1 00:00:00,080 --> 00:00:02,440 Welcome to Epicentre, the show which talks about the 2 00:00:02,440 --> 00:00:05,240 technologies, projects and people driving decentralization 3 00:00:05,240 --> 00:00:07,800 and the blockchain revolution. I'm Frederica Anst and today I'm 4 00:00:07,800 --> 00:00:12,280 speaking with Michael Soboda, who is the CEO of Liquidity. 5 00:00:12,280 --> 00:00:15,640 AT banking is under pressure, Sybil code is a much better 6 00:00:15,640 --> 00:00:18,760 product than having your dollars in your bank because there you 7 00:00:18,760 --> 00:00:22,520 have the counterparty risk and this bank and in Germany might 8 00:00:22,520 --> 00:00:25,400 lend them the money to Banco. We had the kind of this huge 9 00:00:25,400 --> 00:00:26,920 scandal and you're not aware of it. 10 00:00:26,920 --> 00:00:31,440 We see these forces now playing out with ACT with Clarity ACT. 11 00:00:31,880 --> 00:00:33,960 Honestly it's not about the users. 12 00:00:34,040 --> 00:00:38,680 Regulation is actually used to protect the banks or create the 13 00:00:38,680 --> 00:00:41,440 mold. Liquidity just follows 100% of 14 00:00:41,440 --> 00:00:45,520 the borrowers fees to the stable coin holders to facilitate that 15 00:00:45,520 --> 00:00:48,240 peer-to-peer credit market. It's very hard. 16 00:00:48,240 --> 00:00:51,480 It's a very competitive market, but that's why we tried with 17 00:00:51,520 --> 00:00:56,040 Liquidity V2 and Bold to have a very clear and distinct value 18 00:00:56,040 --> 00:00:58,560 proposition. Rather serve a niche, but be 19 00:00:58,560 --> 00:01:06,880 very clear. Liquidity Protocol is a 20 00:01:07,320 --> 00:01:10,800 governance free Ethereum protocol that lets users borrow 21 00:01:11,320 --> 00:01:16,360 a decentralized dollar against ETH at self set interest rates. 22 00:01:16,800 --> 00:01:20,320 Before I talk with Michael, let me tell you about our sponsors 23 00:01:20,320 --> 00:01:22,240 this week. This episode's brought to you by 24 00:01:22,240 --> 00:01:24,440 Lido. As Ethereum Mistaken continues 25 00:01:24,440 --> 00:01:27,480 to evolve, more teams building staking products are running 26 00:01:27,480 --> 00:01:30,560 into a familiar challenge. On one hand, pooled liquid 27 00:01:30,560 --> 00:01:34,000 staking gives you liquidity and access to Defy but can limit 28 00:01:34,000 --> 00:01:36,560 customization. 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If you're just looking for a 40 00:02:03,760 --> 00:02:07,560 place to generate yield on your idle assets, Lido Earn makes it 41 00:02:07,560 --> 00:02:10,000 super simple. It offers curated Defy 42 00:02:10,000 --> 00:02:13,280 strategies built around SD ETH you deposit once you choose a 43 00:02:13,280 --> 00:02:15,800 vault and manage everything from a single interface. 44 00:02:16,600 --> 00:02:20,440 To learn more and start building with SD Vaults, go to Lido dot 45 00:02:20,440 --> 00:02:23,960 fi slash SD Vaults and get in touch with Lidar contributors 46 00:02:24,080 --> 00:02:25,520 today. Hi, Mike. 47 00:02:25,520 --> 00:02:26,720 It's good to have you on the show. 48 00:02:27,400 --> 00:02:29,720 Hi Fredrique, thank you for having me. 49 00:02:30,840 --> 00:02:37,440 Good, before we dive in, who who are you and what originally got 50 00:02:37,440 --> 00:02:40,160 you interested in all of this? Yeah. 51 00:02:40,160 --> 00:02:43,760 So I'm Michael. I live in Switzerland and I was 52 00:02:43,760 --> 00:02:47,320 working in a normal corporate telecommunications in the 53 00:02:47,320 --> 00:02:51,360 digital space and we were talking about disruption and I 54 00:02:51,360 --> 00:02:53,560 was talking to B2B clients about disruption. 55 00:02:53,560 --> 00:02:56,720 And then I heard about blockchain and I realized this 56 00:02:56,720 --> 00:03:00,080 is really the only disruptive thing that is happening right 57 00:03:00,080 --> 00:03:03,000 now, like the Internet, which took out intermediaries for 58 00:03:03,000 --> 00:03:04,640 comms and media. This will take out 59 00:03:04,640 --> 00:03:07,360 intermediaries in finance. And that fascinated me. 60 00:03:07,360 --> 00:03:10,040 And then I quit my job because it's not going to happening in 61 00:03:10,040 --> 00:03:13,080 this big corporate and I jumped into the crypto world. 62 00:03:13,080 --> 00:03:17,160 I think that was 2019 around the ICO craze. 63 00:03:18,800 --> 00:03:23,120 Liquidity itself was founded I believe a year or two earlier, 64 00:03:23,120 --> 00:03:27,120 right by Hobart, who is still with Liquidity but in a more 65 00:03:27,120 --> 00:03:31,680 research re background role. Can you talk about the original 66 00:03:31,680 --> 00:03:34,360 rationale for the founding of Liquidity? 67 00:03:34,360 --> 00:03:38,480 So what did Robert feel was fundamentally broken or missing 68 00:03:38,480 --> 00:03:42,480 in how Unchained Credit and Sabre coins were being built at 69 00:03:42,480 --> 00:03:44,600 the time? First, I think he was really 70 00:03:44,600 --> 00:03:47,560 fascinated by blockchain, so he was working before for the 71 00:03:47,720 --> 00:03:49,600 Infinity on the consensus algorithms. 72 00:03:50,040 --> 00:03:54,760 And then I think this maker kind of sparked his interest. 73 00:03:55,120 --> 00:04:00,360 Being able to issue your own stablecoin, be your own National 74 00:04:00,360 --> 00:04:04,320 Bank kind of I think was a very cool concept. 75 00:04:04,480 --> 00:04:08,160 He saw that and he just immediately came up with ideas 76 00:04:08,160 --> 00:04:10,520 and said, hey, we have blockchain technologies, why do 77 00:04:10,520 --> 00:04:12,920 we need governance? Can't we automate the debt? 78 00:04:13,040 --> 00:04:14,960 Maybe we can also make it interest free. 79 00:04:14,960 --> 00:04:17,920 Do we need to have interest? You know, you can break with all 80 00:04:17,920 --> 00:04:20,800 these paradigms. And he also thought he can 81 00:04:20,800 --> 00:04:22,920 create a higher loan to value ratio. 82 00:04:22,920 --> 00:04:26,600 So with these propositions he set out to create a more 83 00:04:26,600 --> 00:04:30,960 efficient, more autonomous borrowing protocol that is was 84 00:04:30,960 --> 00:04:34,840 very similar like single collateral dye and that's what 85 00:04:34,840 --> 00:04:38,160 they did what they set out and that it was launched in 2021 was 86 00:04:38,160 --> 00:04:41,600 been running since then and had more managed more than 5 billion 87 00:04:41,600 --> 00:04:45,320 in TBL had its own has its own stable coin LUSD, but. 88 00:04:45,440 --> 00:04:50,280 What kind of talking about kind of like this early Maker era 89 00:04:50,520 --> 00:04:55,400 that there were a couple of events that must have shaped 90 00:04:55,560 --> 00:04:58,840 kind of how Robert. And then also you kind of 91 00:04:58,840 --> 00:05:01,160 thought about about protocol design, right? 92 00:05:01,160 --> 00:05:05,000 Kind of like there was the infamous Black Thursday that 93 00:05:05,000 --> 00:05:09,880 kind of led to the rise of Deepak tools. 94 00:05:10,200 --> 00:05:16,280 And so Maker still has the PSMPSM, yes, the tax stability 95 00:05:16,280 --> 00:05:18,640 module. What lessons did you take away 96 00:05:18,640 --> 00:05:21,880 from watching Maker evolve in real time? 97 00:05:22,280 --> 00:05:25,280 Yeah. I mean Maker set out to follow 98 00:05:25,280 --> 00:05:28,720 up half maybe more of growth, taking in more diverse 99 00:05:28,720 --> 00:05:33,880 collateral, getting exposure to tread Fi, which helped their 100 00:05:33,880 --> 00:05:35,920 growth. They also introduced the PSM 101 00:05:35,920 --> 00:05:39,840 with USDCA centralized Sablecoin to keep the pack I think which 102 00:05:39,840 --> 00:05:42,240 helps the product. But I think robot was very 103 00:05:42,600 --> 00:05:45,960 Etherium aligned and just wanted to get out most of the 104 00:05:45,960 --> 00:05:51,120 technology creating like the most Etherium dollar like money 105 00:05:51,120 --> 00:05:54,480 you can get, you know, by reducing all intermediaries and 106 00:05:54,520 --> 00:05:58,240 all kind of dependencies. But one big learning that we 107 00:05:58,240 --> 00:06:02,520 learned and that also kind of got introduced in V2. 108 00:06:02,520 --> 00:06:05,000 It was for example, we had this interest free loans. 109 00:06:05,000 --> 00:06:07,800 So you had only a one off fee, which was very interesting. 110 00:06:08,200 --> 00:06:11,400 If you talk to threat high people and you said you don't 111 00:06:11,400 --> 00:06:14,280 pay any interest, it was like totally puzzling for them. 112 00:06:14,920 --> 00:06:18,920 That was very viable in a low interest rate environment and 113 00:06:18,920 --> 00:06:23,360 Wendy's rates kind of raised. Then the protocol wasn't 114 00:06:23,360 --> 00:06:26,280 designed for that. It still works, but it had 115 00:06:26,320 --> 00:06:28,720 drawbacks on the collateralization ratio. 116 00:06:29,120 --> 00:06:32,360 So a learning was there. How can we design the interest 117 00:06:32,360 --> 00:06:37,640 rates in a more dynamic way to create an equilibrium or have a 118 00:06:37,640 --> 00:06:41,920 a rate and the pack that can better self regulate itself? 119 00:06:42,560 --> 00:06:44,440 And that was definitely a learning. 120 00:06:44,440 --> 00:06:48,760 And, and I think again, I think what I really like why my joint 121 00:06:48,760 --> 00:06:51,720 equity is all this innovation, interest freeness. 122 00:06:52,080 --> 00:06:54,800 And then with V2, we have users set interest rates also 123 00:06:54,800 --> 00:06:58,160 something very cool, go to your bank and say, hey, I would like 124 00:06:58,160 --> 00:07:00,240 to have this interest rate. That's something you can do. 125 00:07:00,800 --> 00:07:05,360 And that was also a decision. Again, a lot of protocols set 126 00:07:05,360 --> 00:07:08,400 the rates by governance or by utilization and then it's 127 00:07:08,400 --> 00:07:11,240 spikes. And we took really a market 128 00:07:11,240 --> 00:07:14,200 approach who's the best to decide which rate we should have 129 00:07:14,200 --> 00:07:16,480 in Defy. So we let the users decide. 