ETHDay - Borrowing and Utilising DAI in DeFi with Chris Bradbury, OasisApp

foreign [Music] what you can do with it so I saw a few hands about die in there just before we touch on die I think we already had a great intro but um yeah I'm Chris I was previously in the makeup foundation as well uh with Lenka I was originally a product manager there and since 2018 and then as the maker Foundation dissolved last year we moved Oasis that originally formed inside the American Foundation out into its own company really to be one of the front end protocols ready for maker and defy um but yeah it's like what are we going to talk about today so yeah we're going to have a quick very quick introduction on die uh also going to very quickly talk to you about the maker protocol as well um and how that is used to Mint and borrow dye uh also other ways you can borrow dye around okay uh yeah other ways we can uh otherwise we can mint and borrow die and then also how you can use that die either to increase your exposure to certain assets or actually earn a yield on it within D5 so again not using any centralized exchanges not giving up custody of your money at any point or anything like that so what is what is die then so I know a number of you have used it but just to give a very quick overview then dye is that was the first decentralized crypto-backed USD PEX stable coin so does that mean that means one US die one one die is equal to one US dollar it is today backed by a variety of crypto assets so it's an over collateralized stable coin uh it's also backed by some real world assets as well make up a very small proportion if you actually look at the uh yeah on the bottom right you can actually see kind of what is backing die today it's obviously it's a large part of that is in usdc and we're going to talk about why uh ever so slightly and then a large part in eth wrap Bitcoin and so on diet actually first look first launched in 2017 uh is what is today known as site single collateral die the very first version was just backed by eth um but now it's backed obviously by a variety of different things and in November 2019 is when we launched multicolateral die or what you now see and use today as diet and there was over 14 and a half billion dollars backing almost 10 million dollars of die in circulation I don't see when when we first launched multiclateral die it was a little bit of a rocky start like the peg was kind of bouncing around a little bit and you can see kind of just about my my left shoulder just kind of like how that chart looks like but over the last kind of two years really it's really stabilized and kind of fixed itself really around one one dollar so what is the maker protocol because the maker protocol is key and that's what mints die we don't just mint die from a multi-sick there isn't just 10 billion die just kind of floating around it was created on day one or anything like that diet is ultimately created through the makeup protocol which is a set of set of smart contracts which is used to mint fresh dye every single time you lock up collateral and borrow die against it so on the screen is a very like kind of a standard behavior of what you would do with the mega protocol and open kind of let's say like a vault this is where you would lock collateral and borrow die against it one of the most popular collaterals well the most popular collateral in this system is eth and where users are looking up their eth and borrowing die against it so I spoke before about about the maker protocol and died being an overcotherized stable coin like the most easiest analogy to this is a mortgage where you borrow money against the value of your house like from the bank effectively Maker Works in exactly the same way you look up your assets into the maker protocol your eth and you borrow against it if you look ten thousand dollars worth of eth you could borrow three thousand dollars worth of dye for example the big difference between a mortgage and the maker system is in particular with Ethan rap Bitcoin and so on is that the price fluctuates a lot more of Ethan wrap Bitcoin and in real time as well compared to your house or your home so where your home is is what you paid for it it doesn't really get revalued until you come to move house again eth obviously is being kind of repriced every second or in the maker system really it takes the price every hour so this means that you need to make sure that you keep your your assets and your vaults above a certain collateralization ratio so in the maker system if you have locked 200 worth of eth I'm borrowed 100 die you would have a collateralization ratio of 200 percent this means that you need to maintain and if the Vault parameters contain a minimum collateralization of 150 you need to make sure you maintain at least 150. so you would never open about 150 you would always open a vault at least like 200 250 and borrow that die against it but as well as just eighth and so on like I said before there was also real world assets inside uh the system as well but each collateral that is approved for borrowing against is approved by maker governance as well and it's each each collateral and each collateral application goes through this vigorous process where risk teams technical risk teams and so on will analyze the collateral and actually set risk parameters such as the minimum collateralization ratio and so on but crucially the maker system allows you to borrow die and every time you borrow that die that is brand new die that's been minted out of the system