EthCC #6 | Stani Kulechov - "GHO is the Next Big Stablecoin"

🇫🇷 Welcome to the Bankless EthCC 2022 Experience 🇫🇷 With fantastic guests from all corners of the ecosystem, this 8-part series is an exploration of crypto culture and the current state of Ethereum. In episode 6, we’re joined by Stani from Aave. With the GHO Stablecoin and Lens Protocol tackling two different corners of the crypto ecosystem, we explore the Web3 movement—where we’ve been, and where we’re headed. ------ 📣Rhino. Fi | Massive Mystery Airdrop https://bit.ly/3o9trRE ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: 🌱 LENS | ACCESS CODE: WAGMI https://bankless.cc/Lens 🚀 ROCKET POOL | ETH STAKING https://bankless.cc/RocketPool ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 🌉 JUNO | BRIDGE FIAT TO LAYER 2 https://bankless.cc/Juno ⚡️ ZKSYNC | THE LAYER 2 SCALING ENDGAME https://bankless.cc/zkSync ------ Topics Covered: 0:00 Intro 2:30 Stani Vibe Check 4:10 Analyzing the Ecosystem 7:20 Web3 Social Footprint 11:49 Non-Financial Use Cases 15:15 The Web3 Data Stack 19:24 The GHO Stablecoin ------ Resources: Stani on Lens: https://www.lensfrens.xyz/stani.lens ----- 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.

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

• 0:03David Hoffman?

  Welcome back, Bankless Nation, to the ETH/CC experience. We are almost done in this series of episodes. On this particular episode, we are talking with Stani from AVE, who is also pioneering the world of the Web3 social media revolution. Stani is always such a treat. I always see him whenever I'm going into that neck of the woods, the Europe, London, France side of things. He's always around there, and he's just such a treat. In addition to, of course, talking about AVE, we also talk about the ghost stablecoin, brand-new decentralized stablecoin out of AVE, but also just get a temp check of the app layer of Ethereum and the vibes around the crypto space. So I'm quite sure you're going to enjoy this conversation with Stani from AVE. For these episodes, we would usually do our prerecorded ads, but since they're so short, we're doing a speedrun of these ads, and so here that is.

• 0:48David Hoffman?

  One of the big themes of ETH/CC Week was the launch of the ZK-EVM. Three different teams all launched their testnet, and while everyone is trying to claim who was first, we can confidently say that ZK Sync has been focused on the ZK-EVM for the longest. The golden endgame of the ZK-EVM has been the vision of ZK Sync since the beginning, and during ETH/CC Week, they launched their 100 Days to Mainnet Plan, which is now already down to 93 days. So if you're going to join the ZK-EVM wars, make sure you post about it on Lens, the first decentralized social networking graph. In crypto, we say "not your keys, not your crypto," but on Lens, we say "not your keys, not your content." Own your own social media handle, choose your own algorithm, and mint your profile using the secret code word in the show notes. And something that's likely going to be talked about on Lens is, of course, the Ethereum

• 1:33David Hoffman?

  merge. And the merge is why you should be staking your ETH with Rocketpool. It's a decentralized Ethereum validator network where you deposit ETH and get your re ETH in return, and then you can take that re ETH into DeFi. And if you run a node, you can let other people deposit their ETH into your node, and you earn 15% of their staking commission as payment for your node operating services. And then maybe you want to take your re ETH over to Arbitrum. For all of your DeFi things, Arbitrum is where you have to be. With over 35,000 contracts deployed and 1 million unique addresses, Arbitrum is leading the way into the age of rollups. You know how I know those numbers? Because I watched Arbitrum's talk at ECC, which you should definitely also watch. But not before you're done watching this video first. But in order to get your money over to Arbitrum so you can buy your REith natively,

• 2:15David Hoffman?

  then you should use Juno, because Juno is the fastest bridge from your checking account to an Ethereum Layer 2. A checking account to an Ethereum Layer 2 is absolutely crazy and it just takes minutes. Juno is your crypto checking account for the crypto era. But when you're doing all of these things, make sure that it's on a privacy-first browser, which is why you should be using Brave. It blocks all the browser ads. It's got a native Web3 wallet and it puts the user-first the Web3 way. And so I hope you use all of these sponsors on your quest for going bankless. And now I bring you Stani from AVE. Hey, Stani, how's it going, man?

