1 00:00:00,120 --> 00:00:05,440 Amms didn't need to be only the simple version of X * y = K, 2 00:00:05,560 --> 00:00:08,680 which implies that the pool always has like the same amount 3 00:00:08,680 --> 00:00:12,720 of value in both, in both tokens and discover that it's possible 4 00:00:12,720 --> 00:00:16,880 to have any number of tokens with any weights that you want. 5 00:00:17,040 --> 00:00:20,840 Like pretty similar to what an index fund or an ETF would look 6 00:00:20,840 --> 00:00:22,640 like. And that was Balancer, Balancer 7 00:00:22,640 --> 00:00:27,760 V1 we launched in 2020. And yeah, since then we went 8 00:00:27,760 --> 00:00:33,000 more from an end user focus protocol to developer focus 9 00:00:33,000 --> 00:00:37,960 protocol where people can build their own AMM innovations on top 10 00:00:37,960 --> 00:00:40,200 of balancers. So we went in that direction 11 00:00:40,200 --> 00:00:42,960 with Balancer V2. There are people who say like 12 00:00:43,240 --> 00:00:46,720 Amms are what what they are now and there's not much to to do. 13 00:00:46,880 --> 00:00:50,200 But then we see a lot of interesting things like priority 14 00:00:50,200 --> 00:00:53,560 fee mechanisms. Balancer V3 is a bad that this 15 00:00:53,560 --> 00:00:56,960 is going to keep happening and we want to be this platform for 16 00:00:56,960 --> 00:00:59,840 people to try new things around AMM design. 17 00:01:00,000 --> 00:01:02,400 Welcome to Epicenter, the show, which talks about the 18 00:01:02,400 --> 00:01:05,160 technologies, projects and people driving decentralization 19 00:01:05,160 --> 00:01:08,200 and the production revolution. I'm Federica ANZ and today I'm 20 00:01:08,200 --> 00:01:11,280 speaking with Fernando Martinelli, the Co founder of 21 00:01:11,400 --> 00:01:14,800 Balancer Protocol. 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Fernando, it's fantastic to have 53 00:02:57,920 --> 00:03:00,480 you back on. Last time you were on this show 54 00:03:00,480 --> 00:03:04,640 was was actually four years ago. It's a really long time. 55 00:03:05,080 --> 00:03:08,240 Remind us. In crypto, it's a it's a 56 00:03:08,240 --> 00:03:11,440 generation or more. Yeah, it's like in four years 57 00:03:11,440 --> 00:03:15,800 it's at least one generation. So remind us how how did 58 00:03:15,800 --> 00:03:21,960 Balancer get started and how has it developed since 2020 when we 59 00:03:21,960 --> 00:03:24,280 last had you on? Yeah. 60 00:03:24,280 --> 00:03:30,520 So I've always been a fan of of Krypton General, Bitcoin and 61 00:03:30,520 --> 00:03:34,560 Ethereum and got involved in the early days of Maker Dow worked 62 00:03:34,560 --> 00:03:39,800 with Ruin and Nicolai and was active, active in the 63 00:03:39,800 --> 00:03:43,440 discussions around AM NS. And it was the early days in 64 00:03:43,440 --> 00:03:50,240 2017, even before that. And the idea came in 2018 when I 65 00:03:50,240 --> 00:03:54,480 realized that AM miss didn't need to be only the simple 66 00:03:54,720 --> 00:03:59,560 version of X * y = K, which implies that the pool always has 67 00:03:59,840 --> 00:04:03,680 5050 like the same amount of value in both, in both tokens. 68 00:04:04,240 --> 00:04:09,560 So, yeah, I, I kind of slept, slept little for some nights 69 00:04:09,560 --> 00:04:13,760 and, and went through lots of maths and discovered that it's 70 00:04:13,760 --> 00:04:18,000 possible to have any number of tokens with any weights that you 71 00:04:18,000 --> 00:04:21,959 want, like pretty similar to what an index fund or an ETF 72 00:04:21,959 --> 00:04:24,920 would look like. And, and that was Balancer. 73 00:04:24,920 --> 00:04:30,480 Balancer V1 we launched in 2020. And yeah, since then how it 74 00:04:30,480 --> 00:04:37,000 evolved, we went more from like a, an end user focus protocol to 75 00:04:37,320 --> 00:04:42,000 developer focus protocol where people can build their own AMM 76 00:04:42,000 --> 00:04:46,640 innovations on top of Balancer. So we, we kind of went in that 77 00:04:46,640 --> 00:04:50,360 direction with Balancer V2 and even more so with Balancer V3, 78 00:04:50,360 --> 00:04:53,920 which we can talk about now, but it's been a, a long journey. 79 00:04:53,920 --> 00:04:57,880 And yeah, a lot, lot, a lot of people now beauty and Balancer. 80 00:04:58,280 --> 00:05:03,920 So very, very glad that we're here still like doing, doing 81 00:05:03,920 --> 00:05:06,160 interesting stuff. And yeah, very happy to be here 82 00:05:06,160 --> 00:05:08,480 with you again. Cedric, super nice. 83 00:05:09,560 --> 00:05:13,120 So maybe let's talk about the very early days of AMM. 84 00:05:13,120 --> 00:05:15,960 So kind of like in my view, kind of AM miss, we're very much 85 00:05:15,960 --> 00:05:21,040 developed as a stop gap measure because kind of, I mean, people 86 00:05:21,040 --> 00:05:28,640 had been used to central order book exchanges off chain, but 87 00:05:29,120 --> 00:05:32,280 implementing them on chain is actually very difficult because 88 00:05:32,280 --> 00:05:35,280 everything is kind of is ex ante. 89 00:05:35,280 --> 00:05:38,080 It's it's public, right, kind of like and you can front run 90 00:05:38,080 --> 00:05:42,200 things. And so that's kind of how Amms 91 00:05:42,200 --> 00:05:49,680 kind of started off. How how do you see the evolution 92 00:05:49,680 --> 00:05:52,400 of AM Ms. in this space? How have they matured? 93 00:05:53,440 --> 00:05:57,520 Yeah, it's crazy how how we learn things that today in 94 00:05:57,520 --> 00:06:04,480 hindsight feel just obvious. But we it took us like for four 95 00:06:04,480 --> 00:06:06,880 years, maybe until today we're learning new, new stuff. 96 00:06:06,880 --> 00:06:11,360 But like only a year after we started the AMS, we started 97 00:06:11,360 --> 00:06:16,760 discussing things about like impermanent loss and then MEV, 98 00:06:17,840 --> 00:06:21,680 which then evolved to LVR loss versus rebalancing. 99 00:06:22,080 --> 00:06:28,680 And we realized that there were lots of dark forests, ARK bots 100 00:06:28,680 --> 00:06:33,760 that were being there mean in a way, like sandwiching innocent 101 00:06:33,760 --> 00:06:36,640 users. And then things like cow swap 102 00:06:37,640 --> 00:06:42,000 came, came around to to make Ethereum more fair or fairer. 103 00:06:42,600 --> 00:06:45,480 And yeah. So there, there's been a lot of 104 00:06:45,480 --> 00:06:48,200 evolution. And then Uniswap came with, with 105 00:06:48,200 --> 00:06:52,240 their V3 changing the the landscape with concentrated 106 00:06:52,240 --> 00:06:54,560 liquidity, which was definitely groundbreaking. 107 00:06:55,000 --> 00:06:59,680 But that itself introduced some new challenges like just in time 108 00:06:59,680 --> 00:07:04,440 liquidity where like LP's put 100% of the liquidity in a very 109 00:07:04,880 --> 00:07:09,520 short tick or narrow tick when a a big swap happens. 110 00:07:09,520 --> 00:07:11,480 And then people who are providing liquidity with a 111 00:07:11,480 --> 00:07:15,600 longer range, they just, yeah, got them there. 112 00:07:15,760 --> 00:07:19,520 They get their lunch eaten by by those guys who only apply to 113 00:07:19,520 --> 00:07:24,120 that narrow tick because they they get proportionally almost 114 00:07:24,120 --> 00:07:28,160 all the the fees. So with new innovation comes new 115 00:07:28,160 --> 00:07:31,560 challenges and I think we're still learning today. 116 00:07:31,560 --> 00:07:33,720 There's lots of interesting things that we're doing at 117 00:07:33,720 --> 00:07:38,400 Balancer and others are doing as well around mitigating math and, 118 00:07:38,400 --> 00:07:43,040 and LVR and our profits and, and really trying to return the, 119 00:07:43,760 --> 00:07:47,240 the, let's say the profit or the, the surplus of the 120 00:07:47,240 --> 00:07:51,920 operations to the end user instead of to validators or to 121 00:07:51,920 --> 00:07:56,800 the math bots or, or arbors That we really want to, to make sure 122 00:07:56,800 --> 00:08:02,400 that the users get all of the like the return for the risk 123 00:08:02,400 --> 00:08:06,120 they're taking by providing liquidity or by doing trades as 124 00:08:06,120 --> 00:08:08,680 innocent good flow as we call them. 125 00:08:09,240 --> 00:08:11,960 So very excited. I think bouncer V3 is all about 126 00:08:11,960 --> 00:08:16,160 this bat that AM miss are still in their in their infancy. 127 00:08:16,640 --> 00:08:21,240 There are people who say like AM miss are are like what what they 128 00:08:21,240 --> 00:08:23,280 are now and there's not much to to do. 129 00:08:23,840 --> 00:08:27,040 But then we see a lot of interesting things like priority 130 00:08:27,040 --> 00:08:31,920 fee mechanisms like discussed by Dan Robinson, who's a, an OG 131 00:08:32,120 --> 00:08:34,559 and, and, and, and someone we all look up to. 132 00:08:35,039 --> 00:08:38,159 And yeah, some, some very interesting ideas that keep 133 00:08:38,159 --> 00:08:40,559 coming up. So I, I, I think balance of V3 134 00:08:40,559 --> 00:08:44,560 is a bad that this is going to keep happening and we want to be 135 00:08:44,560 --> 00:08:49,000 this platform for people to try new things around AMM design. 136 00:08:49,760 --> 00:08:52,400 Yeah. There's a lot to unpack here and 137 00:08:52,400 --> 00:08:55,760 I think I kind of want to defer most of it until later in the 138 00:08:55,760 --> 00:08:57,480 episode. So, but I think it's it. 139 00:08:57,640 --> 00:09:05,640 We should note that Amms are extremely susceptible to MEV and 140 00:09:05,640 --> 00:09:10,920 LVR just because you're always at a disadvantage if if you're 141 00:09:10,920 --> 00:09:13,720 the maker, right? Kind of like you ideally want to 142 00:09:13,720 --> 00:09:16,880 be the taker and kind of like if you have stay liquidity and kind 143 00:09:16,880 --> 00:09:22,280 of like prices have changed, that's really detrimental. 