DeFi 2.0 Summit | Rari, Olympus, Tokemak, TracerDAO, Alchemix

Among these five protocols is over $8 Billion total value locked. But what is DeFi 2.0? What primitives are changing, and where do we go from here? From liquidity to self-paying loans to permissionless borrowing/lending, these projects intertwine and work to align incentives between protocols and users. ------ SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ ️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ DHARMA | From Dollars to DeFi! https://bankless.cc/dharma ------ BANKLESS SPONSOR TOOLS: GEMINI | FIAT & CRYPTO EXCHANGE https://bankless.cc/go-gemini​ https://bankless.cc/go-gemini%E2%80%8B LIDO | DECENTRALIZED STAKING https://bankless.cc/Lido AAVE | LEND & BORROW ASSETS https://bankless.cc/aave UNISWAP | DECENTRALIZED FUNDING https://bankless.cc/UniGrants ------ Guests: Jai Bhavnani https://twitter.com/jai_bhavnani?s=20 Rari Capital https://rari.capital/ Pat McNab https://twitter.com/pat_mcnab?s=20 TracerDAO https://tracer.finance/ Scoopy Truples https://twitter.com/scupytrooples?s=20 Alchemix https://alchemix.fi/ Carson Cook https://twitter.com/LiquidityWizard?s=20 Tokemak https://www.tokemak.xyz/ Zeus https://twitter.com/ohmzeus?s=20 Olympus DAO https://www.olympusdao.finance/ ----- 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 I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

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

• 0:06Ryan Sean Adams?

  Hey Bankless Nation, welcome to the first of its kind. This is not a DeFi 2.0 panel. This is a DeFi 2.0 summit. David, what's the difference, man? Panel versus summit, what's different about this one?

• 0:19David Hoffman?

  It's a simple math game, Ryan. Panels have three people, summits have five. So we are bringing on everyone from, uh, hold on, I need to get this music out of my ears. Let's go and mute that. Apologies about that. Okay, so yeah, we have brought on five of the biggest minds out from the space of these next generation of DeFi apps. These DeFi apps that have really caught a lot of the energy, caught a lot of the excitement, and notably are not part of the DPI, which is why my DPI bottom call has not done so well. Because if these tokens were in the DPI, it would be a different story.

• 0:52Ryan Sean Adams?

  That's the DeFi Pulse Index for people who are not familiar, which is supposed to track, which tracks like the top 15 or 20 or so DeFi projects. But this new cohort is not part of those original projects. Yeah, it's a new cohort.

• 1:05David Hoffman?

  New cohort and time is not linear. Time goes in cycles, time goes in generations. And this is kind of the gist that we're getting from this new cohort of DeFi apps. It's a new generation. There's a certain kind of disposition. There's a certain kind of construct. And so we're going to unpack what all of those things are with all five of these different members from these different DeFi teams. So many of these people have come on to the Bankless show before. Actually, I'm pretty sure every single person has been on Bankless before. We've got Jay from Rari Capital. We got Pat from Tracer. We got Scoopy Triples from Alchemix, Carson from Tokemak, and of course Zeus from Olympus Dow. So again, perhaps the most stacked panel that Bankless has ever come up with.

• 1:47Ryan Sean Adams?

  Sorry, not panel, sir. This is a summit, not a panel.

• 1:50David Hoffman?

  Pardon me, pardon me.

• 1:51Ryan Sean Adams?

  Absolutely. And this is like, I'm really excited to dive into this because I want to hear what the panelists, ugh, what the summitters, what the summitters think of this entire term and how to define it. Because it has been in Zika, it's like DeFi 2.0, is this just a new cohort? I mean, Scoopy Triple put out a thread and Said there are some patterns that are emerging around like token incentives. It's been a theme we've been talking about on bankless for I guess the past few weeks and into into months. I feel like this is kind of the culmination of the topic where we're assembling all of the Avengers to to talk about it together. So that's what we're about to do. David, before we get started, we have to let bankless listeners know about something cool

• 2:34Ryan Sean Adams?

  that's going on, and that is Dharma has moved to Polygon. Okay, so Dharma is one of my favorite smart contract wallets. These guys make it super easy to go from bank account to bankless, right? So you know, the process of getting into crypto can be long and arduous, right? You connect your bank to go to Coinbase or Gemini, and then you've somehow get the funds to MetaMask, and then there's gas fees involved, and you're like you're in DeFi. Seven, eight steps later, Dharma makes it super easy, particularly with Polygon, their new Polygon integration. So you can go from bank account, straight to token, straight to Polygon in like, less than 10 minutes. Like, that's how easy this experience is. And also, as a little cherry on top here,

• 3:17Ryan Sean Adams?

  Dharma is offering bankless listeners, of which you are one, $50 in ETH when you try this out.

• 3:23David Hoffman?

  ETH, that's my favorite.

• 3:25Ryan Sean Adams?

  Yeah, that's your favorite money, David?

• 3:26David Hoffman?

  That's my favorite money, yeah.

• 3:27Ryan Sean Adams?

  There are rewards for using DeFi, guys, right? If you don't know, now you know. Airdrops, rewards like this come all the time. So check this out. Click the link in the show notes that will get you the code that you'll need to use to get this bankless deal on Dharma. Set that up on your mobile wallet as well as just a simple app. You're good to go. 10 minutes. Give it a try.

• 3:48David Hoffman?

  10 minutes or less, it's a wormhole from your bank account into DeFi. All right, Ryan, I think we're ready to go ahead and get right into the show. And I've come up with a name for who these who these people are. If you're if you're on a summit, you are a mountaineer. So we are going to get into these five mountaineers who are exploring the frontier of DeFi 2.0 in just a moment, after we talk about some of these fantastic sponsors that make the show possible.

• 4:13David Hoffman?

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• 4:58David Hoffman?

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• 5:42David Hoffman?

  there are markets for over 30 various different crypto assets, including many of the hot DeFi tokens, and it's one of the few exchanges that has liquid DAI markets. Gemini just launched their Earn program, where you can earn up to 7.4% interest on 26 various crypto assets. If you're tired of paying fees in DeFi, or you don't want to worry about DeFi exploits, but you still want to earn interest on your crypto assets, Gemini Earn is the product for you. Another product I'm stoked to get my hands on is the Gemini Crypto Back Credit Card, which gives you 3% cash back on all of your purchases, but paid to you in your preferred crypto asset. When I get my Gemini credit card, I'm going to make sure that I get my cash back in ETH, so whenever I buy something, I get a little bit of ETH bonus back to me at the same

• 6:26David Hoffman?

  time. You can open up a free account in under three minutes at Gemini.com/goBanklist. And if you trade more than $100 within the first 30 days after signup, you'll be gifted a free $15 Bitcoin bonus. Check them out at Gemini.com/goBanklist. Alright guys, we are back with our mountaineers of DeFi 2.0. We got Jay on the left, Jay from Rari. We got Carson in the center, Carson from Tokamak. We got Scoopy on the right, Scoopy from Alchemix. We got Patrick in the top right corner, clocking in from Tracer Dow. And last but not least, we got Zeus from Olympus Dow here on the bottom of the screen. Guys, thank you for all showing up for this fantastic DeFi 2.0 summit. Thanks you all for being here. We are spanning

• 7:11David Hoffman?

  the globe. We have the globe surrounded, and we also have DeFi surrounded as well. So, thank you guys for all showing up.

• 7:18David Hoffman?

  Alright guys, let's start with Jay. Jay, since I named you first, Jay, what the hell is DeFi 2.0 in your own words?

• 7:26Speaker 02

  Yeah, that's a good question. I feel like we see so many different definitions floating around. But I think to me, what DeFi 2.0 really represents is a movement beyond the traditional, right? I feel like DeFi 1.0 was about replicating what we saw in traditional finance, putting that into DeFi. And DeFi 2.0 was about shaping these products, even taking the 1.0s, and thinking about them from a DeFi perspective. And what does that mean? And what are the innovations we see? It's thinking about liquidity differently, thinking about things like PCV and reserves in a totally different way. It's about thinking about all of these, like, tokenomics themselves, thinking about DeFi and all these products from first principles perspectives with DeFi

• 8:11Speaker 02

  notions in mind.

• 8:14David Hoffman?

  Thank you for that, Jay. And then turning into Patrick from Tracer. Patrick, what do you think about DeFi 2.0? What does DeFi 2.0 mean to you?