• 2:48Speaker 01

  Very good, David. Thanks for coming.

• 2:50David Hoffman?

  Yeah, where are we?

• 2:51Speaker 01

  We're in Paris for ETC.

• 2:53David Hoffman?

  Yeah, now, are you excited about that?

• 2:55Speaker 01

  I am super excited, yeah. It's a bear market, a lot of people and full of builders.

• 3:00David Hoffman?

  Full of builders. It's, of course, both a build market and a bear market at the same time. But before we go into what we're doing in the build market, I want to kind of recap with you the bull market. What are like the big lessons that you learned in the 2021 bull market?

• 3:14Speaker 01

  Well, bull markets are nice because they get a lot of traction in the sense that we have more and more audience and visibility into the space. But I think some things we learned quite heavily is that during bull market, there's a lot of things happening at the same time and we call it kind of like a noise. And essentially, a lot of projects that come out, we spend less time on actually looking into the fundamentals and understanding how it actually, how the protocol or protocol affects the ecosystem, what are the fundamentals, and also validate those ideas. And I think that's something that always gets like less attention during a bull market.

• 3:57Speaker 01

  And I think that's what we learned recently, that like we, despite of the market conditions, like we need to build very sound systems, especially in decentralized finance.

• 4:08David Hoffman?

  So let's go through some of the things that we know are valid things that maybe we didn't really totally get right in the bull market, but we know that they're going to stick around. Like NFTs, for the most part, like there are definitely some parts of NFTs that like are definitely going to stick. A lot of them kind of drifted apart.

• 4:24Speaker 01

  Yeah.

• 4:25David Hoffman?

  And there's like other parts of like, there's the whole like DeFi 2.0 part of the bull market. What are the things in the bull market that we experimented with that we need to iterate on in the bear market that we know are going to be things in the future?

• 4:37Speaker 01

  Well, I think it's quite a lot also relates to the governance. So we have a very interesting, I would say like a DeFi community is now forming and governing some of the major protocols. So the governance game is still going on, so I think that's not over yet. So we will see a lot of innovation and iteration there. In terms of decentralized finance, I think we, as it's, DeFi is open ecosystem, we see a lot of innovation coming in. And the kind of like a DeFi tip on a movement was, was interesting idea of like getting more innovation. But a lot of these ideas should be kind of like validated more within the community before they're actually accessible for a wider DeFi community.

• 5:19Speaker 01

  So I think the, the, the part that we did really well also is that we saw more builders coming in and trying to solve different kinds of things. You know, we're, we're working on under collateral loans, for example. We, we see a lot of things being built already. The DeFi primitives that exist might be, let's say, the AWE protocol or some other protocol and the composability. And I think one important thing is that many of the new users that are coming into the space, they are actually also onboarding to these layer twos that are actually enable lower cross, cross, cross transactioning, but are still inheriting the security from Ethereum. And I think that's going to be like the path where we have to also focus upon.

• 6:04David Hoffman?

  What would you say, because you're a veteran of the 2018 to 2020 bear market? How would you say this bear market feels different?

• 6:11Speaker 01

  I think in the previous bear market, there was a lot of ideas and I would say like team is excited to build new things. A lot of the things that were good on the paper weren't actually good in the execution or even validated well and didn't have necessarily a product or protocol market fit. Now, in the current situation, we actually built a lot of things during the bear market. So we built a very extensive decentralized finance ecosystem. There are protocols that are very resilient, battle tested, and they work very well. So we have like a very good infrastructure. We have a better Oracle infrastructure at the moment. We have a lot of communities DAOs that are governing different protocols, for example.

• 6:56Speaker 01

  And most importantly, some of these protocols are earning treasury. So they have actually cash flow to allocate to different grants and further development of that particular ecosystem. So we actually have sustainability now. So I think a lot of things has been built. So there is value and markets usually don't correlate the value or the culture that we are building in the space.

• 7:19David Hoffman?

