AMA with Hart Lambur, Co-Founder of UMA Protocol

UMA Protocol (https://umaproject.org/​) provides open-source infrastructure for developers to efficiently create secure synthetic assets. Hart Lambur is Co-Founder. ----- 🚀 SUBSCRIBE TO NEWSLETTER: http://bankless.substack.com/​​ http://bankless.substack.com/%E2%80%8B%E2%80%8B 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/​​ http://podcast.banklesshq.com/%E2%80%8B%E2%80%8B ----- 💪BECOME A BANKLESS PREMIUM MEMBER: Lock in $12/month for life before March 1! http://bankless.cc/membership​​ http://bankless.cc/membership%E2%80%8B%E2%80%8B ----- GO BANKLESS WITH THESE SPONSOR TOOLS: ⭐️ AAVE - BORROW OR LEND YOUR ASSETS https://bankless.cc/aave​​ https://bankless.cc/aave%E2%80%8B%E2%80%8B 🚀 GEMINI - MOST TRUSTED EXCHANGE AND ONRAMP https://bankless.cc/go-gemini​​ https://bankless.cc/go-gemini%E2%80%8B%E2%80%8B 💳 MONOLITH - GET THE HOLY GRAIL OF BANKLESS VISA CARDS https://bankless.cc/monolith​​ https://bankless.cc/monolith%E2%80%8B%E2%80%8B 📱 DHARMA - MOBILE ONRAMP DIRECTLY INTO DEFI https://bankless.cc/dharma​ https://bankless.cc/dharma%E2%80%8B ------ 📣LATTICE | NEXT GENERATION OF HARDWARE WALLETS https://bankless.cc/gridplus​ https://bankless.cc/gridplus%E2%80%8B ------ Relevant Links: UMA Protocol https://umaproject.org/ Hart on Twitter https://twitter.com/hal2001?s=20 ------ Don't stop at the video! Visit the official Bankless website http://banklesshq.com/​​ http://banklesshq.com/%E2%80%8B%E2%80%8B Follow Bankless on Twitter https://twitter.com/BanklessHQ​​ https://twitter.com/BanklessHQ%E2%80%8B%E2%80%8B Follow Ryan on Twitter https://twitter.com/ryansadams​​ https://twitter.com/ryansadams%E2%80%8B%E2%80%8B Follow David on Twitter https://twitter.com/TrustlessState​​ https://twitter.com/TrustlessState%E2%80%8B%E2%80%8B ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:13Ryan Sean Adams?

  Bankless Nation, welcome to this community Ask Me Anything. We've got Hart Lambert here from the UMA Protocol. This is a Synthetix Protocol. We're super excited to bring him here today. Some quick logistics. Of course, this is a community Ask Me Anything, so you guys feel free to ask questions. We will try to bring those questions into the conversation. You can ask them on YouTube. You can ask them in the Bankless Members Only Discord. We're making a change. We usually do these on Thursdays around 12:00 PM Eastern. We are now doing them on Wednesdays at 12:00 PM Eastern. So, quick change. I think we're doing it the second and fourth Wednesday of every month. So, this is the fourth Wednesday of the month of February,

• 0:57Ryan Sean Adams?

  and we're bringing this to you here. David, how you doing, man?

• 1:00David Hoffman?

  Super awesome. You know, I've always been curious as to what the spiel behind UMA is, right? It's one of the few protocols that I haven't really done a deep dive into myself. So, I'm really excited to get Hart on here to answer some of my questions, and then, of course, also the community questions as well. I know that a lot of these viewers for these AMAs are on Periscope, right? Because it's just easy to see on Twitter. But if you want to get your questions asked, go to the YouTube chat box. I'm monitoring the YouTube chat box. You've ever seen me doing this, like looking off to the left. It's because I'm trying to get your guys' questions and relay them to Hart. So, that's what's going on. Always, the YouTube chat box is a really fun place to be when we do these live streams. And so,

• 1:44David Hoffman?

  get your questions in there as well. And of course, if you are a Bankless Premium subscriber, you can also put your questions into the Bankless Discord where we will prioritize those.

• 1:52Ryan Sean Adams?

  Absolutely. All right. Well, before we get to Hart, we're going to introduce him in a moment. But first, we want to tell you about the fantastic sponsors who made this Ask Me Anything possible. Guys, we've entered a bull market. Now is the time to start building your crypto empire, and you should do it on Gemini. You already know Gemini is the world's most trusted crypto exchange, but now you can do even more than trade. You can earn. You can take one of your crypto assets and park it in an interest-earning Gemini account, where you can get up to 7.4% annualized. There's nothing more satisfying than earning passive income on an asset that you're already bullish on. This is a crypto-native superpower. You know what's coming soon, too? A Gemini crypto credit card.

• 2:36Ryan Sean Adams?

  Yup, that's a credit card, not a debit card. It gives you rewards in hard-money crypto assets, not something inflationary like airline miles or hotel points. Gives you up to 3% cash back in crypto. The card is coming in Q2, but you should get on the waiting list right now, and we'll include a link. See what I mean? This is more than just trading. Gemini is your bridge to crypto for the bull market. Open a free account in less than three minutes at Gemini.com/go-bankless. Get $15 in Bitcoin after you trade your first $100. That's Gemini.com/go-bankless.

• 3:11David Hoffman?

  Aave is a borrowing and lending protocol on Ethereum, and just recently released Aave version 2, which has a ton of cool new features that makes using Aave even more powerful. With Aave, you can leverage the full power of DeFi, MoneyLegos, yield, and composability all in one application. On Aave, there are a ton of assets that you can deposit in order to gain yield, and all of those same assets can also be borrowed from the protocol if you have deposited collateral. Here you can see me getting a 200 USDC loan against my portfolio of a number of different DeFi tokens and ETH. I'll choose a variable interest rate, because it's a lower rate than the stable interest rate option, but I could choose the stable interest rate option

• 3:53David Hoffman?

  if I wanted to lock that interest rate in permanently. One of Aave's V2 features is the ability to swap collateral without having to withdraw your assets, trade them on Uniswap, and then deposit them back into Aave. Aave does all of this for you, all in one seamless transaction. So you don't have to repay loans in order to change the collateral you have backing them. Check out the power of Aave at Aave.com. That's A-A-V-E dot com.

• 4:19Ryan Sean Adams?

  All right, guys, we are back with Hart Lambert, who's the co-founder of the UMA Protocol. This is a synthetic asset protocol on Ethereum. We've talked about synthetic assets in the past, on the newsletter, various other places. We think it is absolutely massive, has absolutely massive potential within DeFi. Hart, how are you doing? It's great to have you on Bankless. Are you ready for the questions today?

• 4:44Speaker 02

  It's great to be here. And yeah, Ryan, David, I am ready for the questions. I'm looking forward to chatting with you guys.

• 4:51Ryan Sean Adams?

  That is awesome. All right, so we got to clear this up because you are a former Goldman Sachs person. So you've spent some time in the belly of the beast. David didn't know.

