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#16 DeFi Trading and Token Management with Rigoblock creator Gabriele Rigo | POT: The Cryptocurrency Podcast
54 Plays9 months ago
Gabriele is the creator of Rigoblock an on-chain protocol for asset management, aiming to democratize the trading and investment landscape. The platform empowers aspiring traders to deploy DeFi strategies swiftly and cost-effectively.
Rigoblock facilitates the creation of "smart pools" - smart contracts that hold tokens and interact with external applications, ranging from decentralized exchanges to governance and staking applications.
One of the unique features of Rigoblock is its ability to build a publicly verifiable track record for traders, enhancing transparency and security within the DeFi ecosystem. It abstracts the complexities of token approvals, mitigating the risks associated with token mismanagement and approval exploits, thereby safeguarding trader assets.
Rigoblock can be used by individual traders willing to explore the DeFi world of trading, and even by institutional investors that can operate a pool where users can deposit their funds.
From Traditional Finance to Crypto Innovation
Gabriele's journey into the crypto was fueled by the value of Bitcoin as a hedge against monetary inflation, eventually leading him to Ethereum for decentralized applications. His background in hedge fund trading and risk assessment laid the groundwork for developing Rigoblock. The platform's inception was driven by the vision to leverage Ethereum for asset management, a vision that required navigating the young ecosystem of Solidity development and decentralized exchanges.
Rigoblock's Governance and Security Model
Rigoblock is a community-driven ecosystem governed by its users through the GRG token. This governance model ensures that the protocol evolves in alignment with the collective interests of its stakeholders, from approving new applications to overseeing protocol upgrades. A nuanced governance mechanism balances innovation with security, allowing pool operators to opt into upgrades while safeguarding their assets against potential governance attacks.
Rigoblock opens up new paradigms for asset managers, enabling both manual and automated management of pooled assets. The platform's design eradicates the traditional fee structures, replacing them with a performance-based reward system driven by the GRG token. This model incentivizes pool operators to enhance the protocol's security and their pools' performance, creating a win-win situation for both managers and investors.
As the DeFi landscape continues to evolve, so does the conversation around security, trust, and adoption. Gabriele envisions a future where DeFi's inherent transparency and verifiability foster a new era of asset management, but acknowledges the ongoing challenges in completely eliminating trust from the equation.
This podcast is fueled by Aesir, an Algorithmic cryptocurrency Trading Platform that I helped develop over the last 2 years that offers a unique set of features.
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Transcript
Introduction to Rigoblock and Cryptocurrency
00:00:00
Speaker
had a section which was called, back in the day it was called fund management I think. Their interface would recognize if you had a Rigoblock pool and it would allow you to connect and to trade directly there.
Andre's Podcast and Crypto Background
00:00:11
Speaker
Basically what you saw was a different portal but the order book was
00:00:25
Speaker
Hello and welcome to Proof of Talk, the cryptocurrency podcast where we invite leaders and builders into the space to come on and talk about their experience in the industry as well as the projects and products that
Rigoblock's Asset Management Solutions
00:00:35
Speaker
they've been building. My name is Andre and I've been in the cryptocurrency space since 2017. I've also helped co-found algorithmic crypto trading platform ACR that enables users to quickly and easily automate their trades while managing the risk. I'm here today with Rigo Block founder Gabriel. Nice to have you, man. How are you doing? I'm doing great. Thanks, Andre.
00:00:55
Speaker
Great to be here.
AI in Smart Contracts and Ethereum's Future
00:00:57
Speaker
Yeah, great to have you. I think there's like a really interesting, Rego block is like a really, really interesting solution that I want to hear more about. I did a bit of research beforehand. So, and we spoke a little bit beforehand as well. So I have a bit of an understanding of it, but I kept most of my questions, you know, kind of for this recording, just to get a real feeling of what it's like and for you to walk me through this process and your tool.
00:01:26
Speaker
But first, I just wanted to say I was reading about Vitalik's new proposal to have AI based code audits for smart contracts. And I thought that was super interesting, especially coming from Vitalik. I don't have a specific idea on that, just generally speaking.
00:01:51
Speaker
If you see just now the Cancun hard fork is upcoming in a few weeks and there's this big upgrade of transient storage is one of the upgrades that is kind of promising for reducing the gaseous on Ethereum and their tools as well.
AI's Role in Real-Time Code Auditing
00:02:12
Speaker
And basically, already that has sparked a lot of controversy. And so yeah, I'm curious to see what AI can do in this field. I think it can do a lot in regards to code auditing in Kubernetes security.
00:02:30
Speaker
but the human hand is kind of always, human touch is always kind of needed to find you on the very specifics of the alien.
00:02:44
Speaker
Yeah, I think having a human override or something or a confirmation, it's definitely needed. But I think an AI could just learn in real time what's going on in that contract, what's happening with that code base, what are the new features or the new code that's coming into that code base.
Gabriel's Early Experiences with Solidity
00:03:03
Speaker
And would that add any kind of... You would immediately know if that adds a vulnerability or not. And I think there's...