• 8:23Speaker 03

  Well, it's certainly not 1.0 and not quite yet 3.0. So somewhere in between the two. I think one, one signal of what DeFi 2.0 has sort of evolved into is the fact that five of us are here on the call who are each different contributors to different projects. There's an incredible social layer that's forming between different DAO communities and treasury interactions particularly as well. You've got sort of hundreds and millions of dollars

• 8:54Speaker 03

  within these DAO treasuries and you're now seeing incredible tools being produced by protocol developers that are within this call that allow treasuries to utilize these funds and earn yields and interoperate amongst one another. But as well as that, I suppose your 1.0, you had some pure primitives that were built with respect to lending, with respect to exchange, a few derivative primitives. And I think DeFi 2.0, you're seeing native applications that are built plugging into some of those core primitives that allow users to do really particular things. And I think Alchemix is an incredible example of something like that as well as TokenMac. So yeah, I think that's probably a decent classification of what 2.0 could mean to me.

• 9:40David Hoffman?

  Is what you're saying that DeFi 2.0 is just generally a lot more collaborative than the applications that we've seen previously?

• 9:47Speaker 03

  I think so, yeah. And I think there's also this element of permissionlessness as well with respect to like market creation. Something that DeFi is going to usher in is this Cambrian explosion of new markets driven by Oracle infrastructure as well as just innovative new algorithmic stablecoins or any type of function that you can encode within these smart contracts. I think there's that element where developers can come in and leverage existing code bases to be creative and create new financial tools that produce value for the economy and ecosystem that are large.

• 10:23David Hoffman?

  Fantastic. Scoopy, turning to you next. What does DeFi 2.0 mean to you? Anything you want to add on to what Patrick and Jay had to say?

• 10:31Speaker 04

  I'm just gonna be yeah, piggybacking on to them a little bit here. So I think it to me, it represents three things. One is sort of like yeah, building on the previous layer of applications and having like increased composability and capital efficiency as a result of it.

• 10:47Speaker 04

  You know, like Alchemics, how our deposits aren't doing anything or they're they're not just, you know, sitting there, they're they're going into urine and making yield. Things like that, you know, Abracadabra does that as well. And I think you're seeing more and more like treasuries do this with their their assets as well. Is that they're they're they're not leaving them idle.

• 11:09Speaker 04

  So another thing I think is the liquidity dynamics for protocols instead of relying solely on yield farming. There are now like, you know, alternative ways to source liquidity for your protocol. Whether that's through like Olympus Pro and, you know, like an ownership model of liquidity or something more like a Tokemak where it's a much more like efficient, like market driven, like rental of liquidity. I think those are some some pretty big innovations as far as the DeFi 2.0 stack. And then the other thing is like sort of like Dow treasuries becoming like firms in and of themselves.

• 11:47Speaker 04

  Where they're not just like, you know, just sitting there, they're they're doing things like you see a lot of them are now tapping into the power of like rare refuse. And they're they're starting their own markets for their their coins and they're they're kind of doing some really cool and innovative things. As a result of that, and it's not just limited to that, but you know, there's lots of different things like if you look at fracs, like they have these algorithmic market operators. And they mint and and burn the supply of fracs and put it into various markets. And then with that like extra supply of fracs and the liquidity tokens, they go out and then they're farming with those and making more money for the protocol.

• 12:29Speaker 04

  And I think it's like just a really cool way to see, you know, like DAOs evolve and becoming like active market participants and investors. I think that's pretty cool.

• 12:39David Hoffman?

  Seuss, with everything that's been said so far, anything that these people have missed, anything you want to add on to the conversation of what DeFi 2.0 is?

• 12:47Speaker 05

  Yeah, I mean, obviously, everyone's really like, you know, covered all the good stuff. But uh, no, I think that like, you know, the 1.0 is these like crucial infrastructural primitives that got built. And then, you know, this new wave is kind of leveraging those kind of with this focus on like strong communities, building strong protocols, in my opinion. So it's a little bit less focused entirely on the user side of things. And how do we get like, you know, people to come in here and use this? And, you know, LP for it and whatever, and more on, you know, how do we build a strong protocol that has longevity? And is going to like, you know, persist along with us.

• 13:26Speaker 05

  One other thing that I think it kind of symbolizes the shift towards is, you know, along with that, this shift from like B to C models to B to B models, where you're, I think that we're going to see a lot more protocol to protocol activity, whereas previously it was very constrained, I think, you know, on the most part for protocol to end user.

• 13:46David Hoffman?

  Fantastic. Zeus and Carson, last but not least, the hardest, hardest role of all, coming in last after everything's already been said. But Carson, what do you think about DeFi 2.0? Anything that these fellow members of the summit has missed?

• 14:00Speaker 06

  Yeah, so I think everyone got it totally right. I would agree with everything that's said so far. Not surprising, given who the cohort is within the summit. But maybe just a couple of things to layer on. So I think of DeFi 2.0 not necessarily as something that is defined or not necessarily as a thing, but more a moment in time. And I think then within that, it's like, guys, there's, there's certain sort of themes that you can come up with. And I would agree with everything that that's been said so far. A few things to layer on would be, I consider DeFi 2.0 at the moment, sort of being the protocols that extend value or increase utility of other DAOs. So there's a sort of shift in mindset from how do we maximize the value internally just for my DAO? Into how do we unlock the most utility and value for other DAOs? And then indirectly or as a corollary from that, increase the value of our own.

• 14:44Speaker 06

  I think a lot of these things take DeFi 1.0 primitives and build on top of them. And I think there's this strong kind of focus on getting to sustainability. So really focusing on the DAO as this. And living, breathing entity and how you can get to sort of a self sustaining DAO moment. Some of us call it singularity, but again, a lot of this goes into a shift from hey, it's not just thinking about TVL. Or, or, you know, basically rented liquidity into a platform, but rather what's, what are your protocol controlled assets or protocol controlled value look like? Maybe two more things to say on this. I think DeFi 1.0 was largely for users. I think DeFi 2.0 is largely for DAOs. Not at the expense of the users, but DAOs are a significant user of DeFi 2.0.

• 15:28Speaker 06

  And I also think just the common theme here, the community was brought up. That's very strong. It's really all about collaboration and building bridges. Between protocols, between DAOs. And I think we're going to see that only get more and more so as we go forward.

• 15:42David Hoffman?

  Wow, Carson, rising to the challenge of taking the hardest spot with a fantastic answer. I really like everything you guys have said. And the gist I've gotten so far is that it's all about collaboration and where DeFi 1.0 didn't have a layer of DeFi to build upon. DeFi 2.0 does. And so DeFi 1.0 had to go after the users. That was the only thing, but DeFi 2.0 doesn't have to go after users. It now has DeFi 1.0 to actually go after. And in this era of collaboration, it's also worth noting that a lot of the projects that each of you represent. Are integrated with other people's projects. And so I think there's just the, the collaboration is evidenced by just the collaboration that we see on here on this summit. So now I'm going to throw it to Ryan to take the next question.

• 16:27Ryan Sean Adams?

  Yeah. So I guess maybe, and we'll start with Carson this time because I think that's only fair. But, but, but actually Carson, this, this might be a trickier question because I want to take the, the other side of this and ask this question, right? From, from somebody who's a bit skeptical about DeFi 2.0. I really loved how you defined it as like, hey, maybe this is a moment of time. Maybe this is just about a generation of DeFi builders and kind of what they're doing at this point in time. But anytime we have a new generation of builders that are doing things differently, sometimes the previous generations raise some eyebrows, right? And they start to question because I think part of what DeFi 2.0 is doing.

• 17:06Ryan Sean Adams?

  Is it's kind of questioning, or at least it is building with different assumptions than some of the blue chip DeFi 1.0 assumptions have built on. One of the charges or one of the criticisms to DeFi 2.0 is like, guys, you guys are playing with fire. Some risk. Look, doing perpetuals. I mean, what Patrick and Tracy are doing in DeFi, that's kind of risky business. And we're talking, you're talking Scoopy about like.

• 17:37Ryan Sean Adams?

  Collaboration and capital efficiency and using all of the other primitives, but doesn't that build compounding risk, right? Smart contract risk stacked on top of smart contract risk. And Jay, talking about like permissionlessness. That sounds fantastic, but like Ave and Maker, there's a reason governance exists. And that that reason is kind of a check and balance to make sure that assets aren't getting deposited into these contracts. That are, that are, you know, too risky, right? Or the entire system can collapse. So, you know, I haven't even addressed some of the other panelists, but.

• 18:14Ryan Sean Adams?

