# Latest developments in DeFi 2024 - definikola | DeFi Saver

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2024-10-07
- Duration: 30:28
- Topics: People & Blogs
- Watch: https://streameth.org/watch/yt-QhdSHUkn-sc
- YouTube: https://www.youtube.com/watch?v=QhdSHUkn-sc

## Transcript

um hello everyone first of all wanted to thank you for coming to the second edition of eth Belgrade and thanks for joining to discuss all things ethereum and defi of course um my name is uh Nicola I'm coming from defi saber team and today we are going to talk about latest um developments in defi latest uh veloping Trends in defi what basically um Builders are building and what the users are using okay so um today's today's agenda looks like this we're going first to cover some new iterations of defi blue Tre protocols because there is there has been a bunch of them um throughout the last year last time uh we were here uh then we're going to head to um an upgrade that ethereum protocol uh went through the Denon that resulted in lower transaction costs for layer 2 networks by introducing new uh data type the blobs um then we're going to head to the point to the topic that uh most of us would say could not be avoided for this talk and that's of course points that has taken defi by storm um we're going to just briefly explained the the mechanism because uh a lot of teams are doing the points program now and after that we are going to talk about two strategies very popular strategies in defi the first one is the cash and carry uh strategy that is being that is has been enabled uh in defi with the introduction of the petrol future swaps the first implementation of Perpetual future swaps in Defi and uh the iation of this strategy which is ethena Project doing another one is the leverage staking or now raking with the introduction of the Egan layer project and I would wrap up the talk with some defi tools uh you can consider using now nowadays while uh wandering through through the defi space okay to start off um wanted to go through some new protocol versions um a lot of teams releasing their new iterations of protocols uh I have um uh put here some QR codes if you want to dive deeper into those I'll just talk about them U very briefly um Ava V4 has AA team has proposed their version four um features uh most notable one being the unified liquidity layer where the a team try is trying to avoid uh liquidity fragmentation upon each uh protocol deployment new version of of the protocol uh and another one is for example uh the soft liquidations for their stable coin called go um liquidy V2 also introduced um uh also released the the white paper recently actually the buan from liquid team will speak right after me so stay tuned for more more details um liquid basically in their V2 introduced so-called user set interest rates so basically if you want to open a position in the liquid protocol in V2 you would need to specify the collateral amount the depth amount and the interest you are willing to pay now this is this can be adjusted anytime in the future uh but the my point being is that they are now um releasing the new Redemption mechanism that will be based on interest rates uh on your interest rate rather than on your collateral ratio which was the case for V1 a Redemption mechanism is by the way uh used to keep the peg of their new stable coin called Bal uh unisoft V4 of course releasing a new version releasing um a bunch of features to be honest one of them and the most notable one probably being hooks which um enables developers to build any logic before and after the swap is performed and a lot of more things um synthetics V3 and GMX V2 two um most popular Perpetual Futures protocols releasing their new versions uh trying to introduce a delta neutral liquidity pool meaning that their LPS liquidity providers now don't need to hedge their positions elsewhere they can rather do it uh just by depositing in the synthetics or GMX because the it's the delta neutral pool the the hedging is like built in in the protocol uh curve USD another one curve USD introduced the mechanism called Soft liquidations for uh their stable coin soft liquidations are in brief a mechanism that um tries to gradually swap your collateral from a volatile asset to like a stable asset a stable coin usually in this case their stable coin called Curve USD um and it goes uh both ways so if the collateral price start starts to go down your let's say ether if you're using ether as collateral will be gradually swapped to curb USD and used as collateral and uh in the opposite way if the ether price recovers your curvus D now used as cerol will become ether again will be converted to Ether again lamaland is uh kind of another iteration of curve US USD because lamaland is a money market meaning that you can also short any type of asset by using curve USD as collateral and then borrowing any supported asset because curve USD the protocol is more like a CDP protocol where you can just take long positions on supported assets by to stable coin Morpho blue being another one Morpho blue uh is not an Optimizer like the previous