00:03:09
Speaker
like you said, a lot of a lot of power that AI can bring to this. I was thinking way before this that AI actually, it makes perfect sense to have some kind of LLM or some kind of AI that's aware of the state of the chain, like, you know, like a ghost in the machine, if you like, something that's aware of everything that's going on on the chain. So you would be able to know if there's going to be a fraudulent transaction going on or you'd be able to detect things in real time as they happen.
Gabriel's Journey into Cryptocurrency
00:03:39
Speaker
I started coding in Solidity very early on. And back in the days, like the whole testing, unit testing framework was non-existent. And now we are at the point where we have automated testing all around everywhere.
00:04:01
Speaker
And so we can get like full test coverage on code and stuff. And so that's like pre-production. So having also tools that have monitoring production. Yeah, that's totally cool. Yeah. Is your experience in development, does that start before you got into crypto? Well, yeah, I mean, I started my career in a hedge fund.
00:04:27
Speaker
as a phone trader and so basically I was already I had already developed the developing models for trading risk assessment in the past with with the Rego block yeah I mean actually very early on
00:04:55
Speaker
So I got into crypto because of Bitcoin, first thing first. I was first attracted to it as the idea of
00:05:08
Speaker
store of value somehow.
Early Ethereum Development Challenges
00:05:10
Speaker
So something that would not be depreciated by massive quantitative easing and money printing. So that's how I got into cryptocurrency in the first place. And then there was the big promise of Ethereum. And I realized that I could
00:05:31
Speaker
that actually asset management, which is the field I was working in, could be implemented on this new technology that was not yet existed. So at the beginning, I realized that there were no developers, not so easy developers. And so I started working on the first prototypes and from
00:06:00
Speaker
lucky enough Solidity in as a framework is not so much difference from other Python like
00:06:12
Speaker
programming languages. Like any statically typed language, it's kind of similar to maybe like C sharp, a bit of Java in there, stuff like that. Yeah, it was not difficult to learn. It was not difficult to also cooperate with the
00:06:31
Speaker
peers in the community, it was very easy to get in touch with everybody. Basically, back in the day I wrote an interface contract in Solidity, which was a Solidity translation of the
00:06:51
Speaker
viper smart contract for the original ethereum proof of stake implementation and beta distributed and commented it so it was like still to the day today it's it's easy to interact with everybody back in the day it was like a very
00:07:09
Speaker
tiny bunch of developers who were trying to build things. Yeah, it was a small team. It was a small team. I actually had a chat with one of the core developers of Ethereum back in a day, back in 2013, 2014, when they were just starting out.
00:07:28
Speaker
And the plan was that they were going to have multiple development teams for different languages.
Evolution of Rigoblock from Drago
00:07:35
Speaker
So right now, the most popular client is the Geth, the Go client for Ethereum. But at the start, there was a C++ client. There was a Python client that Vitalik wrote and the C++ client that Gavin Wood wrote. But Ethereum had some financial trouble. So the C++ and the Python client had to go.
00:07:56
Speaker
And the only team remaining was like the Go team, like marketing went and everything right out. So it's interesting to see how that happened. So when you got into crypto, when did you start learning solidity at which point?
00:08:14
Speaker
Basically when it was released it was right after frontier there was like Some some documentation coming up and there I started I don't remember exactly the year because like time flies it's now almost eight years and and Yeah, it's It was
00:08:43
Speaker
long long time ago. I don't remember whether 2016 or 17 because Ethereum was released without smart contracts first so you could only play around with but but
00:08:57
Speaker
there was no real blockchain to deploy smart contracts to. But basically right after it was possible that a few months we got the first prototypes and then we got a different iteration. So we got like the first protocol out in 2018, late 2018.
00:09:19
Speaker
And then we got the second protocol out about a year ago. Right. That's for Rigoblock. Yeah. Yeah. Yeah. Yeah. Rigoblock actually at the beginning, it
Rigoblock's On-Chain Asset Management Protocol
00:09:30
Speaker
was called Drago. So, okay. And it has, it had, I think I saw that in the white paper. Sorry.
00:09:39
Speaker
Sorry, I think I saw that in the white paper. You did have used the name. Yeah, it's still there in the terminology. And it was this little drag on the very first interface. And then we decided to give it like a different name because it was, well, I mean, it was before the reference. So
00:10:07
Speaker
Right. It probably wouldn't even have been such a bad name. It's not a bad name. I like it. Sounds pretty cool. Yeah. So let's, do you want to give like a high level overview of, of what Regoblock is and kind of what is the issue? What is the main problem that is trying to solve? Yeah. So basically Regoblock is a protocol for on-chain asset management.
00:10:31
Speaker
It allows aspirant traders to deploy their trading strategies in no time at basically zero cost. That's the very short description of the project. What it does, it provides a framework
00:10:52
Speaker
for a user to deploy in their smart pool, which is a smart contract that holds the tokens and interacts with external applications. So this system is preset to interact with decentralized application, which are also today, decentralized exchanges, governance application, and staking applications.
00:11:16
Speaker
And it's kind of on top of allowing a trader to build a track record, a publicly verifiable, having a publicly verifiable portfolio and all the transactions, of course. So Madoff style scams cannot be implemented because everything is public.
