📺 TribeDAO - The Biggest Protocol Merge Ever

we are in a very positive sum game and i'm not going to discount that but at the end of the day it is also a very competitive industry and i'm excited to see how each of the players evolve to try and win welcome bankless nation to the state of the nation this is the episode where we talk about what's happening we relate it to the big picture items and of course we drop some action items and insights about whatever is going on in the news cycle in crypto this week this comes out every single tuesday we usually live

stream this on the youtube and it also goes out on the bankless podcast every single wednesday morning and to this week we are talking about the first major protocol merger can protocols merge apparently they can in defy how does a dow to dow merge even work what's actually happening here between faye and rari where are the synergies what are the alignments behind this merger and is this the first of many merges to come all questions that we ask joey and jay of tribe and rari capital but first

before we get to that conversation some announcements uh you might have noticed that ryan is no not here at the moment ryan the ai robot is down due to a massive snowstorm that hit the state of virginia he is currently in his car at a gas station wi-fi trying to talk to me and i told him no ryan you cannot come on the the podcast without pristine internet quality so he is sadly not able to make it this week um and in addition to that we also had vitalik buterin on the podcast one more time that podcast came out on monday we talked

about the future of the ethereum roadmap what is left vitalik thinks that we are perhaps 50 percent of the way done once we get the merge with the ethereum roadmap but there's so much left in the ethereum roadmap to unpack lots of metaphors and cool analogies to kind of understand what's left in the ethereum roadmap but we also talked about what vitalik thinks about the rise of the alternative layer ones uh in the first half of 2021 ethereum really stole the show but in the second half the rise of the of uh the eath killers the alternative layer ones really kind of dominated the narrative what does

vitalik think about that he also wrote this article called endgame which illustrates what vitalik thinks is the logical conclusion of every single smart contract platform that exists every single blockchain they all are going to converge upon the same outcome so what does that mean for ethereum the one that has sacrificed scalability versus others that have sacrificed decentralization how do all of these things converge really interesting conversation uh we also had cooper turley on layer zero i interviewed cooper in person in puerto rico had a fantastic conversation there that is coming out on that came out on

the podcast this morning tuesday morning so definitely tune in to both of those podcasts the gmi index another index out of bankless dow and the index co-op is live uh wednesday wednesday is going live the gmi index is a index full of uh defy tokens that aren't in the dpi and so definitely worth checking out i'm really excited to get that launched out the door we'll have a link in the show notes to check out what is in the gmi index and lastly our friends at on juno want to tell you about this sponsored

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away free nfts on twitter so you can also follow on juno at on juno hq on twitter to get some of the hottest drops of the year thank you andreno for sponsoring this message i will refrain from asking myself what is the state of the nation this week uh i would not do such a thing without my my partner ryan uh i'm sure he will be back soon as soon as he gets power back into the state of virginia but until then we are going to get into the conversation between the first and most significant doubt to doubt merger ever between tribe and the

fey protocol and rory capital we've had uh jay from rory on the show before but joey is new so let's go ahead and get right into that conversation with joey and jay uh about the first ever significant dow to doubt merger right after we talk about some of these fantastic sponsors that make this show possible arbitrary is an ethereum scaling solution that's going to completely change how we use defy and nfts over 250 projects have already deployed on arbitram and arbitrom's defy and nft ecosystems are growing rapidly arbitrary increases ethereum speed by orders of magnitude for a fraction of

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in the direction that you think it should go thank you uniswap for sponsoring bankless all right banquet nation i'm here with jay from rory and joey from tribe guys some really interesting news has come about lately and we are definitely going to unpack it here on today's state of the nation so just just for a little bit of context in in november jaywin jay of rari went to the tribe forums and joey of tribe went to the rari forums and you each proposed to each other's communities about the benefits of a potential merger between these two daos between these two

protocols and this was debated on for a little bit over a month and then just last the last week of december this was put to a token vote uh for each of the community and it passed this merger proposal passed overwhelmingly uh 93 to one percent uh margin among the uh rari dao uh and then 90 to zero among uh the fey of the tribe protocol uh and so now according to this merge uh proposal the the these organizations are now going to merge uh guys tell us how does this feel to i'm