  And so when we put all of these pieces together in this current bear market, like we're, there's the idea that we're not just going to magically wait out this bear market. We need to build our way out of this bear market. So when we take that frame of mind, what do we need to get done in this bear market to turn this into another bull market? Like, what do we need to build?

• 7:38Speaker 01

  I think we, we have built very exciting, like a financial ecosystem within Web3. And, and I think we're going to see more and more innovation. So we're going to see more smarter solutions built as well. I'm personally also excited about the, the non-financial use cases. And this is something that also Vitalik has been talking about in the space. And, and, and what it allows is that we can actually onboard more people into the Web3 ecosystem without thinking of the financial path. Because as long as you have to actually buy certain assets to participate in governance or pay for transaction fees, you always buy yourself into the ecosystem. But if you can actually create a path where maybe your first thing that,

• 8:22Speaker 01

  and your first interaction with a blockchain is maybe minting a decentralized social media profile and following other profiles in the space or, you know, participating in communities without actually having that financial part. We, we unlock the blockchain to massives in a way where they don't have to think about finance. And less speculation will happen as well, in my opinion, because you think about blockchain as utility.

• 8:49David Hoffman?

  So that was definitely a big theme in this last bull market where you would buy your way into a DAO and you would have like access to the DAO tokens, or you would buy your monkey picture JPEG and all of a sudden you're part of that community. But what you're saying is that if we're going to get out of this bear market, we need to figure out ways to reach out to people that don't require capital, that don't require money, so that they can be onboarded onto this ecosystem. That the whole like money aspect, while it definitely triggered the whole mania of 2021, it also like turned a lot of people outside of crypto off because of how like financial it was. So you're saying that during this bear market, 2022 bear market, we're going to need to find ways to onboard people into our ecosystem that they don't have to buy their way in, they still get to participate,

• 9:33David Hoffman?

  they still get to do like crypto fund things, but it doesn't necessarily require capital to get onboarded. Is that what you're saying?

• 9:39Speaker 01

  Exactly, and the idea here is that you create an economy where you might have financial protocols and use cases and a lot of those non-financial use cases. And that way you get more people into the ecosystem and those users that are not using the financial protocols, they will be the future users of them. So essentially, especially when they create this kind of like an own-chain footprint that can be used, for example, deciding for builders. Builders can build products where they can show that which applications or protocols you should actually use and what risk appetite might fit you based on your Web3 social footprint. And I think that's very valuable because that brings more users into the DeFi ecosystem and empowers more people.

• 10:25David Hoffman?

  Yeah, and when it's free to onboard, I would imagine the sheer numbers of people will more than 10x versus what it would be if like we had to have, we had to charge to onboard, right?

• 10:35Speaker 01

  Exactly.

• 10:36David Hoffman?

  So we'll be able to onboard so many more people and just like as a result of that, so many more people will be proximate to like the DeFi apps. And maybe they go to like Uniswap to go from euros to dollars rather than, I don't know, like their local bank perhaps.

• 10:50Speaker 01

  Yeah, and I think that's an interesting kind of like a vision because we already build an amazing financial infrastructure. So now we have to just build those other parts and those are the things that actually get people here as well because like not everyone might necessarily be super interested about finance in general, but everyone uses finance one way or another. And being able already to be onboarded into the Web3 ecosystem by, let's say, by By DAOs that doesn't require you to actually buy yourself in by creating a, let's say, Lens profile and posting on Web3 social media or some other similar kind of like a use case. What we create is an ecosystem of potential users.

• 11:34Speaker 01

  And essentially, if you're already a Web3 user and you're using those other parts, naturally you will choose decentralized finance because obviously it has benefits. And we saw with centralized finance like how important DeFi is.

• 11:47David Hoffman?

  Right, certainly, certainly. So what are these non-financial use cases that are going to bring people in? Do you have any thoughts as to which, how, what do these things look like?