• 5:02David Hoffman?

  I was uninformed.

• 5:05Ryan Sean Adams?

  Tell us, so what is it like being in the belly of the beast in Goldman Sachs for the time you spent there? And then coming to DeFi? What's that transition been like?

• 5:18Speaker 02

  Well, I learned a lot. So, okay, Ryan, I'm old for DeFi, as we previously discussed.

• 5:28Speaker 02

  But I studied computer science in university, like the true nerd that I am. And honestly, when I graduated, I was in New York at the time. I'm Canadian and there was no jobs, there's no startup jobs, there's no computer science jobs when I graduated. New York startup scene has changed dramatically. The only place I could get a job was at a big bank. That's actually how I ended up there. And I ended up as a bond trader through the financial crisis. So I was actually the guy trading government bonds. When the Fed was doing all their buybacks, I was the guy at Goldman Sachs that was actually selling the Fed all the bonds from Goldman Sachs. It's like absolutely hilarious.

• 6:09Speaker 02

  And so I learned a lot around how markets work, how market structure works, and how people respond to incentives. That's just been really fascinating.

• 6:18Ryan Sean Adams?

  Did you learn how bailouts work during that time as well?

• 6:23Speaker 02

  I did learn how bailouts work. I did learn a lot about monetary policy. I'm not actually sure you and I agree on all the macroeconomics here, but doesn't matter. I really learned a lot about how markets work, learned a lot about economics, learned a lot about incentive structures. And that set me up to play in DeFi really nicely.

• 6:46Ryan Sean Adams?

  So, so what has, like, what's different about DeFi versus kind of traditional finance? So a lot of people, I think, in DeFi, it's, it's honestly, they're learning finance through DeFi, which is, which is somewhat incredible. I think that the best way to learn finance these days is to actually get into DeFi, start using these tools, because that's a crash course in financial history. But anyway, a lot of people entered finance, listening to this through DeFi, and don't know much about kind of the traditional financial world. What should they know about it? What are kind of the differences that you see?

• 7:22Speaker 02

  Well, there's a lot of, a lot of, a lot of work, a lot of stuff has been invented in traditional finance. It's just completely unapproachable and completely unavailable to the average person. So like, the thing that I think is wild about DeFi is it like makes it possible for some 15-year-old kid in his parents' basement to like create a financial product. Like, that's a wild idea. It might be dangerous, by the way. There might be like, you know, some rug pulls or some bad ideas that get created in those basements, but that approachability and accessibility is, is pretty fascinating. And if you think about it, like, when I first started at Goldman, I, I started right when structured products and CDOs and all this stuff

• 8:07Speaker 02

  was kind of getting created, or was booming, I should say. And these were effectively financial products being engineered within these Wall Street banks, and being engineered actually pretty badly within these Wall Street banks. And DeFi now is like letting a whole other category of people tinker and build things, and I hope they're being built and engineered a lot better than that stuff was. But the approachability and the ability to actually write a financial contract in your parents' basement, that is wild, and that just does open up finance to a whole different market for people to better understand it.

• 8:46David Hoffman?

  Hart, so let's go into that a little bit more. I love that juxtaposition between financial products from the legacy world versus financial products in the DeFi world. But let's talk about financial products and synthetic assets in the legacy world. What is this world like? And what are synthetic assets specifically in the legacy world, legacy financial system? How are these things built? How do they operate? Who uses them? Why are they useful?

• 9:14Speaker 02

  Yeah, well, let's talk about maybe the concept of just a derivative. David, so what is a derivative? What's the point? Why does it matter? A derivative is a financial contract. And in traditional finance, it's really a legal contract. And I'll actually come back to this analogy here, too. But it's a legal contract. So Ryan and I can make a legal contract where we're betting on something. And it could be the value of Brazilian equities, the Brazilian stock market. And I'm picking the Brazilian stock market right now because it's actually like Ryan's in the US. It's actually really difficult for him to buy the Brazilian stock market because of regulations and rules or whatever else.

• 9:57Speaker 02

  But Ryan doesn't really care about actually owning the Brazilian stocks. He just cares about betting on whether they go up or down.

• 10:04David Hoffman?

  He just wants exposure.

• 10:05Speaker 02

  And so he just wants the exposure. So if you are a hedge fund or whatever, what you do is you go and you write a legal contract called a derivative with an investment bank that gives you access to this type of risk. And you can now sidestep the fact that this hedge fund can't actually buy Brazilian equities because it's difficult to do so. Instead, they can buy the price exposure of Brazilian equities through this derivative contract. And so call that a synthetic kind of exposure where they don't actually own Brazilian equities directly. They own a legal contract that gives them exposure to Brazilian equities.

• 10:45Speaker 02

  And so what has happened here is that hedge fund, rather than not being able to buy something, is able to use a synthetic asset to kind of bet on anything and to get price exposure on anything. And it makes finance for them global.

• 11:04Speaker 02

  The problem is that like Ryan's not a hedge fund and he can't get access to that as an individual. Right? He he just he he just doesn't have the re- there's not a resource as a Wall Street bank won't write a derivative contract for him. Hence.

• 11:18David Hoffman?

  Because it's a because it's a permission system, right? Like Ryan doesn't have like billions and billions of dollars on his bankroll. Like, what are the other restrictions that prevent? Because I I like I got my roommate downstairs. Uh, we like to talk about the future of finance. Why can't we just go create a contract between each other? And how is that different than like perhaps a a bigger, well-capitalized institution making a contract?

• 11:42Speaker 02

  Well, you and your your buddy probably could create a contract for each other. Like, David, let's say you're in the uh state of California. The two of you guys could write down on a piece of paper a legal agreement, what that thing is and say, hey, we want to do this. And you could probably like, like, what's your enforcement? Like, you could do that. But what's your enforcement mechanism there? I guess you could go and sue your buddy um in the state of California if he doesn't like pay up on your derivative contract. Uh, which would be hilarious. Uh, but uh, it's it, there's sort of a barrier to. Better write like a multimillion dollar contract in order for it to be worth it to sue the guy, you know?

• 12:23Speaker 02

  So it's the same reason why Ryan like won't have access to the derivative markets that a hedge fund does. Because he's just not a big enough fish to like go after, sue you. The the enforcement mechanism, this legal enforcement mechanism only works at like big scale for huge entities writing these contracts.

• 12:45Speaker 02

  DeFi and frankly, what we're doing is designed to change that, to make that be uh accessible at a much, a much more approach. Like a much lower entry point, lower the barrier of entry.

• 12:55David Hoffman?

  David, just uh, just, just, you know, I think it's bad news for roommate relations to write derivatives with your roommate. Yeah. So do you know, maybe no to that, but I've got a question, and this is like a big picture question. Because when you, when you talk about terms like derivatives, Hart, I want to make sure people understand this. Um, I think a lot of people have seen this graphic. Have you seen this, Hart? It's like.

• 13:18Ryan Sean Adams?