144 00:09:22,560 --> 00:09:28,080 And then also on top of that, if someone kind of actually is 145 00:09:28,640 --> 00:09:35,600 somewhat unsophisticated taker, this potential revenue that 146 00:09:35,600 --> 00:09:39,800 should accrue to the to the makers, it often actually goes 147 00:09:39,800 --> 00:09:42,720 to arbitragers. So kind of they, they, they kind 148 00:09:42,720 --> 00:09:46,920 of lose on both sides. And kind of I think kind of we, 149 00:09:46,920 --> 00:09:51,800 we should talk about how to how to mitigate MEV a little bit 150 00:09:51,800 --> 00:09:55,160 later. So kind of if, if, when I think 151 00:09:55,160 --> 00:10:01,240 about other things that kind of have changed for Amms over the 152 00:10:01,240 --> 00:10:05,520 past four years or so, it's kind of efficiency and cost 153 00:10:05,520 --> 00:10:07,720 reduction, right? Kind of like so you talked about 154 00:10:08,720 --> 00:10:12,520 this simple constant product market maker and kind of this, 155 00:10:12,520 --> 00:10:16,080 this also has changed dramatically, right? 156 00:10:16,760 --> 00:10:20,880 Right, exactly. Yeah, I think that there are 157 00:10:20,960 --> 00:10:24,800 like this is a definitely there are two examples of AMM 158 00:10:24,800 --> 00:10:29,560 innovation where efficiency in terms of capital efficiency, 159 00:10:29,560 --> 00:10:36,040 which means how much price depth or how much useful liquidity for 160 00:10:36,040 --> 00:10:39,920 traders which is translated in, in terms of bad depth, how much 161 00:10:39,920 --> 00:10:44,240 you can trade for a given amount of dollars you deposit into a 162 00:10:44,240 --> 00:10:47,680 pool. And Curve came with the, the 163 00:10:47,680 --> 00:10:52,080 1st, in my opinion, innovation in, in that regard for packed 164 00:10:52,080 --> 00:10:54,680 tokens. And we also have an 165 00:10:54,680 --> 00:10:59,840 implementation of, of yeah, stable swap on, on Balancer and 166 00:11:00,560 --> 00:11:04,760 yeah, and, and Uniswap also innovative in terms of making 167 00:11:04,800 --> 00:11:08,120 those positions non fungible. So anyone can express their 168 00:11:08,120 --> 00:11:11,280 opinion in terms of what range they want to provide liquidity 169 00:11:11,480 --> 00:11:13,760 in, which has also its challenges. 170 00:11:13,760 --> 00:11:16,680 So yeah, I think there's different ways you can talk 171 00:11:16,680 --> 00:11:20,760 about efficiency and different challenges that those those, 172 00:11:21,880 --> 00:11:25,520 yeah, ways you solve efficiency bring to the table. 173 00:11:27,160 --> 00:11:30,720 So you, you already kind of mentioned kind of the main 174 00:11:30,720 --> 00:11:34,560 competitors in the AM landscape. So there's unit swap and curve 175 00:11:34,560 --> 00:11:39,360 and curve very much launched with stables in mind where kind 176 00:11:39,360 --> 00:11:43,840 of say you, you trade one USD sable coin against another. 177 00:11:44,040 --> 00:11:50,080 And then kind of there's very there's very high liquidity kind 178 00:11:50,080 --> 00:11:55,520 of at kind of at the point kind of at in the middle. 179 00:11:55,520 --> 00:11:59,040 So kind of you can trade them against each other really 180 00:11:59,040 --> 00:12:02,520 efficiently, a kind of like even large sums, which is not usually 181 00:12:02,520 --> 00:12:05,840 the case with, you know, vanilla AM Mississippi and the other 182 00:12:05,840 --> 00:12:08,800 one's uniswap. So kind of how, how would you, 183 00:12:09,200 --> 00:12:13,600 how would you say balances positioned with respect to both 184 00:12:13,600 --> 00:12:16,800 of these? Yeah, we're a bit in the 185 00:12:16,800 --> 00:12:20,920 intersection and and really exploring like the like build, 186 00:12:21,160 --> 00:12:24,440 build your own AMM. So AM Ms. made easy. 187 00:12:24,520 --> 00:12:28,080 It's, it's really kind of you have those two and then you have 188 00:12:28,080 --> 00:12:31,040 Balancer kind of an intersection, but also expanding 189 00:12:31,040 --> 00:12:35,160 through third party teams like some of which we're, we're going 190 00:12:35,160 --> 00:12:38,240 to talk about like Cal swap, building the Cal AMM with 191 00:12:38,240 --> 00:12:43,560 Balancer and, and Gyroscope and safe finance and, and lots of 192 00:12:43,560 --> 00:12:47,200 others. So yeah, we, I think we, we are 193 00:12:47,400 --> 00:12:51,800 really positioning ourselves as a platform, not taking any 194 00:12:51,800 --> 00:12:55,040 preferences or any favorite saying like we're going to be 195 00:12:55,040 --> 00:12:58,600 just like many token pools. You know, that that is something 196 00:12:58,600 --> 00:13:03,760 that curve can do, but it's not in a way that we can do it like 197 00:13:03,760 --> 00:13:06,880 with flexible weights and flexible AMM logic. 198 00:13:07,080 --> 00:13:09,840 So we can have up to 8 tokens per pool. 199 00:13:10,600 --> 00:13:14,920 And the main thing that we're not decided is strategically not 200 00:13:14,920 --> 00:13:19,440 to chase after because we, we think that they already do a 201 00:13:19,440 --> 00:13:22,280 good, a very good job at is concentrated liquidity. 202 00:13:22,280 --> 00:13:27,400 So unit swap has pioneered that that concept and we believe that 203 00:13:27,840 --> 00:13:33,360 we can add more value to the space by focusing on fungible 204 00:13:33,360 --> 00:13:35,360 liquidity. So whenever you think of 205 00:13:35,360 --> 00:13:40,520 Balancer, we have a pool token that is like a representation of 206 00:13:40,520 --> 00:13:43,360 a share of a pool where all the users are equal. 207 00:13:43,360 --> 00:13:46,560 So there's no risk of like they're sophisticated players 208 00:13:46,560 --> 00:13:49,080 doing just in time liquidity. So they're LP's just for the 209 00:13:49,080 --> 00:13:52,040 transaction and take all the fees from the other poor LP's 210 00:13:52,360 --> 00:13:57,480 that are humans. So we we solve this by focusing 211 00:13:57,480 --> 00:14:00,280 on fungible liquidity. But within fungible liquidity, 212 00:14:00,280 --> 00:14:02,200 you can have concentrated liquidity as well, which is 213 00:14:02,200 --> 00:14:05,720 something that gyroscope is pioneering within balancer. 214 00:14:05,720 --> 00:14:10,920 So yeah, it's a, it's a invariant shape that follows 215 00:14:10,920 --> 00:14:14,480 the, the shape of an ellipse. That's why it's an elliptical 216 00:14:14,640 --> 00:14:18,400 pool, ECLP, concentrated liquidity, elliptical 217 00:14:18,400 --> 00:14:22,000 considerate liquidity pool. So there are other ways to do 218 00:14:22,000 --> 00:14:25,360 interesting stuff without giving up on the fungibility. 219 00:14:25,760 --> 00:14:29,640 So that, that, that that's how I I would put balancer amongst the 220 00:14:29,640 --> 00:14:34,360 other competitors. When you look at non fungible 221 00:14:34,360 --> 00:14:38,680 and fungible liquidity. So to me it's pretty clear why 222 00:14:39,000 --> 00:14:44,720 non fungible liquidity would be preferable in, in many instances 223 00:14:44,720 --> 00:14:48,400 just because you can kind of you can do very concentrated 224 00:14:48,400 --> 00:14:51,440 liquidity where you're comfortable kind of providing it 225 00:14:51,680 --> 00:14:56,600 and kind of you, you, it's much better APY potentially if you're 226 00:14:56,600 --> 00:14:58,840 doing it right. Why? 227 00:14:59,000 --> 00:15:03,240 What are the advantages of doing fungible liquidity? 228 00:15:04,160 --> 00:15:06,480 Yeah. So fungible liquidity is really 229 00:15:06,480 --> 00:15:11,440 about setting a level playing field like you, you ensure that 230 00:15:11,640 --> 00:15:15,800 sophisticated players cannot come in and and grab your lunch 231 00:15:15,800 --> 00:15:21,200 using just in time liquidity though it it kind of sets a 232 00:15:22,640 --> 00:15:26,600 known and and easy to manage like something that I call set 233 00:15:26,600 --> 00:15:29,680 and forget or yeah, deposit and forget. 234 00:15:30,520 --> 00:15:33,080 Whereas if you're dealing with concentrated liquidity, of 235 00:15:33,080 --> 00:15:36,680 course you can be more efficient and say like, I want to trade if 236 00:15:36,680 --> 00:15:42,120 between 3200 and 3300 and I'm going to make more fees than 237 00:15:42,120 --> 00:15:45,120 people who have a unity to poor balance or pool. 238 00:15:45,560 --> 00:15:48,200 But like you have to be very active. 239 00:15:48,240 --> 00:15:51,680 You have to make sure that as soon as you're your liquidity 240 00:15:51,680 --> 00:15:56,160 goes out of range, then you need to rebuy half of the tokens to, 241 00:15:56,760 --> 00:16:00,200 to go back to, to the play or position your, your position, 242 00:16:01,240 --> 00:16:03,920 your, your LP position closer to where the price is. 243 00:16:04,160 --> 00:16:07,240 Which means you're rebuying for more than you sold for or you're 244 00:16:07,240 --> 00:16:08,840 selling for last than you bought for. 245 00:16:09,200 --> 00:16:12,880 Though it it, it, it comes with a lot of caveats. 246 00:16:12,880 --> 00:16:17,040 So I would say concentrated liquidity is better for active 247 00:16:17,360 --> 00:16:22,920 more sophisticated professional market makers and and fungible 248 00:16:22,920 --> 00:16:28,520 liquidity is better for I would say like passive LP's might be 249 00:16:29,240 --> 00:16:31,760 have a not a better connotation, but I think that's what it is. 250 00:16:31,760 --> 00:16:35,600 Like there's a lot of people who want to just put the money in an 251 00:16:35,880 --> 00:16:40,960 in an LP position and forget. So those are safe because the 252 00:16:40,960 --> 00:16:45,320 environment does not let active traders kind of come and eat 253 00:16:45,320 --> 00:16:47,880 their lunch, for example, through just in time liquidity 254 00:16:47,880 --> 00:16:52,240 or through more advanced techniques that the normal human 255 00:16:52,680 --> 00:16:57,280 passive LP's are not in a in a position to do or to perform. 256 00:16:58,320 --> 00:17:02,560 That makes a lot of sense. So balance of V3 just came out 257 00:17:02,600 --> 00:17:08,200 or came out a short while ago. So what are what are the main 258 00:17:08,200 --> 00:17:11,520 goals of V3 over V2? Yeah. 259 00:17:11,520 --> 00:17:17,119 So V3 is really taking that idea of Bouncer is a platform for AMM 260 00:17:17,119 --> 00:17:21,240 innovation step further. So a lot of the hard work we put 261 00:17:21,400 --> 00:17:26,040 and yeah, we spent like almost two years working on V3, maybe 262 00:17:26,040 --> 00:17:30,440 more is is really towards like making it easier for anyone to 263 00:17:30,440 --> 00:17:35,040 develop their own pool or to innovate with their own AMM idea 264 00:17:35,560 --> 00:17:39,240 so that the Dev X experience improved by 10X at least. 