  Let's talk about some of these, but I could, yes. Let's talk about some of these, maybe these criticisms or even call them sort of trade offs. Or some of these things warranted. What's your take, Carson? Is like, you know, some people might go even as far as to say, hey, you know, DeFi 2.0 is not really. A thing. It's just this new set of, set of protocols that are taking, you know, new risks and I, it's just an extension of DeFi. What are your take about? What's your take on all of those things? We'll start with Carson.

• 18:47Speaker 06

  Yeah, I can jump in. So, and agreed. This is a good question and a tough question. So. I think, I think it's sort of a natural evolution. Like, I don't think there's anything, if you're playing, if you've been playing through. Through the DeFi ecosystem over the last year or two, I don't think there's too much that's being built here that's overly surprising. Maybe the first time you hear it, but then I think kind of in retrospect, probably, you know, all five of the great projects that are represented on, on this summit. Like, it just seems sort of obvious, like, okay.

• 19:16Speaker 06

  That's smart. Now, that doesn't mean that it doesn't introduce risk to your point. I think I think the the thing you have to weigh here is sort of what you unlock. And I'll maybe just talk for one second on Tokemak only because that's the one, of course, I'm most familiar at. But I sort of think of DeFi 2.0 as a lot of these things, not not in every case. This is again, it's sort of undefinable. But in most of these cases, it's something that couldn't exist without the previous set of DeFi protocols. So in the case of Tokemak, if we we are not an exchange, we don't want to be an exchange, there's always the underlying AMM. So at launch, it's Sushi Swap, Uniswap, Xerox, Bouncer, and we'll be adding more over time. So you can really think of like a natural evolution of this was great. We have a decentralized Coinbase, right, which was Uniswap, Sushi Swap. How do we have a decentralized jump trading?

• 20:01Speaker 06

  How do we have the decentralized liquidity provider and market market maker sort of be the the thing that controls the flow and is sort of the puppeteer of liquidity into those venues? And so if you think about it like that, certainly, this introduces sort of risk up at that higher level. But you unlock a ton by sort of evolving beyond just just being reliant on on centralized trading firms and market makers. And interestingly, they can still plug into this in a way that actually can help their business as well, which is too detailed for this discussion, I'm sure. But the point is, there's going to be risks at these higher levels. You still have the inherent risks of the under of sort of the underlying ones. And in some cases, you have what I'll call emergent phenomena risk or like integration risk with some of these things. But I actually think in general, that's not where most of the the risk comes from.

• 20:47Speaker 06

  It's really trying to understand the inputs, outputs of each of these protocols, whether it's at the DeFi 1.0 layer or 2.0 layer, and and just trying to mitigate those things. And absolutely, I think we probably need to get into a more advanced sort of system-based approach probably to audit and risk assessment that isn't just limited to a single protocol, but rather how it's sort of interacts with other protocols.

• 21:09Ryan Sean Adams?

  So let's talk about that a bit more and maybe I'll direct this to Scoopy since you kind of brought up the idea of DeFi 2.0 being all about composability. I remember back in the day, like a couple of years ago, anytime that David and I tried to talk about money Legos in DeFi when everything was so early, right? We inevitably, you'd see a maximalist meme of some sort saying, "Not money Legos, money Jenga", right? And they depict everything sort of, you know, falling down and tumbling in on itself. But, but talk about this risk because we have talked about smart contract, you know, the, the compounding risk of smart contracts stacked up on top of smart contracts. So Scoopy, what's your take on that?

• 21:52Ryan Sean Adams?

  Are we adding a whole bunch of risk into DeFi systemically by building on top of all of these, these additional protocols?

• 22:03Speaker 04

  Well, I think that whole money Lego versus money Jenga like comparison is very fair. And I think, you know, out there in DeFi, there are some money Legos that are very solid and secure. And there are some money Jengas, which might not be good things to build on top of. And as far as like Alchemix goes, like the reason we, we were with Urn, why we chose Urn is because they have a very good reputation. They have an amazing dev team and dev ops team and they're there to support you and all sorts of stuff like that. And we could have gone with a different yield aggregator, but we chose Urn because, you know, we wanted to make sure that, you know, the underlying stuff in Alchemix didn't break.

• 22:43Speaker 04

  And Alchemix V2, we're going to be adding different strategies, different yield providers and stuff like that. But for every single strategy that we are going to be including, it's going to have to go through a very rigorous audit. I know that if you incorporate, you know, yield bearing tokens from another protocol and you don't catch, you know, some little tiny detail in their code, then it could lead to some, you know, disastrous consequences. So as a result, we have to take a very, very security first, you know, like approach when it comes to building with these Lego blocks. So we can ensure that we build it intelligently. So we don't have this, you know, This tower fall over and collapse on us. Um, but yeah, I mean, there, there's no getting around it like even with every single precaution and you know, you know,

• 23:28Speaker 04

  you know, like putting in safeguards in your, your DAP to, to mitigate any kind of, uh, you know, risk or disastrous effect, there is still going to be an increase of risk the higher you go up the stack. You know that that's just a matter of fact, you know, if, you know, since we're building on Dye and then going on yearn and stuff like that. So like if something happens to die, like we're, you know, that's bad for us. If something happens to you and it's bad for us. So, you know, it's, uh, it's, it's about choosing the, the best protocols to build with at that point to make sure that you're not, you know, going to, you know, make a, a money Jenga tower.

• 24:03Ryan Sean Adams?

  J, Jay, our, our summiters, our, our mountaineers so far have, uh, it kind of talked about the risks and definitely acknowledged, uh, the risks. But I think what they're also saying is the rewards exceed the risk, the rewards of this innovation, what we might find on the other side. Once we unlock these things, what's your take on that? Do you think the rewards exceed the risk? Um, give us, give us the pitch for these new methods.

• 24:28Speaker 02

  Yeah, I, I agree with everything that has been said so far. I think it's, it's the cost of innovation, right? It's like DeFi 2.0 is moving at light speed compared to DeFi 1.0 for a variety of different reasons. A part of it is risk tolerance, right? We're able to ship contracts much faster, we're able to move much faster than a lot of these older projects. And yes, that means there is smart contractors. Yes, that means that there is market risk, that there's risk of all sorts of factors. At the end of the day, it's what's going to need to happen if we want to innovate in this industry, right? Somebody's going to need to be pushing the bounds, be pushing into these risky areas. And yes, people will lose money and that's going to be extremely unfortunate. We need to do our best to educate users on the risks of these protocols.

• 25:13Speaker 02

  But at the end of the day, it's going to be a small, a small blip in history compared to the innovation that's about to happen.

• 25:20Ryan Sean Adams?

  Zeus, what would you add to all of this that's been said so far about kind of the risk reward of DeFi 2.0?

• 25:28Speaker 05

  Yeah, I mean, I really just think it's in the nature of innovation that, you know, inherently, you know, with innovation and, you know, the reward that comes with that, you have risks attached to it. I think a really important thing is just insulating as much of that risk as possible. So it's not, generally, the best case scenario that you can have is something fails, but it doesn't affect anything else. If that's the case, then you as the depositor or user of that, you know, you're hit, but you should have known the risk that you're taking on being involved in that. And no one else kind of gets hurt. I think that one of the actually like the

• 26:02Speaker 05

  really good things about DeFi is the fact that things can be very insulated. So not always and generally or definitely like, you know, DAI is one of them that, you know, is pretty entrenched kind of everywhere. But for for a large part, you know, things stay pretty separate. I also think that it's just kind of a matter of time when it comes to like these becoming new, you know, building blocks is that, you know, we as an industry generally do take time to just wait and see, okay, is this thing going to fail? I don't want to build on that as my own project if I think that it's going to fail or there's some high risk that it does because then I'm also hurt.

• 26:40Speaker 05

  And so, you know, this is the reason that we can look at a lot of these like 1.0 primitives and like, you know, they're they're safer. We have have a collective belief that they are safe. Just because they've been around for a long time, they haven't failed, and that inspires confidence. I think that that's generally the best way to mitigate risk is just to take it one step at a time, not rush into things. You know, let things kind of arise, observe them, make sure that they're safe and solid, and then you can start to utilize them and, you know, build up the stack.

• 27:09Ryan Sean Adams?

  Patrick, I want you to weigh on in on this too. Obviously, perpetuals are much more complicated. You know, protocol and in project than than many that that we've we built in kind of the DeFi 1.0 world. Does that complexity weigh on you? Or why is now the time to kind of lean into these more complex financial instruments in DeFi?

