:10:50,600 --> 00:10:53,000 Speaker 1: you can you can basically create arbitrary logic, and then 181 00:10:53,040 --> 00:10:55,880 Speaker 1: that logic dictates how the funds stored in that smart 182 00:10:55,880 --> 00:11:00,720 Speaker 1: contract behave. And so an automated market maker is a 183 00:11:00,760 --> 00:11:04,920 Speaker 1: way of coordinating market participants within unit swap. So you 184 00:11:04,960 --> 00:11:06,840 Speaker 1: know there's two classes of users, right, we call them 185 00:11:06,840 --> 00:11:10,520 Speaker 1: traders and then liquidity providers or takers and liquidity providers, 186 00:11:11,000 --> 00:11:13,720 Speaker 1: and then there's also and And creating a new market 187 00:11:13,720 --> 00:11:16,200 Speaker 1: on unit swap is incredibly easy, the same way that 188 00:11:16,240 --> 00:11:18,520 Speaker 1: anyone can kind of create a new account on bitcoin 189 00:11:18,720 --> 00:11:21,800 Speaker 1: or on ethereum, and anyone can deploy a new code 190 00:11:21,800 --> 00:11:24,840 Speaker 1: to ethereum, and anyone can transfer value on ethereum. Anyone 191 00:11:24,880 --> 00:11:28,000 Speaker 1: can create a new market on unit swap. So there's 192 00:11:28,040 --> 00:11:30,960 Speaker 1: basically a smart contract that dictates, you know, the creation 193 00:11:30,960 --> 00:11:34,760 Speaker 1: of new markets. Anyone can basically create new assets, right, 194 00:11:34,840 --> 00:11:37,160 Speaker 1: you can also create new assets on ethereum very easily. 195 00:11:37,400 --> 00:11:39,600 Speaker 1: So anyone can create a new asset on ethereum and 196 00:11:39,600 --> 00:11:42,240 Speaker 1: then they can add that asset to unit swap. And 197 00:11:42,280 --> 00:11:45,120 Speaker 1: in the same way that you know ethereum is decentralized 198 00:11:45,120 --> 00:11:47,640 Speaker 1: and permission lists and and can be access anywhere in 199 00:11:47,679 --> 00:11:50,719 Speaker 1: the world, the same exist for unit swap markets. And 200 00:11:50,760 --> 00:11:53,440 Speaker 1: so anyone can create a new market by you know, 201 00:11:53,600 --> 00:11:56,960 Speaker 1: calling what's called a factory smart contract, which deploys a 202 00:11:57,000 --> 00:12:00,200 Speaker 1: new market for two tokens, and then they can create 203 00:12:00,200 --> 00:12:04,000 Speaker 1: liquidity in those two tokens by basically depositing some of 204 00:12:04,040 --> 00:12:06,880 Speaker 1: two assets into that smart contract. So you might deposit 205 00:12:06,920 --> 00:12:09,000 Speaker 1: some U s d C, which is a stable coin, 206 00:12:09,520 --> 00:12:12,080 Speaker 1: and some ETH and then that creates a marketplace between 207 00:12:12,080 --> 00:12:14,280 Speaker 1: E and U s DC. And then what you know 208 00:12:14,520 --> 00:12:18,280 Speaker 1: very different is that rather than having just market makers 209 00:12:18,320 --> 00:12:21,600 Speaker 1: posting it and asks, essentially the smart contract manages the 210 00:12:21,640 --> 00:12:24,800 Speaker 1: market making for you. So you just deposit capital into 211 00:12:24,800 --> 00:12:28,120 Speaker 1: the contracts. The contracts automate the pricing, the price updating, 212 00:12:28,160 --> 00:12:32,200 Speaker 1: the rebalancing, and then people can immediately start trading against it, 213 00:12:32,400 --> 00:12:35,200 Speaker 1: and so you're not matching up buyers and sellers. You'll 214 00:12:35,280 --> 00:12:38,120 Speaker 1: have this smart contract which will always buy and sell 215 00:12:38,600 --> 00:12:42,079 Speaker 1: in either direction in either asset, and then people who 216 00:12:42,080 --> 00:12:44,600 Speaker 1: trade against that, and so you're not coordinating between people, 217 00:12:44,640 --> 00:12:48,679 Speaker 1: but you're actually coordinating people to a smart contract. So 218 00:12:48,920 --> 00:12:52,840 Speaker 1: this is where the liquidity provision becomes quite important, right 219 00:12:52,840 --> 00:12:57,280 Speaker 1: and different to other types of traditional exchanges. So you 220 00:12:57,360 --> 00:13:02,400 Speaker 1: have to incentivise peep roll to contribute to the liquidity 221 00:13:02,480 --> 00:13:05,640 Speaker 1: pool um in order to be able to provide liquidity 222 00:13:05,760 --> 00:13:08,080 Speaker 1: for as you put it, the sort of long tail 223 00:13:08,400 --> 00:13:12,280 Speaker 1: of crypto assets, things that people might not naturally make 224 00:13:12,320 --> 00:13:15,760 Speaker 1: markets in. Yeah, So what's really interesting is in a 225 00:13:15,760 --> 00:13:19,240 Speaker 1: traditional order buck structure, essentially all market makers are competing 226 00:13:19,240 --> 00:13:21,920 Speaker 1: against each other. You know, Basically the first person to 227 00:13:22,120 --> 00:13:24,920 Speaker 1: put up in order, you know, is executed in a 228 00:13:24,920 --> 00:13:27,960 Speaker 1: a MM or an automated market maker you know, essentially 229 00:13:28,040 --> 00:13:32,640 Speaker 1: pools liquidity across thousands of different liquidity providers and together 230 00:13:32,800 --> 00:13:35,360 Speaker 1: they function as a single market maker in sort of 231 00:13:35,400 --> 00:13:38,640 Speaker 1: sharing the same strategy in this automated market maker. And 232 00:13:38,720 --> 00:13:41,400 Speaker 1: so you might put in a hundred dollars someone someone 233 00:13:41,440 --> 00:13:43,120 Speaker 1: else might put in a thousand dollars. Someone else might 234 00:13:43,160 --> 00:13:45,360 Speaker 1: put it in a hundred thousand dollars, and that's all 235 00:13:45,400 --> 00:13:48,760 Speaker 1: pulled together and market makes us a single unit unit 236 00:13:48,800 --> 00:13:51,400 Speaker 1: spot basically has built in fees, and so every time 237 00:13:51,400 --> 00:13:53,760 Speaker 1: someone makes a trade, there's a fee taken on that trade, 238 00:13:53,760 --> 00:13:57,199 Speaker 1: and that's paid out to liquidity providers as are called. 239 00:13:57,520 --> 00:13:59,840 Speaker 1: And so liquidity providers are taking on some price risk 240 00:14:00,400 --> 00:14:04,000 Speaker 1: because you know, the the automated market maker is managing 241 00:14:04,240 --> 00:14:06,640 Speaker 1: their their liquidity before them and buying and selling tokens, 242 00:14:06,679 --> 00:14:09,120 Speaker 1: and there is some price frisk being taken on, but 243 00:14:09,200 --> 00:14:12,880 Speaker 1: that's compensated for in these being paid paid by people 244 00:14:12,880 --> 00:14:15,240 Speaker 1: who want to trade against it, right, so explain that. 245 00:14:15,320 --> 00:14:19,120 Speaker 1: So you mentioned, for example, a pair trade between E 246 00:14:19,560 --> 00:14:21,720 Speaker 1: and U S d C. And if I look at 247 00:14:21,760 --> 00:14:23,760 Speaker 1: the website coin and get go right now, that is 248 00:14:23,800 --> 00:14:26,560 Speaker 1: actually the number one. It looks like that's the highest 249 00:14:26,640 --> 00:14:30,480 Speaker 1: volume traded pair. So if I had some and I 250 00:14:30,560 --> 00:14:33,720 Speaker 1: had some U S d C, I could put both 251 00:14:33,960 --> 00:14:37,040 Speaker 1: into this pool. And then what I'm locking it up 252 00:14:37,080 --> 00:14:40,280 Speaker 1: for a defined period of time or for period of time, 253 00:14:40,320 --> 00:14:42,200 Speaker 1: and then how much am I getting paid? Like explained 254 00:14:42,240 --> 00:14:45,560 Speaker 1: to me, like exact the mechanics of what my incentive 255 00:14:45,720 --> 00:14:48,440 Speaker 1: is uh to lock them up. There you locked up 256 00:14:48,480 --> 00:14:50,440 Speaker 1: for as long as you want, essentially, right, so you 257 00:14:50,440 --> 00:14:52,480 Speaker 1: can lock it up for a second a day, well, 258 00:14:52,560 --> 00:14:54,760 Speaker 1: I mean at the times the block, so fifteen seconds 259 00:14:54,760 --> 00:14:57,120 Speaker 1: is the minimum, or you know, a day or a year, 260 00:14:57,600 --> 00:15:00,520 Speaker 1: however long you want. And while you're so, let's say 261 00:15:00,520 --> 00:15:02,520 Speaker 1: you put in a thousand dollars and the entire pool 262 00:15:02,600 --> 00:15:05,200 Speaker 1: is a hundred thousand dollars, you are now one percent 263 00:15:05,280 --> 00:15:07,760 Speaker 1: of that liquidity pool, and so you are earning one 264 00:15:07,760 --> 00:15:10,520 Speaker 1: percent of the trading fees on that pair. And so 265 00:15:10,560 --> 00:15:12,600 Speaker 1: in terms of like the profits right now, there's a 266 00:15:12,640 --> 00:15:16,920 Speaker 1: point three percent fee taken on every trade, and you 267 00:15:16,960 --> 00:15:19,560 Speaker 1: know there's about one point to So today's volume was 268 00:15:19,600 --> 00:15:22,760 Speaker 1: one point two billion dollars and so you know, one 269 00:15:22,760 --> 00:15:25,560 Speaker 1: point two billion times. I can just do the math 270 00:15:25,640 --> 00:15:27,720 Speaker 1: right now, but so it's a point three percent fee. 271 00:15:28,120 --> 00:15:30,160 Speaker 1: You know, you're getting about three point six million dollars 272 00:15:30,200 --> 00:15:33,400 Speaker 1: and fees today on un swap distributed to liquidity providers. 273 00:15:33,640 --> 00:15:35,920 Speaker 1: And so one way to think about is, you know, 274 00:15:35,960 --> 00:15:37,760 Speaker 1: if a pair is earning a thousand dollars in fees 275 00:15:37,800 --> 00:15:39,520 Speaker 1: per day and you're one percent of that pair, then 276 00:15:39,560 --> 00:15:41,640 Speaker 1: you're earning about ten dollars in fees per day. If 277 00:15:41,640 --> 00:15:43,920 Speaker 1: you're ten percent of you're earning a hundred dollars per day. 278 00:15:44,120 --> 00:15:46,360 Speaker 1: And so you know, the returns are very kind of 279 00:15:46,560 --> 00:15:49,600 Speaker 1: different across different pairs. There's tens of thousands of different 280 00:15:49,600 --> 00:15:51,920 Speaker 1: trading pairs and they're all doing different volumes, and so 281 00:15:52,320 --> 00:15:55,440 Speaker 1: you know, returns have been all over the place. So 282 00:15:55,680 --> 00:15:59,040 Speaker 1: just to be clear, the trading fees for end users, 283 00:15:59,040 --> 00:16:01,200 Speaker 1: so you don't. Not everyone has to lock up. Some 284 00:16:01,200 --> 00:16:03,520 Speaker 1: people might just want to go from one coin to another. 