►
From YouTube: Amplifying Consensus Participation with Blockspace Markets by Julian Traversa | Devcon Bogotá
Description
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https://archive.devcon.org/archive/watch/6/amplifying-consensus-participation-with-blockspace-markets/
In order to maximize staking participation post-merge, we need to provide capital markets for blockspace demand.
This can come in the form of Yield Tokenization (e.g. Swivel, Element), blockspace reservations (e.g. Eden Network), or direct exchanges (e.g. Alkimiya), however composable infrastructure is necessary.
With composable infrastructure on the capital markets layer, we can create interesting instruments such as combined staking+lending+options products, and derivative stablecoins.
Speaker(s): Julian Traversa
Skill level: Intermediate
Track: Cryptoeconomics
Keywords: Staking,MEV,Derivatives
Follow us: https://twitter.com/efdevcon, https://twitter.com/ethereum
Learn more about devcon: https://www.devcon.org/
Learn more about ethereum: https://ethereum.org/
Devcon is the Ethereum conference for developers, researchers, thinkers, and makers.
Devcon 6 was held in Bogotá, Colombia on Oct 11 - 14, 2022.
Devcon is organized and presented by the Ethereum Foundation, with the support of our sponsors. To find out more, please visit https://ethereum.foundation/
A
A
Finance
I'm,
technically
the
CEO,
but
I
do
a
lot
over
there
and
today
we're
generally
going
to
be
talking
about
eth2
and
the
way
that
we
can
really
use
D5
products
to
kind
of
amplify,
both
the
Securities
of
the
ecosystem
generally,
as
well
as
just
the
attractiveness
of
what
we
can
offer
in
defy
itself.
So,
to
start
really
what
is
block
space
right
block
space
is
generally
just
a
reservation
of
some
computation
space
on
the
ethereum
network,
for
specifically
the
mutation
of
state
right.
A
So,
generally
speaking,
when
you
try
to
submit
a
transaction,
it's
going
to
require
a
certain
amount
of
computation
and
you
then
must
reserve
a
certain
amount
of
block
space,
of
course,
to
transfer
those
funds
or
whatever
you're
doing
also,
generally
speaking,
right.
This
is
supplied
by
validators
in
eth2,
it's
applied
by
miners
traditionally
and
the
demand
really
then
just
comes
from
purely
user
transactions
or
Arbitrage
or
whatever.
It
might
be
right.
So
yeah
going
towards
demand.
You
see
that,
generally
speaking,
it
actually
is
insanely
volatile
right,
it's
very
difficult
to
predict
demand.
A
There
are
a
number
of
just
confounding
factors
that
continue
to
screw
up
any
sort
of
models
people
have
made
and
really,
at
the
end
of
the
day,
this
volatility
is
fueled
by
mutually
extractable
opportunities.
Right
Whenever,
there
is
volatility
in
the
market
itself,
there's
liquidation
opportunities,
Arbitrage
opportunities,
Etc
Whenever.
There
are
nft
drops
like
that
massive
one
up
to
450
gas
for
an
entire
day
it
just
and
it
screws
things
up
for
really
how
people
must
price
and
create
instruments
around
the
eth2
market.
A
On
the
other
side
right,
we
see
that
Supply
is
kind
of
weird
right.
You,
you
have
an
increasing
number
of
validators
and
this
will
continue
to
increase.
It
really
hasn't
started
to
plateau,
in
my
opinion
yet,
but
on
the
other
side
of
that
right,
the
actual
block
space
within
a
given
block
is
actually
static.
A
So
you
really
look
at
this
and
kind
of
have
to
think
of
it
in
two
ways,
right
and
and
when
it
comes
to
the
factors
of
block
space
right,
you
have
to
look
at
a
number
of
things
that
will
impact
the
yields
of
the
validators
and
how
that
really
makes
the
product
attractive
to
them
right.
You
kind
of
have
to
make
things
financially
incentivized.
A
So
then
the
question
comes
right.
When
you're
looking
at
block
space
in
these
supply
and
demand
factors,
how
can
you
actually
properly
price
these
right
to
start?
Obviously,
everyone
knows
what
base
rewards.
Most
people
actually
don't
know
that
this
kind
of
it
does
shift
depending
on
how
much
demand
there
is
within
a
short
period
right.
A
So
if
a
block
is
full,
there's
more
rewards
in
the
next
block
and
essentially
they
just
try
to
to
move
around
on
this
direction,
but
on
the
other
side
of
this
right,
what
most
people
are
most
familiar
with
is
just
purely
the
fees
that
you
pay
right.