00:11:43
Speaker
also allows traders to have a safer experience with decentralized applications because it abstracts the approvals so when tokens are in the pool they can get in and out of the
00:12:03
Speaker
of the smart pool without the trader having to manually set the approvals, which is like a big problem on EVM because tokens get lost and also approvals can be abused. And so the protocol takes care of that and it's preset to interact with
00:12:34
Speaker
Approved applications. So there's a governance that is based on the token. So there's a community based governance that can add applications, no applications, no extensions.
00:12:50
Speaker
to the Rigoblock protocol. Yeah. Okay. And that's your own token that governs this. The Rigoblock protocol is formally owned by the GRG, which is the protocol token holders. Technically, more specifically the active GRG holders who are the stakers. So GRG stakers,
00:13:22
Speaker
actually govern the protocol upgrades, so the addition or removal of extensions, basically.
Smart Pool Structure and Governance
00:13:34
Speaker
And a few others. Okay. Yeah. So when a new extension, when someone wants to build a new extension, then does that go through an approval process and people, nodes vote on whether that extension should be allowed on the market or not?
00:13:47
Speaker
Yeah, so basically the all smart pools in RegoBlock operate the same way. The governance, so there's some fixed parts and moving parts. So the fixed parts is like the pool implementation. The pool implementation can be upgraded by the governance in order for having such an upgrade.
00:14:15
Speaker
the governance must approve so there must be an on-chain vote and has to have qualified majority so two-thirds of the voters must approve in favor of an implementation approval and then the pool operator has to accept it so every single pool operator has to accept an implementation
00:14:42
Speaker
upgrade. So if they don't want to migrate to the latest, they can stay on the one they are. So this is a safeguard mechanism. So if there's a rogue attack on the governance, then the
00:15:01
Speaker
the smart pools tokens are not at risk. It's just the pool operator must accept the upgrade. Whereas for the extension, so the external, so that is basically for the core. The core is supposed to be stable, not changed very often and implement some core.
00:15:23
Speaker
rules like minting, learning the tokens of the smart pools and a few other administrative tasks of the smart pools. So everything that is not related to interacting with external applications. When it comes to interacting with external applications, then the governance, basically in order for the governance to add
00:15:48
Speaker
or for a user for adding a new application, they must make a non-chain proposal, the governance must accept this new adapter, then there is a process of mapping the methods of the adapter
00:16:10
Speaker
So it's a technical, but it's a way so that the smart pool knows where to route the call. So when he receives a call, it needs to be forwarded to the external application. So we always have these extensions that make
00:16:33
Speaker
that create a filter between the protocol and the application.
Secure Token Handling in Rigoblock
00:16:37
Speaker
So there is also some sanitizer, sanitizerization of parameters.
00:16:44
Speaker
in case something goes wrong. And that's where we add the increased security for the user. For example, Rigoblock sets the approval for a token on an external application just for the duration where the approval is required. And when the transaction is finished, the approval is reset. So the
00:17:12
Speaker
Basically, the user doesn't need to set the approval every time, doesn't need to leave the approval open and can safely interact with the external application.
00:17:24
Speaker
Right. And that would be, in that case, that would be the pool operator who's effectively the asset manager. Is that right? Yeah. If he operates as an asset manager, yes. Yes. Yeah. So I wanted to go a little bit through the idea of asset managers and how they can use RegoBlock. Like what would be like a practical application of an asset manager? So let's say there's someone creating a pool.
00:17:51
Speaker
that then people start putting funds into this pool and then the asset manager will obviously manage these funds. Can these funds be managed manually? Can they be managed automatically or is there a scope to do both?
Role of Asset Managers in Rigoblock
00:18:05
Speaker
Yeah, they can be both because it's discretionary smart pools. So basically the asset allocation, currently we have a token whitelist. We're working to
00:18:21
Speaker
For an upgrade, so I hope that by the time this interview was public we have At least an RV IP an improvement proposal Public so it can be discussed as well public on the open and
00:18:40
Speaker
to remove the whitelist requirement and allow potentially any token to be swapped within the pools. But right now we have a token whitelist. The process of whitelisting a token is very simple. As long as it's a reputable token, we will add it. And when a pool already owns the token, then of course they
00:19:07
Speaker
they can always sell it for their base token. But basically it's, so what was the question?
Incentives in Rigoblock's Smart Pools
00:19:20
Speaker
So like what happens in the case of, let's say that I'm a fund manager on Regal Block, I have my own smart contract in my own pool and people come putting money into the pool.
00:19:32
Speaker
When do they see returns or like how are rewards being distributed from the pool, from the pool manager? Yeah, okay. So basically the smart pools don't have fees. So in traditional asset management, you have investment funds, so it's a little bit different, but the dynamics are similar. They have fees, they have management fees and performance fees, and ReoBlock doesn't implement fees.
00:19:58
Speaker
It does implement an entry and exit markup that goes back to the pool. So it's to protect the pool from
00:20:10
Speaker
front running and back running of holders. That's it. So technically, the smart pool itself gets rewarded by participating in the staking system. They don't have a pool operator, like a pool doesn't have to participate in the GOG staking system.