• 27:32Speaker 03

  Yeah, look, I think it's always been a fundamentally risk-taking space since its inception. Like, the early Ethereum developers developing the first smart contracts. You saw what happened with the DAO and everything in between now and then. There's continually been risk that's existed within DeFi or Ethereum and the blockchain industry more generally. But alongside that, you've seen incredible security auditing companies emerge alongside the growth of TVL. You've seen insurance protocols emerge to provide ERC20 credit default swaps, like Risk Harbor, incredible, incredible protocol. Shout out to them who are supporting Tracer DAO at the moment.

• 28:17Speaker 03

  And with that, with those further steps and more energy and more attention within the space. To me, at least, it doesn't feel like it's taking more risk than the first DAO smart contract developers were taking. It's continually just building upon what we've got in terms of the foundation. And of course, there's going to be some shoddy parts of the foundation that crumble as more pressures put on them. But continually over time, and this is why we're here, this movement will become more fundamental. And the foundations will continue to build to provide financial transaction support into the future.

• 28:54David Hoffman?

  One of the favorite quotes that I believe Amin Soleimani, one of my heroes in this space, said about smart contracts. Risk is kind of like the steam engine. It blows up a bunch of times and then at some point we figure it out and it just works. And overall, DeFi has been blowing up less and less and less over time. And we've kind of been figuring out this whole smart contract thing. And maybe, hopefully, in five, 10 years from now, we're just looking back on like, oh yeah, remember when we didn't know about how to do smart contracts? That was a fun time when everything blew up along the way. So I want to move into our next question here and framing this question under Jeff Bezos's quote. Your margin is my opportunity. What about DeFi 1.0 has been left on the table that the project that you guys all represent has been able to grab?

• 29:39David Hoffman?

  What did DeFi 1.0 not do that gives you room for you to build your DeFi 2.0 app? And we'll go in reverse this time and start with Patrick from Tracer. Patrick, what did Tracer grab that was on the table that DeFi 1.0 left?

• 29:54Speaker 03

  So we're probably an interesting hybrid between what you might consider 1.0 primitive and 2.0. Trace it out right now with our perpetual pool contracts. We're simply just leveraging chain link oracle infrastructure and not interoperating with any other smart contract at the base layer right now. So I think for us, the opportunity and the opportunity that we've seized is in providing leverage tokens for the DeFi economy. So we've got non-liquidatable leverage tokens and perpetual pools enable you to not have to set up a margin account. It's a very simple experience for people that understand the concept of leverage, but don't want to go through the complexity of trading a perpetual swap contract

• 30:37Speaker 03

  can can mint a token and then utilize it within uni swap, utilize it within other other DeFi primitives to trade these ERC 20s. So this is this is where we've we've ventured into with with tracer to start off. And it's something we're continually excited about growing.

• 30:55David Hoffman?

  Jay, let's turn to you. People often talk about Rari as a superset of compound and Ave where it doesn't actually formalize specific assets. It lets you do all of them. Is that what what Rari has really brought brought taken from the table of DeFi 1.0? Or what else is in addition to that? What else is there to say?

• 31:13Speaker 02

  Yeah, that's exactly it. I think that the big thing is before you had these token holders telling you what you can and can't borrow, which is just like the new version of banking regulation, whatever you want to call it, permitting collateral, right? You have to go lobby to the token holders in the same way they have to go lobby to whoever it is in traditional finance. And we said, that's not fair. Let's enable any token as collateral. And you can pick who you want to govern your pool, right? If you want the omis to govern your pool, you can have them govern your pool. If you trust Tetra No More, you can have him govern your pool and enable not only just the lending and borrowing of really any asset, but the administrative, the administrative controls to any.

• 31:51Speaker 02

  Who you are comfortable with.

• 31:53Ryan Sean Adams?

  That's a pretty spicy take Jay. I want to maybe dig into that for a second here, but like you were equating kind of like token holders, basically, you know, governance forms as another form of gatekeeping for assets, right? And you think it's a more open world to not have those gatekeepers in between. Just let the market decide. That's what you're saying.

• 32:12Speaker 02

  Exactly. Yeah. I mean, like, like how I'd like to think about it is before Uniswap, right? I feel like a lot of new entries have come into crypto. There was radar relay and iDex, right? And radar relay had a permissioned listing of assets and it was completely taken over by Uniswap because it was more efficient. You could have any assets you wanted. And I think we're seeing the same thing happen with Fuses is Compound and AVE, they're the radar relay, right? They're going to continue trying to iterate in the ways that they can, but it's like it's inevitable for the liquidity to migrate over to a product like Fuse.

• 32:45Ryan Sean Adams?

  Do you think that's a, that's a, that's a trend in general? Do you think that permissionless will always outcompete, you know, permissioned versions of the same thing? Or do you think it's, it's going to happen more on the long tail?

• 32:59Speaker 02

  I think it will always win. The one exception being how institutions and regulation plays a role into it. And I think that's something that we're still seeing play out. Obviously like AVE has their institutional product, Compound has theirs. Once, once we start seeing usage, if we start seeing usage, then we'll know what the play there is. But until then, why bother? We'll focus on DeFi natives, the D gens and everybody in between. And then we can worry about those guys.

• 33:26Ryan Sean Adams?

  I know you didn't mean this, but I think this is hilarious that you called like a bajillion people inside of DeFi as the next bankers because they're getting the token holders are gatekeeping the permissions. It's a, it's a great take and it's, I think it's, it's one of those really nice takes that it's jarring, right? And it actually makes people rethink about what that means to actually build a DeFi app. Great take. Carson, let's go to you. What about DeFi 1.0 was left on the table that Tokemak was able to capture?

• 33:52Speaker 06

  Yep, and so what I'll say that DeFi 1.0 left on the table, they didn't have a choice in leaving it on the table. So the beautiful thing about DeFi 2.0 is we're past the bootstrapping phase. And what I mean by that is DeFi 1.0 was really bootstrapping users and bootstrapping capital. And all these different protocols that chose to use a token essentially separated users from their product with a token, which meant they lived and died by liquidity. What that meant was they needed to secure liquidity because our sort of thesis is that in Web 3, value flow is replacing the data flow in Web 2, and therefore liquidity is in the bandwidth of the system. So they needed to pay for that liquidity, and of course, that came via inflation. So these liquidity mining emissions is really the thing that we're tapping into with Tokemak.

• 34:36Speaker 06

  We realized that protocols need liquidity. It's not just about liquidity, it's not about traders and investors like it is in traditional finance. It's about users and protocols since different tokens of value need to be swapped for others. And therefore, that was really the signal that we went after with Tokemak was how do we both increase liquidity within the ecosystem while at the same time reducing the cost to DAOs for securing that liquidity? And in fact, even getting to an inversion of economics so that DAOs can actually earn while securing liquidity, really profit from their own liquidity as opposed to always be paying for it.

• 35:12Ryan Sean Adams?

  This is something I want to jump in on what you said, Carson, because I think this is also a paradigm shift for people, right? You said liquidity is bandwidth, which is super interesting. So most people, when they think about like crypto bandwidth, they're talking about maybe transactions per second or something like this. But like, we on Bankless have talked a bit more about like something called economic bandwidth, right? And this fits this idea of liquidity as bandwidth. And so what you're doing at Tokemak, are you basically a bandwidth provider? Are you some sort of an ISP, I suppose?

• 35:48David Hoffman?

  Web 3 bandwidth?

• 35:49Speaker 06

  Yeah. Yes, that's exactly, it's a great way to put it, and that's exactly how we think about it. We think of this as infrastructure and really a liquidity utility. So if liquidity is the new bandwidth, then what Tokemak is trying to usher in is the broadband moment for DeFi and really all of Web 3 for that liquidity bandwidth. Put another way, we sort of think of multiple layers to the infrastructure to go a little deeper on this. You've got electricity, you've got the internet running on top of that. You have blockchains, including Ethereum, running on top of that. And then on top of that, you need liquidity. And that, of course, doesn't just mean from Tokemak. Liquidity is a more generalized concept, but Tokemak is sort of one example of a broadband access to that liquidity. And the reason we think of all those as infrastructure is, just like on this call, if any of us drop, if the battery in our,

• 36:33Speaker 06

  in our laptop dies, or if any of us drop internet access, we drop them the call. Similarly, nothing works in DeFi with zero liquidity. And so that's why we think of it as infrastructure.

• 36:43David Hoffman?