  Money around the world, right? And like, this is comparing the world's money and markets 2020, and it's very visual, right? So you've got each each size square is worth a billion dollars. So you've got silver here, $100 billion with one square. And then you've got the size of cryptocurrency. And then you've got like military spending and its size.

• 13:37David Hoffman?

  That cryptocurrency metric needs to get significantly updated. It says it's $244 billion. This was made a while ago.

• 13:45Ryan Sean Adams?

  Yeah, so I guess like add like eight blocks or so, whatever, right? But it's like, it's like close. All right. So then you've got US budget deficit on you go. And you got billionaires, how much they own. Then you've got the, you know, how much for gold? Eight trillion, 10 trillion in this calculation, 11 trillion Fortune 500. Anyway, you get all the way down, you pass global debt, you pass real estate.

• 14:07David Hoffman?

  Global wealth, real estate, holy shit.

• 14:09Ryan Sean Adams?

  Going past real estate, which is huge. Okay, real estate is how big is real estate? God, that's before global debt. I don't know. I miss real estate. It's somewhere in here. Then you've got global wealth. But then you've got this big thing at the end, which I think is the stunner, which is derivatives. Okay, if all that other stuff, real estate, stocks, global debt, you thought that was big, you get to the end of this graph infographic and you see derivatives, and it's like 560 trillion worth of global money is in derivatives. And you keep scrolling down and it takes a whole bunch of scrolls to see all of the value in derivatives. Can you explain that? Like, is this good? Is this healthy? Is this how markets work? Or is this just, is there a real problem here?

• 14:54Speaker 02

  This this sort of stuff is a bit of a misnomer, because you have a lot of offsetting risk. So Ryan, you and I make a billion dollar derivative where you're going long Bitcoin. And then you unwind it later, but you don't actually unwind that trade. You just do a derivative in the opposite direction for a billion dollars. So now we've got a $2 billion derivative, derivative is outstanding. And the way the derivatives market has evolved, there's just all of this offsetting risk. Which, by the way, part of the problem here, part of the problem in the financial crisis, is that nobody actually really had a good picture of that offsetting risk, because it wasn't written down any like in one place.

• 15:37David Hoffman?

  And was the issue was that it wasn't actually offsetting correctly? Was that the issue?

• 15:42Speaker 02

  Or people didn't know what was offsetting, right? People like there was like sort of just um like, oh, I think like I was actually on the Goldman Sachs derivative trading desk on like when Lehman's blowing up and Goldman doesn't really know what risk they have to Lehman Brothers. They kind of think they know, but it's like if you're, when you've got numbers like that, if you're off by a little bit, it could be like billions and billions of dollars, right?

• 16:09Speaker 02

  And so, you know, frankly, there's a whole other thing where if you had a blockchain and you had all those derivatives written on a blockchain where somebody could actually go and look at really articulate precisely what the risk was. That to me reduces systemic risk a lot. This is a whole other conversation, right? Of just, um, but this is where I think DeFi is going and why I think, going back to what I was saying earlier. In two thousand and six, when people were inventing CDO cubes or whatever, there was not a lot of transparency, you know, what the underlying risk of those products were. If you put them on a blockchain, it's a hell of a lot safer because people independently can see like, okay, here's what this thing is.

• 16:50Speaker 02

  Um, and so to me, finance is meant for a blockchain, like finance and what people's contracts are should be written on a blockchain because it provides a lot more transparency um into where things are going.

• 17:01David Hoffman?

  This is a big conversation that I've had with a number of Bitcoiners is that, you know, Bitcoiners will point at DeFi and be like, look at all that risk, look at that composability risk. Like if Maker Dow goes down, the whole thing goes down. We're just going to recreate the financial crisis. And that's never made sense to me because I, I would say that financialization and financial tools can, can be dangerous. Um, I think Warren Buffett has this quote that like finance could be like, create weapons of mass destruction. But it's, I totally see that like the, there's a fundamental difference that when everything is done in an inside out fashion and everyone has equal access to information and that information is actually consumable. That is what prevents something like an O eight crisis, right?

• 17:42David Hoffman?

  It's like, we just didn't have the information because people only had a very narrow view of what they were able to see and no one could have the big picture. And now we have things like Dune Analytics and like the graph, which lets us help us consume data. And that I think is really the fundamental difference that, you know, if we had Ethereum as the financial platform, the O eight crisis wouldn't have happened. Does that, how does that land with you, Hart?

• 18:06Speaker 02

  I agree, man. Like, listen, this is a controversial statement, and some people will push back on it. But like, at a minimum, you take these mortgage-backed securities that blew up in 2008. And the reason why they blew up is nobody knew what was behind them. Nobody knew what was in these mortgage-backed securities. Right? They had to basically trust some bank or then some credit agency. And those guys didn't know either. It was bad. Think of trust, actually, here. There's too much trust baked into the creator of these products that couldn't be verified as to what it was. And so if instead, that structure, if you were to make, imagine a sort of Ethereum-based version of it,

• 18:47Speaker 02

  there's some wrapper that includes a bunch of like loans, but you can actually go and look at those individual loans on the blockchain. And you can verify with yourself trustlessly what's happening there. That is so much safer. And so I agree, David.

• 19:05Ryan Sean Adams?

  You have the ability to view source on like financial tools and financial products, which is super powerful. You know, before I get off the infographic, one other question I have heart is this. So if you scan the infographic, you look at traditional finance, the other thing that kind of jumps out at me is like the base money, the reserve assets are relatively small. And then like the derivative assets are absolutely massive. So like multiples of the the reserve-based money assets, right? So you've got kind of your your layer one M1 money that's tiny, and then everything built on top gets bigger and bigger and bigger until you get derivatives, and they're the biggest of all, over 500 trillion.

• 19:45Ryan Sean Adams?

  Do you expect the same thing to play out in this new financial system that we're building in DeFi? Where you have a relatively small kind of base money, reserve asset, and then you've got like things built on top. But derivatives are the biggest from a notional value perspective of all. Does that play out here too?

• 20:06Speaker 02

  Yeah, I just don't know if you call them derivatives, like there may just be something different. There's room for like new shit to get invented here. But like Ryan, I do agree that what you will see at some level is like a base asset, a reserve asset, which, you know, ETH is money, right? So we can eat. But you have a base asset and it gets used in all these ways that then the notional value builds up. And you're already seeing that happening in DeFi where like your base asset is ETH, which is used to create DAI, and then you take the ETH DAI pair, and that can be used as collateral to take something

• 20:49Speaker 02

  else. You're already beginning to see this happening. And I think that is the nature of finance with leverage and debt happening. That's just the way it works.

• 21:05David Hoffman?

  Hart, let's get into some of the more specific details about UMA. And I think a lot of listeners, their mental models around synthetic assets will probably begin with Synthetix, which uses chain link oracles to come to a consensus about what the price of an asset is. How is the, what is the UMA model for producing a synthetic?

