Managing Tokenomics and Using Data Analytics for Protocol and Project Growth — ​Lisa JY Tan | Orus

me so I know that previously you guys had a very big session on tokenomics and you guys loved it so I want to continue the conversation a little bit more and given that this is the second session I believe you probably came here with a lot of questions so I want to begin with setting an agenda if you have any key topics you want to talk about let me know this is my plan and I really want this to be very informal just very live because this is not a lecture we didn't finish school to go back to school again so I'm going to split this into two parts the first one is explaining what token economics is what kind of framework and systems I have designed and basically built the first company that I have and the second one is looking at how can we use tokens to do data analytics which I believe is the growing field in the next 5 years so with that feel free um I would like at least five different topics from you guys and later we'll have Q&A and the best person that ask or the person that ask the best question will receive a book that I've written and the book is the economics and math of token engineering and D5 I wrote this book 5 years ago and it's still the book of how to design economics in the web 3 space Sounds good perfect perfect all right so given that you guys have done the first session before I believe you came here with some questions otherwise you won't be here cuz the summertime the sun is beautiful but you're spending time here so there must be some opportunity cost for you to come here what is it you what is the takeaway you want to get out of this session so it's worth your time yes you mentioned token analytics so what data are you pulling and how do you pull the data good question okay well at that later great what else yes so I feel that currently toing onic of many projects is really broken because like there are lots of token unlocks which are coming and if you look at the actual of uh like of these funds and so on under some cors and other guys they exit very early and those like or left waiting for these unlocks I mean all the big guys they just do not wait for that so there should be a solution to this problem otherwise people just pass so I'm going to that's a very big question I'm going to figure I'm going to call it token unlocks and utility yes and also the problem for big players uh exiting too early okay um stakeholders for tokens sorry my handwriting is like almost I'm like a doctor it's terrible all right what else yes I have a question for the uh it's great to have something like a list of uh TPS or something like uh um deep s a scam token ah scam tokens very good in my book I have one chapter called ponics how to create scams and from there you know how to how to deal with scams or how to identify scams all right one more one more yes some type of forecasting maybe and Which models are using for forecasting prices in the future okay great question so yes uh actually we had a recent discussion about this like big companies having audits for their finances uh uh our web 3 companies also have audits on their tokens on on their tokenomics they all have their plans they all have their toomics but are they abiding by this day by day year by year okay so what does token audit look like how can we make it more secure and uh transparent for everyone Perfect all right any other questions no all right let's get started so I'll give you a very quick high level introduction of who I am and what I do and why I'm standing here speaking to you so I came into this space 7 years ago and my background is in economics I saw I saw web 3 as a very Fant fantastic tool but before that I didn't believe in blockchain at all I thought it was the world's biggest scam and that's fine the new technologies you have scammed that's completely fine but they were using economics to scam people they were just taking some random economic equation in theory and tell people my white paper is super solid you've got this economics math in place and so you should give me all your money mortgage your house and then I'm going to make you rich doesn't work this way and I got personally offended and I started my whole crypto Journey just arguing with people online arguing so much that I couldn't write anymore and I started making videos and explaining exp to people why this doesn't work how to create a framework on how do you build something that works I get your intention but this is not you can't just take a random math model and tell people this is how things work this is not life is not like that if we can just put a math model and explain how things work we won't have situations like Venezuela Argentina Zimbabwe we can just meth our way out we can just forecast and model our way out and find solution but life is not like that so I came into this space figuring out okay this is a fantastic technology but what is missing what do we need in web 3 that's different from web 2 from a human sense and how can economics solve that the most important thing that's different in web 2 and web 3 from an economics perspective is coordination and collaboration at the end of the day as societies what we're trying to do is to find get people to coordinate and collaborate together you see that in projects you know your different kind of Sprints in your software you see that in companies people of different departments coming together to work together to build a company you see that in countries different people working on different kind of stuff coming together to build bu value in a company value in the country increased GDP so it's all about coordination and collaboration and tokens I believe are the solution to is the solution to that and we'll talk about it later so basically this how I began my journey I want to do a PhD but back then of all the different Deans or different professors in the universities told me crypto is a scam you can't you can't talk about doing a PhD because nobody cares about crypto you need to do traditional economics or traditional Finance otherwise no one will take you seriously so I said Thank you for that good feedback I don't care about you I'm going to start my own company instead so I started the first company economics design and the company helps projects to go from zero to one so projects come to us with a protocol with a with an idea with a business and say that I need a token either to bootstrap my community to fundraise or potentially even to do Economic Security in terms of running valid data notes and validating different kind of data so with that we help projects to build the designer model until they go to tge halfway through this system I realized okay this is really great to help projects to come into the space with all these new projects coming up you know especially like what what this gentleman said earlier lots of projects lots of interesting ideas and tokens but halfway through you realize this entire thing is just a bit weird sure they have designed with good intentions and good objectives in mind but as project starts to grow the founders leave the tokens get diluted tokens keep getting unlocked and the whole intention or the whole principle of why the project existed in the first place just went away and that's where I believe economics uh analytics comes back in to figure out how do we use data which is verified data we have on blockchain how do we use that to help improve business operations so today I want to divide this into two sessions the first session talks about why we need a token how tokens come in how we design a token answering some of these questions and the second part we talk about analytics so once tokens Al what the hell do we do with it it's not just about investment it's not just about asset allocation it's not just about voting on on the Dow votes but how can we use these data that we have these onchain data or maybe offchain data to make actual business decisions to create value in the long run so that's what I'm going to talk about today and answer all your questions in the meantime and this session is going to be a two-way conversation okay if you have questions just shout out or you can raise your hands whatever you feel comfortable with and then we can have a dialogue sounds good Perfect all right so I'll start with the framework that I've built and created which is the main thesis of how any of the things work and it came from it it came from traditional economics and what we're going to look at is these three different boxes here we're going to look at macro to micro and this is how we're going to design economics in the first place we have tokens in place and how what does tokens even mean and why do we need to design tokens what are the different aspects we need to consider the first thing we're going to look at is market so Market is really the macro environment yes you've got tokens yes you have users yes you have your business but we need to figure out what is this Market we're talking about who gets to come into this ecosystem who maybe you need to validate and you need to whitelist or maybe it's completely free for all people just need to provide liquidity into your protocol and other people can trade understanding who is in your Market what is this environment what's this Market structure who are the users that get to come in is the first thing we design in this economy so we start with high level market then we look at the next one mechanism mechanism is the rules of how users interact in this ecosystem so Market will be how many new users com in user acquisition user retention and mechanism these are incentives of how people interact and behave with each other at the end of the day the reality in life is that nobody does everything just pure out of goodness of their heart they're always incentivized to do some they do something because they're incentivized to do so the butcher doesn't sell you meat because he's worried you get hungry the which are sales you meet so he can get money and he can feed his family so understanding how incentives comes in is what we look at in mechanism now with in the market we've got all these users coming together we gather users together and now we need to figure out what are these incentives we have in place for users to interact with each other make sense so far anyone unclear so far no okay and last one token so every everything we've talked about so far has not touched tokens at all and lastly tokens come in tokens come in because in said when we talk about Market users come in