285 00:16:04,240 --> 00:16:09,880 Speaker 1: Those are constant. But what determines how much UM the 286 00:16:10,000 --> 00:16:15,080 Speaker 1: liquidity providers get ultimately is based on their share of 287 00:16:15,120 --> 00:16:17,960 Speaker 1: the pool. So in theory is that how like the 288 00:16:18,280 --> 00:16:22,000 Speaker 1: is that how the remuneration structure works for the liquidity provider, 289 00:16:22,120 --> 00:16:24,920 Speaker 1: just like how much of their the whole pool of 290 00:16:24,960 --> 00:16:27,360 Speaker 1: their steak is. You know, what we're calling fees is 291 00:16:27,360 --> 00:16:29,760 Speaker 1: actually very is much closer to what a spread would 292 00:16:29,800 --> 00:16:32,880 Speaker 1: be on a quarter book UM. And there's no you know, 293 00:16:33,280 --> 00:16:36,280 Speaker 1: exchange fee. Right, There's the whole point, right is it's 294 00:16:36,280 --> 00:16:40,000 Speaker 1: it's decentralized, and so you have participants who are creating 295 00:16:40,000 --> 00:16:44,200 Speaker 1: these liquidity pools, and then there is this this spread essentially, 296 00:16:44,200 --> 00:16:46,280 Speaker 1: which is what the point three percent is, which is 297 00:16:46,400 --> 00:16:48,120 Speaker 1: you know, collected on a trade, and those are paid 298 00:16:48,120 --> 00:16:52,120 Speaker 1: out to liquidity providers proportional parada proportional their portion of 299 00:16:52,120 --> 00:17:11,439 Speaker 1: the liquidity pool. What's the downside of providing liquidity in 300 00:17:11,480 --> 00:17:15,280 Speaker 1: this way? Because I imagine without someone sort of in 301 00:17:15,359 --> 00:17:18,480 Speaker 1: between the trades or a traditional market maker, you could 302 00:17:18,480 --> 00:17:22,240 Speaker 1: for instance, see like quite a big spread, I guess, 303 00:17:22,359 --> 00:17:26,200 Speaker 1: or at least like prices move before a trade is 304 00:17:26,240 --> 00:17:29,560 Speaker 1: actually executed on well, so there's risks to being a 305 00:17:29,560 --> 00:17:32,639 Speaker 1: liquidity provider, right. Being a liquidity provider is similar to 306 00:17:32,640 --> 00:17:34,239 Speaker 1: being a market maker, which is that you take on 307 00:17:34,320 --> 00:17:37,200 Speaker 1: price risk. Basically, you take on risk in the divergence 308 00:17:37,280 --> 00:17:39,880 Speaker 1: between the two assets, right, because you're putting up two 309 00:17:39,880 --> 00:17:41,600 Speaker 1: tokens and you're getting out two tokens, but you're not 310 00:17:41,600 --> 00:17:43,480 Speaker 1: getting them out at the same ratio. If there's been 311 00:17:43,480 --> 00:17:45,960 Speaker 1: a price change, and so you know, UNI swab is 312 00:17:45,960 --> 00:17:49,360 Speaker 1: constantly being arbitraged against other against other markets. If there's 313 00:17:49,359 --> 00:17:51,840 Speaker 1: a very large price movement, you might have sold some 314 00:17:51,920 --> 00:17:53,960 Speaker 1: of your token. You just essentially sells on the way 315 00:17:54,040 --> 00:17:55,800 Speaker 1: up and buys on the way down. And so if 316 00:17:55,800 --> 00:17:58,320 Speaker 1: you there's a very large price movement, you might have 317 00:17:58,359 --> 00:18:01,280 Speaker 1: sold some tokens at a suboptimal price and and lose 318 00:18:01,320 --> 00:18:03,479 Speaker 1: some some money there. But you know you're earning fees 319 00:18:03,920 --> 00:18:06,800 Speaker 1: along the way, and you know, very frequently or very 320 00:18:06,800 --> 00:18:09,320 Speaker 1: often that makes up for it. So someone could put 321 00:18:09,359 --> 00:18:14,359 Speaker 1: in ten nis in ten USDC and Okay, I'm gonna 322 00:18:14,359 --> 00:18:16,200 Speaker 1: forget about it for a year and collect some yield, 323 00:18:16,720 --> 00:18:21,960 Speaker 1: but I do run the risk of crashes of the meantime, Yeah, basically, 324 00:18:22,119 --> 00:18:24,040 Speaker 1: but you know it could crash and it could still 325 00:18:24,040 --> 00:18:26,439 Speaker 1: be profitable in a world where enough fees have been collected. 326 00:18:26,800 --> 00:18:28,760 Speaker 1: One thing to think about here is if you're thinking 327 00:18:28,760 --> 00:18:31,640 Speaker 1: about maybe like the biggest market paers in the world, right, 328 00:18:32,000 --> 00:18:34,560 Speaker 1: you still can compete on these But as I kind 329 00:18:34,560 --> 00:18:37,320 Speaker 1: of highlighted before, for kind of you know, let's say 330 00:18:37,320 --> 00:18:40,840 Speaker 1: it's some new asset gets created, it's just got created today. 331 00:18:41,040 --> 00:18:43,439 Speaker 1: Let's say, and you know they want and you know 332 00:18:43,520 --> 00:18:45,119 Speaker 1: they can't, they can't immediately just reach out to a 333 00:18:45,160 --> 00:18:48,080 Speaker 1: professional market making firms and say, hey, we created this 334 00:18:48,119 --> 00:18:50,800 Speaker 1: new asset. You know, we're one of five thousand assets 335 00:18:50,800 --> 00:18:53,439 Speaker 1: that got created today on ethereum. You know how do 336 00:18:53,520 --> 00:18:58,360 Speaker 1: we uh? And I'm barely exaggerating there in the numbers. Essentially, 337 00:18:58,359 --> 00:18:59,840 Speaker 1: all the creators of that asset need to do is 338 00:18:59,840 --> 00:19:02,639 Speaker 1: a basically can deposit some of that to some of 339 00:19:02,720 --> 00:19:04,520 Speaker 1: one token and some of another token into unit swap 340 00:19:04,600 --> 00:19:07,760 Speaker 1: and there's immediately a trading pair that people can trade 341 00:19:07,760 --> 00:19:10,520 Speaker 1: against immediately. So it's kind of one one thing to 342 00:19:10,560 --> 00:19:12,639 Speaker 1: think about. One analogy, it's almost like the user generated 343 00:19:12,720 --> 00:19:16,359 Speaker 1: content like Netflix first YouTube, but for liquidity Netflix, you 344 00:19:16,440 --> 00:19:18,119 Speaker 1: kind of have this limit in the amount of content 345 00:19:18,160 --> 00:19:20,480 Speaker 1: you can create, and they sort of whereas this is 346 00:19:20,520 --> 00:19:25,000 Speaker 1: like user generated content, but for liquidity. So just on 347 00:19:25,119 --> 00:19:27,800 Speaker 1: that note, I guess one of the problems with decentralized 348 00:19:28,000 --> 00:19:33,639 Speaker 1: UM user generated content is that it could migrate somewhere else. 349 00:19:33,760 --> 00:19:36,040 Speaker 1: And I have to admit, like I just heard a 350 00:19:36,080 --> 00:19:39,080 Speaker 1: little bit about this. I had some people actually asking 351 00:19:39,320 --> 00:19:41,479 Speaker 1: UM if we could do an all thoughts episode entirely 352 00:19:41,560 --> 00:19:44,560 Speaker 1: on this, but could you please explain what happened with 353 00:19:44,760 --> 00:19:49,560 Speaker 1: shoot Sushi Swap and this idea that they UM siphoned 354 00:19:49,600 --> 00:19:51,840 Speaker 1: off your liquidity. Oh, we're good, this is the good 355 00:19:51,880 --> 00:19:54,280 Speaker 1: stuff here. Yeah. So this is like people call this 356 00:19:54,400 --> 00:19:57,399 Speaker 1: a vampire attack, which immediately means we must ask you 357 00:19:57,440 --> 00:20:01,119 Speaker 1: about it. Yeah. Yeah, so so funny enough. You know 358 00:20:01,160 --> 00:20:03,720 Speaker 1: that the siphon off thing is is really funny because 359 00:20:04,000 --> 00:20:06,480 Speaker 1: before Sushi Swap launched, Una Swap had three hundred million 360 00:20:06,560 --> 00:20:10,240 Speaker 1: dollars in its liquidity pools, and and after Sushi Swap 361 00:20:10,400 --> 00:20:12,280 Speaker 1: it had about one point six billion, and today it 362 00:20:12,320 --> 00:20:15,639 Speaker 1: has about nine billion. It definitely has enciphoned off liquidity. 363 00:20:15,640 --> 00:20:20,040 Speaker 1: But essentially, unit swamp is a decentralized protocol, right, and 364 00:20:20,400 --> 00:20:23,280 Speaker 1: you know, something that's sort of core to smart contracts 365 00:20:23,280 --> 00:20:26,920 Speaker 1: on Ethereum is the the idea of open source software. 366 00:20:27,359 --> 00:20:30,320 Speaker 1: Unit swap is basically built entirely open source, right, so 367 00:20:30,359 --> 00:20:33,200 Speaker 1: all the code is is probably available so that people 368 00:20:33,240 --> 00:20:36,800 Speaker 1: can verify the kind of workings of it. And but 369 00:20:36,880 --> 00:20:38,840 Speaker 1: basically the whole idea, right is users don't need to 370 00:20:38,840 --> 00:20:41,040 Speaker 1: trust anyone with their money, they're just trusting the code 371 00:20:41,040 --> 00:20:43,560 Speaker 1: that's being run. And so all the code of UNI 372 00:20:43,560 --> 00:20:46,959 Speaker 1: swap is is publicly available. And so essentially what we 373 00:20:47,000 --> 00:20:50,280 Speaker 1: saw is Shi swap was if someone created a fork 374 00:20:50,320 --> 00:20:51,879 Speaker 1: of unit swap the same way we've seen forks of 375 00:20:51,920 --> 00:20:55,840 Speaker 1: Bitcoin in forks of other crypto platforms, and they released 376 00:20:55,880 --> 00:20:59,480 Speaker 1: a new token, uh, and they basically INCENTI said, anyone 377 00:20:59,720 --> 00:21:03,919 Speaker 1: who is our version of this protocol will be earning 378 00:21:04,119 --> 00:21:07,359 Speaker 1: sushi tokens. And so they kind of incentivized people to 379 00:21:07,960 --> 00:21:10,879 Speaker 1: basically put their liquidity in Sushi swap instead of Uni swap, 380 00:21:11,040 --> 00:21:13,040 Speaker 1: to kind of try to compete with Uni swap and 381 00:21:13,119 --> 00:21:15,679 Speaker 1: grow their own liquidity. And for a while that had 382 00:21:15,680 --> 00:21:17,639 Speaker 1: an effect where you know, there's a little bit added 383 00:21:17,640 --> 00:21:19,720 Speaker 1: context here, which is that when you create liquidity on 384 00:21:19,800 --> 00:21:23,240 Speaker 1: uni swamp, you get a token that represents your portion 385 00:21:23,280 --> 00:21:26,160 Speaker 1: of that liquidity pool. Right, I had kind of mentioned that, 386 00:21:26,320 --> 00:21:28,119 Speaker 1: you know, if you're earning if you're one percent of 387 00:21:28,160 --> 00:21:29,920 Speaker 1: the pool, you're earning one percent of the fees. There's 388 00:21:29,960 --> 00:21:31,720 Speaker 1: actually a token that says, you know, I own one 389 00:21:31,720 --> 00:21:35,119 Speaker 1: percent of the DIE and USDC in this contract. So 390 00:21:35,160 --> 00:21:37,480 Speaker 1: what Sushi Swap did is a basically incentivized people to 391 00:21:37,560 --> 00:21:41,560 Speaker 1: deposit their Uni swab liquidity tokens. While they were deposited, 392 00:21:41,560 --> 00:21:44,960 Speaker 1: they were earning fees. Basically they were earning sushi tokens. 