• 21:27Speaker 02

  Yeah, I think the mental model to think about here, I actually want to think of it as almost a primitive that we're putting forward. And if you, if you go back to the early days of Maker, where Maker was single collateral DAI, where it was only had ETH in it, what happened there? You took ETH, and let's call, let's make it wrapped ETH, let's call it an ERC20 asset. You took ETH as a collateral, and you created a derivative token, a synthetic token, DAI, that was deemed to be worth, there's a payout function, it was deemed to be worth a dollar of ETH. That was what DAI's were supposed to be worth, it was supposed to be back.

• 22:10Speaker 02

  What we've built is effectively a generalized version of that concept. Where we call it a synthetic token that takes an ERC 20 collateral and takes a payout function and creates a synthetic token, a derivative token, that is some amount of that underlying collateral as defined by this payout function. And so this is actually a surprisingly powerful primitive because we can do all kinds of crazy things where we convert or transform one ERC 20 asset into another.

• 22:50Speaker 02

  The difference to point out, because you mentioned synthetics, synthetics has a different, just a very different model where they have a pool, a debt pool, that's everybody staking their SNX to, to create this debt pool. And out of that debt pool, they allow users to buy synthetic assets. So all synthetic assets in the synthetics platform are collateralized or backed by this single debt pool. Whereas what we're doing, what we're, what we proposed is it's actually much more of a component. It's a single primitive that an ERC 20 asset goes into this contract to mint a derivative token according to some payout function.

• 23:29David Hoffman?

  So there's a, a big criticism of the synthetics model is this like systemic risk conversation where like this one single pool of debt, if that doesn't work out, all synthetic assets crumble. It seems, and so the takeaway that I just got out from you and correct me if I'm wrong is that UMA as a more, as a primitive, doesn't actually depend on one single pool of debt. It is more modular between like the input asset and the output asset. Is that correct?

• 23:58Speaker 02

  Yeah, that's, that's, that is correct. I mean, again, I, I think I actually have a lot of respect for the synthetics platform and all that, just to be very clear. And I think they're doing like really fascinating stuff and the whole deep buy ecosystem should be thankful to a lot of their innovations and the way they push things forward. So say that clearly, but yeah, there, there is a pooled risk approach here that is true for other platforms like Compound has the same issue. Compound, the, the, any asset, it's got a, if any asset fails, the whole thing fails. There's similar arguments that can be made to some of these other pooled platforms. David, what we're kind of producing is more, we really think of it as a developer infrastructure. So developer can come to us and take our contract, take our primitive

• 24:43Speaker 02

  and say, I'm going to segregate this pool, where I'm going to create a synthetic asset that's backed by just this, this one ERC 20 in its own sort of segregated pool. And that has pros and cons. It's kind of got its own different use case.

• 25:02Ryan Sean Adams?

  I think there's one, one kind of takeaway here is if this is, if you're listening and this is kind of your, your first exposure to synthetics, like the magic moment for me in understanding it was back to Hart's example of, of DAI. Like, once I wrapped my head around DAI and understood that, then I started to understand what, uh, what a synthetic is. And it's basically, if you take an ERC 20, like a store of value, right? Whether that store of value is wrapped Bitcoin, or Ether, or whether that's USDC. So you take a store of value, and you combine that with an oracle, like so with a price feed. Store of value plus price feed in a smart contract platform equals anything. You could

• 25:43Ryan Sean Adams?

  create anything you want out of it. You, you could create S and P 500, you could create like, you know, um, gold, silver, any commodity, any asset, anything that has value, you know, the art on David's wall, anything, basically. So that, that to me is, is why this, this synthetic primitive is so powerful, because we have a lot of store of value ERC 20 assets, right? And we've made a lot of, like, strides forward to create great oracle solutions. Now we have even arguably like more decentralized oracle solutions like the Uniswap, uh, Twap. Uh, and now we can create anything. Um, and by the way, this is the, the notion, if you've been following Bankless for a while, the notion of why economic

• 26:26Ryan Sean Adams?

  bandwidth is so important. What we mean when we say economic bandwidth is just the, the market cap and the liquidity of that store of value asset. And it can be either, you know, centralized, like, like a USDC, or it can be more trustless, like ETH. But anyway, that's the combination. Store of value plus oracle equals any kind of asset that you want. Is that, is that a good way to think about it?

• 26:50Speaker 02

  I love that. I'm gonna steal it and use it, Ryan. But it's alchemy, right? It is alchemy where you're taking store of value, ERC twenty asset plus price feed, right, to any other thing. And it actually probably segues nicely into what our oracle solution is, which I'm not even sure you guys have, like, we're pretty quiet about the, or it's a bit under the radar, a bit more nerdy. But we have this whole philosophy on how to, we're written something, we're gonna label this the optimistic oracle. Our whole solution to this is to not rely on a price feed, but to actually try to create these things where we only need a price if there's a dispute. And I can go into a bit more detail.

• 27:36Speaker 02

  But this priceless methodology that we've adopted, this optimistic oracle, allows us to essentially create a price feed for anything. Which, if you take it back to your model of what you just described, if we have store of value, so ERC twenty asset plus price feed for anything, it literally lets us create a derivative or synthetic asset for anything. And this is where I think our, I think the ability to create new shit, to actually dream up assets that didn't otherwise exist, suddenly becomes possible. So we could, if we wanted to make a price feed, if the price feed for anything could be

• 28:22Speaker 02

  the, the, the number of subscribers to your guys' YouTube channel, right? All of a sudden, we can make a synthetic asset that actually tracks the value of like the number of subscribers to your guys' YouTube channel. And I think this becomes super interesting and kind of fun.

• 28:39Ryan Sean Adams?

  Yeah, it's, it's basically back to that, that kid in the basement, that kid in the basement can go create a synthetic of anything, of value, and then go trade it in this platform. That's the magic of it. The other magic of it, I think, is when we're talking about DeFi, permissionless, open decentralized finance. This is what solves the GameStop problem, right? Like, We could like rather than Robin Hood stopping trading on GameStop, we can create these synthetic assets in ways that they really can't be stopped by a centralized intermediary. So, so that's powerful too. Okay, so I'm, I gotta confess though, Hart, I don't fully understand the priceless Oracle thing.

• 29:18Ryan Sean Adams?

  And I'm not sure we have the time to get into the technical detail. Like I have my head wrapped around what Chainlink does. Like I understand that. All of these various Oracle, like I understand that. I understand Uniswap's Oracle at like a, you know, a decent level, but how is your priceless Oracle different? Is there like an explain it like on five just for that?

• 29:41Speaker 02

  Yeah, the way to think about this is we're, we're enforcing our contract optimistically. And you can actually think like frankly, a lot of the thought process came from conversations we had with Plasma Group, which is now the optimistic team and optimistic rollups, like same concepts here. The goal here is let's minimize Oracle usage. Let's only use the Oracle if there's like a genuine dispute effectively in like layer two, like an exit game. And the way to think about this in, in a traditional, it's actually more like a traditional legal contract. Back to David's derivative agreement that he wrote with his roommate, right? In that derivative agreement, David wrote with his roommate, this legal contract.