versions like it does not optimize the interest rates on underlying protocols like Ain compound but rather is a protocol for itself it aims to be the infrastructure layer the immutable liquidity layer to which Builders can build on top of to let's say agre liquidity or provide Risk Management Services this is or permissionless and the layers on top of morph blue which is immutable uh can be um upgradeable um Oiler I mean uler V2 sorry and uh uler and Ur also releasing the new versions um an interesting observation when looking at all those new protocol and um versions is that a lot of teams decided to take a step back and release a more generalized version of their protocol in a sense that for example you can build synthetics V2 on top of synthetics V3 or you can build compound V3 on top of morph blue a also a good example with their approach of having unified liquidity layer where basically rvv free can um be just one borrow Market on that unified liquidity layer um and generally just taking a more modular approach when designing their new versions of protocols which is a great thing for from the perspective of integrators like defer because it leaves the room for us to provide additional value to the protocol to make the user experience more um better and more convenient in general just to build tools on top of those protocols again if you wish to you know r more more about what's new in those protocols feel free to scan the QR codes I don't know if it will work I hope so okay um so if you now go a layer uh below to the pro to to the ethereum protocol itself um it has it went through the upgrade called Denon which uh brought lower transaction fees for the layer to networks by introducing new data type called blobs so basically now Layer Two Solutions um can rent the storage uh on L1 for a limited period of time which reduces instead of you know indefinitely I mean infinitely sorry uh and that reduces costs transaction costs which those networks can then transfer to the users to either on board new users or on board new use cases um new projects that are building on rollups one of that use case is of course on chain trading which has become a lot cheaper like significantly cheaper after the upgrade um for example creating a leverag position via RV free or let's say arbitr optimism now costs a few cents which is I think really cool because now um we can onboard more people they can just try things out try new protocols try the trading in a completely non-custodial way um bringing the new new use cases um when speaking about it also new Landing Protocols are now going to l2s deploying their uh newest versions on l2s so the first one was a as it kind of first took the approach took the multi-chain approach then we got compound V3 going on l2s now we got Morpho blue on deployed on Bas or soon to soon to be deployed in base and we got curves Lama land uh on arbitrum and this is not just Landing protocols when it comes to trading you can use uh also Perpetual future protocols like synthetics V3 which also deployed on l2s GMX was there from the from the start and the protocols for margin trading like the gearbox also recently went to to l2s when it comes to stats from our perspective from defy saver the usage of l2s I think has been gradually following the overall usage of increasing usage of uh rollups so if we take arbitrum for example last time I talk here it was June last year um from that point until now I think arbit tvl like FreeX which is a which just shows that these kind of upgrades can bring you know uh significant improvements leading to more adoption like in the long run okay now the the mechanism that has taken defi by storm it's called points um it's a recently popularized me popularized mechanism uh the teams are using to attract liquidity and to incentivize certain activity activities on their platform um it's basically an offchain tracking of uh user behavior um that stems to you know uh attract more users with uh the aim of future uh rewards that are usually tokens so if we assume that the majority of projects in our industry will end up having a token at some point I think this is actually N Net positive for the industry because at least users now have uh some clarity some information about whether the air drop is going to happen uh when it's going to happen and how long um will the points program last so from the user perspective the more points you earn the greater the potential rewards that are again as I said usually tokens okay so now we head to to the strategies the first one is the cash and carry one this strategy is actually very has been very popular in the traditional Finance uh but it has brought a new yield source in defi after we first implemented the Perpetual future swaps on chain basically uh it's a pretty straightforward because it requires opening a delta neutral position now what that is uh is that imagine that I have like 10 E I deposit nine into a and the remaining one um I deposit into the Perpetual future protocol like synthetics and use that one ether in synthetics as a margin to open a tenx uh short position ether short position