393 00:21:45,400 --> 00:21:47,840 Speaker 1: And then at the very end of this I think 394 00:21:47,840 --> 00:21:50,960 Speaker 1: it was like a ten day period basically they migrated 395 00:21:51,000 --> 00:21:55,360 Speaker 1: all the liquidity over to their own system. The actual result, though, 396 00:21:55,440 --> 00:21:58,160 Speaker 1: is funny enough, a huge increase in Uni swaps liquidity 397 00:21:58,280 --> 00:22:00,760 Speaker 1: during that period of time and how was migration. Actually 398 00:22:00,880 --> 00:22:03,879 Speaker 1: huge amount of liquidity stayed and and the overall system 399 00:22:03,920 --> 00:22:06,280 Speaker 1: has grown. So it's been quite beneficial in the long 400 00:22:06,359 --> 00:22:08,760 Speaker 1: run for you SPA. But it was a very interesting, 401 00:22:09,320 --> 00:22:13,160 Speaker 1: uh time for share So what were you actually thinking 402 00:22:13,400 --> 00:22:15,400 Speaker 1: when this was happening. It's sort of like a ten 403 00:22:15,480 --> 00:22:19,200 Speaker 1: day period when people have basically you know, they're leaching 404 00:22:19,359 --> 00:22:22,280 Speaker 1: off the protocol that you created in order to um 405 00:22:22,440 --> 00:22:25,600 Speaker 1: steal your liquidity. How did that feel? I'm just curious, 406 00:22:25,640 --> 00:22:29,080 Speaker 1: like what you were doing during that time frame for 407 00:22:29,200 --> 00:22:31,200 Speaker 1: some contacts. Right, I had been working on this project 408 00:22:31,600 --> 00:22:34,280 Speaker 1: for over three years at that point, so I know 409 00:22:34,359 --> 00:22:36,240 Speaker 1: the first two years was was I was the only 410 00:22:36,240 --> 00:22:38,480 Speaker 1: person working in full time on unit swab, and then 411 00:22:39,040 --> 00:22:40,439 Speaker 1: I've kind of built out of a company over the 412 00:22:40,440 --> 00:22:43,359 Speaker 1: past year and a half two years. Someone came along, right, 413 00:22:43,400 --> 00:22:46,040 Speaker 1: and the probably in five days, they created a new 414 00:22:46,080 --> 00:22:48,600 Speaker 1: token and they forked the entire protocol and said, hey, 415 00:22:48,760 --> 00:22:52,440 Speaker 1: you know, use this one instead and have a huge 416 00:22:52,440 --> 00:22:55,000 Speaker 1: portion of those tokens reserved for the people who created it. 417 00:22:55,280 --> 00:22:57,600 Speaker 1: This open question and defied generally, right, which is like, 418 00:22:58,080 --> 00:23:00,600 Speaker 1: you know, how do creators capture value owen and how 419 00:23:00,600 --> 00:23:03,240 Speaker 1: do our creatives rewarded for their efforts? And there did 420 00:23:03,320 --> 00:23:05,400 Speaker 1: did There was this element it was maybe a little 421 00:23:05,400 --> 00:23:07,280 Speaker 1: bit personal to it, but at the same time that's 422 00:23:07,280 --> 00:23:08,800 Speaker 1: also part of you know, the fact that it was 423 00:23:08,840 --> 00:23:11,040 Speaker 1: open source. It's also fair game, right, as part of 424 00:23:11,040 --> 00:23:13,560 Speaker 1: the ethos is the fact that you can kind of 425 00:23:13,720 --> 00:23:16,640 Speaker 1: have competitor spin up and then the long runess it's 426 00:23:16,640 --> 00:23:19,960 Speaker 1: worked out. There's so many questions, but I will make 427 00:23:20,000 --> 00:23:22,359 Speaker 1: a so many things. I'm trying to think which way 428 00:23:22,400 --> 00:23:25,880 Speaker 1: to go next, but I will say so unite swab 429 00:23:26,880 --> 00:23:29,240 Speaker 1: on May five. So I don't know exactly what day 430 00:23:29,240 --> 00:23:31,800 Speaker 1: people are gonna be listening to this, but right about now. 431 00:23:31,840 --> 00:23:37,000 Speaker 1: But on May five, according to something, you're launching a 432 00:23:37,119 --> 00:23:39,359 Speaker 1: version three and we could talk about some of the 433 00:23:39,440 --> 00:23:42,480 Speaker 1: upgrades and why you launch new versions. But you are 434 00:23:42,640 --> 00:23:49,679 Speaker 1: releasing that code under a different license, Am I correct? Yeah? Correct, 435 00:23:50,000 --> 00:23:53,120 Speaker 1: We're using something called the Business Source License, which essentially, 436 00:23:53,160 --> 00:23:55,760 Speaker 1: you know, all the code is public, all verifiable. You know, 437 00:23:55,800 --> 00:23:57,800 Speaker 1: people can build on top of it and integrate it. 438 00:23:58,160 --> 00:24:01,399 Speaker 1: And for the first two years or two years at 439 00:24:01,400 --> 00:24:03,480 Speaker 1: a maximum, could could be less, but two years of 440 00:24:03,520 --> 00:24:06,919 Speaker 1: sort of this hardcap. Essentially you can't you can't or 441 00:24:06,920 --> 00:24:10,440 Speaker 1: get in a production set. So in theory, you can't 442 00:24:10,480 --> 00:24:13,399 Speaker 1: be sushi swapped, you can't be vampire attacked for at 443 00:24:13,480 --> 00:24:17,720 Speaker 1: least two years in there does that sort of fly 444 00:24:17,960 --> 00:24:21,280 Speaker 1: in the face of the decentralized ethos, Like I get 445 00:24:21,320 --> 00:24:24,639 Speaker 1: that it's always a balancing act, but it feels like 446 00:24:24,680 --> 00:24:27,080 Speaker 1: one of the big selling points of UNI swap was 447 00:24:27,119 --> 00:24:29,600 Speaker 1: that it was truly a decentralized exchange, and if you 448 00:24:29,640 --> 00:24:33,879 Speaker 1: move away from open source UM ideals, then maybe it 449 00:24:34,000 --> 00:24:38,520 Speaker 1: isn't I think that it's you know, truly decentralized in 450 00:24:38,560 --> 00:24:41,879 Speaker 1: that you know, it's all completely verifiable, it's all you know, 451 00:24:42,000 --> 00:24:45,160 Speaker 1: no one controls it, right, there's still this no control 452 00:24:45,280 --> 00:24:47,639 Speaker 1: even the kind of license. Uh, you know, there's this 453 00:24:47,720 --> 00:24:50,440 Speaker 1: sort of this community governance system that I haven't even mentioned, 454 00:24:50,720 --> 00:24:53,639 Speaker 1: we haven't gotten into, but the community government system actually 455 00:24:53,640 --> 00:24:55,760 Speaker 1: does have so the un swap community does have the 456 00:24:55,760 --> 00:24:58,480 Speaker 1: ability to kind of grant exemptions to that license or 457 00:24:58,520 --> 00:25:02,760 Speaker 1: even reduce the kind of two year period where it's 458 00:25:03,040 --> 00:25:05,800 Speaker 1: can't be forked. One of the kind of funny things 459 00:25:05,840 --> 00:25:08,240 Speaker 1: is that there is this sort of community of users 460 00:25:08,280 --> 00:25:12,680 Speaker 1: and developers around unit spop And when we were releasing 461 00:25:12,720 --> 00:25:15,280 Speaker 1: the UNI swaft e three code, there was kind of 462 00:25:15,280 --> 00:25:17,040 Speaker 1: this feeling of you know, what, what would the uniwop 463 00:25:17,080 --> 00:25:19,800 Speaker 1: community want. Does it want you know, to be CUSHI 464 00:25:19,880 --> 00:25:22,120 Speaker 1: swop day one? Does it want to be swap day two? 465 00:25:22,560 --> 00:25:24,600 Speaker 1: Or does it you know, does it want to have time? 466 00:25:24,720 --> 00:25:27,159 Speaker 1: You know, the kind of long term modes almost if 467 00:25:27,200 --> 00:25:30,879 Speaker 1: you think about it, of decentralized protocols, the best example 468 00:25:30,880 --> 00:25:33,000 Speaker 1: would always be ethereum for for these types of things. 469 00:25:33,040 --> 00:25:36,199 Speaker 1: But the long term value is in the network effect, 470 00:25:36,240 --> 00:25:38,720 Speaker 1: in the community um that build up around it. And 471 00:25:38,760 --> 00:25:41,040 Speaker 1: so the idea here is essentially to kind of protecting 472 00:25:41,080 --> 00:25:43,439 Speaker 1: un swap community in the short term and in the 473 00:25:43,480 --> 00:25:45,800 Speaker 1: long term there will be this sort of massive network 474 00:25:45,840 --> 00:25:50,239 Speaker 1: effect built up around it. Explain the role of the 475 00:25:50,359 --> 00:25:53,280 Speaker 1: unit swap token in the network, because there is in 476 00:25:53,320 --> 00:25:55,760 Speaker 1: addition to the exchange of the protocol, like everything, there 477 00:25:55,840 --> 00:25:59,720 Speaker 1: is a token associated with it. My understanding of right, 478 00:25:59,720 --> 00:26:03,640 Speaker 1: and is that the token doesn't really confer anything. It's 479 00:26:03,680 --> 00:26:06,960 Speaker 1: not equity. I don't think from what I understand, the 480 00:26:07,000 --> 00:26:09,879 Speaker 1: token holder actually collects any of the trading fees or 481 00:26:09,880 --> 00:26:13,200 Speaker 1: the spread or anything. And yet the token has gone 482 00:26:13,200 --> 00:26:15,600 Speaker 1: absolutely nuts. And if you bought it a year ago 483 00:26:15,760 --> 00:26:17,639 Speaker 1: or when it came out, you'd be sitting out of 484 00:26:17,720 --> 00:26:21,800 Speaker 1: fortune right now. What is the role of the uh 485 00:26:22,119 --> 00:26:25,280 Speaker 1: UNI the coin? Yeah, so I think that, you know, 486 00:26:25,600 --> 00:26:27,200 Speaker 1: it might even be helpful here to back up and 487 00:26:27,440 --> 00:26:30,040 Speaker 1: give some added context about you know, what are it like? 488 00:26:30,520 --> 00:26:33,240 Speaker 1: You know, the value of defying the value of unit 489 00:26:33,280 --> 00:26:37,640 Speaker 1: spop is in its decentralization, right, And there's a decentralization. 490 00:26:37,640 --> 00:26:40,040 Speaker 1: There's kind of a lot to even unpacking that word, right. 491 00:26:40,119 --> 00:26:42,080 Speaker 1: You know, it doesn't mean that no one controls. It 492 00:26:42,119 --> 00:26:44,320 Speaker 1: doesn't mean that, you know, there's no kind of central 493 00:26:44,359 --> 00:26:48,600 Speaker 1: points of failure. And there's different ways of achieving decentralization. Right. 