265 00:17:39,760 --> 00:17:43,800 It's very much easier, a lot easier to create your own pool. 266 00:17:43,800 --> 00:17:48,320 You only need to define an invariant and and that's it. 267 00:17:48,320 --> 00:17:52,160 All the functions like swap or add liquidity, remove liquidity, 268 00:17:52,400 --> 00:17:55,200 they all stand from this definition of invariant. 269 00:17:55,480 --> 00:17:59,520 Whereas in V2 you had to define all the different functions like 270 00:17:59,680 --> 00:18:04,600 swap in for out, swap out for in and they could be conflicting. 271 00:18:04,600 --> 00:18:08,280 So you could have an AMM that is not consistent. 272 00:18:08,280 --> 00:18:13,800 So they took more, more care for AM designers to make sure that 273 00:18:13,800 --> 00:18:17,920 everything was consistent. Whereas V3, as I said, you just 274 00:18:17,920 --> 00:18:21,200 like have this invariant like the, the shape of, of the, of 275 00:18:21,200 --> 00:18:24,720 the curve of your AMN. And then bouncer does everything 276 00:18:24,800 --> 00:18:28,400 it does scaling, it does rounding. 277 00:18:28,400 --> 00:18:33,400 It makes sure that your AMN cannot be exploited through 278 00:18:33,400 --> 00:18:37,360 rounding because we we do like rounding at the vault level in 279 00:18:37,360 --> 00:18:41,440 the direction of the pool. So we're kind of taking away a 280 00:18:41,440 --> 00:18:47,240 lot of the burden that MN designers needed to carry about 281 00:18:48,960 --> 00:18:54,000 to worry about. Sorry, in B2 to the vault, we 282 00:18:54,000 --> 00:18:57,480 have this idea of transient accounting. 283 00:18:57,600 --> 00:19:00,600 So you can do lots of transactions, add liquidity, 284 00:19:00,600 --> 00:19:03,760 remove liquidity, swap. And then at the end you settle 285 00:19:03,760 --> 00:19:07,000 your, your tab. Let's say like, like you're at a 286 00:19:07,000 --> 00:19:10,280 bar and you, you drink and then just at the end you pay your 287 00:19:10,280 --> 00:19:13,280 bill. So it's it's similar And, and by 288 00:19:13,280 --> 00:19:18,240 the way, a lot of the things we, we did for Balancer V3 are 289 00:19:18,320 --> 00:19:20,800 similar to somethings that, you know, swapped before. 290 00:19:20,800 --> 00:19:24,520 Also has we even changed our names to make sure that we, we 291 00:19:24,520 --> 00:19:26,000 had the same names as as uni before? 292 00:19:26,000 --> 00:19:30,360 Because we want people to like, yeah, that are used, used to 293 00:19:30,360 --> 00:19:33,760 unisop before to also look at the Balancer V3 and, and see if 294 00:19:33,760 --> 00:19:38,160 it's a good or a better fit. So we also have hooks which make 295 00:19:38,160 --> 00:19:43,720 it easy for specific things that you do before and after swap to 296 00:19:43,720 --> 00:19:47,120 be applied to a different set of, of pools without having to 297 00:19:47,320 --> 00:19:50,840 rewrite all the pool code, which was possible in V2. 298 00:19:50,840 --> 00:19:55,120 So you, you can always deploy a pool with, with a specific code 299 00:19:55,320 --> 00:19:59,880 that is customized by you. So with the hooks on Bouncer V3, 300 00:19:59,880 --> 00:20:02,120 you can just reuse hooks that exist. 301 00:20:02,640 --> 00:20:05,280 And we have a, a few examples of of that. 302 00:20:05,640 --> 00:20:09,200 And maybe the coolest thing for the end user, I think about 303 00:20:09,200 --> 00:20:14,520 Bouncer V3 is the, the new idea of boosted pools, 100% boosted 304 00:20:14,520 --> 00:20:17,320 pools. We we had that in Bouncer V2. 305 00:20:18,160 --> 00:20:22,560 And we're improving that by making like before they weren't 306 00:20:22,560 --> 00:20:26,000 100% boosted, we're making them 100% boosted. 307 00:20:26,400 --> 00:20:29,280 And we do that by and it's kind of technical. 308 00:20:29,320 --> 00:20:33,120 So yeah, maybe I I'll just stop here and and I can talk more 309 00:20:33,120 --> 00:20:36,760 about how it works, but I'm very excited about boosted Puzo, 310 00:20:36,840 --> 00:20:41,080 which means that instead of like having to choose between landing 311 00:20:41,400 --> 00:20:47,320 your say, die or USDC on Avid or adding liquidity to an LP with 312 00:20:47,320 --> 00:20:51,280 your USDC and die or your SDC and E, you can do both. 313 00:20:51,640 --> 00:20:56,200 Like you can add liquidity using your dye and then under the 314 00:20:56,200 --> 00:21:01,800 hood, balancer will deploy all that dye to to bad to Avi and 315 00:21:01,800 --> 00:21:05,840 turn it into a dye. So people are trading dye and 316 00:21:05,840 --> 00:21:10,960 USC are dying and and wet. But in the like under the hood 317 00:21:11,040 --> 00:21:13,720 balancer is making sure that this is being lent out to Avi 318 00:21:13,840 --> 00:21:17,560 and all of your position is earning yield. 319 00:21:17,640 --> 00:21:22,480 So this is pretty cool and. That's super cool because here 320 00:21:22,480 --> 00:21:27,360 it's on, particularly at U.S. dollar stables, really high. 321 00:21:27,360 --> 00:21:31,600 So kind of competing with this kind of as a liquidity provider 322 00:21:31,840 --> 00:21:37,000 is really difficult. Tell us how this works under the 323 00:21:37,000 --> 00:21:39,640 hood and kind of why it was difficult to going from 324 00:21:40,000 --> 00:21:42,960 partially boosted pools to fully boosted pools. 325 00:21:44,120 --> 00:21:48,720 Great question yeah, so the way it so first, why why is it 326 00:21:48,720 --> 00:21:50,880 difficult? Like in in essence, it's not 327 00:21:51,080 --> 00:21:55,320 hard like we what you can do in curve does that, but it's not 328 00:21:55,320 --> 00:22:01,560 very popular because of the the reason why it it's not yeah, 329 00:22:01,640 --> 00:22:04,960 simple to do it, which is like you could just have all the 330 00:22:04,960 --> 00:22:09,800 liquidity go to a tokens. Let's use Avi as an example, but 331 00:22:09,800 --> 00:22:11,520 it could be other landing protocols. 332 00:22:11,840 --> 00:22:17,760 So if you want to have like both the swap fees like being an LP 333 00:22:17,760 --> 00:22:20,400 and also have the landing protocol, you can just put your 334 00:22:20,520 --> 00:22:27,000 a die paired with an AUSDC on balancer and then people can 335 00:22:27,000 --> 00:22:30,360 trade a die for AUSDC. But this is not what people want 336 00:22:30,360 --> 00:22:32,520 to trade. People have die, people have 337 00:22:32,520 --> 00:22:37,400 USDC, they don't have AUSEC or a DIE or the wrapped version of 338 00:22:37,400 --> 00:22:40,120 those tokens. So really the trading happens in 339 00:22:40,120 --> 00:22:46,040 the underlying token right in in die and USC, not in landing 340 00:22:46,200 --> 00:22:47,720 wrapped versions of those tokens. 341 00:22:48,880 --> 00:22:53,760 So you could solve that by having very kind of 342 00:22:53,760 --> 00:22:58,400 sophisticated aggregator like Logic, which one inch has and 343 00:22:58,520 --> 00:23:03,600 and others like COSOP also have. You can abstract away that from 344 00:23:03,600 --> 00:23:06,920 the end user and say to the end user, you're trading the eye for 345 00:23:06,920 --> 00:23:09,360 your CC. But I am going to Ave. 346 00:23:09,360 --> 00:23:12,440 I'm going to wrap it and then I'm going to trade on Balancer 347 00:23:12,440 --> 00:23:15,480 and then I'm going to give it back to Ave. you know, and do 348 00:23:15,480 --> 00:23:17,840 all that back and forth, which costs a lot of gas. 349 00:23:17,920 --> 00:23:21,560 So this is quite hard to do because of a lot of gas. 350 00:23:21,560 --> 00:23:26,280 So what we did to solve this in Balancer V3 and we don't have, 351 00:23:26,520 --> 00:23:29,120 no one has that. So it's a pretty unique feature 352 00:23:29,120 --> 00:23:32,520 feature, which is what we call buffers. 353 00:23:32,520 --> 00:23:38,000 So what we do is very simply we have a it's like a mini instance 354 00:23:38,000 --> 00:23:42,640 of Ave. inside the Bouncer vault, which has like a little 355 00:23:42,640 --> 00:23:44,360 bit of a dye and little bit of dye. 356 00:23:45,000 --> 00:23:50,240 And then everybody who trades using Balancers vault, they they 357 00:23:50,240 --> 00:23:54,160 trade actually, they see dye as liquidity, but they trade with 358 00:23:54,640 --> 00:23:59,760 in the pool that has a dye and AOSEC, which is already 100% of 359 00:23:59,760 --> 00:24:03,800 Ute for our piece. But then balancer that the vault 360 00:24:03,880 --> 00:24:07,640 looks at the buffer. So the buffer is kind of has a 361 00:24:07,640 --> 00:24:12,760 die and die and wraps and wraps with the same rate as Avi, but 362 00:24:12,760 --> 00:24:17,600 much cheaper because it only reads the rate that Avi is 363 00:24:17,600 --> 00:24:22,240 offering without having to. If you had to wrap using Avi or 364 00:24:22,240 --> 00:24:25,960 unwrap, you would have to do all the update of the accounting of, 365 00:24:26,160 --> 00:24:28,600 of the whole like pool of of Avi. 366 00:24:28,600 --> 00:24:32,920 So that's quite gas intensive. Even though Ave. is 367 00:24:33,240 --> 00:24:36,520 superficiency and has improved efficiency over time, it's still 368 00:24:36,520 --> 00:24:39,760 quite gas heavy. So what we do is we use this 369 00:24:39,760 --> 00:24:43,280 buffer and then like let's say you trade a little bit of dye 370 00:24:43,280 --> 00:24:46,720 for your STC. You put dye in the vault, the 371 00:24:46,720 --> 00:24:51,840 vault puts dye in this buffer, takes some wrapped or some a dye 372 00:24:52,240 --> 00:24:56,360 trades with the pool that has a dye in your STC, and then the 373 00:24:56,360 --> 00:25:02,320 AUSTC goes to the buffer of USCC and then the user gets USCC. 374 00:25:02,320 --> 00:25:08,480 So the user has the like the the, the experience of trading 375 00:25:08,480 --> 00:25:12,680 die for USCC and there's no external calls to Ave. because 376 00:25:12,840 --> 00:25:17,840 the buffer, the buffers of die and USCC are enabling that 377 00:25:17,960 --> 00:25:20,920 trade. Then of course, what can happen 378 00:25:20,920 --> 00:25:24,880 is the buffer doesn't have enough die or USCC to give back 379 00:25:24,880 --> 00:25:26,720 to the user because the user's doing a big trade. 380 00:25:26,760 --> 00:25:31,520 That that's where I think the the cool thing happens is that 381 00:25:31,520 --> 00:25:33,960 when, when the buffer, so the buffer goes back and forth, back 382 00:25:33,960 --> 00:25:35,920 and forth. And then whenever there's a big 383 00:25:35,920 --> 00:25:39,680 trade, then the buffer doesn't have enough. 