Latest developments in DeFi - definikola | DeFi Saver

[Applause] oh quite a lot to defy enthusiasts around here and always glad to see that um first of all thank you for coming um my name is Nicola it's a very common name in the D5 saver team so we gave ourselves nicknames and I ended up being a d51 um anyway today we are going to talk about latest developments in D5 um to be more precise we are going to cover Perpetual Futures and their Inception in centralized exchange exchanges and uh then we're going to talk about their usage in the default in and talk about decentralized Perpetual futures after that we are gonna head to relatively new movement in D5 and that is Oracle free Lending we have already a couple of projects out there providing this kind of service trying to shift the Oracle dependency from the core protocol to the users of the protocol specifically in this case the lenders talk more about that later and the Deferred topic about we're going to talk today is the leveraged is taking and how can you let's say boost your if staking apy Okay so first off our Perpetual futures [Music] I'm going to give a brief overview of what they are and there is actually an interesting fact that they were first implemented in the cryptocurrency space it was done with the by the bitmax centralized exchange back in 2016. it's a new type of derivative and it's a special version of the expirable Futures because they have no expiry and I'll try to give a short example and to break down how Perpetual swaps or Perpetual Futures work for example let's say you don't have if and I don't have uh die but let's just pretend that as if I have borrowed eth from you and as if you have borrowed the same dollar amount of dye from me um and let's pretend that the price of it has increased after the we opened that position that would mean that I experienced a loss and that you have experienced profit because essentially I was the one shorting it and you were the one opening long position since you lent out either to me and borrowed die from me and I did the opposite and the point here is that we can keep our position basically perpetually um what that means is that if our collateral also known as margin which we must deposit prior to opening a position is lower than our loss that position can be open perpetually otherwise your position would be basically liquidated okay um why are we talking about Perpetual Futures now and why it's a trend in the D5 space well I'll start with the saying that in traditional Finance the market of derivatives is huge and that is um recently coming to the cryptocurrency space it started firstly on centralized exchanges for example we can see that the average daily volume of derivatives on centralized exchanges is already three times the average daily volume of on the spot mark on the top 10 centralized changes in their spot markets and that's from 2022. why is this that is a good question and the answer is pretty simple actually the Perpetual Futures are a type of derivative that offer very similar trading ux to the ones on the spot Market but with a way more higher Leverage so because you were essentially not borrowing actual assets on Perpetual future since there are derivatives you are kind of borrowing the exposure to assets you're Trading so it's a diff a bit different from the margin trading on the on the spot markets now when we shift our attention to the D5 space and talk about Perpetual features that are based on decentralized exchanges we can see that they have also increased in volume in 2022 compared to 2021 and the growth has continued this year despite the bear Market the one thing one thing that has changed however was that now we have various different protocols decentralized leveraged trading protocols that offer this kind of service however if when we compare the volumes the average volumes from dexes versus the ones on centralized exchanges we get the that Dex derivatives account for only 1.5 percent of centralized you change volume while the share is closer to eight percent on the spot markets and the question what question may arise is that what we can do to improve to bring Traders from let's say custodial Solutions and decentralized sorry centralized exchanges to the D5 space because it seems that being a non-custodial is not enough at least so far one of the solutions may be that we need to improve the trading ux along with the onboarding process we may need to lower the training costs and this is this spectrum is in the should I say design space of uh defined lending protocols um we can introduce new features we can offer [Music] a wide range of assets user can trade in the D5 space or if we take a look at this graph the goal would be to move this optimal ux that we can find on centralized exchanges to the right hand side or should I say to the Khan B evil okay the next topic is a pretty interesting movement recently in defy their their protocols that emerged offering lending without the need for external price feeds now the goal and the problem they try to solve is how to trigger Liquidations in lending protocols without the need of external price feeds um one of the projects that managed to do that is porn finance and and what they did is they offered expirable loans which is not something we're used to see in the D5 lending space for example maker of a compound liquidy all have Perpetual loans bonfire born Finance came and said okay the loans will be expirable and the liquidations will only be possible after the expiry date so nobody can liquidate any loan before that date and I said okay if the liquidations are possible only from certain date we don't need oracles the second solution is blend that's a short for blur Landing it's a protocol that the blur team launched for their platform blur is an nft Marketplace and they launch The Lending protocol where you can put an nft as a collateral and take out a loan in eat so you can let's say for example buy another nft without it um and how they managed to shift the dependency from the protocol to the lenders is that they said okay liquidations are going to be can be triggered only by the lenders by the ones who provide eth as a liquidity that can be done anytime and here the important difference compared to the porn violence is that loans are Perpetual just like we used to in D5 so they said okay if the lender comes and decides