130 00:07:16,920 --> 00:07:20,720 OK, maybe let's dive into how that works in just a second, but 131 00:07:20,720 --> 00:07:24,560 let's just contrast that to how maker and are they do it right, 132 00:07:24,560 --> 00:07:28,280 kind of like the the the two main players in this arena, 133 00:07:28,280 --> 00:07:31,760 right? So basically in Maker, the 134 00:07:31,760 --> 00:07:34,720 interest rate is set by governance and kind of like it's 135 00:07:34,720 --> 00:07:37,720 fairly slow moving. It feels a little central 136 00:07:37,720 --> 00:07:41,440 bankersh to me sometimes. There's a lot of governance and 137 00:07:41,440 --> 00:07:45,160 in Ave. it's algorithmic, but that also means it can spike 138 00:07:45,360 --> 00:07:47,960 unpredictably. So kind of if you take out a 139 00:07:47,960 --> 00:07:55,000 loan and initially your, your rate was, I don't know, 5%, it's 140 00:07:55,000 --> 00:07:59,240 possible it kind of spikes to 10% or 15% and there's nothing 141 00:07:59,240 --> 00:08:02,280 you can do other than kind of repay the loan and kind of get 142 00:08:02,280 --> 00:08:05,000 out from under it. Let's kind of walk me through 143 00:08:05,200 --> 00:08:09,840 how the mechanics of liquidity work end to end. 144 00:08:09,840 --> 00:08:12,720 So kind of, I know that the range of collateral that I can 145 00:08:12,720 --> 00:08:17,520 deposit is very limited. So say I have ETH or some sort 146 00:08:17,520 --> 00:08:23,400 of wrapped staked ETH token. What and I want to borrow USD, 147 00:08:23,480 --> 00:08:27,040 what actually happens step by step inside the protocol? 148 00:08:27,160 --> 00:08:31,040 So like with every collateralized depth position 149 00:08:31,040 --> 00:08:34,240 protocol or CDP position, you come with your collateral. 150 00:08:34,760 --> 00:08:38,120 So if or Rep staked, if or, or if we only have these three 151 00:08:38,120 --> 00:08:42,080 collateral to again don't have dependencies on, on other 152 00:08:42,080 --> 00:08:44,000 collateral that we feel are less safe. 153 00:08:44,000 --> 00:08:46,720 So kind of as human native as possible. 154 00:08:46,760 --> 00:08:50,840 And you self issue a loan. So you deposit the collateral 155 00:08:50,920 --> 00:08:54,360 into the protocol where it's held, where it's not lent out, 156 00:08:54,360 --> 00:08:56,880 it's always there. And then you can take out the 157 00:08:56,880 --> 00:09:03,840 loan up to 90% loan to value. So let's say you put in 50K in, 158 00:09:03,880 --> 00:09:08,680 if you take out the loan of 25 K, you'll get that in the 159 00:09:08,960 --> 00:09:12,840 protocol stable coin bolt. And then you can set the rate. 160 00:09:13,320 --> 00:09:16,480 So you can say, OK, I will have for example 3%. 161 00:09:17,400 --> 00:09:20,880 You do that, you get the bolt. Usually what you do, because you 162 00:09:21,240 --> 00:09:24,320 take out the loan because you need liquidity, you will swap it 163 00:09:24,560 --> 00:09:27,800 to another stable coin off ramp into Fiat for example. 164 00:09:28,320 --> 00:09:31,840 Or if you say I want, I get a cheap borrowing rate, I don't 165 00:09:31,840 --> 00:09:34,000 know. Right now it's 3% on Eve, which 166 00:09:34,000 --> 00:09:36,800 is low. You could form somewhere else 167 00:09:36,800 --> 00:09:39,680 for 10% and that could be also your use case. 168 00:09:39,680 --> 00:09:42,040 So that's the the borrowing side. 169 00:09:42,360 --> 00:09:44,520 I think that's quite straightforward and simple. 170 00:09:44,520 --> 00:09:47,640 And maybe the the question people ask now, OK, how do I set 171 00:09:47,640 --> 00:09:49,640 the rate? I guess. 172 00:09:49,680 --> 00:09:53,120 Everybody setting it to 0. Exactly, this would have been my 173 00:09:53,120 --> 00:09:55,360 first question. So kind of like if someone tells 174 00:09:55,360 --> 00:09:59,600 me you, you can borrow money here, what what kind of interest 175 00:09:59,600 --> 00:10:02,920 do you want to pay? I would go like 0. 176 00:10:03,800 --> 00:10:06,200 Why don't people do that? Yeah. 177 00:10:06,200 --> 00:10:08,680 So for that, we need to look on the other side. 178 00:10:08,680 --> 00:10:11,760 We're really a market, a peer-to-peer finance market. 179 00:10:11,760 --> 00:10:15,480 So we have the borrower on the other side, we have the stable 180 00:10:15,480 --> 00:10:18,600 coin holder, you know, because essentially if you want Fiat, 181 00:10:18,600 --> 00:10:22,000 you sell the stable coin and then somebody needs to hold it. 182 00:10:22,000 --> 00:10:24,640 They can't disappear. You know, if everybody sells it 183 00:10:24,640 --> 00:10:26,440 and nobody hold it, then it D packs. 184 00:10:26,720 --> 00:10:30,520 So it's like the stable coin holder is like your creditor on 185 00:10:30,520 --> 00:10:33,160 the other side. And now you both need to agree 186 00:10:33,160 --> 00:10:37,280 on the right rate because if the rate is not high enough, nobody 187 00:10:37,280 --> 00:10:40,800 will hold it. So borrowers have an interest to 188 00:10:40,800 --> 00:10:44,360 pay enough yield because there is like a stick you know look at 189 00:10:44,360 --> 00:10:46,040 you have like the carrot and the stick. 190 00:10:46,040 --> 00:10:48,000 So stable coin holders have a stick. 191 00:10:48,080 --> 00:10:53,000 If the stable coin D packs below 1, everybody has the right to 192 00:10:53,000 --> 00:10:55,600 redeem the stable coin at face value. 193 00:10:55,640 --> 00:10:58,480 So that's also something that you don't have many protocols 194 00:10:58,480 --> 00:11:01,880 you can come with the dollar and you get really the underlying 195 00:11:01,880 --> 00:11:04,200 collateral. Try to do that with your feet or 196 00:11:04,200 --> 00:11:07,560 your USDT and this is called redemption. 197 00:11:07,560 --> 00:11:12,960 So if I have 10,000 in bold that is below pack, I can go to the 198 00:11:12,960 --> 00:11:17,440 protocol and say, OK, I want now this is only worth 9500. 199 00:11:17,440 --> 00:11:21,720 I want 10,000 in EVE as from the collateral and I can exchange 200 00:11:21,720 --> 00:11:24,160 that. And this redemption hits the the 201 00:11:24,160 --> 00:11:27,240 borrower with the lowest rate. So you see kind of the stable 202 00:11:27,240 --> 00:11:29,720 coin holders are chasing the ones that think I have the 203 00:11:29,720 --> 00:11:32,560 lowest rate, they have also the highest risk they get redeemed. 204 00:11:32,560 --> 00:11:36,040 They don't have kind of a, a economical, that's not an 205 00:11:36,040 --> 00:11:38,440 economical penalty. It's not the liquidation where 206 00:11:38,440 --> 00:11:41,440 you lose 5% of the value, but you just lose the exposure of 207 00:11:41,600 --> 00:11:44,480 your underlying Eve, which can be also for some people, they 208 00:11:44,480 --> 00:11:47,680 want to avoid that. So if people see that, oh, I get 209 00:11:47,680 --> 00:11:50,960 redeemed, I'm really low, I'm going to higher my rate and this 210 00:11:50,960 --> 00:11:53,720 protects me from the redemption. So you have now this market 211 00:11:53,960 --> 00:11:57,840 where borrowers adjust and stable coin holders with the 212 00:11:57,840 --> 00:11:59,640 redemptions are, are driving the rates. 213 00:11:59,640 --> 00:12:03,200 So you have really market driven rates and it's like a 2 sided 214 00:12:03,200 --> 00:12:06,000 market of borrowers and the stable coin holders, the the 215 00:12:06,000 --> 00:12:07,480 creditors. And I think it's one of the 216 00:12:07,480 --> 00:12:10,880 first time I've seen that been implemented like that. 217 00:12:11,080 --> 00:12:13,800 And the beauty is it's actually very direct. 218 00:12:13,880 --> 00:12:16,120 You know these parties talk together if you think about it 219 00:12:16,120 --> 00:12:20,240 like how it's done in other protocols as you said, OK, I 220 00:12:20,240 --> 00:12:22,840 don't know stable coin DPEX. So we have a problem. 221 00:12:22,840 --> 00:12:26,120 There is a governance proposal we increase the rate the yield 222 00:12:26,320 --> 00:12:30,720 funnels through a complex system while while in liquidity. 223 00:12:31,320 --> 00:12:35,000 Liquidity just follows 100% of the borrowers fees to the stable 224 00:12:35,000 --> 00:12:39,960 coin holders to facilitate that peer-to-peer credit market. 225 00:12:40,040 --> 00:12:41,920 At the end, I have a couple of questions. 226 00:12:41,920 --> 00:12:44,680 So maybe let's kind of apply this apart a little bit. 227 00:12:44,680 --> 00:12:48,360 If bulk doesn't trade below a dollar, but at a dollar above a 228 00:12:48,360 --> 00:12:52,080 dollar, there's there are no redemptions, right? 229 00:12:52,080 --> 00:12:56,520 Kind of like I am not at risk of having my collateral kind of 230 00:12:56,840 --> 00:12:57,640 sold. Right. 231 00:12:59,120 --> 00:13:02,120 Your loan gets repaid kind of from a third party. 232 00:13:02,560 --> 00:13:05,360 You have less debt, but you also have less collateral. 233 00:13:05,960 --> 00:13:10,640 OK, but if a bulk trades above a dollar or add a dollar, this 234 00:13:10,640 --> 00:13:13,960 doesn't happen right? This only happens kind of at 235 00:13:13,960 --> 00:13:17,280 negative DPEG. Why if I don't expect this to 236 00:13:17,280 --> 00:13:19,240 happen? If I don't think this will 237 00:13:19,240 --> 00:13:23,120 happen, why am I setting an interest rate at all? 238 00:13:23,120 --> 00:13:27,280 Am I at risk of not being matched if I don't set an 239 00:13:27,280 --> 00:13:28,240 interest rate? No. 240 00:13:28,240 --> 00:13:32,960 So if a stable coin is above, then people or kind of advanced 241 00:13:32,960 --> 00:13:36,520 users will set really low rates. They can benefit because they 242 00:13:36,520 --> 00:13:39,360 can't get redeemed. But this means now the borrowing 243 00:13:39,360 --> 00:13:43,400 fees and the yield that is paid out get smaller until it flips. 244 00:13:44,360 --> 00:13:47,280 But this kind of reduced the problem that we had in V1 that 245 00:13:47,280 --> 00:13:49,360 the stable coin could D pack above. 246 00:13:49,360 --> 00:13:53,200 So this happens now very rarely and the peg is quite good for a 247 00:13:53,200 --> 00:13:56,560 decentralized one that is not packed to any, you know, kind of 248 00:13:56,840 --> 00:13:58,920 treasuries or centralized stable coin. 249 00:13:59,360 --> 00:14:02,480 So this puts down the pressure down more people are probably 250 00:14:02,480 --> 00:14:05,280 selling the stable coin because they don't have enough yield. 251 00:14:05,280 --> 00:14:08,800 Then it goes below pack and then you have the opposite mechanism, 252 00:14:08,800 --> 00:14:12,120 you know the ones that said it low, not now raising again on 253 00:14:12,120 --> 00:14:15,160 the top and then you have you're getting this balance. 254 00:14:16,000 --> 00:14:21,640 So if you compare the current rates with protocols like make 255 00:14:21,640 --> 00:14:24,920 and other where, where are we at with liquidity? 256 00:14:25,080 --> 00:14:27,560 Yeah. So I mean always much more 257 00:14:28,040 --> 00:14:29,960 volatile. So you don't get that much. 258 00:14:29,960 --> 00:14:35,240 I think it's it's quite low on average and I'm maker I had to 259 00:14:35,240 --> 00:14:37,600 look up, but usually. So the proposition of the 260 00:14:37,600 --> 00:14:41,400 borrower side is that liquidity had always quite low and 261 00:14:41,400 --> 00:14:44,280 predictable rates because it's also so efficient. 