384 00:25:39,680 --> 00:25:44,120 So balancer knows that the vault knows that and goes to Ave. and 385 00:25:44,120 --> 00:25:47,840 then wraps or unwraps exactly the amount needed for the trade 386 00:25:47,840 --> 00:25:51,520 to be executed. Plus giving putting the the 387 00:25:51,520 --> 00:25:55,040 buffer back in the middle, which means that this user that did a 388 00:25:55,040 --> 00:25:59,040 big trade, they're paying for the buffer to be puts into the 389 00:25:59,040 --> 00:26:00,680 sweet spot, which is right in the middle. 390 00:26:00,680 --> 00:26:03,640 So for next trades, smaller trades, it can go back and 391 00:26:03,640 --> 00:26:08,080 forth, back and forth and still, yeah, save a lot of gas for 392 00:26:08,080 --> 00:26:11,040 subsequent trades. So this is this is something 393 00:26:11,040 --> 00:26:14,240 really neat that I think we are just starting to to explore. 394 00:26:14,840 --> 00:26:20,560 And 111 thing that I think a lot of people think is that in layer 395 00:26:20,560 --> 00:26:25,640 two it's not very relevant how much gas you spend because gas 396 00:26:25,640 --> 00:26:30,640 is so cheap, more so on ZK roll ups because yeah, it's really 397 00:26:31,200 --> 00:26:34,840 free processing. But I think that it's still it 398 00:26:34,840 --> 00:26:37,800 still can make a difference between like two sources of 399 00:26:37,800 --> 00:26:39,560 liquidity, say Balancer and Uniswap. 400 00:26:40,000 --> 00:26:44,800 If Balancer has slightly less gas for that trade, then that 401 00:26:44,800 --> 00:26:48,960 liquidity will be used by solvers on cost swap or by by 1 402 00:26:48,960 --> 00:26:51,200 inch or whatever aggregator matcha. 403 00:26:51,680 --> 00:26:55,120 So I do think that the gas discussion even though that's 404 00:26:55,120 --> 00:26:59,640 relevant for L2's, it's still, it can still be like a a 405 00:26:59,640 --> 00:27:02,200 differentiator or sources of liquidity. 406 00:27:02,720 --> 00:27:06,560 It will also become more relevant again once blobs fill 407 00:27:06,560 --> 00:27:07,440 up. Right? 408 00:27:07,440 --> 00:27:09,880 So kind of like. I mean, the only reason why L2's 409 00:27:09,880 --> 00:27:13,080 are currently as cheap as they are is because kind of BLOB 410 00:27:13,080 --> 00:27:17,760 space is pretty abundant. 100% we'll always be reaching that 411 00:27:17,760 --> 00:27:21,600 scalability like moment where like, oh, things are going to be 412 00:27:21,600 --> 00:27:25,720 expensive because we filled up the yeah, the, the Ledger and, 413 00:27:25,720 --> 00:27:28,520 and we need, we need more, more space and keys will go up. 414 00:27:28,520 --> 00:27:34,000 So yeah, absolutely. How baked into the designers 415 00:27:34,000 --> 00:27:36,560 ABBA could we, could you in principle kind of switch this 416 00:27:36,560 --> 00:27:40,480 out for another money money market or does it does it have 417 00:27:40,480 --> 00:27:43,600 to be ABBA? Will there be other versions 418 00:27:43,600 --> 00:27:46,080 that kind of use a different money market? 419 00:27:46,640 --> 00:27:49,160 So Abba's definitely our preferred partner. 420 00:27:49,160 --> 00:27:52,960 We've been together for a long time where they're close and 421 00:27:53,360 --> 00:27:57,680 they use Bouncer for their 8020 pool for providing liquidity in 422 00:27:57,680 --> 00:28:01,800 the AVID token. So it's also the bad like 423 00:28:01,920 --> 00:28:04,800 longest, most battle tested protocol around. 424 00:28:04,800 --> 00:28:09,960 So we're definitely, yeah, kind of bias towards Avid, but the 425 00:28:09,960 --> 00:28:14,400 protocol is neutral. So the smart contracts work with 426 00:28:15,440 --> 00:28:21,720 a wrapper which is a 4626. So as long as your token is 4626 427 00:28:21,720 --> 00:28:25,280 compatible, then you can, you can use a boosted pool. 428 00:28:25,280 --> 00:28:31,800 So other protocols like like Morpho and Euler is looking into 429 00:28:31,800 --> 00:28:33,280 it. There's, there's also already 430 00:28:33,760 --> 00:28:36,720 auto protocols that have boosted pools on balance already. 431 00:28:36,720 --> 00:28:39,440 So it's definitely an open thing. 432 00:28:39,440 --> 00:28:44,760 But of course, we, yeah, we, we, we kind of have A at least in 433 00:28:44,760 --> 00:28:46,640 the UI. And the UI is, is controlled by 434 00:28:46,640 --> 00:28:48,800 its own team that has their own opinions. 435 00:28:48,800 --> 00:28:52,800 But I think the, the standard option is obvious. 436 00:28:52,800 --> 00:28:55,960 So it's just because we we trust them so much. 437 00:28:56,800 --> 00:28:59,200 Correct. Yeah, that's that makes sense. 438 00:28:59,800 --> 00:29:04,440 When you say kind of it's fully boosted, I take it the part 439 00:29:04,440 --> 00:29:06,280 that's not boosted is the buffer, right. 440 00:29:06,280 --> 00:29:08,800 And I mean the size of the buffer kind of has to be 441 00:29:09,480 --> 00:29:13,240 somewhat in relation to the total pool size and the the the 442 00:29:13,240 --> 00:29:16,240 average trade size, I assume. So kind of like when you say 443 00:29:16,240 --> 00:29:19,120 fully, it's probably like 95 or whatever percent, right? 444 00:29:19,760 --> 00:29:22,480 It, it is full because that that's, that's a great question. 445 00:29:22,840 --> 00:29:27,240 The buffer is not paid or is not filled by the LP's. 446 00:29:27,240 --> 00:29:32,080 So the LP's, yeah, the LP's only put their liquidity in the pool. 447 00:29:32,600 --> 00:29:36,520 And by the way, if there is no buffer, it's fine because that 448 00:29:36,520 --> 00:29:39,480 means that all the all the two. Sections will have to write it 449 00:29:39,560 --> 00:29:42,400 right. Using, yeah, exactly. 450 00:29:42,400 --> 00:29:46,120 So it's just a plus if you have a buffer, it reduces gas for 451 00:29:46,120 --> 00:29:49,840 most of the trades. And like I said, perfectly put 452 00:29:49,840 --> 00:29:52,400 like depending on how big the buffer is, the more trades it 453 00:29:52,400 --> 00:29:57,920 can kind of enable without having to resort to, to an 454 00:29:57,920 --> 00:30:01,320 external call. What how, how we deal with 455 00:30:01,360 --> 00:30:06,240 buffer so far is the projects are putting liquidity there 456 00:30:06,560 --> 00:30:10,960 because like protocols usually have protocol on liquidity. 457 00:30:11,400 --> 00:30:15,200 So you don't need a lot to enable most of the trades in the 458 00:30:15,200 --> 00:30:17,840 buffers. The protocols that are creating 459 00:30:17,840 --> 00:30:22,000 boosted pools are pretty 100K, sometimes 200K in the in the 460 00:30:22,000 --> 00:30:25,760 tokens that they want to boost. And very nice as well is that 461 00:30:26,160 --> 00:30:31,080 one token is. So you only need one buffer to 462 00:30:31,080 --> 00:30:34,280 boost a token and that token can be in many different pools. 463 00:30:34,280 --> 00:30:39,440 So if you have a buffer for a die and a die, then ADI can be 464 00:30:39,440 --> 00:30:43,200 in like a DIUSCCAD i.e., you know, a DI whatever. 465 00:30:43,440 --> 00:30:47,920 Every time you do this lag, which is boosted dye, then you 466 00:30:47,920 --> 00:30:51,200 use the same buffer. So it's kind of a shared common 467 00:30:51,200 --> 00:30:54,600 good that helps everyone to save, yes. 468 00:30:55,480 --> 00:30:58,400 Yeah, that makes a lot of sense. So when we talked about kind of 469 00:30:58,400 --> 00:31:02,360 like new features for V3, kind of the the first thing that you 470 00:31:02,360 --> 00:31:04,600 kind of mentioned was improved dev experience. 471 00:31:04,600 --> 00:31:09,920 So kind of like making it easier for devs to kind of build good 472 00:31:10,480 --> 00:31:14,000 well designed AM Ms. on top of on top of balancer. 473 00:31:14,560 --> 00:31:17,440 And the other thing that kind of you mentioned but didn't really 474 00:31:17,440 --> 00:31:20,440 go into was hooks. I'm interested in the in this. 475 00:31:20,440 --> 00:31:26,120 So kind of hooks are kind of modular customizations. 476 00:31:27,280 --> 00:31:33,000 Tell us about what kind of logic you see and what kind of logic 477 00:31:33,000 --> 00:31:36,760 you expect to see in the future. Great question. 478 00:31:36,760 --> 00:31:43,000 So hooks are really like this. Very interesting way to open up 479 00:31:43,360 --> 00:31:49,760 experimentation without creating dangers for developers or LP's 480 00:31:50,240 --> 00:31:54,440 and also kind of reusing re utilizing code that's better 481 00:31:54,440 --> 00:31:56,240 tested. So that that's the beauty of 482 00:31:56,240 --> 00:32:00,280 hooks, in my opinion. An example of of interesting 483 00:32:00,400 --> 00:32:05,600 hook is you change the the swap fee based on whatever like a 484 00:32:05,600 --> 00:32:08,400 parameter. For example, priority fees. 485 00:32:08,560 --> 00:32:15,560 Those are they're useful for mitigating MAV or LVR in in 486 00:32:15,560 --> 00:32:18,640 chains that are priority fee sequenced. 487 00:32:19,560 --> 00:32:25,640 L twos, right? L twos yeah so base is it uses 488 00:32:25,760 --> 00:32:29,480 it it can change there's nothing set in stone, but differently 489 00:32:29,480 --> 00:32:34,080 from Ethereum L1. They just take like the the the 490 00:32:34,440 --> 00:32:37,840 transactions and order them by priority and execute them. 491 00:32:37,920 --> 00:32:42,400 The base like Coinbase is not interested in in doing money 492 00:32:42,400 --> 00:32:47,840 with Med, at least so far, thankfully, yeah. 493 00:32:47,840 --> 00:32:51,520 So if you are if you're trying to be a math bot and you you 494 00:32:51,520 --> 00:32:54,280 want to capture a very good opportunity, let's say sandwich 495 00:32:54,280 --> 00:32:57,400 someone to be able to get that opportunity. 