ETHWarsaw 2023: DeFi Uncomplicated - Panel Discussion

hi everyone uh so we'll start with the panel on uh defy so I'll let you let you introduce yourself and uh here thank you uh can you hear me well I suppose yes so uh welcome again to the discussion panel the uh title is defi uncomplicated and what we're going to talk about is what value uh does defy offer to an average user and what can we do to make this defi even uh more my name is B rovski I'm going to be your host and these are my fabulous guests alesandro Johannes and Connor welcome them with a round of applause thank you so much okay so before we get into it uh let's start with a round of introductions guys please uh tell us a little about yourself what are you doing in the space what's your background what makes you an expert um I think there's no experts in crypto right it's so new in a way but but anyways uh I'm Alexandro founder of brahma. so what we're working on currently it's uh we're building an like a custody and execution environment using safe for Asset Management so think of like f blocks but built with smart contract wallets instead of uh MPC technology so things like you know uh transaction policies automation uh Team accesses to use dii um and before this we were a prop trading firm in centralized uh crypto so we used to trade on Cal exchanges and then we fully transition to working on essentially on chain liquidity and this is how we got here great Direction yeah hi everyone uh my name is johanes I'm one of the founders of narif network um what we're basically doing is uh we're trying to make web 3 sock a bit less um and we do that by by building automation so uh what you can do with Nar uh as a developer is is building or just automating all those backend processes you know be for D5 be for um what we call the volume driven World gamei um social media and so on so you can really focus on on what matters for you which is is building your product building your your business logic and uh also building a really good user experience in user interface from a background you know why I kind of talk about defi as well is I I spent a couple of years of my career uh building or helping to set up um a an asset manager investment manager in in the web 3 space so I know kind of the the world from both sides uh as an investor as an Institutional kind of style of investor but also as a Founder being very much in the weeds of building an implementing um you know decentralized application and what it means to struggle with the technical limitation uh blockchain gives us uh to this day awesome I agree there's no experts in blockchain so I'm Conor the founder of V of Finance for those who don't know we are a UniFi DPI to interact with all di Primitives so if you want to embed let's say lending farming borrowing swapping whatever it may be natively within your application you can just plug in our API to do this we are a solver for cow swap as well and we're going to be a solver for many other platforms awesome uh so now as we know our guests a little more we can start off with a first question and before we jump into uh how we can make D5 better let's start with with why why do we want make defi better so let's start with outlining some of the key features that you have in mind that make defi compelling to users uh in comparison with fintech applications or traditional Finance uh applications or products that they offer why defi makes sense for the users in your opinion um it's open permissionless you don't have any barriers anyone can interact with this ecosystem system the way they would like nobody can tell you what you can and cannot do for me that's kind of the core purpose to get more people to use dii we need to have better aggregation tools and we also need to have better user experience right now if you want to interact with let's say a bey Vault very basic dii interaction you need to go to four different interfaces and do eight different transactions so ultimately if we want more normies to interact with a space we need to create better user experience I would go a step further and kind of differentiate here a bit right um we have to be very clear that I'm Swiss and probably in Switzerland the the penetration of having a bank account is 99.9% or something so we like most of those tools or defi Primitives which are relevant for the end user I mean you're not you know leverage trading I don't necessarily see that as necessary for the average retail user um we have a bank account I can do payment I can use this thing called 20 and so which doesn't really work properly but it you know it's there it's free uh to make transactions at the same time we have probably about 2/3 of the world population which does not have access to uh this kind of banking system it doesn't have an account so we need to make and and that's where defi is a really really really big chance where they can suddenly basically be on the same terms no matter if you live in uh in Burundi or or in Switzerland right uh you can have the same quality Financial Services have that access and that's where where really defi can have a huge impact but in order to actually leverage that we need to make it accessible so we need to have a user experience and a user interface which is easy to use where as you very rightly put so we don't have to use four different interfaces um I I can very easily get my harder money on this somehow without you know that's where stable comes come in come come in having to fear that I have a 200% analyzed volatility and I don't actually have any idea how much my money is going to be worth tomorrow or if it's going to be Rock pulled just have like more stability in a sense making it more boring um but just kind of to work very simple but work and and work work forever and work very very cheaply and I think the project the combination of tools which can pull that off and which can penetrate those markets and be on par From ux perspective with something like a Volute is is going to you know re the world I agree and disagree with some parts but generally speaking like cross cross border can only be enabled by crypto clearly like otherwise you have to use something like Swift or like some some like really web to standard with uh people in Excel uh but for example does anybody know what UPI is UPI in India great okay that's good that nobody knows that's cool so UPI