494 00:26:48,960 --> 00:26:51,560 Speaker 1: One way of achieving decentralization, and we've seen a lot 495 00:26:51,600 --> 00:26:56,600 Speaker 1: of people talk about it, is through kind of automation, right, 496 00:26:57,119 --> 00:27:01,000 Speaker 1: and so what that means is basically relying entirely on 497 00:27:01,560 --> 00:27:04,800 Speaker 1: code essentially, right, So smart contracts can have logic that's 498 00:27:04,800 --> 00:27:08,679 Speaker 1: built in, and you know that logic can basically lead 499 00:27:08,680 --> 00:27:10,800 Speaker 1: to a very decentralized world, right where the you know, 500 00:27:10,880 --> 00:27:13,560 Speaker 1: you're not relying on any people or any company to 501 00:27:13,560 --> 00:27:15,360 Speaker 1: to follow its word. You're just relying on the code 502 00:27:15,359 --> 00:27:17,960 Speaker 1: to execute as defined. And so you know this at 503 00:27:18,000 --> 00:27:21,399 Speaker 1: its core, unit swap is decentralized and that the logic 504 00:27:21,400 --> 00:27:25,119 Speaker 1: for unit swap, the protocol is entirely in these on 505 00:27:25,359 --> 00:27:29,399 Speaker 1: chained smart contracts. And one of the benefits, right is 506 00:27:29,440 --> 00:27:32,200 Speaker 1: that there's you know, it's not custodial, so people who 507 00:27:32,240 --> 00:27:35,200 Speaker 1: put their their tokens in there, they're not trusting any 508 00:27:35,280 --> 00:27:38,359 Speaker 1: third party, like if you deposit liquidity into unit spap 509 00:27:38,760 --> 00:27:41,480 Speaker 1: that liquidity. The sort of right to claim that liquidity 510 00:27:41,520 --> 00:27:43,800 Speaker 1: is it's in a smart contract and that smart contract 511 00:27:43,880 --> 00:27:46,840 Speaker 1: is not controlled by anyone or anything other than kind 512 00:27:46,840 --> 00:27:49,879 Speaker 1: of you know, Ethereum skin census your private key. Right, 513 00:27:49,880 --> 00:27:52,359 Speaker 1: if you have an Ethereum private key, that gives you 514 00:27:52,400 --> 00:27:54,919 Speaker 1: the right to claim your portion of the liquidity and 515 00:27:54,960 --> 00:27:56,639 Speaker 1: no one else can claim it and you're not you 516 00:27:56,640 --> 00:27:59,520 Speaker 1: don't need to trust anyone else this type of system, right, 517 00:27:59,600 --> 00:28:03,320 Speaker 1: that's the most important version of decentralization. But what there 518 00:28:03,320 --> 00:28:06,080 Speaker 1: are there are things that can't be decentralized in that 519 00:28:06,160 --> 00:28:08,720 Speaker 1: same way. You know, another way of achieving decentralization is 520 00:28:08,760 --> 00:28:12,479 Speaker 1: relying on almost market dynamics, and so a really good 521 00:28:12,520 --> 00:28:15,560 Speaker 1: example would be like proof of steak and Ethereum is 522 00:28:15,880 --> 00:28:19,119 Speaker 1: basically achieving decentralization and proof of work I guess, and 523 00:28:19,119 --> 00:28:24,480 Speaker 1: b pitpoint is achieving a decentralization through economic incentives. Essentially, 524 00:28:24,480 --> 00:28:26,800 Speaker 1: you know, people have an incentive to act in a 525 00:28:26,800 --> 00:28:29,360 Speaker 1: good way or they're losing money. That's that's another version 526 00:28:29,359 --> 00:28:32,679 Speaker 1: of decentralization and an incredibly important one. But when you 527 00:28:32,720 --> 00:28:36,480 Speaker 1: talk about you know, a decenter, like a decentralized ecosystem. 528 00:28:36,800 --> 00:28:39,800 Speaker 1: But there there are still things. There's still sometimes decisions 529 00:28:39,840 --> 00:28:44,160 Speaker 1: that can't be perfectly made and don't have perfect answers 530 00:28:44,520 --> 00:28:47,920 Speaker 1: from a market incentive standpoint, right, those types of decisions 531 00:28:47,920 --> 00:28:52,680 Speaker 1: are still important words building out this this decentralized finance ecosystem. 532 00:28:52,760 --> 00:28:54,400 Speaker 1: The way that I think about unit swapped the un 533 00:28:54,440 --> 00:28:59,040 Speaker 1: swapt token, which is a governance token. Essentially, its role 534 00:28:59,800 --> 00:29:04,200 Speaker 1: is taking on decision making in the best way possible, 535 00:29:04,680 --> 00:29:07,520 Speaker 1: um in the most es centralized way possible, make making 536 00:29:07,520 --> 00:29:12,280 Speaker 1: decisions that can't be immediately automated and can't be you know, 537 00:29:12,320 --> 00:29:16,760 Speaker 1: it's essentially coordinating the human element of the decentralized finance 538 00:29:16,880 --> 00:29:20,560 Speaker 1: movement and end of unit swap, which you know can't 539 00:29:20,640 --> 00:29:23,360 Speaker 1: just be perfectly automated or and it can't perfectly rely 540 00:29:23,560 --> 00:29:26,760 Speaker 1: on market incentives. That's essentially the role of the UNI token. 541 00:29:27,080 --> 00:29:29,640 Speaker 1: And so something that's really cool is that unique token 542 00:29:29,640 --> 00:29:32,479 Speaker 1: holders can't, for example, just withdraw all the funds from 543 00:29:32,480 --> 00:29:34,760 Speaker 1: the un spot protocol. Right, that's a decentralized you know, 544 00:29:34,960 --> 00:29:37,040 Speaker 1: it makes them more decentralized. Right. But there are kind 545 00:29:37,040 --> 00:29:40,719 Speaker 1: of these other things, right like long term community ecosystem 546 00:29:40,760 --> 00:29:43,400 Speaker 1: growth and development. Uh, there's a lot of value that 547 00:29:43,480 --> 00:29:46,120 Speaker 1: can be kind of created by the un spot protocol UM, 548 00:29:46,160 --> 00:29:48,360 Speaker 1: and there's a lot of sort of human work and 549 00:29:48,560 --> 00:29:50,800 Speaker 1: effort that can be coordinated to towards building value and 550 00:29:50,840 --> 00:29:52,960 Speaker 1: growing the protocol. That's sort of the role of the 551 00:29:53,040 --> 00:29:54,760 Speaker 1: UNI token. So the only kind of are the main 552 00:29:54,840 --> 00:29:57,440 Speaker 1: kind of governance action that it's taken so far, it 553 00:29:57,520 --> 00:30:00,680 Speaker 1: is basically spinning out this this grants to me UM. 554 00:30:00,760 --> 00:30:02,760 Speaker 1: So you know what the Uni swap governance is it's 555 00:30:02,760 --> 00:30:05,800 Speaker 1: an ontain government system. So unied token holders can vote 556 00:30:06,160 --> 00:30:08,840 Speaker 1: on on actions from a smart contract, and that smart 557 00:30:08,880 --> 00:30:11,760 Speaker 1: contract has a treasury. Just to be clear, could at 558 00:30:11,800 --> 00:30:15,560 Speaker 1: some point the UNI token holders vote to pay a 559 00:30:15,600 --> 00:30:19,040 Speaker 1: de facto dividend to unied token token holders down the road. 560 00:30:19,920 --> 00:30:21,840 Speaker 1: I mean, so use governance is a smart contract and 561 00:30:21,840 --> 00:30:24,240 Speaker 1: it's very broad in what it can do. And so 562 00:30:24,760 --> 00:30:28,320 Speaker 1: definitely the UNI swap token holders are unwap Governance has 563 00:30:28,400 --> 00:30:30,520 Speaker 1: this thing that we call the fee switch, which is 564 00:30:31,000 --> 00:30:33,360 Speaker 1: a sort of built in kind of bee that can 565 00:30:33,360 --> 00:30:35,840 Speaker 1: be taken off the you know, basically it can come 566 00:30:35,840 --> 00:30:38,520 Speaker 1: out of liquidity provider fees. So right now point three, 567 00:30:39,480 --> 00:30:42,600 Speaker 1: but this UNED token holders could vote to add up 568 00:30:42,600 --> 00:30:44,640 Speaker 1: to a point zero five percent fee, which is a 569 00:30:44,640 --> 00:30:47,240 Speaker 1: pretty low fee kind of coming out of that that 570 00:30:47,240 --> 00:30:50,400 Speaker 1: that could theoretically be kind of given. You know, it's 571 00:30:50,520 --> 00:30:52,080 Speaker 1: sort of a government system, so it can do whatever 572 00:30:52,080 --> 00:30:54,600 Speaker 1: it wants with the fees that it got and so 573 00:30:54,840 --> 00:30:56,480 Speaker 1: or whatever the UNI token holders want and whatever the 574 00:30:56,520 --> 00:30:59,440 Speaker 1: community wants. So the UNISWAP governance system has it's like 575 00:30:59,480 --> 00:31:01,120 Speaker 1: built in trad tree and so it has kind of 576 00:31:01,560 --> 00:31:04,080 Speaker 1: and and so far it's it's basically the main things 577 00:31:04,080 --> 00:31:06,440 Speaker 1: that it is done is basically fund other teams and 578 00:31:06,480 --> 00:31:09,520 Speaker 1: projects and developers building on top of the unit spalp ecosystem. 579 00:31:09,800 --> 00:31:12,080 Speaker 1: So you know, there's other kind of teams building analytics 580 00:31:12,120 --> 00:31:15,040 Speaker 1: platforms and other interfaces, and those kind of gifts have 581 00:31:15,120 --> 00:31:17,520 Speaker 1: been funded out of UNI token holders who who voted 582 00:31:17,520 --> 00:31:20,280 Speaker 1: to fund that. So there's this community treasury. It technically 583 00:31:20,280 --> 00:31:23,360 Speaker 1: has a fourteen billion dollars worth of UNI tokens in it, 584 00:31:23,640 --> 00:31:25,960 Speaker 1: and so it doesn't necessarily need trading fees either because 585 00:31:25,960 --> 00:31:30,760 Speaker 1: it can sort of use the UNI tokens for for disbursement, 586 00:31:31,120 --> 00:31:34,760 Speaker 1: but in the future it could theoretically collect keys. So 587 00:31:34,840 --> 00:31:36,520 Speaker 1: I mean, it does seem like you guys are working 588 00:31:36,560 --> 00:31:39,080 Speaker 1: on quite a lot at this moment in time. We 589 00:31:39,160 --> 00:31:41,720 Speaker 1: spoke a little bit about the new protocol, but what 590 00:31:41,760 --> 00:31:44,920 Speaker 1: do you think is next for you, um in terms 591 00:31:44,960 --> 00:31:49,160 Speaker 1: of your own company's development, the technology and the wider 592 00:31:49,160 --> 00:31:51,680 Speaker 1: crypto market. So we we've just seen this big moment 593 00:31:52,160 --> 00:31:54,720 Speaker 1: for coin base, which we talked about a little bit 594 00:31:54,800 --> 00:31:57,640 Speaker 1: in the intro, But where do you see UNI swap 595 00:31:57,680 --> 00:32:01,520 Speaker 1: actually going over the next you know, a couple of years. Yeah, 596 00:32:01,560 --> 00:32:03,520 Speaker 1: I think that it's you know, something that's really important 597 00:32:03,520 --> 00:32:05,840 Speaker 1: to think about when you're thinking about DEFY is how 598 00:32:05,880 --> 00:32:08,560 Speaker 1: early on we're in DEFY And you know DeFi is 599 00:32:08,640 --> 00:32:11,440 Speaker 1: essentially what we're trying to do is modernized financial infrastructure. 