If
you
want
to
get
a
transaction
through
in
a
reasonable
amount
of
time,
you
have
to
pay
a
fee
and
I
mean
the
important
factor
is
really
that
this
has
been
very
clearly
an
increasingly
impactful
mechanism
over
the
past
few
years.
Right.
A
You
cannot
really
look
at
purely
any
of
these
base,
Rewards
or
other
factors
alone.
You
have
to
really
get
abstract
with
your
thinking.
So
on
the
other
side
of
that
right,
you
can
also
disincentivize
negative
activity,
and
this
really
just
introduces
more
risks
for
validators
than
really
people
recognize
at
this
point
in
time.
Right,
there's
an
entire
row
of
of
blocks
that
were
entirely
completely
destroyed
in
the
past
and
realistically
you
end
up
having
to
to
sorry.
A
A
Okay
on
the
demand
side,
or
rather
the
the
apy
that
you
can
earn
in
the
yield,
we're
seeing
increasing
amounts
of
this
not
coming
from
the
traditional
mempool
tips
and
Etc,
but
large
blocks
that
are
proposed
by
off-chain
relays,
primarily
flashbots
right
in
a
row
here
right
you
have
about
20
or
no
I,
think
that's
about
10
within
about
100
transactions.
I
know,
actually
that's
only
about
20
blocks
and
really
these
transactions
allow
people
to
do
a
lot,
and
particularly
right
as
a
validator.
A
A
Generally
speaking,
again,
I
said
that
this
isn't
plateauing,
it's
very
consistent
because
there's
a
certain
amount
of
validators
that
can
actually
be
introduced
per
day
and
at
the
end
of
the
day,
we've
seen
that
over
the
past
year
year,
regardless
of
increases
of
yield
based
on
you
know,
Mev
and
the
eth2
merge.
Validator
yields
have
actually
just
been
diluted
by
50.
If
this
continues
right,
we
will
see
yields
crunch,
but
you
need
to
introduce
more
incentives
for
this
to
continue
right.
A
So
then,
when
you
actually
try
to
apply
this,
you
get
this
massive
formula
where
effectively
you
have
the
base
fees,
the
fees
themselves,
nav
and
tips
and
as
well
dilution
all
really
kind
of
dependent
on
on
demand,
as
well
as
these
time
factors
right.
If
you
know
that
six
months
from
now,
there's
going
to
be
a
five
percent
yield
well,
you
can
actually
predict
things
pretty
accurately.
However,
if
this
is
going
to
be
massively
volatile
over
that
time
period,
you
need
to
actually
do
some
pretty
complicated
stuff
in
there
right.
A
A
What
are
block
space
Capital
markets
at
their
core
block
space
Capital
markets
allow
users
to
take
the
future
yield
that
they
might
generate
on
some
amount
of
block
space
that
they
can
commit
and
sell
that
to
other
people
to
reserve
today,
whether
that's
in
direct
reservations
like
Eden
Network,
whether
that's
through
peer-to-peer
transactions
directly
like
alchemia,
or
whether
that's
through
larger
validator
pools
and
everything
like
Lido
and
Etc,
through
the
stack
of
swivel
and
on
our
end,
I.
Think
that
some
something
that's
very
important
to
note
right.
A
We
split
up
the
components
into
yield,
tokens
and
principal
tokens.
So
if
you
took
a
a
deposit
on
Lido
and
you
instead
immediately
gave
it
to
us,
we
would
take
that
deposit.
We
would
split
it
into
those
two
components:
the
yield
tokens
representing
the
yield
that
would
actually
be
generated
and
the
principal
tokens
representing
your
actual
deposit
itself
and
allow
you
to
actually
trade
those
right.
So
the
most
common
use
case.
There
is
then
well
I
want
to
trade
away.
A
My
yield
tokens
that
future
yield
to
somebody
else
and
the
result
really
is
that
as
a
Staker,
you
then,
are
completely
insulated
from
any
slashing
risks.
Any
dilution
risks
any
volatility,
and
on
the
other
side,
the
party
is
effectively
leveraging
massively
on
the
rate
right.
You
can
either
hedge
your
costs.
If
you
are
a
validator
yourself,
you
can
hedge
variability
or
I
mean
at
this
point.
In
time
rate,
the
gas
price
is
literally
on
on
a
regular
basis.
Down
to
two,
you
could
speculate
that
it
will
increase
over
the
next
year
right.