00:20:31
Speaker
A pool can operate on Rigoblock with no fees and no cost forever. So basically we don't make money on that. A pool has an incentive to allocate some of its capital to staking, so to increase the security of the protocol. It's in its own interest because by increasing the security of the staking system, it increases the security of
00:20:56
Speaker
as a whole, so also the management of extensions and upgrades, also pools that have stake, have an incentive, basically have a possibility to vote on the decision, so they also own the protocol, and there's a rewards mechanism, it's based on a constant inflation, so there's a
00:21:20
Speaker
maximum 2% of total of total supply per year which is minted on a continuous basis on a bi-weekly schedule that is allocated algorithmically to the pools and the pools operators and of course the stakers because there's a system where
00:21:42
Speaker
A pool participates in this reward system based on how much stake they have in the system and they compete with the other pools. So the one that has more stake gets more reward. This is the principle.
00:21:59
Speaker
Right. So that's for the pool that that's for the pool operators themselves. But I'm talking in terms of the the the people who put money into the pool. Yeah. If the pool is like a hedge fund, right? Yeah. Then a hedge fund pays back its, you know, its stakeholders. How does the fund manager pay back its stakeholders in the smart pool? So there's two things that that
00:22:25
Speaker
I would like to highlight here. One is that crypto is very personal. So what I've noticed working along is that it lowers the barriers to entry to everything. And so normally people
00:22:43
Speaker
Well, people in traditional finance, they get to, they buy investment funds because it's easier, simple, and their core activities are something else, so they just delegate, and it's easy. And I've seen that it so happens also on crypto that people want to delegate capital to other people.
00:23:07
Speaker
So, well, because it, because, for example, because now the barrier to zero, because your cost for setting up a poor, I think it's potentially like it will be much more an individual thing rather than
00:23:25
Speaker
managing investment for third parties. But say someone is very good and can attract capital, right? So, holders, users, deploy their capital to a smart pool. Right. Yeah, basically, they get the appreciations of the underlying tokens within the smart pool without paying fees.
00:23:48
Speaker
So it's kind of a win-win because the pool operator can make money on his activity based on the value of the pool and on how much he participates in the staking system, in incentive system.
Delegated Staking and Pool Rewards
00:24:07
Speaker
And the more capital he has, the more capital he can allocate to the staking system. So the more power he has for farming GRGs.
00:24:21
Speaker
So he makes more money and the users at the same time they actually get the return, the performance of the pool without any money being taken from them because they don't
00:24:40
Speaker
they don't take these, actually. So of course. And yeah, alternatively, the alternatively, the holders can can we have a delegated staking system. So basically, users can also stay to a certain pool because he's very, he has very high staking rewards.
00:25:02
Speaker
And there they can kind of participate in the performance of the indirectly participate into the performance of the pool operator. So it's like two ways for that offers that they both have trade offs in terms of like how much
00:25:25
Speaker
or security you want to have. Right. So when you say that the second one, they can participate in the rewards of the pool operator, what do you mean by that? Well, basically, pools compete with other pools, with the other pools in the system for farming the rewards. So there's a fixed amount of rewards and they compete. The more georgistic they have,
00:25:48
Speaker
the more they make. But maybe there's a small pool, but very promising. And basically they don't have much stake, so they can basically, they can attract the GRG stakers. So the stakers from the market, existing GRG holders or stakers, they can attract so that they can
00:26:17
Speaker
attract more stake to their own pool by either producing higher yields by having more power or increasing the reward percentage that they share with the delegated staker. So every delegated staker receives 30% of the pool operators rewards minimum by rule.
00:26:46
Speaker
It receives 50% of the pool. 30. Oh, 30. Okay, got it. That's a lower bound. And then the pool operator can increase how much he's sharing with the community. And so that's a way to attract capital to the pool.
00:27:05
Speaker
And in this context, even a smaller pool that is emerging can attract capital and have higher yields.
Staking Strategies for Traders
00:27:18
Speaker
OK, yeah, that makes total sense. So that's all when it comes to pull operators that stake funds to earn JARG tokens. But what if a pull operator is more like a trader? What happens in that scenario? I mean, it's logically a pull operator.
00:27:37
Speaker
will not allocate 100% of the capital to the staking system. Basically, the idea is that we call it proof of performance. The GRG amount that a pool is taking is like a proxy for the performance. So it's not really, we don't calculate the performance for each pool, but we allow the GRG to be
00:28:02
Speaker
to be digested by the pool to be considered a proxy of the pool value. So yes, it's possible that the pool takes everything, but generally speaking, a pool will have like a small percentage one too.
00:28:19
Speaker
5% of its capital to the GRG staking system or whatever it deems appropriate, even 0.1%, if it deems appropriate that it helps. Basically, there's an incentive for the trader to stake when he's holding GRG. Otherwise, yeah, he can just trade in and out and the holders of the pool would get the performance of the pool.
00:28:47
Speaker
That's it. Obviously the, so it's in the, in that context, a regular block as a protocol doesn't, doesn't generate, it doesn't, doesn't generate value for, well, it kind of generates value always because there's some TVL extra to be in the protocol. It's just doesn't create like immediate,
00:29:17
Speaker
value to the staking system, but it's fine. I mean, if you want to operate a pool and you have your own
00:29:24
Speaker
clients and you don't want to participate in the staking system, you can do that just fine. You don't have to pay fees and the users don't have to pay fees. The idea is that we provide an incentive for pool operators and pools to stake and to attract stake, but if someone doesn't want to do that, it's totally fine.