pretty sure this is most one of the most unprecedented things i've seen in a while uh how does it feel to be in this moment in crypto history right now uh jay let's start with you yeah it feels really exciting honestly like this came together pretty fast right but i think that like it just feels so right i don't know any other way to describe it and i'm i'm super excited like i think from the first time that i that me and joey started talking right it's just like you can feel the energy right you can feel the energy between the teams you can see the energy on twitter and now you're

going to see the energy and the products that we're going to build together right and like it's just absolutely exciting to me and i'm i'm excited for everything that we're going to build together joey what about you how does it feel to be at this point in history dude jay just did the thing where he said the same thing i was going to say i i he said it just feels right i mean it does like and so i mean we can talk a little bit more about like the history of the merge but the the tldr how i'm feeling is just incredible like the energy's through the roof um it makes so much sense like we're always trying to escape to where the puck is going in

defy i think that was a big idea with fev1 that was the big idea with fuse that jay had permissionless lending fully decentralized protocol owned liquidity for a stable coin and now what we're where we're going is like we're going to make the best product suite for daos and for web3 um and we're going to use fuse and vault and fey and like the teams are so aligned and the the the market timing is perfect like couldn't be better and i'm super hyped to jam with you all on it um you know over the next hours so totally yeah so we're

definitely going to unpack what the merger actually looks like why the merger makes sense uh but uh i'm a big fan of being able to name things so we have rari and we have tribe what are we calling this new thing uh what's what's the new name for the thing that comes out on the end of this merge yeah so it's it's the tribe dao that's like like up until now we've been kind of pay protocol and rari has been very capital and those maintain so like tribe now is like more than just rari and more than just say it's like all of

the products that we build the branding that goes under the tribe dial and like fake protocol is one part of it i'm sort of like leading fei labs big part of say protocol rory is still like you know being led you know a lot by the infra team and jay but we're together under the tribe dao okay so uh for just to make sure that listeners are up to speed with us i want uh each of you to explain what uh your respective protocols are all about and then also explain uh the synergies that are involved with uh this merger uh so

jay let's start with you what is rari capital what does rory do and then why why what about faye what does fey have that rari really wants and and why does integrating rory and fey just make sense yeah so to to start off with what what exactly is rory right right he's a lot of things so let me start with that right but our main product today is fuse right and fuses surrounding this idea of let's enable any asset in the entire world to become lendable or borrowable right so anything

that's on the blockchain anything that we can get an oracle feed for anything that's on chain link right you should be able to take out leverage you should be able to bar against it you should be able to do whatever you want with it really turning every asset into a productive asset and alongside this we have a yield aggregator which can direct liquidity into all of these different pools of pools of lending and borrowing that we offer and we have a couple other smaller projects like nova which is basically this like l1 to l2 transaction layer but but at its core these are all

products that that feed the the main fuse product right and the the cool thing about the fey integration is we we spoke to joey before v1 was even was even live right and we we conceptualized this world at which faye could be borrowed directly using by directly using the the the rarifuse protocol right and that that evolved into fay becoming the first protocol owned pool right it was actually the fey governance who governed their own lending and borrowing

pool i was like the the first time in history that that was possible by an external token holder group and then that suddenly like that that relationship only continued to grow with time right faye again was the first ones to to to decrease their fee with infused they were the first ones to initiate token incentives they were the first of many within the rory capital ecosystem which is why i was so excited about the fey team and again the the big piece and the big the big drawing thing for fey inside of the rari ecosystem is this idea of

liquidity right it's they've developed a very very strong liquidity engine right yeah it has a stable coin component to it but at the end of the day what fey really is is a liquidity engine right and what is what is fused is fused as a way to get liquidity on any asset so these two things were basically a match made in heaven for for for us right so when when talking to to the team and talking to everybody about what is the future of fuse it obviously needs liquidity in the stack and that's why i

was really excited about the conversations with joey excited about all of our collaborations is because that was the last key piece in really owning lending and borrowing and now that's what we're going to do joey let's turn to you and take this from the tribe side of things what is tribe and what does try need that rory has yeah so there's kind of two questions right because we have two tokens so what is tribe and what is today and i think that um well we can start with bay because