you your product should be your product is a business it should be good enough that people want to come in and use your product in the first place if you need to incentivize people you need to bribe people to use your product and then they leave after the bribe is gone that's not a business that's a very expensive hobby so firstly the market is to understand you need a good product to attract people in then we need some rules of how people engage with each other in this economy and lastly we have tokens and tokens Can represent anything it could be fungible nonf funable tradeable non-tradeable token is everything that represents whatever asset is in your in your ecosystem that you're creating so for example reputation as a way to Signal intent of trading as part of your incentive mechanism that can be a token it's a non-tradeable reputation based token maybe like a soulbound token of sort it could be a fundable token like a like a currency to trade to in to allow interaction in your Market it could be a security like token that Acres value whether it's monetary value or non-monetary value as your ecosystem grows so the long story short is for every e ecosystem and economy that you create you have to look at Market mechanism and token design look at who's in the market what rules they have to abide by in the market and what kind of assets are there in the space because once we once we Define who's in the market what are the rules they get to abide by then we can start looking at how do we use tokens to incentivize more of such activities or disincentivize certain activities and behaviors everyone with me so far okay perfect so this is the core basic framework of how everything is done how everything is run and if we go back to a couple of these things this is where we can start diving deep into these topics so let's deal with shareholders for tokens first so when we look at shareholders for tokens it's important to understand okay I'll ask you where does shareholders come in shareholders come in Market mechanism or token just the idea of shareholders which category do they fall under Market Market correct so shareholders are basically a kind of economic agent right so in the market it's who are in the space so you have shareholders you have investors you have users you have whatever kind of others other players in the space so now that we know that that shareholders are part of this market then we need to understand if shareholders are here it's important to understand what kind of how do they interact what are the incentives what are the rules they interact they live they have to abide by to interact in this economy and from there we have tokens to incentivize certain kind of action let's make this as action so shareholders are they have to do a certain kind of action it could be to create and increase value in the long run of these project by really investing making the right decisions or maybe they are just just here to extract value in the in the short run once tokens pump up they're just extracting the value sell the tokens and they leave so because of that it's very important to understand what is the what kind of action they will do the natural action and what is the action we want them to do we want them to hold the tokens longer to not sell the tokens and how can we use tokens to incentivize that so I guess one of your qu you you as the question of of shareholders and tokens right who yes and your question is basically tokens are getting unlocked and shareholders are just selling the tokens how do we deal with these ecosystems moving forward yes and actually for example a huge investment fund they can uh give their like portion of future tokens to to a small fund uh sell the other part and just cete that's why it happens too often y so the question is basically a lot of um these investors they hold the tokens once it's time to sell they put some some smaller share of the tokens into another fund and then they sell everything yeah so basically a big dump into the market they basically so they give like 50% to somebody else sell 50% they to do yes so that that is a that's something that really frustrates me as well if I could expand that a little bit I'm also looking at this category of air drop drops air drops you're giving out tokens and there is not a very long lock up period and people are not really incentivized to hold these tokens and they're selling it there are a lot of ways we can dive deeper into figuring out how to incentivize to stakeholders to hold longer it could be different kind of benefits it could be given like different kind of threshold and Milestones where they can get token unlocked after a certain Milestone is reached so that they're not just dumping it's not just a time value or not a time a Time limitation before they sell but there's some Milestones that you can hit within the project so it's over here life doesn't need to be so direct as okay you get tokens after X amount of months you sell but you can get tokens and you have other terms and conditions applied to it before you can release and sell the tokens and this is where it's important to this is also where projects the quality of the projects matters a lot because if the Quality quality of the project is very high and investors believe in it they believe that in the long run holding it in the long run in t+1 gives me much better value than just selling it at t0 now I'm more likely to hold it for Tom I sell it tomorrow than sell it today because I believe that the project will grow and giv me more value tomorrow so the problem is that um somebody can sell this right to acquire toets in the future to somebody else of Market under the table and get know about it so yeah and the problem with that is I don't know how to solve it that's a very good question and I don't know if that's a problem that we need to solve because in the the traditional Market the traditional Financial market like that these are all derivatives right when we hold an asset there's a risk attached to it if I can sell some of that risk off and and I pay someone to hold that risk I can do that because maybe I'm holding a huge chunk of dydx token or hold a huge chunk of whatever kind of tokens and so this is a whole new market that you can create out of just a token a token based Market everything we're talking about here is the current spot rate Market of how tokens are being created we can start creating secondary and tertiary Market of getting more complex Financial models and financial products I don't think that's a bad thing per se are we sophisticated enough to do that are we measuring risk enough to start creating more complex structure I don't think we're there yet but the ability to to create such structure I think is going to be a good thing for Pro for crypto with time to come okay so the next thing is scam tokens I I really like talking about scam tokens because I have an entire chapter on in my book in scam tokens because this is like the most common thing the thing is as we Design This Market we start to design top down right so why should people come really understanding what is the value proposition why should people come to your protocol there's so many protocols out there people can just Fork the code and create the protocol why should people go come to your protocol there's a lot of value that needs to be added and it can't just be because the influencer is pretty or the the pudy penguin is very cute that there needs to be a value acquisition value proposition of why people come into your ecosystem and then understanding what the mechanisms what are these rules that is embedded within the system to allow people to interact more with each other and then from there understanding how the tokens help to achieve these goals and how does that impact the market is going to be very important of course there when it comes to scam tokens there's a lot more a lot of deeper dive to go into there a lot of different kind of rate Flex out there I think a very high level simple one is that of course a huge allocation goes to the founders and we don't see that as much anymore last couple of years there were a lot and you know sometimes it's not directly to the founders but it could be a part allocated to community and Community has different kind of trenches the first trench which is the biggest lot given to community it's only given to insiders and somehow these insiders are all the founders of friends of Founders or or shareholders or investors and investors friends there are lot of projects like that and you have to White Label your wallet so the these these people create like 100 different metam Mas wallets to just Cil attack the entire system so just understanding who has access to the information if information is very transparent it's clear and easy to find it's easy to see they're not hiding between the lines that's one of a one of a good sign that this is a bit more of a serious serious project and the second thing is going back to I know that we talk about tokens but one important thing is who are the people behind it if it's projects that are like influenc tokens and projects that's that has been has been scanned before then probably don't believe in them if it's too good to be true it's probably a scam all right and I want to talk about forting and models before I move into token audits because the token audit part is a very good question so forecasting and models who here work with tokens and do like modeling for tokens one two three okay and who who here like invest in tokens and you need four casting to figure out how you should do your s allocation two three okay what what else do you guys do with tokens like do you just hold it and just like print it yes no ST for example a St each project okay good good good point staking and reaking what else do you guys do with tokens voting voting okay I like that burning burning thank you for the rest of the world says thank you [Music] okay so tokens have a lot of different use cases and forecasting and models is actually a very big category after this is being done so what we're doing over here is the qualitative rules of how or qualitative aspect of how the economy works so the analogy that I always put it's like a country we're building a brand new country we're we're building a brand new Serbia and we need to write the laws of how Seria 2.0 is going to be how taxes are going to to be done how much income tax people have to pay how much government is being paid we have to write all these rules of how people in Serbia need to abide by it and this is exactly