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From YouTube: Graph Day: Open Financial Primitives with Robert Leshner
Description
Robert Leshner, CEO at Compound, gave a presentation entitled "Open Financial Primitives" at Graph Day in San Francisco on January 25th, 2019. In this talk, Robert outlines the components of a new open financial system.
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A
I'm
gonna
talk
about
where
new
financial
markets
are
headed
and
what's
being
built
today
in
the
world,
and
we
call
these
new
financial
markets
open
financial,
primitives
and
I'm
gonna
explain
what
that
means.
Cuz
it's
a
little
bit
complicated
to
start
with
a
little
bit
about
my
background,
I'm,
the
founder
of
compound,
where
one
of
these
new
markets
on
ethereum
blockchain
we're
creating
interest
rates
for
different
crypto
assets
on
aetherium
at
night.
I
spent
a
lot
of
time
thinking
about
economics
and
on
the
weekends
I
spent
a
lot
of
time.
A
Thinking
about
other
projects,
building
things
in
this
ecosystem
and
I'd
like
to
invest
in
the
best
project.
So
if
you're
building
something
cool
talk
to
me
afterwards,
so
what
is
an
open
financial,
primitive?
This
is
a
really
weird
phrase
and
there's
a
lot
packed
in
here.
So
the
full
definition
is.
They
are
composable
building
blocks
of
economic
functions,
each
a
self-sustaining
system
made
available
to
developers.
Well,
that's
a
lot!
Why
don't
we
break
this
apart?
Word
by
word,
so
you
guys
can
get
a
sense
of
what's
getting
built
out
there
in
the
world.
A
A
Self-Sustaining
means
they
exist
entirely
on
their
own.
They
don't
need
any
outside
resources
to
run.
They
operate
as
closed
packages
and
available
means.
Any
developer
can
interact
with
a
financial,
primitive.
Any
developer
can
read
the
source
code
or
choose
to
include
them
in
their
own
projects.
Financial
primitives
are
basically
building
blocks
that
are
being
built
for
the
most
part
right
now
on
aetherium
that
provide
economic
activity
and
I'll
talk
through
a
couple
of
the
most
popular
examples.
So
one
example
is
a
system
called
0x.
Zero
X
is
a
financial,
primitive
that
allows
people
to
trade.
A
That's
all
it
does.
It
allows
people
to
exchange
one
asset
for
another
asset.
It's
up
to
users
to
decide
what
those
assets
are.
It's
up
to
developers
to
decide
where
this
superpower
of
trading
gets
built.
Any
new
application
can
build
trading
into
it,
and
this
concept
of
trade
execution
is
made
available
to
the
entire
aetherium
ecosystem
and
it's
flourishing
in
all
types
of
new
ways.
It's
just
one
building
block
and
it's
being
used
everywhere.
Another
financial,
primitive
is
Dharma
they're,
creating
a
system
for
users
to
structure
loans
between
themselves.
A
These
loans
can
exist
as
a
self-sustaining
system.
I
can
loan
you
money.
You
can
loan
me
money
for
six
months,
but
they
can
also
be
included
elsewhere
in
the
open
financial
system.
These
loans
can
be
traded
on
0x.
These
loans
can
be
sent
to
a
friend.
These
loans
are
able
to
be
recycled
and
reused
and
built
upon
by
pretty
much
any
developer.
A
There's
maker,
if
you
guys
have
heard
of
the
stable
coin
die
maker,
is
a
financial,
primitive
for
credit.
You
can
basically
take
an
asset
that
you
already
own
like
ether
and
you
can
extract
a
new
asset
from
it
die
it's
a
financial,
primitive
to
give
yourself
credit
based
on
the
assets
you
already
own,
there's
compound,
which
is
creating
interest
rates
for
different
aetherium
assets.
It's
a
short-term
interest
rate.
Anybody
can
choose
to
earn
this
interest
rate
or
to
borrow
the
asset
at
this
interest
rate
and
there's
a
complete
open
landscape
that
doesn't
even
exist.
A
A
So
what
makes
a
primitive
really
really
interesting
is
that
it
can
be
combined
with
other
primitives.
You
can
take
the
ability
to
trade
and
combine
it
with
an
interest
rate.
You
can
take
the
ability
to
trade
and
combine
it
with
credit.