262 00:14:44,280 --> 00:14:47,760 You know the system is not taxed, nobody's taking away 263 00:14:47,760 --> 00:14:50,000 revenue. So the spreads are are really 264 00:14:50,000 --> 00:14:52,520 low. So I think I don't know right 265 00:14:52,520 --> 00:14:55,560 now with the markets, I haven't looked up, but a month ago maybe 266 00:14:55,560 --> 00:15:00,200 you know Maker was at 5% for Eve and and liquidity was at 3%. 267 00:15:00,720 --> 00:15:05,560 Why do you think kind of force deleveraging through redemptions 268 00:15:06,480 --> 00:15:11,200 is a better failure mode than the traditional liquidation 269 00:15:11,200 --> 00:15:16,640 cascades that we see in the other CDP protocols when loans 270 00:15:16,640 --> 00:15:18,440 are underwater? Yeah. 271 00:15:18,440 --> 00:15:22,720 So these are two different mechanisms and we also liquidity 272 00:15:22,880 --> 00:15:25,960 has also liquidations and liquidations are here if your 273 00:15:25,960 --> 00:15:29,480 collateralization ratio that is packing the stable coin gets too 274 00:15:29,480 --> 00:15:33,920 low. So then like in every protocol 275 00:15:33,920 --> 00:15:37,280 you get liquidated, there is a margin call and then your 276 00:15:37,280 --> 00:15:40,360 collateral is taken away and you're taking a haircut and your 277 00:15:40,360 --> 00:15:43,560 position is wiped out. But that's something different 278 00:15:43,560 --> 00:15:46,520 that's the the over collateralization loan to value 279 00:15:47,320 --> 00:15:52,080 and that happens just to your trophant is dependent on your 280 00:15:52,080 --> 00:15:54,400 collateralization ratio redemptions. 281 00:15:55,040 --> 00:15:58,400 Everybody can do redemption and that has to do with the PEC and 282 00:15:58,400 --> 00:16:02,160 only the ones that have low interest rates are targeted. 283 00:16:02,280 --> 00:16:04,000 So these are two different mechanism. 284 00:16:04,160 --> 00:16:07,120 Why? Why do we have them exactly to 285 00:16:07,200 --> 00:16:10,320 let the market define the market rate, do not need a governance 286 00:16:10,320 --> 00:16:14,680 to be able to to do that algorithmically or let the 287 00:16:14,680 --> 00:16:17,440 market decide. And also to introduce I think a 288 00:16:17,440 --> 00:16:20,160 really nice feature not many stable coins have that every 289 00:16:20,160 --> 00:16:23,960 user has the right and can instantly redeem for the 290 00:16:23,960 --> 00:16:28,360 underlying collateral. That's the redemption mechanism 291 00:16:28,360 --> 00:16:31,800 and it helps the the pack and not the the over 292 00:16:31,800 --> 00:16:34,080 collateralization of the protocol for that. 293 00:16:34,080 --> 00:16:36,800 That's liquidations, like in any protocol. 294 00:16:37,280 --> 00:16:41,960 So you, you have deliberately only very small set of 295 00:16:41,960 --> 00:16:45,320 collateral options, right? So kind of like as someone who 296 00:16:45,320 --> 00:16:49,960 now wants to redeem collateral because bald is trading below a 297 00:16:49,960 --> 00:16:57,360 dollar, can I, do I have to take the lowest interest vault or can 298 00:16:57,360 --> 00:17:00,320 I choose which collateral I want to get back? 299 00:17:00,520 --> 00:17:03,600 Because it's possible that kind of, I mean the, the probability 300 00:17:03,600 --> 00:17:07,240 is low, but it's possible that kind of like one of the liquid 301 00:17:07,240 --> 00:17:09,920 staking tokens kind of has a problem, right? 302 00:17:09,920 --> 00:17:11,880 Sure. So V1 was only EVE there, you 303 00:17:11,880 --> 00:17:16,200 didn't have the problem, but like the market adopted these RE 304 00:17:16,200 --> 00:17:21,200 even wrapped staked EVE as the next safe place and well, what 305 00:17:21,200 --> 00:17:24,800 we did, you have like 3 branches of these collaterals and they 306 00:17:24,800 --> 00:17:29,960 are managed quite independently. So the system detects if people 307 00:17:29,960 --> 00:17:33,680 kind of trust this collateral less it, it will shrink faster. 308 00:17:33,920 --> 00:17:37,400 But if you redeem, you get from all three markets, but it's 309 00:17:37,400 --> 00:17:39,880 split up. You can't choose because also 310 00:17:39,880 --> 00:17:42,360 the stable coin is backed by all these collaterals and you could 311 00:17:42,360 --> 00:17:44,640 say yes into it introduces a bit more risk. 312 00:17:44,960 --> 00:17:48,120 But if you compare that with what other stable coins are 313 00:17:48,120 --> 00:17:50,480 backed, you know, it's still amazing. 314 00:17:50,480 --> 00:17:52,960 You know, now kind of if you see all these collateral that all 315 00:17:52,960 --> 00:17:55,720 the stable coins have, you can't even redeem. 316 00:17:55,720 --> 00:17:59,040 And if one of those failed, the risk is much greater. 317 00:17:59,040 --> 00:18:02,240 So yes, I agree. So you can't choose and you get 318 00:18:02,240 --> 00:18:05,440 get it in a proportion, but it's still way better than I think 319 00:18:06,040 --> 00:18:09,120 any other Define stable coin that is backed by crypto, 320 00:18:09,120 --> 00:18:12,560 because then the crypto needs to be a collateral that is probably 321 00:18:12,560 --> 00:18:16,520 less pristine than EF and the two biggest staking EF 322 00:18:16,560 --> 00:18:19,160 derivatives. I hear that, but kind of in, in 323 00:18:19,160 --> 00:18:23,360 principle, kind of like if one of those liquid staking tokens 324 00:18:23,360 --> 00:18:26,360 were compromised, kind of like I'd get a haircut by by kind of 325 00:18:26,360 --> 00:18:30,480 getting a proportion of the collateral back in a compromise 326 00:18:30,480 --> 00:18:33,320 token, right? Yeah, You know, you have that, 327 00:18:33,560 --> 00:18:35,840 you have that risk. You wouldn't have that in Eve. 328 00:18:35,960 --> 00:18:39,160 And then kind of it could happen that the protocol can handle 329 00:18:39,160 --> 00:18:43,080 some something so that this branch just shut downs and tries 330 00:18:43,080 --> 00:18:45,920 to reduce as much bad debt as possible. 331 00:18:46,360 --> 00:18:49,080 And then, yeah, then it's kind of turned off. 332 00:18:49,440 --> 00:18:51,680 So it it's built with that in mind. 333 00:18:51,680 --> 00:18:54,760 Of course, you don't want that. And if it's catastrophical, it's 334 00:18:54,760 --> 00:18:57,480 50%. It's repped stake EVE and kind 335 00:18:57,480 --> 00:18:59,880 of repped stake EVE loses 50% in the value. 336 00:18:59,880 --> 00:19:01,680 Yes, the the system has a problem too. 337 00:19:02,040 --> 00:19:04,200 Yeah. We already touched upon this 338 00:19:04,360 --> 00:19:08,160 lightly earlier. So kind of liquidity is notably 339 00:19:08,160 --> 00:19:10,480 governance free and immutable, right? 340 00:19:11,240 --> 00:19:14,800 And you, you already said that kind of this was super important 341 00:19:14,800 --> 00:19:19,520 to to Robert. Why, why was removing 342 00:19:19,520 --> 00:19:22,560 discretion? And by that also emergency 343 00:19:22,560 --> 00:19:26,080 control is so, so important. And I mean basically because it 344 00:19:26,080 --> 00:19:29,840 costs you flexibility, right? Yeah, sure. 345 00:19:29,840 --> 00:19:31,680 And everybody makes that compromise. 346 00:19:31,680 --> 00:19:35,160 But from a user perspective, what people like about 347 00:19:35,160 --> 00:19:37,040 liquidity, you have this predictability. 348 00:19:37,320 --> 00:19:40,240 You don't have to check every two weeks is it updated, has the 349 00:19:40,240 --> 00:19:42,840 parameter change. And under the hood, some of the 350 00:19:42,840 --> 00:19:46,040 big protocols are doing quite a lot of updates, which another 351 00:19:46,040 --> 00:19:50,760 way or just think, oh, it's protocol XYZ version 2, but it 352 00:19:50,760 --> 00:19:53,960 changed in between. So I think for the user that 353 00:19:53,960 --> 00:19:58,640 gives them also this trust and predictability and kind of we 354 00:19:58,640 --> 00:20:00,960 need to change, but we need to change in the hard way. 355 00:20:00,960 --> 00:20:05,600 We need to redeploy the system and people need to get out and. 356 00:20:06,640 --> 00:20:09,760 But this gives the the users also this guarantee that there 357 00:20:09,760 --> 00:20:13,360 is not a governance that can change things and somebody else 358 00:20:13,640 --> 00:20:16,160 in in control of it. So I think it was really with 359 00:20:16,160 --> 00:20:21,560 this ethos enabling sovereign users with sovereign dollars 360 00:20:21,800 --> 00:20:26,880 without anybody being able to interfere with it and also 361 00:20:27,120 --> 00:20:29,760 because it's more efficient, you know, I'm a maker. 362 00:20:29,760 --> 00:20:31,160 I just saw these numbers recently. 363 00:20:31,160 --> 00:20:35,000 They have 100 people budget of 30 million managing that. 364 00:20:35,000 --> 00:20:37,400 Of course they have real world assets and probably do a lot of 365 00:20:37,400 --> 00:20:40,840 stuff, but it's just beautiful to see that bold to manage the 366 00:20:40,840 --> 00:20:43,240 stable coin. Don't need any of that and and 367 00:20:43,240 --> 00:20:45,960 it can work. Yeah, quite well. 368 00:20:46,880 --> 00:20:49,800 How how many people do you have in the company? 369 00:20:50,160 --> 00:20:52,560 Yeah. So we were usually around 8 to 9 370 00:20:52,560 --> 00:20:56,240 people, half of IT developers and the the other half more 371 00:20:56,240 --> 00:20:58,480 operational or business side marketing. 372 00:20:59,680 --> 00:21:01,360 That that really is a pretty smart team. 373 00:21:01,360 --> 00:21:06,440 Tell me in some sense, I mean, I, I understand kind of the the 374 00:21:06,440 --> 00:21:13,200 ethos of kind of having this very pure only kind of stable 375 00:21:13,200 --> 00:21:17,080 coin protocol, right. So kind of, I mean, this is also 376 00:21:17,080 --> 00:21:20,720 why people loved single collateral dye, right? 377 00:21:20,720 --> 00:21:23,880 And kind of one when multicolateral dye kind of 378 00:21:24,560 --> 00:21:30,280 appeared, there was definitely blowback from the ecosystem, 379 00:21:30,280 --> 00:21:34,960 especially when then kind of it became at some point 80% USCC 380 00:21:34,960 --> 00:21:38,560 backed and and so on. On the flip side, if you look at 381 00:21:38,680 --> 00:21:42,440 the outstanding amount of sables for maker and Ave., there are 382 00:21:42,440 --> 00:21:45,880 also orders of magnitude bigger than equity, right? 383 00:21:45,880 --> 00:21:48,920 Kind of like I, I checked earlier today and kind of you 384 00:21:48,920 --> 00:21:57,880 guys have 30 million in outstanding, but and make and 385 00:21:57,880 --> 00:22:02,280 have a 300 times bigger or so. Maybe I'll, I'll look up the 386 00:22:02,280 --> 00:22:06,080 numbers of how big, but it's, it's, it's in, in the many 387 00:22:06,080 --> 00:22:09,640 billions, right. So kind of seeing that kind of 388 00:22:09,880 --> 00:22:12,960 liquidity, it is more efficient in some ways. 389 00:22:13,200 --> 00:22:15,280 What? What do you attribute this to? 390 00:22:15,920 --> 00:22:20,160 That it's still so, so small. Yeah, comparably small. 