  It's a great take. I'm loving the metaphors, big fan of the metaphors. All right, let's take this one to Zeus. Zeus, what about DeFi 1.0 left cool stuff on the table that Olympus was able to capture?

• 36:55Speaker 05

  Yeah, so just real quick, I want to tag on to Carson's thing there.

• 36:58David Hoffman?

  Absolutely.

• 36:58Speaker 05

  Because I super strongly agree. I, my own saying is, like, I think of it as liquidity rails of the new railroads. You know, so this kind of crucial train, or what's the word I'm looking for? Transportational system that, you know, is kind of required for this commerce within DeFi. In terms of what 1.0 left behind, I think it's that they go for very high-volume, low-margin businesses. So these are, you know, kind of, at least when we're thinking about the blue chips, it's, you know, very high capital, like startup requirement. There's an actual phrase there that I'm blanking on. You know, and kind of these low-margin businesses, like if you look at Uniswap, they don't even take a fee.

• 37:41Speaker 05

  Sushi Swap, you know, it's basis points, you know, pretty much across the board. Same goes for lending protocols. And, you know, 2.0 is kind of the shift into, you know, push into these more niche things that you can build on top of that, where you can take higher margins and kind of, you know, accrue more value. Because you don't need to build up incentivized billions in liquidity or, you know, service other users of your protocol that, you know, have low margins as well. And so they can't really afford, if you're taking a higher fee.

• 38:15Speaker 05

  So, yeah, it seems like important products, but, you know, they don't accrue a crazy amount of value back to the, the protocol that facilitates them.

• 38:23David Hoffman?

  Do you think that's going to be a trend moving forward where what we are building in DeFi trends towards higher and a higher margin, just products?

• 38:32Speaker 05

  Um, I mean, I see it as kind of what innovation brings in. So I feel like over like the, the natural courses of margins trend towards zero or towards some minimum viable margin, at which point, you know, the protocol can't really sustain itself anymore and the activity dies off.

• 38:50Speaker 05

  But that, you know, existing products and ideas will mark or kind of,

• 38:58Speaker 05

  you know, merge towards that minimum viable margin. And then, you know, innovation will always create higher margin businesses that then do the same.

• 39:07David Hoffman?

  Fantastic. All right, Scoopy. You've been patiently waiting. Scoopy, what about DeFi 1.0 left money on the table that DeFi 2.0 was able to grab?

• 39:16Speaker 04

  For Alchemix, we just saw this opportunity because we saw all this yield being generated and we're like, hey, what can we do with, with, you know, yield as a derivative? And, um, you know, what we came up with was basically a way for you to, uh, save your money and spend it at the same time with Alchemix. So you can just like, keep all your, your principal tokens, like earning yield, and then you can borrow off of that. And then have your yield pay off your debt. And that, that's something that we would need these, uh, you know, 1.0 primitives to make in order for Alchemix to work. And you know, we were surprised like before Alchemix launched in the months running up to it.

• 39:55Speaker 04

  We were like, oh man, is somebody gonna do this? Is somebody gonna do this? Is this, is this Andres credit? You know, why credit thing? You know, is it, is it this? Is it that? And we, we were, that's why we're in stealth mode and in such a hurry to launch because we thought somebody else would run with this idea before we did. Um, so I think it's just, uh, you know, we, we just saw, you know, the cool things that we could build, uh, from the people, you know, all the DeFi 1.0 stuff. And then we, we took it and we ran with it and we, we needed, you know, an AMM like sushi stuff. We also need another AMM like curd for, for our stable assets. Um, and then we also needed your aggregator. So we just had to, you know, kind of combine and compose, you know, what was out there in order to build what we wanted to build.

• 40:35Ryan Sean Adams?

  Guys, this summit has already been super mind-expanding, mind-blowing for me. A couple of takeaways. Talking about DeFi 2.0 primarily servicing other DAOs is super interesting to me. DeFi 2.0 as being just a moment in time. This idea that liquidity is bandwidth. So much good insight is being dropped right now. And if you are listening right now, make sure you hit subscribe on your notifications so that you can get more of these live streams in your inbox. You know about them first. So hit subscribe on YouTube right now. Guys, we are not done with this summit, though. When we come back, we're going to be talking about DeFi 2.0 even a bit more broadly. In fact, the question of what's next?

• 41:19Ryan Sean Adams?

  Is there a DeFi 3.0 in store? Is that what's next? And what generally is the bull case for DeFi? What's all of this going to culminate in and what's it going to mean? So stay tuned for that. But for now, we want to thank the sponsors that made this episode possible.

• 41:36David Hoffman?

  Bankless is proud to be supported by Uniswap. Uniswap is a new paradigm in asset exchange infrastructure. Instead of a cumbersome order book system where trades are matched with other humans, Uniswap is an autonomous piece of software on Ethereum, which is what Ryan and I call a money robot. No human counterparties or centralized intermediaries, just autonomous code on Ethereum. Input the token you want to sell and receive the token you want to buy. Something brand new in the Uniswap ecosystem is the Uniswap Grants Program is now accepting applications for grants. We have been saying this for a while and we'll say it again. DAOs have money and they are in need of labor. If you think that you have something to contribute to the Uniswap DAO, apply for a grant to Uniswap.

• 42:20David Hoffman?

  Just look at the size of the Uniswap Treasury. It's almost $3 billion. This mountain of capital is looking for labor. Do you have something of value to contribute to the Uniswap DAO? No matter how big or small your idea is, you can apply for a uni-grant at unigrants.org and help steer Uniswap in the direction that you think it should go. That's exactly what we did to get Uniswap to be a sponsor for Bankless and you can do the same for your project. Thank you Uniswap for sponsoring Bankless. The Aave protocol is a decentralized liquidity protocol on Ethereum, which allows users to supply and borrow certain crypto assets. Aave version 2 has a ton of cool features that makes using the Aave protocol even more powerful.

• 43:02David Hoffman?

  With Aave, you can leverage the full power of DeFi Money Legos, yield and composability all in one application. On Aave, there are a ton of assets that you can supply to the protocol in order to gain yield. And all of those same assets can also be borrowed from the protocol if you have supplied collateral. Here you can see me borrowing 200 USDC against my portfolio of a number of different DeFi tokens in 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 if I wanted to lock in that interest rate in permanently. V2 also features the ability for users to swap collateral without having to withdraw their assets, trade them on Uniswap and then deposit them back into Aave.

• 43:46David Hoffman?

  With Aave, users can do this in one seamless transaction, saving you time and gas costs. Check out the power of Aave at ave.com. That's A-A-V-E dot com.

• 43:58Ryan Sean Adams?

  Hey guys, we are back with our DeFi 2.0 summit. This has already been an extraordinary conversation with our five panelists. We're going to get right to the meat of this discussion, starting with this question. Been super curious about how this DeFi 2.0 trajectory we're on is going to shape the course of DeFi in the future. And also the question of what's next? Is there like a DeFi 3.0 in store? Where are we moving into? And what are we evolving? And what's coming down the pike? Want to start this question with maybe Zeus? Get some of your insights. I know with Olympus Pro, you guys are have lots of conversations open with many different protocols. What is happening in the DeFi 2.0 world?

• 44:42Ryan Sean Adams?

  How is it changing the trajectory? And what's next? Is there a DeFi 3.0 that we should be looking forward to? That's coming on the horizon?

• 44:51Speaker 05

  Yeah, um, so first kind of touching on the last thing there like I do just want to throw out that I'm not a big fan of the name. I think that it means that we've kind of learned something from Apple, maybe when it comes to like, you know, branding and stuff, but I don't really see this as. You know, I feel like that inherently kind of uh points to a fork or some kind of separation between, you know, this new cohort and the old one. Really, you know, we're standing on the shoulder of giants, um, you know, we are leveraging our predecessors and, you know, using them for what they're meant to be, uh, you know. It just kind of bumps me out and that I don't want to, you know, feel like we're just kicking them to the curb and like, you know, y'all are irrelevant now. No, it's like, you're still very relevant.

• 45:33Ryan Sean Adams?

  Can I just pause and ask the other panelists if they feel that way too? So it's like, we didn't, we didn't actually ask the question about like, do you like the name DeFi 2.0? Because I'm not convinced that um, that I like it yet either, but with memes, it's not always the meme that you want to win. It's just the meme that that sticks, right? Who like, who on the panel likes the term DeFi 2.0 and who actually has some qualms with it? So Zeus said he had some qualms. Anyone else with some qualms on uh the term DeFi 2.0? Patrick, you look like you want to speak.