496 00:32:57,400 --> 00:32:58,960 What you're going to do is you're going to put a high 497 00:32:58,960 --> 00:33:02,920 priority fee for you to be like the first one to do to get it 498 00:33:02,960 --> 00:33:06,560 right. What we do is we we have a hook 499 00:33:06,560 --> 00:33:10,760 that says read the priority fee, which is something that is like 500 00:33:10,880 --> 00:33:16,400 readable in the transaction. And then we say like that 501 00:33:16,400 --> 00:33:20,040 priority fee if it's above a threshold, which is kind of to 502 00:33:20,400 --> 00:33:23,760 safeguard users that are using Madamask or other wallets that 503 00:33:23,760 --> 00:33:29,440 always have some small priority fee as standard minimum up up to 504 00:33:29,440 --> 00:33:34,880 five GUI for example. If you pass that threshold, then 505 00:33:34,880 --> 00:33:38,160 you're considered to be a bot that's trying to extract MAD 506 00:33:38,160 --> 00:33:42,560 from the poor LP's because. Because kind of you're, you're 507 00:33:42,560 --> 00:33:46,320 paying to kind of be early in the sequence and kind of like 508 00:33:46,400 --> 00:33:51,280 get to fulfill some sort of vulnerability or kind of like AB 509 00:33:51,280 --> 00:33:54,160 against something that won't be there for, for a long time, 510 00:33:54,160 --> 00:33:56,120 right Kind. Of like exactly, perfect, 511 00:33:56,560 --> 00:33:59,760 exactly. So what we do is like we, we 512 00:33:59,760 --> 00:34:01,960 calculate the swap fee of the AMM. 513 00:34:02,400 --> 00:34:08,000 So we make the price worse, less attractive as as much or, or or 514 00:34:08,159 --> 00:34:10,960 proportionally to how much the priority fee goes up. 515 00:34:10,960 --> 00:34:14,400 So if you, if you, if we read a transaction that has a very high 516 00:34:14,400 --> 00:34:20,080 priority fee, we, we increase the swap fee to extract more 517 00:34:20,080 --> 00:34:24,120 value to the LP's. So this way we effectively make 518 00:34:24,120 --> 00:34:27,920 sure that if you're trying to get MEV by paying too much the 519 00:34:27,920 --> 00:34:31,000 sequencer, we say the price is worse. 520 00:34:31,120 --> 00:34:37,560 So it's kind of a very, very interesting way to say the, the, 521 00:34:37,639 --> 00:34:41,719 the share of profit that this MAV opportunity created will go 522 00:34:41,719 --> 00:34:45,840 to our users and not to to you. Box text the box. 523 00:34:46,199 --> 00:34:48,920 Exactly. It it's, it's a it's based on a, 524 00:34:49,159 --> 00:34:51,120 an article. I don't, I don't think it was 525 00:34:51,120 --> 00:34:54,600 the first article talking about that, but Dan Robinson, as I 526 00:34:54,600 --> 00:34:59,120 mentioned, wrote a very interesting paper on this and 527 00:34:59,120 --> 00:35:01,080 we're we're like implementing it. 528 00:35:01,080 --> 00:35:04,360 And I think it's the first, first AM that's doing that. 529 00:35:04,360 --> 00:35:10,280 So the like the very flexible infrastructure Balancer V3 530 00:35:10,320 --> 00:35:11,560 allows that. And we're, I think we're 531 00:35:11,560 --> 00:35:13,520 launching it like next week or so. 532 00:35:13,520 --> 00:35:15,960 We're already, it's already audited. 533 00:35:15,960 --> 00:35:17,520 So. And also the cool thing, as I 534 00:35:17,520 --> 00:35:21,160 mention of hooks is that they only have the very small surface 535 00:35:21,160 --> 00:35:26,280 of kind of interaction or, or, or surface of attack. 536 00:35:26,280 --> 00:35:30,120 Because with a, with a swap hook, you cannot, it's, it's a 537 00:35:30,120 --> 00:35:32,560 view function. You cannot it, it only returns 538 00:35:32,560 --> 00:35:36,440 the swap, the new swap amount and swap percentage and that 539 00:35:36,480 --> 00:35:40,680 itself cannot. It's probably not something that 540 00:35:40,680 --> 00:35:45,880 can drain the the AMM or put LP's in risk because the worst 541 00:35:45,880 --> 00:35:51,160 it gets is the fee goes to 100% and then the trade is like it. 542 00:35:51,480 --> 00:35:53,520 No one is going to trade with that pool, but it cannot be 543 00:35:53,520 --> 00:35:56,520 negative, which would be draining the pool. 544 00:35:56,520 --> 00:35:59,400 So it's it's something that people can just interact and 545 00:35:59,640 --> 00:36:04,600 interact and innovate, iterate a lot without the risks that AMM 546 00:36:04,600 --> 00:36:08,200 design bring with it. Cool. 547 00:36:08,280 --> 00:36:11,880 What other hooks are you working on or looking forward to? 548 00:36:12,920 --> 00:36:15,080 Yeah. So we have the priority fee 549 00:36:15,080 --> 00:36:18,680 hook, we have the stable search hook, which is very interesting 550 00:36:18,680 --> 00:36:21,120 as well. So if you have a, a stable pool 551 00:36:21,120 --> 00:36:26,080 SO2 assets that are correlated like your SCC and die if the, 552 00:36:26,280 --> 00:36:30,280 the PAG is lost or is broken, then you have like, I don't 553 00:36:30,280 --> 00:36:34,560 know, let's say die for $0.70. The the stable storage hook, 554 00:36:34,640 --> 00:36:39,680 What it does is it charges a higher fee towards the side that 555 00:36:39,680 --> 00:36:42,640 you don't want the pool to go. So if you, if you want to dump 556 00:36:42,640 --> 00:36:46,200 more dye and, and make the pack go even worse, there's a higher 557 00:36:46,200 --> 00:36:50,560 fee, whereas the fee that brings the pool back to the, the pack 558 00:36:50,560 --> 00:36:54,720 to where we want it to be is, is lower or even 0 can't be 559 00:36:54,720 --> 00:36:58,480 negative because that opens up problems, but it can be 560 00:36:58,480 --> 00:37:02,240 virtually 0. So we kind of incentivize the 561 00:37:02,240 --> 00:37:06,120 spread to go towards where we want the pool to go. 562 00:37:06,120 --> 00:37:07,920 So that that's an interesting one. 563 00:37:08,720 --> 00:37:13,040 What do you do if a saver kind of D pegs for a good reason, 564 00:37:13,080 --> 00:37:14,840 right? Kind of like, so for instance, 565 00:37:15,760 --> 00:37:19,800 say someone has invoked the global settlement with Maker and 566 00:37:19,800 --> 00:37:22,840 then kind of dye D pegs. I mean, that's pretty 567 00:37:22,840 --> 00:37:25,280 reasonable. Wouldn't you have to kind of 568 00:37:25,280 --> 00:37:28,840 disable this hook? No, because that's a good 569 00:37:28,840 --> 00:37:30,800 question. Like what the hook would would 570 00:37:31,160 --> 00:37:37,560 do is it would just like not enable trades in that direction. 571 00:37:37,560 --> 00:37:43,160 So let's say the, the, the swap fee or spread grows a lot. 572 00:37:43,520 --> 00:37:48,720 So there's no trades between 80 cents or die and $0.60. 573 00:37:49,200 --> 00:37:54,920 So even though the price is like 79, right, it's almost, almost 574 00:37:54,920 --> 00:37:58,080 80, which is the upper margin where we want the the AM to 575 00:37:58,080 --> 00:38:01,800 trade. It's still has all that margin 576 00:38:01,840 --> 00:38:06,920 to go back and forth to the 60 where our AMM is just saving our 577 00:38:06,920 --> 00:38:09,240 users. So in a way it's protecting the 578 00:38:09,240 --> 00:38:15,440 LP's by not giving away more, let's say USDC, which is the one 579 00:38:15,440 --> 00:38:20,280 that's still at $1.00 because yeah, it, it's not worth it. 580 00:38:20,280 --> 00:38:22,280 So it's a trade off between swap fees. 581 00:38:22,280 --> 00:38:26,120 So we, we give up on being traded on, so generating swap 582 00:38:26,120 --> 00:38:30,040 fees because there's a lot of case or most cases when the pack 583 00:38:30,040 --> 00:38:33,160 is broken, it's something that could be dangerous and it could 584 00:38:33,240 --> 00:38:37,080 mean that there's a problem in one of the, the tokens and then 585 00:38:37,080 --> 00:38:41,600 the, the pool will just get drained or, or, or drain all the 586 00:38:41,600 --> 00:38:44,280 good tokens. So that's another cool thing of 587 00:38:44,280 --> 00:38:47,280 the stable storage. The more you get to, to the pack 588 00:38:47,280 --> 00:38:51,040 being broken, the, the more you protect the token that's still 589 00:38:51,120 --> 00:38:53,280 in pack and you don't, you don't sell it. 590 00:38:53,800 --> 00:38:56,880 So yeah, it's, it's, it's fine. It's, you don't need to 591 00:38:56,880 --> 00:39:01,600 deactivate it, but you still like we, you, you trade blasts. 592 00:39:01,600 --> 00:39:05,920 It's, it's like giving up on swapping fees, swap fees for 593 00:39:06,600 --> 00:39:11,400 yeah, the chance protecting LP's and, and in the in the event 594 00:39:11,400 --> 00:39:15,200 that that DPAG is not going to be permanent or is something 595 00:39:15,200 --> 00:39:20,000 like temporary or related to a bug or, or some instability of 596 00:39:20,000 --> 00:39:23,040 the system. But as an LP, you're always 597 00:39:23,560 --> 00:39:26,640 allowed to. Withdraw anytime. 598 00:39:26,680 --> 00:39:29,440 Yeah, that's, that's a premise that bouncer has. 599 00:39:29,480 --> 00:39:31,760 It's actually enforced by the vault. 600 00:39:32,640 --> 00:39:39,040 We have functions that allow the LP's to withdraw their liquidity 601 00:39:39,040 --> 00:39:42,360 without even talking to the pool contract at all. 602 00:39:42,360 --> 00:39:45,880 So, yeah, and that that's, that's just super important. 603 00:39:45,880 --> 00:39:50,320 Like any, any pool that has codec could be broken because of 604 00:39:50,320 --> 00:39:54,240 a bug or whatever. Bounce the vault enable. 605 00:39:54,240 --> 00:39:56,400 It's almost like, now that I think of it, it's almost like 606 00:39:56,680 --> 00:40:02,040 the L2's kind of having this forced exit mechanism. 607 00:40:02,040 --> 00:40:05,640 You know, if the L2 stop creating blocks, then you can go 608 00:40:05,640 --> 00:40:10,880 to the L1 and, and, and just force a withdrawal of your L2 609 00:40:10,880 --> 00:40:14,200 funds and bridge them back. So it, it's kind of similar. 610 00:40:14,200 --> 00:40:16,040 The vault doesn't need to talk to the pool. 611 00:40:16,400 --> 00:40:18,640 To allow users to withdraw their funds. 612 00:40:19,800 --> 00:40:22,880 Yeah, I, I think, I think a lot of L2's don't actually have this 613 00:40:22,880 --> 00:40:25,320 implemented yet, but. They say they have or they say 614 00:40:25,320 --> 00:40:27,640 they will have or they should have, but. 615 00:40:27,640 --> 00:40:29,440 We're going to get to this eventually. 616 00:40:29,480 --> 00:40:30,360 Exactly. It's one. 617 00:40:30,360 --> 00:40:34,240 Of the stages of yeah, the ladder of L2's, right? 618 00:40:35,120 --> 00:40:37,520 Cool. You alluded to this kind of like 619 00:40:37,520 --> 00:40:38,840 in the very beginning of the podcast. 