minted out of the smart contracts and sent to your wallet so some assets such as like etherap BTC and so on have multiple options against them and if we look at eth just for example as it is ete after all like we actually have three different varieties of eat that we could actually borrow or die against and we kind of term them and make her as eth a e b and e c the difference really here is just the risk properties uh around them so EC for instance is the cheapest one just to borrow die against so if you have let's say you have two hundred thousand dollars of eth in your wallet and you actually want you don't want to give up that if but you do like want to say like you want to buy a new car you want to you need a deposit for your house you can use your eth without selling that simply just by locking that eth up in a in a vault in into the makeup protocol and borrowing die against it now 8C it might be the cheapest to borrow but it has the highest minimum collateralization ratio which means it has the minimum the highest minimum ratio that you have to maintain at all times as soon as you go below that minimum ratio your Vault can get liquidated almost instantly and that collateralization ratio is ultimately dictated by the price of Eve so if eth is a thousand dollars when you when you when you lock it in at 200 and then it goes to two thousand dollars you're actually going to be at 400 collateralization ratio which is great if it falls to 500 you're right you're then going to be much much lower and possibly a risk of liquidation so how do you actually borrow die on on the maker protocol because if any of you have noticed though I know there is no front end to make a protocol per se there's no make a dow.com dashboard or anything like that and this is actually where Oasis does come in along with several others around there so with Oasis you you choose your collateral type as you just saw on the previous screen so I think in this next example we're actually going to look at eth B because that has the minimum the lowest minimum collateralization ratio so here you would type in for instance your your you'd put your collateral into the top right box so let's say we deposit let's say 75 eighth or 50 eighth and then we want to borrow some dice we want to borrow let's say 75 000 worth of dye and actually what you can see on here is it kind of shows you kind of like what's that going to do to you what's that what's that going to give you as a loan basically so you can see here that's going to give me a collateralization ratio of of 100 of 194 well there were thereabouts okay it's also going to be a liquidation price of one thousand one thousand nine hundred and fifty dollars so that means that each cannot go below 1 950 otherwise you would lose all of your eth your ether would be sold and there's no guarantee that you would get any of that back if the prices go well in an auction you may get some back but these are just some examples of the of the kind of risk parameters really that you can see and how you would open a borrow Vault uh ultimately on the maker protocol and again this is just using the very standard Vault system really like the most popular one really the kind of end user Vault system uh on there but it does enable you use a borrowed die as soon as you open this bolt that die will go straight into your wallet for you to go and use so we're going to touch on that tiny little bit later about what you can actually do with that die uh still staying inside the D5 ecosystem so there are other ways to borrow dye as well some of them still using the maker protocol such as the d3m modules this is the dye the die direct deposit module now you wouldn't use this module as an end user but actually you may have been borrowing dive for instance on Ave on Ave today uh and actually the maker protocol is connected to RBA through this d3m module which keeps the borrow weight at a set rate so not only are maker governance controlling the rates and the parameters on the maker protocol they're also helping to keep a Target borrow 8 on Ave as well so from a die point of view if you borrow die on the Ave you'll also have the knowledge that dye is going to be a very kind of like within a certain range and it's not going to suddenly shoot up to 20 or 30 percent like several other collaterals could do on RV depending on their utilization so this module allows maker to lend die directly into RV it also and it makes use of it it does this by making use of its own kind of like Vault type really called this d3mbox like I said you as a user could not go and use that Vault directly but if you used RV you would ultimately be indirectly using this d3m module to mint fresh dye to keep the borrow weight at its PEC ultimately if the borrow rate is above that pick that they make a governance is set then it will pump more die from the maker protocol into Ave if it's below the peg then it'll withdraw that die the next one really from the maker protocol is the is the pack stability module the PSM and this is effectively almost creates the kind of like a one-to-one swap at all times really between die and several other stable coins that are in the system this was introduced on the back of black Thursday when like the demand for die absolutely shot through the roof and has ultimately been like more demand for died and Supply ever since that day really thanks to D5 summer but the peck stability module means that you can lock or swap usdc for die or usdp uh or several others but always knowing that you're getting a