📺 DeFi 2.0 Summit | Rari, Olympus, Tokemak, TracerDAO, Alchemix

hey bankless nation welcome to the first of its kind this is not a defy 2.0 panel this is a d5 2.0 summit david what's the difference man panel versus summit what's different about this one uh it's a simple math game ryan panels have three people summits have five so we are bringing on uh everyone from uh hold on i need to get this music out of my ears let's go to mute that apologies about that okay so yeah we have brought on five of the biggest minds out from the space of these next

generation of defy apps these d5 apps that have really caught a lot of the energy caught a lot of the excitement and notably are not part of the dpi which is uh why my dpi bottom call has not done so well because if these tokens were in the dpi it would be a different story so we've got d5 pulse index here which is supposed to track which tracks like the top 15 or 20 or so d5 projects uh but this new cohort is not part of those because they're brand new projects yeah it's a new cohort new cohort and uh

time uh is not linear time goes in cycles time goes in generations and this is kind of the gist that we're getting from this new cohort of defiance it's a new generation there's a certain kind of disposition there's a certain kind of construct and so we're going to unpack what all of those things are with all five of these uh different members from these different defense teams so many of these people have come onto the bankless show before actually i'm pretty sure every single person has been on bank list before uh we've got j uh j from from robbery capital we got pat from tracer we got scoopy trouples from

alcamix carson from tokamak and of course zeus from olympus dow so again perhaps the most stacked panel that bankless has ever come up with sorry not panel sir this is the summit summit not even that's pardon me pardon me absolutely and this is like i'm really excited to dive into this because i i want to hear what the panel is with the summiters what the summoners think of this entire term and how to define it because it has been in zika it's like defy 2.0 is this just a new cohort i mean scoopy triple

put out a thread and said there are some patterns that are emerging around like token incentives it's been a theme we've been uh talking about on bank list for i guess the past few weeks into into months i feel like this is kind of the the culmination of the topic where we're assembling all of the avengers to uh to talk about it together so that's what we're about to do david before we get started we have to let bankless listeners know about something cool that's going on and that is dharma has moved to polygon okay so dharma is one of my favorite smart contract wallets

these guys make it super easy to go from bank account to bankless right so uh you know the process of getting into crypto can be long and arduous right you connect your bank to go to coinbase or gemini and then you somehow get the funds to metamask and then there's gas fees involved and you're like you're in d5 seven eight steps later dharma makes it super easy particularly with uh polygon their new polygon integration so you can go from bank account straight to token straight to polygon in like less than 10 minutes like that's how

easy this experience is and also as a little cherry on top here dharma is offering bankless listeners of which you are one fifty dollars in eth when you try this out ethan that's my favorite yeah that's your favorite money david that's my favorite money yeah there are rewards for using d5 guys right if you have if you don't know now you know airdrops rewards like this come all the time uh so check this out click the link in the show notes that will get you the code that you'll need to use to get this bankless deal on dharma set that up on

your mobile wallet as well it's just a simple app you're good to go 10 minutes give it a try 10 minutes or less it's a wormhole from your bank account into defy all right ryan i think we're ready to go ahead and get right into the show and i've come up with a name for who these who these uh people are if you're if you're on a summit you are a mountaineer so we are going to get into these five mountaineers who are exploring the frontier of d5 2.0 in just a moment after we talk about some of these fantastic sponsors that make the show possible the era of proof-of-stake is upon us

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the center carson from tokamak we got scoopy on the right scooby from alchemics we got patrick in the top right corner clocking in from tracer dow and last but not least we got zeus from olympus dow here on the bottom of the screen guys thank you for all showing up for this fantastic defy 2.0 summit thanks you all for being here we are spanning the globe we have the globe surrounded uh and we also have defy surrounded as well so thank you guys for all showing up all right guys uh let's start with uh jay jay since we i named you first jay

what the hell is d5 2.0 in your own words yeah that's a good question i feel like we see so many different definitions floating around but i think to me what dfi 2.0 really represents is is a movement beyond the traditional right i feel like defy 1.0 was about replicating what we saw in traditional finance putting that into d5 and d5 2.0 is about shaping these these products even taking the 1.0 and thinking about them from a d5 perspective and what does that mean and