to withdraw his eth borrower gets some grace period to react to either pay his loan back or to find another lender who is who would take the place of the previous one so you can basically now um maybe even see where this movement is going so we are trying to do something very similar to what the uni swap we free did with concentrated liquidity they made a trade-off between making the process of liquidity provision and liquidity management a bit more complex in exchange for adding new feature to the protocol or for upgrading the protocol and the similar thing is happening here also one good example of that is the next project I want to talk about and that's ajna ajna Finance they're yet to be launched and it's a bit more complex than the previous two since since it has a variable liquidation price based on two parameters I will not get into details but the first parameter is called lowest utilized price and the second one is called highest threshold price and if the Lup Falls below the HTTP basically anyone can liquidate loans in Arizona Finance as I said it's a bit more complex than the previous two ones by the way I wrote about Arsenal in detail uh on Twitter so if anyone is interested you can check it out um okay so the the third topic here would be probably the most popular defy strategy recently especially after the Shanghai upgrade when the withdrawals were enabled um in a couple of last months we saw that liquid staking protocols like light or rocket pool so an enormous growth in their tvl one of the main reason and contributor contributor to that tvl is exactly the Leverage is taking strategy which resulted in Lido being one of the protocols with the highest tvl in the default at the moment so I'll try to explain why how can you boost your it's taking apy briefly and why Can it can be useful compared to just holding some of the liquids taking tokens like staked eat from Lido or are it from rocketpool which let's say for example yields about five or six percent a year the first step would be for each eth you can Flash loan another two eth stake that free eat with some liquid staking provider as a lighter and then Supply that's taked eth into one of the the defile Landing protocols and borrow two if against it use the two ether to repay the flesh loan the result is a free x leverage position which whose goal is to boost your apy the question that arises is why maybe let's say how is that boosted API possible the answer sits behind the fact that historically if borrow rate in lending protocols was lower than the if staking yield keep in mind that both of those are variable if the borrow rate depends on the pole utilization of the protocol you are using let's say compound Arabic and the second apy the if staking API depends on the basically on the congestion and the usage of ethereum network um now in the market there are various tools of how of making the process of opening and closing and managing the if the leverage if taking position there are tools for automated leverage management automated liquidation protection and also on one click shifting even the one click shift in between the protocols because maybe someone wants to shift their whole position to another protocols because they find out that another protocol has for example lower it borrow rate or they simply want to switch to another liquid staking token um one of those tools is defy saver where you can find I mean choose between different um liquid staking tokens you can choose between what underlying Protocols are you using under the hood and you can even choose the network on which you want to open this kind of position since lately um Layer Two Solutions are also have enough liquidity so you can Leverage The is taking position on other B3 for example I'm yep that would be it thank you all for listening I'm open for any kind of questions yeah [Applause] there's one yeah what do you think about the future of the perp Texas on other chains except the arbitrary um I think layer 2 Solutions have a bright future when it comes to designing and developing that's a good question designing and developing decentralized Perpetual features because we need a high transaction throughput we need a lower trading fees and I think with the layer 2 on evenly free Solutions we can offer that kind of that kind of service so um beside arbitrim optimism and other GK Roll-Ups can surely be the ones used for this kind of training trading service and and exchanges anyone else can you please give a small comment uh on the last slide like where you talked about leveraged uh staking so if I understand correctly deviceaver is more about infrastructure so how do you implement the leverage part of this product do you have some connections like some partnering protocols or like what about the leverage itself um if I understand the question correctly we are integrating and supporting the landing protocols by default and we are using them to get to gain this leverage it's a let me check if I can go back no okay um what we are doing we are essentially depositing youth depositing sorry stake teeth and borrowing it and sort of looping debt to gain Leverage and users are the one choosing which protocols they want what they want to use under the hood we are just providing the interface users can utilize to do that let's say in one transaction or two easy manage their positions easily but they're sort of interacting with the landing protocols directly through our smart contracts okay well yeah okay uh could you explain more about where risks for for leverage taking come from uh and you say the risk the risk yeah yeah okay that's a good question I um the risks or leverage staking uh is that the liquid staking tokens Can debug because they rely on the on-chain liquidity since the withdrawal of state if is not an atomic operation so you would need to if you want to unwind your position you would need to go to some decentralized exchange and basically sell your state eat to eat and it basically has a market price which can debug from The Ether so I would say that is the main risk you are taking when opening that kind of position but after the Shanghai upgrade um the dpeg risk I think has been lowered significantly and before the Shanghai upgrade and I think that's the most important thing when you are if you are considering opening uh such such position anyone else thanks [Applause]