• 11:58Speaker 01

  I personally have few ideas. I definitely believe in the idea of communicating with peers on chain in a way where you can retain data. That's interesting. Web3 social is interesting. Music is quite interesting. There's a project called Stems DAO, which is focusing on actually onboarding creatives into the space and essentially creating different kinds of beats and sounds and music and also have this kind of like a remix component there. So you have this kind of like a content, music and visibility as well. But these are just examples, like you can actually build like anything on chain and you don't need to actually use the whole on-chain ecosystem, even the infrastructure, even if

• 12:42Speaker 01

  you are building something on layer two. So you could essentially build a protocol that is on-chain, but actually the data is stored on IPFS, RV or something else. So there's a lot of opportunities in how you actually build things. So we are living in a very, very good times for builders. Going few years back, it was so hard to even build on Ethereum, for example, because of the less of information available and the technology wasn't that right. So this is like the golden times to build.

• 13:13David Hoffman?

  And so there, when it comes to a Lens profile or a Lens protocol, excuse me, where this is like your on-chain social graph, I think this unlocks just like, not only is Lens protocol like a single application, but it's actually a platform for many other applications. What's going on in the world of building on top of Lens? What kind of activity are you seeing there?

• 13:32Speaker 01

  There's two kind of activities. So we've seen, especially because we have done a lot of hackathons, we've seen teams building very base layer. For example, we have Lensster that is essentially a front end that shows all the content that is in the Lens Protocol. And you can essentially post, follow, comment, and mirror. Mirror is kind of like a retweeting, but essentially with monetization in mind. So if you amplify someone else's content, you essentially can get also mirroring fees from that creator. But also, we have LensTube, which is something similar to YouTube. They are very base layer. But we've seen interesting things like Tea Party, which essentially uses Saltbound Tokens to reward on interactions that you have on the Lens Protocol,

• 14:17Speaker 01

  which is a very fascinating use case for Saltbound Tokens and the Lens Protocol. StemsDow is essentially building something where you actually have all those stems and music and sound as essentially NFTs and posts in the Lens Protocol and focusing on the music audience. And more and more of the applications we've seen being built, they're focusing on actually one very important thing, which is the experience layer. Because if you want to win the Web3 social, kind of like a game, and given how big the Web2 social media companies are, we actually need to build a better user experience. And also, we at AVE, with our Lens team,

• 15:01Speaker 01

  we're building our own application as well and kind of like showing how far you can take the experience for the users and what kind of interesting things you can do with on-chain data as well and on-chain profiles.

• 15:15David Hoffman?

  One thing that I've noticed being built and just is overall capturing a ton of attention in this space is like this data stack, this decentralized data stack that is at the back end for so much of this technology. So Lens Protocol, I think, is a very surface area level where these are talking about NFTs that are social graphs on Polygon. But there's also so many other aspects to this data stack. You have things like RWeave, which I believe Lens2 puts all of the video data onto RWeave, for example. And there's also like Filecoin, for example. And then there's also Ceramic Network. And then there's just a bunch of like data stacks. And Disco is also like the user interface for all of these things. Do you have any thoughts about this, like, coming data stack? And really, what can it unlock for the next run of crypto?

• 15:57Speaker 01

  That's one of my favorite things to think about, because the Lens Protocol itself is agnostic how you store data. So with Lens Protocol, you can create an on-chain infrastructure. So the protocol is modulized. You can build modules, for example, how to follow other profiles. And maybe to follow some profile, you might need to have a membership into the, for example, Bank of Dow and have a specific NFT, and you can go over that part. But then you have the other part, which is the off-chain part. So you can, with the protocol, essentially decide where to store. And I'm most excited about the middle layer, which is being built. So there's, obviously, there's a graph, which is building a kind of like a decentralized data layer.

• 16:39Speaker 01

  The Lens team built the Lens API, which is going to get decentralized in the future more. But essentially, it was built to bootstrap the development on the Lens Protocol. And it indexes all the data that you have on Lens, and also kind of like a bit beyond that. And it makes it easier to interact with that data. So essentially, to build an application, you don't need to be a Web3 builder. You can use the traditional format of APIs that you have used to. And I think that that layer is going to build further, because our goal is to open and create like an open algorithm platform, where data engineers can come actually and create different kinds of ML algorithms and provide those different services to the users.

