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#22 DeFi trading with Bancor project lead Mark and contributor Jen
47 Plays7 months ago
Join Bancor contributor Jen Albert and project lead Mark Richardson for a deep dive into algorithmic DeFi trading. Carbon DeFi is Bancor's most advanced DeFi product featuring on-chain crypto trading bots and automation.
What is Carbon DeFi?
Developed under Mark Richardson's lead, Carbon DeFi makes a bold step away from traditional automated market maker (AMM) systems by eliminating pooled capital and liquidity pools, thus allowing users to engage directly with the market through uniquely designed trading curves.
The Core Philosophy of Carbon DeFi
The driving philosophy behind Carbon DeFi is to enhance user agency and reduce the inefficiencies prevalent in existing DeFi platforms. Mark and Jen discuss how traditional AMMs often cater more to token issuers than to the traders themselves, creating an environment ripe for reevaluation and improvement.
Carbon DeFi’s model is built around giving users more control over their trading strategies, thereby aligning better with the decentralized ethos of blockchain. With Carbon DeFi, users have granular control over
By moving away from the standard AMM model, which typically relies on pooled resources, Carbon DeFi allows for a more direct interaction between buyers and sellers. This not only enhances transaction efficiency but also mitigates some common risks associated with pooling funds, such as impermanent loss and vulnerability to smart contract exploits.
Although Carbon DeFi doesn't use a traditional order book, you it's a lot closer to an order-book style of trading rather an a liquidity provider approach. On top of that, Carbon DeFi allows users to automate their deFi trading with strategies such as recurring orders, range and swing trading, in a fully peer-to-peer, decentralised system.
Through Arb Fast Lane, Carbon DeFi can also perform advanced arbitrage opportunities across various chains.
Regulatory Considerations and Future Outlook
The discussion also moved in the direction of the regulatory landscape surrounding DeFi crypto. Mark and Jen highlight how Carbon DeFi navigates these complexities by engaging with regulators, particularly in jurisdictions like Switzerland and the United States. Looking ahead, they plan to expand Carbon DeFi's capabilities to support a broader range of financial instruments and transactions, aiming to bridge the gap between traditional finance and DeFi further.
As DeFi continues to evolve, platforms like Carbon DeFi are pivotal in pushing the boundaries of what can be achieved in decentralized finance. With their user-centric approach and continuous innovation, Mark Richardson and Jen Albert are set on a path to redefine the norms of cryptocurrency trading.
This podcast is fueled by Aesir, the smartest crypto trading bot platform on the market. Sign up and use code AESIRPOT20 at checkout for 20% OFF your subscription.
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Transcript
Introduction to Carbon Defy and Participants
00:00:00
Speaker
this is what carbon defy will automate, right? So rather than set all of these up, you say, I want to strictly buy or sell in between these two price points. And then on the back end, the way it's been designed is to break this down into all of those orders.
00:00:25
Speaker
I'm here today with Mark, who's the project lead for Carbon Defy and Jen, who's a amazing bank or contributor. We're going to be talking today about Carbon Defy, which is a super interesting project. So thank you both for accepting my invitation to talk
Guest Journeys into Crypto
00:00:41
Speaker
about this. um How are you both doing today? very Wonderful. Thank you so much. Thank you for having us and excited to be here to talk about it. um So we usually kind of start the conversation um just to get a bit of an idea of um how you got into crypto. So ah whichever whichever one wants to take the question first, I think it'd be super interesting to understand, you know, how you got to where you are today, how you got working with Bancor and what excited you about cryptocurrency in the blockchain space to begin with. Let's see. I got into crypto about 2020, mid 2020. It was
00:01:16
Speaker
I think really just what it allows, the underlying technology was what got me. you know I think what you're able to achieve with blockchain and smart contracts. And it was DeFi that really caught my attention, just bringing something so valuable to so many who otherwise wouldn't have you know certain opportunities that they do with decentralized finance. So that was what really got me interested in the industry and I started out as just a DeFi enthusiast and then I became a Chainlink community advocate not too long after and a community member and Dow member of Bancor and
00:01:55
Speaker
you know, I'm very much into the fundamentals. And like I said, you know, like what you're able to bring forth and Bancor has such a history that it was really something that I was leaning into on a project that I took a big interest in. And I became a full-time contributor in addition to the DOW member and the community member about two years ago now. And and it's just been kind of full steam i ahead since Right. Right. that That's a cool
Early Lessons from Crypto Experiences
00:02:25
Speaker
story. Have you lost your first bag yet or or just not yet? Oh my goodness. God, that happened. I joined May 2020. I think that probably happened like, I don't know, June 2020. I mean, you you know how it goes, right? i Like you kind of.
00:02:38
Speaker
you You go. And I always figured I was so early that I should probably be taking these risks and doing these things. And then I kind of, you know, as I was in the space a little bit longer, I realized that maybe some of these risks weren't worth taking. And this is kind of a role that I played within Bancorp also kind of helping get this out a little bit and educating users and and things of that sort as well. So I've definitely lost my first bag and try to avoid losing. yeah It's like a coming of age in crypto, whether it's because you've you've traded it or because you've lost access to it. Like so many people, they're like, yeah, so I got into crypto in 2017 and I lost my Bitcoin wallet. And here I am like three years later or something. Right. And DeFi Summer, I mean, there was a lot going on then. So if ah yeah i think that that was that was kind of when I was taking maybe some more risk than I i should have.
00:03:32
Speaker
yeah And I mean, it's fine as an individual, it's just that there were so many organizations that were taking risks that were way beyond what's what's
DeFi Summer and Industry Insights
00:03:40
Speaker
acceptable. That's why we've seen so many going down eventually. and And I think that's, again, super important in DeFi. And it's really good that the DeFi summer happened. It's really good that we've had... products that were proven to be financially unsustainable because we now we know where the limit is. We know you know what's ah what's a business model that works in an entire market cycle, not just in know in a bull market cycle. Everything works in a bull market. It doesn't matter what you do, you're going to make money. um It'd be really hard not to make money in a bull market. Agreed.
Carbon Defy Platform Features and Community Feedback
00:04:11
Speaker
um so So obviously Carbon Defy is your new DEX platform. I say new, it's it's been released when in beta, I think July, 2023. So just over a year ago, I'm guessing now it's a full release. It's it's fully available or is it still in beta mode? It's released, but there's always new features that are being released. If I can add to it, you know, it's there, right? When it was first released, it was in its beta. It was kind of that MVP. right um Something entirely new. Mark was actually the creator behind the curves, right? It's an entirely new set of curves. So he invented this, we got this product out there, but it's, I mean, just as the space continues to evolve, right? And you see new things being introduced.
00:04:58
Speaker
This was kind of carbon defy also just I think within the last month, two new features were just introduced um to really help users understand trading and and really get these insights and things. So as much as it release it's it's not complete. I'll say that. Right. Okay. So, but but that goes with any piece of software. It just kind of grows in time as the community, you know, realizes what it is that they want from it and then give you guys that piece of feedback to integrate into the application and, you know, make a more robust solution. What I really liked about carbon defy is, is the yeah it's.
00:05:36
Speaker
Like the idea or the philosophy of automating ah trading on DEXs, which is not something that I've seen before, at least not you know in a nice easy to use package. um So I was wondering if you can talk a little bit about like the vision behind Carbon Defy, what's the mission and what kind of you know gaps in the market yeah if you have identified and how are you trying to solve these with with the solution that you've built? Go ahead, John. That's very much, Mark.
00:06:04
Speaker
Anyone can take it. I can't take it. I would.
