Crypto AMA with The LAO (1.31.20)

Guests:

  • Aaron Wright

  • Priyanka Desai

Moderator:

  • Spencer Noon


Moderator:

Please give a warm welcome to Aaron Wright, co-founder and CEO of OpenLaw who is leading the effort around The LAO (https://thelao.io), a limited liability DAO and Priyanka Desai, VP of Ops at OpenLaw!

As a reminder for everyone participating — please keep the discussion respectful at all times.

Aaron — could you start off by giving us a brief bio on your background as well as how you got started in crypto? And then a short overview of The LAO and a brief update on your progress to date? We’ll then be off to the races with questions.

Aaron Wright:

Thanks so much for having me @spencer. It's really an honor. We're excited about reviving The DAO and doing so in a way that aims to comply with US law.

As noted above, I have a background in tech and law, a bit of an odd combo. I've been in the bitcoin/blockchain space since 2011 and have worked with with some great projects like Ethereum.

Most recently, I co-founded and have been building a robust ricardian contracting system called OpenLaw, which makes things like building DAOs, personal tokens, smart derivatives, tokenized stock, easier.

Before starting OpenLaw, I sold a company to Wikia, the for-profit sister project to Wikipedia. And helped build one of the first open source search engines.

I'm also a full time professor at Cardozo Law School, where I research blockchain related topics. As part of that inquiry, I publishing a book, with a co-author, on blockchain law and policy (Blockchain and the Law), which Harvard published about a year ago.

Excited to dig in and discuss The LAO more 🚀

Pri Desai:

Also, hi! I lead Ops at OpenLaw and have been helping the efforts around The LAO. Prior to joining, spent a few good years in law school--working at the NYDFS (bitlicense stuff) and R3. Wrote a few papers on Ethereum + legal issues. Priot to all this, worked for Committee on Cap. Hill

Aaron Wright:

The LAO is reviving The DAO — a for profit decentralized organization that funds blockchain based projects and initiatives. We've been heads down developing The LAO for the past month or so and it will operate in many ways like The DAO. Folks will be able to purchase LAO Tokens, through a public sale, pool their ether and make investments.

Investment decisions are directed by the members. If a majority of members vote to fund a project, then the funding will happen shorlty thereafter, with all of the underlying paperwork automatically generated using the tools we have built with OpenLaw

Aaron Wright:

The DAO was the first great experiment in the Ethereum community and was spectacular. But, it ran into technical and legal issues. We're in a position to fix those issues. We now have the opportunity to start to not just create stable currencies, interesting sythentic assets, but also build organizations that are native to Ethereum.

Aaron Wright:

In terms of where we are, The LAO is getting close to launch. We've extended MolochDAO's underlying smart contracts with the help of Ameen and others so that a DAO can collect funds and also receive back tokens (tokenized securities, utility tokens, etc.) and are putting the final touches on a sale site and site to manage the operations of the DAO

Guest:

Thanks for coming in - can you all explain the general structure and setup of a LAO? What does it take from participating parties, and how does it enforce particular agreements. For example, in written agreements are addresses tied to identities?

Pri Desai:

awesome, def. thanks. i also wanted to add a sneak peek of what this is going to actually look like: https://medium.com/@thelaoofficial/the-lao-an-early-sneak-peek-a0c9be66a3ae. we have a video here

Guest:

Any plans to open to Reg A+?

Aaron Wright:

Great question. The LAO is structured as an LLC organized in Delaware. The LLC will have a legal wrapper — a legal agreement — that memorializes that members are agreeing to have their affairs governed by the Moloch v2 smart contracts and a related dapp.

Aaron Wright:

We have just released some docs that dive into the structure in more detail: https://docs.thelao.io/

Aaron Wright:

The nice thing about this set up is that is limits the liability of members to one another (to the extent permitted under US law), so that if anything goes wrong the rights and obligations of members are clear. The operating agreement itself will be enforceable in a court, abrbitration system, and all of those nitty gritty questions which members of the eth community have puzzled over just fall to the wayside

Aaron Wright:

Folks that want to be a member of The LAO and make investments will be able to purchase LAO tokens through a public sale that we're slating for the end of February. Folks can purchase blocks of 1% interests in The LAO, up to 9%.

Aaron Wright:

No plans to do that yet. The LAO will initially be limited to 100 members, all of whom will need to be accredited. We're exploring ways to permit folks outside the US to participate without having to go through that process too.

Alex Masmej ⚡️ (I don’t ask for crypto), [31.01.20 12:17]

Hi Pri & Aaron, big fan of OL. What’s the difference between thelao.io just released and MetaCartel Ventures, if they both choose to invest in crypto projects? Different investment thesis? Thank you

Aaron Wright:

Big fan of RocketNFT too. The investment thesis is up to the members of The LAO. We anticipate that the legal structure will be a bit more robust with The LAO, there will be a public sale, and we're ready to launch in a couple of weeks. We're beyond a whitepaper and everything is largely built, which is great.

But, I think it's great that there will be multiple for-profit DAOs coming to the market.

Guest:

But isn’t MCV a LAO itself?

Guest:

Are the types of investment opps that you think LAOs/DAOs are better positioned to go after than traditional VCs?

Pri Desai:

insofar that it's a limited liabilty autonomous org, but unclear as to the exact structure. it may look a bit different!

Guest:

Ok got it! Thanks. Also echoing Spencer question: is “decentralizing due diligence” something the LAO could bring over VCs? What else?

Guest:

How would the LAO have solved for the problems that plagued the DAO years back?

Also, are there any aspects of The LAO that are immutable/censorship resistant?

Aaron Wright:

The LAO will be better positioned for crypto related investments. Members of The LAO will presumably be deep into the crypto space and will be able to see emerging opportunities faster than traditional venture. For folks that have been in the space for awhile, we've seen traditional VC miss a bunch (case in point many of them missed Ethereum). I also think collectively we're able to spot the next promising crypto projects faster than VCs can act.

With The LAO, projects can apply, members will be able to vote, and funding will be delievered in DAI in potentially days. No more need to run to sillicon vallley or another major hub for funding.

Aaron Wright:

I also think The LAO will be an interesting structure to explore other forms of investment, like liquidity pools, etc. If there's one thing we've all learned in the cyrpto space, is that new opportunities come up fast and with pooled capital via The LAO we can begin to fund those initiatives faster

Julien Bouteloup | Stake Capital, [31.01.20 12:26]

Are the requirements for investors profile going to change? Or it will only be for accredited investors (Income of $200K ($300K with spouse) in each of the last 2 years

or Net worth over $1M) ?

Pri Desai:

For this first version of The LAO. For the second one, we're exploring creating a LAO for unaccredited investors. we also have delegated voting for The LAO. Meaning, if a member of The LAO does not want to make investment decisions, they can delegate that right to someone else, who doesn't have to be accredited.

Aaron Wright:

The DAO had a couple of issues, both technical and legal. On the legal side, as confirmed by the US and other jurisdictions, the sale of DAO tokens involved the sale of securities, which created liability for the members of The DAO.

When The DAO went sideways, it created a number of risks for members — since in most major jurisdictions it would have been considered an implied partnership and members would have been liable for other members' losses.

The LAO addresses these issues. On the legal side, by wrapping the DAO in an LLC, all of the liability questions fade away. If you participate, and things go sideways, you'll only be responsible for your own assets. On top of that, because everything is backed by legal agreements, there won't be any loss of value.

By limiting membership to accredited investors, you address securities issues and also create a place for folks to begin to explore eth-based funding, financing, capital raising, and deployment

Guest:

Can an accredited investor opt-in for auto delegate their right ?

Guest:

In a traditional VC fund, LPs invest in GPs and delegate deal flow selection to them. Since there’s no GP in the LAO, members have both LP and GP roles and are responsible for deal flow quality. A reasonable assumption is that the quality of the LAO deal flow will be as strong as the quality of its members. How do you encourage a high quality deal flow in the LAO? Will members of the LAO here have a say on who the other LAO members are?

Pri Desai:

Yes, any member can delegate their right to vote to any address they want

Aaron Wright:

That's a great point. The LAO will have more folks sourcing deals than a traditional VC fund (100 members + ecosystem of folks who may have received delegated voting rights) as opposed to a handful of GPs. The hypothesis is that a networked VC fund is as good, if not better, than a traditional VC fund in terms of deal flow. The LAO's deal flow therefore will be as strong as its network.

I also think that The LAO's ability to deliver funding rapidly to projects will be very attractive to folks in the Ethereum community. Many of the teams are not based in the same location as traditional VC, are remote first, and frankly getting early funding from The LAO may be the easiest path toward funding.

In terms of folks having a say in who is members, the public sale will occur on a first come first serve basis, which should be a decent barameter for interest in the initiative and the crypto community. If a member rage quits, then members will have the right to vote in a new member.

We opted not to create a "country club" model.

Guest:

Thanks @aaron. Also bumping this second question

Guest:

How do you guard against front-running of deal flow by other funds?

Aaron Wright:

Thanks for re-raising. I meant to address. All of the core operations of The LAO are going to managed via the v2 Moloch smart contract code — contributing, voting, allocating funds to projects / investments. At the same time, members will have the right to vote to change the smart contracts that they're relying on or any other operations.

Aaron Wright:

The LAO should be able to close deals faster. After a voting period, a project will be notified, click a button, and after some basic checks will receive funding—all of the paperwork will be handled on the back end and signed with evidence recorded on chain. The LAO will be incredibly agile.

Guest:

Is voting subject to quorum?

Aaron Wright:

If over 50% of the members (based on token holdings) make decision, then an investment will occur.

Guest:

Gotcha. The devil’s advocate here is that more parties involved + less time for diligence = fewer good investment decisions. I for one am super excited to see what actually happens over time. How will you ensure the quality of decision making stays high?