• 17:23Speaker 01

  And the applications can reflect which of those algorithms are useful for the users. And it becomes like a distribution channel. So if you build a module that has interesting logics, the application might use it. If you build an interesting algorithm, which is transparent, for example, it might get traction on those application layers. So it unlocks this idea of like, why we're actually stuck with one algorithm in Twitter, for example, or in TikTok? Why we can open the systems to all of the users and let them basically decide with their feed or their choice what algorithms they want to use and which ones serve them the most? And that's what the Lens Protocol middle layer is trying to solve.

• 18:03David Hoffman?

  And how important is this whole data stack towards the non-financial use case of crypto?

• 18:09Speaker 01

  Very important because with the Web3 footprint, actually, we can get different kinds of data in terms of like what's your interaction in the ecosystem. So we can see, for example, what might be the DAOs you are super excited about, what NFTs you might be interested in collecting, which protocols you are using and how you interact with the Lens protocol. And on top of that, like the users can always choose that how much they actually want to keep things private or whatnot. So you have this kind of like ecosystem of value that can actually be used within the data layers as well. And we, for example, in the onboarding phase now, it's a closed beta, the protocol,

• 18:54Speaker 01

  but we have been allowing this thing to different communities. For example, if you hold a particular NFT, you can actually claim your Lens profile. If you were a member of the Bankless DAO, you can actually also claim your profile and one community at a time based on their on-chain data. And then there's a component of off-chain data as well. So we, data is a spectrum and identity is a spectrum and part of it is on-chain and off-chain. And being able to use all of that through the API is very valuable for the users.

• 19:25David Hoffman?

  I know we've been talking a lot about the non-financial use cases of crypto, but I want to also make sure we talk about this brand new stablecoin out of AVE. Can you give us like a speedrun, a TLDR of this new stablecoin?

• 19:37Speaker 01

  Definitely. So the way the AVE protocol and the AVE market's work is that you simply supply different kinds of collaterals into the AVE protocol, for example, ETH, and then you're earning interest on that ETH. And typically, when you need liquidity, you usually borrow one of the stablecoins that the AVE protocol has. So the market is very diverse, there is a lot of optionality. So what we're doing is essentially we're adding a ability to mint a stablecoin, which is the go, and meaning that it's going to be the first stablecoin which is over-collateralized, but also at the same time you can earn yield. On your collaterals that you're supplying into the AWE protocol. And you don't need to basically create a separate wallet for each and every single asset,

• 20:22Speaker 01

  but you can use your whole portfolio to get the borrowing power and mint the go-stablecoin. And if you are the holder of SDK AWE, which is basically staked AWE, and you are backstopping the risk of the protocol, you can mint it as a discount. So essentially, it's a way of getting liquidity from AWE more and brings more optionality. And the other stablecoins that are listed in the protocol, they're not disappearing anywhere. It just makes the whole market more diverse. And it's part of our, kind of like a bigger vision where we want to see that stablecoin going into L2s. For example, you should be able to supply and borrow the stablecoin also in, let's say, Optimism and Arbitrum.

• 21:06Speaker 01

  And we believe that we have a lot of potential for stablecoins to become the actual internet money, but also solving payment problems in real life. So for example, today, Argentina is a good example where you have inflation that is doubling all the time and the stablecoin usage is increasing beyond that. But essentially, most of the transactioning between crypto users are happening in centralized exchanges, so from one Binance account to another. And we want to change that. We want to ensure that these transactions can happen actually on Layer 2. And we want to see more developers building payments applications on top.

• 21:46Speaker 01

  So we want to kind of like push a bit forward the organic adoption of stablecoins beyond the current DeFi ecosystem.

• 21:53David Hoffman?

  Well, Stani, with the destruction of C-Fi lenders and the blowing up of UST, and also just like the very negative, like, attitude that crypto outsiders have towards crypto because of the financial use cases. What I see you doing is building out the social use cases of crypto, the Web3 social, which is very much needed in the world of Facebook and Instagram. Building out brand-new stablecoins that are backed by tried-and-true protocols. And also just kind of like changing the game when it comes to like DeFi and in social use cases. So I'm super bullish on everything you're doing. So thank you for contributing all of that to the space.

• 22:30Speaker 01

  Thank you so much for having me here and giving the opportunity to talk to you.

• 22:34David Hoffman?

  Cheers.

• 22:34Speaker 01

  Thank you.