391 00:22:20,440 --> 00:22:24,160 Yeah, I mean it's really hard to scale a Defy stable coin. 392 00:22:24,160 --> 00:22:28,320 So so yes, maker is big kind of first mover advantage and and 393 00:22:28,360 --> 00:22:32,720 and and you know some yeah like USDC and USDT a lot of first 394 00:22:32,720 --> 00:22:35,600 mover advantage over you shouldn't compare the the 395 00:22:35,600 --> 00:22:38,440 lending market size with the stable coin size. 396 00:22:38,440 --> 00:22:41,000 So the stable coin size is smaller still much bigger than 397 00:22:41,000 --> 00:22:44,080 liquidity. But all these defy stable coins 398 00:22:44,080 --> 00:22:49,400 say go curve ethics. They are around 30 to maybe 300 399 00:22:49,400 --> 00:22:53,560 million. So they are way, way smaller 400 00:22:53,560 --> 00:22:57,440 than the more centralized ones. Yeah, I think mainly I mean the 401 00:22:57,440 --> 00:23:01,920 big ones are USDC and USDT And there it's quite clear why they 402 00:23:01,920 --> 00:23:04,680 dominate because they're integrated, you have all these 403 00:23:04,680 --> 00:23:08,680 utility and it's just so easy. And for every new stable coin, 404 00:23:08,680 --> 00:23:13,040 it's very hard to to get distribution and and adoption. 405 00:23:13,480 --> 00:23:17,760 But that's why I also think some parties, yes, of course it's 406 00:23:17,760 --> 00:23:21,920 much easier to have USDC, but I think also some people are maybe 407 00:23:21,920 --> 00:23:25,400 not aware of the differences between these C5 stable coins. 408 00:23:25,640 --> 00:23:28,200 And I usually compared, you know, like like the core with a 409 00:23:28,200 --> 00:23:31,240 composition engine. These are if they are built 410 00:23:31,240 --> 00:23:35,480 well, these are government market money funds that just are 411 00:23:35,480 --> 00:23:40,680 tokenized Fiat products on chain versus the the core with the 412 00:23:40,680 --> 00:23:43,800 electric engine, which looks like a car, which drives like a 413 00:23:43,800 --> 00:23:47,800 car, but is built completely different and has other product 414 00:23:47,800 --> 00:23:51,120 properties and and other risks. That could be interesting. 415 00:23:51,440 --> 00:23:54,720 And I think a lot of people are not aware of it or still maybe, 416 00:23:54,720 --> 00:23:58,280 you know, kind of trust the traditional system more. 417 00:23:58,280 --> 00:24:03,480 But I still think to me why, why it's important is that it adds a 418 00:24:03,480 --> 00:24:08,080 new option that you can opt out out of traditional rails if you 419 00:24:08,280 --> 00:24:12,160 feel like that. And I think there they can 420 00:24:12,160 --> 00:24:15,600 shine, but usually they only shine if things go South. 421 00:24:15,720 --> 00:24:18,760 You know, if things go wrong, you you hope these things are 422 00:24:18,760 --> 00:24:22,000 there. We had the moment with USDC when 423 00:24:22,000 --> 00:24:25,880 it D packed where LUSD was great and a lot of people switched to 424 00:24:25,880 --> 00:24:26,400 it. Yeah. 425 00:24:26,520 --> 00:24:30,280 But to answer your question, yes, it it's it's very hard. 426 00:24:30,280 --> 00:24:33,520 It's a very competitive market. But that's why we tried with 427 00:24:33,680 --> 00:24:38,120 liquidity V2 and Paul to have a very clear and distinct value 428 00:24:38,120 --> 00:24:42,000 proposition, rather serve a niche, but be very clear. 429 00:24:42,160 --> 00:24:44,720 So you, you know, I think you have the traditional threat 5 430 00:24:44,720 --> 00:24:47,480 stable coins that can be fully regulated safety through 431 00:24:47,480 --> 00:24:49,320 regulation. Or I think on the other hand, 432 00:24:49,320 --> 00:24:52,160 you have liquidy and bold that takes out as much as 433 00:24:52,160 --> 00:24:54,840 intermediary as possible and you trust the code. 434 00:24:54,840 --> 00:24:57,240 And you have these two extreme, I think they have a value 435 00:24:57,520 --> 00:25:00,080 because they give you safety from from different sides. 436 00:25:00,400 --> 00:25:03,160 And we rather are totally on the spectrum and rather a niche than 437 00:25:03,200 --> 00:25:06,520 somewhere in in between. I call it the trust me, bro zone 438 00:25:06,520 --> 00:25:10,400 where kind of people are just adding risk to it, you know, 439 00:25:10,560 --> 00:25:14,200 either by introducing a multi sick or being a hatch from not 440 00:25:14,200 --> 00:25:17,560 regulated. And there it gets it's it's a 441 00:25:17,560 --> 00:25:20,720 very greyish area. I think that we'll have a hard 442 00:25:20,720 --> 00:25:24,120 time when regulation kicks in. And there we also see a the the 443 00:25:24,120 --> 00:25:26,160 advantage. So they say, hopefully we we can 444 00:25:26,160 --> 00:25:30,080 stay outside of regulation because there is nothing to 445 00:25:30,080 --> 00:25:31,600 regulate. That's a bit the long answer, 446 00:25:32,320 --> 00:25:35,440 but it's what, what's more, why I think it's important, why I'm 447 00:25:35,440 --> 00:25:39,760 passionate about it, why I think it's a genuinely Ethereum native 448 00:25:39,760 --> 00:25:43,240 product, you know, can be only built on Ethereum in, in that 449 00:25:43,240 --> 00:25:47,200 way and why I'm passionate to build it and further drive it. 450 00:25:47,200 --> 00:25:50,680 But it, it doesn't make it easy that people understand it and 451 00:25:50,720 --> 00:25:53,680 and value it for, for it's proposition, especially like 452 00:25:53,800 --> 00:25:57,200 you, you and me, you know, we live in, I think you live in 453 00:25:57,200 --> 00:26:00,040 Germany and Switzerland. We have great financial systems, 454 00:26:00,040 --> 00:26:04,160 we have good governments, so we don't have this immediate need. 455 00:26:04,160 --> 00:26:07,040 But I think maybe from different countries in different region 456 00:26:07,040 --> 00:26:10,600 that looks a bit more different. I hear the spectrum. 457 00:26:10,600 --> 00:26:13,600 So kind of, I fully understand if you hold USCC you kind of 458 00:26:13,600 --> 00:26:18,240 trust that circle is sufficiently regulated and they 459 00:26:18,240 --> 00:26:21,360 kind of have the deposits they say they have. 460 00:26:21,520 --> 00:26:24,000 I also understand look it's maths. 461 00:26:24,000 --> 00:26:27,560 You can check it out on chain argument that you guys are 462 00:26:27,560 --> 00:26:31,680 driving. I'm not fully caught up yet on 463 00:26:31,680 --> 00:26:34,000 the value proposition that you were referring to. 464 00:26:34,080 --> 00:26:38,680 I understand it kind of appeals to a different set of people, 465 00:26:38,720 --> 00:26:41,400 but who's your customer? Who do you want your customer to 466 00:26:41,400 --> 00:26:42,600 be? Yeah, I think there, there are 467 00:26:42,600 --> 00:26:47,640 three customer segments I think for whom this can be 468 00:26:47,640 --> 00:26:50,160 interesting. So first of all, what are the 469 00:26:50,160 --> 00:26:52,400 properties you you talked about the USP. 470 00:26:52,440 --> 00:26:55,320 So I see three, sorry, three areas. 471 00:26:55,640 --> 00:26:58,200 One is no exposure to threat, fire risk. 472 00:26:58,760 --> 00:27:02,440 So bold, by the way, was rated by Blue Chip. 473 00:27:02,640 --> 00:27:06,240 It's a rating agency that rates stablecoin and it was the only 474 00:27:06,240 --> 00:27:11,040 D5 stable coin with a rating, a minus to be precise, and the 475 00:27:11,040 --> 00:27:14,320 only one in the A segment without counterparty risk 476 00:27:14,320 --> 00:27:16,560 because there is no counterparty out there. 477 00:27:17,400 --> 00:27:21,000 So I think for people that look at that and say, hey, safety 478 00:27:21,000 --> 00:27:23,440 level, I can a centralized version where I have 479 00:27:24,160 --> 00:27:27,200 counterparty risk or I can have this D5 version without 480 00:27:27,200 --> 00:27:29,000 counterparty risk. So threat 5 exposure is 481 00:27:29,000 --> 00:27:32,680 counterparty collateral, centralized exchanges, all the 482 00:27:32,680 --> 00:27:39,080 kinds of risks you are taking on to get the yield kind of taking 483 00:27:39,080 --> 00:27:42,560 out all these intermediaries and that I can tell you now for whom 484 00:27:42,800 --> 00:27:44,920 afterwards for whom this is interesting, but that's, that's 485 00:27:44,920 --> 00:27:47,960 the first really differentiate and no other stable coin 486 00:27:48,080 --> 00:27:51,240 provides that this kind of risk profile and it's good for 487 00:27:51,240 --> 00:27:54,120 diversification. The second thing is people that 488 00:27:54,120 --> 00:27:57,680 want to have more control. So what bold also gives you is 489 00:27:57,680 --> 00:28:02,240 more control over for example, the stronger property rights. 490 00:28:02,240 --> 00:28:05,320 There is no freeze. You can directly mint and redeem 491 00:28:05,320 --> 00:28:07,240 with a lot of stable coins. You can't do that. 492 00:28:07,240 --> 00:28:10,200 You need to be a corporation, you need to be onboarded. 493 00:28:10,440 --> 00:28:12,280 You're probably the last one in the queue. 494 00:28:12,280 --> 00:28:15,360 So that's another one you you get more control and also 495 00:28:15,360 --> 00:28:17,800 predictability. Nobody changes the terms. 496 00:28:17,800 --> 00:28:21,960 So in liquidity, for example, me as a CEO of liquidity IGI don't 497 00:28:21,960 --> 00:28:25,120 have more information and control over this product than 498 00:28:25,120 --> 00:28:27,120 you have. So I think that's also something 499 00:28:27,120 --> 00:28:29,320 unique level playing field. So we have not heard for 500 00:28:29,320 --> 00:28:32,360 exposure, more control, the full transparency and predictability 501 00:28:32,360 --> 00:28:35,280 because everything is on train. So I think these are three 502 00:28:35,280 --> 00:28:40,360 propositions not many stable coins have and you as a user, 503 00:28:40,360 --> 00:28:43,520 you just get a stable coin, you know that it's built it with the 504 00:28:43,520 --> 00:28:46,480 best interest in mind, you know the best user interest. 505 00:28:46,480 --> 00:28:49,920 So for whom is this proposition? If this is the differentiating 506 00:28:49,920 --> 00:28:53,120 factor? I think three people, 11 is of 507 00:28:53,120 --> 00:28:56,760 of course, the self sovereign individual that just say, Hey, I 508 00:28:56,760 --> 00:29:00,640 want to also hold dollars, maybe dollars of loss resort where 509 00:29:00,640 --> 00:29:04,360 there is not a government, where there's not a jurisdiction that 510 00:29:04,360 --> 00:29:07,080 can interfere and and have strong property lines. 