Alternative AMM Models in Carbon Defy
00:06:09
Speaker
Yeah. d ah The original AMM model was, um you know, was established with a very specific purpose, a very specific use case in mind. And we can speak about this with some authority because we're the ones that established it. um The, that model um prohibited, um, unknown people from providing liquidity to those pools. Um, and that was for the simple ah reason that they're not very financially performing and it wouldn't really make sense for a regular people to add tokens to liquidity pools, who it does make sense for our token issuers. You know, if you've actually launched the token or if you're trying to, uh, you know, raise funds with a, um, with a token release.
00:06:53
Speaker
then it is your responsibility to, let's say, shoulder the like caretaker status for the liquidity for that token. Or at least that was the that was the objective with the AMM. So the AMM is being a um a product for regular people to try and realize a return on their, on their money. Um, this was more like a marketing gimmick that was shoehorned into a financial instrument that was never designed to, um, to, to weather that. Um, and you know, that is, I think where a lot of the criticisms of AMMs come from, um, things like, you know, the, the lack of agency.
00:07:38
Speaker
you know, in, in choosing your, um, your buying and selling prices, for example, for the tokens that you contributed to it. And instead subscribing to a very specific, um, trading strategy, um, that, sure, it has a, uh, a bid ask spread associated with it, but even the idea of a fee, right? That, that AMMs charge fees is a fuss, you know, AMMs don't charge fees. I never have. um But in order to try and attract liquidity providers, it helps to simplify some of that messaging. And so it's not quite a lie. um But I do think it is a stretch of of the truth and one that was necessary because getting people to understand the the short gamma or short straddle trading strategy that an AMM represents is very difficult. And so of to simplify that message in order to make it more
00:08:31
Speaker
you know, more appropriate for mass consumption has meant that we've kind of relaxed, um, you know, some of the, uh, some of the, the details, um, in order to, you know, to, to bring people onto it. Um, but I think that trading, um, you know, it can just be simple. I think the mistake is trying to make an AMM, um, into something that it's not, um, in order to, to, to align it with people's trading, um, you know, interests. and So Carbon DeFi really is sort of the answer to that. you know the In a perfect world, what we would do is just implement a an order book on the blockchain. um and There are so many reasons why this would never work. One is that that the
00:09:16
Speaker
The amount of of data um associated with an actual functioning audiobook is crazy. um And you know block size is is finite. And um you know to sync up that much data would require so much storage that even just a ah simple trade would have so many rewrite processes associated with it that it would just consume the you know the the gas limit for every block. um And so I think what i AMMs have at least demonstrated in theory is that there is a way that you can recreate certain aspects of an audiobook using, you know, borrowing from concepts in in calculus, where rather than having sort of discrete limit orders at certain positions, you can instead use like a continuous summation. And and this is essentially how the AMM algorithm works.
00:10:06
Speaker
and So with carbon DFI, what we've done is to separate out the parts that we don't think are necessary. um Things like having pooled capital, so like carbon DFI has no liquidity pools. This is also partly inspired by, or at least motivated by um the the perception of an oncoming regulatory landscape where pooling uses funds together is not necessarily a good idea, um especially with things like travel rule and things already being you know a hard truth in Europe and and things like that. um So there is a way to organize these things. And you can create much of the functionality of an audiobook without having to actually implement an audiobook, which is good. um Because audiobooks also have a very strict regulatory definition and having something that offers um you know a similar functionality, but is itself not an audiobook. So for example, it doesn't require a clearinghouse um and doesn't have yeah it doesn't
00:11:04
Speaker
require anyone to um identify themselves as a dealer broker or something like that is um is is helpful. So in short, um what Carbon DeFi represents is sort of ah the the concession that the AMM design does not represent the interests of the users, right? The people who actually provide liquidity to it and instead gives them back that agency of being able to quote prices and trade the way that they want to. So things like normal limit orders are are an intrinsic like natural expression of the smart contracts rather than something that is shoehorned into an AMM to make it operate that way. um And also think you know it's also recognizing that pure limit orders aren't necessarily all you want out of an order book.
00:11:52
Speaker
So on a traditional exchange, when people are you know scaling in and out of a position, they generally don't put all of their chips down on one price. They would prefer to create like dozens of limit orders or something in a in a certain price direction. um And so Carbon DeFi recognizes that and says, look, we can actually do that. But instead of you know having to create many entries um you know and and consume a lot of of data or storage in order to create that, we can capture it using you know one of these price cards. And this means that it's much more gas efficient and you know with much less computational overhead in order to achieve it.
00:12:34
Speaker
So that kind of kind of scaling approach, recognizing that people don't want single limit orders, but prefer to scatter limit orders around a certain price target, is again, a natural expression of those of those systems. And then also recognizing that people tend to fade, um you know you know, perform fading strategies in a a volatile market. So if you're selling Bitcoin, for example, at at a certain price point today, it's probably with the intention to buy that Bitcoin back at a lower price. Right. This is just how traders interact with markets.
00:13:11
Speaker
and so Again, Carbon DeFi realizes that intrinsically. you know You can link your buy and sell positions together so that after you've nominated to sell a token at a certain price, that the stablecoin or other token that you're quoting its price in is then available at a completely different price to rebuy that token. And this means that you're not paying the gas right on every single trade, but you only pay the gas once to tell the the system how you want it to trade on your behalf. And then after that, people interact with it the same way they would any other decentralized exchange. right From the taker's perspective, it just looks like a normal AMM. But of course, it doesn't have those same kind of AMM mechanics. there are yeah there There's more that we can get into the into the weeds of this thing. but
00:14:00
Speaker
There are other advantages such as, you know, um, you know, sandwich attacks become impossible to perform in a system that's designed this way. And that's, you know, if that's just happenstance. You know, that's a happy coincidence. It wasn't like sandwich protection was a part of the design process, but something that fell out of it. You know, that's more of a, um, uh, an unfortunate side
Appeal to Retail and Institutional Traders
00:14:22
Speaker
effect of the AMM design. And so by foregoing the AMM design, you also, you know, lose a lot of, um, the, the problems that AMMs inherit such as sandwich attacks and other things. So yeah. Right. And is that mainly because you're using, uh, something that's kind of like an order book, but not an order book. So everything is, or like you cannot front run something that hasn't some, some kind of timestamp order or something. Well, you can still front run stuff like front running is, you know,
00:14:49
Speaker
Front running is yeah any an intrinsic you know ah component of markets. you you know you and It depends on your time horizon, but you know you could make the argument that someone buying Bitcoin today was front run by someone that bought the Bitcoin last week. you know like ah But right within the within a block, um if there's competition for a certain order, then sure, whoever is um first and best dressed will get the order first. And that means that you're effectively front running someone that would have liked to purchase that, even if it's occurring in the same block. The point is, is that a lot of front running is only performed because it wants to back run afterwards.
00:15:30
Speaker
Right. That the, uh, that a sandwich attacker will only perform the front run because they have access to the back running opportunity afterwards. Um, but in carbon defile sales are final. Right. So, uh, if, if a sandwich attacker buys those tokens, they have to keep them, right? They can't sell them back on the same position, the same way they could in an AMM. And so their motivation to front run you in the first place is completely, uh, eradicated, which means front running, you know, but for its own sake. um, is all that's left and that's relatively thin on the ground. Okay. Yeah, that makes sense. Um, so it's, so then carbon defy is mostly targeted towards retail investors, traders rather than institutions is individuals just doing their, their investment, whether it's DCA, whether it's buying the dip, whether it's limit orders or combination of recurring limit orders. That's kind of the vision behind it. It's I'd say it's well, I mean, the, the vision is certainly broader than that.