You
can
take
a
short-term
interest
rate
and
combine
it
with
a
loan.
You
can
basically
mash
up
these
financial
primitives,
like
they're,
literally
building
blocks,
and
you
can
build
new
applications
on
top
of
them,
because
they're
open
anyone
can
create
new
experiences.
A
Anybody
can
design
new
interfaces
in
new
use
cases,
they're,
basically
used
as
the
inputs
into
mashups
of
new
experiences.
So
a
great
example
is
you
could
take
0x,
which
is
the
ability
to
execute
a
trade
and
compound,
which
is
the
ability
to
borrow
at
a
specific
interest
rate,
and
when
you
combine
them
the
ability
to
borrow
with
the
ability
to
trade,
you
can
create
a
short
sale,
you
could
borrow,
and
then
trade
simultaneously
is
one
cohesive
experience
and
the
possibilities
are
endless.
A
You
can
literally
take
any
of
these
new
tools
and
systems
being
built
on
etherium
and
mash
them
up
in
new
ways.
There's
no
one
to
stop
you
there's
no
one
to
tell
you
what's
right
and
what's
wrong:
the
market
will
decide
if
they
want
it
or
not,
and
multiple
developers
can
build
the
same
types
of
experiences
just
because
there's
one
application
that
does
this
another
application
can
do
the
same
thing.
A
These
systems
are
open,
anyone
can
extend
and
what
we're
left
with
is
a
financial
system,
that's
created
by
developers
and
the
users
and
us
in
this
room,
and
it's
radically
different
than
the
financial
system,
that
most
of
us
are
used
to
using
these
financial
primitives
we're
able
to
build
a
financial
system,
that's
open,
anyone
is
able
to
interact
with
it,
no
matter
what
country
you
live
in,
no
matter
what
time
of
day
it
is
it's
completely
driven
by
software,
and
it's
completely
open,
it's
transparent.
Everything
is
happening
out
in
the
open
this
source
code.
A
All
of
these
systems
is
available
for
you
to
read.
The
transaction
history
is
available
to
you
on
the
blockchain.
Every
single
interaction
is
public.
You
get
to
see
exactly
what's
happening
inside
each
of
these
financial
primitives
as
it
occurs,
and
that's
really
powerful.
People
like
in
companies
like
the
graph
are
making
it
even
more
transparent
they're,
making
all
this
information
queryable
by
any
other
developer.
All
of
this
information
that's
happening
in
this
new
financial
system
is
at
our
fingertips.
A
It's
extensible,
anyone
can
take
it
in
new
directions
and
something's
working,
and
you
have
an
idea
to
make
it
work
better
or
in
a
new
way.
You
can
do
so
and
it's
fair,
it's
driven
by
code,
which
behaves
the
same
for
every
single
user,
not
based
on
arbitrary
parameters
and
this
future
financial
system.
That's
being
built
right
now
using
this
financial
primitives
is
exciting
when
you
play
around
with
the
new
tools
on
etherium
when
you
interact
with
compound
and
earn
interest
on
your
die
or
on
your
ether
or
when
you
do
a
trade
using
0x.
A
It
just
feels
so
much
different
than
going
to
the
bank
or
calling
up
your
broker
or
using
the
tools
of
the
existing
financial
system.
I
predict
that
everything
that
we
have
today
in
our
financial
system
will
be
replicated
in
an
open
future
financial
system,
but
one
that's
more
transparent,
extensible
and
fan,
and
that's
really
exciting.
A
Now,
there's
a
whole
future
of
financial
primitives
that
don't
exist
pretty
much.
Every
single
component
of
the
existing
financial
system
will
become
a
primitive,
a
project
on
the
ethereum
blockchain
right
now
we
have
a
few
of
these
primitives
out
in
the
wild.
We
have
trade
execution,
we
have
tradable
loans,
we
have
credit,
we
have
spot
interest
rates,
but
there's
a
whole
host
of
different
primitives
that
have
yet
to
be
built.
In
fact,
the
list
probably
goes
for
many
many
slides
I
just
put
out
there
a
few
that
are
yet
to
exist
if
you're
a
developer.
A
Looking
for
something
to
build
in
this
space,
there
are
so
many
things
that
you
can
build.