Guest:

Would it make sense to penalize non-voters?

Aaron Wright:

Members have the right to remove other members. If they want to implement a rage kick, it'll be on the table.

Guest:

How will the LAO protect against conflicts of interest with its members?

Aaron Wright:

(1) There's some self-selection here. If you're participating in The LAO, you're presumable pretty deep into the crypto space and have a fair amount of assets.

(2) delegation means that folks will be able to give others the right to make decisions on their behalf, which should help prevent voter apathy and also open up ways for people who are great at sourcing deals to show their meddle.

(3) OpenLaw will be sitting in the background here, and we'll be able to help build out tools, create channels, to make sure that members have all the information they need to make decisions and also have a bunch of ideas to give members a way to get a pulse on what the eth community thinks about various different projects too. The members will have support.

Guest:

Thanks. Is rage kicking a different action than rage quitting? Anywhere we can read about rage kicking on the docs?

Aaron Wright:

The members can sort that out pubicly (i.e., they won't vote for something if there is an obvious conflict of interest). However, since many of the member may be involved in other organizations or want to make separate investments, the organizational docs don't preclude those types of relationships (i.e., co-investing, follow-on investing, providing other services).

We think that's the right call, at least off the bat. But, members will have the right to change that rule, if they disagree, or if it becomes an issue.

Members will also have the right to rage quit, which is strong minority projection, so they can leave and get back their undeployed capital before any investment is made that rubs them the wrong way.

Aaron Wright:

It's in the Moloch v2 smart contracts that we helped put together. You can read a summary of those changes here:

https://medium.com/@thelaoofficial/the-lao-joins-forces-with-moloch-dao-and-metacartel-to-begin-to-standardize-dao-related-smart-b6ee4b0db071

Pri Desai:

If you're interested in becoming a member, we've just opened up the accreditation flow for approval to join The LAO today at https://www.thelao.io/apply. We've also just released some FAQs that summarize much of the legalise in the Operating and Sub. Agreement at https://docs.thelao.io. If you have questions that come up about anything here or the docs, we have a telegram: https://t.me/joinchat/FLvdBBVz3o9pfi-rfd9BqQ and weekly community call. Please join us!

As a side, we’re thinking about having a mentor/advisor portal tied to The LAO for projects seeking advice/help. If you’re interested in becoming a part of that advisor/mentor roster, please DM me here. If you want updates, follow us on Twitter at @TheLAOOfficial. We’ll also be at ETHDenver, so please get in touch!

Guest:

How will members participate in LAO ops? Is there a members-only website, Telegram chat, etc.?

Pri Desai:

Once we have the members, we'll have private channels on Slack. The LAO itself will also have features that will be available to members only

Guest:

This is great, thanks! Do I understand correctly then that there's no ragefiring in the LAO, only ragequitting?

Aaron Wright:

Both are available, technically. The intiial dapp will make "rage quitting" and delegation as easy as clicking a couple of buttons. If members want to kick someone, we can update the dapp to provide that functionality easily.

It's all member directed and I think we'll see an evolution of how these orgs operate, just like we saw an evolution of how joint stock companies develop and LLCs over the past several decades.

Aaron Wright:

In my mind, DAOs have always been one of the most—if not the most— interesting part of the ethereum ecosystem. We're rebuilding the commercial world and each time that's happened in the past there has been new forms of entities to support that and new ways to finance innovation.

We strongly believe that DAOs will be as important, if not more important, than all of these previous structures.

The headline here is we have the tools to experiment and watch these organizations evolve. Now that there is a structure to pool capital, we believe that it's going to be like throwing gasoline on the smoking defi pile. Assets are great but organizations drive the most value.

Moderator:

Alright guys, running up on Aaron and Pri's time here. Any final questions?

Guest:

what are your thoughts on private voting mechanisms like

https://github.com/barryWhiteHat/maci

Guest:

desirable? or bias towards transparency

Aaron Wright:

they're super cool; hopefully we'll get to experiment with that form of decision making too. Private voting —> capital deployment

Guest:

Clarification on assets under management, the design sets the LAO to have a max of $22.5M under management, correct? Is there a minimum contribution for each of the 100 members? Apologies if this was already covered.

Aaron Wright:

Minimum contribution is $25,000 for 100 members, so $2.5m. Once the first LAO is filled, we can create another LAO to continue to build out the ecosystem

Guest:

Thanks for your time/insights. Exciting project, best of luck pushing things forward!

Pri Desai:

thanks!

Pri Desai:

keep in touch

Moderator:

Okay - thanks for your time today! What's the best way for people to get in touch and stay up to date with The LAO?

Pri Desai:

If you're interested in becoming a member, we've just opened up the accreditation flow for approval to join The LAO today at https://www.thelao.io/apply. We've also just released some FAQs that summarize much of the legalise in the Operating and Sub. Agreement at https://docs.thelao.io. If you have questions that come up about anything here or the docs, we have a telegram: https://t.me/joinchat/FLvdBBVz3o9pfi-rfd9BqQ and weekly community call. Please join us!

As a side, we’re thinking about having a mentor/advisor portal tied to The LAO for projects seeking advice/help. If you’re interested in becoming a part of that advisor/mentor roster, please DM me here. If you want updates, follow us on Twitter at @TheLAOOfficial. We’ll also be at ETHDenver, so please get in touch!

Pri Desai:

just reposted from before ^

Pri Desai:

twitter / telegram, best way to keep in touch.

Pri Desai:

thank you @spencer for hosting

Pri Desai:

and moderating

Aaron Wright:

thanks everyone and thanks @spencer for hosting! we're here if you have any other questions. Let's rebuild sillicon valley on eth.

Crypto AMA with Aave (1.29.20)

Guest:

  • Stani Kulechov

Moderator:

  • Spencer Noon


Moderator:

Everyone, please give a warm welcome to Stani Kulechov of Aave!

As a reminder for everyone participating — please keep the discussion respectful at all times.

Stani — could you start off by giving us a brief bio on your background as well as how you got started in crypto? And then a short overview of Aave and a brief update on your progress to date?

We’ll then be off to the races with questions.

Stani:

Hey all, lucky to be here with you today 👋 Just a brief background infromation, got into crypto actually when I discovered Ethereum back in 2016 (did not get burn by theDAO tho), mainly was interested in Smart Contracts and the immutability. Wanted to create financial transaction with smart contract and ended up creating the first overcollateralized lending protocol ETHLend (yes the very OG-one), now pivoted to Aave Protocol that was launched couple of weeks ago and we managed have already 7 mm USD worth market-size 🎉

Last year was pretty much on product dev so happy for the launch 🙂

Interesting part of Aave is that it includes some nice features, which amongst is the ability to take Flash Loans from the Aave Protocol and also aTokens (aDai, aLEND etc) that increases interest straight in your address balance

Guest:

Why is aDai better than cDai?

Stani:

Example of aDai 🙂

Guest:

thanks @Stani - let's dive into questions starting with eli

Stani:

it's actually not better or worse, it's different. aDai increase straight in your balance whereas cDai increases in value and uses exchange rate that you apply when you exchange your cDai to Dai. In terms of aDai, when you deposit 100 Dai into Aave, you'll get your 100 aDai to your wallet and that aDai will increase there, which makes it quite easy to see how much you are earning interest.

Guest:

Is this streaming being done on L2?

Stani:

nope, its straight view from Trust wallet

Guest:

Gotcha. Wouldn't gas costs make that capital inefficient?

Guest:

Curious to learn more about your interest rate swap.

Guest:

What is being swapped? MKR stability fee for a fixed rate?

Stani:

In practice what happens is that tokens usually represent balance sheets, so when for example you are sending a token from one address to another, what actually happens is that you are making a transaction to update the balance sheets. In some cases you don't need to do a transaction to update a balance sheet if you have math in the smart contract that applies logic which changes the accounts. In aTokens case there is interest rate formula dependend on the Aave Protocol which is used to update the balances of aToken holders similarly as BalanceOf is called. What wallets are doing is they are constantly calling balanceOf to see if the user is receiving new tokens and that is how MetaMask or TrustWallet etc wallet providers are streaming your interest and you see your balance growing 🙂

Stani:

you mean the stable interest rate right?

Stani:

in this case, there is no gas consumption as there is no need for transaction (whoa!)

Guest:

> 7 mm USD worth market-size

What exactly is this in reference to, assets locked up?

Can you provide a breakdown of the different products you have (e.g. flash loans, stable interest rate) and what % they are of your current market size?

Stani:

in case of the stable rate, it's in practice a fixed rate that is offered for the borrowers. Techically there is an oracle that pushes a rate into the smart contracts from other lending protocols and we calculate a sufficient margin to offer interest rate stability without reducing too much of the possibility for the whole pool to earn less.

Guest:

Hey Stani - thanks for joining us today, also enjoyed your conversation on David's podcast. On Flash Loans, nice job on how you named it. Could you pls give us another illustration with a use case where flash loans would be useful?

Guest:

On mechanics of flash loans, how long do users have to return the funds plus the fee required before the transaction is reverted? Is there a penalty for users when a loan transaction is reverted? Is this an all or nothing revert action so if not enough funds are returned, is the loan reverted entirely or proportionally?

Stani:

https://aavewatch.now.sh/ total market-size (came slightly down from the morning) 6,699,809.58 USD, from which is Available: 5,011,194.45 USD (74.8%) and Borrowed: 1,688,615.13 USD (25.2%). This is an awesome tool that one of our community members created to track our progress (if you want to contribute to our community: aave.com/discord or t.me/aavesome which ever format your prefer. In terms of smart contract locked assets I recommend to follow the Aave LendingPoolCore smart contract: https://etherscan.io/address/0x3dfd23A6c5E8BbcFc9581d2E864a68feb6a076d3 which totals now around 5 mm USD worth locked assets.