one-to-one swap so again you may not realize that when you're swapping for instance usdc for die but you're actually borrowing die from the mega protocol but unlike the other folks this is a shared access Vault and actually you don't you're not you're not actually taking out a loan you never have to repay that but actually you're putting diet you're putting usdc into a makerville and the and the maker protocol is just minting die depositing depositing that and sending it to your wallet so that that die out there did didn't exist until that moment you kick started that transaction and it's an incredibly useful tool to keep the Peg and hold the peg like hint its name the textability module um but again it's one of those things you may have used unknowingly if you ever swapped uh anything on on on one inch or match you or anything like that any Dex aggregator there's a very good chance that maybe the die usdc PSM may have gone around there to swap from like die to usdc or usdc to die in particular to actually help you get the best price for your swap simply because it's a one-to-one swap no matter what the size of your trade is you go and use uni swap or sushi swap or anything like that every single time you do that swap if you do a huge huge trade it's gonna it's gonna impact the price that you get you're never going to get one die for one usdc and as we already touched on you don't have to use the maker protocol to borrow die borrowed you can borrow a dive from a variety of different places whether that is as a user doing it to a transaction or whether it's through a flash loan as well you can borrow down a variety of different ways the two most other popular ways outside of the makeup protocol is obviously RV that we've already talked about before how we've got that d3m connection we can actually help control the borrow weight on are they but the other major place that you can borrow die is compound as well and on compound you can you can put up any asset you like it doesn't have to be any of the maker supported assets it can be any asset that compound supports and by doing that you can borrow die against that and it's a very similar model as well on both RV and compound whereas over clatterized borrowing or like kind of lending and borrowing so you supply one side of the loan uh or like position and that you are lending that collateral so let's say it's ether gain you are lending eth to other compounds and you are borrowing die now that eat that you are lending could actually be Borrowed by somebody else and that's the big difference between Ave compounds and and the maker protocol when you supply your assets than a maker protocol they can never actually be lent out or anything like that they remain it really into your total like kind of custody they never leave your custody unless you go below that liquidation price on our van compounds they are actually like potentially going to get lent out and we're going to touch on those risks ever so slightly uh on within like the next few bits so how could you also use die then to like increase your asset exposure while staying in defy I don't know how many of you have you like kind of open like Leverage positions in in like kind of like traditional Finance world or on centralized exchanges but you go to any kind of centralized exchange and you can open like a very easily leverage positions now on on maker a very large use case for the maker protocol has historically been kind of leveraged trading or leverage like trading really and leverage trading in traditional terms is borrowing funds from a third party traditionally like a centralized entity um to go long and shorten on asset in the maker world the pre the maker protocol can be that third party that is the protocol that allows you to borrow that die against it as we talked about the deposit and asset you borrow die and this kind of takes us on to the next part of our topic then really about what do we do with that die then once once we've borrowed it once it's in circulation so that diet ended up in your wallet if you want to do this manually you would look up your eth you would borrow die you'd head to somewhere like uni Swap and you would swap it for eth you've now got you've now got almost twice well probably one and a half times as much eth in your wallet than before you started but you you're the oh maker some die back so let's say we deposited fifty thousand dollars worth of eth we borrowed 25 000 worth of dye and we swapped that 25 000 for eth or 25 000 die for each we'd have 75 000 worth of eth but we owe the maker protocol 25 000 die like back in our debt plus a very small stability fee which kind of starts at 0.5 and goes up to four percent a year at the moment but at some point we have to repay that loan I say at some point there are no term kind of conditions right it isn't six months it's not a year it's however long or short you want it to be so let's say in that period your effects are going to go long on the 8th Place here because you borrowed 25 000 die that's priced in USD you actually want to like you're now hoping that eth goes up in price right that is the price of each doubles in price you know 150 000 worth of ease but you still only got a 25 000 like died debt outstanding basically so now let's say you take you sell 25 000 worth of your your East to die take that die go back to the maker protocol and push it back into the into make a protocol and withdraw your eth you have 125 000 worth of eth where initially you started with fifty thousand dollars worth of