00:29:52
Speaker
Right. And I think that just makes that make sense. So what are the incentives then for pool operators to stake? What are the rewards that they're getting in percentages? Yeah, besides increasing the security of the protocol, which for smaller pools, of course, it could be marginally irrelevant. It's the staking reward themselves.
00:30:19
Speaker
So basically because you compete, there's always UV. Like is there a fixed amount or a fixed reward percentage or is this dynamic based on how much they contribute?
00:30:36
Speaker
Yeah, it's basically there's a fixed amount of tokens that we have produced. And these are used and allocated. So it depends on it's like, I mean, it's obviously it's not proof of work. It's not proof of stake. It's a different system. It's a staking based incentive system. But it's kind of the similar
00:30:56
Speaker
concept where you have a fixed amount of reward that gets regularly minted and some, according to, they are allocated according to some rules. So basically it's, if you have, there's
00:31:16
Speaker
say there's 5000 GRG minted for epoch time. Then these get allocated to the people that contribute to the pools that contribute to the system and their stakers. So basically it's pure mathematics. I mean a pool operator will decide whether to
00:31:43
Speaker
participate or not based on their own calculations. Because it's not linear, the smaller pools have an advantage, an edge over the bigger ones. So technically, assuming that the gas fees do not impact the return,
00:32:11
Speaker
the yield because on Ethereum sometimes they can be high so for smaller steaks obviously they can they can eat out the the rewards for tiny steaks I mean really small but
00:32:26
Speaker
Generally speaking, there will be so I don't want to name yields or measure numbers or estimates or anything because I don't think it's fair.
Liquidity and Future Integrations
00:32:38
Speaker
But it's basically the pull operator, according to their calculations, they will decide whether it's convenient to them or not.
00:32:49
Speaker
That makes sense, that makes sense. So what are then some of the other features of Rego block? What are the things can people do with on Rego block? Yeah, I mean, you can interact with, yeah, top indexes, you can trade. And so you can trade on Uniswap to try and get through the, through Uniswap v2 and v3. So you have like the,
00:33:17
Speaker
best X liquidity available. And you can also create liquidity providing strategies. So you can provide liquidity to pairs on Uniscope v3 and generic yield on your tokens. So you can do that on volatile pairs or unstable coins. It's up to you.
00:33:46
Speaker
you can obviously stake on GRG, on the GRG staking system, you can participate in Rigoblock governance. So in the documentation, there's a list of the implemented applications, supported applications. It's still short, but the basic idea is that it's being built on demand, based on demand. So when there's demand for
00:34:15
Speaker
for a feature, then we will work to make sure that it gets implemented. For example, now, I mean, it's been a relatively quiet period of time due to the Ethereum Cancun fork. Everybody, every project seems to be kind of holding, I mean, there's been launches and stuff, but everybody seems to be waiting for the hard fork and then deploy like Uniswap before and then other
00:34:46
Speaker
protocols, so we plan to support Uniswap before as soon as it's technically possible. There's also a plan to integrate
00:35:09
Speaker
aggregators so that liquidity can be pulled from multiple sources. It's a little bit trickier. And so that could be still be delayed a bit. We see how because now Uniswap still had like 60, 70 percent of liquidity volumes. So it really depends on how urgent it is to improve
00:35:38
Speaker
the liquidity depth to recover pools and and what the resulting slippage improvement will be because if you spend two months or six months but no six months it's exaggerated but if you spend three months for an integration that brings up
00:36:02
Speaker
5% price improvement, like 5% price slipperage improvement, it's not worth it. It's probably not worth it. Generally speaking, there's a lot of things that are going to happen after the... I'm talking Ethereum community-wise, like projects and stuff, after the hard fork,
00:36:32
Speaker
And also we are going to have a few upgrades. For example, one of the things that I've been like, it's also written in the white belt, but I've been looking for it since Ethereum existed is like on Chain Oracles and Uniswap before is a great venue for creating on Chain Oracles. And so.
00:36:59
Speaker
basically there, our nav estimate, like the value of the pools, which now is decentralized in the sense that we don't intervene in that. That will be fully automated, like will be estimated by like through on chain. I mean, it's totally reasonable to expect that that will be, that Uniswap before,
00:37:26
Speaker
price oracles will be effective, an effective source of price truth on chain.
On-Chain Oracles and Price Feeds
00:37:38
Speaker
So I have kind of big expectations for that. And yeah, I've made a bit of research before that. A few weeks that
00:37:54
Speaker
You know, you need backrunning protection for rogue Oracle updates, but I mean price updates, but generally speaking, it's very, very promising.
00:38:12
Speaker
So what makes what makes an on-chain oracle special? What makes the Uniswap's oracles special? Well, you know, like, say the alternative is just one. I mean, you have a few, but it's really just one. It's changing. So if you want to have a non-chain price, you need to use a non-chain price. But it's currently it's changing.