Stani:

the whole market size is mostly deposit and borrowing against assets, there has been a frist developer that builded upon Flash Loans functionality, which is called ArbitrageDAO that has done some Flash Loans and many others to come with different use-cases.

Stani:

Here is an interesting post about how much small batch of Flash Loans could affect the APR:

Stani:

the cool part about Flash Loans is that it allows Aave depositors to earn yield from activity that happens in other protocols such as Compound, MakerDao and dydx. For example if there is a liquidation happening on Compound with Aave Flash Loans, that would provide yield to the protocol similarly as refinancing from dydx to Compound etc.

Stani:

We're on early stage, however the use-cases are quite solid

Guest:

+1 on this, I know it's probably painstaking, but I think a lot of people in this chat (including me) would appreciate a step by step walkthru example of opening / closing a flash loan

Stani:

The first use-case I saw was the above arbitrage example, where you borrow flash loan from Aave, buy asset at lower price in exchange 1 and sell asset at higher price in exchange 2, return the loan and keep the profit. An example arbitrage opportunity with SAI/DAI pairs:

Stani:

just to give some background, the flash loan allows you to take any available liquidity from Aave without a collateral, the only condition is to return the loan with the same transaction, otherwise the transaction fails.

Stani:

Hence you could do all kinds of atomic transaction (so called nested transactions) with the borrowed liquidity

Stani:

Another quite interesting use-case is to use Flash Loans for the liquidations. The collateral value of the borrow might have reduced to the extent that there is a liquidation event such as in protocols as Maker/Compound etc. In such case the borrower looses up to 13% of the collateral value for the liquidators that are incentived to keep the protocols solvent. Normally a liquidator needs to keep the invetory of the borrowed asset to be able to bite the collateral and sell it in a secondary market. With flash loans, that inventory is not needed. Hence you could take a Dai flash loan from Aave, close the CDP/Vault, take the collateral ETH for example, Sell it in Kyber/Uniswap for Dai and returning the Flash Loan to Aave (quite a circuit of composability).

Stani:

Even better is that a dev can create a service where borrowers can self liquidate, hence saving that 13% or whatever is the liquidation discount.

Third, cool use case is refinancing. Imagine that Compound offers 7.89% apr for borrow and dydx 6.25% or less on Dai. You have a borrow but your Dai is already spent or in use somewhere so you can't return the loan atm. What you could do is to take a Flash loan to close that Compound loan and open dydx Dai loan with lower apr and return that Dai flash borrow to Aave

Guest:

It's basically insurance for your CDP becoming undercollateralized

Stani:

it takes the liquidations proceeds from the liquidatiors back to the pocket of borrowers as well

Guest:

Has someone turned that into a product? How much would borrowers stand to save would you say by your estimates?

Guest:

Thanks Stani. I have follow-up questions but I'll wait for you to answer my other question.

Stani:

You could even go completely mind-blowing by adding to the above interest rate swap scenario (refinance) a currency swap (either periodical or for the whole loan period). Let's say that actually dydx is offering even lower rate of USDC, so instead of opening a Dai loan in dydx, you would instead borrow USDC, sell it on UniSwap/Kyber for Dai and return the flash loan to Aave. What is the result is that the borrower spend or is using Dai but has lowest market rate (add more flavour by even making this algoritmic) of all stablecoins (you could add function on top that when the user returns the Dai it gets converted back to USDC and dydx loan closed) 👈 someone needs to build this, it's mind blowing

Guest:

Is it possible to have a botched flash loan? i.e. something breaks down on one of the protocols (e.g. Kyber) and the flash loaner is left holding the bag

Stani:

Also you could even add more sugar on top buy allowing to do collateral swap, so basically when you have a CDP/Vault open with BAT and you are spending that borrow, but for some reason would like to be long on ETH instead with your collateral, you could basically take a flash loan to close the vault and sell the collateral in exchange and reopen the vault with ETH collateral. Nice money lego application from oldFi. Imagine if the tokenization goes further with synths and you could swap your collateral from NYC house price index to Hong Kong house price index etc just like that at the same time while unleasing liquidity form your collateral in stablecoins. 😍

Stani:

I know that there are few developers racing to build one, that would save quite a lot of liquidation fees, interesting to see how it will change the mechanics of the liquidation models these lending protocols have now. If anyone else is interesting building some of these kind of stuff with flash loans, jump into our discord to talk with Marc Zeller for grants and docs help (developers.aave.com)

Stani:

Please do ask 🙂

Guest:

Hi Stani, thanks for great answers.

Aave sounds like a great addition to defi ecosystem. The refinancing example is great. I’m trying to put it together in my head, so correct me if I’m wrong.

The idea is basically that the only way the platform can be in full control of risk given no collateral is to control the environment where that loan is deployed, and what class of trades it is deployed on (i.e. riskless arb). The point about reverting transactions if the platform is not made whole, which implies you are in control of the loan's destination environment.

It seems like platforms like Aave will ultimately move towards real time quantification of risk, based on which they can provide most competitive rates.

How do you manage credit / counterparts risk?

Stani:

I can't happens since the transactions complety fails to execute since the condition of the transaction (return the funds) is not met.

Guest:

Hey @Stani! Thanks for the time and thanks to @spenceer as always for organizing.

Guest:

What are the token economics of Aave protocol?

Stani:

Interesting perspective. I would say tha the risk is controlled by the function-level, i.e. you could use the flash loans with any other protocol or smart contract hence it does not need to be within the Aave smart contracts system rather any transaction that in short does not fulfill the condition will not get executed. You can do as many nested transactions in the Ethereum transaction as you will, only limited by the Ethereum blocksize

Stani:

in other words, there is no counter party risk as the flash loan is settled in the same transaction and there is no option for the user not to settle due to the atomic nature of the transaction

Guest:

Thanks Stani! Can you speak to the relationship between block times and use cases for flash loans? i.e. would shorter block times make flash loans unusuable? is there an optimal block time for flash loans?

Guest:

Does a user then have to return the funds borrowed + the fee within one block?

Stani:

Hey Cole, the Aave Protocol itself is open source (really open source, not just published copyrighted prop code) the protocol needs to be governed by the community. To govern the protocol we are using the LEND token, which means that in essence the token is governance token. Besides beind able to control the protocol with the token, our aim is to use LEND token as a insurance for the protocol whereas it provides risk/reward mechanics to the token holders. We are releasing very soon the Aave Governance paper, which presents the model. Moreover, our current Governance Smart Contracts are being audited and will be deployed within few weeks and in that case the admin keys from the team are transferred to the governance protocol (yeey!).

Stani:

Good question, block time per se does not affect the use cases for flash loans as block time is the time quantity of when a new block is confirmed. Each block has what I like to call "seats", in other words included transactions, so what ever you are doing with your transaction (and the nested transactions within this transactions) just needs to get inside of a block (which is determined by the pricing of the blocks i.e. how much you pay gas to get the the seat). Hence you might just have a block with one Ethereum transaction which consumes all the blocksize with it's nested transactions if your transaction operations are something that consumers a lot of gas.

Stani:

hence there is no need for optimal block time, the important thing is that when you are consuming flash loans for your use-case you need to simply calculate your operations gas costs etc and ensure that you have enough margin to make profit on whatever you are going to do (arb, refi, collateral swap, currency swap etc)

Stani:

yup, the actual concept is within one Ethereum transaction, thats how we are able to do undercollateralized loans on Ethereum by taking advantage of the atomicity of the blockchain

Guest:

WDYM by insurance for the protocol?

Stani:

Interesting hack during SFBW on Aave Flash Loans (on test-net tho back in the days), I recommend to take a look: https://docs.google.com/presentation/d/1uShmPVXMk-pfBwjEnCPL3JeiBAqKflCoXk-7_eh5oQM Ficient wanted to make flash loans easy to use in practice by creating circuits where you could add any transactions in between and it allows you to in take the flash and return the flash, in between you can add any transaction you want that makes sense (profit in terms of defi language 🤓)

Guest:

Thanks. Just to make sure I understand, one block is confirmed every 12.9 seconds or so right now. How long does it take for one Ethereum transaction to be recorded? Trying to make rough parallels to HFT in traditional markets where transactions are measured in micro seconds. This is important obviously time is money in this case.

Stani:

Governance tokens are in practice additionally utilizing a way to provide risk and reward mechanisms with the ability to insure the protocols for certain actions, such as in the case of MKR where there is burning (the deflatory economy) and minting (inflatory) when needed. In similar fashion (plus some innovation that we are going to add) LEND token would be used within the protocol. In other words, normal condition of the protocol creates a cycle of burns/deflatory economy for LEND token and in case of black swan event that LEND token deflatory economy is turned into inflatory economy for the temporary period of time. This creates a risk reward model for the tokens holders besides the ability to govern the protocol. The exact model and it's economics is not yet disclosed completely rather will be described in the Aave Governance Paper that we are releasing soon. Since the protocol and the token will be based on decentralized governance, the token holders are able to vote on how the protocol or the token model will look like in the future as well.

Stani:

Each block confirms set of transactions, in Ethereum, you can made various transactions that are settled with these blocks, the difference with HFT is that every small part of a seconds counds and speed is important. In terms of flash loan you are not actually competing for time speed but seat in the block, i.e. gas/how much you are willing to pay to get your transation confirmed (settled)

Guest:

Thanks, Stani!