what things are we're writing the rules of how this economy will run who gets to come into the economy you know employment immigration all that kind of stuff what are the rules of how people should interact in this system how much taxes you have to pay um do you get free healthcare do you get free education all these rules of how you interact in this ecosystem and going to be what kind of currency are we going to use maybe we're going to integrate with EU and we start using Euros or maybe we integrate with another country or we start our own new currency again this is feeding into centralizing the whole ecosystem so what why why are we centralizing this whole ecosystem centralize the centralized Finance good question so what what we're doing over here is really coordinating coming together to agree on the rules they we all follow yeah but then we shouldn't ask government bodies it should be the community oh yes good question so I was using an an example saying that if we need to re let's say all of us here are in the future Serbia is only all of us for some reason and we all come together to write how we want Serbia 2.0 to look like and because we're participants of this new ecosystem it's only us we come together to make that decision and we can update these decisions through you know decentralized voting through new people coming in and we can update the system as we go does that answer your question we're not centralizing this is not not fixed and that's it this is stage one you know with every every country growth every company growth every protocols growth there's going to be a change in the market structure which requires a change in the mechanisms and maybe we need to either redesign the token or we need to create new kind of token models in the space so everything we've done so far right now is discussing what will the qualitative rules of or qualitative incentives of how this economy will look like that is not enough that will not help you to raise funds especially that will not help you to design or write any smart contract what we need is to go into the forecasting and models part to really take all these qualitative rules out and find a quantitative number to it and really model this entire thing out anyone confused so far I feel like people are confused no can you repeat what you just said so we can yes yes okay so the there two steps we're going to we how we design economy is in two folds step one we Define the qualitative side of things so everyone needs to go to school full strong then we need to put a number to that everyone needs to go to school but everyone only needs to go to school three times a day not five times a day so we need to put a number to these things we say that um everyone needs to interact with each other but what does that mean everyone needs to pay each other what does that mean and we need to put a number to that so this is where forecasting and models come in forecasting and models are two separate things a model is just understanding given all these how do we model how do we look at putting the numbers to these systems I'll go into details a bit later basically all this qualitative stuff requires a number in there and we'll put them on an Excel model just to understand what the economy looks like forecasting is then predicting what the price of of assets or change would be in the long run so when we start with model how we usually do this with everything in economics is supply and demand what we have in the market structure here is Supply who are the people coming in why do they come in how do they interact in the system what we have in mechanism and token over here is the demand how how do we get people to want to interact in our system just because there's user acquisition just because the you hold the specific to just because you hold the Lisa token the doesn't mean you spend money or you spend the Lisa token or you stake and restake or you burn the Lisa token or you vote using the Lisa token that is just there's just a supply of the Lisa tokens full stop so we need to understand what is the demand given that we have users in the space given that we have all these economic agents given that we understand how we want them to behave given that we have incentives there to get them to behave what does that look like what does that demand and Supply look like that's that's what we do in models forecasting thing then is to really stretch that out and start playing with a bit more probability so maybe out of 100% of all the daily active users or new users coming in only 20% will stay in the next two weeks cuz the drop off is is huge and so with all of these kind of numbers and probability in place can we forecast what will the economy look like in the next 60 months next 5 years or next 10 years so on a very high level this is the difference between forecasting and models when it comes to the tools used there are couple of the two main models that people or two main kind of mechanisms people do the first one is Exel models anyone here does done anything in finance all right in in finance you know they use a lot of excel models and they do a lot of prediction and you can write very complicated beautiful models in EXL that's the standard thing Exel has been there since dinosaurs were here and Exel will still be here once humans are gone very powerful tool and they will continuously be an an extremely powerful tool so if Excel over there the second kind is Asian based modeling this is something a little bit more new and this is where you typically typically people run Python and one of these tools out there is called Kat cat so c a DC a so Kat is designed by the block science team in the token engineering community and it's based on it's a it's a langu something like a language or package built on python what they do is they start modeling user Behavior so what does that mean how do I explain that so let's say we've got this guy John so we have John in the market and John is a liquidity provider what and he has maybe 10,000 tokens and John wants to make wants to earn some some rewards by providing liquidity so what the model does is is gets John gets the gets this amount and understands what's the probability what's the probability of him making money what's the probability of him interacting with other other users in the space what's the probability of this this token being super attractive that people want to trade so it's a bit more complex but it's very very powerful because you can model out a a whole economy another tool that's a little bit simpler it's called machinations so Kat is python based machinations is a little bit more of drag and drop you know what you see is what you get you build relationships between between like this this kind of boxes and then you you put um you put 10% probability here 20% probability here and it it runs through the entire system a thousand times to give you what this model could look like on an agent based in a in a modeling perspective yes okay there is no standard maybe are things doing doing the auto regressive models for for forecasting and maybe G for good question so the the questions that you're asking is really more of how how do I build more sophisticated mathematical model to start aggregating Randomness into my ecosystem and predict that out the the answer you probably want to hear is yeah we're going to make super sophisticated math models and we've got like phds writing math every single day the the real no the reality is you know as much as that's that's nice to have people don't do that right you don't get central banks or even in governments today or in companies today nobody uses that kind of extreme forecasting to model things out those are used in quantitative Finance to figure out how to trade why because those models like you know your markof chains they are very they're very good at predicting bit more discrete model continuous model in a small time frame what we're looking at over here it's like a period of 60 months or 20 years so these are really really big that probabilities Randomness in probabilities even a small fluctuation can give us very huge differences and that model is not meaningful at all that's why we don't use that so typically we use a bit more probab we just follow on just understanding probabilities how does probability what's the probability of the demand growth Supply is Supply we know right we have the tokens just one more question so the uh confidence intervals for the later periods are how big what would you say for if you're forecasting for the so long periods of time for like for four three four five years so all the questions you're asking will be more related to how we do token anal anal analytics data because everything that we've talked about here so far is still very academic based very assumptions based we're assuming that this is 10% this is 20% what reality is I don't know because this project is not live yet so if you start taking a lot of Statistics into your model the output is not going to be meaningful because you're doing assumptions you apply statistics to assumptions the output is not very interesting so that that comes in in later part all right and and so when it comes to forecasting and models some ex uh Excel cat cat machinations there is something uh there's a new project right now that I can't remember what the name is but there it's a Spanish based company I'll figure it out later I'll tell you guys but what they do is they basically Excel model planted into the their software and the software runs something like a k or mechan to get the output out so as machine learning gets more advanced as humans start using you know natural language to start updating and correcting the models I think the forecasting and modeling part will be a lot easier moving forward all right any any other topics on this or any questions on this chapter before we move on to token audits yes [Music] what so your question is when we're doing systems design there are a lot of Loops in there and how do we validate those Loops uh like is is this [Music] approach okay so your question is as we have different Loops in a system like recurring interaction system has number of loops and you try to understand what what you change this particular part of the system what Willem this approach popular okay I'm going to repeat your question so that everyone gets it so your question is there are a lot of Loops in in the design of the system because you know you the people have to keep interacting with are those so there are Loops in there and how does that Loop show up