really the tribe is the governance token for faye protocol at the foremost like that's what it was when we launched when i said tribes i mean holistically the whole entire thing yeah exactly exactly and so like um the the the tribe dao has been governing say protocol which we consider to be like among the most defined native and forward-looking stable coin projects that like we're trying to like i said skate to where the puck is going so they is a stable coin it's a usd staple coin it's backed by this really powerful idea of protocol own liquidity

so instead of having like an over collateralized model like maker dow which is pretty governance heavy and subject to you know some inefficiencies i mean the maker's incredible project um the difference with fey is that all the assets are owned by the dao they're managed by the dao the fees are earned by the dao the trading and like portfolio allocation that's all done by the dao and then um so it makes say an extremely decentralized asset we're like primarily backed by ethan decentralized stable coins so um if usdc or usdt was to

completely nuke or the regulatory environment was extremely unfavorable faye would still be strong it would be one of the strongest staple coins out there that's according to our value proposition but more than that what tribe is is tribe is the asset that controls the fey parameters and it controls the protocol and liquidity the pcv protocol controlled value and um this is a super powerful idea and it's what jay mentioned about us being a liquidity engine like we discovered very quickly that our product market fit is actually

not just being a stable coin but it's being a partner to daos and a partner to platforms we provide liquidity and we bootstrap markets all over the place and we get compensated in tokens we get compensated in yield for doing that and that's how we generate revenue to continue to adequately backfay in addition to making it an attractive opportunity for tribe holders to be incentive aligned with this ecosystem so you can think about it as like a two-sided market where we're trying to create a stable coin and bootstrap demand and utility for the stablecoin at

the same time as partnering with dows and earning yield for token holders so it's a really nice synergy and what rari has that we need is rari is a perfect product for us because now we can bootstrap all of these long tail fuse pools and we've earned a ton of revenue like millions of dollars from these other dows um for borrowing faye and just generating interest and we're putting some of our other assets into fuse now we're actually moving all of our liquidity mining rewards over to fuse because what that allows users to do is it allows

them to lever up on their yield farming positions which generates more demand for fey more tvl for views more fees for the tribe dow so it's a super reflexive loop and um we're going to go all in on the future product suite ferrari um you know they're building vaults we're going to put a ton of capital into vaults they're building um but we're building our first joint product together which is going to be called turbo and we're really excited to talk about that um so that's really where we're going is like building these products for dows putting the liquidity

engine to use and making d5 like the next level you know d5 2.0 or whatever you want to call it like we want to be at the forefront of that before we go further i really want to unpack this whole liquidity engine thing because that's something i still haven't yet wrapped my my head around how so um uh you're saying that the one of the products of of tribe is the fae stable coin but that's not the it's not the prime product it's a very significant one but there's this other thing that you're saying is like a liquidity engine where you have uh the

the stable coin and it can provide liquidity and that's different from something like a maker dow which you know really just has died that's their one product their one job is to pre-induce demand for the die stable coin you're saying um tribe has this uh alternative side of it it's additional side to not only just a decentralized stable coin but also a liquidity engine well can you just really unpack that what that means for listeners that really don't uh they are hearing this for the first time yeah so i recently had like a cool like paradigm idea around this so if you

think about what's important in web 2 it's compute and storage you need like you need to be have like services that can answer your requests and you know make your app run and you need to store data um so if you analogize that to define web3 you need two things compute you need products like fuse but you need liquidity instead of storage so liquid you can think of liquidity as value storage instead of data storage and that's what's so important about defy

and so what fey has is we have both sides of the market we have value in the form of hard assets like eth and we have value in the form of synthetic stable coins with fey so if you need a stable coin we have a stable coin for you if you need eth we have heath for you we could put it in your protocol we can make both sides of a market and that's a huge huge advantage because products need to dilute themselves to hell with liquidity mining just to get enough you know to bootstrap a market and even then they're probably still going to lose but

with fey you could have 100 million dollars that's diamond hands that's making a market for you that doesn't cost you anything or it costs you something much less and we're actually starting to get token allocations from projects who realize how powerful this is like volt protocol they're going to integrate with us very heavily they're making a rye fork that's kind of like halfway between rai and mim and it's going to use views very heavily we're really excited about that project and we think that that's just the beginning so we're building a lot of products to like make these services more available to more dows and that's