00:16:28
Speaker
Um, there are, um, you know, it is a generic exchange protocol and there are so many things that you can do with it. Um, so in terms of like, you know, the, the retail and institutional use cases, I would argue that, um, for institutions, there are things about it that are going to make it a lot more attractive than, um, other decentralized exchange implementations. For example, um, the fact that your funds are not pulled. um and that they are you know yours alone and that they they aren't combined with other users' funds, so also means that you can implement your own whitelist or blacklist. So if you wanted to, you could say, only these people are allowed to trade with me and Carbon-EFI can then be used for OTC purposes. um And you can, you know, obviously the OFAC sanctions list is something that
00:17:17
Speaker
that's generally implemented across DeFi. Um, but you might have your own more strict, you know, blacklist that you want to maintain. And if you wanted to permission your liquidity, um, you know, more specifically than, um, then those generic, um, effect sanctions include, then you're welcome to do that. Things like that. Um, so yeah. but There was also the case of Woo Mark, you know, projects who want to, but so if you wanted to speak on that. Yeah, so yeah, projects that have their own token allocations um can also use it to manage their, you know, the
00:17:56
Speaker
the effective ah liquidity on the chain um in a much more granular way. um So, you know, you can use Carbon DeFi to create generic concentrated liquidity positions that emulate something like Uniswap v3, for example. um But because we don't have tick boundaries, um you're not limited to, you know, certain certain price constraints. um And you can also adjust the bid-ask spread or the effective fee um continuously, right? That's just a parameter of the position that you've created. um And so you don't have to like redeploy a pool or something like that. You don't even need to give up the the NFT. You just modify the properties that are that are on it, which means it's a ah lot more cost-effective as a project to manage your token liquidity on on Carbon DeFi than it is anywhere else.
00:18:43
Speaker
ah So there are these use cases. And so I'd say that it's it's broadly appealing both to to retails institutions, new token projects, and then also companion protocols. So I, one of the discussions I've had frequently is the use of carbon defy to perform more effective liquidations for um lending positions. um okay because because the arbitrage network you know has me is much more efficient than the liquidation network. And there's no reason to to make a distinction between these two, other than that liquidators generally demand a much higher premium um to liquidated position than an arbitrager. So whereas a liquidator says, you know I'll liquidate this position for you, but I want a 20% margin, an arbitrager will take a you know a fraction of a percent as their margin.
00:19:32
Speaker
um yeah top And helping DeFi allows for that in ah and a very high certainty manner because the price execution is absolute, right? There is no slippage or front running or sandwich tax or anything that you need to worry about when you're making a market, whereas taking the market has all of those risks um you know um implicit to it. So yeah, it's ah it is a a general tool. It really is a ah very strong sort of Swiss army knife style ah protocol. And everyone finds you know some other kind of value in it.
00:20:06
Speaker
Right. Well, I like the explanation. I like that you call it a Swiss army knife because that's I feel like that's exactly how I envisioned it as well. um When it comes to like, you know, institutions or retail investors, um there's there's something that i I meant to us regarding any potential regulation or or any kind of, you know, maybe regulatory challenges that you've seen because um like, for instance, in the UK, even centralized exchanges which are regulated to shift, right? They're still having troubles providing certain kind of services. um You can't do staking. You can't trade ah like features. You can only do spot, for instance, on Binance and other exchanges as well. So are you are you seeing with Carbon Defy any kind of regulation coming your way or anything that might inform the way you're you're developing this product?
Regulatory Challenges in DeFi
00:21:00
Speaker
i mean we yeah we're We're pretty close to the to the regulator in Switzerland.
00:21:05
Speaker
um and so And due to, you know, Bangkok's heritage, um you know, we were actually used um as a an example case. So we had sort of like an friendly investigation by FINMA over 2019 to 2022 that was kind of to establish what the rules in Switzerland even would be, which is where we're headquartered. um And so under the under the Swiss law, we know that we're we're following the law to a T or even, you know, are an exemplary case of of a DeFi protocol, you know, deployed in a in a regulatory compliant fashion. Europe is slightly different again. But, you know, the um the
00:21:50
Speaker
the regulatory weather in Europe right now is still pretty much, ah DeFi isn't big enough to warrant much regulation. um So there's there's not too much to do there. the the The one that everyone's always concerned about is the United States. And so we we in terms of the United States, ah we still geoblock Um, you know, all us IP addresses and we don't market to Americans. Um, and this is, you know, when we, when we did that, it was, um, very unpopular. Um, yeah I've seen since then, and um, a lot of people have started to follow suit, you know, one inch, for example, I think now blocks, um, you know, us IP addresses, where everyone is starting to do it. Right. And so why why is that? Is it because of, uh, regulations in the U S again against defy? I wasn't aware of that. Yeah. So you, well in the U S.
00:22:39
Speaker
There's still a lot of, um, uh, there's a, it's not entirely clear what the, the rules are. Um, but we do know that, um, that it is, it's possible. Like the, the SEC has certainly made its case clear, or at least it's motives clear that it considers everything to be illegal. You know, uniswap is categorized as a criminal syndicate. Um, and you know, it's going, you know, and Uniswap has been under investigation for, for years now. Um, you know, I'm sure, I'm sure you remember, you know, even Hayden Adams bank account was frozen at one stage. Yeah. Um, so yeah, like the U S is just a chaos at the moment.
00:23:23
Speaker
um the The short answer is that in the US, um much like in the rest of the world, you kind of need to wait for um certain suits to be settled to even know what the law is, right? The law becomes um sort of a ah um but You know, the the the law is made in the court, you know, like, yeah, as precedents are set. um Because of decisions that are made you now know what those things are. And there's so much going on, you know, you you may have seen in the um the the case that was filed against Kraken.
00:23:58
Speaker
that The scc has pointed out that it that it thinks basically all of these tokens of security is based on um you know some of the notes that were put there so you know the the specific um allegations against cracking is that it offers unregistered securities on its exchange but the examples that they give of things like. Matic right and link and and aetherium like it's crazy and aetherium And so we don't really but all but those are still just alleged, you know, we don't actually know how um how much um You know how seriously to take those allegations until the American cause have made a decision about them so we will wait and see um but yeah, just pay attention to the you know that there's always a
00:24:43
Speaker
you know, notes being released, you know, every week. Obviously the XRP case is is ongoing. The ah Coinbase suit, you know, some of that stuff got thrown out, but some of it is left in. um So I think the um the wallet as being a securities offering has been thrown out, which is good for all wallet developers. um But the staking um the staking product, I think, the the courts decided that the SEC has made the their case sufficiently well that it should go to trial. So we'll just have to wait and see how those things happen. you know It's not like there's a legislator somewhere that's just
00:25:21
Speaker
waiting to to write an opinion, this is something that actually needs to to happen in the in the battle of um the color room. So, waiting to see. Yeah, but well from what I've seen, everyone um is happy to follow some kind of regulation. I've seen exchanges, I've seen DEXs and DAOs, and everyone is is happy to you know to be regulated in a way that it makes sense, right? Because if you suddenly come out and say, well, you know what? Everything's illegal. That's it. everything Everything and everyone are doing illegal things.