in your modeling and forecasting good question so this is both a good and bad side of things and you know I'm saying this because I've been doing this for like six years now and I've a lot of like understanding lot pros and cons so Loops are going to be very useful especially something that's useful is machinations because machinations you can you can draw the design like this and you can see Loops very clearly so it's it's useful to help us to understand how users interact because in in real world we're going to interact a lot of times so it's important to have loops in place the downside of that is sometimes we can overestimate the amount of Loops there is and the frequency of Loops can also be a big factor and so that could impact the output that being said what one of the ways that you could update your model is the the loop is not fixed there is a probability of this loop as well so I'm interacting with you and the probability of me interacting with you again will be 25% but me interacting with another person maybe it's 5% and that helps with building a better model one last thing I'll say before I I complete the chapter on on models and forecasting people like to have very complex models people like love to show look at my code and look at my design of my ecosystem and I have this huge probability and I run Monte Carlo analysis and I give you this output you know big buzzword investors typically like them as well the thing is people don't understand what's going on and you will take about sometimes projects take about 2 three months to build this entire forecasting out only to impress the investors for 20 seconds and the thing gets thr away and I'm not lying I've seen a lot of that many many many times so as much as if you're building a project as much as you want to focus on the forecasting side of things take it with a pinch of salt you don't have to focus to the N degree of super granular data just a high level macro version of supply and demand understand how they work will make sense however that's not at the end once you have once your project goes life once you have actual data then you add that into your data analytics to start understanding with given live data how do I improve the system as I go so we talk a little bit about that later but before that I want to go into token audits yes one more question is like on the bring on the brink between uh models and audits uh is there some approach standard approach or tools for let's say formal verification of such system so for example we design some kind of stable coin and we have a invariant in mathematical language that like it's expected to US dollar like most of the time with very very very high probability and we want to verify uh this uh this uh condition while modeling because I think it's very important because like that Alum didn't uh do these kind of checks before their protocol as a result we can caps so your question is there are how do we check for certain kind of yeah are is there some kind of functionality for that the J this uh logical invariance the loops and the systems and so so on so so that it's not at that on the design level yeah good question so basically we've designed everything and how do we check if there any ways to attack the system almost like a pen test to see if there's a bad actor that can penetrate the ecosystem and destroy the ecosystem from outside then within so yes very good question and that is basically something I've been trying to work on for a long time um which really brings us to token audit and token audit comes in I'll would say three three big ways the first category of token audit is your smart contract technical audit right and the technical audit will be code bug you know any like back door that people can access to you know I believe things that you guys know and I don't really know that much about the second category is financial audit and financial audit it's probably more like when things are Al and you take the you look at the fin the finances to make sure that no embezzlement No Stealing of the money the third audit that we need to start talking about is economics audit and it's exactly what you talk about the penetration test but from a system design perspective and this is a very interesting way or very different way to analyze and understand what economics risk look like cuz to do audit we need to understand what risk is this is very interesting because we we are now designing a system from scratch we're really designing from who gets to interact here how they get to interact and what are the assets that they use to interact so anyone can come in here as a bad actor to destroy the system think of it as you know political espinach you have some spies coming in kill your systems from within destroy democracy or whatever po economic system that you have and destroy it or you can have people with voters you know very very huge amount of tokens voting to change the rules of how users can interact maybe stakeholders come in or shareholders come in saying that instead of investing for 5 years it's only going to be vested for 5 months because I own all of the tokens and I'm forcing all the other validators to vote in my favor and to yeah tokens it really depends on a lot of things but typically tokens we can't really touch them unless there's a code error so with economics audit we're really looking at how market and mechanism can be impacted which is really on the systems designs perspective so on this thing there's a good answer and there's a bad answer the good answer is this is something I've been working on for about four years now and we're starting to figure out how to design and how to quantify risk the thing is risk is very different from each ecosystem the way you quantify risk for a defi or decentralized exchange versus Landing protocol versus stable coins versus meme tokens versus nfts versus games they're quite different so understanding what the first principles is so that we can start create we can start taking this measure at at some level just comparing and benchmarking them almost like credit risk scores when you're investing in countries or companies a credit risk SC that makes sense across all kind of economies the bad side of things is that I've spoken to PWC e you know all the big fours and just ask ask them how do you guys see this topic how do you guys understand audit because they the the boss of audits right they they know audit best even they themselves are not very sure how this thing is going to work and so the good news is that we get to redesign audit from bottom up the bad news is we have no idea how to get that started because there's so many variables and the most important thing which at the end of the day you know we're all business people who's going to pay for audit and why would they pay for that right now people pay for for your PWC ey KPMG to come in to do anal audit because the government mandates that if you're a public company you need to get audited every single year right now even the government doesn't know what audit looks like so who's going to mandate that who's going to pay for that will Community pay for that will investors pay for that why would they pay for that how will that impact their decision so there's still a lot of question mark going on yes we see a lot of benefit in doing audit just as increased security and transparency for everyone in the economy but who's going to foot the cost that's still a big question that I not figured out the answer out yet but I'm going to figure out in the next 12 months in the meantime I'm working on the model to figure out how to start measuring risk at least from a first level perspective uh you said that we can think of it like three levels and first one is actually security correct yeah correct uh we see this now as a general practice among all projects who does pay for that good question so right now because security risk is very easy to measure this is the number of bucks yeah more objective and more Comon but it was not like this 5 years ago 10 years ago correct uh like you said who will be uh paying for that who will be checking for that users wanted that after they had incidents then it became a norm uh in between the industry and uh as far as we're looking well who is paying for that the company or the team is paying for that but paying it with funds so everyone is paying for that actually correct so they're paying for that because it increases user acquisition and inre increases the attractiveness for VCS to come in because we can call it we can objectively say that having a a lower risk in terms of security audit means my project is safer everyone gets to come in right now with security audit it's easy to measure right how many lines of code and it's it's easier to say okay this this error happened because of a bug in the code when it comes to economics when it comes to political Espionage or when it comes to some Dow voter tipping the skill it's it's still much harder to prove that because you can argue oh this is someone's Liberty this is like their own tokens and they can decide to vote anytime they want and if they Bri people off chain to vote in their favor this is the Free World this is the free market so that is a bit of a challenge but I agree I think it can be solved and I think once we start taking economics audit more seriously or just understanding what economics risk is we have a better sense of respecting what economics audit look like and people will start demanding it maybe I'm hoping so because I think it's going to be very important we forgot the finance side of things we forgot the security side of things I think the economic side of things will be next and we um people investors or uh holders right now they are interested in more of the legal side of the business more of the economic side but what's on the paper what's on the blockchain uh okay data is here but no one is auditing that yes so the legal side of things is a whole different category and that is really multi-jurisdictional every country has their own jurisdiction and the jurisdictions change quite a lot I'm not a law I'm not a lawyer so I don't know and I work with a lot of lawyers they're really a pain IND the S I love them but they are just a pain because every time we suggest something we suggest okay this incentive will work because it should incentivize a certain user and this is how we designed the token they tell us no no no there's going to be a security risk and there's a lot of uncertainty there so as the space matures I think this is going to change people are going