600 00:32:11,480 --> 00:32:13,600 Speaker 1: And so there's all these you know, these benefits, right 601 00:32:13,680 --> 00:32:16,160 Speaker 1: that are kind of inherent. You might have seen stuff 602 00:32:16,200 --> 00:32:20,440 Speaker 1: like you know, very centralized exchanges, whether it's crypto exchanges 603 00:32:20,520 --> 00:32:23,560 Speaker 1: like coin based and Finance, or you know non crypto 604 00:32:23,560 --> 00:32:26,520 Speaker 1: exchanges like robin Hood, or brokers like robin Hood or 605 00:32:26,720 --> 00:32:28,480 Speaker 1: you know a meritory. They all have these sort of 606 00:32:28,520 --> 00:32:32,520 Speaker 1: downtime and you know, there's these like inherent benefits to DEFY, 607 00:32:32,560 --> 00:32:34,360 Speaker 1: but you know it's also early and so there's also 608 00:32:34,440 --> 00:32:37,160 Speaker 1: sort of these uh early downsides. One way to think 609 00:32:37,160 --> 00:32:39,160 Speaker 1: about is we're in the early days of the internet, right, 610 00:32:39,200 --> 00:32:42,080 Speaker 1: and so you know, people who there's sort of transaction 611 00:32:42,120 --> 00:32:43,800 Speaker 1: fees can be high at times, it doesn't have it 612 00:32:43,840 --> 00:32:46,840 Speaker 1: can't process them that many transactions in the early days, right, 613 00:32:46,880 --> 00:32:48,160 Speaker 1: So it's kind of like you know a O L 614 00:32:48,240 --> 00:32:50,080 Speaker 1: days where things are still a little bit slow, but 615 00:32:50,080 --> 00:32:52,240 Speaker 1: they're getting built out very rapidly. And I think that 616 00:32:52,280 --> 00:32:55,360 Speaker 1: over the coming years we should expect Defy and Ethereum 617 00:32:55,400 --> 00:32:57,520 Speaker 1: to scale up from being able to do what it 618 00:32:57,520 --> 00:33:00,520 Speaker 1: can do today, which is ten transactions per second to 619 00:33:00,840 --> 00:33:03,760 Speaker 1: you know, being able to do hundreds or thousands or 620 00:33:03,840 --> 00:33:06,760 Speaker 1: millions of transactions per second. We've seen a kind of 621 00:33:06,760 --> 00:33:10,080 Speaker 1: explosive best explosion in the usage of d fium. So 622 00:33:10,440 --> 00:33:13,239 Speaker 1: you know, you just didn't exist two years ago. Right 623 00:33:13,240 --> 00:33:15,520 Speaker 1: today is doing ten billion dollars in volume. Six months ago, 624 00:33:15,520 --> 00:33:17,400 Speaker 1: it was doing per week. Six months ago, I was 625 00:33:17,440 --> 00:33:19,600 Speaker 1: doing about two billion, and a year ago I was 626 00:33:19,640 --> 00:33:22,040 Speaker 1: doing about fifty million. So we've kind of seen this explosion, 627 00:33:22,320 --> 00:33:24,000 Speaker 1: and I think it's attracting a lot of new users. 628 00:33:24,040 --> 00:33:26,440 Speaker 1: We've we've seen that kind of similar explosion users, but 629 00:33:26,480 --> 00:33:29,680 Speaker 1: it's still in the like maybe five thousand users range. 630 00:33:29,920 --> 00:33:32,680 Speaker 1: But I think over the coming years, these sort of 631 00:33:32,720 --> 00:33:36,240 Speaker 1: inherent benefits of d FI are gonna become more apparent 632 00:33:36,280 --> 00:33:56,840 Speaker 1: and the downsides are going to be slowly worked out. Well, 633 00:33:56,920 --> 00:33:58,840 Speaker 1: let me ask you a question, because you talk about 634 00:33:58,920 --> 00:34:01,720 Speaker 1: users and you talk about the benefits of Defy, and 635 00:34:01,760 --> 00:34:05,120 Speaker 1: I have to admit, like the technology, the sort of 636 00:34:05,160 --> 00:34:07,920 Speaker 1: rethinking of what a market maker can be, he's really cool. 637 00:34:08,120 --> 00:34:12,319 Speaker 1: And the liquidity I'm super impressed by it. However, when 638 00:34:12,360 --> 00:34:15,719 Speaker 1: you think about like a traditional stock exchange, one of 639 00:34:15,760 --> 00:34:19,200 Speaker 1: the nice things about a stock exchange is you can 640 00:34:19,480 --> 00:34:22,360 Speaker 1: raise money there and then go do something. So, for example, 641 00:34:22,560 --> 00:34:25,200 Speaker 1: you could be a company like game Stop and raise 642 00:34:25,280 --> 00:34:27,920 Speaker 1: money on the stock market and then go build physical 643 00:34:28,000 --> 00:34:30,880 Speaker 1: video games stores, which may not be the best business 644 00:34:31,080 --> 00:34:33,320 Speaker 1: these days, but whatever it is, what it is, or 645 00:34:33,360 --> 00:34:36,200 Speaker 1: you could build something really exciting. When I look at 646 00:34:36,320 --> 00:34:41,040 Speaker 1: what's when you refer to like using defy, it just 647 00:34:41,080 --> 00:34:43,200 Speaker 1: seems like, Okay, you have a bunch of people who 648 00:34:43,200 --> 00:34:46,080 Speaker 1: are trading, that's cool, and you have people who are 649 00:34:46,120 --> 00:34:49,160 Speaker 1: sort of lending or staking and earning yield. That's cool, 650 00:34:49,760 --> 00:34:52,879 Speaker 1: But like who's doing the borrowing? In other words, like 651 00:34:53,120 --> 00:34:56,040 Speaker 1: where are you competing with trad fire. I guess for 652 00:34:56,120 --> 00:34:59,839 Speaker 1: like actual people who need liquidity or people who want 653 00:35:00,000 --> 00:35:03,120 Speaker 1: to raise money, it seems like a bunch of trading 654 00:35:03,160 --> 00:35:05,480 Speaker 1: and lending. But where is the like sort of like 655 00:35:05,600 --> 00:35:07,719 Speaker 1: end user who's getting something out of the system that 656 00:35:07,840 --> 00:35:10,400 Speaker 1: isn't just more trading. Because also when I look at 657 00:35:10,400 --> 00:35:13,239 Speaker 1: all the top coins, everyone just seems to me it's 658 00:35:13,239 --> 00:35:15,759 Speaker 1: like this like Russian doll of Well, this is the 659 00:35:15,800 --> 00:35:19,720 Speaker 1: thing that it's just more coins. That's a really good question, 660 00:35:19,760 --> 00:35:21,520 Speaker 1: and I think that that gets to what I was 661 00:35:21,520 --> 00:35:24,160 Speaker 1: saying about it being in the early days, and so 662 00:35:24,520 --> 00:35:26,920 Speaker 1: you know, where a DeFi is now will necessarily be 663 00:35:26,920 --> 00:35:28,680 Speaker 1: where it is in a couple of years. I think 664 00:35:28,719 --> 00:35:30,880 Speaker 1: that in you know, five ten years, it won't be 665 00:35:30,920 --> 00:35:33,920 Speaker 1: called defiled, just be called finance. So in part of 666 00:35:33,960 --> 00:35:38,160 Speaker 1: what we're trying to do is build better financial infrastructure 667 00:35:38,680 --> 00:35:42,640 Speaker 1: that has inherent benefits to it that will sort of 668 00:35:42,680 --> 00:35:46,440 Speaker 1: benefit the entire class of existing financial use cases. There 669 00:35:46,560 --> 00:35:48,400 Speaker 1: is a lot right now. It is sort of living 670 00:35:48,520 --> 00:35:51,320 Speaker 1: like there is kind of this almost closed ecosystem or 671 00:35:51,360 --> 00:35:54,680 Speaker 1: closed system of crypto and crypto like you know, like 672 00:35:55,160 --> 00:35:58,239 Speaker 1: within crypto, right you saw already kind of works better 673 00:35:58,320 --> 00:36:02,640 Speaker 1: than most centralized exchanges, right, and and these decentralized lending 674 00:36:02,640 --> 00:36:04,880 Speaker 1: systems are far more used than than other ones. But 675 00:36:04,880 --> 00:36:08,560 Speaker 1: outside it's still not it hasn't quite penetrated. And in 676 00:36:08,560 --> 00:36:10,239 Speaker 1: the early days of of anything, right, it's more as 677 00:36:10,280 --> 00:36:12,719 Speaker 1: kind of die hard users and kind of early adopters. 678 00:36:12,719 --> 00:36:16,080 Speaker 1: And that's definitely the phase where we are. And over time, though, 679 00:36:16,920 --> 00:36:20,600 Speaker 1: basically the kind of ux barriers will will be reduced 680 00:36:20,840 --> 00:36:23,239 Speaker 1: and the kind of security will increase, in the kind 681 00:36:23,239 --> 00:36:27,280 Speaker 1: of groutput will increase, the more people will be exposed 682 00:36:27,520 --> 00:36:30,640 Speaker 1: to the very real benefits that underlie it, because there 683 00:36:30,640 --> 00:36:33,200 Speaker 1: are so there's sort of like fundamental benefits and value 684 00:36:33,239 --> 00:36:36,959 Speaker 1: to defy. It's true that those are not all being 685 00:36:37,000 --> 00:36:39,800 Speaker 1: accessed by a wide enough audience. And what we're expecting 686 00:36:40,239 --> 00:36:42,279 Speaker 1: over the coming years is for that to change, and 687 00:36:42,320 --> 00:36:44,600 Speaker 1: we're expecting for more people to get brought in. But 688 00:36:44,719 --> 00:36:46,960 Speaker 1: that's like a you know, an ongoing process, and we're 689 00:36:47,000 --> 00:36:48,799 Speaker 1: still in the early days of that. But can you 690 00:36:48,840 --> 00:36:51,799 Speaker 1: give me an example of how someone who needs to 691 00:36:51,880 --> 00:36:55,480 Speaker 1: raise money for something that's not just more tokens, or 692 00:36:55,520 --> 00:36:58,319 Speaker 1: someone who needs to borrow for something that's not just 693 00:36:58,360 --> 00:37:02,800 Speaker 1: a token development thing gets value from financing, and the 694 00:37:02,880 --> 00:37:06,560 Speaker 1: DeFi system is opposed to all the One kind of 695 00:37:06,600 --> 00:37:10,160 Speaker 1: really easy example is people in kind of you know, 696 00:37:10,280 --> 00:37:11,920 Speaker 1: like we have this sort of a nice advantage of 697 00:37:12,040 --> 00:37:15,000 Speaker 1: living in the US and having at least mostly trusting 698 00:37:15,000 --> 00:37:18,080 Speaker 1: our banks and you know, having a lot of acts. 699 00:37:18,200 --> 00:37:20,000 Speaker 1: You know, we we still have pretty good access to 700 00:37:20,000 --> 00:37:23,520 Speaker 1: financial tools, but there's definitely you know, a huge portion 701 00:37:23,600 --> 00:37:27,080 Speaker 1: of the world that doesn't have as good access, and 702 00:37:27,320 --> 00:37:29,200 Speaker 1: you probably would love to even be able to open 703 00:37:29,239 --> 00:37:32,319 Speaker 1: a US bank account. A very probably early adopt use 704 00:37:32,400 --> 00:37:35,680 Speaker 1: case that I could see UM growing is first off, 705 00:37:35,680 --> 00:37:37,239 Speaker 1: having a U a US bank account would be great 706 00:37:37,239 --> 00:37:39,120 Speaker 1: just being able to store dollars and in US dollars, 707 00:37:39,600 --> 00:37:42,240 Speaker 1: but then beyond that being able to earn a return 708 00:37:42,320 --> 00:37:46,920 Speaker 1: on them. And so these decentralized money markets that we're seeing, 709 00:37:47,480 --> 00:37:49,760 Speaker 1: along with these kind of decentralized stable points that we're seeing, 710 00:37:50,080 --> 00:37:52,080 Speaker 1: could give people, you know, in in in the world 711 00:37:52,080 --> 00:37:56,760 Speaker 1: countries and in developing economies exposure to less risky assets 712 00:37:57,000 --> 00:37:59,600 Speaker 1: and and even yields on those assets UM which I 713 00:37:59,640 --> 00:38:03,040 Speaker 1: think will be a pretty big early ES game. Do 714 00:38:03,120 --> 00:38:06,560 Speaker 1: you worry at all that as DeFi becomes more accepted 715 00:38:06,560 --> 00:38:11,480 Speaker 1: by traditional finance or more incorporated into traditional finance that 716 00:38:11,560 --> 00:38:14,800 Speaker 1: it loses I guess some of the ethos or culture 717 00:38:15,080 --> 00:38:18,920 Speaker 1: that began it. Like I'm thinking this idea of generating 718 00:38:18,960 --> 00:38:22,479 Speaker 1: yields and things like that, there are people out there 719 00:38:22,640 --> 00:38:26,080 Speaker 1: who would see this very much as a money making opportunity. 