00:25:52
Speaker
And that that's not something that anyone can work with. um I saw this Reddit post the other day. There's this guy that sold a ah accepted an offer on OpenSea for his mutant ape. He listed it for 7 ETH, got an offer for 6.5 ETH, accepted the offer. And then he had to his withdraw his funds, you know, took his money, it took his ETH to Binance. And Binance immediately froze his account because allegedly the 6.5 ETH came from accounts associated with illicit transactions, right? What that means is and they've done an AML check on the wallets and then they've seen that the wallets may have had you know illegal ETH or ETH that went through, I don't know, tornado cash or mix or any anything like that. But the interesting thing is if you go and you perform this AML check on your wallet,
00:26:43
Speaker
Right. Uh, on a clean wallet, it will likely consider it an illegal activity because there's like, they're so East is moving in, in any direction. It's almost impossible to have clean. It's just as it's impossible to have clean Fiat. Like how can you guarantee that the Fiat that you've used doesn't have like cocaine particles on it? Cause it probably does. The older, the, yeah yeah, the, the irony is that, um, you know I would say that it is par for the course, meaning that the the majority of um you know project founders and leaders, their ambition is to be um compliant. you know they No one wants to ignore regulation. No one's even afraid of regulation.
00:27:27
Speaker
Um, but what you'll find is, especially from like, you know, the institutional perspective is that there's, um, there's three categories. There's like white, which is everything's perfectly legal, black, everything, which is absolutely illegal. And then the worst kind gray, right? Where people don't know if it's illegal or legal. And a lot of um the DeFi businesses kind of exist in that gray area, which is certainly holding back institutional adoption in the space. um But that gray area, like it it is shrinking. um And it's via this you know this process of court battles where you know where clarity is sought. But yeah, it's not the case that people want to avoid regulation. I think that that's a ah mischaracterization of the industry yeah in general.
00:28:19
Speaker
People want to be regulatory compliant, but what you need is clear instructions of what the regulations are. And that's what's lacking. 100%. And it's always, I feel like, you know, I don't want to blame the regulators because at the end of the day, everyone's breaking new ground every day.
Impact of Regulation on Innovation
00:28:38
Speaker
Everyone's creating new solutions that didn't exist three, five years ago. But it's also the lack of understanding of what these things do and where the risk is. Like I've seen people going on, ah you know, markets like, you know, DeckScreener. DeckScreener in itself is a perfectly valid, useful tool to use, right? DeckScreener is not the problem. Just like, just like, turn out of cash is not the problem. The problem is how it's being used and the bad actors that, you know, are in the space, which are able to, you know, cheaply create tokens for no price at all. You can pump out hundreds of tokens a day if you want to.
00:29:14
Speaker
um And i I just see different things being regulated or or put under a microscope rather than the actual bad actors are contributing to to to this ah crime in crypto. Yeah, I think regulation should be, it would be much better if ah regulation and lawmaking had as it's like as a ah focus point, distinguishing between good and bad actors. But that's just not how bureaucracy works. you know A lot of these rules are about order. Regulation is not necessarily to prevent bad things from happening. um And I think that that's, ah again, and another misunderstanding. The regulation is about how does how do these industries like fit into sort of the fabric of society?
00:30:08
Speaker
And you know how do how do you um how do you make them compatible with other mechanisms? um So regulation isn't yet is not just in fault. We usually hear things about investor protection and that kind of stuff. I promise you, the regulators don't give a fuck about investor protection. They they don't give a fuck. It's much more subtle than that. um what they What they really care about is like disruption on like ah on a catastrophic scale. and Certainly, cryptocurrency and and DeFi threatens you know some of the the mainstay systems. and I think that that makes a lot of regulators nervous.
00:30:46
Speaker
you know that they' They're unprepared or they don't understand these technologies and they need to consider how their adoption might affect you know disparate parts of the you know of of of the network, meaning like you know the network of you know um of other businesses and industries that are you know that are adjacent cryptocurrency. So that's really the, you know that's why these things take so long. And I think that it's also why, you know like the ah like the digital payments systems that ah were represented by, um I can't remember which banks got shut down, but you know the the government has already this idea for a digital payment system where many governments have ah an idea for digital payment systems. And to see that kind of becoming privatized or earned
00:31:37
Speaker
um or to have a competing digital payment system owned entirely by a private company um is terrifying. It is terrifying. and so they yeah And so it's those kinds of things that they're worried about, not necessarily the, oh, you know, this person stole, you know, 28th from this other person. That's not really what they're paying attention to. What they're really paying attention to is, um you know, is this company setting up something that's going to compete or threaten the government's interests? Yeah. Well, unfortunately, in most cases in crypto, the answer is yes. Things are rather disruptive. And that's okay. It just, yeah. And that's okay. that I don't think that they want to stop it, but they want to understand it and regulate it.
00:32:24
Speaker
Yeah, and that's a fair distinction to make 100%. Jen, you're you're you're doing ah your Twitter spaces right on a weekly basis. um do do you talk Do you talk at all in in terms of regulation? of what like I'd be curious to to see what like the general public thinks about it. What's their like emotional... you know charge You know, I think it's, uh, it's divided, you know, you speak to a lot of the developers and and founders of projects and things, and they're, they're saying similar things to what Mark is saying, right? They're not anti-regulation, they just want clarity.
00:32:58
Speaker
you know you speak to a lot of users right and it's still like they still want the wild west we don't want to be regulated we don't want this and and i think that's um i think that's where that sort of different opinion comes in you know like we We don't mind being regulated. just Just let us know what that gray area is. Let's get out of that gray area and let's just move on. Let's continue building. Let's continue making these these sorts of tools, you know technology available to everyone. um you know and And without the fear of being penalized for it or, you know, being, being handed a suit for it, you know, that it's just, it's really, um, like you said, it's disruptive, you know? And if you are developing with this sort of weight on your shoulders or this sort of fear, this like looking back behind you of, you know, am I doing, am I, am I okay even doing this? Um, <unk>s it's not,
00:34:05
Speaker
It's not going to allow us to really grow and thrive the way that I believe our industry is capable of doing. and But then, you know like I said, you talk to some of the users and it's censorship resistance and it's that and it's you know that that real ethos, that like core of ah blockchain that they're really holding onto. And that goes for the government as well, right? We don't just stay out of it. I think there's a divide, you know depending on who you're really speaking with. Yeah, 100%. Do you think the ah lack of regulatory clarity has hindered some the development of the industry?
00:34:42
Speaker
mark maybe you know
00:34:46
Speaker
I think that it's made it more difficult, right? I think even developers and things, I've spoken with so many who are looking to build in this industry and even just being a builder in the industry, it's like, I don't necessarily want to be in the US because if something were to happen, are they coming after me personally? It makes it, there's a big hesitation there. you know, there is that that sort of fear where should I even, should I move? And you see a lot of people relocating, you know, if if I'm going to be welcome to to build in this industry, I should go somewhere else. And so I do think it's hindered the growth in that aspect. um But from like a developer sort of project standpoint, Mark could probably speak to that a little bit more. I'm on more on the outside looking in. Mark is kind of more on the in, you know. Mark, what's your take on that?
00:35:41
Speaker
Um, yeah the the question being whether or not I think that what, uh, legal threats are are holding back developers. Yeah. but whetherly yeah clarity Whether we would have been further ahead as an industry, if we did have, uh, more regulatory clarity. Hard to say. Um, I think that, you know, the, uh, specifically in the United States. Yes. Um, I think that. uh, you know, it's already been pointed out by, um, you know, by leaders in, in Congress that a lot of, uh, there's been a, like a huge amount of capital flight out of the United States due to the, what they categorize as mismanagement by the SEC, or at least, um, you know, an, an enforcement based approach, um, to, um, to, to regulation, which is uniquely, um, you know, uh, United States flavored.