511 00:29:07,080 --> 00:29:10,880 Like I can hold Bitcoin, I can hold a digital dollar that 512 00:29:10,880 --> 00:29:14,600 doesn't have ties into the traditional system and that 513 00:29:14,600 --> 00:29:18,440 values this control transparency and being able to exit into Eve. 514 00:29:18,440 --> 00:29:21,040 You know, which bold you can anytime exit to Eve, which you 515 00:29:21,040 --> 00:29:24,640 probably feel more familiar and you're again in your world 516 00:29:24,640 --> 00:29:28,360 without needing to hope through traditional institutions. 517 00:29:28,520 --> 00:29:32,840 The second one is I would call low risk defy yield seeker that 518 00:29:32,840 --> 00:29:37,400 says, Hey, I would like to have some, some decent yield 519 00:29:37,400 --> 00:29:40,760 borrowing fees, native defy yield, but I don't want to have 520 00:29:40,760 --> 00:29:43,560 the risk with all the other stable coins in the trust me, 521 00:29:43,560 --> 00:29:45,240 bro zone. You know, where, where people 522 00:29:45,240 --> 00:29:49,280 just are exposed to six different protocols, where you 523 00:29:49,280 --> 00:29:53,400 have 5 different stable coins, where it's looped, where Ann and 524 00:29:53,400 --> 00:29:56,600 team is running it. This, this transparency of the 525 00:29:56,600 --> 00:30:01,080 yield and I think it's good risk adjusted yield for people that 526 00:30:01,080 --> 00:30:06,440 are we're looking for a passive saving accounts or like defy 527 00:30:06,440 --> 00:30:08,640 Treasury qualities like you, you want U.S. 528 00:30:08,640 --> 00:30:11,160 Treasury yield. I think we are close to defy 529 00:30:11,160 --> 00:30:13,600 Treasury yield. So this will be the second one. 530 00:30:13,960 --> 00:30:17,240 And the third one, Treasury and asset managers that that want to 531 00:30:17,240 --> 00:30:21,640 have a risk diversification. So imagine if 999% of your 532 00:30:21,640 --> 00:30:25,880 stable coins in USDC and USDT and we saw the USDC kind of 533 00:30:25,880 --> 00:30:29,800 Silicon Valley Bank drama, you could say, hey, I don't shift 534 00:30:29,800 --> 00:30:33,200 everything. But having 5 or 10% in a totally 535 00:30:33,200 --> 00:30:36,600 different risk profile with an uncorrelated yield, not treasury 536 00:30:36,600 --> 00:30:39,800 yield could be an interesting play like a diversify your 537 00:30:39,800 --> 00:30:42,840 portfolio. I think these are the the the 538 00:30:42,840 --> 00:30:45,480 USPS and target segments that would be most open. 539 00:30:45,480 --> 00:30:47,800 And obviously these are crypto native ones. 540 00:30:48,600 --> 00:30:51,760 You know, I think for for every new crypto users, probably USDC 541 00:30:51,840 --> 00:30:53,800 and USDT is totally fine, I think. 542 00:30:53,800 --> 00:30:56,720 But then the next level, if you start touching all these 543 00:30:56,720 --> 00:30:59,320 different stable coins, I think you should really think of how 544 00:30:59,320 --> 00:31:01,560 much risk you're holding for, for that yield. 545 00:31:01,560 --> 00:31:04,720 And there I think we're just a very simple, a very clear and 546 00:31:04,720 --> 00:31:07,560 very honest play. And I think people that want to 547 00:31:07,560 --> 00:31:10,520 have a bit this Peace of Mind, yeah, I think for those we're a 548 00:31:10,520 --> 00:31:14,840 good alternative. Over the last couple of years 549 00:31:14,840 --> 00:31:19,600 and months in particular, holding U.S. dollars had its own 550 00:31:19,600 --> 00:31:22,360 risks, right. So kind of if you look at how 551 00:31:22,360 --> 00:31:27,440 much value the US dollar has lost deliberately by most 552 00:31:27,440 --> 00:31:31,440 accounts it was not a good time to kind of be Ausd holder. 553 00:31:32,560 --> 00:31:37,000 Have you thought about, but I mean the, the, the fact remains 554 00:31:37,000 --> 00:31:41,400 that 99% of of the global stable coin market is U.S. dollars, 555 00:31:41,440 --> 00:31:43,040 right? Is that on your side? 556 00:31:43,040 --> 00:31:46,040 Is that a design choice or is it a historical accident? 557 00:31:46,040 --> 00:31:51,440 And would are you thinking about supporting non USD denominated 558 00:31:51,440 --> 00:31:54,000 loans in principle? Yeah, I think the decision was 559 00:31:54,000 --> 00:31:57,000 it's just a dominant currency. You know, it's the world 560 00:31:57,000 --> 00:31:59,360 currency. Defy is denominated in that. 561 00:31:59,360 --> 00:32:03,640 So it makes a lot of sense, but but that's the current time. 562 00:32:03,640 --> 00:32:07,360 That's why I think models like liquidity or or others really 563 00:32:07,360 --> 00:32:10,960 Krypton native stable coin are important that we have these 564 00:32:11,320 --> 00:32:15,160 Krypton native products that are on the crypto rails that are not 565 00:32:15,160 --> 00:32:19,040 dependent on traditional rails that in the next step today we 566 00:32:19,040 --> 00:32:22,760 are USD denominated, maybe we can decouple from the dollar. 567 00:32:22,760 --> 00:32:24,600 That will be the next natural step. 568 00:32:24,600 --> 00:32:28,040 And for that, we need kind of these kinds of designs and these 569 00:32:28,040 --> 00:32:30,880 kinds of stable coins that are backed by crypto and can 570 00:32:30,880 --> 00:32:34,360 decouple also from the all that. I think that should, should be 571 00:32:34,360 --> 00:32:36,560 the future. We don't have plants, you know, 572 00:32:36,560 --> 00:32:39,080 rye did it and maybe now would be a better time. 573 00:32:39,080 --> 00:32:42,240 Maybe they were too early. Now we've, as you said, like the 574 00:32:42,240 --> 00:32:47,640 dollar and, and, and all these global financial market shake 575 00:32:47,640 --> 00:32:49,040 UPS. Now will be the time. 576 00:32:49,040 --> 00:32:52,040 We don't have the plan, but I think it will happen and it 577 00:32:52,040 --> 00:32:53,840 makes sense. And that that's again, you know, 578 00:32:53,840 --> 00:32:57,360 why I think it's important that we have these stable coins like 579 00:32:57,360 --> 00:33:00,560 with electric engines rather than the combustion engines. 580 00:33:01,080 --> 00:33:03,120 And because that's why we set out, you know, that's why we 581 00:33:03,120 --> 00:33:07,640 started to build on on Etherium to have our own financial rails 582 00:33:07,640 --> 00:33:11,600 and our own financial products and take finance also in our own 583 00:33:11,600 --> 00:33:15,000 hands, not doing everything, but just kind of being able to opt 584 00:33:15,000 --> 00:33:18,200 out if you think just things are going too crazy and in a 585 00:33:18,200 --> 00:33:23,000 direction we don't like. What are the Fiat options you 586 00:33:23,000 --> 00:33:27,040 would be considering if he went in that direction? 587 00:33:27,040 --> 00:33:32,200 Is it anyone particular currency or is it a basket of currencies 588 00:33:33,040 --> 00:33:36,040 like yeah, like special drawing, right? 589 00:33:36,040 --> 00:33:39,680 So what, what, what? Where do you think the ecosystem 590 00:33:39,680 --> 00:33:41,800 is going to go post dollar? Yeah. 591 00:33:41,800 --> 00:33:44,760 I think post dollar and more from a global perspective, I 592 00:33:44,760 --> 00:33:46,520 think we're entering a time of multi. 593 00:33:46,520 --> 00:33:50,960 So dollar losing the dominance, maybe it's a multi currency 594 00:33:50,960 --> 00:33:53,080 thing, something new. So I think it will be very 595 00:33:53,080 --> 00:33:56,960 interesting if we can have that. So crypto has a bit it's own 596 00:33:56,960 --> 00:33:58,680 thing I think that has potential. 597 00:33:58,680 --> 00:34:02,080 Other than that very difficult to say which currency of course. 598 00:34:02,080 --> 00:34:06,240 And and Swiss, I like the the Swiss franc, which is a great 599 00:34:06,240 --> 00:34:09,880 value and there is a project called Frankencoin that does 600 00:34:09,880 --> 00:34:11,560 that. So I think it's interesting 601 00:34:11,560 --> 00:34:14,000 because a lot of people should be interested in it. 602 00:34:14,080 --> 00:34:16,639 It's a bit harder model, especially if you want to do it 603 00:34:16,639 --> 00:34:19,239 centralised, because if you get no interest or have negative 604 00:34:19,239 --> 00:34:22,639 interest, the business model doesn't look so interesting. 605 00:34:23,080 --> 00:34:24,600 And Fronk and Coin is, is doing a great job. 606 00:34:24,600 --> 00:34:27,520 So, so I really love them, but it's also really hard. 607 00:34:27,520 --> 00:34:29,639 It's a much smaller market and bootstrap that. 608 00:34:29,920 --> 00:34:33,880 So I'm I'm happy with what what we have and I think I rather 609 00:34:33,880 --> 00:34:36,360 take what we have. I think we have a good product 610 00:34:36,440 --> 00:34:41,480 and look that that we can get more adoption, some critical 611 00:34:41,480 --> 00:34:44,639 mass so the project can sustain itself. 612 00:34:45,199 --> 00:34:48,920 As I said, you know, and I think there we also need the support 613 00:34:48,960 --> 00:34:52,159 of users in the community, not only liquidity, but also other 614 00:34:52,159 --> 00:34:54,560 stable coins. These things are not used. 615 00:34:54,639 --> 00:34:57,600 We won't have the options when when we need them and then we 616 00:34:57,600 --> 00:35:02,480 only rely on the other options. There's also a liquidity token, 617 00:35:02,480 --> 00:35:03,000 right? Kind of. 618 00:35:03,080 --> 00:35:07,920 Can you shed some light on what the token actually does, and 619 00:35:07,920 --> 00:35:11,680 just as importantly, what powers it doesn't have? 620 00:35:12,000 --> 00:35:15,800 Yes. So with liquidity V1, it had 621 00:35:15,880 --> 00:35:19,520 actually no power unless you could stake it and earned the 622 00:35:19,600 --> 00:35:21,400 the revenues out of the protocol. 623 00:35:21,400 --> 00:35:24,840 So the fees that were generated and with liquidity V2, because 624 00:35:24,840 --> 00:35:28,520 they said it's a continuation, we wanted to give also value 625 00:35:28,520 --> 00:35:32,520 back to the LQDY holders as we recognized, you know in the 626 00:35:32,520 --> 00:35:35,160 system, the borrowing fees, we shouldn't give it to token 627 00:35:35,160 --> 00:35:39,200 holders like most stable coins do it and then it goes into the 628 00:35:39,200 --> 00:35:41,960 Dow and then they realize if they don't give it to the stable 629 00:35:41,960 --> 00:35:44,000 coin holders, the stable coin holders D packs and they have 630 00:35:44,000 --> 00:35:46,960 this complicated system probably wanted people that figuring out 631 00:35:46,960 --> 00:35:50,080 where the interest should go. So we followed that through. 