Stani:

HFT in DeFi world would be some sort of a front-runner that tries to snatch your transaction, for example you might do super-awesome cool Flash Loan ⚡️with x profit, just to see your transaction fail because someone copied what you were doing executed the transaction with higher gas and getting x - 1 profit and still earning. These are the Flash Boys 3.0 I guess 😄

Guest:

Ha, this is just like eating lunch with my family.

Stani:

just to mention couple of words about the stable rate. So the stable rate is fixed interest rate wth couple of conditions. In practice you are fixing yourself into pre-defined rate (financial control for you) and the only conditions that you are rebalanced by the protocol to a new market stable rate is in case the deposit rate is higher than borrow rate (which is edge case and the limitation is to avoid gaming the protocol by borrowing to deposit), similarly you are rebalance to a new lower stable rate if it's more than 20% lower than the one you are currently sitting on. Hence it works both ways. 🙂

Stani:

hot cupcakes goes fast 😄

Guest:

You're solving for liquidity risk, and counterparty risk by design. Audits should help mitigate smart contract bug risks. What do you think is the greatest risk for this project?

Moderator:

We're up on time! @StaniKulechov please answer any final questions and then end by telling us (1) the best way to stay up-to-date with Aave and (2) the best way for folks to get in touch?

Stani:

I think it's the overall defi risk (systemic risk) that is associated with smart contract systems, we have smart contracts audits done by Trails of Bits and Open Zeppenin and how have two additional audits under way, which one of the is a bigger one. We want to provide as secure protocol as possible. Also regulation on DeFi is still unclear however, I am sure the whole DeFi space is doing enough legal ice breaking atm.

Stani:

Thank you all for letting me here to share my thoughts here and special thanks to @spencer and active members for asking interesting questions. To follow Aave: t.me/aavesome or aave.com/discord Also check aave.com to try our your first deposit 👻 follow us also on Twitter: https://twitter.com/aaveaave since we make damn good memes as well 😎

Guest:

Thanks so much @StaniKulechov! I look forward to reading up on your governance models when that becomes available. Best of luck to you and your team.

Stani:

💖

Moderator:

Good stuff. Thanks @StaniKulechov and thanks everyone for tuning in!

Crypto AMA with Livepeer (1.24.20)

Guest:

  • Doug Petkanics

Moderator: 


Moderator:

Alrighty let's do this. Happy Friday everyone.

Let’s give a warm welcome to Doug Petkanics (founder) of Livepeer!

As a reminder for everyone participating — please keep the discussion respectful at all times.

Doug — could you start off by giving us a brief bio on your background as well as how you got started in crypto? And then a short overview of Livepeer and a brief update on your progress to date? We’ll then be off to the races with questions.

Doug Petkanics:

Hello everybody! Thanks for joining. Excited to be here for the next 90 minutes.

Thanks Spencer for hosting. My background is in traditional computer science, software engineering, and general hackery. I studied CS at UPenn, and after a couple of years working on large software engineering projects, I joined a YC startup right before going through the program in 2008. Since then I founded and lead engineering at two startups - one successful data infrastructure startup which was acquired by Groupon, and one not-successful mobile startup with some prominent video features. My co-founder at Livepeer, Eric, was also with us on those two startups so we’ve been working together for 11 years now, and when we were exploring what was interesting to us in 2016, we both caught the blockchain virus inspired by web3 and ethereum as an open development platform - and spent 6 months learning, meeting people in the space, and building open source projects (including the pre-cursor to ERC-721 - nonfungible tokens) - before deciding to dive in and build Livepeer....

To give a brief overview of Livepeer, our mission is to build the world’s open video infrastructure. Building video applications like Youtube or Twitch is difficult, expensive, and require building on proprietary software and platforms. Via the Livepeer protocol, anyone with excess video encoding compute power (such as GPU miners - more on this later), can earn additional revenue by transcoding video, while developers can build applications and transcode video at a 10-50x price reduction over what they would have to pay on public clouds. The Livepeer protocol went live in April 2018, and initial token was distributed via an algorithm we designed called The MerkleMine. Since then, protocol participants have earned token by running infrastructure or staking on the network, and users have used the alpha platform to stream live events. We recently released a major update called Streamflow, which takes the *functional* alpha platform, and makes it scalable, reliable, and cost effective on Ethereum - which will enabled scaled usage of the underlying platform for thousands of concurrent video streams.

Livepeer is a little bit complex as it touches not only the blockchain world, but also the video world. The best place to spend 10 minutes learning about it is our user friendly primer - http://livepeer.org/primer

So that’s me, that’s Livepeer, and that’s what’s been happening lately. I’m Doug Petkanics. ASK ME ANYTHING.

Moderator:

Haha this is great. Thanks a lot for the introduction. Everyone feel free to ask away!

Guest:

Who are your ideal customers?

Guest:

+1, and maybe you could expand on your GTM in general?

Doug Petkanics:

The word "customers" is interesting, and if definitely applies to the company Livepeer Inc. So I'll talk about customers first. But note that users of the Livepeer protocol and network may be "users" moreso than customers. So to answer your question though...

The ideal customer for Livepeer is a Video Streaming Platform. Think Brightcove, or Vimeo, or Wowza, or Mux, or Telestream for example. These are existing video industry companies that power video for hundreds of thousands of customers of their own. They have many concurrent streams of video flowing through their own platforms. And hence they have very high operational costs to keep these streams running reliably, at high quality. Livepeer can dramatically reduce those costs and operational burden, and let them scale to infinite capacity (on the compute/processing side), without having to add additional human or infrastructure resources.

And so describe Livepeer Inc's go to market, it's to work with some of these VSP's (smaller ones at first), to identify end users of theirs that could benefit from Livepeer, and to do sponsored offerings to run pilots and create successful case studies about the cost savings that result. Using those case studies and VSP inroads, we can expand our offering within their businesses and attract new business as well. All of which drives demand and fees to the Livepeer network. Finally, a word on "end users" of the Livepeer network....

If the VSP's represent the fastest path to scaled adoption, it's worth asking who the end users are that really benefit from Livepeer. It's streaming applications that have many streams of content - things like Twitch that have 60,000 concurrent streams. Things like web cam providers like nature cams, surf cams, ski cams etc that have 100+ concurrent streams. In a traditional infrastructure like AWS, they may have to add 1 new server to transcode every 2 or 3 streams (if they'd like to offer HD streaming). In a Livepeer world, one server needs to be added for every ~50 streams, as most of the work is outsourced to the Livepeer network. So all the sudden the big streaming applications can reduce costs dramatically. And startups looking to build new or innovative versions of streaming apps can actually affordably do so and deliver good experiences without bankrupting themselves on infrastructure costs.

Guest:

Got it. So how does the protocol work at a high level with protocol participants, end users, VSPs, etc.?

Doug Petkanics:

/END WALL OF TEXT. Next question 🙂

Doug Petkanics:

First, the supply side of the protocol: Who's providing all this video encoding capacity....

Doug Petkanics:

Anyone who wants to earn revenue for using their excess compute capacity to encode video can stake Livepeer token (in the Ethereum protocol smart contracts) to enter the active set. This stake secures their work, as it can be slashed if they act maliciously....

Any token holder can also stake towards these nodes to add more security. And in return the nodes advertise a % of the fees and rewards they earn that they'll share back towards the token holders who staked. You can view the list of active nodes at explorer.livepeer.org ...

On the demand side, if someone wants to use this network for transcoding, they will make an ETH deposit to pay fees to use the network. Their node will look at this list of registered nodes, negotiate price with them, test them for performance, and begin routing video towards them in rough proportion to how much stake they have....

Guest:

Who do you think the first commercial users of the platform will be? How much do you think they will pay the network for transcoding?

Doug Petkanics:

Which each segment of video sent to be transcoded, a probabilistic micropayment is sent to the node who's performing the work. As long as the video isn't malicously misencoded and the transcoded outputs are returned fast enough, the relaitonship continues. If the nodes cheat and misencode the video, they can be slashed by the protocol.

Doug Petkanics:

There are all sorts of interesting complexities related to the economics of the protocol - token rewards in LPT vs fees in ETH. The inflation rate that changes each day. But in short the protocol creates an active set of workers who advertise and secure their service. It settles payments. Validates work. And enables a marketplace for matching the demand with the supply. The client software, which is basically an open source video media server that we wrote called LPMS, along with p2p networking, does all the video heavy lifting.

Guest:

This is a bit more of a video question, but what happens after broadcasters get back the transcoded video? What do they need to do to actually stream the videos? Send the transcoded videos to their CDN?

Doug Petkanics:

I belive it will be a Video Streaming Platform (VSP) that is running a pilot with one of their customers with 100-500 concurrent streams, and paying the network something on the order of $0.05-$0.10/stream. This is disruptive relative to the $3 they may pay a SaaS platform of $0.50+ they may pay to DIY on a cloud, but still has room to go a lot lower.

Guest:

I guess I ask because transcoding is only 1 piece of actually streaming video (though obviously an important and costly piece).

Doug Petkanics:

It's more likely early usage will come in step functions from onboarding these real commercial pilots at scale, than just slowly organically growing from independent developers building new apps that do one or two streams at a time.

Guest:

Hey! Thanks for doing this. What is the monetary policy of LPT and does the token capture value?

Doug Petkanics:

That is correct. The Livepeer transcoding network just transcodes and doesn't deliver content on a broad scale. It's meant to be a pluggable piece that fits into existing video workflows (which have many different components including ingest, ad insertion, analytics, CDN, transcoding, etc). So the user would get the video back and then deliver it to their users however they want. This also is part of the reason why a VSP first strategy makes sense - the VSPs offer all those bells and whistles that have nothing to do with the core disruptive value prop of Livepeer. But they're big challenge and cost in infrastructure is scaling transcoding. So we can make it easy to adopt Livepeer without blowing up their whole stack, and solve a big pain point.