00:36:40
Speaker
um Right. And yeah, and I think that many people are disappointed that, you know, um what could be such a significant um sort of technological cornerstone of, you know, the century is being actively, you know, trampled out in the United States, but in place but that it's a it's a uniquely United States specific phenomenon.
Comparing US and European Regulations
00:37:03
Speaker
um I know that, for example, in the in the in the UK, where you are, Um, that, uh, after Brexit, um, the United Kingdom has been, uh, actively trying to find ways to rekindle their, um, you know, their financial markets. Cause I think during Brexit or a whole lot of stuff, um, I think ended up getting as exploited wholesale to like the muter and and other things. Um, yeah. And so there, yeah, there is, there is a huge gap, um, in the, the financial markets, um, and the dominance that the,
00:37:36
Speaker
London used to have. um And so the regulator has opened up a regulatory sandbox for people to try a new things. I was once speaking with a project who was interested in tokenizing um in what are the insurance securities or insurance liability securities and figuring out ways to do that. And this would be an exclusively institutional product. um And you know those kinds of things in in Britain are Yeah, I think a signal that the government is very willing to cooperate. um They just want oversight and understand what you're doing. um But yeah, insurance link securities and things like that, I think are a very interesting, very good use case for for for blockchain technology. um so yeah and so So yeah, Britain, no, like there's nothing holding it back. Europe, um there's almost nothing holding it back. I think in Europe, it's usually things like what are the the tax implications of certain things and
00:38:35
Speaker
with the number of transactions that people do, um it can be very difficult to to participate because it's classed a certain way. The countries like Australia, like Switzerland are basically a crypto agnostic and don't really care. And they, you know, as long as you pay the capital gains on things, it's not, you know, it's not too much of a big deal. but So no I don't think it's a global phenomenon. I think that there are certain jurisdictions that are actively trying to stamp out cryptocurrency and blockchain technology in general. Um, but I also see in those jurisdictions, um, a lot of, um, pushback from, um, you know, from elected officials. So I think that it will be short lived. Um, but yes, there's no doubt about it. I think the United States is being held back, um, by its, um, you know, by certain three letter agencies. Um, but right.
00:39:27
Speaker
It's become extremely unpopular, both with the public and with other branches of government. So I don't think that it's going to be, I don't think it will be long lived. No, I agree 100%. I think for me, it all kind of became clear when Ripple, I think they they won the first um the first battle in court. when you know that was I feel like that was a massive win for everyone. and Looking ahead, it's just things are going to be given a chance from a regulatory perspective, projects in this industry, which is which is which is great. um I would love to see more of that happen quickly, but I feel like I agree it is just the US problem and even in the US.
00:40:12
Speaker
it's probably going to become less of a problem going forward. um I'm also seeing a lot of activity in in tokenization within Europe. I was i was talking to Christophe who set up um and kind of a which is like the equivalent of a limited liability company, a GMBH tokenization company. software program for Germany. So you'd be able to create um a company, a limited company, and then do either crowdfunding or um you know stuff of that nature with tokenizing assets. There are some legal ah um no yeah legal challenges that they've had to kind of go through. I think that tokenization can be more than 8 million euros or the equivalent of 8 million euros. So you kind of have to make sure that your tokens
00:41:00
Speaker
don't value more than that at the time. But I think it's it's great to be able to, in ah in a place like Germany, to just tokenize your your company and raise funds that way. Because there wouldn't be any other way to do it. Like for you to buy a share from a company that's private through the German legal system, it's an absolute bollig. So just doing it this way, you can you can just buy it on the market. And it's it's all legal. It's all been approved. They're working with the law. So it's great to see that this kind of stuff is happening.
00:41:30
Speaker
Definitely. I haven't heard about this before, so it is great to like hear that these sorts of things are happening. Yeah, it's cool. It's called tokenize.it, t and it's ah made by one of the former Core Ethereum developers. So he's worked with Solidity a while. He was one of the guys that founded the, well, He said he he authored the DAO, the actual DAO, the smart contract and everything, and then he's moved on to this tokenization of assets in in Germany, which is pretty cool. um I wanted to get back um to Carbon DeFi for a moment because I meant to unpack some of the things that you've said towards the beginning that I never got a chance to, which is kind of launched into this regulatory discussion, which has been great, by the way.
Automated Trading Strategies and Cost Efficiency
00:42:09
Speaker
Um, so you've mentioned some aspects that you could, you could do automatically with carbon defy, you could do limit orders and you can do recurring limit orders. Um, and you could do, uh, I also noticed that you can, you can select market orders. If you go on the app and stuff, what level of automation can users do at the moment and, uh, do you expect to offer more automated tools? Like I've been into trading and algorithmic trading myself for a while. So I have a deep interest in that. you Well, it it kind of goes with what Mark was saying earlier, you know, in I guess on a centralized exchange, right? Somebody wants to, you know, like, let's look at the bull run. you You've got your Bitcoin, you've got your target price. You want to start you know scaling out of this position, right? You set all of these different limit orders, decentralized exchanges. You sound right. You know what? I'm going to sell 10 percent at this price. I'm going to sell 10 percent at this price. It's kind of that same thing just, you know, manually in both of instances.
00:43:10
Speaker
um When Mark was explaining the range order, this is what Carbon DeFi will automate, right? So rather than set all of these up, you say, I want to strictly buy or sell in between these two price points. And then on the back end, the way it's been designed is to break this down into all of those orders. So this is where you know a good portion of that automation comes in, where it really just simplifies the user experience. And then helping them achieve what their ultimate goal is. right I only want to buy or sell within these prices. So there's that. But then with the recurring orders, like what you had mentioned and and Mark had mentioned earlier, this is where a user can create their buy order, they create their sell order, and they can link these together. And this is automatic. This is through you know just the process of creating a recurring order.
00:44:04
Speaker
These two orders are now linked together. So you can fund one, you can fund both. However, whichever order is filled, depending on the way the market moves or which you know order you you funded, those tokens that you acquire when an order is filled, say it's your buy order, your buy order is filled, whatever you acquire automatically rotates and funds your sell order. So there's no manual anything. This has been created to be fully automated and it's all within the system itself. So there's no reliance on third parties and things. There are no keepers, nothing of that sort, right? So there's this level of automation where a trader can say, I just want to, you know, I want to create this cycle of rotating my funds and I want them to automatically accumulate. And so this is what it does. And when Mark was speaking about the, um,
00:44:57
Speaker
The gas earlier, I think the most popular question that we get when we explain a recurring order, because this is completely new in DeFi, is the gas prices. You're performing these trades, this this you know liquidity is rotating back and forth. When you're a maker creating this strategy on carbon DeFi, you're not paying for any of these gas fees. or these trading fees so you create you pay to create your strategy and then the taker whoever's filling your orders is paying for that fee so there's this automation as well not only is it you know and we're eliminating that manual aspect but it's also really gas efficient as well um and then the overlapping strategies i think marc can speak to a little bit more but in terms of like the automation i think that's really where that comes into play is
00:45:49
Speaker
It's eliminating the emotions, right? You know, you create your plan, you create your strategy, and you just step back, right? That's that's where that really kind of is a highlight, I think, of carbon-defying. Yeah, so you've mentioned linking the buy and sell orders together. What do you mean by that exactly? Do you mean as if you have a portfolio, so whatever? ah so it means Yeah, i'll I'll give you an example, right? um Say right now, i I don't know what the price of Bitcoin is, but say it's around $60,000, right? I've got this feeling it's going to dip down to $55,000.