what are the innovations we see it's thinking about liquidity differently thinking about things like pcv and reserves in a totally different way it's about thinking about all of these like tokenomics themselves thinking about thinking about defy and all these products from first principles perspectives with define notions in mind thank you for that jay and turning into a patrick from tracer patrick what do you what do you think about d5 2.0 what does d5 2.0 mean to you

well it's it's certainly not 1.0 and uh not quite yet 3.0 so somewhere in between the two um i think one one signal of what d5 2.0 has sort of evolved into is uh the fact that five of us are here on the call who are each different contributors to different projects uh there's an incredible social layer that's forming between different dow communities um and treasury interactions particularly as well you've got sort of hundreds of millions of dollars uh within these dow

treasuries and and you're now seeing incredible tools um being produced by uh protocol developers that are within this call that um allow treasuries to to utilize these funds and and earn yields and inter-operate amongst one another um but as well as that i suppose your 1.0 you had some fewer primitives that were built with respect to lending with respect to exchange uh a few derivative primitives and um i think d5 2.0 you're seeing native applications that are built plugging into some of those uh core primitives that that allow

users to do um really particular things and and i think alcomix is an incredible example of something like that as well as as well as tokamak so um yeah i think that's probably a decent classification of what 2.0 could could mean to me is what you're saying that d5 2.0 is just generally a lot more collaborative than the applications that we've seen previously i think so yeah and i think there's also this element of permissionlessness as well um with respect to like market creation uh something that that defy is is going to usher in is this cambrian

explosion of new markets uh driven by like oracle infrastructure as well as just innovative new um algorithmic stable coins or or any type of function that you can encode within these smart contracts i think there's that element where developers can come in and leverage existing code bases to be creative and and create new financial tools that that produce value for the for the uh the economy and ecosystem that are large fantastic scoopy turning to you next what does defy 2.0 mean to you anything you want to add on to what patrick and jay had to say

i'm just gonna be yeah piggybacking onto them a little bit here so i think it to me it represents three things one is sort of like yeah building on the previous layer of applications and having like uh increased uh composability and capital efficiency as a result of it um you know like alchemics how our deposits aren't doing anything or they're they're not just you know sitting there they're going in the urine and making yield um things like that uh you know abracadabra does that as well and i think you're seeing more and more

like treasuries do this with their their uh their assets as well is that they're they're not they're not leaving them idle um so another thing i think is the liquidity dynamics for protocols instead of relying uh solely on yield farming there are now like uh you know alternative ways to source liquidity for your protocol uh whether that's through like olympus pro and you know uh like an ownership model of liquidity or something more like a tokamak where it's a much more like efficient like

market-driven like rental of liquidity um i think those are some some pretty big innovations uh as far as the d5 2.0 stack and then the other thing is like sort of like dow treasuries um becoming like firms in and of themselves um where they're not just like you know just sitting there they're they're doing things like um you see a lot of them are now tapping into uh the power of like rare refuse um and they're they're starting their own markets for their their coins and they're they're kind of

doing some really cool and innovative things um as a result of that um and it's not just limited to that but you know there's lots of different things like if you look at fracs like they have these algorithmic uh market operators um and they mint and and burn the supply of fracks and put it into various markets and then with that like uh extra supply fracks and the liquidity tokens they go out and then they're farming with those and making more money for the protocol and i think it's like just a really cool way to see

you know like dows evolve and becoming like active market participants and investors i think that's pretty cool zeus with everything that's been said so far anything that these people have missed anything you want to add on to the conversation of what d5 2.0 is yeah i mean obviously everyone's really like you know covered all the good stuff but uh no i think that like you know the 1.0 is these like crucial infrastructural uh primitives that got built and then you know this new wave is kind of leveraging those um kind of with this focus on like

strong communities building strong protocols in my opinion so it's a little bit less focused entirely on the user side of things and how do we get like you know people to come in here and use this and you know lp for it and whatever and more on you know how do we build a strong protocol that has longevity and is going to like you know persist along with us um one other thing that i think it kind of symbolizes the shift towards is you know along with that this shift from like b to c models to b to b

models where you're i think that we're going to see a lot more protocol to protocol uh activity whereas previously it was very constrained i think you know all the most part for protocol 2 end user fantastic zeus and carson last but not least the uh the hardest hardest roll of all particular coming in in last after everything's already been said but carson what do you think about defy 2.0 anything that these uh fellow members of the uh the summit has missed yeah so i think everyone got it totally right i would agree with everything that said so far not surprising giving given