Under our mission to build an open video infrastructure, we have some strong theses on p2p content delivery as well that we'd like to tackle, but it's a very different problem

Doug Petkanics:

The monetary policy of LPT is built around encouraging participation in the network. There is a target participation rate of 50% - ie 50% of LPT should be staked and participating. Each day that the rate was lower than this, the inflation rate went up, meaning more new LPT each day to those who stake. This encouraged a very active set of stakers and network participants who cared a lot about the network and accrued all the new token each day, while those who were purely speculating with the token and sitting on the sidelines without participating, got dilluted.

In reality, despite there being an initial distribution algorithm called the Merklemine, the token distribution is playing out over a ~3 year period through this inflationary policy - with those who participate in the network building up their ownership stakes

Those who participate efficiently also should expect to earn a proportional share of fees that flow through the network in ETH.

Guest:

Hi LivePeer team. Thanks for doing the AMA. Is the protocol censorship resistant?

Doug Petkanics:

But this requires active attention and work, through the form of infrastructure operation, or quality assurance through delegation.

Guest:

Any competitors? Strange to be the only project pursuing this opportunity.

Doug Petkanics:

The underlying protocol is open access as the video segments are just treated as bits over the wire, just like the core internet protocols like TCP...that said, as mentioned before, there are many components in the video stack and Livepeer is just one piece of that stack. The applications that serve as the points of access have their own questions and responsibilities in terms of their approach to censorship resistance. And even within Livepeer, node operators have their own take and policies on what work they want to service.

Guest:

Can you talk about the network/token defensibility? What stops other networks from coming in and forking this to provide the same type of service?

Doug Petkanics:

I think protocols at the technical layer shouldn't descriminate between bits and use cases, but we also need to be responsible to make sure tools and processes can exist to let individuals who opt into participating in networks have control over what their resources are being used to service.

Guest:

Hey 👋🏻 thanks for doing this! Two questions:

1) What is the biggest difference between streamflow v1 and v2?

2) What future upgrades are a priority to implement?

Guest:

Hey Doug - thanks for all the insights here. How much of your early adopters on the demand side are from crypto?

Doug Petkanics:

There are a lot of projects working on things that may look different on the surface, but may collide or intersect in the future...

First there's the video specific projects - Theta, Videocoin, Props - these seem to be focused either on the user economies (different problem), or taking a full stack infrastructure approach tackling CDN, ingest, encoding, etc (a lot to focus on a build, and more end-user driven path to market as a full stack streaming platform)...

Guest:

Have there been negative effects of such a high inflation rate?

Guest:

Great question!

Doug Petkanics:

Then there's the generic compute platforms or vertical specific compute platforms: Golem, Render token, IExec. These aim to be either generic AWS replacements or specific compute platforms for something like 3d rendering...

If you look at Livepeer generically, the protocol allows you to list, advertise, and secure your compute for an known algorithm (CPU transcoding, GPU transcoding, H264 codec, etc), and then to perform that work, get paid, and verify you did it correctly. Zooming out you could see how Livepeer could be used to facilitate other algorithsm on streaming data as well, such as image recognition, deep fake detection or generation, closed captioning and subtitle generation, etc...and so this looks like a similar space to some of the generic p2p compute platforms.

Guest:

Love it, great answer!

Doug Petkanics:

Ok, first I'll take on the high inflation question then Nicolas' questions about Streamflow...

Guest:

There have not been any seriously negative effects that would seem to matter in the long term. The biggest negative effect is just confusion about what it means. This rears its head in two places...

1) People see that they can earn a 137% return and think this means 137% more money. This is probably not what it means. You'd actually expect each token to be worth less as so many more are being created. Hence people SHOULD be thinking about their increase in total network ownership percentage, and what the network as a whole could be worth in the future. IE I own 1% of the network today, and in a year I'll own 1.3% of the network.

2) Taxes. I don't really want to talk about this one very much, but there's no guidance for what tax treatment should be on a highly inflationary protocol, and you can imagine if it appears tons of tokens are appearing to accrue in income, then that needs to be reconciled somehow. The extreme example is that if there were 10 tokens on a network worth $1 each for a total network value of $10, and then the next day all the sudden the protocol minted 1,000,000 new token to you...it is unlikely that you really just had $1M of income.

Doug Petkanics:

The protocol V1 (what I'll call the alpha) was functional but not necessarily scalable, reliable, or cost effective. It incurred too many costs for using the blockchain for payment settlement (in the form of gas), and routed work to only one node on the network who would kill you reliability if they went offline. This was great as a proof of concept to iterate on, and enabled streaming of many single events, but wouldn't provide a big impact at scale...

Guest:

How does Livepeer Inc. make money?

As in what do Series A investors own? Livepeer Inc. equity? Any LPT?

Doug Petkanics:

The Streamflow release (V2) addreses all these issues. We built probabilistic micropayments to scale the payments. (This is really cool, you basically pay by issuing lottery tickets, and nodes get paid when they win the lottery). We moved job assignment and negotiation offchain into the client so that you can fail over between providers on the network seamlessly, use redundancy, and guarantee very high reliability to satisfy enterprise use. And we scaled the protocol to move well beyond the small 25 node set, to up to 100 currently and beyond. We also unlocked GPU based transcoding, and enabled cryptocurrency miners to dual mine crypto while concurrently transcoding video on Livepeer. As such we have over 50,000 GPUs enabled to serve transcoding on Livepeer should there be demand.

Guest:

"enabled cryptocurrency miners to dual mine crypto while concurrently transcoding video on Livepeer." - can you talk more about this please? What is the performance impact on a GPU miner when they dual mine?

Doug Petkanics:

The scaled early targets on the demand side are not from the crypto world, they're from the video world. There are a few crypto enabled video platforms that we'd love to work with like DLive + Props. But we haven't seen crypto or decentralized applications reach scale in the video world yet, and Livepeer provides a value prop to those operating at scale. So I'm excited to see what product visionaries build using web3, Ethereum, decentralized storage, and decentralized compute platforms like Livepeer that actually strikes a chord with consumers and grows to scale.

Doug Petkanics:

This is really cool (maybe the coolest part of Livepeer)....

Guest:

Agreed!

Guest:

It's what enables the deep cost savings.

Doug Petkanics:

So GPUs have 100's of chips called CUDA cores. They can do general purpose compute, and are used to hash cryptocurrencies like Ethereum, Zcash, Grin, etc. Miners are using them at 100% capacity

Doug Petkanics:

But GPU's also have video encoding/decoding ASICS. These CAN NOT hash cryptocurrency. On miners they just sit there doing nothing.

Doug Petkanics:

The Livepeer software can route video encoding jobs to these ASICS without heavily disrupting the hashing. So they can do both at the same time. They may lose 10%-20% hashing performance while encoding video at full force, but just to put the economics of this into perspective...

Guest:

Awesome, thanks!

Doug Petkanics:

The miners hope to make $1.50/day on the hashing. A transcoding job may cost $3/hr for a livestream on a SaaS service or $0.50/hr DIY...So for a cost of only about $0.70/day in bandwidth and electricity a miner can encode two concurrent streams while still hashing and making that income....

Doug Petkanics:

That means they can charge only a couple cents/hour, which is a huge disruption to the $3/hr customers are use to paying, and still make extra income on top of their hashing. This is what makes it a no brainer for cryptocurrency miners to be willing to do both, and why there are so many GPUs standing by ready to encode on Livepeer. now we just need to collectively bring the demand 🙂

Guest:

Thanks Doug, what's the focus of livepeer now? going after developers? protocol upgrades? biz dev connections?

Doug Petkanics:

Proving adoption. Its generating those first successful commercial proof points that this network can deliver the impact that is promised via the above.

Guest:

thanks Doug

Doug Petkanics:

The challenges are

1) productization and reliability - just to make sure this can reliably work on a decentralized infrastructure for an enterprise user.

2) the BD process to work through demonstrations, tests, pilots, commercial agreements

Guest:

Bumping this since I don't think you addressed it. I'm also wondering about the core value prop of having a token, especially bc it seems like most of the ideal use cases for Livepeer don't involve crypto

Doug Petkanics:

But I'm super encouraged by the recent launch of Streamflow. It's working really really well considering its the first release of the new client software. we'll have to iterate on the client side a lot to iron out any bugs, solve reliability issues, build services on top, etc...but we're in a much better starting place than we perhaps expected (just having years of iterative software development experience)

Doug Petkanics:

Sure....

1. The token provides economic security against the work that's being performed. It can be slashed if the work is misperformed. It also represents the right to compete to do X% of work on the network. As this is tuned via the economic policy of the protocol itself, this would be impossible if the underlying security were provided via an asset like ETH...

Doug Petkanics:

2. It also serves as an alignment and coordination point. This is the same as any project - the holders who have staked on the network (with an unbonding period that keeps the token locked) are incentivized the help the project achieve success.

Doug Petkanics:

3. A forked copy of the Livepeer network could certainly offer the same functionality, but wouldn't be able to offer the same economic security, and wouldn't benefit from the network effects of those looking to drive work into the original Livepeer network. (This is TBD, we've still seen that despite many stakeholders who are very helpful on the crypto side and supply side, there hasn't been a tremendous amount of stakeholder contribution on the demand side outside of Livepeer Inc)

Doug Petkanics:

The network effect is further enhanced by additional compute services being available on THE original LP network. Should nodes advertise image recognition, metadata tagging on streams, machine learning on the video, etc...the more composable services offered on the main network, the less likely a forked version would be able to compete. And finally...

Doug Petkanics:

4. Geographic global footprint - video benefits tremendously from proximity on the internet when it comes to latency and reliability. If the main network has GPUs availalbe to transcode at high capacities at any region in the world, this is a huge advantage over a forked network that only has compute available in a single data center.

