Hyperledger Foundation Meetups, 31 Aug 2022

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From YouTube: A conceptual introduction to Decentralized Finance

Description

A virtual meetup hosted by Hyperledger Budapest on August 31, 2022.

Decentralized finance is getting to be a hot topic not only with public crypto fans but it is gaining interest in classical banking and finance industry as well.
During this presentation we are trying to give a conceptual overview of DEFI (Decentralized Finance), focusing rather on DEFI concepts and algorithms instead of exact products or market mechanism.

Among the others the following topics will be discussed:
- The DEFI stack (settlement, asset, protocol, presentation, aggregation)
- Tokenization
- Exchanges, Decentralized exchanges
- Stable cryptocurrencies

If you're interested to explore more about how blockchain is being used in finance, check out our Financial Marketings Special Interest Group and Supply Chain and Trade Finance Special Interest Group.

https://wiki.hyperledger.org/display/CMSIG/Financial+Markets+SIG

https://wiki.hyperledger.org/display/STSIG/

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License
Creative Commons Attribution license (reuse allowed)

A

So good morning, good afternoon and good evening, everybody I mean, depending on the time zone, uh my name is dania seger and in this presentation I'm gonna give you a conceptual introduction, introduction to to d5 decentralized finance, which is perhaps getting to be an interesting topic. uh So this is hyperledger, and this is a I mean free community based hyperledger meetup.

A

Up to this point, d5 was not really a hot topic uh in hyperledger, but I mean I guess it's it's slowly changing so in the future, uh there might be like more hyperledger project projects in terms of the file.

A

Just a few words about me: I'm basically a software architect, specializing different distributed major technologies worldwide. uh Two major directions uh that I have one is is a little bit like the the consortium stuff. uh It's like hyperledger fabric and the other one is is solidity and urbanity uh and well in in that sense. Basically, decentralized finance, of course, is is very, very interesting.

A

uh What I'm gonna have is like almost one hour, perhaps more than one hour presentation.

A

uh My proposition is that I would just do the presentation. I will stop liking every 15 minutes if you have like smaller questions or things yet that you don't understand, um and then I would propose like a longer discussion at the end. uh We might as well have sometimes like 15 or 20 minutes at the end.

A

So basically uh we're gonna speak about defy that's decentralized finance, and I have basically said that this is gonna, be like a conceptual introduction. uh What do you mean by that uh conceptual means defile in the fight. There are like a couple of interesting stuffs uh in terms of like marked market and market development, and there might be some interesting points as well in terms of regulation, but I'm I'm not gonna talk about either regulation or or market development.

A

I mean market goes up and market goes down and regulation is always which is like more complicated.

A

In this presentation, um that's gonna be like the the new innovative and conceptual ideas uh that erase basically, we defy- and that's gonna, be a presentation over on that on that conceptual innovative ideas. Basically, so that's what I mean conceptual introduction. So if you miss like at the end yeah what about regulation, that's a difficult question: what about market market goes up and down and collapses? Sometimes it's an even more challenging and complicated questions, but I'm not gonna talk about them, uh at least not in this uh presentation, not in this slideshow.

B

So let me just start uh this.

A

Is the for my presentation? uh I'm just gonna start with the device stack. uh Then I will just cover it with not so much in details, but as an ideas, as you know, conceptual overview on the different layers of the defy deck. A stack up. That's gonna, be like settlement layer, tokenization um some points from the protocol layer.

A

That's gonna, be like briefly covered decentralized exchanges, stable cryptocurrencies, some further defy protocols like decentralized landing, decentralized derivative, and I have one slide on on the presentation in the application layer and of course, as I mentioned at the end, uh so there's just some some discussion or there's a place for some discussion. So if you have like longer questions or suggestions or ideas, uh I mean just uh we can likely discuss.

A

Basically at the end, if you have like smaller points or questions or something doesn't work or my network breaks, for instance, then you can likely issue them basically during the during the presentation.

A

So let me start basically uh with chapter zero and this is gonna, be the device stack or the conceptual introduction for 4d5 on a very, very basic level. So let me have just one slide: this is a little bit like blockchain evolution.

A

uh We started basically somewhere in in bitcoin or with bitcoin, and after that, basically, we detailed you. I'm not gonna go so much in the details, uh but what I would like to highlight in this in this uh slide is that the evolution, basically of blockchain applications and infrastructure might might be a little bit uh differentiated uh at the moment.