uh who the cohort is within this summit um but maybe just a couple of things to layer on so i think of dfi 2.0 and not necessarily something that is defined or not necessarily as a thing but more moment in time and i think then within that zeitgeist there's there's certain sort of themes that you can come up with and i would agree with everything that that's been said so far a few things later on would be i consider defy 2.0 at the moment sort of being the protocols that extend value or increase utility of other dows so there's a sort of shift in mindset from how do we maximize the value internally just for my dao

into how do we unlock the most utility and value for other dows and then indirectly or as a corollary from that increase the value of our own i think a lot of these things take deep by 1.0 uh primitives and build on top of them and i think there's this strong kind of focus on uh getting to sustainability so really focusing on uh the dao as this and living breathing entity and how you can get to sort of a self-sustaining dao moment uh some of us call it singularity but again a lot of this goes into a shift from hey it's not just thinking about tvl uh or or um you know basically

rented liquidity into a platform but rather what's what are your protocol controlled assets or protocol controlled value look like maybe two more things to say on this i think defy 1.0 was largely for users i think dfi 2.0 is largely for dows not at the expense of the users but dows are a significant user of deep defy 2.0 and i also think just the common theme here the community was brought up that's very strong it's really all about collaboration and building bridges um between protocols uh between dows and i think we're going to see that um only uh

get more and more so as we go forward wow carson rising to the challenge of taking the hardest spot with a fantastic answer i really like everything you guys have said and the gist i've gotten so far is that uh it's all about collaboration and where defy 1.0 didn't have a layer of d5 to build upon d5 2.0 does and so d5 1.0 had to go after the users that was the only thing but dfi 2.0 doesn't have to go after users it now has d5 1.0 to actually go after and in this era of of collaboration it's also worth noting

that a lot of the projects that each of you represent are integrated with other people's projects uh so i think there's just the the collaboration is evidenced by uh just the collaboration that we see on here on this summit um so now i'm going to throw to ryan to take the next question yeah so i guess maybe and we'll start with carson this time because i think that's only fair um but but but actually carson this this might be a trickier question because i want to take the the other side of this nasa's question right from from somebody who's a bit skeptical about defy 2.0 i really loved how you

defined it as like hey maybe this is a moment of time maybe this is just about a a generation of d5 builders and kind of what they're doing at this point in time but anytime we have a new generation of builders that are doing things differently sometimes the previous generations raised some eyebrows right and they start to question because i think part of what d5 2.0 is doing is it's kind of questioning or at least it is um building with different assumptions than some of the blue chip d5 1.0

assumptions have built on um one of the charges or one of the criticisms to d52.0 is like guys you guys are playing with fire some risk look doing perpetuals uh i mean what patrick and trace are doing in d5 that's kind of risky business and we're talking uh you're talking scooby about like um collaboration and capital efficiency and using all of the other uh primitives but doesn't that build compounding risk right smart contract risk stacked on top

of smart contract risk and uh jj talking about like permissionlessness that sounds fantastic but like ave and maker there's a reason governance exists and uh that reason is kind of a check and balance to make sure that um assets aren't getting deposited into these contracts that are that are you know uh too risky right or the entire system can collapse so uh you know i haven't even addressed you so the other panelists but let's talk about it but i could yes

uh let's talk about some of these maybe these criticisms or or even call them sort of trade-offs or some of these things warranted uh what's your take carson is like you know some people might go even as far as to say hey you know d5 2.0 is not really a thing it's just this new set of set of protocols that are taking you know new risks and i i it's just an extension of defy what are your take about what what's your take on all of those things we'll start with carson yeah i can jump in so and i agree this

is a good question and a tough question um so i think i think it's sort of a natural evolution like i don't think there's anything um if you're playing if you've been playing through um through the d5 ecosystem over the last year or two i don't think there's too much that's being built here that's overly surprising um maybe the first time you hear it but then i think kind of in retrospect probably um you know all five of the great projects that are represented on on this summit um like it just seems sort of obvious like okay yeah that's smart now that doesn't mean that it doesn't introduce risk to your point i think i think the the

thing you have to weigh here is sort of what you unlock and i'll maybe just talk uh for one second on tokamak only because that's the one of course i'm most familiar at but i sort of think a d5 2.0 as a lot of these things not not in every case this is again it's sort of undefinable but in most of these cases it's something that couldn't exist without the previous set of d5 protocols so in the case of tokamak if we we are not an exchange we don't want to be in exchange um there's always the underlying amm so at launch it's sushi swap unit swap 0x balancer we'll be adding more over time so you can really think of like a natural evolution of