720 00:38:26,640 --> 00:38:28,520 Speaker 1: One thing that that's kind of important is, you know 721 00:38:28,640 --> 00:38:34,120 Speaker 1: what infrastructure is the global economy run on? And right now, 722 00:38:34,160 --> 00:38:38,400 Speaker 1: it's sort of run on these kind of siloed centralized 723 00:38:38,560 --> 00:38:42,560 Speaker 1: systems that people are bridging across. And there is these 724 00:38:42,560 --> 00:38:45,480 Speaker 1: inherent benefits to running everything on this sort of shared, 725 00:38:45,600 --> 00:38:51,440 Speaker 1: globally accessible infrastructure, and you know, there's still benefits I think, 726 00:38:51,480 --> 00:38:53,480 Speaker 1: I think the defy you know, in the long run, right, 727 00:38:53,760 --> 00:38:55,880 Speaker 1: not everyone wants to self custody either on fund right, 728 00:38:55,920 --> 00:38:58,120 Speaker 1: Plenty of people don't want to think about you know, 729 00:38:58,320 --> 00:39:01,279 Speaker 1: private key management all this stuff, right people, you know, 730 00:39:01,880 --> 00:39:05,239 Speaker 1: many people want to use a bank, but you know what, 731 00:39:05,239 --> 00:39:07,520 Speaker 1: what are banks using as their rails? Are they using 732 00:39:07,600 --> 00:39:10,520 Speaker 1: kind of you know, these siloed, closed off systems or 733 00:39:10,520 --> 00:39:13,279 Speaker 1: are they using this sort of global infrastructure that is 734 00:39:13,320 --> 00:39:17,920 Speaker 1: kind of inherently accessible but and shared. And I think 735 00:39:17,920 --> 00:39:22,000 Speaker 1: that's part of the the idea here, like there's these 736 00:39:22,040 --> 00:39:24,319 Speaker 1: inherent benefits. Right, So one one thing to think about 737 00:39:24,440 --> 00:39:28,239 Speaker 1: is downtown time. In other ways, like centralized exchange hacks. Right. 738 00:39:28,920 --> 00:39:30,800 Speaker 1: You know a lot of the problems that Defy solved 739 00:39:30,880 --> 00:39:33,440 Speaker 1: users don't really care about until it affects them personally. 740 00:39:34,239 --> 00:39:37,359 Speaker 1: But what it does, it's like catastrophic, right. And so 741 00:39:37,480 --> 00:39:39,600 Speaker 1: you know a lot of people have held funds and 742 00:39:40,280 --> 00:39:42,359 Speaker 1: you know, not being able to withdraw them, or your 743 00:39:42,600 --> 00:39:44,879 Speaker 1: your bank shut you out, or all these different things 744 00:39:44,920 --> 00:39:48,200 Speaker 1: that happened. Right, the kind of in the long run, right, people, 745 00:39:48,280 --> 00:39:51,000 Speaker 1: you know, if if Defy successful this sort of amount, 746 00:39:51,320 --> 00:39:53,359 Speaker 1: the kind of these types of events should be much 747 00:39:53,400 --> 00:39:56,239 Speaker 1: more rare, and users should have a much better kind 748 00:39:56,239 --> 00:39:59,160 Speaker 1: of experience using financial tools um in a way that 749 00:39:59,239 --> 00:40:01,120 Speaker 1: you know, they might don't even think about it in 750 00:40:01,120 --> 00:40:04,000 Speaker 1: the moment, but they're sort of benefiting it from it indirectly. 751 00:40:04,239 --> 00:40:06,120 Speaker 1: And so yeah, I do agree that, you know, it's 752 00:40:06,160 --> 00:40:10,000 Speaker 1: incredibly important as we build defy to some extent, right, 753 00:40:10,040 --> 00:40:11,600 Speaker 1: it's a it's a chance to correct some of the 754 00:40:11,640 --> 00:40:13,879 Speaker 1: wrongs that were made the first time in the kind 755 00:40:13,880 --> 00:40:16,720 Speaker 1: of creation of the first of the of the existing 756 00:40:16,800 --> 00:40:20,960 Speaker 1: financial system. One really interesting example of that is, you know, 757 00:40:21,000 --> 00:40:24,320 Speaker 1: incentive alignment. Um, there's sort of this principal agent problem 758 00:40:24,400 --> 00:40:25,719 Speaker 1: that we see. You know, if you think about even 759 00:40:25,760 --> 00:40:28,560 Speaker 1: like the subprime mortgage crisis, where you know a lot 760 00:40:28,600 --> 00:40:33,200 Speaker 1: of the people who were kind of creating these risky mortgages, right, 761 00:40:33,200 --> 00:40:36,440 Speaker 1: they didn't have personal risk and personal accountability, um, if 762 00:40:36,680 --> 00:40:40,120 Speaker 1: something went wrong. And our hope in building out defy 763 00:40:40,200 --> 00:40:43,600 Speaker 1: as an ecosystem is essentially the people who are making 764 00:40:43,600 --> 00:40:48,960 Speaker 1: the decisions, right, they're directly accountable financially or if something 765 00:40:49,000 --> 00:40:51,480 Speaker 1: goes wrong, and you know, the hope is that that 766 00:40:51,560 --> 00:40:54,080 Speaker 1: kind of benefits everyone. You know, the yeah, there'll be 767 00:40:54,080 --> 00:40:56,000 Speaker 1: a lot of people kind of making money and and 768 00:40:56,360 --> 00:40:58,880 Speaker 1: in it for themselves, and you know, that's sort of 769 00:40:58,880 --> 00:41:02,879 Speaker 1: just part part of how capitalism works. But I think 770 00:41:02,880 --> 00:41:05,600 Speaker 1: that there's these sort of inherent benefits that can be 771 00:41:05,800 --> 00:41:08,600 Speaker 1: built into the systems, you know, if the people who 772 00:41:08,600 --> 00:41:11,040 Speaker 1: are building them care to do so. And that's sort 773 00:41:11,080 --> 00:41:14,400 Speaker 1: of my hope. So on these big so you know, 774 00:41:14,440 --> 00:41:18,560 Speaker 1: you talk about some of the benefits of decentralization, so 775 00:41:18,680 --> 00:41:24,040 Speaker 1: on these like the big block chains like Bitcoin and ethereum, 776 00:41:24,080 --> 00:41:27,399 Speaker 1: it would be extremely hard for anyone to hack them 777 00:41:27,480 --> 00:41:31,399 Speaker 1: or take control of them or block transactions. But conversely, 778 00:41:31,840 --> 00:41:38,080 Speaker 1: they're computationally expensive, and that translates into monetarily expensive fees 779 00:41:38,600 --> 00:41:40,600 Speaker 1: For if you want to send a bitcoin transaction are 780 00:41:40,640 --> 00:41:43,200 Speaker 1: fairly high, if you want to send an ethereum transaction 781 00:41:43,560 --> 00:41:47,879 Speaker 1: are fairly high. Uh, they're not particularly fast. There are 782 00:41:48,080 --> 00:41:52,920 Speaker 1: other decentralized exchanges that exist. The second biggest one right 783 00:41:52,920 --> 00:41:56,840 Speaker 1: now is I think something called pancakes Swap, which runs 784 00:41:57,000 --> 00:42:00,239 Speaker 1: on the the Binands smart chain, which is its own 785 00:42:00,280 --> 00:42:04,640 Speaker 1: a blockchain, and they're selling point is from what I understand, 786 00:42:05,000 --> 00:42:10,080 Speaker 1: way faster, way, lower fees, probably somewhat less decentralized. But 787 00:42:10,160 --> 00:42:12,680 Speaker 1: if you're just sort of a random retail trader, you're 788 00:42:12,719 --> 00:42:15,200 Speaker 1: someone who wants to spin up a project, why go 789 00:42:15,280 --> 00:42:18,520 Speaker 1: to UNI swap where a trade or a connection could 790 00:42:18,719 --> 00:42:21,799 Speaker 1: you know, cause like fifty dollars and the ethereum when 791 00:42:22,320 --> 00:42:25,400 Speaker 1: you can go way go way cheaper and faster on 792 00:42:25,600 --> 00:42:30,759 Speaker 1: something like serum or pancakes swap. Something that I said 793 00:42:30,880 --> 00:42:34,560 Speaker 1: before is people don't care about the benefits of decentralization 794 00:42:34,640 --> 00:42:38,000 Speaker 1: until it affects them, right. Pancake Swap is essentially is 795 00:42:38,040 --> 00:42:40,800 Speaker 1: saying like, yeah, it's you get all the benefits of 796 00:42:40,880 --> 00:42:43,680 Speaker 1: UNI swap except you know, except it's run on you know, 797 00:42:43,719 --> 00:42:47,120 Speaker 1: twelve servers on by binance, right, and so it kind 798 00:42:47,120 --> 00:42:48,920 Speaker 1: of and and that sort of gets that this like 799 00:42:49,040 --> 00:42:51,600 Speaker 1: what is the fundamental value of UNA. The fundamental value 800 00:42:51,600 --> 00:42:55,320 Speaker 1: of uniswap is that it's decentralized. And you know, there 801 00:42:55,360 --> 00:42:58,040 Speaker 1: there are hundreds of people around the world working really 802 00:42:58,080 --> 00:43:02,640 Speaker 1: hard to kind of scale up uh, you know, decentralized protocols, 803 00:43:02,680 --> 00:43:05,120 Speaker 1: but it's a sort of long and there there. I 804 00:43:05,120 --> 00:43:06,320 Speaker 1: think that some of them are kind of going to 805 00:43:06,360 --> 00:43:08,080 Speaker 1: be coming to the market very soon, but it's still 806 00:43:08,120 --> 00:43:11,680 Speaker 1: like a very kind of intense technical problem. And if 807 00:43:11,719 --> 00:43:13,839 Speaker 1: you're kind of just saying, oh, well, you know, we can, 808 00:43:13,920 --> 00:43:16,840 Speaker 1: we can centralize it and everything will be fine, I 809 00:43:16,880 --> 00:43:18,520 Speaker 1: mean some people don't you know, some people don't care, 810 00:43:18,560 --> 00:43:22,360 Speaker 1: and you know, centralized exchanges probably will always have market share. 811 00:43:22,680 --> 00:43:25,000 Speaker 1: But in the long run, right, they still still have 812 00:43:25,120 --> 00:43:27,879 Speaker 1: this same problem, right, which is that what happens if 813 00:43:28,200 --> 00:43:31,680 Speaker 1: if finance decides to kind of change everyone balances, you know, 814 00:43:31,920 --> 00:43:34,600 Speaker 1: you know, they kind of change change their twelve notes 815 00:43:34,640 --> 00:43:38,279 Speaker 1: to to running, right, they can kind of rewrite history whatever, right, 816 00:43:38,480 --> 00:43:40,719 Speaker 1: and so you sort of lose these kind of fundamental 817 00:43:40,840 --> 00:43:43,719 Speaker 1: value and so yeah, you can always scale up to 818 00:43:43,840 --> 00:43:46,880 Speaker 1: by sacrificing decentralization. But what is really hard is scaling 819 00:43:47,520 --> 00:43:51,239 Speaker 1: without sacrificing decentralization. And you know, the main kind of 820 00:43:51,440 --> 00:43:54,239 Speaker 1: solutions there which are in the works and it are 821 00:43:54,320 --> 00:43:57,400 Speaker 1: coming are you know, THEORYM two point oh with with charning. 