Swaps
are
actually
a
very
interesting
example
because
you
can
start
to
break
a
part
of
credit
risk
in
the
quinary
of
risk
and
generation
risk,
but
there's
so
many
financial
primitives.
Every
one
of
these
little
transparent
boxes
is
a
project
or
a
company
waiting
to
happen.
That's
really
exciting,
and
over
the
next
couple
years
we're
gonna
constantly
see
new
use
cases
and
new
primitives
and
new
ideas
get
developed
that
we
haven't
even
thought
about.
A
A
The
theorem
has
a
rapidly
growing
decentralized
financial
ecosystem
and
everything
works,
because
it's
all
in
one
place,
there's
a
lot
of
other
blog
chains
that
are
being
built
where
theoretically,
new
open
financial
ecosystems
will
also
be
built
and
there's
a
lot
of
these
activities
occurring
outside
of
blood
chains.
They're
still
occurring
the
old-fashioned
way
with
pen
and
paper
they're
occurring
over
the
counter
they're
occurring
in
ways
that
don't
yet
interact.
If
we're
gonna
build
a
new
open
financial
system,
it
actually
has
to
work
with
all
the
other
components.
A
We
can't
isolate
ourselves
just
to
one
location.
We
can't
say:
oh
there's,
this
new
amazing
ecosystem,
but
you
have
to
be
on
aetherium
because
not
everyone's
going
to
be
on
ethereum,
it's
not
right
for
every
single
developer.
It's
not
right
for
every
single
trader.
It's
not
right
for
every
single
application.
It's
the
most
fertile
ground
right
now
and
it's
the
best
place
for
an
application
to
get
built,
and
it's
why
we're
seeing
this
new
financial
ecosystem
unfolding
on
top
of
aetherium.
A
But
in
order
for
this
to
truly
succeed,
it's
gonna
have
to
exist
and
get
developed
everywhere,
and
it's
going
to
exist
with
lots
of
different
technologies
and
in
lots
of
different
places
and
what's
interesting
to
think
about
is
how
we
can
build
interoperability
between
these
different
components
of
a
new
open
financial
system
and
how
it's
all
gonna
play
together.
If
you're
a
developer
right
now,
there's
a
lot
to
think
about.
There's
a
lot
to
consider:
there's
so
much
opportunity
craft,
a
new
economic
narrative
and
there's
a
lot
of
directions.
A
A
A
So
we
require
collateral
so
basically
at
compounds
the
protocol
which
its
autonomous
software.
What
allows
someone
to
borrow
from
the
protocol
at
any
hour
of
the
day
instantaneously,
without
having
to
wait
for
a
counterparty
without
having
to
negotiate,
is
the
ability
to
make
sure
that
they
can't
just
run
away
with
what
they're
guarding.
So
our
protocol
relies
on
collateral.
There's
a
lot
of
other
approaches
that
one
could
take.
They
can
do
it
based
on
reputation.
They
could
do
it
based
on
you
know,
credit
parameters,
but
our
system
for
the
time
being
relies
exclusively
on
collateral.
A
Our
team
keeps
a
very
small
portion
of
the
interest
that
moves
through
the
system
and
it's
a
business
model.
That's
extremely
native
to
the
financial
primitive
itself.
I
could
theoretically
see
a
trading
primitive,
keeping
a
very
small
portion
of
the
assets
being
traded.
There's
a
lot
of
ways
to
go
about
this
and
there's
a
lot
of
new
business
models
that
have
yet
to
be
explored,
and
some
of
them
won't
have
business
models.
You
know
part
of
what
made
open-source
so
powerful
and
what
allowed
applications
on
the
Internet
to
develop
faster
and
faster
and
faster.
A
A
That's
a
great
question:
how
do
you
solve
for
liquidity?
So
some
of
these
don't
have
to
solve
for
liquidity.
They
might
be
something
as
simple.
As
you
know,
the
ability
to
facilitate
a
trade
I
can
build
that
into
my
application,
and
I
can
come
up
with
the
liquidity.
Others
of
them
might
need
to
jumpstart
liquidity
and
compound
we're,
creating
a
marketplace
essentially,
and
so
we
jump-started
liquidity
by
talking
to
lots
and
lots
of
different
small
crypto
funds
and
say
even
before
we
launched.
This
is
what
we're
building.