Doug Petkanics:

Related to many use cases not involving crypto...

Guest:

Awesome, thanks. I too am excited to see livepeer continue to grow.

Looking at people working at YouTube or Vimeo, they have a strong engineering culture but are definitely heavier in bus dev/sales/partnership/marketing skillsets. Are these roles that you think are needed for your team to push through its mission? How do you see the Livepeer team evolving in the future?

Doug Petkanics:

Yes, fees are paid in ETH today but hopefully in a stablecoin in the future. The buyers are going to want to pay fiat, as they're from the video world. So this is an example of a service that Livepeer Inc or others can provide. Payment gateways that abstract the crypto. While the supply side cares deeply about the crypto for the coordination, open access, easily settled payments, incentives, etc.

Doug Petkanics:

Yes, we have added a great head of BD to the team (formerly leading business at a large VSP). We'll publicize it more in conjuction with a go to market and first successful commercial pilot. But yes, this sort of thing will be critical to driving early adoption to the Livepeer network. Video is complex - it's not an "if you build it they will come" sort of thing, especially at scale.

Doug Petkanics:

Livepeer Inc has token exposure (so is aligned with the network) and plans to make money building commercial products and services that enterprises need in order to adopt Livepeer. We think of it in the same way as Coinbase being great for Bitcoin and Bitcoin being great for Coinbase.

Moderator:

Good stuff, thanks Doug. 15-minute warning folks - get your questions in!

Doug Petkanics:

Anyone have any inspirational product visions for what could be enabled in the video streaming world via web3? People just talk about decentralized Youtube or decentralized Twitch, but I think we need to think bigger and different.

Doug Petkanics:

(Disclaimer - Livepeer is not building this sort of thing. But we'd love to support entpreneurs or developers who want to build this sort of thing on Livepeer)

Doug Petkanics:

Well...here's one...

Doug Petkanics:

Crypto enabled video moderation platform. Anyone in the world can serve as "moderator" to watch Livestreams for social applications and flag/moderate content. Payments to the moderators can be settled in crypto, so it can be open access and can unlock earning opportunity for anyone in the world with a mobile phone.

Guest:

This is a great one.

Guest:

Do you have a favorite web3 video storage provider?

Guest:

Especially for someone trying to build a decentralized YouTube (i.e. global scale)

Doug Petkanics:

Still waiting for the right upload-and-disappear storage protocol to emerge. *crosses fingers for Filecoin*

Guest:

Anything that’s actually live?

Doug Petkanics:

Arweave has a great platform but recognizes the cost of permanence, and hence storing video would likely be cost-prohibitive

Doug Petkanics:

IPFS requires pinning and essentially running the servers yourself.

Doug Petkanics:

I'm excited to spend more time with the Sia team soon as they're not only focused on storage but also streaming the video p2p as well

Guest:

Not sure this is the visionary product vision you're looking for but we've seen recent successes of viral apps (web2) raise public awareness about data ownership and privacy. There's a play for web3 viral apps to alleviate these concerns.

Doug Petkanics:

Looks like we're coming towards the end of the AMA. I'd like to leave with one inspirational thought as it relates to Livepeer...

I am confident that Livepeer has the opportunity to be the first web3 non-finance oriented success story. If you read a case study in a couple months from a real scaled recognizable enterprise that indicates they cut their infrastructure costs from $2,000,000/year to $100,000/year via Livepeer, while enabling great HD video experiences for their users, that would be a huge win delivered by the web3/blockchain world to the mainstream. This is the sort of thing we're focused on delivering. And then as the rest of the web3 infra space matures along with us, we'll start to see not only this existing web2 impact, but innovative things in web3 that haven't been possible yet. Let's do this people 🙂

Guest:

Heh nice. Thanks for coming on today @petkanics!!

Guest:

What’s the easiest way for folks to get in touch / stay up to date?

Guest:

Thank you doug. Best of luck to you and the rest of the team

Guest:

Thanks @doug! And congratulations on the Streamflow release!!

Doug Petkanics:

Thanks for having me everyone and thanks for all the great questions. You can follow the twitter at https://twitter.com/livepeerorg, where we'll share any important updates.

Crypto AMA with StakerDAO (1.16.20)

Guests:

  • Jonas Lamis

  • Christian Arita

Moderator: 


Moderator:

Please give a warm welcome to Jonas Lamis and Christian Arita of StakerDAO!

As a reminder for everyone participating—please keep the discussion respectful at all times.

Could you guys start off by giving us a brief bio on your backgrounds as well as how you got started in crypto? And then a short overview of StakerDAO and a brief update on your progress to date? We’ll then be off to the races with questions.

Jonas:

Hey all!  Thanks for having us

I’m Jonas Lamis and I am the founder and CEO.  Prior to Staker, I’ve been heavily involved in the Tezos ecosystem.  I run Tezos.Capital which is one of the largest validators (bakers) in Tezos.  I also produce the Tezonomics podcast, and was previously a co-founder of Tezos Commons, the U.S. based Tezos non-profit foundation.

Christian Arita:

Hi everyone. My name is Christian Arita and I am the Ops Lead here at Staker. Before transitioning into this role, I worked in traditional finance, specifically in Research at Deutsche Bank out in New York. My role focused on Global Macro and Equity Strategy so I spent a lot of my time looking at things like the duration of economic cycles, how to position across sectors, and structuring baskets for buy-side clients. I ended up with a strong interest in crypto after I connected with Analysts who were covering crypto at equity research shops.

Jonas:

StakerDAO is a platform for governing financial assets in a decentralized, secure, and compliant manner.  We’re implementing a multi-token model where the governance token - STKR - is used to make decisions about how the DAO operates and what products the DAO launches and manages.  Other tokens that represent the economic interest of those products will be developed over time under the direction of the governance process.

In our model, governance decisions are made by a council which is made up of token holders. The governance process runs every month and is fully transparent on the Tezos blockchain.

We launched Staker on Tezos on January 1st and our first monthly governance cycle is underway.  In this cycle the first 3 council members are being appointed and the operations team is being chartered to finalize plans for the first synthetic product that StakerDAO will launch.

You can see our contract on chain: https://tezos.id/accounts/KT1EctCuorV2NfVb1XTQgvzJ88MQtWP8cMMv?op=contractStorage&tab=contract

The storage shows the public keys of the newly appointed council members, and it also shows the monthly proposal and the checksum of the pdf document that officially contains it.

We just entered the voting stage of our governance process, so you will see the 3 new council members voting to approve this proposal in the next week.  Our current council consists of Olaf Carlson-Wee from Polychain, Luke Youngblood from Coinbase Custody, and me (Jonas). We anticipate adding 2 more council members in February based on the funding round that we are currently finalizing.

Within the next week, we will have a Staker Agora governance explorer on our site that will let everyone see exactly how each cycle is progressing, what is being considered and who voted for each proposal.

The next big step for StakerDAO is the February proposal which is being developed by our Ops team in conjunction with our STKR token holders.  That proposal is going to authorize the launch of our first economic product - a synthetic ethereum tracker token that will track the price of a basket of PoS tokens.  The economic model for this token is being finalized and will be released in the February governance proposal.

Our plan is to launch a product that is broadly accessible by the crypto community and provides an easy way to go long on the best proof of stake blockchains.  However we also plan for this product to be compliant with the regulatory requirements for the jurisdictions where it is available.

What is the main value proposition of StakerDAO?

We think the main value proposition of StakerDAO is its governance for launching and managing financial products.

For the first product we put out there, the synthetic basket of PoS tokens, the value proposition is around the ease of use, but includes other benefits.

Can we short the basket?

Today, we have not implemented a method for shorting the basket. There is potential of course to do this on other platforms, but for now, on our platform, this is a long-only product.

Can you talk about the purpose and long-term goals of the council and why you went with Olaf and Luke?

We looked at governance models across crypto and came back to the representative model as what we wanted to start with. Having spent a lot of time with Tezos, we liked how coinholders are involved in discussions and proposal development, but ultimately the voting is done by their bakers. We are modeling Staker after that. In our case, the council will be elected by the STKR holders on an annual basis.

But to jump start this, we are appointing the initial council for a 1 year term. Polychain was the seed investor in StakerDAO and Olaf is a great visionary in the space - so a great fit. Luke has been a great supporter of PoS over the years and has deep expertise on the technical side. He's bringing the kind of expertise we want to be able to use to make Staker products well received across the industry. In 2021, we will have an election among all holders to determine the council for that year.

Can you talk about the composition and management of allocations in the staking token basket?

When we were looking at how some companies in the crypto space create baskets or index funds today, we realized that many of them have simple market cap weighted baskets. This works great in traditional finance, but is complex in crypto because of some assets, which are often seen as undesirable. Even crypto assets within the top 10!

The composition today is a multi factor approach. We have thresholds for market cap and volume, but once we filter our universe for these two, we start to look at rewards % and staking ratio (% of tokens staked on the network). On the reward ratio side, we want to maximize growth/risk/profit, however you'd like to think about it while on the staking ratio side, we want to optimize for quality of the network. Essentially, are users excited about the network and staking to secure it? Today, our basket includes Tezos, Decred, Cosmos, and Algorand, but can contract and expand as other PoS come to life. The methodology itself is able to grow based on STKR token holder feedback!

In terms of allocations, once we have these multi factor scores for which assets will enter the basket, we market cap weight them.

How do you view the current landscape with folks like Coinbase and Binance and others adding staking support for users assets held on the platform, as compared to something like this token accrual model?