• 46:05Speaker 03

  Yeah, I just think there's, there's, there's no clear place where um DeFi 1.0 has stopped and and DeFi 2.0 has begun. Carson's characterization of the moment in time is probably somewhat apt, but I think there's characteristics in there that, that, that we're seeing that weren't experienced a couple of years ago in the DeFi economy. Particularly around, around those ideas that we've discussed of DAOs and, and social communities that are forming. So I think there's some benefit to it, um, although there's no sort of end and start um that you can say this is when we cross the barrier, in my view.

• 46:42Ryan Sean Adams?

  Any other thoughts on this panelists?

• 46:44Speaker 04

  Yeah, I mean, I made the thread was a number of weeks ago about in D5 2.0. I think that that started the meme. Uh, or at least the the branding of it. Um, and I just kind of arbitrarily said that, you know, I before I was calling this Gen 2. And just in that post, I just said, uh, D5 2.0 and it kind of stuck and I never wanted it to be like this dividing line. Between, you know, the OG protocols and, you know, the ones that came out in 2021. Um, you know, I just, you know, like, it kind of took me a surprise that some people took offense to that, like as if we were trying to like, you know, you know, you know, kind of. Throw the the OGs to the side, but that wasn't it. I think it's is, you know.

• 47:26Speaker 04

  It's as much, uh, it's it's as meaningful as saying something is a blue chip. It's just like a name that people subscribe to it and that and that's it. You get to actually look at each protocol like, you know. You know, as an individual thing and not just try to lump it all together as, you know, blue chip or D5 2.0 or whatever.

• 47:45Speaker 06

  Yeah, I can quick, uh, yeah, chime in as well because I'm probably, I I really see both sides of this. I again, I mentioned before that I think of it as a moment in time or or meme here and I think.

• 47:57Speaker 06

  Titles, whether rightly or wrongly acquired can just be helpful to help people try to wrap their head around what's going on and categorize things. So I think. Insofar as it does that, it can be helpful. Um, but I think, uh, you know, myself and other people on here said earlier, and I agree with some of Zeus's sentiment as well, where like. None of this was meant in a reverent way to the the giants that we're standing on, uh, the shoulders that we're standing on of of those giants, because. As I mentioned early on, like a lot of this stuff really isn't possible had those people not, uh, those those innovators basically not built those and those are just as critical a piece of the stack now. It's it's really just we have. Layer two of DeFi now, right? Being built on top of layer one and you still need those things just as much. So.

• 48:36David Hoffman?

  I think that's exactly right. I think the right mental model is generations, right? I know people that are born officially in the zoomer generation that identifies millennials and also vice versa. And going back to what Pat was saying, there is actually no clean line. It's just like, there's a bit of a vibe over here, there's a bit of a vibe over here. They're a little bit different. And then also exactly what Carson just said, one vibe was actually explicitly built because of the first vibe. But everything is a little bit loose. Everything's a little bit nebulous. But we do need these names to actually talk about the things that we're trying to talk about. Hence, why we have landed on DeFi 2.0. But I think everyone here is in agreement that it's not, it's not one coming to delete the other. It's one building on top of the other. We all gonna make it.

• 49:19Ryan Sean Adams?

  We're all gonna make it. It's definitely not, it's definitely not tribal. And I'm not hearing that from any of, any of the people, you know, in the summit, that one is, one is better than the other. And who knows how long this DeFi 2.0 meme will actually last, right? It'll be useful for a time. And I think it's been super useful as a mental model to just even to frame this conversation about what's new and what's unique about this new generation of, of protocols. But will we still be talking about DeFi 2.0 in six months or, or a year? Or are we gonna just be talking about something entirely new? And all of this DeFi stuff just smashes together? I guess it remains to be seen. Anyway, Zeus, we, we got a little sidetracked there. Thank you. Thank you, though. That was a really interesting, yeah. So, so tell us more about the, I guess,

• 50:03Ryan Sean Adams?

  how this changes the trajectory of things. And then like, what's next?

• 50:09Speaker 05

  Yeah, um, you know, so one of the really cool things that I think can come of this is, you know, with the shift to more B2B activity, um, you know, one of the things that I see in DeFi is that, you know, as, since we're, we're so early in this, you know, no, like, cliche intended, um, you know, it's still very just financial activity for the sake of financial activity, um, you know, and constructing markets with not a lot of real world things going on, uh, behind it. Um, you know, it is interesting to see like NFTs in that NFTs are this like virtual real world, um, commodity type of activity, um, or-

• 50:50Speaker 05

  Like virtual real world world good if that makes sense. But I think that, you know, with this shift towards more B to B activity, we we kind of enable real world funds to come into the DeFi economy, start to leverage, you know, the the capital efficiency or, you know, innovation innovations that, you know, can benefit their business and start to utilize these for things that maybe don't have anything to really do with finance itself. You know, and start to utilize capital markets for what they're meant to be used for, which is generally agnostic to the market functionality itself. You know, if you look at TradFi, you know, it's you have a lot of financial activity in this massive financial industry,

• 51:34Speaker 05

  but it's built around things that don't exist within that financial industry. You know, I I see that as, you know, one crucial to the long term success of DeFi, but also probably the most exciting thing that we can look forward to, you know, is that proliferation start to occur.

• 51:49Ryan Sean Adams?

  Jay, how does DeFi 2.0 shape the trajectory of of DeFi? What what does it unlock for us? What does it change?

• 51:58Speaker 02

  Yeah, I feel like we could talk about like mechanisms specifically in a lot of depth, right? Stuff like PCV, stuff like new tokenomics that's been explored. But at the end of the day, I think what what the biggest thing about DeFi 2.0 is, and I think Zeus is the one that brought this up in the beginning of the call, is community driven, right? It's it's like you are one with your community. And what that means is it's so much more exciting, right? Innovation is not only moving faster, but you're gonna you're gonna have products that are superior in every single way. So what does that mean for DeFi? It means a lot of different things. It means that, one, this is going to be a really fun place to be working, because you're just going to be working with a bunch of people that you like to hang out with.

• 52:41Speaker 02

  Two, because of that, you're going to have better products and better better platforms for other people to build on top of, and better platforms for even the TradFi bros to come in and start using one day. So I I wouldn't look at it from necessarily a product point of view, but almost from like a like a community point of view and a perspective point of view and the fact that DeFi 2.0 is here to excite things and to change things up and do go even a step further than DeFi 1.0 in many ways.

• 53:09Ryan Sean Adams?

  Carson, what's your take? What's going to be the long term impact here? What would you add?

• 53:14Speaker 06

  Yeah, I think it's interesting because even though, you know, we talked about the pros and cons of DeFi 2.0, just again to be, to use it for its benefit, I'm going to talk about DeFi 3.0 and 4.0 here for a second of just talking about what the next evolution of these are. I think that we will see a couple more cycles of this stuff that goes more Dow to Dow level and sort of seems to be retreating further into DeFi in a sense to outside users where like the power, the power users, the power builders understand what this unlocking on like a D to D, like Dow to Dow or protocol to protocol level. But, you know, Main Street is still like, if they even hear about this, they'd be like, what's going on?

• 53:52Speaker 06

  Ultimately, this is because right now we're laying, laying the foundations for, and I don't mean this in a bad way, but laying the foundations for the new Wall Street and the new Silicon Valley in one. And what really is exciting is the next phases after that, which is, if you think about Wall Street and Silicon Valley right now, right? There's a whole economy that is sort of built up around that. That's much bigger than that, actually, but that's enabled by that. We're building those layers right now. And the really exciting thing is the moment that we sort of

• 54:20Speaker 06

  come up for air from this sort of protocol to protocol moment and then go out to the world, basically. So once with what I call the economy, the decentralized economy is there and you're starting to see glimmers of this with NFTs and the metaverse gaming and gamefi. But any of these things now where you're actually building on top of what DeFi 1.0, DeFi 2.0 and the next few layers are, eventually users are going to have no idea what's happening under the scene. In fact, a lot of the builders aren't going to even know what's happening sort of under the covers. It's going to be protocol to protocol. That's using these things and instead the interactions back with humans are going to be at this much higher consumer level.

• 54:57Ryan Sean Adams?