is uh is like a payment Network that the government of India established with all the banks so all the banks by default have to be imp like integrated and you can basically have a QR code that you spin up with a phone and internet connection and you have 24/7 instant payments no fees and you can offload it to any bank account whenever you have a bank account so like uh part of my team in India when I go there you want to buy a smoothie on the road literally like a food truck stall with you know $1 vegetable cart they have a UPI code and that you will just pay like that a bit like in China with wichat so that is already possible with government rails but it's only applicable to India so if like Switzerland wants to integrate to make it crossborder there's no way I mean they would have to create a Consortium so this is what crypto can solve the crossborder part of it I agree the actual payment uh unbanked infrastructure country by country is already solved like uh UPC has 90% penetration in India meaning 90% of people will Mobile use that so that's like a lot of people like almost a billion people that's India right India Russia also has a similar system but but cross B no I agree for me it's composability so like if if I develop an app in fintech there are like unicorns that were born only to connect banking apis like plate because the standards are so old and so bad and in crypto anybody could integrate with Enzo and narif and Brahma at the same time um so we just lack the regulation in a way to allow web two parties to integrate us into their stack I think like Revol to use Enzo wouldn't until there's some sort of regulatory framework that tells them they're not breaking lot good good example so revolute pulled it off uh I was I mean I think it's been life couple of months now but you basically have you can withdraw I think it's been free and to any any wallet like an like a yes ah okay and the other way around as well I saw beam you saw Beam Beam e beam beam is like a payment app in crypto beam Echo so they use MasterCard direct where when whenever you deposit you receive a deposit to beam in crypto like Connor sends me some if automatically gets offed instantly to my bank account or debit card but this is like you have to adhere to MasterCard rules and like obviously right like so so I think there is already a lot of Regulation so I worked in like sign bank and I created like the cold storage hot storage and if those who aren't aware it's basically a fully licensed and regulated crypto bank so there is regulations already here in certain jurisdictions in particular Switzerland now for these regulated entities to interact with defi since is a fully permissionless system is a whole other b game because then it's seen as uh mixing it's seen as money laundering because you cannot identify the counterparty and a banking that's so impressed with revolute yeah because it's like you know even with u a big provider like Bitcoin Swiss you have to uh in a sense make proof of ownership of a wallet to withdraw to you don't have to do it with revolute I can literally withdraw to any wall wallet but you can withdraw because you're already kyc you cannot send money from a crypto wallet to revolute you can oh sorry we went off TR yes uh sorry yes I'm going to I'm going to no that that was very interesting so so I so kind of we went with the flow but like the outcome like from from this question what I'm hearing is that like defi makes sense and even there are some communities around the world that seem like to be in desperate need of defi so like what are like regulations were meant meant or ready but what are the pieces uh of infrastructure or whatever else that are missing or are blocking us from uh like seeing defi being the kind of default way to interact uh financially with each other if I would have to mention one thing I would say on-ramps like cheap on-ramps which are available basically everywhere in in once again you know we don't have the problem in Switzerland but I think for I don't read the market that well but for example in Latin America every country has its own onramp which is like a four five% fees to get crypto and it's like super slow so that's if if you ask me I would say on ramp on ramp okay not sure what what do you guys think yeah I think onramp and like ease of use for wallets so like pasy wallets if you tried one recently like alenik did a demo that is really cool I saw it at FCC so it's demo. al. Tech and you can basically from your device you just use your face ID or your um you know fingerprint scanner on your Mac and that establishes a wallet and instantly can do a transaction without any gas any private key storage because it's on device so we also like my team hacked something at ifcc for generating a save creating a save from fingerprint and then doing a swap on one inch so this kind of like instant like on-ramp without friction for a private key like people don't want to store private keys I mean I tried literally with friends like oh set up a wallet set up a ledger and people are just like oh I'm going to lose it and then they end up using maybe Argent and Rainbo um uh which is already good right social recovery and some level of obstruction so I think abstraction and then onramp is like what I mentioned with be more ho held like this payment apps with cards that make it really easy to you know to get into and out of crypto mostly out of crypto is the problem usually into is I agree with all the points I would um just abstract all of D away people don't even need to know that there's blockchain underneath they just need to know what the benefit is so if I can put my funds here and I can generate the this Rewards or I can even borrow funds whereas before I would need to go to a bank and so forth so just substract all of this away and just make it extremely simple for people to get part of this ecosystem awesome so I see like two main two main points one is on ramping on ramping seems to be like a very complicated thing and very closely related to the regulatory environment and that's probably kind of slow and not only in the hands of Builders but user friendliness I guess is something that we could work on so I wanted to ask you what are in your opinion the most promising developments that will make uh the interfaces more user friendly and I will here ask especially about the things that