to take it more seriously and we got to start somewhere whether it's correct or wrong at least we start somewhere we get feedback and then we improve as we go okay so anything else before I want to move to the next topic on token analytics yes cont usually vulnerabilities and we also have like set qu that we [Music] how good question so your question is there's some form of Benchmark and guideline best practices for security audit so or for for the technical side of things so people can have can use that as a reference when designing your smart contract do we have that from economics perspective so let me ask you how many successful token projectss have you seen many or not so many there's 7,000 tokens being created every single day and this has been done this has been ongoing for like last 10 years of all these gazillion number of tokens how many are successful it's really really a small handful it's a very small amount and this is this is really evolving as the market evolves as we have better projects because we can't we as as much as I want to say we can Theory our way through all the way down life is not about Theory there's a lot of reality there's a lot of unexpected consequences that we can't figure out until we go and try and then we let people interact the system so until we have a little bit more good projects out there and we can start looking at patterns and understanding how they work how people react what Market structures look like what incentives look like we're still a little bit away from creating those kind of Benchmark that being said a lot of people are working on it a lot of companies are working on it and people have been working on it for years now so it will keep evolving as we go are we there yet I don't think so I think need maybe another three more years as better projects come up but we're definitely getting there okay anything else before I move on to analytics nope okay perfect so everything we've talked about so far is zero to one tokens are not even live yet tokens have not launched and we already have so much planning in place the next thing we need to talk about is what happen happens once token are launched tokens are going to be a very meaningful tool because again everything we have over tokens is really a a way to understand how users are behaving and why are they behaving so how they behave and the incentives of how they why they behave in the certain way and so we want to analyze tokens because it gives us more insights to how this company protocol project operates so this was a big question that I I was trying to figure out for a very long time and in fact this started because we're working on this portfolio management company got vper Finance like many years ago and they wanted to understand okay I've got tokens to incentivize people to to state more to to add their liquidity into this poort this poort so I can invest and I I want to understand how people are moving in this ecosystem where people are going how do I update my tokenomics to incentivize more or less use case more or more or less you know activities in the ecosystem and with that I need to go to data and I tell you I'm not a sequel person at all like not even close not even 1% but we had like two months to finish this project and my team really not SQL based at all we need to go through the data come through the data understand okay yes everything is on blockchain but blockchain really is just a change lck of the changes that happen I need to aggregate these things understand what's going on figure out how users are behaving what user retention is looking like what user acquisition is looking like average revenue user do they go to substitutes do they go to CI and they leave the ecosystem why do they come in is the interaction with macr markets there's so many questions and not so many time so what I needed was a simple tool that instead of writing 17 lines of code I just need one line of code and my focus is how do I start exploring data a very important thing to understand as much as we're talking a lot of like business related stuff web 3 still explores a lot of brand new business models we talk about Market just now right new new stakeholders now stakeholders is a lot more inclusive there's a lot of other people if users investors um Dow Dow voting treasury everything is transparent and we need to analyze that from a bigger perspective to understand how is the project running and how is the project operating why because then we can make better decisions in to look at the longevity of a business so I'll give you something real quick and real simple I want to show you two things the first one is how easy it is to drag and drop to show you to to query and and analyze the second thing is how easy it is to query so the first thing I want to do is show you this way what we have over here is really looking at Unis Swap and the bottom one we have aru average revenue per user arpu and you can see that aru oops you can see that outp is going down the top one over here is transactions per user I hope you can see that but transactions per user is going up that's a bit weird right how can people be trading a lot more and I'm not earning enough money I'm earning even less money every single day so that's a bit weird so let's let's validate that maybe one reason is because it's correlated with e prices so let me just add Charts okay so the first chart I want to see is maybe this is related to East prices that's why that's why the charts look like this so I look at e asset price graph 90 days and for very quickly you can see very quickly you can see that it's completely not related at all this is going up this is going down so probably not related to E prices so let's go back to this main main guy over here transactions are increasing per user now there are two reasons transactions could increase the first one is because people are swapping more the second is because people are creating new liquidity pools people are adding uh depositing always so there's a lot more interactions regarding liquidity pools and so maybe there are more new liquidity pools being created so let's validate that real quick so we look at East chain because we're only looking at East chain right now we look at Unis swap oops Unis swap V2 application new pool count graph 90 days so you get a chart immediately and you can see that there they're quite correlated and there's an increase in new pool counts being created if you think about it as I mentioned there 700 tokens being created every single day and this this really started in February in the Bitcoin ETF boom and so a lot of tokens are being created with that of course there are a lot more New Pools being created with new pools being created people are depositing people are withdrawing and so that that experence a lot of increase in interaction of per user at the same time these these new tokens are mean tokens are are bit more like games that will last for three months and then they die off they they're not contributing that much to new to average revenue being earned so this helps us to understand a little bit better of a very quick example of a an an uh analytics one last thing I want to show you to I hope this thing works so what we want to look at is rep e SN asset uh rep with s an asset liquidity so this will take a bit of time to analyze but what I want to see over here is rep e as an asset what is the native liquidity graph 90 days so based on all the liquidity pools that we have all the tokens and all the chains that we have what is the distribution of the Native Native liquidity in the network without G just out the table sorry without G it would be just numbers so without G then you can change to T for table you can change to like Pi for pie chart and we're updating that as we go okay it's just taking because there's a lot of liquidity pools it's taking some time but the whole point is I need a tool to make it easy to analyze and what are we analyzing over here as much as a lot of people are looking at analyzing liquidity Market analyzing trading Market open interest rates Buy sell Buy sell depth what we're analyzing over here is really okay it's really focusing on operations so you can see here there's like a lot of different chains with how the distribution of of rep e so an example of the chart that might make sense this might this is graph right what you could do is change it to stack chart so you could see the market share of how where rep e is in all the system but nobody's going to look at this this is way too way too messy too too much so what I can do is I'm just going to put the word AG over here that's loading and AG is just aggregating all these things in into one line CU I want to see Trends I want to see how things are are working out it's taking some time but I'm just combining all of them together to look at Trend we'll dive deeper into that later yes can I ask what other tools you considered and why you chose to go with this one because I'm not familiar with the analytics tools out there yes good question so there are I would say there are three kind of tools out there one is SQL based so you have your nson you have your Dune you have um like flip side so they're all SQL based these tools are great for data scientist people who want to create their own charts we want to create their own indexes and they want to analyze on the other other end yeah I'm going to explain that first before we go back to this on all the way on the other end you've got the click the defined charts for you so this could be your defi Lama your um the deck scanner so you just click and then you just get the output the good thing about the SEO part is that you can customize to the end degree of whatever stuff you want the problem is not many people use SEO and to Lear SEO I met a lot of people because they want to use Dune they went to laun SEO they lost they lost a lot of hair because it was just too stressful on the other side you have the drag and drop functions but they're not powerful enough to query the specific stuff you're looking for so that's a little bit more like I just want to do high level due diligence on what is Project About You Know What's the total circulating Supply and and what is the liquidity looking like that's it and so I need something in between that allows The Best of Both Worlds where I have things that I I don't need to customize all the way into SQL at the same time I I want it to be flexible enough for me to start exploring data so like this we look at we look at we just aggregate all the liquidity the native liquidity