  If you guys are able to build out this protocol to protocol infrastructure, this kind of this additional bandwidth, this liquidity, everything that you're building, it just kind of hits me that, man, our DAOs are going to be badass. Right? Like, I'm just saying, like, if you were trying to start a corporation versus starting a DAO, how are you really going to have a chance? This, I think, is what you're talking about in terms of getting ready for mainstream. It's like, by the time, this is, right now, it's DAO to DAO, but it's mostly like DeFi DAO to DeFi DAO, right? But by the time this infrastructure is built out, there's going to be a massive competitive

• 55:38Ryan Sean Adams?

  advantage to launching your capital pool, your entity, your business, your, what you're get, whatever you're launching on DeFi, rather than in the traditional world. Is that a world we're moving to? Scoopy, any thoughts on this?

• 55:59Ryan Sean Adams?

  Scoopy, you're muted.

• 56:03David Hoffman?

  Scoopy might have taken a break.

• 56:07Speaker 04

  Sorry, I was muted. I agree totally with what you just said there. I think our DAOs are going to be badass going forward. Like, we have different ways of, you know, DAOs can, like, raise funds now and become powerful entities. I mean, you look at, you know, Olympus DAO and, you know, what they've been able to accomplish in not even a year. And, you know, we're seeing also new waves and waves and waves of, you know, Olympus likes that are, that are, you know, spawning. And it's just like a giant moment of capital formation. And I think what's going to make the DAOs, like, supercharged compared to the corporations is that they're going to have, like, really awesome financial tools at their fingertips that they can use, you know, to manage their firms a lot better than they could with the TradFi markets.

• 56:52Speaker 04

  Like, for example, like, in Alchemix V2, we're, you know, shameless plug here, we're going to be a lot more composable right now. It would be one, we lock down smart contracts from interacting with it. But the V2, we're not going to have that restriction. And then we definitely see, like, other DAOs as big customers for Alchemix. You know, if they have, like, you know, a few million stable coins sitting around their treasury, they could put them in Alchemix and then take out a loan, right? And then they can use that, you know, they can spend, you know, from their treasury while still saving, you know, stuff like that. And I think that that's really cool. That'll just be one tool that DAOs can use going forward. And, you know, I think...

• 57:31Speaker 04

  You know, everything that we're building now in the Dow to Dow services, business to business services are going to make it just that much more attractive to have a Dow in the future.

• 57:40Ryan Sean Adams?

  Patrick, round this out for us then. So we've been talking about how DeFi 2.0 changes the trajectory. And I don't know if you have any insights on that. And also any insights on what's next? Like, what is the next cohort of builders? What are they going to build? I know of all the panelists, I believe you guys are probably for this to long on like layer two. I don't know if that's part of the story. Give us your thoughts here.

• 58:01Speaker 03

  Yeah, sure. So I think the the trajectory of DeFi generally, whether it's 1.0, 2.0, 3.0 is somewhat inevitable in terms of just providing the foundations for future financial transactions. How DeFi 2.0 is contributing to that, it's probably accelerating that. There's there's extensibility with respect to the value that DeFi 2.0 is bringing to its users. By enabling them to do just different things at 1.0, I suppose, didn't didn't allow. But I think one thing that hasn't been touched on is around Oracle infrastructure generally, and how that will seep into what we now know and understand as as DeFi.

• 58:40Speaker 03

  I think the the transaction costs required for the creation of new markets within the DeFi environment are so low that experimentation and so many new markets can emerge just simply based off of something like an Oracle price fee. So something we're particularly excited for with Tracer and excited to see DeFi get into is is providing real world markets for people that operate within the economy on a day to day basis. So like we imagine a world where an Uber application, for example, has a hedge price of fuel button now. That's that's powered by a decentralized finance smart contract. And you've got an oracle that's providing the the price of fuel. So this Uber driver, they can they can budget on a monthly basis for

• 59:23Speaker 03

  for their their consumption of fuel. Particularly as well, I think Climate Dow has taken a really awesome step towards providing climate market infrastructure around around carbon. Markets that have traditionally been extremely expensive to create. There's a lot of bureaucracy involved. There's There's a lot of plural lateral like multinational agreements that need to be formed to create standard environmental markets, but but now with secure oracle infrastructure and reliable smart contract technology, if there's demand, these markets can be created and facilitated around things like water, around things like air, markets that we haven't been able to properly define because property rights haven't haven't really existed and the information or oracle architecture hasn't been there. So I think that's that's the part

• 1:00:08Speaker 03

  that we're really excited about. And I think that's that's the the big bull case for DeFi is when it really starts hitting the world and and we interact with it within our smartphone applications on a day to day basis.

• 1:00:20David Hoffman?

  It's a fantastic reminder, Patrick, about why we are all here in DeFi. Sometimes we get caught up in the meme coins and the JPEGs and kind of forget that like, oh, yeah, we are actually here to to change the world and make the world a better place. So thank you for for grounding us back into into reality. And I want to I want to tie off this conversation with a little bit of a lightning round for everyone, both taking off the 2.0 hat, putting on the generalized DeFi hat at large, but also getting more granular into your specific projects as well. So this lightning round question will have two parts, because the question is, what are you excited about? But I want you to each one of you guys to answer it twice. What are you excited about about generalized DeFi? And then what about you?

• 1:01:04David Hoffman?

  What are you excited about about your specific project? So you get each of you gets to answer the question twice. One, you get to answer about your own project. One, you have to say something about the rest of DeFi. So let's go in reverse order. So Patrick, let's start with you. And you kind of actually just did this, but I'm going to throw it give you a second chance to do this again. Patrick, what what about Tracer DAO excites you? And then also, what about generalized DeFi also excites you in the moving forward into the 20s?

• 1:01:27Speaker 03

  Yeah, I think I didn't touch on the metaverse piece too much. But I think there's what what's getting built right now within DeFi, a lot around the property rights and and the financial market contracts that are being created are going to be applicable to metaverse circumstances. So it's something we like to imagine and think about within Tracer is how can risk management infrastructure? Structure be applied to something like the metaverse. I played a bit of RuneScape when I was growing up and remember like buying, buying things such as god swords and having like pretty fluctuating prices in, in the RuneScape in-game economy. We'd like to imagine that we can provide risk management infrastructure for people that want to hedge their in-game item risk

• 1:02:12Speaker 03

  and, and provide those types of tools that, that sort of haven't previously existed, that app developers that are creating these games can plug into, to provide unique services to their users that, that, that it's just they're plugging in code, they're plugging in markets for people to, to interact with on a daily basis. So the, the metaverse component is something we're particularly excited about seeing that bridge between what's currently getting built within DeFi and, and how users are now interacting with these metaverse in-game economies.

• 1:02:41David Hoffman?

  Very elegantly answering the question, two birds with one stone there. Nice job. Scoopy, what are you excited about for the future of Alchemix and also what are you excited about for greater DeFi?

• 1:02:51Speaker 04

  Yeah, I mean, our version two is in audit right now, so I'm super pumped about getting our version two out, which is going to enable multi-collateral and multi-strategy Al assets, so Al U C, Al E. We're gonna have L B T C and then some, a couple more surprises along the way. So building that out, you know, like whenever we're able to launch that and then building it out throughout next year is something that's really exciting to me and my team. And also other things we want to build on top of Alchemix along with it. And then what's exciting me in, you know, in the DeFi space, in the crypto space overall. The thing that at least like, you know, tickles my imagination the most is kind of like

• 1:03:36Speaker 04

  game five, the gaming economies and things like that. So like, you know. Just as Patrick was talking about like RuneScape, yeah, I really want, you know, a dungeon crawler. I want an MMO like, you know, that's built, you know, the blockchain backend. And I want to have, you know, my sword and, you know, like that I earned, you know, in the game and then be able to sell it if I want to, you know, or buy someone else's sword. I want that so much, you know, and to be, you know, built on blockchain rails. Um, so looking forward to seeing games who are, you know, and companies who are pushing in that direction. Um, you know, a lot of, you know, respect to Axie and what they've been able to build, um, you know, hugely respectful to them.

• 1:04:17Speaker 04

  Uh, excited for Illuvium as well. So it's sort of like a Pokemon game that's gonna be coming out. Um, uh, so, you know, yeah, I think that sector is probably, you know, one of the most exciting ones, uh, just because of the, the potential of it in like, you know, I guess a metaverse con- in context, or just a play to earn context. I think this is really cool.

• 1:04:38David Hoffman?

  And Scooby, do you think De- DeFi is like the, the banking layer of all of that, all of these in-game economies?