620 00:40:38,840 --> 00:40:42,640 So kind of you talked about Med mitigation, kind of we already 621 00:40:42,640 --> 00:40:46,240 touched on this kind of with and the priority fee hook where kind 622 00:40:46,240 --> 00:40:50,240 of you surmise that kind of like anyone who's willing to pay a 623 00:40:50,440 --> 00:40:57,680 higher tip is, is probably trying to do something 624 00:40:59,400 --> 00:41:03,520 extractive and it's not just trying to be nice to the 625 00:41:03,520 --> 00:41:08,440 sequencer. So there's another MEB 626 00:41:08,440 --> 00:41:12,440 resistance mechanism with cow AMM. 627 00:41:13,480 --> 00:41:15,600 Can we talk about that? Because kind of like that's, 628 00:41:17,000 --> 00:41:20,840 that's less circumstantial in a way, kind of right with them. 629 00:41:20,840 --> 00:41:25,600 The priority fee hook kind of. You're just assuming that 630 00:41:25,760 --> 00:41:30,200 because someone's winning to pay for first for the first spot 631 00:41:30,440 --> 00:41:33,720 that they're trying to do something malicious or 632 00:41:33,720 --> 00:41:37,240 extractive. How does how does it work with 633 00:41:37,680 --> 00:41:40,520 the cow AM? Great question. 634 00:41:40,560 --> 00:41:44,120 Yeah, as always, it's like a trade off. 635 00:41:44,200 --> 00:41:50,760 I think my personal preference is what Cal swap does or the cow 636 00:41:50,760 --> 00:41:55,320 AMM that's powered by, by Cal Swap, which is really the like 637 00:41:56,160 --> 00:42:00,040 to, to to take a step back. Like MEV stems from the the fact 638 00:42:00,040 --> 00:42:06,480 that there is adverse selection. So there is a, an unfair, as I 639 00:42:06,480 --> 00:42:10,520 said, Sir, tricky. Like the, the, the, the LP's are 640 00:42:10,720 --> 00:42:14,280 like, they are on chain, like you cannot update prices 641 00:42:14,280 --> 00:42:16,320 instantly. There's like block times and 642 00:42:16,600 --> 00:42:18,680 there's gas costs to change things on chain. 643 00:42:19,080 --> 00:42:22,720 Whereas traders, they, they have instant information. 644 00:42:22,800 --> 00:42:27,280 You have like all sorts of flow of transactions and man pool, so 645 00:42:27,280 --> 00:42:32,240 you have a lot more oversight of the price of assets. 646 00:42:32,240 --> 00:42:34,600 You have access to all the off chain information. 647 00:42:34,600 --> 00:42:36,920 So it's it's really a, an unfair game. 648 00:42:37,240 --> 00:42:42,720 What COW swap does, and I'm big fan of COW swap, by the way, is 649 00:42:42,720 --> 00:42:47,080 like they, they bring this knowledge to the table by having 650 00:42:47,080 --> 00:42:50,640 this competition between solvers and they, they make sure that 651 00:42:50,640 --> 00:42:54,400 the there's a surplus that has to go to the users and the the 652 00:42:54,400 --> 00:42:57,720 solver that maximizes surplus to the users. 653 00:42:57,880 --> 00:43:02,520 In, in this case, the COW EMM is considered a user, which is like 654 00:43:02,520 --> 00:43:05,120 the whole, the whole novelty of of this design. 655 00:43:05,120 --> 00:43:09,680 Like usually only users that put trades on COW Swap are 656 00:43:09,680 --> 00:43:13,120 considered users and they get the surplus for COW EMM. 657 00:43:13,120 --> 00:43:17,280 The EMM itself is like a user. So it also has like the surface 658 00:43:18,080 --> 00:43:20,960 included in the calculation for the OR the winning solver. 659 00:43:21,520 --> 00:43:28,680 So it, it, it really so COW soft allows this, this this kind of 660 00:43:28,680 --> 00:43:35,080 disadvantage of on chain LP's to to kind of yeah, be counteracted 661 00:43:35,240 --> 00:43:38,960 counterbalance. So with, with COW AMM, you are 662 00:43:38,960 --> 00:43:43,200 sure that you are selling whatever you have in your, in 663 00:43:43,200 --> 00:43:47,360 your AMM pool for the market price because there is 664 00:43:47,360 --> 00:43:51,360 competition between solvers and the one that provides the Cao 665 00:43:51,360 --> 00:43:54,000 AMM with the most surplus is the one that's going to win. 666 00:43:54,560 --> 00:44:00,000 So it's really like you, you have like a, a swap fee that is 667 00:44:00,960 --> 00:44:04,440 it's not, it's variable. So like I said, like you can 668 00:44:04,440 --> 00:44:07,880 increase the swap fee to give more value to the LP's by 669 00:44:07,880 --> 00:44:11,480 looking at the priority fee or you can increase the the swap 670 00:44:11,480 --> 00:44:15,240 fee by looking at how the competition between the the 671 00:44:15,240 --> 00:44:20,080 solvers is willing to give more to the LP's to get this 672 00:44:20,080 --> 00:44:23,360 straight. So it's two ways of returning 673 00:44:23,360 --> 00:44:27,560 value to the LP's. And yeah, I like it a lot 674 00:44:27,560 --> 00:44:33,920 because it's just, it has more information from the whole 675 00:44:34,000 --> 00:44:36,560 ecosystem. It's not just some, some mad 676 00:44:36,560 --> 00:44:41,040 bots that are doing like trying to extract and giving to the 677 00:44:41,040 --> 00:44:44,680 sequencer through priority fees. It really involves all the 678 00:44:44,680 --> 00:44:47,320 solvers of Cal Swap, which is getting bigger and bigger and 679 00:44:47,320 --> 00:44:51,600 has more and more participants. So it's, it's fair and fair. 680 00:44:51,600 --> 00:44:55,200 But the, the problem is that the, the downside is that it's 681 00:44:55,200 --> 00:44:58,040 not permissionless as the priority fee hook. 682 00:44:58,040 --> 00:45:00,360 So the priority fee hook, the beauty of it is that anyone, 683 00:45:00,840 --> 00:45:04,040 it's like open anyone can post the transaction on, on the base 684 00:45:04,040 --> 00:45:08,400 sequencer. Whereas for CAU MMS, it works if 685 00:45:08,400 --> 00:45:14,440 you allow only solvers of cow swap to interact with that, with 686 00:45:14,440 --> 00:45:17,400 that liquidity. So it, it's that trade off. 687 00:45:17,400 --> 00:45:20,760 But in my opinion, as COW swap grows bigger and bigger and, and 688 00:45:20,760 --> 00:45:25,840 there's lots of solvers and a lot of diversity in the solver 689 00:45:25,840 --> 00:45:28,760 ecosystem, I think this is a trade off that we're willing to 690 00:45:28,760 --> 00:45:31,760 do in we're going to publish some results soon, but we're 691 00:45:31,760 --> 00:45:35,520 super excited. Like with smaller pools on Cao 692 00:45:35,520 --> 00:45:41,520 MMS, we have much better APRAPRS from swap fees then like 693 00:45:41,560 --> 00:45:45,000 compared to Balancer vanilla weighted pools or unit swap V2 694 00:45:45,000 --> 00:45:47,040 pools. Like like they even being a lot 695 00:45:47,040 --> 00:45:49,480 bigger. Cao MMM pools are doing a lot 696 00:45:49,480 --> 00:45:52,600 more APR. So kind of protecting the users 697 00:45:52,600 --> 00:45:58,880 and and giving back, yeah, swap piece to them as compared to the 698 00:45:59,040 --> 00:46:03,200 conventional Uniswap V2 or Balancer AMS, which is amazing. 699 00:46:03,400 --> 00:46:05,560 Something we're going to be building on more and more and 700 00:46:05,560 --> 00:46:09,960 we're going to expand COW MMS to to Balancer V3, which is 701 00:46:09,960 --> 00:46:11,320 something we're working on right now. 702 00:46:13,280 --> 00:46:16,000 Are there kind of like benchmarks that you can give us? 703 00:46:16,000 --> 00:46:20,960 So kind of like how much more APR can I expect to kind of get 704 00:46:20,960 --> 00:46:26,280 as an as a cow AM MLP? So I, I've, I've just today seen 705 00:46:26,280 --> 00:46:30,960 some, some numbers by the Cal swap team and it's sometimes 706 00:46:30,960 --> 00:46:35,920 like 4-5 percent annualized in pools that are much smaller. 707 00:46:36,480 --> 00:46:40,280 So the results are really like really promising. 708 00:46:40,560 --> 00:46:43,640 And I'm not going to give you any hard numbers because I might 709 00:46:43,640 --> 00:46:48,880 be wrong and more like more judicious analysis has to be 710 00:46:48,880 --> 00:46:52,040 done. But it, it, it's as as much as 711 00:46:52,040 --> 00:46:55,160 like 5% annualized more. But it makes sense, right? 712 00:46:55,160 --> 00:46:59,200 Because like what COSOP does is really like it, it lets people 713 00:46:59,200 --> 00:47:03,400 trade with the price of the market even though the pool has 714 00:47:03,680 --> 00:47:06,760 a stale price. Like you said, for anything it 715 00:47:07,000 --> 00:47:11,280 the the competition ensures that the pool gets it's it's fair 716 00:47:11,280 --> 00:47:15,120 value for the the the assets, which increases the the APR 717 00:47:15,120 --> 00:47:17,800 considerably. So toxic would have lowers 718 00:47:17,800 --> 00:47:20,560 effectively just filtered out. Perfect. 719 00:47:21,160 --> 00:47:21,800 That's right. Yeah. 720 00:47:22,320 --> 00:47:24,800 Cool. One more thing that we also kind 721 00:47:24,800 --> 00:47:28,200 of like tangentially already touched on and that's kind of 722 00:47:29,200 --> 00:47:34,600 scalability and kind of your L2 and multi chain strategy. 723 00:47:34,600 --> 00:47:37,400 Kind of like what we've seen increasingly in kind of like the 724 00:47:37,400 --> 00:47:42,600 theorem ecosystem is that liquidity has splintered 725 00:47:42,600 --> 00:47:45,040 dramatically between different L twos. 726 00:47:45,320 --> 00:47:50,720 And contrary to kind of what what we had hoped for initially, 727 00:47:51,000 --> 00:47:53,600 these L2 are very much not interoperable. 728 00:47:53,600 --> 00:48:00,480 So kind of like despite the fact that they have this shared 729 00:48:00,480 --> 00:48:06,200 security layer, you, you still have really long settlement 730 00:48:06,200 --> 00:48:07,720 time. So in principle, kind of like 731 00:48:07,720 --> 00:48:13,240 say go from arbitrum to base and back, it'll take you 2 weeks, 732 00:48:14,040 --> 00:48:17,680 you might as well send a postcard to the other side of 733 00:48:17,680 --> 00:48:20,880 the world, right? So kind of, So what what you 734 00:48:20,880 --> 00:48:27,680 actually have is you have, you know, arbitrage between 735 00:48:27,680 --> 00:48:30,600 different L twos and kind of like it's very liquidity 736 00:48:30,600 --> 00:48:36,360 intensive and and so on. How do you guys think about 737 00:48:37,880 --> 00:48:42,520 balances kind of mighty chain and mighty L2 strategy? 