We think that the basket token provides several benefits vs. individual token staking. The index nature of our offering will provide easy access to a broader set of assets.  It can be complicated to manage a wider set of PoS assets and our governance process lets us always stay in front of emerging assets. Also, our model allows holders to get in and out of their position without worrying about lockup risk and timing. Lastly, the basket has the potential to be tax advantaged.  Rewards generated by staking are used to buy back and burn the token - creating a deflationary model for holders. Rather than a distribution of regular income as they get today through staking rewards.

Who/what is the oracle?

Today, we don't implement an oracle. Our current framework publishes the NAV on-chain for any participant to see. We expect to work with market makers to peg the price to NAV, but we also will implement fail safes to bring the token tracker back to NAV by potentially selling the underlying to buy back the token tracker. Otherwise, we think there's a strong floor associated with the rewards the basket would generate on an annual basis.

The council is 3 today; how big / who is involved in that council "at scale"?

The council will grow to 5 as of the February governance cycle.  We intend to have it set at 5 for 2020, with an election in 2021.  However, we leave it up to the governance process to decide if the council should grow in size. As StakerDAO launches more and different assets, we think the council could become multiple councils over time.

Why did you choose a basket of PoS tokens to start with? Because there are "dividends", or because you actually want to have the tokens on inventory (and I assume you have XTZ, ATOMs, etc.) to back the basket?

The synthetic token will be fully backed by the underlying tokens. We want to both implement the price exposure as well as the rewards. As Jonas mentioned, the product is tax advantaged given that we don't distribute the rewards through a 'dividend', instead we purchase the synthetic token tracker in a buyback. This is equivalent to a public company conducting a buyback instead of a dividend.

Is the DAO holding funds off-chain?

For the first product, yes. The underlying PoS assets are held in custody.  Future offerings might bring those assets on-chain. We'd love to see a DAI type offering emerge on Tezos that could be managed by STKR for example.

What are some interesting things you could see evolving around these staker basket tokens in the DeFi space, or even some that you’d like to see?

After our initial launch, there are several projects we want to move quickly on. This includes synthetic token trackers for Tezos and Cosmos, which we see as highlighted in the debate over lending vs staking. As Jonas said, we also think the Tezos network needs a stablecoin. Outside of these products, we think we can iterate on anything crypto native to real world assets over time. We are super excited about the tokenization of more traditional financial assets over the coming decade as well.  We intend to use this model to bring baskets of those types of assets online too. 

One interesting thought around our first product is whether it can become a primitive in other projects like collateral in Maker

Have you given any thought to the weightings of each asset in the basket?

So once we rank the assets based on the multi factor inputs, the assets are market cap weighted in the basket. Today, this looks like 45% Tezos, 40% Cosmos, 10% Decred, 5% Algorand.

Can you deposit the right amount of each staking token directly into the basket and mint BLND shares yourself? And conversely, can you redeem for the proportional access to the underlying tokens?

The initial design is to offer a fixed amount of the PoS token through a regulatory offering.  We are working with CoinList on this. Once minted, these tokens would exist in perpetuity. The underlying basked of PoS assets would continuously be generating yield which would drive deflationary pressure on the Pos tracker token.

The Council through the governance process can choose to mint more of these tokens and make them available as desired, which might include a self service model.

Can the DAO buy BLND back (and burn) if they wanted with proceeds from the rewards if the price were trading below NAV?

At launch, there will be an auction model for repurchasing tokens from holders with the generated rewards. And the governance process would allow the council to repurchase the token from the NAV should it need to do so. The other interesting lever the council has is setting the "operations fee".  This is the percentage of rewards that the council claims for STKR holders. Sort of like the Stability fee in MKR.

What do you expect the operations fee to be? 

Because of the ease of use and tax shield, we think we could start somewhere between 10-20% of the rewards. So 1-2% of NAV. In reality, it will be an economic experiment to test the boundaries of how greedy STKR token holders can be while providing a competitive product for users.

Is there only 1 governance token even if more products/baskets are launched?

There will only be one governance token even if other products are launched. It's important to note that every STKR token holder is financially aligned on the success of Staker's entire suite of products. Today, STKR token holders will benefit from our initial product, but over time, STKR token holders would accrue value from everything launched.

Why are you building on Tezos and not Ethereum?

We think Tezos is the premier platform for governance. The combination of a broadly decentralized validator pool (over 450 validators), strong proof that on chain governance works for evolving the protocol, and also the fact that the Tezos Foundation is tremendously endowed for long term ecosystem growth led us to that decision.

Now having said that, we intend to launch the first economic asset, this PoS tracker token on Ethereum so that it can be part of the vibrant defi ecosystem there.

So you forked Agora for StakerDAO governance?

Yes. We forked both the FA 1.2 security token standard on Tezos, and the Agora governance explorer.  We are combining both of these and releasing them in open source as what we call the GOV.1 standard. StakerDAO is the reference implementation of GOV.1.  But others can use the code base to launch their own asset governance processes and related governance tokens.

How will you address potential conflicts of interest between STKR holders and holders of the token basket?

We think this system will have inherent conflicts that will play out in an interesting experiment, but STKR holders need to remember that they also should act in the best interests of its users. Reiterating how STKR's products and their associated fees need to remain competitive. This is not too dissimilar from the margin compression we see in traditional finance across brokers. If another platform has better fees, users could leave the platform.

What aspects of the on-chain governance system are the most game-able and have you started to come up with mitigation strategies if someone tries to execute an attack?

We've designed StakerDAO governance to have a 3 party checks and balances type of system to reduce the risk of an attack. The first party is the STKR holders.  They are responsible for voting for the council and also for developing the ideas that go into the on chain proposals. The 2nd party is the Ops team. They are hired and managed by the operating company.  They are responsible for finalizing the governance proposal and publishing it on chain. They are also responsible for implementing the results. The 3rd party is the Council. They are responsible for approving or voting down proposals.  A majority is required. All governance systems are game-able, but we are borrowing from some of the best systems we have around. And to add, outside of these checks it might be interesting for the STKR community to explore hostile takeover defenses like staggered board elections and poison pills! All part of the fun

Did you discuss how StakerDAO is funded? Has a pool of funds been setup?

StakerDAO is a private Cayman Corporation.  It has sold shares to investors and continues to do so.  Those shares are tokenized on the Tezos blockchain. Over 2020 we are aiming to grow our token holder base to several hundred holders, who will all participate in the governance process.  Later in 2020 and into 2021, we expect security token exchanges to be able to offer STKR in a compliant manner to a wider audience.

Could you explain the burn mechanism between BLND and STKR (i.e. how does value accrue to STKR through purchases of BLND)?

BLND has a basket of PoS tokens and these PoS tokens generate ongoing rewards. On an annual basis, this might be a 10% blended rate. So if the AUM in BLND is $1bn, then we generate $100mn in rewards (10%). Of these $100mn in rewards, STKR has implemented a fee and for the sake of an example, let's call it 20%. So $20mn of these $100mn in rewards would flow to the STKR side for a buyback and burn. The rest of the rewards, the $80mn, is used to buyback BLND and burn it. So as more institutions and retail investors purchase BLND, the more AUM we have and the more value that flows to the STKR side.

How can people follow along in the project and stay in touch with us?

The best way to keep in touch with StakerDAO on the latest updates is through Twitter: 

https://twitter.com/stakerdao

If you’d like to keep up with updates, but also interact with our team, we are active on Telegram:

https://t.me/stakercommunity

Learn more:

https://www.stakerdao.com

https://medium.com/stakerdao

Crypto AMA with Binance (1.7.20)

Guest:

  • Changpeng Zhao (CZ)

Moderator: 


Moderator:

Hi everyone, please join me in welcoming CZ to Crypto AMA!

We are thrilled to be hosting CZ today who will be fielding questions for one hour. As a reminder to everyone in the audience, please follow our group rules: (1) be respectful at all time and (2) stay on topic — we're here to talk about Binance and BNB.

CZ, we ask all of our guests the same intro questions: can you please share a brief bio touching on your background and then a short overview of your company/project and how it's going so far?

After that, we'll open it up to the audience and dive into questions!

CZ:

Sure, I am the founder of Binance.com.  Binance.com is one of the largest exchanges in the world.  And we are adding fiat-to-crypto in addition to crypto-to-crypto trading.  We have spot, margin, futures, and p2p trading.  BNB is one of the first "exchange tokens", and has grown to be a native coin on Binance Chain, and supporting an ecosystem.

Moderator:

Excellent. Thanks!

CZ:

I myself was born in China, went to highschool and uni in Canada, worked in Tokyo, New York, Shanghai, Hong Kong, Singapore.  Mostly on trading systems.  Joined crypto industry in 2013, and started Binance in 2017.

Guest:

Recent BaFin regulation spurred Bitstamp to comment that exchanges might have to outsource custodianship to white-label providers.

If other countries adopt such regulation, do we see the end of exchange custodianship en masse?

CZ:

I think this will vary country by country. A few developed nations have this structure in traditional finance, but many countries don't have this requirement. Most custodian services used by exchanges are provided by the same same exchange today. There are significant differences in custody of cryptocurrency versus fiat currency. so will have two wait and see how the industry shapes up. Binance also plan to offer our custodian tools and we actually own even open sourcde our TSS (threshold signature libraries), similar to multi-sig, but should be a lot better.

Guest:

Can you tell us about IEO plans in 2020? (Will Binance continues these?)

CZ:

yes, we will continue.

It is our fundamental belief that fundraising on the blockchain is a killer app. This is the first time in human history that people are able to raise money globally, and people across the world can invest in projects they like, a tiny amount if they wish. This draws many scammers as well, but we shall not let a few bad actors destroy a tool that could help so many upcoming entrepreneurs.

snippet taken from https://www.binance.com/en/blog/419417682154909696/Binance-2020-New-Year-Message-Building-Foundations--

Guest:

Really happy to hear this. I know the process companies need to go through just to try and get approved. I believe your process removes 95% (100%) ?? of scams. Only request/suggestion (from the peanut gallery) is to make them more realistic priced to lower the 7x or 8x “bump” which inevitably leads to big price drops. Your IEO process is the best in the business, thanks for the update.