• 1:04:44Speaker 04

  Well, I, I definitely think that like, you know, like if we do have like a proper MMO game, you know, that's built on the blockchain, then you're going to have like banking services inside of it. Like you'll go to like an AVE kiosk inside of, you know, you know, the game or something like that. And I think that, that would be really cool, you know, so you can have like, you know, player banks. I guess rare fuse would be better because you could actually make, uh, you know, like markets for, you know, swords as collaterals and things like that. So, you know, I think that would be really cool.

• 1:05:16David Hoffman?

  Jay, let's turn to you. What about the future of, of Rari? It really, really excites you. And then also what about the future of DeFi is also gets you going?

• 1:05:24Speaker 02

  Yeah, um, for Rari specifically, I think it's, it's this like idea of pursuing the maximum capital efficiency, which will take various different forms over the next few months, whether it be in onboarding new collateral types and really bringing this idea of superfluous collateral, whether it is like setting limit orders for interest rates throughout fuse or even something as simple as a fuse 2.0, which has greater capital efficiency. All of these things, just like in pursuit of building the most like, the most efficient system, that's, that's what excites me. As for, as for DeFi and zooming out from, like, from just Rari and zooming out to like, what, what are we actually doing here?

• 1:06:06Speaker 02

  I think what, what's exciting is like, I, like, just seeing new stuff, right? And what I'm like, not just like boring new stuff, like new stuff that's a DeFi and crypto native, right? I feel like everybody's still rebuilding the same stuff, working the same stuff. There are very few projects that really catch my eye as something that's DeFi native. The first one in fact was Augur, right? And it's like now that we've built this way to transfer value, let's, let's see what else we can, let's see what we can do with it. That's not just like boring lending and borrowing, right? I think Om is another great example of this. And there are so many, right? And it's just like, what's, what's some DeFi native crazy shit that we can do?

• 1:06:43David Hoffman?

  Well, this is great because Scoopy mentioned Rari and then you mentioned Om. So I'll just go ahead and turn to Zeus here. Zeus, what are you excited about with the future of Olympus? And then also, what are you excited about with the future of DeFi?

• 1:06:54Speaker 05

  Yeah, so, um, you know, we have this migration that is rapidly approaching. We're, we're finally, you know, it's something not to, to take lightly. And so we've spent a while, uh, you know, planning it and we're, we're finally, you know, getting close to wrapping up the audit and getting going on it. Which has, you know, admittedly prevent or like posed as a bottleneck for some activities. So I'm super excited for that to clear up because I think that you can expect to, to see a lot come out of that. So, you know, including like, you know, moving cross-chain at long last, that will be nice. You know, we have these new bonds and with those, uh, you know, we enable like secondary markets for those bonds. I'm so excited to, to explore that.

• 1:07:38Speaker 05

  So, you know, liquid markets on those, um, you know, things like isolated, more strategic, um, you know, bond accumulation of assets. So I know it was just proposed that we start accumulating CBX, um, you know, stuff kind of involved in how do we imbue Olympus with, you know, this influence? You know, to more effectively, uh, you know, tackle its goals.

• 1:08:03Speaker 05

  And then with that kind of like.

• 1:08:06Speaker 05

  See, this is yet to be seen, but you know what I want to see because if you're not familiar, we've had like, I think 70 forks in the past couple of weeks, some ridiculous number. And you know, I kind of always expected that, you know, that if we do well, we're going to get forked. What I really want to see come out of that is this industry of, okay, you're going to hear it here first. I call them decentralized backed, uh, decentralized backed. I'm forgetting my analogy.

• 1:08:38Ryan Sean Adams?

  Your metaphor?

• 1:08:40Speaker 05

  Yeah, okay. Decentralized backed digital currencies, AKA DBDCs.

• 1:08:49Speaker 05

  With this kind of idea that, you know, all of these forks call themselves a reserve currency. I think that they're conflating reserve to be has reserves, whereas reserve means is reserve. So a reserve currency is something that's a reserve currency for other central banks and you know, institutions, um, you know, so obviously not everyone can be a reserve currency. Otherwise, no one is a reserve currency. But with that, we can kind of form this new like Forex market of, you know, these DBDCs, you know, that exist in DeFi and kind of can construct, uh, you know, a much more similar to, you know, fiat currency system where, you know, they against each other are low volatility and most, or like high stability.

• 1:09:31Speaker 05

  And through that, even if, you know, measured against USD, they're still not stable. You know, stability inward, you know, projects into the stability outward. That's my expectation. So I'm excited to see that play out. Maybe it doesn't happen, maybe it does. But if it does, I think it should be cool.

• 1:09:51Ryan Sean Adams?

  Well, there's DBCDs versus the CBDCs, right?

• 1:09:56David Hoffman?

  That just rolled right off the tongue. So you'll be happy to know that the YouTube comments just blew up in forking jokes. Oh, I'm forking.

• 1:10:05David Hoffman?

  All right, Carson, take us home, man. King of the metaphors so far on this summit. What are you excited about with the future of Tokemak? And what are you excited about with the future of DeFi?

• 1:10:16Speaker 06

  Yeah, sounds good. I'll jump in. I don't know if I have metaphors here, but I think I've got some cool things to say. So just building off Zeus, one thing I'm pretty excited about is linking together Olympus Pro Bonds as a Service with Tokemak generalized liquidity. I think there's some really interesting things we can unlock by pairing those things together. And in fact, Zeus and I have had some discussions on that topic, so I'm excited to see what comes of that. Other few things, I'll just go rapid fire on this. We're excited to evolve Tokemak into what I call an any-to-any protocol, meaning we will take tokens as liquidity on any L2 or supported chain. And then the liquidity directors, the holders of a token can direct that liquidity to any venue on any chain. So we want to quickly sort of extend to any-to-any.

• 1:10:59Speaker 06

  Third is one that I won't say much on this call because we've been tight lipped, but a lot's coming out shortly about the membrane project. You'll be hearing a lot more about that in a few months here. And then last thing with regard to Tokemak is, one way to think about Tokemak is really something that transforms tokens into liquidity, or idle tokens into liquidity. We are going to be, in the near future, expanding that to where we actually take ideas into liquidity and not start at the token. We want to go actually, before something is even tokenized, we want to, which sounds probably crazy, but we actually have mechanics to do this, where you would actually take ideas into liquidity. So we're excited to evolve there. Pulling back into sort of the space, I'm super bullish on GameFi and Metaverse, whether you love or hate that term,

• 1:11:43Speaker 06

  and sort of everything that's going to evolve within that economy and liquidity integration from Tokemak and more broadly DeFi into that space. And I think just getting into what gets me excited about DeFi, I think we actually have a really interesting branding or rebranding opportunity in front of us in DeFi. We've of course been calling DeFi decentralized finance. I think we should actually start adopting the term democratized finance. I think that that is ultimately what makes this really exciting. As I think about what this will enable for individuals, as this goes beyond sort of the few and goes out to the many, we can start unlocking scale economics and exciting opportunities that were never accessible to the individual. Now that's going to be available for everyone.

• 1:12:25Speaker 06

  And I think one of my bold predictions here is that in 25 years, DAOs will replace companies because companies cannot compete and also don't want to compete with DAOs.

• 1:12:36Ryan Sean Adams?

  Wow, fantastic. What a load of insights to end with democratized finance indeed. That is another virtue and definition of DeFi and what we're all building towards panelists. I felt the collaboration. You guys talked about DeFi 2.0 as being collaborative. The way you hand it off to one another, talked about building on each other's projects. I feel like I saw the collaboration in real time. So The collaborator.

• 1:13:02Ryan Sean Adams?

  We're not going to overuse that. Yeah, not at all.

• 1:13:06Ryan Sean Adams?

  So anyway, we appreciate you guys being with us and everything that you're building in the space. So thank you. I was about to call you panelists again. Summiters, thank you for joining us on the first ever DeFi 2.0 summit on Bankless. We appreciate it.

• 1:13:22Speaker 04

  Thanks for having me.

• 1:13:23Speaker 06

  Thank you. Thank you so much.

• 1:13:25Ryan Sean Adams?

  Appreciate it. Bankless listeners, if you're still hanging with us, make sure you hit like and subscribe. If you're on YouTube, you're watching this, subscribe, like, so you get the notifications in the future, of course. Got to end with risks and disclaimers. All the protocols we talked about have some degree of risk. Eth is risky, DeFi is risky. There is no free lunch, folks. You could lose what you put in, but we are 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.

• 1:13:55David Hoffman?

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• 1:14:38David Hoffman?

  where we summarize the week in crypto and other fantastic content. Thanks everyone for watching and being on the journey as we build out the Bankless nation.