A
These
are
very,
very
important
dynamics
that
are
standard
honestly
in
almost
any
commodity,
but
for
some
reason
right
now
they
aren't
really
in
eth,
but
then
okay.
There
are
multiple
designs
to
do
something
like
this,
and
the
question
really
becomes.
What
can
we
do
with
these
designs
right?
You
have
a
base
layer
of
staking
to
then
and
continue
to
increase
the
capabilities
of
your
validators
and
in
doing
so
increase
the
safety
of
your
network,
and
the
question
then
comes
in
okay.
A
What
are
the
things
you
are
looking
for
and
really
at
the
end
of
the
day,
it's
composability.
You
have
the
ability,
with
these
sorts
of
maturable
instruments
that
are
designed
about
around
block
space,
to
create
composable
instruments
that
are
continuously
re-hypothecated,
the
first
examples
being
just
composable
principle.
Tokens
right,
I
mentioned
that
this
mechanism
creates
principal
tokens
at
a
redeemable
one
for
one.
This
is
extremely
important,
because
this
is
a
mechanism
that
is
shared
by
about
10
protocols.
A
So
let's
say
they
can
be
really
been
looking
back
at
the
two
different
models:
okay.
Well,
how
can
you
continue
to
build
on
top
of
them?
Alchemia
is
a
very
popular
project
that
is
working
this
direction.
They
take
individual
validators
and
they
ensure
that
those
validators
can
find
counterparties
to
purchase
effectively
those
yield
tokens
these
these
Agreements
are
again
individual
validators
and
they
all
have
unique
maturities,
which
effectively
means
that
they
are
completely
non-fungible.
A
A
However,
right,
if
you
want
to
build
a
more
composable
product,
you
can
combine
these
sorts
of
things
with
Lido,
with
rocket
pool
and
instead
of
having
an
agreement
that
goes
directly
from
validator
to
a
contract.
Buyer,
you
route
that
liquidity
through
a
third-party
validator
that
is
composable
like
Lido,
light
rocket
pool
and
then
through
them.
You
actually
create
this
contract,
and
by
doing
that
right,
you
then
start
to
have
the
ability
to
create
more
and
more
interesting
instruments.
A
A
first
example.
This
is
a
friend
of
our
protocols.
They
they
let
people,
take
those
principal
tokens
and
borrow
against
them
at
extremely
high
ltvs,
around
90
to
95
percent
in
context
that
represents
the
ability
to
leverage
on
the
stake
deal
way
for
way
more
than
anyone
really
ever
would
it
allows
you
to
continue
to
hedge
in
many
directions
and
at
the
end
of
the
day,
it
continues
to
provide
utility
to
these
stakehill
products
that
allow
you
to
make
more
composable
interesting
things.
A
This
is
probably
my
most
exciting
slide
or
the
one
I
like
most.
There
are
really
a
ton
of
advantages
native
to
D5
for
fixed
maturity,
instruments
that
are
not
replicatable
in
traditional
Finance,
primarily
the
ability
to
like
I've
said
re-hypothecate
atomically
and
in
the
context
of
these
maturing
instruments,
a
principal
token.
Let's
say
you
have
in
this
case
a
hundred
or
a
thousand
principal
tokens
maturing
on
December
31st
can
then
potentially
be
used
as
collateral
to
underwrite
options.
Right
in
this
case
again,
you'd.
Take
that
principal
token.
A
You
know
it's
maturing
on
December
31st
and
you
would
find
a
counterparty
that
would
accept
that,
knowing
that
they
would
also
have
that
face
value
at
December
31st
as
well
again.
This
is
a
completely
unique
market
for
D5
right,
try
going
to
a
bank
with
your
bonds
or
with
your
T
bills
that
you
bought
this
year
at
four
percent
right
that
everyone's
bragging
about
and
asking
them.
A
If
you
can
underwrite
some
puts
or
anything
with
it
right,
you
will
find
that
they
will
laugh
you
out
the
door
and
it's
like
it's
just
kind
of
a
joke
to
them
again.
I
think
this
is
probably
one
of
the
more
exciting
things
going
on
right
now.
The
ability
to
take
these
assets
that
really
are
only
traditionally
used
in
one
way
and
to
combine
them
into
these.
These
Structured
Products
that
allow
you
to
utilize
them
further.
A
In
this
case,
specifically,
you
have
the
ability
to
lend
stake,
yield
right,
you're
capturing
the
the
base
yield,
the
Mev,
the
tips,
you're
capturing
it
just
everything
from
eip559,
if
that
was
happening,
you're
capturing
a
lending
yield
on
another
protocol
and
then,
in
addition
to
all
that,
you
can
capture
an
options
View
and
going
further
down
that
rabbit,
hole
right.