• 30:27Speaker 02

  You hope you don't have to sue the other person to enforce it. Your goal is to not go to court and litigate this thing. Your goal is just that you, you only use court as an enforcement mechanism. So that like, wait, if you don't follow the terms of the contract, I will sue you. The very high level understanding for our optimistic Oracle is the same concept. Where we don't use the Oracle in 99% of the cases, and actually it's more than that. We only use the Oracle to get a price if there is a dispute in whether, in, in what happened.

• 31:04David Hoffman?

  Okay, so this seems like there could be some efficiencies here because you guys have removed the oracles and but the oracles are still there in the backstop, right? So it's the threat of the oracles in the background that makes the incentives for people to follow the rules in the first place. And I would imagine like MakerDAO, I heard this crazy stat from somebody who works at the MakerDAO team where they are spending twenty to thirty thousand dollars a day in gas fees to constantly update the oracles on the Ethereum L1. That's inefficient, that's a crazy number, right? Like, we could be doing other things with that capital. And so I think what you are doing is, what you are saying is like, "Well, we'll have

• 31:45David Hoffman?

  the oracles, but we won't use them because we are going to give the option for participants to settle between themselves as they agreed. And if somebody defects from that agreement, then we will do the more expensive stuff, which is bring in the oracles, and that's like, kind of quote-unquote, "bring in the courts," right? Bring in the judges, bring in the lawyers.

• 32:07Speaker 02

  That's exactly right, David. And I think the Maker example, this is part of our path to thinking here, was exactly that. So Maker is pushing all these prices to the blockchain every five, ten minutes or whatever. They're doing all this, and most of those prices aren't being used for any liquidation. They aren't being used for anything, they just have to be there. And then you have liquidations that happen, right? That happen pretty rarely. So our design, or like, kind of simplifying it, is like, okay, when a liquidation happens, you have a keeper, in the same, same in the Maker system, you have a keeper say, "Hey, I'm gonna liquidate this position." But there's no on-chain price feed, they just say, "I'm gonna liquidate this position now."

• 32:51Speaker 02

  And the only difference we do here is we let that liquidation go through, but we don't pay their keeper their reward for a two-hour period, it's a parameter of our system. We don't pay them their reward for that period. And if anyone during that period disputes that liquidation, then it goes to the oracle, that's basically for dispute resolution. And because of the economic design here, because like a liquidator, if they do a bad liquidation, loses a lot of money. We've actually designed this where, you know, to date in the sort of six months, less than that, but five months that this design has been live, um, we only had one dispute, one genuine dispute. We've tested it.

• 33:35Speaker 02

  Um, and basically this optimistic enforcement has actually worked really effectively. And so it's very efficient um, in terms of gas cost thing. But the other thing that makes it really cool is we can be an oracle for a lot more things, for pretty much anything. Um, we don't need to, going back to the example of if we wanted to make a token with the number of subscribers to your YouTube channel, you guys couldn't do that right now in this current gas environment. If you had to push a uh, an oracle update for the number of subscribers to your YouTube channel on chain, that would just be too costly for you to do. The other advantage this approach is that it lets us um, do things like that because disputes are so rare.

• 34:17David Hoffman?

  One thing, one thing I want to ask is um, so the, the threat of the oracles in the background is what keeps people aligned. And this, this makes sense to me when I, I'm reminded of our episode with Justin Drake not too long ago, where he, he uh, he didn't coin anything, but I would like to say he coined this rule, this law that I call Drake's razor, where if you can use crypto or cryptography, use cryptography. And if cryptography fails, use crypto economics. And this seems to be saying like, okay, we'll just use the protocol. And if there's a dispute, then we'll turn to crypto economics, right? What, my, my question is like, that two hour window of that dispute window, that, that is nice.

• 34:56David Hoffman?

  That makes sense, but like, what if uh, maybe, maybe this is kind of missing some, some of the, the design here. But like, two hours is a long time for liquidations, but kind of a short time for humans, right? Like, I sleep eight hours a night, or I at least try to get my eight hours night sleep. What if somebody presses, what if somebody tries to liquidate me in those two hours while I'm asleep? Like, what's up with that? How do we get the assurances there? Where do the crypto economics come in?

• 35:22Speaker 02

  Yeah, that's where that's where this like crypto network is so awesome, right? Because David, we can design this. So if you have a position, you get badly liquidated. You you get liquidated when you shouldn't have been. We don't need you to dispute that. We need just somebody that's watching the network to dispute it. And as long as we can pay that disputer a legitimate, like a appropriate reward, they show up, people respond to economic incentives. So while you're asleep, if you get unfairly liquidated, some guy in Hong Kong should be the guy being like, okay, I'm going to dispute David's liquidation here. The guy that liquidated David here because he shouldn't have been liquidated. And I'm going to get a reward for doing so. Um, and so the idea is that you just have this crypto.

• 36:07Speaker 02

  You have this network where all these eyes all over the globe are watching these transactions to make sure they're appropriately followed. Uh, and they're responding purely to economic incentives.

• 36:19Ryan Sean Adams?

  I'm going to slip a quick YouTube question in here because I think it's relevant right now. Somebody watching on YouTube is asking, um, we recently wrote an article about Keeper Dow. Are you familiar with Keeper Dow Cart?

• 36:30Speaker 02

  Uh, I am familiar, not like super deep. I think it's really interesting.

• 36:34Ryan Sean Adams?

  Are they an entity that can provide some of the liquidations that you were just talking about? The kind of a keeper entity, uh, are they doing that? Or are they the type of entity that would do that?

• 36:46Speaker 02

  Yes, the type of entity, no, they're not doing it right now. But we've talked to them and I would like entities like that to do this. And again, it kind of goes right into this whole idea of like, they'd be one of these these this network. It's like out there in the ether, pun intended, um, that's monitoring, um, how monitoring these contracts to make sure they're appropriately followed.

• 37:11Ryan Sean Adams?

  Okay, so you've got this synthetics, um, synthetics protocol, this primitive that you've built out. Can we get into a few examples of this, of how people are building it? So you've got 63 million total locked value in contracts on on UMA, 21 million of synthetic tokens that have been melted using UMA and nine projects. Can you give us a highlight a few examples of how UMA is being created? And what synthetics are coming out on the other side?

• 37:41Speaker 02

  Yeah, those numbers are actually all stale. We don't have that being updated live yet. That's something that's happening in the next week or two.

• 37:47Ryan Sean Adams?

  You can pull that right from the blockchain.

• 37:50Speaker 02

  I know, I know. It's embarrassing. So they're higher than that. But yeah, I can talk about like the types of things that have been created that I find like really interesting. And again, guys, the part that I push here, we are trying to position UMA, like our infrastructure, as being this platform to create these synthetic assets. We're not creating them ourselves and we want to make it super easy for a developer to, that comes up with an idea. And developer might even be the wrong word. It's like a financial product inventor, right? That comes up with an idea. We want to make it super easy for them to go and create that thing.