so now I have an equivalent exposure of longing and shorting in a sense that I have like 10 spot ether and on the other side I have a 10x short position on on the same underlying asset so I basically have no price exposure and I'm my goal is to earn some yield how the yield is earned from on one side I Am A supplier on a lending protocol let's say ivv free and earning interest on the other side I'm earning what's so what's called a funding funding rate now funding it's a mechanism that keeps the price of Perpetual future contract uh correlated or to be more precise the same as the underlying asset and if you are shorting uh Perpetual future contracts you are usually uh earning an interest so this goes of course with some risks it's a it's not a risk-free strategy of course the interest the the funding can go negative meaning you can end up paying interest on the short side but yeah it it has um become really really popular also in the defi space uh by the way if you want to learn more about perps also left a your code there yeah this strategy uh users have been using it like on their own throughout defi you can open a cash and carry strategy in a completely decentralized way as I explained using let's say a and synthetics and then rebalance your position according to the market market movements um but the thing is that the Perpetual future volumes are uh still happening mostly on centralized exchanges now that means that there is a huge opportunity to capture that yield from centralized exchanges and this is exactly what the ethena project has uh managed to to accomplish uh they're Al I think just over three months now and they already have like three billion in TBL ethena under the hood just does everything for you you deposit some funds to their protocol and they behind the scenes open a delta neutral position for you and mint you uh a token so they essentially tokenize the cash and carry strategy that mean your token in this case it's called USD uh and if you want as a user to capture that yield you actually by the design of their tokenomics need to stake that usde to a token called s usde which has been earning mostly over 30% API so far but keep in mind that uh we are in the High leverage demand uh Market uh conditions meaning that there is a lot of people uh trying to borrow more to increase their exposure to to a desired asset meaning that the interest have spiked uh that means that the funding is positive and that that that that the short side is is earning which is basically explaining where does the yield come from in this case again if you now see um it's so easy to you know you can just go and buy SSD e on the open market and gain that 30% API it's of course a decent uh asset for collateral so a bunch of Landing protocols started onboarding it as a collateral asset on their protocol meaning that now you can open a leveraged uh Cash and Carry strategy by depositing ssde as collateral borrowing some stable coin and then looping that position it is profitable uh if the borrow rate on the underlying Landing protocol is lower than the SD apy the yield and yeah this um has become really I mean quite popular recently the second one I wanted to talk about today is leverag e staking now this has been around for quite some time and I just just wanted to say that it's still a thing if you want to earn yield on without losing the exposure to ether as I said we are in a time of uh High leverage demand so interest went up um so this strategy kind of went into Shadows a bit but you can still earn even over 20% on E uh because of um two main Innovations from last time we talk talked uh the first one is being that now Landing protocols like the majority of Landing protocols uh are using primary exchange rate between the staked eth and eth meaning that for example if you're using Stak lios Stak e in a collateral a is pricing that asset based on lios exchange rate so rather than on the market rate so this uh essentially significantly reduces the liquidation r risk because we are not using the market rate anymore this is by the way true for some uh liquid staking tokens not for all the second thing is that the minimum spread between uh e staking and borrow rate in the underlying protocols went down to 0.2% because you can do up to 18x leverage for example in Moro for this kind of strategy uh minimum spread in terms that um the the leverage staking strategy is still more profitable than just simply holding and liquid staking token which by the way has been the case um for for almost like all the time as we can see on the right hand graph I by the way wrote a risk analysis on The Leverage staking strategy again the QR code and yeah we def saer have has have built a tool last year solely meant for the purpose of this strategy which lets you uh choose the underlying protocol and open the leverage taking position like in in one click under the hood it looks like this so we are utilizing uh fles loans uh to avoid looping the position because it's more gas efficient and it briefly looks like this and yeah uh after talking about uh staking we can talk about raking of course uh there