738 00:48:43,840 --> 00:48:47,960 And that's a very hard question. And like, I'm just representing 739 00:48:47,960 --> 00:48:50,680 my views. I can't speak for all the 740 00:48:50,680 --> 00:48:53,360 balancer community, but I, I do think that this is such a hard 741 00:48:53,360 --> 00:48:57,000 problem and one that a lot of people are working on. 742 00:48:57,520 --> 00:49:00,440 Very, very good people, much more intelligent than than me 743 00:49:00,440 --> 00:49:05,600 for sure, but probably then the then our team and with a lot 744 00:49:05,600 --> 00:49:08,320 more resources. So I, I do think that we, we 745 00:49:08,320 --> 00:49:14,880 should not try to create, you know, new protocols for cross 746 00:49:14,880 --> 00:49:17,400 chain swaps or, or, or things like that. 747 00:49:17,400 --> 00:49:21,520 I think we, we should try to kind of stay in our lane and 748 00:49:21,520 --> 00:49:25,080 then make sure what we do, we do the best we can. 749 00:49:26,800 --> 00:49:31,120 And, and yeah, I, I'm a, I'm not a fan of going the app chain 750 00:49:31,160 --> 00:49:32,920 route. I think this is going to cause 751 00:49:33,320 --> 00:49:36,720 even more fragmentation. Like you said, even if you're 752 00:49:36,720 --> 00:49:42,200 part of the like the Super optimistic chain or you, you 753 00:49:42,200 --> 00:49:45,520 have a base roll up, I think there, there is always 754 00:49:45,520 --> 00:49:47,600 fragmentation that is going to happen. 755 00:49:47,680 --> 00:49:51,200 Maybe it's solved in future. And again, I hope that those 756 00:49:51,200 --> 00:49:54,040 brilliant minds in the, in the Ethereum space are, are going to 757 00:49:54,200 --> 00:49:58,120 be able to, to solve it. As a user, it hurts me a lot to 758 00:49:58,120 --> 00:50:03,120 to, to have that fragmentation. Like I said, it's not not good 759 00:50:03,120 --> 00:50:07,600 you accent it goes like in the direction of all the like Solana 760 00:50:07,600 --> 00:50:11,640 versus E like North Star and and everything that I think I don't 761 00:50:11,640 --> 00:50:15,800 think we we need to get into. But so, yeah, we are trying to 762 00:50:15,800 --> 00:50:18,960 be as good as we can in in what we do. 763 00:50:19,000 --> 00:50:24,240 But what it when it comes to our strategy for multi chain, we we 764 00:50:24,240 --> 00:50:29,480 want to be in the chains that our like our partners require or 765 00:50:29,480 --> 00:50:31,360 want us to be. So we don't want to be on all 766 00:50:31,360 --> 00:50:36,480 chains because it does kind of dilute, you know like capacity 767 00:50:36,480 --> 00:50:41,000 of the team and making sure we can execute with excellence. 768 00:50:41,360 --> 00:50:45,520 So, but given we are protocol for others to build on top, we 769 00:50:45,520 --> 00:50:50,040 have to be on the on the chains that our partners like you know 770 00:50:50,040 --> 00:50:54,360 quant AM, they have very interesting kind of strategies 771 00:50:54,360 --> 00:50:58,000 that use ZK proofs. We don't haven't talked about 772 00:50:58,000 --> 00:51:00,200 them, but I hope we have some time too. 773 00:51:00,200 --> 00:51:04,760 But yeah, teams like like, like them like they want to be on, 774 00:51:04,760 --> 00:51:09,920 you know, ZK sync or whatever chain it's, it's kind of how 775 00:51:09,920 --> 00:51:12,000 we're, we're approaching our strategy. 776 00:51:12,000 --> 00:51:14,920 We want to be supporting the teams viewed on top of Bowser 777 00:51:15,480 --> 00:51:18,320 and our close partners as much as possible. 778 00:51:18,760 --> 00:51:23,360 And we're not tackling directly the the challenge of like cross, 779 00:51:23,920 --> 00:51:26,440 cross chain swaps or or liquidity. 780 00:51:27,040 --> 00:51:31,160 Yeah, at the moment at least. Yeah, I think that's fair. 781 00:51:31,200 --> 00:51:36,560 It's, it's, it's a hard problem. Let's kind of dive into the 782 00:51:36,560 --> 00:51:40,640 other bigger projects building on top of balances. 783 00:51:40,640 --> 00:51:43,800 So kind of you, you already mentioned quant AMM, they'd be 784 00:51:43,800 --> 00:51:46,680 super interested to kind of hear more about them. 785 00:51:47,160 --> 00:51:50,040 The other thing that kind of really piqued my my attention 786 00:51:50,040 --> 00:51:53,720 was a gyroscope. So maybe you can give us kind of 787 00:51:53,720 --> 00:51:57,280 like a short overview of what they do and how they leverage 788 00:51:57,960 --> 00:51:59,680 balancer. Sure. 789 00:51:59,680 --> 00:52:04,600 Yeah. So disclosure, I am an investor, 790 00:52:04,600 --> 00:52:09,160 an Andrew investor in both those protocols, though I, I'm biased, 791 00:52:10,040 --> 00:52:13,280 but I do think they're amazing. Gyroscope has been around for a 792 00:52:13,280 --> 00:52:17,520 long time. They are basically, yeah, this, 793 00:52:17,520 --> 00:52:23,160 this the initial idea is, and I think it expanded a bit, but is 794 00:52:23,160 --> 00:52:28,880 to have this GYD coin, which is a stable coin that is based on 795 00:52:28,880 --> 00:52:33,920 like how to compartmentalize risk and make making sure that 796 00:52:33,920 --> 00:52:37,480 whatever you have in your basket of assets that collateralize 797 00:52:37,480 --> 00:52:40,920 your stablecoin. If something fails or goes off 798 00:52:40,920 --> 00:52:47,080 bag, you still have the kind of the system dynamics to avoid 799 00:52:47,240 --> 00:52:53,920 like a, a, a DPAG of this coin that is basically built by 800 00:52:54,160 --> 00:52:57,480 collateralized BMM pools on top of balancer. 801 00:52:57,480 --> 00:53:02,680 So it's quite big brain stuff. But yeah, has been created by, 802 00:53:02,800 --> 00:53:08,240 by really brilliant guys that yeah, from, from, from the UK 803 00:53:08,680 --> 00:53:12,640 that I've been, yeah, very, very much a fan of since the early 804 00:53:12,720 --> 00:53:14,440 days. And I think they're, they've 805 00:53:14,440 --> 00:53:16,600 been around for maybe four years already. 806 00:53:18,120 --> 00:53:21,560 So yeah, they also created the ECLP that I mentioned. 807 00:53:21,560 --> 00:53:25,680 It's a very gas efficient AM based on elliptical curves or 808 00:53:25,680 --> 00:53:28,320 elliptic curves. Yeah. 809 00:53:28,320 --> 00:53:31,360 So they, they are amazing. And they have built on balancer 810 00:53:31,360 --> 00:53:34,000 V2 and are are now migrating to Balancer V3. 811 00:53:34,440 --> 00:53:39,440 And kind of an as an aside, it was great to see how the devacs 812 00:53:39,440 --> 00:53:42,680 increased or improved because most of the migration process 813 00:53:42,680 --> 00:53:46,320 was like deleting code. You know, you delete this, this 814 00:53:46,320 --> 00:53:50,760 and then it's very, very much watered down version of V2 is 815 00:53:50,760 --> 00:53:55,800 what they need for V3. So kind of validated our, our 816 00:53:55,800 --> 00:54:01,000 hopes of increasing, improving the X quant AMM is really about 817 00:54:01,080 --> 00:54:06,320 like this initial like original idea of bouncer as an index 818 00:54:06,320 --> 00:54:07,600 fund. And it's actually something 819 00:54:07,600 --> 00:54:12,240 we're pursuing not only with quantity MMM, but with, with Cow 820 00:54:12,240 --> 00:54:17,800 AM Ms. and COW swap as partners. This idea of like index funds 821 00:54:17,800 --> 00:54:22,160 and ET apps on chain, like the main reason why I'll talk about 822 00:54:22,160 --> 00:54:23,840 that. But just quantity, MMM, it's 823 00:54:23,840 --> 00:54:28,960 really like how how to have index indices and ET apps or 824 00:54:28,960 --> 00:54:35,520 exposure of like a pool of assets with a very smart kind of 825 00:54:35,520 --> 00:54:40,120 management that's done on chain potentially with ZK proof. 826 00:54:40,120 --> 00:54:44,160 So you have very complex strategies that you don't want 827 00:54:44,160 --> 00:54:48,400 to make public for people to kind of copy you or front run 828 00:54:48,400 --> 00:54:50,280 you. So they have strategies that are 829 00:54:50,280 --> 00:54:56,960 all implemented on chain, but use ZK proofs or yeah, ZK chains 830 00:54:57,360 --> 00:55:00,840 to make sure that it can be implemented on chain without 831 00:55:01,480 --> 00:55:04,880 disclosing what it is and in a gas efficient manner. 832 00:55:04,960 --> 00:55:09,040 So it's, it's really like using balance of V3 as an asset 833 00:55:09,040 --> 00:55:13,320 manager and, and doing very sophisticated strategies. 834 00:55:13,960 --> 00:55:17,160 We're very excited about them. They got a grant, they got 835 00:55:17,360 --> 00:55:23,480 funding from other VCs and yeah, we're, we're launching I, I 836 00:55:23,480 --> 00:55:26,640 think they're already in beta and, and they're going to be 837 00:55:26,640 --> 00:55:29,200 quite big. I I think on balance of V3. 838 00:55:29,920 --> 00:55:33,800 So I'll, I'll say about the apart from quanti, MMM, this 839 00:55:33,800 --> 00:55:38,000 idea of indices and ETFs, I think we have tried that in the 840 00:55:38,000 --> 00:55:41,200 past and I think it was just not the time. 841 00:55:41,480 --> 00:55:44,200 It was too early. You know, it's like, yeah. 842 00:55:44,640 --> 00:55:47,640 I know that feeling. You know like Myspace and then 843 00:55:48,600 --> 00:55:51,120 Facebook comes at the right time executing the right way. 844 00:55:51,120 --> 00:55:55,080 So the, I think the, the one thing that was missing back then 845 00:55:55,160 --> 00:56:01,040 and was the cause for indices like index Co-op, which I, I, I 846 00:56:01,120 --> 00:56:02,440 love, I think the idea was great. 847 00:56:02,440 --> 00:56:07,280 Like they leaked a lot of value because of this adverse 848 00:56:07,280 --> 00:56:10,560 selection like arbors and traders have on chain, off chain 849 00:56:10,560 --> 00:56:15,040 information and they just extract slowly the value from 850 00:56:15,080 --> 00:56:18,560 those indices by having better prices than the market. 851 00:56:18,640 --> 00:56:22,400 But now we have the tools we just talked about to prevent 852 00:56:22,400 --> 00:56:26,280 MAV. So all of a sudden indices on 853 00:56:26,280 --> 00:56:30,000 chain are a thing again. So you can have exposure to 854 00:56:30,760 --> 00:56:36,840 NVIDIA and other other like assets, real world assets and 855 00:56:36,840 --> 00:56:38,160 and have an index fund on balancing. 