632 00:35:50,120 --> 00:35:54,160 So we thought a better mechanism there how we can get value back 633 00:35:54,160 --> 00:35:58,760 to LK device out of these 100 percent 75 goes directly to the 634 00:35:58,760 --> 00:36:01,880 stable coin holders which deposit their stable coin into 635 00:36:01,880 --> 00:36:05,640 the protocol and get this definitive yield, which was 636 00:36:05,720 --> 00:36:07,840 three 4%. And because we had EAF 637 00:36:07,840 --> 00:36:11,680 liquidations that spiked, you know since inception, it had 6 638 00:36:11,680 --> 00:36:15,320 to 8% yield on a definitive stable coin. 639 00:36:15,320 --> 00:36:19,200 So I think I think that's pretty, pretty cool. 640 00:36:19,200 --> 00:36:25,160 But going back to to LQDY and 25% goes to the liquidity venue. 641 00:36:25,160 --> 00:36:28,520 So also something very innovative, liquidity recognized 642 00:36:28,520 --> 00:36:33,200 that you need liquidity. So borrowers are paying for 643 00:36:33,200 --> 00:36:36,320 stable coin holders to give them credit and they should also pay 644 00:36:36,320 --> 00:36:39,280 for liquidity because every protocol needs to pay for 645 00:36:39,280 --> 00:36:40,920 liquidity. You just don't see how it 646 00:36:40,920 --> 00:36:42,560 happens again. And liquidity made that 647 00:36:42,560 --> 00:36:48,120 transparent. 25 goes to LP pools where LQDY holders can stake the 648 00:36:48,120 --> 00:36:51,240 token and they can direct where it goes. 649 00:36:51,920 --> 00:36:55,520 And with that, of course, the idea is when it grows you, you 650 00:36:55,520 --> 00:37:00,160 control 25% of the revenues and to which LP pools with which 651 00:37:00,160 --> 00:37:03,760 pairs you create a a bribing market on top. 652 00:37:03,760 --> 00:37:06,040 Right now it's probably too small, but we've seen the first 653 00:37:06,040 --> 00:37:10,120 steps and that can become then also a revenue source for LKDI 654 00:37:10,120 --> 00:37:14,320 holders. But you guys as liquidity AG, 655 00:37:15,000 --> 00:37:17,760 you don't partake in that revenue. 656 00:37:17,760 --> 00:37:20,360 So kind of how, how, how do you guys make a living? 657 00:37:20,720 --> 00:37:25,040 We have some treasury tokens. So in V1 we also staked and like 658 00:37:25,360 --> 00:37:29,840 any other person could participate in that, we're also 659 00:37:29,920 --> 00:37:34,240 incentivized indirectly of the value of LQDY that others get of 660 00:37:34,240 --> 00:37:36,920 it. I think that's also the main 661 00:37:37,040 --> 00:37:41,400 thing and liquidity was always set out to be rather 662 00:37:41,400 --> 00:37:44,880 self-sustaining. So not kind of to grow and make 663 00:37:44,880 --> 00:37:47,880 it bitter, but rather have a really a small team and maybe 664 00:37:47,880 --> 00:37:51,920 even a shrinking team. That and the protocol should 665 00:37:51,920 --> 00:37:56,280 sustain itself. So you know out of the liquid 666 00:37:56,280 --> 00:38:01,560 LKTY revenues, some of it we use to make their own way longer, 667 00:38:01,800 --> 00:38:05,160 but these were actually the funds to bootstrap the the 668 00:38:05,160 --> 00:38:08,800 protocol and the idea is not to grow it and make a bigger team, 669 00:38:08,800 --> 00:38:10,680 but rather make it so sustaining. 670 00:38:10,680 --> 00:38:15,320 So we are not set up to have this continuous big revenue 671 00:38:15,320 --> 00:38:18,200 stream going forward. Are you worried that liquidity 672 00:38:18,720 --> 00:38:23,680 might end up under resourced compared to systems willing to 673 00:38:23,680 --> 00:38:28,120 extract rent? No, because it don't. 674 00:38:28,120 --> 00:38:31,280 It doesn't need, you know what, what would it need the resources 675 00:38:31,280 --> 00:38:33,080 for it. Now it's only growth. 676 00:38:33,080 --> 00:38:37,560 So yes, I think that's why why we invest into growth to get it 677 00:38:37,560 --> 00:38:39,840 to the critical size. But again, you know, even with 678 00:38:39,840 --> 00:38:42,880 the liquidity, we build it in a way that LK device takers and 679 00:38:42,880 --> 00:38:47,080 the protocol can take care of it and bring it to a size where 680 00:38:47,080 --> 00:38:50,000 it's sustainable. So this is really the goal. 681 00:38:50,000 --> 00:38:53,360 I think all the teams, of course, they can extract more 682 00:38:53,360 --> 00:38:56,720 value out of it, make it just because of the size. 683 00:38:57,000 --> 00:39:00,640 But I'm not sure if you then can achieve that much more. 684 00:39:00,840 --> 00:39:04,440 You know, kind of there is only some limitations or you can buy 685 00:39:04,440 --> 00:39:06,520 your success. You know, that's what most 686 00:39:06,520 --> 00:39:09,640 projects maybe use it for. You buy TBL, you do all these 687 00:39:09,640 --> 00:39:11,960 deals and then it looks great. But the moment where where it 688 00:39:11,960 --> 00:39:15,160 goes away, everything is away. So we tried it rather smaller 689 00:39:15,160 --> 00:39:18,040 steps, but organic that the protocol needs to sustain, 690 00:39:18,040 --> 00:39:21,920 sustain itself. And yeah, that's the main goal 691 00:39:21,920 --> 00:39:24,560 right now. Is that a point where you think 692 00:39:24,560 --> 00:39:29,680 kind of this freeness of governance design becomes 693 00:39:30,120 --> 00:39:34,480 dogmatic rather than principled? Why do you think so? 694 00:39:34,600 --> 00:39:39,080 I think there's a reason why a lot of protocols choose to be 695 00:39:39,080 --> 00:39:41,040 upgradeable, right? Kind of like you want an 696 00:39:41,040 --> 00:39:46,360 emergency off switch, you want some discretion, kind of like 697 00:39:46,360 --> 00:39:51,000 you don't. I know that in terms of the 698 00:39:51,000 --> 00:39:58,360 smart contract set, liquidity is a lot less complex than say RV 699 00:39:58,360 --> 00:40:00,800 three or something. I mean, there's kind of just 700 00:40:00,840 --> 00:40:06,120 pure lines of code. So it's less likely that 701 00:40:06,120 --> 00:40:08,720 something is wrong. But even if you take for 702 00:40:08,720 --> 00:40:12,320 instance, the recent balance they exploit, right, kind of 703 00:40:12,320 --> 00:40:17,560 like it was in code that was, that had been better tested for 704 00:40:17,560 --> 00:40:21,200 four years, kind of there were hundreds of millions of dollars. 705 00:40:21,680 --> 00:40:24,840 In it in the end it was kind of a maths buck, right? 706 00:40:25,680 --> 00:40:29,560 And someone found it after years and years and kind of like it 707 00:40:29,560 --> 00:40:35,280 was exploited. So I think the idea that you can 708 00:40:35,560 --> 00:40:42,080 write code so perfectly that you don't need a fail safe switch. 709 00:40:42,080 --> 00:40:44,560 I totally understand your qualms with governance. 710 00:40:44,800 --> 00:40:48,120 Governance is a complete pain in the neck Yeah. 711 00:40:48,120 --> 00:40:52,720 I mean, so basically make a make a governance is dysfunctional. 712 00:40:52,720 --> 00:40:54,200 I mean, everyone knows this, right? 713 00:40:54,200 --> 00:40:57,440 And kind of like others, less governance and more politics. 714 00:40:57,440 --> 00:41:01,640 I fully understand why you wouldn't want to subject 715 00:41:01,640 --> 00:41:06,720 yourself to that. But going the totally pure way 716 00:41:06,720 --> 00:41:09,800 in the other direction, it does have its risks, no? 717 00:41:10,440 --> 00:41:12,640 Yeah. And and I think, you know, there 718 00:41:12,640 --> 00:41:14,280 are different ways how you can do it. 719 00:41:14,280 --> 00:41:19,600 I think the ethos should go into the right direction. 720 00:41:19,600 --> 00:41:22,760 I mean, why are we building on blockchain exactly that now 3 721 00:41:22,760 --> 00:41:27,440 token holders can decide and kind of upgrade the whole system 722 00:41:27,440 --> 00:41:29,840 in within 10 minutes. I mean, that's why we build on 723 00:41:29,840 --> 00:41:32,120 blockchain. Otherwise we, we can also build 724 00:41:32,120 --> 00:41:34,320 that in that too. And of course, we are a bit 725 00:41:34,320 --> 00:41:36,960 extreme, but I'm not saying that everything is bad, you know, 726 00:41:37,040 --> 00:41:41,600 pause switch with good governance and can, can make a 727 00:41:41,600 --> 00:41:45,040 lot of sense and you can introduce that or these time 728 00:41:45,040 --> 00:41:47,840 locks that you have on voting can make also a lot of sense. 729 00:41:47,840 --> 00:41:52,160 And there are areas where, where you can't build it in immutable 730 00:41:52,160 --> 00:41:54,440 way. I mean, that's why we also built 731 00:41:54,440 --> 00:41:59,280 the liquidity provisioning where where the liquidity goes that we 732 00:41:59,280 --> 00:42:03,760 built it in a more dynamic way where L2 device takers can 733 00:42:04,080 --> 00:42:07,720 decide where it goes. So we recognize we can't make 734 00:42:07,720 --> 00:42:10,000 that immutable. But I still think there are a 735 00:42:10,000 --> 00:42:14,240 lot of good ways how you can design it to protect users and 736 00:42:14,240 --> 00:42:16,920 not take advantage of it. I really like also the curve 737 00:42:16,920 --> 00:42:19,320 model. Let's drive very nice balance of 738 00:42:19,640 --> 00:42:23,240 we can change some parameter, but we can't take away forms, we 739 00:42:23,240 --> 00:42:26,720 can't do much. We have a kill switch and 740 00:42:26,720 --> 00:42:30,520 otherwise we can upgrade. Also this ethos saying if we 741 00:42:30,520 --> 00:42:33,720 find something we can create a new version and people can 742 00:42:33,720 --> 00:42:37,000 decide if they want to move and we don't force them. 743 00:42:37,600 --> 00:42:39,960 And I think that's the the things I like about 744 00:42:39,960 --> 00:42:41,720 decentralization. And there is a lot of widdle 745 00:42:41,720 --> 00:42:45,200 room and it doesn't need to be need to be pure, but I think we 746 00:42:45,200 --> 00:42:48,080 want to give the users the control and safety that 747 00:42:48,080 --> 00:42:50,600 blockchains provide in the best possible way. 748 00:42:51,760 --> 00:42:53,240 OK. I think, I think that's a very 749 00:42:53,240 --> 00:42:55,560 fair take. If you now kind of zoom out, the 750 00:42:55,560 --> 00:42:58,960 global sables market has absolutely exploded over the 751 00:42:58,960 --> 00:43:02,720 last couple of years. What are the thoughts that you 752 00:43:02,720 --> 00:43:05,560 will have when you see that? What are the challenges that you 753 00:43:05,560 --> 00:43:07,400 see? What are the topics you think 754 00:43:07,400 --> 00:43:09,920 about? Wow. 755 00:43:11,400 --> 00:43:14,000 Very open question and it's very open. 756 00:43:14,480 --> 00:43:18,320 So I mean, but what I see is in the past, we had just this 757 00:43:18,320 --> 00:43:22,480 continuum of stable coins and everybody could do things if you 758 00:43:22,480 --> 00:43:26,400 had Terra Luna. Well, now we have a maker model 759 00:43:26,400 --> 00:43:29,840 with which was fully crypto, now has real world assets. 