what turbo is um we'd love to talk about that whenever makes sense but um that's kind of the tl dr does that kind of answer your question all right so the overlap that i'm seeing here uh is that both protocols seem to be targeting the long tail of assets where uh fey is a stable coin that can put liquidity uh across defy on wherever it is needed and then rory capital and its fuse pools also can provide borrowing and lending for again the long tail of assets and so so what i'm seeing here is rari is adopting fey as it's like official

currency of the rari ecosystem uh and so where where both um protocols are are targeting the long tail uh and this seems to work out well for each other because rari capital needs to uh bootstrap liquidity in some of its fuse pools and fey just is better and better and better the more and more liquid it is uh jay do you like that description of rari adopting faye as its own native internal uh currency so a couple of things there i'd say first of all like this idea of the long tail is definitely just the go to market

right we're still in the go to market phase of of both fuse and fey i would say we're still in the early stages the first inning i would say that that's like once we've conquered that right there's no reason that we won't move upstream right into the more into the more common assets that that everybody has and into into more different use cases for faye right and then in in in terms of viewing fey as the official currency of of rari holistically i i would i i don't know how i feel about that completely quite honestly right like we aren't treating faye any

different than any other stable coin at the protocol level right and we have no intention of treating any other stable coin any differently like i i love sam i love the entire frax team i love dola i love all of these other stable coins what the collaboration with fey is about is about building a layer on top of the protocol and that's really where a lot of the cool stuff that that us and the fey team have have talked about isn't necessarily at like cutting cutting like giving fe a competitive advantage and cutting out all other stable coins from the fuse platform it's about okay now

that we're connected with fey what cool can we build on top of fuse together right and that's what that's what like the cool part is it's not necessarily doing this like anti-competitive practice of cutting out these other stable coins because genuinely like i want there to be other stable coins oh like definitely at least over the short to medium term because the competition will make us better right as as as a tribe yeah i completely agree with jay um we're we're very focused on making sure that the fuse platform has the best

possible user experience and having competition at the base player is super important and where the partnership really shines is that fey is a a completely willing and incentive aligned partner to all of the rari products and like that's where it really shines is that like we're there we're gonna go hard on fuse and we're super incentivized because it's the same token it's the tribe dao but that doesn't mean we're gonna out compete or be anti-competitive with anybody else in fact that yeah i agree with everything jay said like it's not an official currency but rather like a default

partner if that makes sense yeah yeah that does make sense um one of the dynamics of stable coins and well really all tokens but specifically stable coins is if you have a stable coin you have the ability to mint it so tribe has the ability to mint faye and again within the bounds of responsibility to make fey actually like pegged to a dollar does this power to mint a stable coin and the collaboration with or or now uh merger with with rory how does the ability for rari now to be able to freely mint faye does that impact or

benefit the liquidity inside of rory fuse pools or benefit rari in any way i think that like fundamentally faye has always been a very very active player in seating various different fuse pools right and i would say that like us us hopping on board the tribe doesn't necessarily change that because they were already super active right now there's a proposal being put in place for like optimistic approvals right and creating a very very strong procedure for what the seating of liquidity looks like what the upper bound of liquidity

looks like and basically standardizing this process and creating creating a machine line out of it which i'm i'm pretty excited about however um i don't think that necessarily what that looks like fundamentally changes the the the one exception to that is the the product changes that were the products and the protocols that were conceptualizing that will fundamentally change the way that that fey is seeded into various different fuse pools not necessarily from the pcv itself but rather from other dows and that's what joey was alluding to with with the turbo

product is an instrument to basically do exactly that so what do you guys think are the most powerful synergies behind this merger what synergies really gets you guys get you guys excited um joey i'll start with you yeah i mean jay kind of teed me up really well i'm gonna i'm gonna shield turbo now so it this is something that we this was kind of the the premier product that we had in mind as our kind of first like joint venture where we were we talked about this during all the community

calls about the merge like we have a huge list of things we want to do together but this was such a no-brainer to me and so basically the idea behind turbo is it's kind of an evolution of the maker down model of a stable coin so in maker dao the supplier and the borrower are the same person like if you want to generate dye you have to put ether some other acid into a vault and then an interest rate that's fixed by the doubt and you get die and that's kind of the mechanism so i had this idea what if we split up the supplier and the