Here's
another
protocol
that
is
another
friend
of
ours
where
they
effectively
create
expirable
Futures
products,
it's
honestly
kind
of
complicated
how
they
do
it
right,
but
the
bottom
line
is
they:
they
use
fixed
rate
markets.
A
That
themselves
can
be
backed
by
youth
consensus,
to
create
these
expirable
Futures
and
in
context.
It's
actually
very
interesting
because
the
most
common
use
case
of
expirable
Futures,
in
fact,
is
hedging
options.
So,
at
the
end
of
the
day,
you
actually
are
already
seeing
this.
This
symbiotic
ecosystem,
where
users
are
able
to
hedge
regular,
just
trading
markets
in
both
directions,
while
getting
additional
yield
and
all
of
these
list
liquidity
is
then
routed
through
the
base,
eth
consensus
layer.
That's
that's
the
big
conclusion.
A
I'm
trying
to
to
push
right
is
that,
at
the
end
of
the
day,
composability
is
the
king
thing
or
the
largest
thing
that
you
can
do
to
ensure
that
the
eith
consensus
is
secure
and
beyond
that
ensure
that
users
are
continuously
attracted
towards
these
products.
Right
I
think
that
we
have
an
extreme
opportunity
to
at
this
point
capture
the
attraction
of
people
that
really,
at
the
end
of
the
day,
are
more
oriented
to
Trad
Phi.
A
The
big
statement
that
is
always
said
is
that
you
need
to
create
a
user
experience
that
is
10
times
better
to
onboard
them
from
one
platform
to
another,
and
really
only
these
defy
Unique
Products
will
be
able
to
do
that.
So
yeah,
that's
really
the
point.
At
the
end
of
the
day,
every
derivative
instrument
in
D5
every
pretty
much
everything
other
than
perps
will
be
being
routed
through
eth2
and
at
the
end
of
the
day
as
well.
This
will
all
be
being
routed
through
these
fixed
rate
instruments.
A
B
A
C
A
It's
extremely
difficult
to
honestly
create
any
markets
without
fungibility,
honestly,
we
were
looking
at
creating
swivel,
initially
with
a
sort
of
non-fungible
agreement
similar
to
alchemia.
But
when
you
start
to
do
this,
you
Silo
off
liquidity
and
users
are
no
longer
able
to
compare
kind
of
what
one
other
person
would
do
for
it
right.
At
the
end
of
the
day,
most
pricing
is
actually
rather
subjective
and
you
need
contextual
markets
in
order
to
price
things
right.
A
D
The
distinction
that
you
you've
noticed,
which
is
that
for
these
kind
of
like
splitting
and
like
re-hypothecating
future
staking
yields
kind
of
requires
going
through.
You
know
central-ish
validator
of
some
kind.
Generally
speaking,
is
there
any
way
around
that
like?
Is
there
a
world
in
which
we
can
create
fundable
claims
to
like
individual
homesteakers,
a.
A
I
need
to
hope
that
honestly
Alchemy
is
working
further
in
this
direction.
It's
more
difficult
than
one
would
think,
I'm
sure
right,
because
you
actually
then
have
to
actually
you
have
to
create
the
infrastructure
between
a
validator
client
and
some
dap
and
honestly
I.
Don't
think
anyone
is
doing
that
whatsoever.
Yet
really
it's
going
to
be
a
difficult
problem
for
them
to
solve.
I
think
they
can.
You
know,
create
more
fungible
markets.
A
Would
yes,
that's
the
point
and
when
you,
if
you
split
away
your
ethereum
you're,
not
it's
not
going
to
do
anything!
What
you
need
to
do
is
find
a
counterparty
to
buy
the
the
yield
token.
The
split
away
yield
that
you're
going
to
be
earning
over
some
future
date
right
and
that's.
Why
again,
it's
very
important
to
try
to
create
these
markets
that
are
fungible
in
liquid.
A
Otherwise,
it's
it
becomes
increasingly
difficult
to
actually
find
these
counterparties
and
then
as
well
right,
if
you
don't
have
a
secondary
market
for
anyone
to
sell
anything
on
it's
impossible
right.
So
you
really
need
really
answering
your
question.
You
just
you're
selling
you're
selling
those
yield
tokens
to
another
counterparty
and
that
person
is
going
to
be
the
beneficiary
of
whatever
eats
staking
and
Etc
yeah.