760 00:43:29,840 --> 00:43:32,200 We have people that tokenize, carry trades. 761 00:43:32,360 --> 00:43:36,200 It's a bit the Wild West. And I think the biggest thing I 762 00:43:36,200 --> 00:43:39,000 see is, is that clearing up. And as I said of these two 763 00:43:39,000 --> 00:43:44,320 models, you have these regulated ones in Miko Genius Clarity Act, 764 00:43:44,320 --> 00:43:47,600 which makes a lot of sense. You want these treasuries in the 765 00:43:47,600 --> 00:43:51,320 most safest way and we know how it's done in Treadfi on Che. 766 00:43:51,880 --> 00:43:55,680 So we will, I think we'll see these models gravitate to that. 767 00:43:55,680 --> 00:43:58,680 That will become a commodity. You know, we can't differentiate 768 00:43:58,680 --> 00:44:00,760 that much. And then you will have the fully 769 00:44:00,760 --> 00:44:04,080 decentralized one, which hopefully will survive because 770 00:44:04,400 --> 00:44:07,320 regulation will say, OK, that's something genuinely different 771 00:44:07,400 --> 00:44:10,120 and there is no intermediary and that's fine. 772 00:44:10,560 --> 00:44:14,880 And the all in between the trust me, Bro zone where you just 773 00:44:14,880 --> 00:44:18,800 could operate. I think there you the, the air 774 00:44:18,800 --> 00:44:22,120 will get very thin unless you get the right licenses because 775 00:44:22,120 --> 00:44:25,760 you can't tell me that you can do anything in between where 776 00:44:25,760 --> 00:44:29,960 you're not controlling users funds, stuff like that, which is 777 00:44:29,960 --> 00:44:33,520 probably clear that like in traditional finance, there needs 778 00:44:33,520 --> 00:44:37,720 to be another setup. So I see this clearance, I think 779 00:44:37,720 --> 00:44:39,760 of of the picture. I think it will be really 780 00:44:39,760 --> 00:44:43,600 interesting on the centralized ones, you have USDT and USDC, 781 00:44:43,640 --> 00:44:46,800 but what happens next? And there I really like the 782 00:44:46,800 --> 00:44:49,960 model. By the way, was a great podcast 783 00:44:49,960 --> 00:44:53,880 with the heck from from bridge, which makes a lot of sense. 784 00:44:53,880 --> 00:44:55,440 You know, there it's just a commodity. 785 00:44:55,440 --> 00:44:57,800 They provide the commodity that take a fee. 786 00:44:58,120 --> 00:45:00,960 No thrills. They can't Yeah that the product 787 00:45:00,960 --> 00:45:05,040 is simple, but the interesting part is what are people able to 788 00:45:05,040 --> 00:45:09,040 do with the yield that they get, which players can can monetize 789 00:45:09,040 --> 00:45:12,520 that and create the model. And for example, Bridge is 790 00:45:12,520 --> 00:45:17,240 issuing native markets stable coin on hyper liquid and there 791 00:45:17,240 --> 00:45:21,520 we already see people need to use this yield for distribution 792 00:45:21,520 --> 00:45:24,440 and liquidity like liquidity, you know, that's what we use it 793 00:45:24,440 --> 00:45:26,480 for. And, and we will see their 794 00:45:26,480 --> 00:45:30,800 models that might work and that will create new stable coin in 795 00:45:30,800 --> 00:45:35,520 combats that that will be able to, to survive in, in the space. 796 00:45:35,840 --> 00:45:39,400 So that that's about the things that I see moving, changing and 797 00:45:39,400 --> 00:45:42,120 that will be interesting. And, and on the decentralized 798 00:45:42,120 --> 00:45:46,200 one, our electric course, I hope we see more adoption there, more 799 00:45:46,200 --> 00:45:50,520 recognition and that this is another model and model that 800 00:45:50,520 --> 00:45:52,240 should survive. And hopefully. 801 00:45:53,040 --> 00:45:56,000 And I think also as an ecosystem, we, we need to fight 802 00:45:56,000 --> 00:45:59,280 for it that people not just say, hey, this is dangerous, like 803 00:45:59,280 --> 00:46:03,560 self driving course, you know, Oh my God, we should avoid them 804 00:46:03,720 --> 00:46:07,080 because we have built a self self driving credit system and 805 00:46:07,080 --> 00:46:10,200 people might be afraid of that. But I think just that still 806 00:46:10,200 --> 00:46:13,880 these things are possible because I think it should be a 807 00:46:13,880 --> 00:46:17,480 right that you and I can facilitate peer-to-peer finance. 808 00:46:17,480 --> 00:46:20,960 We shouldn't be forced that this has to be done in an 809 00:46:20,960 --> 00:46:25,240 intermediate way because it wasn't the normal way before 200 810 00:46:25,240 --> 00:46:30,360 years, before they were back. That was the way how how you did 811 00:46:30,360 --> 00:46:34,120 finance and it was totally OK to do that on a peer-to-peer level. 812 00:46:34,280 --> 00:46:38,760 I hear that and I, I kind of just just to be, just to be 813 00:46:38,880 --> 00:46:41,320 clear, I kind of I, I fully subscribe to that. 814 00:46:41,320 --> 00:46:44,240 So it does really appeal to me. So kind of I also really like 815 00:46:44,240 --> 00:46:47,320 single collateral dye and so on. I also like rye. 816 00:46:47,320 --> 00:46:52,400 So I know which camp I stand in. Zach also said something else 817 00:46:52,400 --> 00:46:55,640 interesting on the podcast, namely that he kind of sees 818 00:46:55,720 --> 00:47:00,240 banking and stable coins kind of converge rather than having kind 819 00:47:00,240 --> 00:47:03,840 of two parallel financial systems in perpetuity. 820 00:47:04,840 --> 00:47:09,040 Kind of. Do you think the user base of 821 00:47:09,760 --> 00:47:13,800 liquidity is going to evolve? Do you think at some point JP 822 00:47:13,800 --> 00:47:17,520 Morgan will have liquidity positions on their balance 823 00:47:17,520 --> 00:47:19,880 sheet? Hey, could be, I mean from a 824 00:47:19,880 --> 00:47:24,000 risk diversification point and also it's interesting because 825 00:47:24,000 --> 00:47:28,160 there is no counterparty. So there's maybe not the AML 826 00:47:28,160 --> 00:47:29,760 topic. So we had Bitcoin Swiss in 827 00:47:29,760 --> 00:47:34,320 Switzerland that facilitated direct loans with liquidity. 828 00:47:34,320 --> 00:47:36,960 So not on their balance sheet, but they just facilitated 829 00:47:36,960 --> 00:47:39,520 directly with liquidity. And that was possible in a 830 00:47:39,520 --> 00:47:42,120 regulatory way because there was no counterparty to it. 831 00:47:42,120 --> 00:47:45,760 It it was the the protocol that issued the stable coin. 832 00:47:46,040 --> 00:47:48,560 So these models can have some advantages. 833 00:47:48,560 --> 00:47:51,480 Also institutional players really like the predictability, 834 00:47:51,800 --> 00:47:54,880 you know, that maybe they're not reliant on a make of governance 835 00:47:54,880 --> 00:47:58,480 and what happens there. So I, I think they're not going 836 00:47:58,480 --> 00:48:02,120 to shift to it, but as I said, as a risk diversification, 837 00:48:02,120 --> 00:48:06,160 adding that to the portfolio, if they understand it, I think that 838 00:48:06,160 --> 00:48:09,360 could be interesting. And on the other side, I'm not 839 00:48:09,360 --> 00:48:14,200 sure what Zach said there, but what you see is now banking is 840 00:48:14,200 --> 00:48:17,440 under pressure. You know that the banking model 841 00:48:17,440 --> 00:48:22,240 with these organized treasuries, stable coins, they're eating 842 00:48:22,280 --> 00:48:25,200 really their market. So I'm really interested to see 843 00:48:25,400 --> 00:48:31,240 how this is, will evolve because banks will see people move their 844 00:48:31,240 --> 00:48:34,720 money to the stable coins. Because honestly, a PayPal 845 00:48:35,880 --> 00:48:39,840 Sabacod is a much better product than having your, your dollars 846 00:48:39,840 --> 00:48:43,200 in, in your bank because there you have the counterparty risk. 847 00:48:43,200 --> 00:48:47,160 And this bank and Germany might lend them the money to Banco. 848 00:48:47,160 --> 00:48:50,760 We had the kind of this huge scandal and you're not aware of 849 00:48:50,760 --> 00:48:52,760 it. And with Poxos, you, your, your 850 00:48:52,760 --> 00:48:55,800 money's parked and you, you get a yield, you know, so with 851 00:48:55,800 --> 00:48:59,200 banks, you, they, they give you the risk without giving you the 852 00:48:59,200 --> 00:49:02,000 yield. So, and, and we see these forces 853 00:49:02,000 --> 00:49:06,120 now playing out with genius, act with clarity, act honestly. 854 00:49:06,120 --> 00:49:09,360 It's not about the users what they are arguing about who 855 00:49:09,360 --> 00:49:12,600 should get the yield. So regulation isn't is is 856 00:49:12,600 --> 00:49:17,440 actually used to protect the banks or create the mold, which 857 00:49:17,440 --> 00:49:20,560 which I think is is a bit paradoxical and then just want 858 00:49:20,560 --> 00:49:23,720 to highlight it. I think half of it is regulation 859 00:49:23,720 --> 00:49:27,400 is used to protect the users, but half of it sometimes it's 860 00:49:27,400 --> 00:49:30,840 also to protect incumbents. And the same for for Miko. 861 00:49:31,600 --> 00:49:34,800 You know, Miko, I don't think they made stable coins better or 862 00:49:34,800 --> 00:49:38,880 less risky for users because they forced I think Oil C to 863 00:49:38,880 --> 00:49:43,880 hold more of their backing in bank deposits where you take on 864 00:49:43,880 --> 00:49:46,960 the counterparty risk of banks. So that was really questionable 865 00:49:46,960 --> 00:49:49,520 to me. That's an interesting take on 866 00:49:49,520 --> 00:49:56,360 the regulatory side. Can you give us more specifics 867 00:49:56,360 --> 00:50:03,760 of how you think the Genius and Charity and Mica Act, how they 868 00:50:03,760 --> 00:50:06,600 protect banks? Is it just that they disallow 869 00:50:06,600 --> 00:50:10,320 the passing on off of yield? What? 870 00:50:10,320 --> 00:50:13,000 What is it specifically? Yeah, exactly. 871 00:50:13,000 --> 00:50:15,240 I mean, that's something I learned with crypto, how a bank 872 00:50:15,240 --> 00:50:18,840 works, you know, your deposit, your your, your money, you don't 873 00:50:18,840 --> 00:50:22,920 get any yield and they can lend it out with some nice interest, 874 00:50:22,920 --> 00:50:24,400 with leverage. You know these are the. 875 00:50:24,800 --> 00:50:27,280 Many times over, right? I mean kind of like they can, 876 00:50:27,280 --> 00:50:30,360 they can lend out like. 8 times leverage, you know, we think 877 00:50:30,480 --> 00:50:34,640 these are these are decent crypto, the one that they need 878 00:50:34,640 --> 00:50:38,280 regulation. So that's a very risky business 879 00:50:38,280 --> 00:50:41,560 model these days, especially if people can just with a click 880 00:50:41,600 --> 00:50:44,480 move all their money out. You know, it's not designed for 881 00:50:44,480 --> 00:50:51,040 that kind of duration of risk is not managed like that. 882 00:50:51,960 --> 00:50:54,240 And so there I see really disadvantage. 