this was great we have a decentralized coinbase right which was uniswap sushi swap how do we have a decentralized jump trading how do we have the decentralized uh liquidity provider and market uh market maker sort of the the thing that um controls the flow and is sort of the puppeteer of liquidity into those venues and so if you think about it like that certainly this introduces um sort of uh risk up at that higher level um but you unlock a ton by sort of evolving beyond just just being reliant on on centralized um uh trading firms and

market makers and interestingly they can still plug into this in a way that actually can help their business as well which is too detailed for this discussion i'm sure but the point is there's gonna be risk at these higher levels you still have the inherent risk of the under of sort of the underlying ones and in some cases you have what i'll call emergent phenomena risk or like integration risk with some of these things but i actually think in general that's not where most of the the risk comes from it's really trying to understand the inputs outputs of each of these protocols whether it's at the d5 1.0 layer or 2.0 layer

and and just trying to mitigate those things and absolutely i think we probably need to get into a more advanced sort of system-based approach probably to um audit and risk assessment that isn't just limited to a single protocol but rather how it sort of uh interacts with other protocols so let's talk about that a bit more and maybe i'll direct this to scoopy since you kind of brought up the idea of defy 2.0 being all about uh composability i i remember back in the day like a couple years ago uh anytime that david and i tried to talk about

money legos in d5 when everything was so early right we inevitably you'd see a maximalist meme of some sort saying not money legos money jenga right and they they depict everything sort of you know falling down and tumbling in on itself but but talk about this risk because we have talked about smart contract uh you know the the compounding risk of smart contracts stacked up on top of smart contracts so scoopy what's your take on that are we adding a whole bunch of risk into d5 systemically

by building on top of all of these um these additional protocols well i think that whole moneylength lego versus money change like comparison is very fair and i think you know out there in d5 there are so many legos that are very solid and secure and there are some money jengas which might not be good things to build on top of um and as far as like alchemics goes like the reason we we we were with urine uh why we chose uranus because they have a very good reputation they have an amazing dev team and devops team and

they're there to support you and all sorts of stuff like that um and we we could have gone with a different yield aggregator but we chose urine because you know we wanted to make sure that you know the underlying stuff in alchemics didn't break um in alchemyxv2 we're going to be adding different strategies different yield providers and stuff like that but for every single strategy that we are going to be including it's going to have to go through a very rigorous audit um i know that if you incorporate you know yield bearing tokens from another protocol and you don't catch you know

some little tiny detail in their code then it could lead to some you know disastrous consequences so as a result we have to take a very very security first uh you know like approach when it comes to building uh with these lego blocks so we can ensure that we build it intelligently so we don't have this you know this tower fall over and collapse on us um but yeah i mean there's no getting around it like even with every single precaution and you know you know you know like putting in safeguards in your adapt to

to mitigate any kind of uh you know risk or disastrous effect there is still going to be an increase of risk the higher you go up the stack you know that that's just a matter of fact you know if you know since we're building on dying and building on urine and stuff like that so like if something happens to die like we're you know that's bad for us so something happens here and that's bad for us so you know it's it's it's about choosing the the best protocols to build with at that point to make sure that you're not you know going to you know make a a money jenga tower

jay our our summoners our mountaineers so far have uh kind of talked about the risk and definitely acknowledged the risks but i think what they're also saying is the rewards exceed the risks the rewards of this innovation what we might find on the other side once we unlock these things what's your take on that do you think the rewards exceed the risk um give us give us the pitch for these new methods yeah i i agree with everything that has been said so far i think it's it's the cost

of innovation right it's like d5 2.0 is moving at light speed compared to d5 1.0 for a variety of different reasons a part of it is risk tolerance right we're able to ship contracts much faster we're able to move much faster than a lot of these older projects and yes that means there is smart contractors guess that means that there is market risk that there's risk of all sorts of factors at the end of the day it's what's going to need to happen if we want to innovate in this industry right somebody's going to need to be

pushing the bounds be pushing into these risky areas and yes people will lose money and that's going to be extremely unfortunate we need to do our best to educate users on the risks of these protocols but at the end of the day it's going to be a small a small blip in history compared to the innovation that's about to happen zeus what would you add to uh to all of this that's been said so far about kind of the the risk reward of d5 2.0 yeah i mean i really just think it's in the nature of innovation that you know inherently you know