00:46:30
Speaker
So I'm going to create a buy order on Carbon DeFi. I'm going to buy you know Bitcoin or wrap Bitcoin with my USDC when it gets down to $55,000 or $55,000 down to $52,000. I'll create a range. Start buying at $55,000. I'll buy down to $52,000. But I can also say, I do still think, though, it's going to go up to $65,000. We're back up to $70,000. So I'm going to create a sell order. for 70. Now these two, I can link. So like normally in a centralized exchange, you create your buy order, you have to wait for that order to fill, then you take what you've just acquired and you create a sell order with those new funds, right? This is all manual in order to achieve it.
00:47:16
Speaker
Unless you have more liquidity for two, two, both. Right. Right. So with carbon defy, you don't have to do that. You can just say, um, this is my buy. This is my sell. And I'm going to, I'm, I'm going to, um, I want to say link again, right? But I'm going to connect these two orders so that this liquidity continues when you were saying like, you don't have to wait for this order to fill to go back and create this order to deposit these funds. That's what a recurring order is.
00:47:47
Speaker
So it's not those two separate orders. Yeah, it's, it's linked together. So you like when the, market when the market is crabbing, you know, you just kind of see this, it's just bouncing back and forth. Okay. Well, why not, why not be able to, you know, capitalize on that? Right. And, and automate that. So that's, that's where that automation and that sort of that linking orders comes in. Maybe Mark has a different way of explaining it, right but you mean Even the ability to create a separate buy and sell order is is kind of new, a new concept, right? Especially when you're comparing it to AMMs and things, but yeah one step farther. like yeah Mark, I don't know if you wanted to add anything to the recurring orders at all or to the automation. No, I think you covered it.
00:48:37
Speaker
So how does it work under the hood? like what's What's under you know the the application layer? Obviously, there's a wallet. You could connect your own. You could create, I guess, a fresh wallet if you wanted to be safe and ah you know make sure that you don't let the bot run free with your funds if you don't want it to. um so ah But I'm guessing there's some kind of middleware somewhere. There's ah there's a script or a service or something that kind of keeps these orders in memory, like your like you mentioned, Mark, like the kind of like not the order book, but something to manage all these things. like The way we do it, um we work with um with with exchanges, right so we we connect to their API to perform these trades algorithmically, but we have a whole series of services that keep in mind everyone's everyone's portfolio and positions and orders and logic that they create in in a database, and then you know based on that,
00:49:32
Speaker
we decide when to call the apis the exchange APIs to perform these disorders. Does that work anything in in in the same vein with Carbon DeFi? No. So the you're you're literally just... And without the CFI side, of course. Yeah, yeah no even without the CFI side. So there there is no middleware. there like Even if we had our front end or back end, it would still work. um the um so the it's an This is what I meant when I said it's a natural expression of the way that the smart contracts are written. um when you when you you know When you're browsing the the positions that are available there, it has a lot more in common with how you might be browsing like Amazon, for example, if you're buying PlayStations.
00:50:19
Speaker
So, you know, if you say I want to buy a PlayStation 5 on and eBay or something, and you you get a list of the items, you can just sort them by, you know, high price to low price. um But the, yeah, so that the smart contract on Ethereum um is basically just a collection of all of those prices. And so if you know how to read the smart contract, then you can just pull that data and then decide which positions you would like to um you know to interact with. um So the it yeah it really is a peer-to-peer sort of trading protocol. Someone says, and you know here is my ETH. If you want it, um I'm only accepting you know um this price. And so someone can browse it and say, yeah, fine. I'll trade it with you. Or no, that's too expensive. I'll trade with someone else.
00:51:11
Speaker
You know, that's right that's it. um So there is no, we don't need to to make any API calls. There is no sophisticated, ah there is no need for a sophisticated architecture to to organize and handle these things. Obviously it helps to have something like an SDK, which we've built, which if you can use it, will um will extract the data from the smart contract and organize it for you. um But if you don't like our SDK, that's fine, write your own. You you know, it's DeFi as normal. um right But but yeah there is so in terms of executing prices, um carbon does not. right Carbon yeah um it only broadcasts the the prices that you wish to trade at, and it's up to the market to decide whether or not it trades with them. um And because of the way that blockchains work practically,
00:52:02
Speaker
Um, there will be, uh, certain market devices, things like, um, liquidity aggregators, things like arbitrage networks and so on, um, that are constantly, um, you know, aware of those prices. And if there is an opportunity to trade with you, um, because the market has demonstrated an appetite for it, it will execute. Um, so the X, the actual execution is something that happens to carbon defy and not by carbon defy. the same way that a ah liquidity pool would operate. you know The liquidity pool in its original implementation has no knowledge right of the market price of something.
00:52:41
Speaker
Um, but it finds the market price anyway because the market interacts with it, um, and isn't, you know, and has a, let's say, um, um, a motive to, to trade prices up to a certain level and so on. So we, we, we basically apply that same assumption, um, and let, you know, just let the, um, all of the bids and asks or all of the buy and sell orders that users have, um, provided, um, be, um, be discoverable. And that's all you really need. With that though, Mark, if I can add, I'm sorry, well just because we're on this topic with the aggregators and the takers of the system and the arbitrageurs, it's not necessarily also just relying on outside sources either. um Because I think, Mark, this is kind of where the ARB Fastlane comes into play.
00:53:32
Speaker
So just prior to the release of Carbon DeFi, Bancor developed the ARB Fastlane, which is an arbitrage bot. And this has been integrated into Carbon DeFi um across the, you know, whatever chain it's it's deployed on, right? So Carbon DeFi is on Ethereum. I believe there are maybe a dozen of the leading DEXs on Ethereum. that it arbitrages and it uses this sort of searching system, right? It searches for all of these trades for border execution on carbon DeFi. And the ARP Fastlane is unique. It's a first of its kind because it's decentralized, it's permissionless. Anybody can go and run the bot, right? I think there are maybe 70, 80 callers of the bot on Ethereum right now of the ARP Fastlane. But this has been- I was looking at the GitHub repo. It's mainly Python, isn't it?
00:54:25
Speaker
It's a Python script. Yeah, that's cool. Yeah. So there's, there's that. So we bank or has that, that it's deployed alongside carbon defy, but then now that bank or has licensed the smart contracts, carbon defy smart contracts. They have been deployed on three chains now and the ARB Fastlane is deployed by Bancor alongside each of these license deployments as well to really support the the sort of order execution. So it's not necessarily only aggregators and and other arbitrages outside of the system. We've kind of built in this sort of arbitrage trading bot to to support that.
00:55:08
Speaker
Right. and And that's very cool. I think, yeah. I was not building that. I think arbitrage is super cool, especially like decentralized arbitrage and ah would definitely. love to know more about um the kind of arbitrage opportunities that R Fastlane provides. um I noticed, I think I just scroll through the main page briefly. So you do one-to-one arbitrage, you do multiple arbitrage, you do triangular. um So that's some that' some pretty powerful features. And and I wasn't aware of of ah this solution before. It's it's really interesting. i'll I'll definitely check it out in more detail.
00:55:48
Speaker
Yeah, it has it's it's ah amazing to see the amount of interest that it's gotten. you know it was It really made it available. it's not It's not as, there's not that sort of technical barrier that there is and so many other you know like arbitrage trading solutions or things of that sort. like And even just having the support of the bank or developers, right? There is a bank or developers telegram group. So as we're encouraging people to go and and and check out the ARB Fastlane, there is that sort of support there as well to answer any of the questions that somebody has an issue when they're forking the GitHub. Mark, you were gonna say something, I'm sorry, I didn't mean to cut you off.
00:56:26
Speaker
Uh, no, that's okay.