account obstruction might enbl that you already touched based on that but I'm wondering like if this is going to allow some sort of a breakthrough or is this just like a small step forward one of many and we'll need many more what do you think well I mean I have to plug narrative here obviously right no but uh it's um no it is a a part I would say it's more a Evolution and a revolution it's it's very much needed spot to kind of make programmable wallets if you will right uh which enables s just mentioned social recovery and so on um it is I I don't think account abstra abstraction for the mass user adoption I mean the same with n like automation also not it's not a silver bullet it is it has to be a package which is in total so compelling that it basically gets that growth flywheel going so it's definitely an important part for me I think it's very exciting to be able to to very easily use something like safe and and kind of the surrounding toolings um but that is once again you know we're we have to be careful that we're not getting too excited about technical stuff because we're building it because for the end user that is completely IR relevant as you said very rightly it's it's in the end it has to be seamless experience and the user doesn't even have to know that there is like blockchain underneath so count obstruction doesn't say anything to you know the end user that's something we're excited about and which is an important part but as I said I don't think it's a silver bullet I personally like smart accounts quite a lot just use safe don't build your own smart contract wallet it creates a lot more fragmentation in the in the ecosystem to stick to that and then start plugging all these different tools on top for me personally I think cration is nice to have things standardized I think is been overhyped quite a lot in particular smart accounts already existed bundlers and relays Al also known as open Zeppelin GSN which has been around for 6 years then kind of multi call or bundling transactions together also has its limitations right you can't use the output of the first Q transaction into the next one and so forth so there are some limitations so generally on the on the tech technological side I would say smart accounts for sure to abstract as private key infrastructure and so forth away and then having very seamless user experience on top and also relaying and paying transactions on other people's behalf so I think kind of this as a foundational layer and then what are the use cases that go on top so this is kind of the base layer of what we can start providing value to people if you want to borrow or you want to avoid a bank account and so forth you use this first and I think the second part we haven't truly figured out just yet yeah I mean everything makes sense I think um definitely smart Contra wallets right we're we're building we're all building on Smart Control wallets in a way like we chose Smart Control wallets versus an EA in an NPC because of the benefits you know multicol gas abstraction most importantly I think like people that use any Financial app they have limits and policies that they can set easily right like max amount that can go out of my wallet at any point in time even if my account is fished somehow or I'm Sim swapped um and the other thing is when I this is anecdotal but when I talk to Normie friends and I asked them if they use Google off or like a tofa app like offie they're like what is it and I'm like bro it's like 2023 yeah like a lot of people still use SMS otps unless they are pushed and oblig to change so we need like the lowest friction for like gas is horrible like web to people don't understand gas uh and why why would they right like it's a fluctuating price currency that they have to send to a chain before they can do something there so I think like you have to obstruct away gas which is possible with relays already and you need to allow people to set policies on their contract on their smart Contra wallets in a super easy way like when you're on board onto revolute and you actually can set like some limits and some specific assets you're going to trade or protocols that you trust and that is in a total web to ux style and behind there's a standardized um you know transaction that gets triggered to impose a guard on your wallet makes sense I think the kind of Revol direction is is is very natural and and mentioned quite often in the space though I have a question how far can It Go I mean right we have the uh private Keys sort of protected by the social recovery by maybe we can set a password different set of policies maybe at the end of the day we'll end up not having the private key at all uh like is this something that you think is one of the ways that will attract more people or does it go against the value of the of the web free like not your keys not your coins like is it is it really you know the song of today or or or do we need to prepare that some users just don't want their keys and want only the password I mean you need to give them what they want you know you can have your fundamental beliefs in life and you can stick to and and continue on that way or we can be realistic and say some people in this room like that some people don't and normally users don't want to care about their private key and if we want more people to get in this industry we need to give them what they need um to take away our let's say philosophical beliefs to a certain regard and if somebody in this room is not going to do that somebody else is going to do it right and it will just Propel this ecosystem even further I mean there's a reason why there's Banks right Banks historically speaking obviously now they're they're different business they historically speaking a place where you could store your values and um I mean technically there will always be a private key and the question is now okay who is holding that private key who's holding a baby and this is a long-standing discussion I've had you know I personally believe here that banks will actually develop towards that that you know they are regulated transparent trustworthy because there's the legal framework there's a social framework which in end up make up nation states um who will hold those private keys for you where you go away from this you know right now we have centralized exchanges which are shady at best right