856 00:56:38,160 --> 00:56:43,120 By the way, we launched with the like help of CARP, like actually 857 00:56:43,120 --> 00:56:46,160 their initiative Carpet key, which is part of the Gnosis 858 00:56:46,160 --> 00:56:48,520 family, as you know, amazing guys. 859 00:56:48,520 --> 00:56:52,640 They, yeah, together with BACT, they launched the first spool 860 00:56:52,640 --> 00:56:57,480 where you can like trade assets and in stocks like NVIDIA and 861 00:56:57,480 --> 00:56:59,480 you can only do that in on Balancer. 862 00:56:59,480 --> 00:57:04,040 So that, that, yeah, that that is something that excites me a 863 00:57:04,040 --> 00:57:07,760 lot about the, yeah, the future of of Balancer and AMS in 864 00:57:07,760 --> 00:57:12,720 general. And it's got an amazing yield as 865 00:57:12,720 --> 00:57:14,560 well, so. Exactly. 866 00:57:14,600 --> 00:57:17,600 It's like I'm, I'm I'll make sure my lawyers don't hear this. 867 00:57:17,600 --> 00:57:21,560 Otherwise kind of like they'll they'll make me delete it for 868 00:57:21,560 --> 00:57:24,440 financial promotion. But yeah, I mean, it's kind of 869 00:57:24,440 --> 00:57:26,800 like the the years you can currently get on Jane. 870 00:57:26,800 --> 00:57:32,320 It's kind of in things that are not inherently risky or not 871 00:57:32,320 --> 00:57:35,120 inherently more risky than doing it on Robin Hood. 872 00:57:35,760 --> 00:57:39,560 Is is is insane. Exactly. 873 00:57:40,320 --> 00:57:44,240 So Fernando, kind of like when I kind of zoom out a bit, kind of, 874 00:57:44,360 --> 00:57:49,440 I heard 22 somewhat different stories about kind of like who 875 00:57:49,440 --> 00:57:53,160 you guys are catering to, right? Kind of like on one hand you're 876 00:57:53,160 --> 00:57:57,800 catering to people who just want to let their capital sit there 877 00:57:57,800 --> 00:58:00,480 and not be sophisticated traders. 878 00:58:01,080 --> 00:58:05,320 And on the other hand, you're, you're kind of looking to cater 879 00:58:06,440 --> 00:58:08,880 to protocols. So kind of like if, if I were 880 00:58:08,880 --> 00:58:11,960 kind of a business person kind of I would, you know, I would 881 00:58:11,960 --> 00:58:15,680 kind of differentiate they these into kind of like B to C&B to B 882 00:58:15,680 --> 00:58:20,840 to C kind of branches. How, How do you think about them 883 00:58:20,840 --> 00:58:26,720 and how, how difficult is it to kind of like corral them into 884 00:58:27,080 --> 00:58:32,320 one product suite? That's yeah, great question. 885 00:58:32,320 --> 00:58:34,800 And, and I agree with you that that impression might be 886 00:58:35,440 --> 00:58:38,880 floating around for, for listeners or, or for you. 887 00:58:38,880 --> 00:58:44,120 So the way I would frame it is like the end goal is really to 888 00:58:44,240 --> 00:58:48,160 be a, a platform for other, others to build on top and 889 00:58:48,160 --> 00:58:50,920 innovate using their own AMM ideas. 890 00:58:50,920 --> 00:58:54,600 So that the the focus is for others to build a balancer. 891 00:58:55,120 --> 00:58:59,440 And I would say that we what we're doing by having our own 892 00:58:59,440 --> 00:59:03,800 types of pools or joint projects like like the Cow AMM with Cow 893 00:59:03,800 --> 00:59:09,520 swap and investing or, or being very closely related to quant 894 00:59:09,520 --> 00:59:12,280 AMM and gyroscope. What we're doing is like we're 895 00:59:12,280 --> 00:59:18,080 trying to give examples of successful projects or, or or 896 00:59:18,080 --> 00:59:20,080 protocols that are built on, on Bouncer. 897 00:59:20,080 --> 00:59:24,760 So with the priority fee hook, for example, our main objective 898 00:59:24,760 --> 00:59:30,240 is to showcase how to use Bouncer B3's hooks and make sure 899 00:59:30,240 --> 00:59:35,040 that other Babs or, or teams know like have an example of 900 00:59:35,040 --> 00:59:38,240 something that works. So yeah, it's really like 901 00:59:38,240 --> 00:59:41,880 bootstrapping Balancer V3 or Balancer in general for others 902 00:59:41,880 --> 00:59:45,240 to look at us and see there is like cool things that we can 903 00:59:45,240 --> 00:59:49,800 build on top of balancer. So once we have some traction 904 00:59:49,800 --> 00:59:54,280 and lots of teams building on top of Balancer and, and, and, 905 00:59:54,360 --> 00:59:57,920 and kind of creating cool stuff, then I think more and more our 906 00:59:57,920 --> 01:00:02,120 focus will kind of transition to help helping others, like 907 01:00:02,120 --> 01:00:05,240 unblocking them as opposed to our team. 908 01:00:05,240 --> 01:00:08,320 And there's like many companies or teams in the balance 909 01:00:08,320 --> 01:00:12,240 ecosystem as opposed to our teams directly involved in new 910 01:00:12,240 --> 01:00:15,840 projects, like we want to be enabling others to build 911 01:00:15,880 --> 01:00:18,280 interesting stuff in the balance ecosystem. 912 01:00:18,280 --> 01:00:22,520 So that that's how I would if it makes sense how I would frame 913 01:00:22,520 --> 01:00:23,840 it. Absolutely. 914 01:00:24,400 --> 01:00:26,720 Then I want to zoom out even more. 915 01:00:28,120 --> 01:00:33,600 So we kind of started off this episode by kind of elucidating 916 01:00:33,600 --> 01:00:38,920 how AM Ms. were initially kind of this stopgap thing that kind 917 01:00:38,920 --> 01:00:46,560 of enabled us to kind of do on chain trading without opening 918 01:00:46,560 --> 01:00:51,440 ourselves up to being to being sandwiched to death. 919 01:00:53,640 --> 01:00:57,960 Now that kind of we have much more advanced cryptography in 920 01:00:57,960 --> 01:01:03,760 principle, we could put central Ledger order book exchanges back 921 01:01:03,760 --> 01:01:08,000 on chain. So do you think AMM are going to 922 01:01:08,000 --> 01:01:11,920 be an interim solution or is there is there kind of a long 923 01:01:11,920 --> 01:01:14,160 term space for them in the ecosystem? 924 01:01:15,600 --> 01:01:17,400 I think it's the it's the latter. 925 01:01:17,400 --> 01:01:21,640 I think there is long term space for them in the ecosystem. 926 01:01:22,120 --> 01:01:27,640 There is always going to be like the fast trading like high 927 01:01:27,640 --> 01:01:34,040 frequency strategy teams or bots that are probably going to use 928 01:01:34,040 --> 01:01:40,800 more concentrated liquidity or or obese centralized order limit 929 01:01:40,800 --> 01:01:43,920 order books that that is just more efficient. 930 01:01:43,960 --> 01:01:47,160 And if you can do that on chain, it's it's even better. 931 01:01:47,160 --> 01:01:50,960 And you have like chains like Solana that want to be, you 932 01:01:50,960 --> 01:01:55,520 know, like the, the ones where, where people can do that. 933 01:01:55,600 --> 01:01:58,680 So it, it brings with itself scaling problems. 934 01:01:59,000 --> 01:02:03,360 There will be L twos on, on Ethereum that will be kind of 935 01:02:03,960 --> 01:02:06,600 more suitable for that. But I do think there's always 936 01:02:06,600 --> 01:02:12,520 going to be some space for passive LP's who want to just 937 01:02:12,520 --> 01:02:18,480 deploy capital to, to let's say L1 or an L2 that has higher 938 01:02:18,480 --> 01:02:20,960 fees. And they, they don't want to be 939 01:02:20,960 --> 01:02:25,000 like actively trading or managing their positions. 940 01:02:25,920 --> 01:02:30,080 So even in, in today's landscape, let's say in the 941 01:02:30,080 --> 01:02:32,360 future, nothing like new is created. 942 01:02:32,360 --> 01:02:35,520 There's no breakthroughs, which I doubt, I'm pretty sure not 943 01:02:35,520 --> 01:02:38,760 gonna be the case. Even in today's landscape, I 944 01:02:38,760 --> 01:02:43,440 think there is space for AM Ms. But given that AM Ms. are 945 01:02:43,440 --> 01:02:48,320 evolving and there's like ways you can mitigate LVR and, and 946 01:02:48,320 --> 01:02:52,320 MEV, this is going to be, in my opinion, even more so the case 947 01:02:52,760 --> 01:02:56,640 that there is space for AM Ms. This is my kind of bat. 948 01:02:56,640 --> 01:02:59,880 I could be wrong, but I, I, I, I'm pretty sure like some people 949 01:02:59,880 --> 01:03:05,240 called AM Ms. like dad, there's just like X * Y = K and that's 950 01:03:05,240 --> 01:03:07,960 it. And then Unisol V3 came and then 951 01:03:08,360 --> 01:03:10,200 like lots of things that we're doing came. 952 01:03:10,200 --> 01:03:14,120 And I'm sure like in four years it will be hard to recognize 953 01:03:14,120 --> 01:03:16,440 the, the space and how much it will have evolved. 954 01:03:16,440 --> 01:03:20,160 So I'm I'm on the not saying Amms are going to dominate and 955 01:03:20,160 --> 01:03:24,400 be the one in all, but I'm sure there's going to be room for 956 01:03:24,400 --> 01:03:26,160 them in the future. I'm pretty sure. 957 01:03:26,800 --> 01:03:30,400 And going on past data in four years is going to be when we 958 01:03:30,400 --> 01:03:32,240 will have you on again. So kind of we. 959 01:03:32,320 --> 01:03:33,080 We can. We can. 960 01:03:33,080 --> 01:03:36,000 Kind of take take up where we left off then. 961 01:03:36,320 --> 01:03:39,960 Exactly. So Fernando, where can listeners 962 01:03:39,960 --> 01:03:43,160 learn more? Where can they kind of start 963 01:03:43,160 --> 01:03:45,720 interacting with the balance ecosystem? 964 01:03:45,720 --> 01:03:49,360 Where can they start building their own protocols on top? 965 01:03:49,360 --> 01:03:51,720 Where can they kind of contribute hooks and so on? 966 01:03:52,480 --> 01:03:55,280 Yeah, I think the best way where you can ask questions and 967 01:03:55,280 --> 01:03:57,880 interact is Discord dot balancer dot fi. 968 01:03:58,000 --> 01:04:02,200 That's where most technical discussion take place. 969 01:04:02,240 --> 01:04:06,200 Of course there's our forum, forum dot balancer dot fi and 970 01:04:06,200 --> 01:04:09,560 our docs as well. If you go to balancer dot file, 971 01:04:09,560 --> 01:04:12,400 you're going to see all the all those different links. 972 01:04:12,840 --> 01:04:17,640 But also of course the the X handle at balancer is where we 973 01:04:17,920 --> 01:04:22,120 talk about the latest and we have some some spaces and 974 01:04:22,120 --> 01:04:25,600 discuss with partners. So yeah, I think that that's 975 01:04:25,600 --> 01:04:28,320 where you should find us. Perfect. 976 01:04:28,480 --> 01:04:30,560 Thank you so much for coming on, Fernando. 977 01:04:31,040 --> 01:04:32,600 Thanks. Thank you for having us. 978 01:04:32,600 --> 01:04:33,840 It was a big pleasure.