into one line to look at Trend you can see that oh it's falling down now let's let's aggregate it specifically by so I can see where specifically is it falling down and you can see that the biggest here most of the rep East is in Unis swap V2 and there has been a big drop about um a month ago and then the rest have not been dropping that much this is a sushi balancer and and balancer so as much as we look I need I need something like this right I need something that's just one line and my job as an analyst or my job as a business executive is not to query data it's not to clean data it's not to spend 60% of my time running through the code and saying oh damn I forgot to put the semicolon at like line 21 I need something that gives me an output very quickly and very easily so I can look at Trends and I can start making business decisions very quickly because I'm paid to make decisions I'm paid to interpret data and that is why I needed a tool that's something somewhere in the middle the good thing is so if you want to go more in details cuz you mentioned also where onchain data comes came from right that's your one of your question so it comes directly from the node itself and it organizes all the information on the back end so there is messy data there is structured time series data with contextualized information so I don't need to be quering total I don't need to be to calculating all the different kind of transactions in the space so for example if we go back to this chart over here transaction per user if you have to write this line if you to write this code out in SEO it's about 120 lines because when I look at transaction count look at transaction account divided by daily active users when I look at transaction account I need to look at the swaps the wols the deposit and the new pool being created I need to add all these things together but I don't want to do that I just want something that that's transaction count and it does all of that for me that just divided by daily active users yes how old is the data that's being pull here and is it real time data also it is real time data okay uh is it possible to do some analytics for specific W for example for for example how much earn St so yes so the structure of this I'll change this to a bit easier I'll explain a little bit more about this this is like data for example we want to one good question so I'm going to begin with so the short answer is yes the long answer is how ow right so this is divided this is divided into four key components the first component is what are we talking about so if you want to look at staking of maybe look at IG layer and you want to look at staking of rep e for for example then you can Define rep e as the asset if you're looking at very specific protocols that is like um compound that is on Unis swap oh compound that's on polygon you you can also Define that or you can look at compound anywhere it doesn't matter I just look at compound you can Define that so firstly is who what are we defining the second thing here is the function so it could be price it could be it could be staking it could be stake or unstake ratio doesn't measure we have like a list 100 over different functions available then what does the visualization looks look like and how many how what's the time period we're looking for makes it easy to analyze and we don't have to waste time you know digging through data any other questions so far so how do you for specific wallet to look at specific wallets so that that comes in in the later half of this year to analyze specific wallets and I think that's going to be very powerful in two ways the first one is we talk a lot about 0 to one just now right new projects coming in I'm a brand new decks coming in and the where do I find my first liquidity providers there's so many other decks out there all these people have the money what do I need to do can I use tokens as an incentive to vampire attack them over to my new protocol so I already have a group of people there waiting give waiting and willing and having the assets available all I need to is just to nudge them a little bit for them to come over so I can start going to look at data wallet analysis to see okay this 20% of people are justifying 80% of the trade in this exper like pancake Swap and I'm building on B&B so can I how can I incentivize them and I can start identifying them and bring them over the second thing that's interesting for wallet analysis is understanding understanding a little bit more about how users behave like graph related analysis like density and just interactions between users so maybe I cannot Define K based on tweets but maybe this K I can look at K based on how many users interact with this specific guy and when this spefic guy moves somehow all these other people just seem to follow as well so maybe that's a reason that we could start analyzing wallets and from there we can start identify new markets it could be marketing or BD related that's why I think data everything that we talk about data so far like traditionally it's all trading related but what we really need to do is shift the conversations to operations related how do we make good business decisions to grow the project in the long run which goes back to your question the the co-founders have left what are we we're going to do now doesn't matter because the project should not be dependent on the existence of the co-founder what if the founders like you know hit by a bus and they die somehow hopefully not the project can't die right the project because it's decentralized it need to be self- sustainable how do we use data to make better decisions the decisions are not based on the founders but how can we make better decisions with data sorry you had a question uh no just an addition um some companies some projects are already doing that it is very new since uh it is less much communication between blockchain accounts Vols uh since it is anonymized but uh they are using tools like you said and they are using the uh dbank and dmail to communicate with uh wallet owners they saying that you are using this protocol you are using this and we are making this you just go check it out uh since there will be more uh social F or ways to communicate between uh these and projects there'll be more us yes very good very good suggestion and one of the ideas of the this as well is anyone used Bloomberg terminal before so Bloom Bloomberg terminal one of the functions over there is that you can text people and like literally there's this guy called Prince he's like one of the Saudi Prince that has a Bloomberg account and you can text him directly his direct line so imagine we can start integrating this into wallets and I can me as a Lisa you guys are all in the Lisa token ecosystem and for for example I've got a brand new new update and new news information I can just send it and it it gets it gets sent to all the Lisa token holders or wallet holders or wallets holding Lisa tokens and they get that message wouldn't that be powerful and then people won't miss out on information just because they they don't have Discord or Discord is just way too messy or they're not following the Twitter updates they get the of course they get the right kind of information not spamming information so that they can they can make whatever kind of decisions this is where it becomes a lot more conducive because I've done a big research about three four years ago during covid time I don't remember any time after covid but during covid time I did a big research on governance voting and we talk someone say one of the users of tokens is to vote that's a very Noble thing because from what I understand or from my research data photo's apathy is very very high there's about 3% of people or 3% of the token being voted every time unless it's a quorum set nobody votes and because people maybe are too lazy they don't care or they just too busy and so how do we encourage voters to make decisions so that we can start having decisions from a decentralized perspective here is about really going back to the philosophy of defi oh blockchain from my own experience so there are like huge guys like BS and braen they can p like huge stake of some Network and they do not actually rol like but like small validators like or Swan steak fish care a little bit more about that our governance participation is higher yes so this is not a problem just to blockchain this is a problem in the traditional world as well about 80% of all the to of all the equities in the you know big markets in the S&P Market they're all owned by your black rock your Blackstone you know all these investment Banks and they're not voting in fact they're vote they're just following the vote of who what the biggest guy who say something so that is a bit dangerous and I see that in crypto just because I won't say a name but there is this specific layer one protocol and one of the founders owns a lot of tokens and he could um he basically delegate a lot of this to the the various kind of validator notes and they say if you don't vote to my proposal and say yes to my proposal I'm going to with draw all my tokens from your validation note and I'm going to put it somewhere else so this is like offchain bribery and then yeah he always gets his way and that's dangerous I think that's dangerous to as as you mentioned right we can't centralize we can't take the centralized world or physical world that we live in bring the same problems into a decentralized world because that's not what we're doing we're building a better system building a better systems means better tools better infrastructure and getting people actively involved because this is the future that they are part of and how do we do that actively and not just waiting for this guy who bries everyone else to vote on his proposal yes more questions I to understand you better so what's the target audience for example I know there are some data projects that provide staken data for example for retail users there are projects that collect for example staken on chain data for big Corpus for accounting purposes and so on some other project so what what Target have like Ordinary People companies or teams I give a short answer and a long answer the short answer is decision makers how do I make decisions how do I use data to make decisions the long answer will be researchers could be investment analyst you know how you're doing benchmarking just now we talk about modeling right and modeling you need a lot of data input and instead of using assumptions that how can I use competitive data to