• 38:29Speaker 02

  And so, stuff that's been created, fixed term loans, we'll call these like yield dollars or zero coupon bonds where I take Ethereum, or I take wrapped Bitcoin, that's my collateral, and I want to create a synthetic token that's worth a dollar at some future date. So, okay, I've just built a lending platform based on this asset. What the Badger DAO community is doing is taking this concept in a wild direction, where the Badger DAO guys have all of these vault tokens. So people that have,

• 39:12Speaker 02

  my favorite example is like the Badger WBTC E sushi token. So you're providing liquidity on WBTC E, and then you're staking it in Badger to earn Badger tokens. And you've got this bulk token that is an illiquid asset. Well, what if you use that as collateral in a synthetic asset to mint a yield dollar token, a token that's worth a dollar at X breake? Shit, I've just like used my illiquid asset and I've transformed it using this Alchemy process into something usable that I can now get leverage or borrow against, which is kind of cool. So that's, that's one thing.

• 39:53Speaker 02

  I'm going too deep here. Project teams are creating a Bitcoin dominance tracker. So I can buy a token that tracks Bitcoin dominance. As Bitcoin dominance goes up or down, I make money. Same with altcoin dominance. I think this is a super interesting financial product to bet in like the market, a market neutral way on the, whether the long tail of crypto assets is going to do better or worse.

• 40:21Speaker 02

  Somebody created a Bitcoin cash synthetic on Ethereum.

• 40:27Speaker 02

  I didn't want to go into, I don't, not really. I shouldn't say anything too controversial, Bitcoin cash. I don't know why people care about this, but someone wanted to.

• 40:34David Hoffman?

  We can say controversial things about Bitcoin cash.

• 40:37Ryan Sean Adams?

  Yeah, it's fine.

• 40:41Ryan Sean Adams?

  So, so, okay, so hard. Like, i- it's pretty amazing because it's a blank canvas. Anyone can, can create anything they want, but where would someone get access to? Like, let's say I wanted to bet against Bitcoin dominance. Not saying I do, but let's say I did. Where would I go do that? Because there's no like UMA protocol where it's all of like website or, you know, where, where it lists sort of all of the different assets from UMA. It's just, this is just available in the rest of kind of the DeFi infrastructure? Like, I'd go to Uniswap and find that? Or is there one central location where all of these synthetics are trading?

• 41:17Speaker 02

  Yeah, I mean, Ryan, it's kind of like a good, like, we don't know, I don't know the answer to that. I don't know if we, like, should we have a centralized page that lists everything that's been created with a protocol? Maybe. That seems like a good idea. That seems like something we should build.

• 41:33Speaker 02

  For, if you wanted to bet against Bitcoin dominance, you can buy an altcoin dominance token right now on Domination Finance, which is using our infrastructure behind the scenes.

• 41:44Speaker 02

  There's sort of an open question here, just for us as a project, where how loud do we want to be versus behind the scenes? Like, like, you know, Stripe doesn't list every merchant using the Stripe platform to like process credit card payments, right? But we might be different. Maybe we are supposed to list everybody that's building synthetic assets. I, it's kind of an open question that I, I don't know. And discoverability does matter. So you make a good point. Maybe we should have a page where here's everything you can buy.

• 42:18David Hoffman?

  Hey guys, we're gonna take a break in the action. Don't go anywhere because there is so much left in this AMA. We bring up next the conversation of liquidity. All assets on Ethereum need liquidity and each one gets its liquidity in its own particular way. And so we ask Hart how the synthetic assets out of the UMA protocol find liquidity. And we compare and contrast that to the Synthetix model as well, which was a pretty interesting conversation. There's some nice nuances to pull out there. So don't go anywhere, there's so much left in this AMA. We're gonna take a quick break to talk about some of these fantastic sponsors that make this show possible. If you are looking for a product that connects your fiat bank account with DeFi tokens and products, you need to download the Dharma mobile app.

• 43:01David Hoffman?

  Dharma is a non-custodial smart contract wallet and comes with a bridge that connects you right into your bank account. Dharma is the fastest and most efficient wallet between your fiat in your bank account and any token on Uniswap, or even any vault in Yarn. With Dharma, you can get over $25,000 per week into the DeFi universe and you can do it non-custodially. If you or anyone you know is hot on DeFi and you're trying to get your money into a DeFi investment, Dharma is the place to go. Signing up and going through KYC is an absolute breeze. It took me just under three minutes and after signing into my bank account via Plaid, I am now just one transaction away from any token that Uniswap has to offer.

• 43:44David Hoffman?

  Go to www.dharma.io, that's D-H-A-R-M-A dot I-O. Download the Darba app and get yourself unbanked today. If you want to live a bankless life, you need to get a Monolith DeFi Visa Card. Monolith is both a one-two punch of an Ethereum smart contract wallet, as well as an accompanying Visa Card that lets you spend the money that you have in your Ethereum wallet wherever Visa is accepted. It's really a fantastic tool that lets you use Ethereum for what it does best, which is holding and managing your financial assets, but also keeps you connected to the rest of the world's payment rails. Monolith also offers on-ramp services for getting your fiat

• 44:27David Hoffman?

  Money into the world of DeFi. So it's trivial to top up your Monolith card if ever you need to, and your deposited money goes straight into your non-custodial wallet. So your money is never held by a centralized intermediary because your Monolith wallet is native to Ethereum. Monolith helps you transcend both the legacy and the crypto worlds because the money that you hold in your Monolith wallet has the power of DeFi behind it. Swapping assets on Uniswap or earning yield in DeFi is at your fingertips. But with Monolith, so are the groceries at your grocery store or the coffee at your coffee shop. Go to monolith.xyz to sign up and get your Monolith Visa card today.

• 45:09David Hoffman?

  Hart, I want to know where liquidity comes from in the system, right? We earlier talked about a potential synthetic asset that tracks the bankless subscribers, right? And I would be bullish on such an asset, right? But doesn't that mean that- I'm glad to hear you say that, David. No, super bearish, not going anywhere.

• 45:29David Hoffman?

  But like, if I buy into an asset that tracks bankless subscribers on YouTube, does that mean that somebody needs to take the opposite side of that trade? Like, where does the liquidity come from? How does this work?

• 45:43Speaker 02

  Yeah, so David, this is where AMMs are mind-blowing and are the future. And guys, like, this is again coming from a guy that was a market maker at Goldman Sachs for like a decade. Like, screw that, AMMs are the future.

• 46:02David Hoffman?

  It's because of this long tail, right? It's long tail stuff.