00:38:40
Speaker
Changing aggregates from centralized exchanges and decentralized exchanges, right? So right's like a bunch of like How many they can get but they don't support all tokens. They just support the mostly with tokens like on and on tools Now we have ethereum and one we have tools and so on ethereum as tools there might be
00:39:07
Speaker
L1 bridge tokens that are liquid on L1, that are still liquid on L2, but are not supported on L2. So you want to support those, how can you do that? You cannot do that in a decentralized way, obviously changing his centralized service. So it might have downtime. And also there has been price manipulations. I mean, it's a reliable source of
00:39:36
Speaker
The basic idea of Uniswap Oracle is not that it's a Uniswap exchange.
00:39:45
Speaker
Through arbitrage, all on-chain sources get, how do you say, get... They all level. They all... Yeah, of course. That's the nature of arbitrage, making fair markets and everything. As you see, I'm very excited about that. It's kind of like one of the missing pieces in our white paper. When we started, there was...
00:40:10
Speaker
I think Rego block in some ways was started in a wrong way, because when we started, we started with the idea that eventually by the time we developed, there would be DEXs, there would be oracles, there would be everything. And then there was none. In fact, the first protocol we launched, it was integrated with a 0x. Back in the day, it was, so it's now original .fi back
00:40:40
Speaker
was the diversifier and initially was Ith PNEX from Ith PNEX.
00:40:44
Speaker
And so we integrated the order book from Bitfinex or through Bitfinex. And that's how we got to actually have the possibility of executing trades because back in the day, there was no decentralized exchange.
Early Decentralized Exchange Challenges
00:41:00
Speaker
So you did it through a centralized exchange. You did it through the order book of Bitfinex. Yeah, I mean, it was a pretty cool integration that Will from Diversify, Norino, did find the whole team.
00:41:14
Speaker
Basically, they were pulling liquidity from Bitfinex, so the order book. And the user, they had their own portal, which was called, I don't remember what it was, Bitfinex or Diversify at the beginning. So they had their own portal and the user would go there, execute a swap on chain. And so with his on chain wallet,
00:41:43
Speaker
right and he would settle uh with uh if phoenix and if phoenix on the back end would settle with uh
00:41:55
Speaker
with its own order book. Yeah, exactly. So the prices would be from Ithinx's order book and then they'd be settled on Ithinx. So there would be basically very little slippage, just what you see on Ithinx. Actually, it was the big Ithinx order book. So when you were trading, we did a pretty good integration back in the day. So we had a section in our interface where you could actually trade it
00:42:22
Speaker
On, um, on with the, if Phoenix APIs and also on, uh, if the next, uh, you had a section which was called, uh, back in the day was called a fund management. I think that you would, it would, their interface would recognize if you had a regular pool and, uh, it would allow you to connect and to trade it directly there.
00:42:46
Speaker
That's pretty cool. Basically, what you saw was a different portal, but the order book was the actual big Phoenix portal, so a centralized exchanger, full-depth order book. And back in the day, it was a big deal because there was no real decentralized exchange. I mean, yeah, you had the early AMMs
00:43:09
Speaker
But they were not near close to, like, Uniswap and, you know, like... Well, there was very little liquidity on those at all, if any, like
Token Whitelisting and Security Strategies
00:43:20
Speaker
people were not... They were not ready for it back in the day, I think. Yeah, yeah, yeah.
00:43:25
Speaker
Yeah. So basically we started with this idea that everything would exist and then nothing existed. We were there. We were lucky that we partnered with this great company and we delivered. And then
00:43:49
Speaker
there was Uniswap, the iterations, so I think we integrated Uniswap v2 initially because there was no v3, when there was v3 we integrated like through smart routing v2, v3 together so and obviously I mean that's really cool because you can trade
00:44:10
Speaker
tokens that are not necessarily supported by centralized exchanges that might be liquid that might be I mean if you want to spot opportunities that's why we have a whitelist but we want to remove the whitelist because I mean how there's a time plug between the time that we are requested to the token and the time where we are right
00:44:32
Speaker
And also there might be some controversy, but as by removing that, I mean, and the best opportunities are always the ones that are most overlooked. So the one that's true. That's I totally agree. But I can see also why it's controversial, because like some
00:44:53
Speaker
like it may be maybe you want to have the security of just having a whitelist but at the expense of at the expense of sporting less opportunities would it at all be possible to let pool managers choose whether they want to use a whitelist or not because that could be up to them yeah no i mean we're gonna remove it so basically as soon as we can deliver a stable
00:45:22
Speaker
how do you say, extension for on-chain prices through Uniswap before, we're going to remove it. Because we're going to just check that the order code is valid. As soon as the order code is valid, it just needs, basically, we're going to allow any token. I mean, the protocol is going to allow any token
00:45:46
Speaker
uh just uh based on the on the fact that there is a non-chain price fee. Okay and is that enough for it to be trusted? Well yeah because we can always we can do the checks in um I mean there are multiple reasons why we implemented our artists. First it could be a rock token so uh you know we we wanted to avoid the the idea that uh that uh
00:46:16
Speaker
a pool operator can run away with a rogue token. And then we wanted to avoid the potential side effects of interacting with external smart contracts because if a rogue transaction is encoded in a way that it then gets rooted not to a token but to any contract, then
00:46:52
Speaker
It's totally possible that it gets used to perform an attack. I mean, it's an edge case. We cannot reproduce, but we wanted to avoid that kind of scenario. And so we needed to have a way to verify that a token was legit, but then
00:47:15
Speaker
when you create a Uniswap before pool, like an Oracle, then in some ways you give proof of legitimacy to a token. You also have to provide some liquidity. And so, yes, it's possible, but I mean, there's, on one hand, we want to be very good guarantees to people that operate with Rego block. On the other hand, there are ways
00:47:43
Speaker
through which a pull operator can always abuse their users. So we basically, what we do as a philosophy with RegoBlock is because we cannot prevent that kind of abuse.