ARB Fastlane and Market Support
00:56:28
Speaker
I just wanted to say that there's, um, you know, it, the, the ob fast lane is partly the answer to a generic problem in defy, which is that when someone is creating, um, a new exchange, there is an implicit assumption that, um, if there is If there is an opportunity to to make money, um that that money isn't going to be left on the table for very long. And you know that is the that's a requirement to have the system function correctly. um So in carbon defi's case, you know that assumption is that
00:57:02
Speaker
if you're selling your Bitcoin for, you know, for $50,000 and then the price of Bitcoin sort of in aggregate, um, gets above that level. Um, someone should buy it from you, right? And, and the user is happy because, you know, the, they got their auto field, but if you, you know, if it's a bespoke protocol, um, or it has unfamiliar, um, math or the, the, the way that the contracts are um constructed are unfamiliar. then it's unlikely to show up on the search and networks immediately. Different arbitrageurs might not find it or want to integrate it immediately. um and So the system can kind of persist in limbo for a little while.
00:57:42
Speaker
I'm sure you will remember when like Uniswap v3 launched um because it was, you know, it was ah so unlike its predecessor um for the first week or something. Like it it wasn't really behaving the way that I think um people expected it to. It is now um because everyone's familiar with it. um And so there is this, you know, there is a ah common thread where developers and new protocols will call up their arbitrage friends and be like, Hey, you know can you study this and and work it into your bot for me so that the system performs the way that it should? um And you know now you you kind of have a and ah third party dependency that you have no control over. And sure, it will take care of itself over time, but you really want it to take care of itself right away. And so with the fast lane, we can reach out to to new projects and say, you know what is, you
00:58:42
Speaker
help us understand your system and we can actually build a module into that thing. um And then everyone in the arbitrage network can immediately know how to interact with your protocol. um And so this is a very ah very fast, much more efficient way of of introducing new extend you you exchange primitives. um And also is attractive from the perspective of, let's say, um like new new blockchains, where there might be like a dozen or so different DEXs. Um, but the, you know, the arbitrage networks haven't really found their way there yet. And so it's not really functioning. You might get a lot of stale prices and other things. Um, and so they, it it turns out that, you know, new, new chains are also very interested in getting it because they get more transactions. They get, you know, higher volumes. The exchange infrastructure tends to behave a little bit better. Um, and so, so it's, it's really, you know, trying to address that, that unspoken assumption that markets should behave rationally.
00:59:42
Speaker
um because they often don't. And sometimes you need to provide people with a you know a little bit of lubricant you know to get their systems performing um or integrated into into your systems. And that's what the ARB Fastlane provides. Oh yeah. A hundred percent. And it also helps level the playing field. I feel like it just helps spread liquidity across the different decks, different pools. So it just, it doesn't, you know, like things are no longer solitary. Um, so you said it works. Artfast Lane works with Ethereum and the main decks is on Ethereum. Is that right? Also on Phantom mantle base. Um, and we've got to deploy it in a few other locations, but it will be deployed eventually on, on every chain.
01:00:26
Speaker
um It's a part of, it it kind of comes with the um the license um when people buy a a carbon deployment. So we you know we make sure that the the infrastructure there is up and running and and generally everyone's pretty happy about it. That's cool. Any plans to deploy or interact with Cosmos at all? They've got an amazing ecosystem. Yeah. If we find a license, if we we find a group that that wants to license the protocol, we absolutely will. I've always been ah a big fan of Cosmos. um I think in general, it helps to have um you know yeah EVM. I know not every part of um Cosmos, I think, is is EVM compatible. um But I could be wrong. It's been a long time since I've examined it. But yes, like I don't have any specific plans to. But if there is a yeah if there's a ah group that wants to add Audibook-like functionality to their existing products or if they want to launch a
01:01:22
Speaker
um you know a new product on their own, we offer a complete white label service for this protocol. That's very cool. Yeah. I would love to see something like that deployed across the but majority of the chains. As much as I'd love to see a project like Cosmos, maybe Cosmos, maybe something else, ah just to be you know to be like this ubiquitous glue that just connects all of the chains together. I feel we we are moving in ah you ah in a place where we're abstracting away from this complexity of you know this chain and that chain and the other chain. and
01:01:53
Speaker
And I think it really helped with adoption to just to have something that just, you know, brings everything together like it should. Because every chain's idea is like, oh, this is going to be the chain. No, it's going to be like 500 others that are going to be used. Yeah. We've spoken about chains quite a bit. And I think what are, would we have like 250 chains now, 225, something like that? Quite a bit. Nice to have the glue, like you said. Yeah, i think this I think this industry needs that desperately. And the sooner it will happen, the sooner like adoption will start to follow suit. Because like we've we've all been here since you know ah quite a while ago. Jenn, you've been here since 2020, you said, in the crypto space. Mark, you've obviously been there a while. And you yeah are you a programmer? I didn't ask.
01:02:42
Speaker
Yeah, it's more on the data science side. So I don't do solidity, obviously have specialists to to handle the the smart contract stuff. um But I do a lot of the, um you know, I build the models and I program it almost exclusively in, in Python, I can also do, see a little bit of JS, but Python is my, my brown and butter. Nice. Python's nice. I like Python. It's It's cool. But yeah, I was going to say, it's like none like we're not and of us have the experience of not knowing what it's like to to just be exposed to something that's completely alien. like I live this stuff. I understand it. and Even sometimes it's confusing for me as well. but like I can only imagine someone that just found out about Bitcoin you know like last year.
01:03:28
Speaker
how confusing this space must be. It's like, oh, wait, there's more than just Bitcoin. There's also Ethereum. And wait, on Ethereum, there's other coins in Ethereum. And wait, Ethereum does what with their code? It's it's absolutely bonkers. and This was exactly my reaction in 2020. Yeah. Now it's crazy. There's more than one. And this one integrated with this one. And what does that even mean? And what purpose does this serve? And how does it use? Yeah, I mean, I remember connecting those dots and and falling deep into the rabbit hole when I first joined the industry. And even now- Yeah, because all all you do is read at that point. like All you do is read different articles about what different different chains are and different projects are. And then you know once you've been in the space for a while, you realize there's a new thing
01:04:15
Speaker
coming out every day, that you're, you're, it's almost impossible to catch up with, with everything. And there's people building incredible things. And to be just new in, in this space, you're like, you're being thrown at the deep end, like at the absolute deep end of things. Yes, you are. Yeah. Um, so do you guys have anything planned for this year in terms of features that you'd like to let people know about regarding carbon defile or, or any other bank or product, anything that you'd like to tease or anything that, uh, you'd like to shine a light on?
New Features: Simulator and Logging
01:04:46
Speaker
I generally touch on one that we just released. Yeah.
01:04:52
Speaker
Yeah. Okay. and Because we didn't speak about the simulator. So something that we just released, something that Mark had actually developed and started developing before Carbon Defy was even released was a back-testing tool. It's the simulator. I was just playing with this before yeah before our podcast. Very cool. So it's on the front end. It's available on desktop, um but it's something we didn't speak about. So with Carbon DeFi, Mark had spoken about how you don't have pools, right? You can create a trading pair with any two standard ERC-20 tokens. So to have the ability to create a unique trading pair is really um
01:05:29
Speaker
I won't say it's exclusive, right? But it's a really, it's it's a benefit of Carbon DeFi. Being able to say, like, you wouldn't normally trade these two pairs, but that's a pattern I really like. You know, I want to take advantage of this. But then to take the simulator and look at how these tokens would have traded against each other over the last 30 days, 7 days, 60 days, 90 days, whatever it was, two years, right, or year. And you it it allows you to back test this. It gives you a really solid, like a deeper understanding of what was happening with those trades and how you can improve your strategy moving forward you know from this sort of and historic data.