• 46:06Speaker 02

  Yeah, and you like, listen, so right now, the answer is that to get, to make these synthetic assets usable, they need to be put in a Uniswap pool or AMM pool that has reasonable liquidity. Right now, that's actually pretty capital-intensive. It takes a lot of capital to create a Uniswap pool that has decent liquidity around this stuff. But I have a lot of faith that that's going to change, be it in future versions of what Balancer and Uniswap are doing, or we've got some other half-baked ideas too on how to make this stuff be a lot more capital-efficient. But really, the AMM idea and the fact that there's people out there that now get it,

• 46:47Speaker 02

  they're like, oh, look, I can be a liquidity provider and earn fees by being this market maker. And I might get short, I might sort of sell an asset that I otherwise like, but I'm getting paid to do so. This is like a core concept that is frankly making, I think, these long-tail synthetic assets usable. So your core question, David, you're right, like right now, your YouTube channel subscriber, it's a bit costly, like you'd have to actually put a lot of capital in to make this subscriber token liquid. But I think that's going to get better, easier and easier and easier and less capital intensive in the near future.

• 47:27David Hoffman?

  Okay, so I would just like to summarize, and again, I want to compare and contrast the UMA model with the Synthetics model. The Synthetics model, people really appreciate because they have infinite liquidity on any asset, because all they have, they have this massive debt pool, which means liquidity can come from anything. But there's also that conversation of like, well, this is also, the commitment to infinite liquidity is also a commitment to systemic risk, right? It's like bullish and bearish, right, at the same time. UMA strips out that mass, like that unified liquidity debt pool. And so it doesn't have infinite liquidity for everything, but it also doesn't have any systemic risk, right? So that means that it's not just enough to make a synthetic asset. You need to also create liquidity, right?

• 48:11David Hoffman?

  So just because you can create an asset doesn't mean that it's liquid, right? So it's a two-part process, is that correct?

• 48:18Speaker 02

  That's spot on, and I think that's exactly right. So right now, in order to make, you can make a synthetic asset right now on pretty much anything, but then you've got to make it usable, right? And making it usable requires making it liquid, right? So I agree with your two-step process. And I'd also agree that the second part of this process right now, that's where I think making it less capital intensive to make it liquid makes that two-step process easier and easier and easier.

• 48:46Ryan Sean Adams?

  It's the other difference between Synthetics that UMA is a bit more like blank canvas in that it's permissionless, like I could create whatever synthetic I want. Whereas with Synthetics, you know, they kind of add, you know, different synthetic listings over time onto their platform. But Synthetics, you could just build anything, it's kind of permissionless.

• 49:09Speaker 02

  That reasoning goes back to the oracle, like goes back Ryan to your your bit of like store of value ERC 20 plus plus price feed. You know, so synthetics is limited, synthetics is limited by price feeds. They need a chain link price feed for something. So that has to exist. And also then I guess financial engineering concerns around like their Deadpool and the risk they're they're doing.

• 49:33David Hoffman?

  Yeah.

• 49:33Speaker 02

  But um chain link, like there aren't chain link price feeds for anything. And in the current Ethereum gas environment, they they couldn't be, it'd be too costly.

• 49:44David Hoffman?

  For sure.

• 49:45Speaker 02

  Um, and even if you didn't have this gas environment, you still need, uh, like that's that's still different. And also, by the way, I'm a fan of chain link and a lot of what they do and you know, there's there's real use in having, call it like the fat head assets being pushed on chain, like the ETH dollar price should be on chain for people to use. That makes a lot of sense, you know, but the long tail stuff, this is where you get more constrained. So there's just pros and cons to all these different approaches. And I think, um, so as you pointed out, this is a very, very big market and it's all symbiotic, right?

• 50:24Speaker 02

  So, um, different approaches for different use cases, um, that I think all jog together quite nicely.

• 50:32David Hoffman?

  So one thing we've noticed ever since DeFi summer came around is that protocols are able to leverage their token to add liquidity, to help bootstrap liquidity into their system. Uh, is that something that the UMA, because UMA has a token, I believe it's called UMA. Um, uh, how does, how does the UMA token integrate itself with the UMA protocol? And is, does that help bootstrap liquidity anywhere?

• 50:55Speaker 02

  So our, our token, our token holders, um, are fundamentally the voters in the oracle. Our token holders are effectively the oracle that we try to minimize usage of. Um, and we'll keep it at a, at a high level for that. And then separately, David, to your point, we are using our token, um, in liquidity mining campaigns. Um, and we actually have a pretty interesting program we call the developer mining. But we are using our token to help incentivize liquidity in these pools to help make them, make the assets be more liquid or usable. And so. Yeah, yeah.

• 51:31Ryan Sean Adams?

  Can we talk about developer mining for just one second? Because that's a theme we we talk about a lot on Bankless, which is, you know, Dave and I like to joke that we work for algorithms and protocols, which we basically do, right? And but there there are more and more opportunities. We're talking to the Graph, you know, not too long ago, maybe it was our AMA before last. And they talked about how success, all of the earning potential possibilities that existed within the Graph protocol. So tell tell us about your developer mining. If I'm a developer, I want to do something for UMA protocol. Is there an opportunity for me?

• 52:09Speaker 02

  Yeah, so first of all, a high level question or question statement. We are designing incentive structures, like crypto is designing incentive structures. Ryan, to your point, we work for algorithms. We work for incentive structures here. And liquidity mining, like yield farming, is a fascinating incentive structure that has been proven super successful at getting liquidity into AMMs, call it.

• 52:38Speaker 02

  We wanted to take that concept and be like, OK, well, wait, we actually really want to incentivize developers with an idea for a product to come and build on our platform or build using, build on the, build using our infrastructure. And so we can actually do clever things, like we can measure any new synthetic that gets created, how how much value is minted in that synthetic? How popular, quote unquote, popular, popularity measured by dollar value locked? How popular is that synthetic? And then what we can do is every week, we can look at all the synthetics minted on our platform and be like, oh, this synthetic is, here's the popularity.

• 53:22Speaker 02

  Let's pay these guys rewards. Let's pay these developers rewards based on the popularity of their idea.

• 53:29Ryan Sean Adams?

  This is cool. OK, so so when you say developers, what you mean is kind of this new class of financial engineers who's developing synthetics. And what's really cool about like this is when we, when we Started to get web two dot O, right with like Facebook and Instagram and everything that came after. It it it created this whole new economy of people from their their offices or from their homes. Who would just generate content for what for attention for likes. That was kind of the currency. What you're talking about is essentially these kids in in in their houses or wherever they live. Or anybody really being able to create synthetics. And you know, the value of the synthetics that they create is is based upon its usage.

• 54:12Ryan Sean Adams?

  And you could actually earn an income that way, right? So like now now you have you have YouTube influencers, basically. You could have like synthetics creators as a as a full time hobby job like or you know, maybe a maybe a very lucrative job depending on the success of it. This this is what you're talking about.

• 54:31Speaker 02

  Yeah, um, I'll Fred or Sam, I stole this idea from a while ago, but so um. Long tail, long tail financial products, right? If you think of YouTube's like the unboxing video, something you could have never predicted, right? And like this whole like on on like all this shit that happened because of user generated content. I I do have a belief and I'm a timing of this is hard, but I do have this belief. That we will have like user generated financial products of a sort. That are like this long tail of things that um. You wouldn't otherwise predict and you're right, Ryan, I see there being a world where if people produce financial products or produce ideas that other people want.