uh with innovation and you know the reward that comes with that you have risks attached to it i think a really important thing is just insulating as much of that risk as possible so it's not generally the best case scenario that you can have is that something fails but it doesn't affect anything else if that's the case then you as depositor user of that you know you're hit but you should have known the risk that you're taking on being involved in that and no one else kind of gets hurt i think that one of the actually like the really good things about d5 is the fact that things can be very insulated um so

not always and generally or definitely like you know die is one of them that you know is pretty entrenched kind of everywhere but for for a large part you know things stay pretty separate um i also think that it's just kind of a matter of time when it comes to like these becoming new uh you know building blocks is that you know we as an industry generally do take time to just wait and see okay is this thing going to fail um i don't want to build on that as my own project if i think that it's going to fail or there's

some high risk that it does because then i'm also hurt um and so you know this is the reason that we can look at a lot of these like 1.0 primitives and like you know they're they're safe or we have have a collective belief that they're safe um just because they've been around for a long time they haven't failed and that inspires confidence um i think that that's generally the best way to mitigate risk is just to take it one step at a time and not rush into things um you know let things kind of arise observe them make sure that they're safe and solid and then you can start to utilize them and you know build up the

stack patrick i want you to weigh on in on this too um obviously perpetuals are much more complicated um you know pr protocol in in project than than many that that we've we've built in kind of the d5 1.0 world um does that complexity weigh on you or why is now the time to kind of lean into these more complex financial instruments in d5 yeah look i think uh it's always been a fundamentally risk-taking

uh space since since its inception like the early early ethereum developers developing the first smart contracts um you saw what happened with the dao um and and everything in between now and then there's continually been risk that's existed within within d fire or ethereum and the blockchain industry more generally but alongside that you've seen incredible security auditing companies emerge alongside um the growth of tvl you've seen insurance protocols emerge to to provide um erc 20 credit default

swaps like risk harbor incredible incredible protocol shout out to them who are supporting tracydow at the moment and with that with those further steps and more energy and more attention within the space to me at least it doesn't feel like it's taking more risk than the first dow smart contract developers were taking um it's it's continually just building upon what we've got in terms of the foundation and of course there's going to be some some shoddier parts of the foundation that crumble as more pressures put on them but continually

over time and and this is why we're here this movement will become more fundamental and and the foundations will continue to build to provide financial financial transaction support into the future one of the favorite quotes that uh i believe amin solomoni one of my heroes in this space said about smart contracts risk is it's kind of like the steam engine uh it blows up a bunch of times and then at some point we figure it out and it just works uh and overall defy has been blowing up less and less and less over time and we've kind of been

figuring out this whole smart contract thing and maybe uh hopefully in five ten years from now we're just looking back on like oh yeah remember when we didn't know about how to do smart contracts that was that was a fun time when everything blew up along the way so i want to move into our next question here uh and framing this question under jeff bezos quote uh your margin is my opportunity what about defy 1.0 has been left on the table that the project that you guys all represent has been able to grab what did defy 1.0 not do that gives you room for you to build your defy 2.0

app and we'll go in and reverse this time and start with patrick from tracer uh patrick how is tracer what did tracer grab that was on the table that d5 1.0 left yeah so we're we're probably an interesting hybrid between what you might consider a 1.0 primitive and and 2.0 um trace it out right now with our perpetual pool contracts um we're simply just leveraging chain link oracle infrastructure and and not interoperating with with any other smart contract at the base layer uh right now um so i think for us the the opportunity

and and the opportunity that we've seized is um in providing leveraged tokens for the d5 economy so we've got non-liquidatable leveraged tokens and perpetual pools enable you to not have to set up a margin account it's a it's very simple experience for people that understand the concept of leverage but but don't want to go through the complexity of trading a perpetual swap contract can can mint a token and then utilize it within uniswap utilize it within other um other d5 primitives to to trade these erc20s so

this is this is where we've we've ventured into with with tracer to start off and uh it's something we're continually excited about growing jay let's turn to you people often talk about rari as a super set of compound in ave where it doesn't actually formalize specific assets that lets you do all of them is that what uh what uh rari has really brought brought for taken from the table of d5 1.0 or what else is in addition to that what else is there to say yeah that's exactly it i think that the big thing is