01:06:15
Speaker
and then create a strategy right from that. So I think it's it's really neat because one, it gives you a lot of information um and really helps you become a better trader. And then two, because it really kind of allows you to step outside of that mentality that I think a lot of us are in where it's like trading against E, trading against a stable. Here you can create these pairs and you can actually see it. And having that visual with the simulator, and has been really, really helpful to a lot of to a lot of our users and I think can be really useful to a lot of just traders, you know, potential users also. So I kind of wanted to highlight that one before we went into future features. I'll let Mark speak to the future features a little bit.
01:07:00
Speaker
Yeah, I love the simulator tool. And I, what I, what I really liked about is that you compare the, uh, buy and hold versus your trading strategy. Like, is it more efficient? Cause that's what the baseline is for a lot of people is, is it actually more profitable to be trading this than to buy and hold? And I liked that you have the visual there to kind of let you know. Yeah, I agree. That's the, um, that's, that's the numero that should be used. It's, uh, you know, cause otherwise, you know, if you're comparing it to us dollars, um, you know, yeah
01:07:30
Speaker
A very bad trading strategy in a bull market can still look like it's performing quite well. yeah um Whereas if you had done nothing at all, you would have performed a lot better than that. So I agree with you. Comparing it to the to the buy and hold is is the correct numerator, and that's the one that we use. um Yeah, the another feature that I think we should talk about is the the actions, which we added just recently. And so this allows you to actually download Um, all the transactions, um, for one of your trading strategies. So, uh, you know, the, the time date that, uh, that it executed whenever you update the prices, if you add or remove liquidity, that kind of thing. Um, which is, it can be very beneficial, um, when it comes to, you know, tax season, for example, you actually give your accountant something that is a total, like a list of everything that's, that's happened, um, with your, with your strategy on carbon, which is, um, extremely valuable.
01:08:29
Speaker
Um, in terms of future, um, future prospects, uh, I generally don't like to tease stuff just because, you know, development lead times can be, um, a little while, but we have spoken about, um, a, an element in the system that's called the automatic auctioneer, um, which is currently like we, we have developed it and are already using it for the project's own, um, for the project's own use case. Um, but it is potentially generic. Um, so at the moment, this is a ah way that, um, the bank or protocol can also with, uh, with carbon defy can consolidate, um, all of the different fees that it's collected on the protocol side, um, into like one token, right? Like into eighth or something like that. And then we use that to, to buy and burn B and T the, um, the point is, is that that is a problem.
01:09:22
Speaker
that many projects have, um either for um you know because they have the the same sort of diverse portfolio of different tokens that they would rather get into one thing, um but also more abstractly, um the the problem that we're trying to solve with that thing is that if you have a token and you don't want to trust an Oracle price or you don't want to trust a you know an AMM's self-reporting pricing, um How do you, um in a decentralized and and permissionless way, transfer value from one token into another? um And this Dutch auction style system that we've that we've developed is is useful um because it has no dependencies. um All that is, again, the only assumption is that there are people watching it um who will who are motivated to interact with it as soon as it's profitable for them to do so.
01:10:19
Speaker
which is where the, you know, the fast lane comes back into it. And so if you've got a very large number of unique callers, we're all paying attention to that auction. Um, I guarantee you, you know, as soon as there's like you know a couple of cents of profit to be made off the paying gas, they, someone will take that deal. No one's going to wait around for, um, you know, for the, the profit margin to go up because everyone is scared that they will lose that transaction. Um, if they wait too long. And so this is potentially generalizable to things like you know debt liquidations from um you know from lending protocols. um You can also use it for you know to to consolidate other kinds of value. like It doesn't necessarily need to be about token fees and things like that. There are so many reasons why um a project might want to transmit value from one token into another that won't doesn't want to risk having a developer
01:11:14
Speaker
you know, perform a swap on an AMM or something like that, which has all kinds of of risks associated with it, not just um practical, but legal as well. And so this mechanism is is extremely valuable. um And so while it's, you know, While it's developed and we're and we're using it at the protocol level, um it's still a um you know ah boutique product that owned that we're only dog fruiting. It could be something, and I i plan to to make it available for general uses so that anyone can interact with it.
01:11:46
Speaker
And um in ah an ideal world, it would just be another order type in Carbon DeFi that just introduces a time element.
Auction Mechanics and Online Presence
01:11:54
Speaker
So rather than have your bidding price or asking price or your range of prices be a horizontal channel across the the chart, um all this does is introduce a slope, right? So either linear, inverse linear or exponential, however you would like to do it. um And that, you know, that brings in an auction mechanic. um, that I think is, um, you know, has been missing from, um, from DeFi exchanges for, for a very long time. And you can see that, you know, projects like, uh, like CalSwap, like one inch, um, like, uh, like Uniswap X, um, they've all come to a similar conclusion, right? And that the, the best way to interact with the market is possibly, um, to have, uh, an auction and competition between people to, to interact with that, you know, with the auction.
01:12:45
Speaker
Um, and so that is an element that we technically have, have ready to go. Um, it's just a question of how to appropriately productize it. You know, there, there are UI UX considerations and and that kind of thing. You want to make sure that it's clear what it is and what it does so that people don't use it by accident, that kind of thing. But yeah, I, that that will absolutely become a part of the the fabric of carbon defy. I'm just not sure. Um, when it will be appropriately productized that I'm ready to release it. Okay. Well, that sounds like a really interesting thing and I'd love to see it somewhere on the on the retail investor side. um And i'll I'll make sure to check in with you guys maybe in a few months, a year or so, see where that is on the roadmap. That'd be fascinating to to see. Perfect. Awesome. um Well, where can people find out more about Carbon DeFi and um what are some of the social media links that you'd like to to shout? to
01:13:45
Speaker
We made that super simple. Everything's basically carbon defy XYZ. Um, so, uh, the actual website itself, carbon defy dot XYZ, the Twitter accounts, carbon defy XYZ and our telegram. So it's really just, this is what you need to remember carbon defy, you know, um, I definitely suggest checking that out. There's also a generics links page. you know Obviously, you can find everything from the website, the blog, and things of that sort. There's actually one about the automatic auctioneer and how it uses Carbon DeFi, or it's able to achieve these things using Carbon DeFi. um But this is where you'll find all of the new features being added, all of the new deployments, the new licensees that are being announced.
01:14:33
Speaker
um So yeah, definitely carbondefi.xyz would be the the best place along with the Twitter. and then join the community. you know I mean, on Twitter, we're always like interacting, but then on Telegram, it's kind of fun too because we'll run simulations and and things of that sort and kind of compare what are the biggest narratives right now? Is anybody trading this? Take two unlikely tokens that you wouldn't normally be trading and kind of run a simulation. So it's nice to be interacting with others that are creating strategies and and using the features you know that
01:15:09
Speaker
the way that they were made to be used, you know, with the orders and the simulator. So yeah, Telegram as well. Yeah. And that's, it's really important ah to have that community aspect of it because people learn from other people. So to have a community of, you know, people interested in in trading or experimenting with it and sharing their results, you know, super useful. And and that's a cool thing. um Thank you guys for the conversation. I think, I think this was awesome. And I would love to do this again sometime, maybe check in next year or something and see what other cool things you've built. That would be wonderful.
01:15:45
Speaker
Thank you so much for having us. It's been great. and Have a nice rest of your day. Thank you, everybody. You also. Thank you. Thanks, guys.