model out the system to understand the riskiness of my investment it could be business analysts it could be data analyst it could be blockchain analysts who are creating charts for people to understand to analyze data better yes I have a question um you said that there are quite a few number of tokens which are really successful right like out of the thousands and so on and do you have any stats for cins which use um inflation model because I'm asking because as for me inflation model is some kind of a cheating uh it's like I don't know Federal Reserve which can bring like uh different kind of uh amounts of dollars and I do not believe in long so do you have I don't know any kind of examples of BL talks which you may add to this question like inflationary ECS versus deflation economics like fundamental differences what you believe yes so don't care about what I believe in because I don't you should not care about what I believe in I'm not like God or whatever kind of stuff I'll give you the scientific answer of inflationary versus deflationary and I'll come back to answer your question so inflation and deflation exist for an actual reason that's why it's not it's not just a fluffy thing that we have in the dictionary it's an actual tool in economics that we study and inflation the reason why we have our EXP the reason why we have inflation inflationary Assets in the the physical world first um that's because the the economy grows to we're always tge getting the economy to grow about 3% every year GDP growth and the the currency is if you think about it's kind of packed to the GDP so as your your country gets richer if you don't increase your your tokens if you don't increase your your money then your money gets more valuable correct simple right if if you have one big bag and the bag keeps increasing you only have 10 uh what's the analogy so basically as as you have more more assets coming in or more value increasing if you don't increase the quantity of of your tokens your tokens increase in price very simple now this is a a fixed phenomenon from an policy maker perspective going back to the qualitative design with the incentive design we talk about just now one of the one of the reasons why we have these tokens is to allow people to trade and exchange with each other right so if let's say this pen cost $10 today and I can pay $10 today or tomorrow it will still be the same 10 coins that I need to pay but tomorrow's value of the 10 coins is more expensive than today make sense because tomorrow there be more value added into the economy and the value of of these coins are going to be more expensive so if the value of money is more expensive tomorrow than today than to than today will I spend money today no because with $10 I can I can buy one pen today or tomorrow I can buy like 100 Apples because the value has increased and so this is the reason why we have we have inflationary assets for two reasons the first one is because the value of this economy grows and with every economy that we have we want it to grow especially when the token is used as a means of trade and transfer the second thing is we want people to spend we want people to interact because when it comes to a currency the main the kpi we're looking for for is transacting hands velocity and so if everyone says that tomorrow my money is going to be more expensive I'm going to spend it tomorrow I'm not going to spend it today that nobody spends money how are you going to make money how you going to make tax revenue how are you going to create a healthy economy if nobody wants to spend so that's the reason why we have inflationary tokens deflate yes I just wanted to say from the perspective of the token design I think weating token with a high utility we wanted to have the higher inflation because we want people to move the ah okay so that's a big problem that is a that is the main reason why I came into the system because that does not work like this there is input and output right I know we have relationship between High utility and high velocity just because you have high velocity doesn't equal High utility High utility first then High Velocity so you cannot design and plan velocity into your system because you have no idea what the demand function is going to be does that make sense so yes I get the concept where people want High inflation because people want the the tokens to keep changing hands but that is a a planned output not real output so going back it's theoretical yes oh when when you make that assumption but when you use actual data to analyze then that that's real empirical analysis okay so the demand is excluded so that's why we don't get the same thing from the theoretical model and from the real right correct CU there's a lot of other nuances that's happening in the real world so deflationary tokens come in a lot of other different different ways different reasons there can be a bunch of other reasons it could be one could be there's a lot of value being accured and you don't want you either want to burn the tokens to increase the value almost like a token buyback system or whatever ways to increase the value of the token whether for security reasons like to increase the value or or SEC other kind of security reasons like Economic Security because you you punish bad behaviors so that's a whole different set of principles of why we design deflationary tokens so they're not I know the words they sound like they cousins and their best friends but they come from very different School of thoughts very different principles before designing this mechanisms so when it comes to have I analyzed you know good tokens that or good projects that's inflationary good projects that's deflationary I don't compare them like this because they the first principles are completely different in the first case deflation like if is right now is quite deflationary because everyone is taking the tokens and then and then the transaction fees are being burnt only the bright fee is being earned and that is the kind of model that they're they're creating to increase Economic Security of that layer one and that is just the design principle the mechanism design the middle layer of how this protocol is being designed does it mean that we can take this and replicate everywhere not really because if your design principle is different then then you just can't take it it's almost like a girl that uh that has like uh in the world today the gender thing is very difficult to make analogy but imagine that we live in the old world where you know there's like the whole gender whatever kind of stuff oh okay okay that's good so a girl wears a dress and it looks she looks pretty a guy says oh that looks pretty I'll wear the dress and I'll look pretty as well doesn't work like this because it it needs to fit right so going back to First principles what is the main the first principles of why why this incentive is designed the first place and you just can't copy paste it everywhere yes so how do we properly Define a fair inflation rate so I know only one project and it's not live yet chain and they have like inflation naturally defined by the like yes so good question um the short I short answer long answer again short answer cannot there's no such thing as fair in the world there's AB No Such Thing everyone that says this is a fair system it's lying to you because there's no such thing it's fair however we can try to make things a little bit more Equitable so there are two ways you do that the first one is you do a lot of beta test you get a lot of data and just understand how the market has changed what user behaviors are and you keep updating the model as you go so you know that's where your dep environment is your test net is you get feedback and understand okay given these set of of environment this is how people typically behave and then you can Des design the right kind of inflation inflation with other parameters in place the second one is where bonding curves come in and bonding curve basically means complex math that defines relationship between participants and there I have a whole chapter of I have a couple of chapters on B in the book that I've written and it really depends on what kind of relationships you're talking about who you're talking about what kind of maybe the relationship is not between PE people and people interacting like P2P interaction but that could be supply and demand of tokens whatever it is bonding cve is the mass formula that defines the interaction between projects a very good example which I I liked a lot until you know they they blew up is bankor I think they now rename it to carbon and they basically create a bonding cve that explains the relationship between the to token liquidity depth and also token you're adding in to swap token a for token B so the it's a very simple elegant model that has a lot of parameters that allows the the MTH to change and update as new par as new numbers come into the system another one that um I think they still life it's called Nexus Mutual it's an insurance protocol and they also have a very interesting you know well-designed well thought out meth these are both bonding cuffs by the way so bonu can be a very powerful tool and there are a few other bonu examples out there you know used in a lot of different ways but really defining the relationship between two independent variables introduced after this scw no so that was something before and they they've updated a few they were the first pioneers of bonding Cs and bonding CU is one of this brand new beautiful meth that created because of web 3 so unof uses bonding curve like all the dexus uses bonding cve and a few other projects use bonding curvs they got they got messed up well I believe it's not I don't have stti in them but I believe it's not their fault it's um Celsius exploiting the system so this is one of the big downsides in everything that we've talked about today everything is truly transparent and you know like it or not people just want to game the system and whatever system you be no matter how robust people will try to crack it it's like penetration test like full force and just try to break your system and destroy it from within and this just life so I believe that was one of the biggest tests that they didn't they didn't imagine sales were just um dump the tokens and then everything gets liquidated and the whole system Falls there's the risk parameter in place to the and this thing works to a degree in which tokens are being dumped but when it's above that the whole system doesn't work so another interesting