borrower to two different entities just like on compound but instead of using a money market you have a synthetic issuance like fey so it's kind of combining fuse plus maker dial and fey is the the backbone of this and so this is our turbo product and it's extremely powerful because it's like it's a strict improvement on the on the pre-existing model in almost every way um so here's the benefit for users of turbo our target market is doused as it is for

like you know for fuse and for um you know for faye we want dallas to use turbo and the way it looks like is let's say the uniswap dao wants to create a liquid lending market for uni um what they would do is they would collateralize a fey loan through turbo and they would pay zero percent interest but they have to put that fey back into another fused form so this is kind of a two-step process so the borrowing side the generation side is done by the dao and it doesn't cost them anything then they put the fey back into a fuse pool

and that fuse pool um is now a market determined interest rate that could have whatever assets they want it could have unisocks it could have uni it could have fey it could have other stable coins but they're going to have this base layer of fee liquidity that was generated by the uniswap dao for their users to go lever up on uni or get capital efficiency against unisocks or whatever and there's also a revenue split so the uniswab dao would actually earn part of that interest back to the dow and then the tribe dial the way that we benefit is obviously

more utility for faye plus um more uh yeah plus revenue like we would be earning the same interest that maker dial uses but there's this great incentive alignment this great separation of concerns meaning it's gonna be a huge product it's really like liquidity acceleration is the way that ben has been describing it and um a lot of the like yeah i think it's a really really exciting um really exciting products jay do you want to uh riff on that or add into a different synergy that really gets you excited about this merger

what's your favorite synergy that is coming out of this yeah i i think like joey joey covered turbo really well it's to be like a no-brainer for daos right like dao's don't actively like manage their treasuries nor should they honestly right it's a very passively managed thing right so what i imagine that we'll see is a lot of large dowels coming in depositing because it's a no-brainer they earn interest they get to provide their users lower cost of borrowing right it's it's going to be really cool for for fuse in general and

for phase adoption the the other key area that i'm most excited about is is this idea of of d5 verticalization right we i've spoken a little bit about this on twitter but basically this idea of the growth of the d5 mafias right where we're starting to see it in terms of the danny's mafia in terms of like mim right wonderland et cetera et cetera right you you have all of these different mafias and i'm excited to see them them all come to light right you have the

olympus mafia year now building we're now building the tribe mafia and they are each experimenting with different pieces of incentive alignment whether one token revenue shares treasury swaps et cetera et cetera it'll be it'll be really cool to see how this evolves over over the coming the coming months in the coming year and seeing what what what is required to build a mafia is it an amm is it a land to borrow is it a stable coin is it all three what else is necessary for the growth of them and and what's going what's it gonna take to to win it right like obviously we we are in

a very positive sum game and i'm not going to discount that but at the end of the day it is also a very competitive industry and i'm excited to see how each of the players evolve to to to try and win i want to unpack how or what's happening with the tokens because uh in this merger there's only the the rgt token is being subsumed by the tribe token uh but why do that strategy rather than a token swap uh where uh rgt tokens get put into

the fey treasury or the tribe treasury and then the tribe tokens get put into the rory treasury uh why well instead of doing a token swap why do a token merge isn't that just like way hairier and more complicated uh versus a token swap what's the thought process behind that whoever wants to take that the easy answer is like these treasuries that we all wield are too big right it's like a treasury swap doesn't do anything beyond like a cool medium post that gets the community excited for about a week and like we've

seen this time and time again that like the the the benefits of like a value extraction will far exceed the the the size of it any any decent treasury swap right and like this was about going all in with one another and that's what that's what we're here to do joy you want to add anything to that yeah i mean i think the a lot of the benefits stem from what what jay said which is this deep like protocol level incentive alignment where we have the same token there's no question it's like fey and rory like

it's not like oh we did a treasury swap but we also did a treasury swap with compound it's like no we're all in you know and um the other part that i think is extremely underappreciated is the decentralization benefit like the tribe dao will quickly become a hydra of like a bunch of different development teams that all have a ton of incentive alignment and all work towards the exact same token and i think that that's an extremely powerful incentive alignment and regulatory like you know we want to create something that's truly decentralized and this is the way to do