822 00:43:57,440 --> 00:44:00,319 Speaker 1: But also you know ethereum layer two solutions such a 823 00:44:00,480 --> 00:44:03,120 Speaker 1: roll up, you know, those are kind of the real 824 00:44:03,160 --> 00:44:06,680 Speaker 1: solutions that are much more decentralized and retain more of 825 00:44:06,719 --> 00:44:10,080 Speaker 1: the properties that I think are you know, fundamentally valuable 826 00:44:10,080 --> 00:44:14,600 Speaker 1: about defied. So there's one other um big thing which 827 00:44:14,600 --> 00:44:17,440 Speaker 1: we haven't really mentioned, and I guess it's again a 828 00:44:17,520 --> 00:44:21,440 Speaker 1: sort of tension um or risk that's inherent in defy. 829 00:44:21,600 --> 00:44:25,279 Speaker 1: And this is the response of the regulators. Do you 830 00:44:25,360 --> 00:44:29,880 Speaker 1: worry at all that someone like the Securities and Exchange 831 00:44:29,880 --> 00:44:33,319 Speaker 1: Commission is going to come in and take a hard 832 00:44:33,360 --> 00:44:36,400 Speaker 1: look at the tokens trading on your platform and decide 833 00:44:36,440 --> 00:44:40,480 Speaker 1: that you are in fact dealing registered securities or unregistered securities, 834 00:44:40,480 --> 00:44:42,600 Speaker 1: I should say, yeah, I mean I think that you 835 00:44:42,600 --> 00:44:46,680 Speaker 1: know one interesting thing here right is you know you 836 00:44:46,680 --> 00:44:48,680 Speaker 1: can almost look at bitcoin and you can look at 837 00:44:48,719 --> 00:44:54,640 Speaker 1: Ethereum as leading examples where you know, I think it 838 00:44:54,680 --> 00:44:57,440 Speaker 1: took time for regulators, and I think, but I think 839 00:44:57,480 --> 00:45:00,000 Speaker 1: over time, you know, regulators have slowly become more comfort 840 00:45:00,000 --> 00:45:03,400 Speaker 1: able with bitcoin and with ethereum as these infrastructure layer 841 00:45:03,920 --> 00:45:07,440 Speaker 1: uh decentralized infrastructure layer platforms, and sort of recognize that 842 00:45:07,440 --> 00:45:11,040 Speaker 1: people can build you know, regulatorily compliant or non compliant 843 00:45:11,200 --> 00:45:14,399 Speaker 1: applications on top of them. Right, you can build a 844 00:45:14,400 --> 00:45:17,160 Speaker 1: compliant token on on on ethereum, and you can build 845 00:45:17,160 --> 00:45:19,040 Speaker 1: a non compliant token on on ethereum, and you can 846 00:45:19,040 --> 00:45:21,000 Speaker 1: build right and and Ethereum is sort of this lower 847 00:45:21,040 --> 00:45:26,000 Speaker 1: level infrastructure underlying it and you know, unit swap while 848 00:45:26,080 --> 00:45:28,440 Speaker 1: there are stuff like interfaces to it that that exists 849 00:45:28,440 --> 00:45:30,520 Speaker 1: on top of it, and those interfaces kind of feel 850 00:45:30,520 --> 00:45:32,279 Speaker 1: more like you know, traditional exchanges in terms of what 851 00:45:32,320 --> 00:45:36,600 Speaker 1: they look like, uh, you know visually, the infrastructure underlying it, right, 852 00:45:36,680 --> 00:45:41,160 Speaker 1: is still this sort of low level infrastructure and platform 853 00:45:41,560 --> 00:45:44,920 Speaker 1: that supports you know, regulated and and you know that 854 00:45:44,960 --> 00:45:46,840 Speaker 1: can kind of people can spin up a you know, 855 00:45:46,840 --> 00:45:50,000 Speaker 1: a regulated compliant market on top of the unit swap, right, 856 00:45:50,040 --> 00:45:52,680 Speaker 1: and and we've seen that happen. And and then there's 857 00:45:52,680 --> 00:45:56,160 Speaker 1: still value in defy even with that being the case. 858 00:45:56,200 --> 00:45:58,680 Speaker 1: And so I think that, you know, as the same 859 00:45:58,719 --> 00:46:03,239 Speaker 1: way that sort of regulators became comfortable with Ethereum over 860 00:46:03,280 --> 00:46:05,560 Speaker 1: time seeing it as an infrastructure. There I think that 861 00:46:05,840 --> 00:46:08,160 Speaker 1: all the same things, you know, un kind of hits 862 00:46:08,200 --> 00:46:11,880 Speaker 1: the same bars of decentralization that ethereum itself does because 863 00:46:11,920 --> 00:46:14,800 Speaker 1: it runs entirely on Ethereum and is you know, entirely 864 00:46:14,800 --> 00:46:18,520 Speaker 1: composed with Aum smart contracts, right, and so you know, 865 00:46:18,560 --> 00:46:20,759 Speaker 1: the hope is that in much the same way that 866 00:46:20,840 --> 00:46:24,120 Speaker 1: Ethereum is is understood to be infrastructure, it will be 867 00:46:24,120 --> 00:46:29,359 Speaker 1: recognized that unit swap resolves. So is this you say 868 00:46:29,360 --> 00:46:32,680 Speaker 1: it's infrastructure, but is this is the argument therefore that 869 00:46:33,760 --> 00:46:37,680 Speaker 1: in the end there's no there's no securities being traded. 870 00:46:37,719 --> 00:46:40,520 Speaker 1: It's just infrastructure all the way down or up. I mean, 871 00:46:40,880 --> 00:46:43,160 Speaker 1: you know, I don't know how many apparently have two 872 00:46:43,200 --> 00:46:47,799 Speaker 1: thousand coins? Are some of them? What are they? Are 873 00:46:47,800 --> 00:46:51,919 Speaker 1: they securities? There's tens of thousands, about two per days. 874 00:46:52,120 --> 00:46:55,120 Speaker 1: But it's it's it's not that the idea is basically 875 00:46:55,280 --> 00:46:57,960 Speaker 1: that you know, much like the you know, the internet, right, 876 00:46:58,000 --> 00:47:01,319 Speaker 1: people can do illegal or illegal things on the Internet, Right, 877 00:47:01,360 --> 00:47:03,239 Speaker 1: people can do illegal or non illegal things on a 878 00:47:03,320 --> 00:47:05,960 Speaker 1: theoryum can people can do illegal or not illegal things 879 00:47:06,000 --> 00:47:08,880 Speaker 1: on bitcoin in that same way people can do illegal 880 00:47:08,960 --> 00:47:11,520 Speaker 1: or not illegal things on unit swop. And it's a 881 00:47:11,560 --> 00:47:14,920 Speaker 1: decentralized protocol that no one controls, right. And so the 882 00:47:14,960 --> 00:47:17,759 Speaker 1: idea is basically that you know, maybe and I don't, 883 00:47:17,760 --> 00:47:20,200 Speaker 1: I don't want to, you know, speculate where you know 884 00:47:20,360 --> 00:47:23,080 Speaker 1: where regulations should occur, right, But you know, it could 885 00:47:23,080 --> 00:47:26,200 Speaker 1: be you know, the issues of assets. Right. It could 886 00:47:26,239 --> 00:47:29,160 Speaker 1: be you know, you can build a token that's compliant, right, 887 00:47:29,200 --> 00:47:31,319 Speaker 1: you can. It could be the kind of it could 888 00:47:31,360 --> 00:47:33,560 Speaker 1: be interfaces built on top of it. It could be 889 00:47:33,719 --> 00:47:36,839 Speaker 1: be you know, specific marketly you know who knows. Right, 890 00:47:36,880 --> 00:47:40,760 Speaker 1: But the you know, uni swap is kind of fundamentally decentralized. 891 00:47:41,239 --> 00:47:42,719 Speaker 1: Someone could come to send me a letter that says, 892 00:47:42,719 --> 00:47:44,400 Speaker 1: hey didn't show off unit swap, and I'd say, I 893 00:47:44,440 --> 00:47:47,120 Speaker 1: can't do that, right, I have no ability to shop. 894 00:47:47,160 --> 00:47:49,399 Speaker 1: You could have no ability. You could shut off unit 895 00:47:49,440 --> 00:47:53,160 Speaker 1: swap dot org. Right, I've ben showed off uniswap dot org, 896 00:47:53,200 --> 00:47:55,759 Speaker 1: which is a well act. Uniswap dot org is a 897 00:47:55,840 --> 00:47:58,960 Speaker 1: specific training interface that exists on top. But you know, 898 00:47:59,239 --> 00:48:02,600 Speaker 1: there's also something like thirty forty other trading interfaces that 899 00:48:02,719 --> 00:48:06,400 Speaker 1: let you access unit swap, and so there are you know, 900 00:48:07,080 --> 00:48:10,759 Speaker 1: the portion of training volume that comes through the one 901 00:48:10,840 --> 00:48:14,279 Speaker 1: interface is actually a relatively small portion more than you know, 902 00:48:14,400 --> 00:48:19,160 Speaker 1: something like trading happens on other interfaces or in other 903 00:48:19,239 --> 00:48:21,560 Speaker 1: smart contracts. Um. You know, something we didn't really get 904 00:48:21,640 --> 00:48:24,320 Speaker 1: into is that you know, you swap is this because 905 00:48:24,320 --> 00:48:26,279 Speaker 1: all the liquid exists on chain, it can be used 906 00:48:26,360 --> 00:48:29,880 Speaker 1: very easily within other smart applications. So a lot of 907 00:48:29,960 --> 00:48:32,680 Speaker 1: trading on unit swap doesn't even happen on any interface, 908 00:48:32,719 --> 00:48:36,879 Speaker 1: but happens directly on chain in other applications. And so yeah, 909 00:48:36,960 --> 00:48:39,759 Speaker 1: maybe maybe you know, after got org could be shut 910 00:48:39,800 --> 00:48:41,800 Speaker 1: down or could be kind of running away, you know, 911 00:48:41,920 --> 00:48:45,000 Speaker 1: where it kind of restricts assets, specific assets. In fact, 912 00:48:45,040 --> 00:48:47,920 Speaker 1: it already kind of does limit what you see in 913 00:48:48,200 --> 00:48:49,800 Speaker 1: in in a way that is kind of designed to 914 00:48:49,840 --> 00:48:53,320 Speaker 1: protect users. But there are alternate interfaces, and you know, 915 00:48:53,360 --> 00:48:55,160 Speaker 1: the code is all open source, and so people have 916 00:48:55,280 --> 00:48:57,240 Speaker 1: even forked the interface and spun up their own versions 917 00:48:57,480 --> 00:48:59,399 Speaker 1: that that do other things, and you know, we don't 918 00:48:59,400 --> 00:49:03,160 Speaker 1: really have any control over that. Hayden um I mean, 919 00:49:03,520 --> 00:49:05,719 Speaker 1: is there anything else that's sort of like you want 920 00:49:05,760 --> 00:49:09,520 Speaker 1: to like make sure our our listeners understand about it 921 00:49:09,600 --> 00:49:13,239 Speaker 1: before we go. One really interesting aspect is what I 922 00:49:13,239 --> 00:49:16,160 Speaker 1: would call them most like permissionless innovation and sort of 923 00:49:16,239 --> 00:49:20,520 Speaker 1: the ease of building applications traditionally, Right, if you wanted 924 00:49:20,560 --> 00:49:22,440 Speaker 1: to build let's say you wanted to build a like 925 00:49:22,600 --> 00:49:26,080 Speaker 1: a I don't know, like a margin trading platform, the 926 00:49:26,160 --> 00:49:27,640 Speaker 1: kind of amount of things that you would need to 927 00:49:27,680 --> 00:49:29,200 Speaker 1: build to do that, right, You would need to build 928 00:49:29,200 --> 00:49:32,080 Speaker 1: an exchange, you would need to build a lending system 929 00:49:32,480 --> 00:49:34,600 Speaker 1: or integrate with one, you would need to kind of right, 930 00:49:34,640 --> 00:49:36,279 Speaker 1: there's sort of all these different things that you need 931 00:49:36,280 --> 00:49:39,160 Speaker 1: to build. But in crypto we sort of, uh, you know, 932 00:49:39,520 --> 00:49:43,120 Speaker 1: there's sort of this like what we call interoperability between applications. 