is a project uh called Eagan layer some of you may be familiar with it it's a project that introduced um the ReUse of ether as a currency on the on the consensus layer eag layer is basically a set of smart contracts on on ethereum that enables ethereum uh holders and sakers to uh restake their ether to to opt in in the smart contracts of Eagle layer in order to extend the cryptoeconomic security to additional applications called uh avss actively validated services and thus increase their staking yield but at the same time uh potentially be exposed to to more slashing slashing risk eag layer uh has attracted over I think 20 billion uh in tvl so far it is in the process of incentivizing the builders to to build the actively validated Services since they have attracted uh liquidity and E layer itself does not have a raking token so if you decide to opt in with let's say uh ether you will not get the proof of deposit token from them and that's why as far as I know we now have over 10 liquid reaking protocols doing just that next step would be to add those liquid reaking tokens to The Landing protocols and create a looping strategy similar to to the previous one with Sude and this is exactly what is uh happening right now in defi uh with um the fact that those reaking tokens actually do not have an increased yield just yet because as I said Eagle layer is in the process of incentivizing Builders to you know build those abss that can be validated by the by ethereum POS yeah and to wrap up I wanted to just leave a few tool few useful tools in my opinion that um you can consider using while wandering through defi um the first topic is transaction submission I basically just um wanted to mention uh if you want to uh avoid being MD um consider using private ICS the tools like M blocker or or Flash Bots if you need for uh if you need e for gas or any token to send transactions uh you can use a tool from D5 llama team called small refuel and if you want to simulate transactions prior to you know executing them live you can use either a defi saver for defi stuff or in more general terms use a wallet that has um simulations built in like a rabbi when it comes to loan management uh to minimize liquidation and frontend downtime risk uh you can just head head to defy saver uh since we now switch to safe I'll uh speak about this like in a couple of seconds more about this and for swapping uh consider using Dex aggregators uh at least or ideally Dex meta aggregators like like the Llama swap uh just to bring more context about def saver and safe we recently switched from using DS proxy as a smart as a default smart for to safes the rational behind it is basically that the safe is a newer uh that it's an industry standard and it's more gas efficient and to be honest we uh got a feedback from user saying yes thiss proxy is an open uh Tech anybody can use it but uh nobody actually ended up using it so we kind of feel locked to your platform and we uh listen to the feedback so this is not true anymore we now uh use safe which has its own official UI so you basically can use any front end that supports uh safe wallets and manage your position there so we try to avoid the the W Garden approach and from the technical standpoint the safe contract can be used as a proxy contract which is important for us since we are not using it to bundle multiple actions into one transaction um and yes so just wanted to uh end the talk with a uh with the audience potentially uh maybe earning some points while using defi saver so safe has actually an ongoing points program called safe pass if you if you have used D server you have already might earned some points and you can check that by by checking the the QR code that would be it um thanks for listening and hope you enjoyed open for any questions I think I see one there uh no sorry can we have a mick oh e so the the first question was about the synthetics or gmax or oh Unis okay right well um if you deposit the liquidity you get the lp tokens back or the nft as you mentioned in in V3 if you essentially burn the the lp tokens or or the uh the nft that means you've uh withdrawn the liquidity you've previously deposited back to you so um it uh it can either as you mentioned in case of hack be drained from the pool um and you can lost funds in case you previously haven't you know burned LP tokens meaning that you haven't previously withdrawn the liquidity um and for the second question I think the V4 will also have nfts but I'm not sure on that one that that that is a good question um I guess they're sticking with the nfts as that has shown to be a good uh good approach for b3e um sorry I can't hear you um well the the I I'm not sure if there will be any difference when it comes to the lp tokens to the nfts but there are bunch of other improvements like I mentioned the the hooks being one of the Improvement essentially that you can build any logic that can be implemented before the swap execution and after the swap execution sorry I didn't hear the question can we can we for oh okay do we have do we have any more questions okay thanks again one more time okay