Guest:

What did you change your mind about in 2019?

CZ:

not too sure, haha.

Guest:

Where does Binance and him think the next 50mm users will come for in crypto and is Binance doing anything to engage specifically with the gaming community?

CZ:

that's the billion dollar question. I think just more adoption of cryptocurrency will bring more people. I think gaming is definitely one of the higher potential areas. The demographic overlap is very high, young males with disposable income and  technological savvy. games require international distribution and usually very costly for them to integrate with multiple payment partners, whereas if they can accept cryptocurrency then you solve the problem.  also most games already have some kind of token in themselves, just not blockchainized so that's a no-brainer. But who knows I think many people/nations in the world are forced to use Crypto, maybe that's a driver, you never know.

Guest:

Hey CZ, thanks for doing this, and staying in the crypto fight 🤙

What is your macro view on the recent shakeup in China mainland crypto exchange sector? Would you agree that the government is anointing winners? Overall, how significantly does mainland China drive the BNB ecosystem and value?

CZ:

Hey Peter, China is tricky. they are obviously pro-blockchain (education/technology), but not so hot on bitcoin. Feels like the aim is to do something similar as the internet, some controls and walled garden approach. It's not clear how that will work for crypto. Maybe one of the local exchanges will get a license, but I don't think it will happen any time soon. Meanwhile, OTC trading volume is very high in China. Some say mover $1b USD equivalent a day by some of the local exchanges. Demand is high.

Guest:

Hey CZ, great to have you here and thanks for all the hard work and impact you've had in the space.

Would love to know what are the regions of the world you're currently more interested in developing crypto ecosystems? What have you learned from Binance Uganda that you're applying elsewhere?

CZ:

We are working on so many places at once that's kind of hard to list. And I also cannot predict with accuracy which regions are going to become fruitful. Naturally we will work on regions where crypto currencies are active or the regulations are positive. We will have many updates this year, will keep you posted.

Guest:

Hey CZ, what are your thoughts on DAOs in general? And do they have a place in the future of Binance?

CZ:

definitely, but I think they are the longer futures. There are still many issues to be resolved in terms of governance, communication, collaboration, etc. we are seeing many of the issues in the sort of decentralized Binance is already. But eventually that will be the goal.

Guest:

Coinbase and other exchanges/custodians are charging above market rates for staking while Binance charges zero or very low. Why did you make that decision and what do you think that means for the future of PoS systems (i.e., centralizing stake)?

CZ:

very simple, we want users to moves to Binance, haha.  More seriously we view it as a service that does not require super high amount of effort. There is some effort involved but it’s a fixed expense, and quite manageable. We already host many wallets, so we want to provide this as a value-added service to our users and we will do it for free.

Guest:

CZ, what are you most passionate about that is tangentially nothing to do with crypto?

CZ:

I usually only focus on one time at a time.  Now, I am passionate about increasing freedom of money, so that is related to crypto.

Guest:

Hi CZ - thanks for your time today! Regarding Binance's 2020  goal to grow fiat-crypto onramps, a few questions come to mind. What do you think is the biggest hurdle here? How do you view your relationship with traditional banks and do you imagine a future where the lines between banks and crypto exchanges are increasingly blurred?  Understand a lot of this is a work in progress so generalizations where things are still confidential will also be helpful to understand the vision.

CZ:

We generally would work with anybody who wants to work with us. I believe for this space to grow everyone have to work together. That’s the fastest path to growth. We are not against anybody, we are not against traditional banks, in fact, we have/will invest or even acquire a few of them in the short future. I do believe fiat and crypto will coexist for a while to come.

Guest:

Hey CZ, thanks for doing this! Do you have a view on DeFi and what role exchanges play in it?

CZ:

Binance Centralized exchange already provides "CeFi".  Binance Chain team is also working on DeFi.  I think it will be a big field. We are just at the starting point.

Guest:

Hey CZ, what is Binance doing to counteract the decrease in interest outside crypto echo chambers? (Source: google trends)

(It seems correlated with the bear market)

CZ:

We don't have any magic bullets there. We try our best to help projects in our space and we try to build as quickly as we possibly can, products  people actually use. We also have educational portals (Binance Academy), Charity program (will announced something for Australia today).

Guest:

What’s your view on the importance of institutional vs. retail as a market/client segment in terms of where to prioritize Binance’s efforts, products etc. (Where is there a bigger opportunity for Binance and others?)

CZ:

I think institutional support is important in established markets, in less developed markets, I think a more retail geared approach works better today.

Guest:

What does your day-to-day look like? I'm super curious (as I'm sure everyone else is) about how you spend your time given all that Binance has going on.

CZ:

I do many many 5-10 minute meeting a day. and in between, I am often redirected to twitter by a few of our colleagues. It changes over time, now, I just do all the talking, conflict resolution, hiring, etc. I am no longer hands on, the team takes care of everything.

so, my schedule is very reactive. lol

CZ:

https://www.binance.com/en/blog/335263596032278528/A-Typical-Day-for-a-Binance-CEO

this is 18 months ago, but still pretty much the same.  But I do spend quite a bit more time on twitter than I try to plan.

Guest:

What is your single biggest concern in regard to Binance’s future health?

CZ:

Just need to continue to recruit the best talent that also shares our values.

Guest:

What is Binance’s core system built using?

CZ:

Core matching engine is in C++, a new version that's already deployed is in Rust. Most of the Web services are in Java. Very simple tech choices.

Guest:

Curious about Binance's go to market strategy when approaching retail investors. What region has the most retail activity and when Binance enters a new market/region, how do yall go about acquiring these users? Thanks!

CZ:

we don't have a fixed strategy, different markets are different. We rely on centralized marketing campaigns, airdrops, trading competitions; local offline events, meetups, etc. We rely heavily on our Binance Angels (volunteers). We also have an attractive Referral program. We have a number of local partners too. Different methods tends to work in different locations, and we often only find out afterwards too.

Guest:

What are you most passionate about that is tangentially nothing to do with crypto?

CZ:

I am curious into biotech and AI, but really haven't spent much time on either, just not enough time.

Guest:

How big is Binance headcount now, and what challenges have you had in getting organised while managing rapid growth?

CZ:

we are 697 today. Oh man, so many challenges as we have grown very fast. Mostly dealing with internal communication and collaboration. I'd imagine they are the same problem for any fast growing company, but we make it a lot worse being a team distribute over 40+ countries and in every timezone possible.

if there are any good suggestions on organization management methodogies, or tools, I am all ears. We tried a lot of different things. still exploring.

Guest:

What do you think made the Binance Angels program so successful? And tangentially, how do you think about engaging devlopers whether it's for getting people to build on Binance chain or to build on projects listed on Binance?

CZ:

I think is the mission and values. Many exchanges tried to copy our program, but they don't work well if the values are not front and center.  For developers, we have Binance X, which give out grants to developers, internally, we have always been able to get strong tech talent. I have a tech background, and our CTO is superb, and we know how to give them interesting work and help them grow. I think all crypto projects should have a community developer fund.

Guest:

Binance's success is very inspiring. Yet, there's always room for improvement. If you had a time machine and could change one business decision from the past, what would it be?

CZ:

start 3 months early, in Mar 2107.  In general, do everything we do a couple month earlier, lol. There are of course a few things to avoid too, hindsight removes all need for trial and error, but don't have that ability in real life.

Guest:

Thanks for your valuable time. 

Who are the three main shareholders at Binance - holding company and where is the holding company incorporated?

CZ:

The overwhelming majority of Binance is held by the team. We have a couple very small external shareholders from the early days. But they don't interfere much with our operations. We are very autonomous.

Guest:

Hey CZ, good to see you here! You mentioned DeFi is a focus.  How do you think about your product growth strategy and integrations in relation DeFi offerings now and in the future?

CZ:

For DeFi, we are not the pioneers, we want pioneers like you guys to push the path. We will want to provide a more integrated product offerings where we can.

Guest:

How do you see the trading fee structures amongst exchanges evolving over time?  Is it purely a race to the bottom and a volume game - or are there other opportunities to win you think are interesting.

CZ:

it's a race to the bottom. Anyone clinging onto exchange fees will get destroyed in the process.

Guest:

What’s the worst thing that ever went wrong technologically at Binance (other than the hack)

CZ:

in Feb 2018, we said we were going to do an upgrade that should take 1 hr. It ended up taking 33hrs of down time... So, that's pretty "wrong". But we learned a lot in that process, especially the fact that if you communicate transparently, people trust you.

Guest:

after the BTC theft in May 2019, has Binance installed any new automated response systems? what have been considerations around this?

CZ:

yeah, we revamped every part of our system for security and monitoring.

Guest:

Hi cz - thanks for joining and being so open to the community. Can you describe how you view the role of Binance Labs v Binance X?

CZ:

any organization with spare cash (or even tight cash) should invest in the future, for themselves and for the industry growth.

Guest:

Related to the hack question- how do you balance engineering progress with security of production systems access?

CZ:

No one has access now. It takes multiple people to access now. to finish on this note, I also removed my own access to even our backend admin panel. I don't use it much.

Guest:

Does Binance run its own node infrastructure in house or outsource it to external parties? If you run it in house, how big is your team that builds and manages it?

CZ:

alright, I do have a 9AM call.  great talking to you guys. and thanks Spencer for organizing! 🙏🙏🙏

Moderator:

Nicely done everyone -- thanks for tuning in and asking excellent questions as always!

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