883 00:50:54,240 --> 00:50:58,360 Now I have a product where I can deposit my dollars, which are 884 00:50:58,360 --> 00:51:01,120 held bankruptcy remote and I still get the yield. 885 00:51:01,520 --> 00:51:04,880 So I mean, I would be really dumb if I wouldn't use it. 886 00:51:05,120 --> 00:51:08,960 And now I mean these products or government market money funds, 887 00:51:08,960 --> 00:51:11,080 they are aware. I think with Fidelity, you can 888 00:51:11,080 --> 00:51:12,960 open such accounts. It's nothing new. 889 00:51:12,960 --> 00:51:16,320 I think crypto just adds new rails, makes it, for example, 890 00:51:16,320 --> 00:51:20,880 for me easier to get access without my bank and be able to 891 00:51:21,040 --> 00:51:24,000 use it in defy and repackage and rebuild it. 892 00:51:24,280 --> 00:51:28,600 So I think that's great, you know, but I think that's what I 893 00:51:28,600 --> 00:51:31,640 messaged you. I learned with crypto that not 894 00:51:31,640 --> 00:51:35,400 every dollar is created equally and how different all these 895 00:51:35,400 --> 00:51:37,840 dollars are, especially from a risk perspective. 896 00:51:37,920 --> 00:51:39,640 Going back to this blue trip rating. 897 00:51:39,800 --> 00:51:44,360 What I also learned is, for example, USDC is only B plus 898 00:51:44,360 --> 00:51:47,800 rated because with USDC you still have some counterparty 899 00:51:47,800 --> 00:51:50,320 risk of Circle. I wasn't aware of that and 900 00:51:50,320 --> 00:51:56,280 PayPal or even Ripple USD dollar is better because it's 901 00:51:56,440 --> 00:51:58,680 bankruptcy remote and it's a better setup. 902 00:51:58,720 --> 00:52:01,720 So these things really matter. And going back to to your 903 00:52:01,720 --> 00:52:05,480 question is, yeah, I think the breaking up this banking model, 904 00:52:05,480 --> 00:52:10,080 they just got this deposit and could lend out and, and taking 905 00:52:10,080 --> 00:52:13,600 the spread. I think that's a bit breaking 906 00:52:13,600 --> 00:52:15,680 up. And everybody says it's they're 907 00:52:15,680 --> 00:52:19,800 afraid saying OK, credit for for small businesses will be very 908 00:52:19,800 --> 00:52:22,640 difficult. But honestly most of these money 909 00:52:22,640 --> 00:52:25,720 went into hedge funds or, or, or a lot of other stuff. 910 00:52:25,960 --> 00:52:29,240 And now I think just these two markets getting yield on your 911 00:52:29,240 --> 00:52:35,160 deposits and getting paid to lend out your money will be 912 00:52:35,280 --> 00:52:38,240 priced differently. So I think that's the pressure 913 00:52:38,240 --> 00:52:43,560 on the model that I see that these stable coins now offer 914 00:52:43,560 --> 00:52:47,040 will offer to to more users and and banks are afraid of bank 915 00:52:47,040 --> 00:52:50,320 deposit flights exactly as you said it because now they're 916 00:52:50,320 --> 00:52:52,920 getting more yield on their dollars somewhere else. 917 00:52:53,280 --> 00:52:57,320 If I turn this argument around, kind of if I'm a small business 918 00:52:57,320 --> 00:53:01,680 owner and kind of I want to get a loan from the bank, what they 919 00:53:01,680 --> 00:53:06,960 do is kind of they, they look at, yeah, they look at me and my 920 00:53:06,960 --> 00:53:10,400 CV, they look at my business plan. 921 00:53:10,640 --> 00:53:14,560 And then kind of they do some sort of risk underwriting to 922 00:53:14,560 --> 00:53:18,640 kind of see whether they think I can make this work and whether 923 00:53:18,640 --> 00:53:22,560 they can kind of make their money back with interest kind of 924 00:53:22,560 --> 00:53:28,080 in, in liquidity. I actually need some sort of 925 00:53:28,440 --> 00:53:33,520 actually very specific capital, IE ES in order to actually get a 926 00:53:33,520 --> 00:53:37,120 loan, right? So kind of this entire under 927 00:53:37,120 --> 00:53:40,200 collateralized loan space, kind of I mean, we don't actually 928 00:53:40,200 --> 00:53:43,480 have to talk about the in between stages where kind of 929 00:53:43,480 --> 00:53:49,480 say, for instance, in Maker kind of you deposit RW as and so on. 930 00:53:50,320 --> 00:53:54,640 But kind of the really under collateralized end of the 931 00:53:54,640 --> 00:53:59,240 spectrum is where most loans actually take place, right? 932 00:53:59,520 --> 00:54:02,720 Everything more or less everything that's not a mortgage 933 00:54:03,920 --> 00:54:06,840 is severely under collateralized, right. 934 00:54:07,040 --> 00:54:13,720 So how do you see that kind of migrating into the trust as RAM 935 00:54:13,720 --> 00:54:16,600 or do you see that migrating into the trust as RAM? 936 00:54:16,600 --> 00:54:21,920 Because kind of I actually see that as the main skill set of 937 00:54:21,920 --> 00:54:25,280 banks that they have become very good at risk underwriting. 938 00:54:26,080 --> 00:54:28,320 Exactly. And it makes totally sense that 939 00:54:28,320 --> 00:54:30,800 they make it so I'm afraid, you know, that's what I said. 940 00:54:30,800 --> 00:54:35,360 If I hold a stable coin and now some crypto team is giving under 941 00:54:35,360 --> 00:54:38,640 collateralized loans to market makers, I think. 942 00:54:38,720 --> 00:54:41,320 And I take a lot of risk. And that's why I said, OK, maybe 943 00:54:41,320 --> 00:54:45,600 I'm, I'm just fine with 6% on, on bold by not taking on all 944 00:54:45,600 --> 00:54:48,520 these risks because that's an old business underwriting 945 00:54:48,520 --> 00:54:52,000 business and traditional banking is very good in, in, in that and 946 00:54:52,000 --> 00:54:56,480 should be done by these people. And the, the role that crypto 947 00:54:56,480 --> 00:55:00,440 can play is that you say now depositing stable coins or 948 00:55:00,440 --> 00:55:03,960 funding such companies that can underwrite the loans is now much 949 00:55:03,960 --> 00:55:08,080 easier, much more direct. So we already some years ago I 950 00:55:08,160 --> 00:55:11,600 talked to invoice financing companies that instead of 951 00:55:11,600 --> 00:55:15,800 getting a credit line from a bank, would take credit from 952 00:55:15,800 --> 00:55:18,560 crypto investors. And I think that makes a lot of 953 00:55:18,560 --> 00:55:23,280 sense as long as you you kind of have this regulated business and 954 00:55:23,280 --> 00:55:25,000 you're doing it in a diligent way. 955 00:55:25,000 --> 00:55:28,840 But then again, blockchain and crypto just become the the 956 00:55:28,840 --> 00:55:33,080 distribution channel or just the the digital channels or rails 957 00:55:33,080 --> 00:55:35,000 for traditional financial products. 958 00:55:35,680 --> 00:55:37,680 Cool. So Michael, tell me, what's 959 00:55:37,680 --> 00:55:40,960 what's next for liquidity? What should we watch out for? 960 00:55:42,000 --> 00:55:45,400 Yeah. So we are really focused on 961 00:55:45,600 --> 00:55:50,120 building out the the ecosystem and the utility for for bold. 962 00:55:50,920 --> 00:55:55,280 So being it, you know, kind of integrated in lending markets 963 00:55:55,880 --> 00:55:59,200 and then really beating the, the drum that people see this 964 00:55:59,200 --> 00:56:03,560 proposition, understand that they get a a stable coin that 965 00:56:03,560 --> 00:56:05,880 can have the same similar risk profile. 966 00:56:05,880 --> 00:56:09,720 Like, you know, even better than USDC and Dai in this blue chip 967 00:56:09,720 --> 00:56:14,200 report that that were B plus and, and, and ball is a minus 968 00:56:14,760 --> 00:56:17,200 and getting a good yield and start using it. 969 00:56:17,200 --> 00:56:20,800 So that's really our main focus. You know, the product is out 970 00:56:20,800 --> 00:56:22,680 there and now it it needs to be used. 971 00:56:22,680 --> 00:56:26,000 So we are really focusing in educating people, understanding 972 00:56:26,000 --> 00:56:30,120 the product proposition, the good yields we we achieved. 973 00:56:30,400 --> 00:56:33,920 So that's you know, as I told you, you have the borrowing 974 00:56:33,920 --> 00:56:39,600 fees, but if you deposit the stable coil, you also partake in 975 00:56:39,600 --> 00:56:41,880 liquidations and you can make 5% gains. 976 00:56:41,880 --> 00:56:44,480 So in these markets now where there were liquidations, people 977 00:56:44,480 --> 00:56:47,520 earned great returns and just making them aware of that, that 978 00:56:47,520 --> 00:56:50,560 kind of in this very risk adjusted way, these are great 979 00:56:50,640 --> 00:56:53,920 earning opportunities. That's really our main focus, 980 00:56:54,160 --> 00:56:57,920 driving driving growth, driving integrations and utility. 981 00:56:57,920 --> 00:57:02,000 And I think that's the blue pen blueprint of every stable coin 982 00:57:02,000 --> 00:57:03,520 holders. And and that's really also the 983 00:57:03,520 --> 00:57:06,920 challenging part. You know, deploying the stable 984 00:57:06,920 --> 00:57:09,880 coin is always the easy part. And we see that we have a lot of 985 00:57:09,880 --> 00:57:13,960 forks actually our model gets forked quite a lot and deploying 986 00:57:13,960 --> 00:57:17,600 it is the easy part. Building a user base, building 987 00:57:17,600 --> 00:57:20,280 utility is, is really the the tough part. 988 00:57:20,440 --> 00:57:23,840 So that's our full focus. So where do we send people to 989 00:57:23,960 --> 00:57:27,680 find out more? Yeah, go to liquidity.org. 990 00:57:28,720 --> 00:57:31,760 There you have the website. There you can inform yourself. 991 00:57:31,760 --> 00:57:34,360 There you find front ends, because even front ends are 992 00:57:34,360 --> 00:57:37,040 decentralized with us. So you have different front 993 00:57:37,040 --> 00:57:39,200 ends. There you have very great and 994 00:57:39,200 --> 00:57:42,880 deep detailed docs. And we have also a Twitter 995 00:57:42,880 --> 00:57:45,080 channel. That's the domain communication 996 00:57:45,080 --> 00:57:49,000 channel that's at Liquidity Protocol, where you can follow 997 00:57:49,000 --> 00:57:51,560 us, learn, learn about us. Yeah. 998 00:57:51,560 --> 00:57:55,600 And then help to push sovereign sovereign money and Ethereum 999 00:57:55,600 --> 00:57:58,040 dollars. Fantastic. 1000 00:57:58,280 --> 00:58:01,240 That's a fantastic way to go out today. 1001 00:58:01,520 --> 00:58:03,480 Thank you so much for joining us, Michael. 1002 00:58:04,400 --> 00:58:06,120 Thank you for everything for for having me.