project is a conselor they they don't run they don't build anything but they consultancy firm they help projects to measure engineering and Financial Risk so we talk about the three kind of risks the economic risk of security risk and Financial Risk they help them to do a little bit of the engineering and Financial Risk that is really just heavy meth super any other questions yes I probably have an addition do you know about logistic map function logistic map functioning yes function it's like there is a very interesting correlation with chaos but different so the idea is like small change in the parameter can change the system completely you can have function you have like function which behaves almost like random and you just change one parameter in the system and uh probably I have like some beliefs that you can't really model the system because it has chaotic parameters unless you have some Demand on locality of the function so for example if you can move fun like $1 per one meter per one second somehow uh you basically have like physical curs even if it's digital so you have property of locality and you kind of start to relate to physics yes which enfor so your question is basically as we modeling systems out a small difference in parameters can create a very chaotic function and the output can be drastically different from what reality is very good question and that basically answers your question just now on modeling and can we model based on you know all these markof chain of Randomness functions added in there ideally yes we can but also reality is that one small difference in parameter change can lead to drastic output changes that is completely far from from what the the actual item is so I like your point where it goes back to physics everything we've talked about today is really just economics the first part the second part we added some data into economics and you know we can expand that to figuring out empirically proving all these incentives that we have designed right so we talk about we designed the incentive as the middle mechanism layer and we can start measuring how people behave and this this can be a set of of inputs and probabilities of to define the chaotic function or the chaotic environment the chaotic system just on a little baby level so given Market structure and given and incentives given Market structure what is the behavior of people and once we have life data we can analyze that and we can start building the model ground up almost replicating physics but using data and using natural experiments which are ecosystems that we built that's something I'm super excited about that's why I'm doing what I'm doing sorry this guy first I just a basic basic level but maybe is there any possibility to because of the chaotic uh things that are going around to include stochastic M and like brown emotions and stuff like that into the into the equation to give us like a bit more precise uh good good question the answer is no no because it's just too random and when randomness is just too much and it can create a very drastic outcome and yes you can add more meth to help you make better decisions but the the input effort versus the output data decision you have to make the ROI is just not worth it so every now and then we hear of a new idea in this space like three three bonding or Bo vat escrow tokens should we always be skeptical of these are there any that you think there's some novel kernel somewhere there yeah I think there are two traits that everyone should have critical thinking and healthy skepticism always have that no matter how how true or how fake things are always have that I think 33 is a very interesting model so anyone here have not heard of 33 Okay so 33 is designed by what was the project called uh who is the first one Olympus Olympus Olympus now yes Olympus yes a long time ago right so they basically this they pinted this new thing called protocol protocol own liquidity so they will issue to you need to stick your tokens with them and every time you stick with them you get you get in um bonds yeah you get bonds but basically you get more tokens and every time you get more tokens you just keep sticking with them and it's like a little game you keep sticking with them you get more tokens you keep sticking with them more tokens so 3 three is is their way of saying everyone sticks with them everyone gets more tokens so that's the general gist and so the protocol owns the LI kind of owns the liquidity can move them around and they keep rewarding people for that liquidity so the short answer is I think it's a fantastic experiment because we don't have this kind of monetary experiment in the world ever before the closest we have done in terms of experiments from monetary perspective was the zero and lower lower effective interest rates Early covid times and we will never ever see that ever again ever we will never ever see Zero interest rates ever again you want to buy a house with zero interest rates yeah never ever think about that it will not come back but this a very interesting experiments we have never done that before so in that in that way we are experimenting with new new things beyond the limits of how literature has has given it's very interesting whether it works out or not I don't really believe in that but also I also don't know a lot of different things so maybe it will work somehow when people find the parameters correctly yes maybe I'm a little bit off topic so well we have designed doents then we put our point on the market and then the bright Discovery happens and that's another mechanism is also did you have any experience uh experience with the all these rice Discovery and so on for example I know people from God beats and from what I know for their internals that's very shady yes very good question and I think I've learned this the hard way because I was very naive before you know if we have good robust economics and good incentive we attract the right kind of people and then we have happy days but reality is in twofolds you have you need economics which is incentives and you need politics which is people and relationship ship you can model economics can model incentives to the tea with all these complex quantitative Finance models but when it comes to human and politics that is it's just humans yes just for example when they put token onto the market they care not about on the economics but also how the curve looks on the scen and I mean that's also some kind of psychological incentive correct you have to like to correctly like Market make the curve so that people can me and to buy another so yes so in crypto Twitter they call it psych Ops right and it's really getting you know market makers coming in to really drive a specific narrative and at the end of the day you know as much as we talk about as much as I want to I want to tell you but I will not tell you this I want to tell you that all you need is strong economics the reality is that you still need to build a narrative around it economics helps us to to do the incentive part of things right the the rewards you give to people for behaving or the disincentive if they Mis if they misbehave but you still need to focus on narrative because we are humans and we love stories we need to build the right narrative we can use data to create narrative instead of using K's and influencers to build narrative and I think that can help us to drive a better a better way to start promoting and building more solid robust models okay with that I think we've asked a lot and talked a lot already I'm just going to pause so that I'm just going to stop so that you guys can mingle around ask more questions um so I said that I'll give one book to the guy to the person who asked the best question I in fact I'll give two because you guys are fantastic and ask a lot of questions but because we are decentralized and we all vote together you guys get to decide who gets to win the books so to oh I wish I wish I thought about that uh anyone can just create a token real quick right now and then we can just allocate to wallets very fun so U those who ask questions maybe you can stand up and then you can come here and then people vote other you either do that or I come to you and like drag you out of your chair thank you come on come on come on I'm not going to bite you like you all know each other so come on come on by default come on come up come up don't be shy yeah you want me to drag you out of your chair I mean I've been lifting so I can start caring people now but come up okay fantastic so you guys get to vote um yeah you guys get to vote as many time as you want uh just don't vote for everyone because I don't have that many books so do we vote actually for each other here no all right uh what's your name kist sorry kist haros uh do raise up hands if you think Haro should win the book what question oh I think that's going to be yeah this will take us until 10:00 okay okay one vote all right your name please Sergey Sergey three okay four all right sorry your name pav pav can we Mo multiple times or just one multiple times okay I think seems like to be the most so far your name engineer on engineer uh oh no we'll figure out later your name ibim ibraim okay your name Gregory Gregory okay k k okay Anan Anan all right okay this is really hard um second round okay so who are the top three now we need to come debates you know debates we're going home at midnight tonight you guys figure it out I'm just going to get a Books Okay this is delegation this is decentralized voting you guys decide who the other two people who win I'll be back in a bit yeah we're not going to do that can I have the key we should put chairs thank thank you so much thank you there's no one left what is this the father was gone okay so this is the book it's the economics and math of token engineering and defi okay so like maybe you can keep it here people will sure like you guys can't decide you guys can auction should we have everyone stand up again get them back up there I think I caus a problem I should cre the Sol actually this place is uh kind of open for the people so you can leave it here and anyone who needs it can just yeah sure what you guys think Library as a library yeah okay then I'll just leave this here and okay you guys can read it and browse it there there are 26 chapters the first 13 chapters talks about economics and the last 13 chapters talks a little bit more about the economics imp application to def5 there something about not inside no unfortunately yeah all right thank you guys thank you so much for this