Heath and you simply just used to make a protocol to use the funds to borrow now again how would we do this through a UI again this is where kind of Oasis comes in so eth B is our example again you would lock eth and we've tried to make this a very simple interaction and taken away all those manual steps wrapping it inside one easy transaction for you so ultimately you would choose how much eth you want to lock up so again here's the example of kind of 50 eighth you've chosen kind of your target collateralization ratio here so we've kind of moved it all the way along to to 200 so we're going we're going 2x long on Eighth here basically um what what you can see here is this is gonna you're gonna go to the market and buy another 50 eth so you're locking 50 if it's going to use that 50 ether borrowed die and go by another 50 eighth so in your wallet at the very end you're actually going to have a total exposure to each of almost 100 each like obviously a few rounding rounding bits on there there too but and that bottom value there you can see as well you're going to have 2X exposure now to if so it doubles in price you don't quite get kind of like the double double of of it just the way like kind of Leverage work because it's a kind of the The Leverage exposure kind of goes down as you're as you're moving along the price but you're pretty much going to end up with if you're looking a hundred thousand dollars and it goes up by ten thousand dollars you're gonna nearest make like eighteen to nineteen thousand extra dollars of eth um on top of the the kind of twenty thousand does you've already made so you're effectively up 38 000 instead of you just held eth you'd be up twenty thousand I would see the downside to that is if you the price Falls you lose money much much quicker so it's great on the way up it's awful on the way down so you've got to kind of time this stuff right but you can use die for go doing much more than just going long on Earth across kind of defy I'm sure there are tons of apps that you've maybe used in the past like three of the very most popular ones again we've got compact we've got compound and RV on this list we talked about being able to lend assets you can lend die on these platforms as well to other people at the moment they're they're earning you around kind of like two to three percent annualized Returns on your diet um so not great but it's better than nothing particularly if you've escaped kind of from a from a volatile asset into die um and then you've got yearn as well which kind of puts an extra wrapper on top of things like um compound and are they to help you earn what should be one of the best rates uh out there doing it again similar sort of stuff to what Oasis is doing but you can earn a very good sustainable yield or it should be a fairly sustainable yield if not great but two or three percent it's better than just holding die normally but again you stay in full custody of your funds at all times using any of these apps you never give up your keys you never send your money to a centralized exchange like coinbase is entirely trustless still and all you're doing is relying on a couple of front ends to still be there really kind of almost finally then you can use your die also to lend to other like kind of Dex pools really like kind of like the uni swaps and Sushi swaps and so on but obviously that's pretty manual you have to make one side of the you have to make the other side of the pool as well so if you want to learn 10 000 die to die usdc pool you're going to do 5000 die to 5000 usdc I know my time is running out so we're going to skip ultimately it's a really good bit here uh ultimately but on Oasis we also have this very incredible uh tool ultimately making the most of uni swap gelato Network and the maker protocol uh it's got to be a horrible name it's like G uni B3 die usdc but ultimately what this is it's a it's a uniswot B3 pool for die usdc and it's using the gelato contracts and maker to mean that whatever you deposit into the uh uni swap pool you can 50x this so if you've got ten thousand dollars you can 50 exit so you're you're not only depositing ten thousand dollars into uni swap you are depositing I gotta get my math right here five hundred thousand dollars into uni swap so you've got person a over here that's gone and done it manually gone to UNI swap set their ranges they've deposited their 10 000. they're getting some fees you come and use this product over here you actually get 50 50x that for instance uh on there and you can actually see some of the numbers uh on there as well from this June dashboard um so like yeah the last seven days it's been averaging I think that says around yeah it's around 15 at the moment um kind of 30 days uh it's about nine and a half percent so it's a much better exposure than for instance compounder are they but and and it's always important obviously to talk about like the negative sometimes around here is that when you were exposing yourself to to usdc as well so this isn't just die but you are swapping generally half and half at die usdc and also tax Protocols are notoriously like unpredictable so yeah 30 days it's been averaging 10 which might sound amazing but people might stop trading maybe die in usdc for instance on uni Swap and the volumes go down your returns are directly tied to the to the volumes on on the pool we were going to try and do a live demo of opening one of these positions but I think the time is up so we're going to leave it there uh yeah see that championship [Music]