00:47:58
Speaker
We gave a transparency through one chain verifiability. So everybody is able to get to the same conclusion with the same data. And it's basically a way to spot problems early on, even though that arguably could be tricky or hard, but I mean, that's one of the properties.
00:48:24
Speaker
and in second we want to make it explicit so when it could be that that a trader purchases a rogue token by accident it could be that it's how you say it's
00:48:48
Speaker
that there is actually, that what he does is not, what a pool operator does is not what he is intended. I mean, not what he wants. So that's what we want to prevent. Because, for example,
00:49:10
Speaker
one way to abuse the users would be to be the liquidity provider of a Uniswap pair, for example, and then trade in and out of the pair with a fee and exhaust the pool's capital just bid by executing a huge number of swaps. So, I mean, these are ways that there is no way to prevent. You cannot know that someone on the other side is
00:49:40
Speaker
front-back running, or you can do flashbot attacks, you can do any sort of slippage attack or swap fee attack on your users.
Security Challenges and DeFi's Future
00:49:51
Speaker
That's why probably I think it's something very personal asset management and
00:49:58
Speaker
Yeah, I mean, we are not able to remove trust from this part entirely. It's not actually our mission to remove the trust
00:50:16
Speaker
Basically, our mission is to minimize in an efficient way the trust that the user has to put in a pull operator and the trust that users have to put in ourselves as a core developer of the protocol because the protocol has no interaction and no control.
00:50:38
Speaker
Right. So that's a good point because I wanted to get to that and to the security aspect of it. And what you've said that there's no kind of guaranteed way to ensure that a pool operator will do what they should do. But
00:50:56
Speaker
Are you able to at least kind of make it easy or accessible for people? Like if someone does what you suggested, they trade in and out of the pairs, is that easily accessible or easily visible for users to see that something suspicious is going on in that pool? Well, at the interface level, you could, but I'm afraid there's not because you have to actually look, I mean,
00:51:27
Speaker
maybe AI tools, like we, that's where we started the, yeah, you need some monitoring tool that can detect. Yeah, actually, I mean, AI would be perfect in this context, even though I don't, I don't use AI. I mean, it's, you could actually train a model to detect suspicious activity and then highlight it.
00:51:54
Speaker
So yeah, because we don't do censorship, right? So we don't, at the protocol level, we have no way to stop activity of a specific pool, activity of a specific pool. And yeah, and also these attacks are very subtle because you might think, oh, there's a huge front and back running
00:52:22
Speaker
or there's a huge flashbot attack, or there's a huge slippage attack. I mean, yeah. But actually, even if you cover those cases, which are mostly covered, you always have those marginal, it's where the, yeah, exactly. I mean, I think you got the point.
00:52:49
Speaker
you take a small fee, but many, many times, and then eventually you deplete the capital. So in this context, there's no way to guarantee that.
00:53:09
Speaker
There's no rational way to do that. You could do that, but I mean, it would increase the gas cost of operating the pool and it would not make much sense because, I mean, possibly, yeah, there's definitely something that we haven't thought about and possibly solutions. Yeah.
00:53:26
Speaker
Yeah, I mean, there's new emerging technologies coming every day. There's things that weren't available when you guys started a protocol on things that weren't even available two years ago, at least not at the level that they are now specifically AI. But then what's the like, if it is if there's always a risk in DeFi, and there always is for the time being, what makes do you what do you think makes people okay to take that risk in DeFi?
00:53:56
Speaker
If you ask me, everybody should have their own smart pool. Okay. Because that's a way that you kind of, also because there's like so much information available. That's what I love about Creep Toys. Especially the Ethereum community. Ethereum and all the side chains, layer tools. It's like a lot of work in open source. And this philosophy is broader.
00:54:26
Speaker
So basically also having all these
Mainstream Adoption of DeFi
00:54:30
Speaker
publicly available track records, it can help you, you know, like you, first of all, you can have people that can back their words, like saying, I'm a good trader with facts. And then you can kind of follow them in some ways, replicate the strategies or so I don't
00:54:57
Speaker
I think that somebody should deploy capital to people that they don't know because we still haven't solved this trust. Actually, people that they don't can have a legal recourse against.