you don't really know what is actually happening and and um yeah so my thing is I the difference will be right now I have to use Banks if I want to access the financial system in the future I can choose to use them but I also have the ability to do it myself if I choose to do so so that's that's where I see that going and then that you know one basically answers the question of will we will I have a private key not necessarily and I have a system in place which is legally protected which is in a society like adopted and kind of part of that whole societal control if you will which which does that for me if I can add on to this this is already happening in Switzerland you know they've got like sub custody so all these hsms they're then licens licensing technically yes technically is it been used effectively so far no and then maybe just for for people who don't know that like how this is being done in Switzerland it's I'm saying technically yes because yes technically there's hsms and they are basically holding your keys but they are restricting you from doing whatever you want with your keys you can only basically you know get your well a certain they're going to start changing that so they I hope so yeah they're going to have like sub custody accounts and then that will go to different companies then they manage that kyc and then it shifts some liability away and then normies can then start plugging into that as well yeah depends a lot what kind of user you are like like Connor said but also like if we're talking as a defi panel and you want to do defi your main Vector of attack like getting attacked is not the private key is usually what you sign so I think there's a lot more work to be done on that regard like uh understanding what you're signing why intense like Rabbi and some other companies are doing really well private key storage is like you know there are people that have gold under their mattress and there are people that actually store gold at Banks historically like like Johannes was saying so like if you want the security in a way of a trusted regulated party and if somebody comes at your home you really have no access to the gold unless they bring you there with a gun then you go for a storage solution right for any Goods like whatever your goodies and Bitcoin with Sappo in the Switzerland in in whatever 2015 16 was the main uh proposition they were basically like a mountain storage with like vaults that was out sapo and the whole custody ecosystem started so yeah I mean it sounds like maybe there is a way to eat the cookie and have the cookie uh because on one hand we want the security uh but on the other we want the seamless experience and before you you uh one of you mentioned uh the SMS verification with with banks maybe there is something that we can do like that here that will still make you hold your keys but do something that's better than nothing it's better than not holding your keys but far easier do you think that there is something like that multi6 right you can have a save multi they can give one of the keys to your bank but also but also like pass Keys is exactly that in a way like just storing your uh your private key in your device and or even in a backup like look at out rainbow as like iCloud backup I don't know how many users use it but you can choose and then in a multi you need a smart Contra wallet then you can set policies and you can say anything above this amount like in a bank they would call you and verify with you are you getting scammed and they do it for the the stupidest reasons I sent a $2,000 transfer to Amsterdam like uh not to buy anything illicit uh it was to pay an event at uh at FCC that Maven organized and uh and they called me up and I said it's €2,000 it's sea transfer and they're like oh it's a random check so with a multi- you can set a second a third hot or like cold key with somebody else as well that you trust and say only above a certain transaction value I need a third signature I need a fourth and you store your primary key in your device but uh nothing can happen happen if you put a time lock I mean nothing horrible can happen like compared to a normal wallet and just signing something with infinite approval and getting drained in one block that that cannot happen I think it really depends on the person's Choice which we're all seeing right one thing of let's say storing your private key pretty sure most of everyone's aware last pass got hacked and many wallets were people were storing the private keys and last pass and last pass haven't even said that they got exploited but it's tailor already proven that it was last past and so forth so giving people The Choice Is Fundamental you know if somebody wants to go and drink 10 beers at this time of day they can do that you know you don't take the choice away so giving them the choice of uh having a smart account or doing an EA maybe having these different recovery methods or using a normalized custodian you know a lot of Foundations a lot of Foundations don't do self- custody and I don't think many people talk about this but the larger foundations store their money at crypto regulated Banks because they don't want all of this overhead of managing all of their keys you know they segregate their custody into let's say hot wallets which might be multi- or even EAS and in larger funds they're all depositing into these crypto Banks instead of Switzerland so just giving people the choices is fundamentally what will improve the ecosystem awesome so kind of one thing that comes to my mind like at hog do you think that there is gonna be someone like or actors like kind of like tech support of blockchain I mean in a sense because with all these institutions there is some someone you know to call and ask hey my whatever disappeared my balance changed why there's someone to call that hey there's you know the big transaction going out of your wallet I mean some of these things can be automated but at the end of the day probably there needs to be a human input do you think that the community can develop or help grow actors that will guide very non-technical users into defi or yeah I hope so and what what generation do you want to Target for that one because I I think support right I think each generation is very different I think all of our Generations the younger and so forth they're very self a to do stuff