933 00:49:43,440 --> 00:49:45,880 Speaker 1: There's you might have heard the phrase money legos, and 934 00:49:46,320 --> 00:49:48,320 Speaker 1: essentially what that means is that, you know, in a 935 00:49:48,400 --> 00:49:50,520 Speaker 1: single day, right, someone could basically spin up a new 936 00:49:50,560 --> 00:49:53,680 Speaker 1: application that and they don't need and they could source 937 00:49:53,760 --> 00:49:55,560 Speaker 1: you know, liquidity from unit swap. Right, they don't need 938 00:49:55,800 --> 00:49:58,320 Speaker 1: that application. It might need exchange as a component, but 939 00:49:58,400 --> 00:49:59,759 Speaker 1: it doesn't they don't need to build their own. They 940 00:49:59,760 --> 00:50:02,200 Speaker 1: can just access liquiding from unit swap and you know, 941 00:50:02,239 --> 00:50:04,239 Speaker 1: they maybe they spend up and they use compound for 942 00:50:04,880 --> 00:50:07,080 Speaker 1: for for lending right, and you could kind of build 943 00:50:07,120 --> 00:50:09,760 Speaker 1: and you know, a new system that lends an asset 944 00:50:09,840 --> 00:50:12,719 Speaker 1: on on compound and trades it for another asset and 945 00:50:12,800 --> 00:50:14,439 Speaker 1: unit swap and put and you can kind of create 946 00:50:14,480 --> 00:50:18,080 Speaker 1: these sort of you can kind of compose applications in 947 00:50:18,200 --> 00:50:20,640 Speaker 1: this sort of really powerful way where you know, things 948 00:50:20,800 --> 00:50:24,200 Speaker 1: that take years to build outside of Defy can be 949 00:50:24,280 --> 00:50:27,000 Speaker 1: built in days. And one of the reasons that I've 950 00:50:27,080 --> 00:50:29,279 Speaker 1: seen so much, you know, so many different things, and 951 00:50:29,320 --> 00:50:31,080 Speaker 1: it can be almost hard to even keep up with 952 00:50:31,200 --> 00:50:33,920 Speaker 1: what's happening is how much is getting built and how 953 00:50:34,040 --> 00:50:36,920 Speaker 1: quick people are building it. And there's there's kind of 954 00:50:36,920 --> 00:50:38,880 Speaker 1: a lot of noise, but beneath that noise, there's like 955 00:50:38,920 --> 00:50:41,320 Speaker 1: a lot of value being built. And you know, I 956 00:50:41,440 --> 00:50:43,160 Speaker 1: think that that will become a more in sort of 957 00:50:43,239 --> 00:50:46,239 Speaker 1: I think that the really valuable applications will become more 958 00:50:46,280 --> 00:50:49,920 Speaker 1: apparent over time. I guess that's one other thing awesome. Well, 959 00:50:49,960 --> 00:50:52,120 Speaker 1: I really appreciate it. I learned a lot from this, 960 00:50:52,440 --> 00:50:54,800 Speaker 1: and you know, I know there's a lot more to 961 00:50:54,960 --> 00:50:58,640 Speaker 1: like Defy we didn't really get into like compound and 962 00:50:58,800 --> 00:51:02,880 Speaker 1: lending and old farming and all that, but this was, uh, 963 00:51:03,239 --> 00:51:07,080 Speaker 1: this is great, appreciate having me, Thanks a lot, h 964 00:51:07,440 --> 00:51:22,160 Speaker 1: thanks so much, Hidden That's great, So Tracy, I found 965 00:51:22,160 --> 00:51:26,920 Speaker 1: that conversation to be really fascinating. I find unite swap 966 00:51:27,080 --> 00:51:30,239 Speaker 1: to be fascinating. I find the whole like rethinking of 967 00:51:30,360 --> 00:51:34,120 Speaker 1: market structure and this automated market maker model to be 968 00:51:34,360 --> 00:51:37,400 Speaker 1: super fascinating. I have to say that, like the thing 969 00:51:37,480 --> 00:51:40,040 Speaker 1: I'm like still hung up on is like, it's great 970 00:51:40,120 --> 00:51:43,160 Speaker 1: to trade, and it's great to have liquidity, but I'm 971 00:51:43,200 --> 00:51:45,759 Speaker 1: still like hung up on the like, yes, but liquidity 972 00:51:46,160 --> 00:51:48,880 Speaker 1: for what you know, And like that stock exchange, at 973 00:51:48,960 --> 00:51:51,440 Speaker 1: least in theory, you like go raise money and you 974 00:51:51,560 --> 00:51:54,360 Speaker 1: do something with it. With defied SOT, it just seems 975 00:51:54,440 --> 00:51:57,440 Speaker 1: like liquidity for the sake of liquidity, or trading for 976 00:51:57,480 --> 00:52:01,320 Speaker 1: the sake of trading. Yeah, I agree. That's still, like 977 00:52:01,920 --> 00:52:04,880 Speaker 1: I guess, a big hurdle to the market really getting 978 00:52:05,120 --> 00:52:08,920 Speaker 1: UM accepted or incorporated into traditional finance. The other thing 979 00:52:09,000 --> 00:52:13,239 Speaker 1: I was thinking about was this idea of uni swap 980 00:52:13,360 --> 00:52:18,080 Speaker 1: basically having to completely or completely is unfair, but you know, 981 00:52:18,200 --> 00:52:21,640 Speaker 1: reinvent itself every once in a while and evolve and 982 00:52:21,840 --> 00:52:24,800 Speaker 1: respond to new developments in the market and things like 983 00:52:25,080 --> 00:52:29,160 Speaker 1: the sushi swap vampire attack. And I think in technology 984 00:52:29,840 --> 00:52:34,719 Speaker 1: that kind of experimentation or adaptation, it is the usual thing, 985 00:52:34,960 --> 00:52:39,000 Speaker 1: like people change their products and they kind of experiment 986 00:52:39,080 --> 00:52:40,960 Speaker 1: with what they're doing. But I think the difference with 987 00:52:41,040 --> 00:52:45,040 Speaker 1: crypto is that you're always doing that with money, and 988 00:52:45,400 --> 00:52:47,880 Speaker 1: that seems to make it so much more difficult, right, 989 00:52:48,000 --> 00:52:52,560 Speaker 1: Like you're experimenting with people's money, and you know, for 990 00:52:52,680 --> 00:52:54,359 Speaker 1: a lot of people at the moment, crypto is still 991 00:52:54,440 --> 00:52:56,560 Speaker 1: this fun thing. It's just something they kind of do 992 00:52:56,680 --> 00:52:59,880 Speaker 1: on the side, but it is more sensitive, and I 993 00:53:00,120 --> 00:53:03,399 Speaker 1: think that makes it more difficult over the long run. Yeah, 994 00:53:03,560 --> 00:53:06,280 Speaker 1: And it's a lot of money, Like all the coins 995 00:53:06,320 --> 00:53:08,560 Speaker 1: added together, I don't know as of right now, it's 996 00:53:08,600 --> 00:53:12,920 Speaker 1: somewhere like around two trillion dollars, And so it's a 997 00:53:13,000 --> 00:53:15,640 Speaker 1: lot of money. And two, you have a lot of 998 00:53:15,680 --> 00:53:18,880 Speaker 1: people who have become like insanely wealthy by buying some 999 00:53:19,080 --> 00:53:21,879 Speaker 1: coin and then it goes up over the next year. 1000 00:53:22,040 --> 00:53:24,480 Speaker 1: This is great, but it's a little weird when it's 1001 00:53:24,560 --> 00:53:28,600 Speaker 1: that much money. And as Hayden basically seem to admit 1002 00:53:29,400 --> 00:53:32,840 Speaker 1: there's no one like at the other end, like no 1003 00:53:32,960 --> 00:53:36,080 Speaker 1: one is there's still it hasn't actually like found its 1004 00:53:36,680 --> 00:53:40,280 Speaker 1: end market for what Defy serves, and so it's like, okay, 1005 00:53:40,320 --> 00:53:42,640 Speaker 1: maybe it's going to be something in emerging markets and 1006 00:53:42,719 --> 00:53:46,200 Speaker 1: people have access to something or other, but it's kind 1007 00:53:46,239 --> 00:53:48,239 Speaker 1: of weird like a how much money there is and 1008 00:53:48,320 --> 00:53:51,160 Speaker 1: be how much money people have already made, where there's 1009 00:53:51,160 --> 00:53:53,279 Speaker 1: still this like ambiguity of like okay, well, like what's 1010 00:53:53,320 --> 00:53:56,400 Speaker 1: it going to be used for? Yeah, I mean defy. 1011 00:53:56,680 --> 00:54:00,560 Speaker 1: Defy contains multitudes I think, and means different things to 1012 00:54:00,640 --> 00:54:02,920 Speaker 1: different people. For sure. It's kind of a shame that 1013 00:54:03,000 --> 00:54:05,480 Speaker 1: we didn't touch more on the yield farming aspect of it. 1014 00:54:05,719 --> 00:54:08,280 Speaker 1: Um on that note, because you do a yield farming 1015 00:54:08,360 --> 00:54:10,960 Speaker 1: one too, because I know that's like a big thing 1016 00:54:11,120 --> 00:54:13,200 Speaker 1: and like you like put your money in here and 1017 00:54:13,239 --> 00:54:14,719 Speaker 1: then you get a coin, and then you put the 1018 00:54:14,800 --> 00:54:16,920 Speaker 1: coin in another thing and collect more yield you like, 1019 00:54:17,680 --> 00:54:19,759 Speaker 1: I know, a yield farmer. Maybe it will have a 1020 00:54:19,880 --> 00:54:22,359 Speaker 1: yield farmer on the show. Yeah, let's do it. Let's 1021 00:54:22,400 --> 00:54:27,399 Speaker 1: do like opposing ends of the defied movement. Let's do that. Yeah, 1022 00:54:27,719 --> 00:54:30,440 Speaker 1: like it's there's something for sure super interesting there and 1023 00:54:30,560 --> 00:54:34,480 Speaker 1: like the whole like it is very inventive, so I added, 1024 00:54:34,520 --> 00:54:37,600 Speaker 1: I'm super interested. It's fun. I went on Unit swap. 1025 00:54:37,680 --> 00:54:39,440 Speaker 1: It's fun to like look at how these things work 1026 00:54:39,520 --> 00:54:41,360 Speaker 1: and the ease. It's like, you know, you don't have 1027 00:54:41,400 --> 00:54:43,720 Speaker 1: to set up an account. You just start like dragging 1028 00:54:43,800 --> 00:54:47,239 Speaker 1: down things you can theoretically trade. But uh yeah, it's 1029 00:54:47,480 --> 00:54:50,319 Speaker 1: it's fascinating to see where it's going. Should we leave 1030 00:54:50,360 --> 00:54:54,399 Speaker 1: it there? Yeah, let's leave it there. Okay. This has 1031 00:54:54,440 --> 00:54:57,920 Speaker 1: been another episode of the All Thoughts Podcast. I'm Tracy Halloway. 1032 00:54:58,040 --> 00:55:00,520 Speaker 1: You can follow me on Twitter at trace See all Away, 1033 00:55:01,440 --> 00:55:03,480 Speaker 1: and I'm Joe wi Isn't all. You could follow me 1034 00:55:03,719 --> 00:55:07,480 Speaker 1: on Twitter at the Stalwart. Follow our guest Hayden Adams. 1035 00:55:07,800 --> 00:55:12,000 Speaker 1: He's at Hayden ze Adams. Follow our producer Laura Carlson. 1036 00:55:12,080 --> 00:55:15,160 Speaker 1: She's at Laura M. Carlson. Followed the Bloomberg Ahead of 1037 00:55:15,239 --> 00:55:19,440 Speaker 1: podcast Francesca Levie at Francesca Today and check out all 1038 00:55:19,520 --> 00:55:23,160 Speaker 1: of our podcasts at Bloomberg. Onto the handle ad podcast. 1039 00:55:23,480 --> 00:55:24,200 Speaker 1: Thanks for listening.