00:55:14
Speaker
Right. Yeah. And that's wrong. You know, maybe we are more ahead than what I think. But this is an aspect that was always problematic. And we have implemented ways to efficiently minimize the trust that someone has to put. But, you know, it's
00:55:42
Speaker
It's definitely an open question. Yeah. And it's definitely not something that's at the point of like mainstream consumer adoption. Like most, I think most people in or many people in finance are not actively looking into DeFi because of the risks, you know, associated to that. That's also, I guess, one of the and the lack of regulation. So you have a thriving
00:56:10
Speaker
DeFi community within Ethereum, within EVM, within the cryptocurrency industry itself. But it definitely seems that something needs to happen in order to get that mainstream adoption. Yeah, absolutely. We are still very early on. There's a tons of innovation going on. And with big innovation comes a big
00:56:39
Speaker
vulnerabilities. Yeah, I think this field is going to keep innovating for the foreseeable future. And not everything has been discovered, obviously. But yeah, I understand the skepticism. It's something that we are faced with our work every day, me myself, because
00:57:06
Speaker
You know, like, for example, we talked about Uniswap before, right? So we don't know when, but after Cancun, I think it's still a few months away because from the work I see. But, you know, it could be two or three months. And so because we want to integrate it, we are looking into it. And looking into it, it's...
00:57:32
Speaker
I mean you have hooks this new addition which makes the protocol great but at the same time it
00:57:41
Speaker
it opens a huge surface for attacks. And so like in what way? Yeah, I think Rigo block, for example, in that context could be very helpful because I think especially at the beginning, we're going to limit the way that hooks can interact with your wallet. For example, not allowing hooks to do any extra, like taking any extra tokens that
00:58:11
Speaker
that the call without the hook will take. And this is kind of extra safeguard. So that's kind of where we want to operate, like providing these bridges to external applications, try to make the user experience better and where reasonable, also safer.
00:58:41
Speaker
Yeah, and I think that's an important thing. So I think within the next few years, we're going to see hopefully some more adoption of DeFi.
Impact of Uniswap v4 on DeFi
00:58:52
Speaker
And I guess the important thing right now about DeFi is that people need to understand that it is still very much a Wild West, where if you just jump into it without
00:59:05
Speaker
knowledge or without researching before, you could just very easily get burned. Like it's happened to so many people in the past because of it. Yeah, yeah, yeah. And yeah, and I think and that's where on-chain oracles are also important, you know, like besides when you saw before, I mean,
00:59:24
Speaker
take any on-chain or reliable on-chain price source. I mean, say you want to do, there's been cases, like very notable cases where swap encoded correctly, but with the wrong maximum sleep edge that requested a minimum amount of zero returned resulted in a zero amount returned.
00:59:50
Speaker
So, you know, protocols like RegoBlob can enforce that by rule, that a swap cannot have more than, say, 20% slippage or even 50% slippage. So you just protect for, like, rogue inputs. Actually, I don't remember exactly what the platform was, but it was a platform that had, like,
01:00:16
Speaker
an issue with the with the with the inputs on their interface so and the user was not aware and he sent a transaction and the transaction was rooted and he lost all of his funds and so you know like that's why i think also so for example you see there's a safe you know this safe it allows interaction with
01:00:37
Speaker
any application but it does not make any assumption, it does not make any discrimination against any application that it interacts to. So it's a very good platform but I think that having some
01:00:55
Speaker
ways to filter out what matters to the community of people using a product and then implementing those features. Maybe you lose 30% of the users but you actually make happy 70% of the users and those 70% of the users or even a smaller percentage but basically that percentage of the total pool of people
01:01:17
Speaker
they can actually have a guarantee that they're interacting in a safer way with DeFi. So in this context, I think, to me, a little of matters.
01:01:32
Speaker
Yeah, no, of course. I mean, a hundred percent. Um, well, listen, it's been really interesting to hear you talk about Riga block and about the work that you guys do out there. Um, is there anything that you're planning to release soon that people should know about? Yeah. I mean, uh, soon. No, it's, um, we have.
01:01:58
Speaker
We discussed some things that are relatively novice. I mean, people that are in the charts, they might have understood that. We're going to obviously share some more information.
01:02:17
Speaker
with the community. But we have this process of developing according to the RBIP agenda. And I don't think we have, let me check something coming out.
01:02:48
Speaker
shortly but every everything is public so what we yeah no there's nothing that that can spice up this conversation so i'm sorry about that but to me this integration with the
01:03:17
Speaker
a pretty big deal in general for the community. I mean, think about decentralized lending protocol, a decentralized leverage trading protocol. I mean, all sorts of things you can develop because you have like a reliable chain price fits. So I think it's going to have a big impact in general. It's going to have a big impact on us.
01:03:48
Speaker
And the, and that's probably the, so short term, no, it's like, it's probably gonna take a few months, like. That's still good lead time for product development. That's good, that's a good lead time. That's a good amount of time to get like a nice super useful feature out. And I think that's exciting. Yeah, that is gonna totally make
01:04:17
Speaker
the user's life, the pull-up editor's life is easier because they can have like instant, they don't have to worry about not estimating stuff. And so it's actually what someone is interested in checking the real-time truck record. And so that's kind of goal of going
01:04:44
Speaker
That makes sense. Well, listen, this has been great, Gabrielle. Thanks again for accepting to come onto the podcast. No, it's been fantastic. Anything, any socials or any Twitter accounts or any kind of information that you want to share with the listeners where they can find you, try out the Rigoblock app for themselves.
01:05:06
Speaker
Yeah, but Discord is obviously the preferred way for interacting. So if you want to get in touch, Discord is the way. And then we have Twitter, Rego block Twitter, they can, I mean, send VMs or just reply to a tweet and we're gonna,
01:05:35
Speaker
Fantastic. Well, thanks a lot for that and have a nice rest of your day.