they will figure out themselves they will try to understand they will try to learn the generation maybe not so much and they need this and the question is should we shift our resources and time to accommodate to that generation or not but I think like support and education are two different things right you can of Club them together so support it's the provider that you interact with which gives you support right like if something happens on the RPC level or on the evm level like a compiler issue whatever we' have seen you will still talk to the unisoft support at one point you will not talk to like the Viper team or whoever else for example so and when it comes to actual education yes you probably need like the fan Foundation to actually do education towards normies or make an education D where we all contribute a little bit and we start explaining the benefit but so far the value is all over the place you have to first have a value that you want to align and convey like again UPI example they conveyed that wherever you are with an internet access you can receive and pay money 24/7 crypto does exactly that but we just didn't compile it into solution that people can really use like out of the box no matter where they are I think just add on to this so I think a lot of uh crypto companies already with their Discord have server support right so it's kind of already there but you need to understand that you need to go to the Discord first to then get that support so maybe we need to go to the steps above there um but I think a lot of people are doing education you know for me personally I think particular companies that try and create all of this educational pieces um are actually losing focus of their core product and they're turning into an educational platform maybe like you said if we go into like an educational Dow then we can all contribute but it allows us to self focus on our area yeah yeah just like basic education I agree until we're ready with the value of but there is but there is you just Google keep in mind here we're once again talking about individual product you know I can go to disc of Unis swap however if we're talking about Mass adoption people will not use Unis swap people will use some kind of user interface which has will have customer support exactly so once again here I would say this is going to be a part of this package's business model right where um this will it actually already is moving away right the banks were free for everyone because they made so much money with their with their money right because of the the interest rate differences and and the money were l in out and and this will move back into kind of a service type which you see with rute right now where you have kind of all the transactions are free the the foreign exchange is very free but you pay a monthly service fee for basically for that and in that service fee you have support included so that's where I see it going where if this unbundling uh where in a sense it becomes and that's actually there's even a legal aspect to that you have um I'm I'm not a lawyer maybe I I'm I'm selling telling a half truth now but I think it's in mik 2 where or in in in the um no sorry miid 2 European regulation where Banks now have to basically separately charge for the research they do so even on the legal side this is kind of going towards that where you have this unbundling and it becomes very clear to an end client what is he paying for and where does the money come from and where is the money being made yeah guys as we are arriving at the end of our time together just one uh final question and let's make it prompt U what are just single one the most what is the single most thing that comes to your mind when you think about uh what will make defi better what's the single most exciting thing in defi that will make it uh tough one yeah I also I think it did what time frame just anything you can pick any time frame so I think that now if you if you ask me a year back like it was the start of like L2 chains and like this kind of development of ramification of how many chains are going to be there now with the op stack and like Bas and so many we're we're seeing that this is like definitely a flourishing business model right like sequencer l2s and now we're splitting liquidity into smaller and smaller blocks so for defi to be efficient you need liquidity for defi to really be able to on board even like you know 5x the customers we have now which is not a lot and and actively trade and efficiently earn yield whatever without slippage you need liquidity so I'm excited for anybody who's bringing back like some some sanity to um you know performing transaction in an efficient way um across chains without a lot of the friction but wallets play a lot into that which is not so yeah awesome it's a really hard question you know I said that before I don't I don't think it's one thing it's it's the Oh no just the one you're most excited about yeah of course it's like this this success by many Cuts you know what I mean where um which which cut do you choose yeah um honestly it's it's tough It's very tough I I I'll let you go further idea I can try maybe some controversy stop doing ponzi's stop doing Token incentivization build real defi products lending and borrowing is useful oh yeah so stop the token incentivization it doesn't help anyone it doesn't create good products but but that's what people currently users want like perss are big wait who who are the users pers is a useful product I know but perss have been incentivized for liquidity to go on purpose it's not like they just put some per contracts and the volume came there was incentives everywh yeah but how many people let's say you use revolute let's say you use any application did you sign up for that because you would get free money given to you no you sign up you do yes you use you use Uber Eats because you get coupons right okay well maybe you're up there let's let's end with a sentence that everyone started using revolute because of its functionality not the rewards and let's have defi the same way thank you very much 100% I have I have one more thing to say though I have I have a bit of alpha to share um I we have a really cool Side Event tonight um I have a handful of spots to give away tacos to give away so if you want tacos well find me yes you can reach out to us after the panel