• 55:17Speaker 02

  Um, they can earn an income off of that. I I think that is a world we're going towards and I'll quite know what it looks like, but I completely agree. It's it's part of our vision, right? That like this, it's easy to create um financial products. It's easy to build in DeFi. We make kind of like building this DeFi stuff simple. And this new class of kids in their basement um create interesting things that other people want.

• 55:42David Hoffman?

  Okay guys, and everyone in the YouTube, this is the last call for listener Youtuber question. So if you have a question for Hart, get it into the chat box. Also like and subscribe. Hart, my question for you is, no one can really predict the future of UMA better than you and the UMA team, right? And so when you guys are shooting the shit, eating lunch, like not really thinking about the future, what are some of like the crazier things that you guys think about that you could do with UMA? Like if you guys really went like super deep and you're like, well, we could do this and then this. And like, give us an example of some really like sci-fi type stuff that could happen out of UMA.

• 56:24Speaker 02

  David, that's a good question. I'm currently obsessed with thinking about this stuff. So we did our KPI options, right? We can create a synthetic token, like a project can create a synthetic token that pays out some amount of project tokens based on a project hitting their KPI. We announced this. I think it's a better type of incentive structure than many yield farming things out there too. Because what you end up aligning, you end up giving the community ownership in the success protocol. I think that's wild. And I think the types of ways you can, you can expand that are pretty wild.

• 57:04Speaker 02

  We can create all kinds of call options, a lot of different options markets, and like structured notes, various sort of interesting payouts using the same primitives, the same synthetic. I've actually very recently realized, we've only scratched the surface of like what Ryan's alchemy is example of store value, like ERC 20 asset plus price feed equals like big, big space.

• 57:34Speaker 02

  Um, one of the things that is really mind bending that I'm recently thinking about is what if we were to create a synthetic asset collateralized by its own AMM pool? This is recursive. It makes your head hurt a lot, uh, but I think there's like wild things you could do there. Um, there's lots of fun stuff. Basically, I think we've got, uh, we've got a, a lot of, a lot of potential innovation coming.

• 58:01Ryan Sean Adams?

  I, I want to ask you, you know, we're getting to kind of the, the close. Maybe there's some other questions we should ask, but, but hard. This has been kind of burning in my mind. So you started at, at Goldman. Now you're, you're fully down the DeFi rabbit hole, right? Like, um, you're all in here. So I guess my question is, why hasn't Wall Street, why haven't other financial engineers, uh, in traditional finance discovered DeFi? Like they love building financial products, don't they? Of course they do. Like, what, do they think you're crazy when you talk to them about this or when you keep in touch? Or like, why aren't we seeing Wall Street? Using UMA protocol to create all of these really cool derivatives?

• 58:46Speaker 02

  So Ryan, they are, they're jealous. They want to be doing this. This is all they want to be doing. Um, and like, you know, my old boss at Goldman, um, works with us now, works really closely. And is doing this, just having a lot of fun. He wrote a blog post on like creating structured notes, using, um, uh, building all this stuff. He, he, he's having a lot of fun, um, doing this. The difference here is the people want to play in DeFi. I actually talked to a lot of Wall Street people that are either looking for jobs in DeFi or want to transition to it or whatever else. The institutions, like having worked at Goldman Sachs, institutions aren't going to move, man.

• 59:25Speaker 02

  They're going to get like, and we don't want them to move. You want Goldman Sachs to have its lunch eaten by like Uniswap or something, right? And that will happen. That's just, I think that's just how technology evolves where the people in the incumbent, in this case, Wall Street, will move to this new infrastructure and will build new entities, organizations, or whatever else that will eat the incumbents. And that's like, uh, that's, that's great.

• 59:54David Hoffman?

  So what's in store for the future of UMA? Like, what's on your guys' roadmap that we have to look forward to?

• 1:00:03Speaker 02

  A lot. So we're doing this KPI option thing, and we're gonna be doing our own version of it, where we are going to be airdropping tokens to people in our community and people that have been used governance in other communities, been active governors in other communities. We're gonna airdrop them an option that will increase in value the more RTVL goes up, which I think is pretty cool.

• 1:00:30Speaker 02

  Like, we're pretty transparent. I think there's a cool idea for call options that we're gonna put out in the near future. We're gonna publish more loudly about our optimistic oracle, which can be generalized for other use cases outside of just synthetic tokens, and make that be kind of like a cool primitive that can be used for applications where you need a price feed on something weird, on kind of a price feed on anything. And then we have a perpetual synthetic token, which is a pretty hard financial engineering problem that is audited and ready to go. We're gonna put an experiment, we're gonna test that out.

• 1:01:11Speaker 02

  So there's a lot. It's like, we're pretty busy right now.

• 1:01:15David Hoffman?

  UMA as a platform, I'm reminded of that one, like, famous gif of the Microsoft people on stage going, "Developers, developers, developers." It sounds like you guys need a bunch of developers. So if we have any developers listening, I'm seeing some developers in the YouTube comments, how can they get started to go start playing around with UMA? Because, interestingly, UMA seems to be not just a Money Lego, but a Money Lego factory, and it seems to really need Money Lego developers to really build out Money Lego structures. How can developers get started?

• 1:01:47Speaker 02

  You guys are so good at like the taglines and the marketing, right? Like, I'm gonna steal that, David. The Money Lego Factory, that's like, good, man. Nice, man.

• 1:01:56Ryan Sean Adams?

  I think there's a job title in there, too. Like, Money Lego Designer.

• 1:02:01Speaker 02

  Money Lego Factory Worker. Like, a very, a very blue collar title here.

• 1:02:09Speaker 02

  I like that a lot.

• 1:02:12Speaker 02

  So, David, you're entirely right. We want, and I actually joke back to that Steve Ballmer onstage, being all sweaty, going, "Developers, developers, developers." That is what we want to do. Best way is join our Discord, to start with. Discord, umaproject.org.

• 1:02:31Speaker 02

  And we need to do better documentation. We need to do all this other stuff, but join our Discord, read our docs. And, yeah, chat with us, basically.

• 1:02:43Ryan Sean Adams?

  All right, I want to see you replicating the Steve Ballmer gif someday. Just getting up on a stage and screaming it. Make sure you, make sure you feel the passion that Ballmer felt at that time. Man, this has been a lot of fun. I think, I didn't know a ton about UMA Critical going into this, but I feel like I, I know a ton coming out. Hart, thank you so much for, for spending time with us today. We appreciate it.

• 1:03:07Speaker 02

  Thank you, guys. This was, like, really fun. Do it again sometime.

• 1:03:12Ryan Sean Adams?

  Awesome. All right. Bankless Nation, we are going through all of these interesting projects on the Ask Me Anything to help level you up on what's going on in DeFi. And it moves so fast. That's why you have to keep tuned in. So, like, subscribe the video. Check out the, the podcast as well. Podcast version of this comes out on Thursday. As always, risks and disclaimers. ETH is risky. DeFi is risky. So are synthetics that are based on the Ethereum platform. You could lose what you put in. But we're headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.