A

So I would say, uh the direction of innovation goes a little bit uh into two direction. uh Two directions: one is like something which is an infrastructure innovation and the other one is is something which is rather an application level innovation.

A

So what do you mean? uh What do I mean by that? So it's like infrastructure. Innovation is something which is like. You know l1 scaling to scaling uh blockchain, interoperability and stuff like that, and they are very technical and very challenging, focusing on more transactions, faster transactions and stuffs like that, but what's very important and very very interesting that there's kind of an application, innovation and basically application innovation- might happen partly like independently from the infrastructure innovation, and I would expect that that that trend continues on the long long run.

A

So we can expect that, like the certain part of application, innovation uh will happen basically uh independently from the underlying infrastructure or from the underlying blockchain. We might as well say that these application innovations happening on a blockchain agonistic way. We are still not there, but that's kind of a trend, actually that's kind of a long-running trend.

A

So what do I mean by that? I mean one part is basically tokenization. uh It's like you know, fungible non-fungible, tokens and stuff like that, so like nft and basically device is kind of a rather application level. Innovation which might, on the long run uh basically run on any kind of infrastructure.

A

This is not the case at the moment, but if you, if you just consider nft nft started basically with ethereum, but at the moment I would say, nft is like a general concept that can be interpreted on almost on any kind of blockchain and perhaps on the long run it will be interpreted even on live. You know I mean perhaps even on banking infrastructures as well. um I know it sounds crazy, but that might come so that's somehow the evolution, evolution and again it goes like two direction.

A

I would say one is basically the infrastructure and another one is the: is the application level innovation?

A

So what is decentralized finance? uh It's just I just situated like topic, uh but not exactly. uh That's gonna be a new topic, so decent slice finance is basically, I would say.

B

Kind of replication.

A

What it does uh it's, basically, financial life services are built on built on different distributed ledgers, so I would say so: yeah is there? Is there any question? uh If not, then would you be so kind to another.

B

A

So if I say financial or financial like services, uh so you know I mean I, I don't want to go very much into the details of like. If you know cryptocurrency or is money or or not money or if like a d5 protocol, is a financial service or, strictly speaking, it's not a financial service, but something different. But I would say I mean the idea and the target is to is to have like financial services uh that exists more at the moment, like with banks and other financial institutes.

A

And practical blockchain, so what do I mean by that? If we copy copy them on the blockchain, there are like two fundamental elements: uh one is the back end and the second one is the front end. So, on the back end terms, uh blockchain means everything is running with smart contracts. Everything is fully decentralized, I mean not. Everything is fully decentralized, but especially the core logic. The core financial services are decentralized with smart contracts that have that have certainly some implications.

A

So, like you know, I mean if it's fully fully decentralized, it's a service basically running throughout the world, and it's just more difficult to get. You know a legal entity behind who's, running, more difficult to repair box and so on, and so on and exploitations, but nevertheless that's the idea that full back-end logic of a so-called d5 financial service is running basically, uh with the help of smart contracts, fully decentralized and there's another part of that uh of d5. That's the front-end path. Front-End looks that way.

A

Front-End is usually non-custodial, uh which means people using like cryptocurrency wallets. uh They transact with the networks with that wallet uh and they they just storing uh their own keys.

A

We can say that cryptocurrency. Well, let's these are sometimes not just cryptocurrency wallets, but we can say something more like identity wallets. Nevertheless, the idea is, is that's kind of a web-free user experience. What we're having uh web free user experience means something that if you just want to uh somehow transact or use that kind of a decentralized financial services, what you need to do is to generate your keys, get some cryptocurrencies or token, perhaps and then transact with the network, and they are just non-custodial solutions.

A

Non-Custodial solutions solution means you are fully responsible for your keys. If you lose your keys, you practically use either your money or your tokens or practically your access to these decent flies financial service and the other part is if your key size store are stolen. Then practically uh your your money, your tokens, your cryptocurrency or your access for this decentralized financial services are stolen. uh I'm sure everybody just already saw like like metamask so like one way of using such uh web free uh user experience uh with decentralized service.

A

Financial service is just uh use metamask, so that's defined from a conceptual point of view. Again, uh we got one backhand and one front end: backhand is fully decentralized running on smart contracts and front-end is standalone custodial, and what we try to do is just build kind of a classical financial services uh in terms of of decentralized solutions, so going a little bit into the little details, uh but we can take a look, is the so-called blockchain layered blockchain application architecture and that focus is pretty much on d5?

A

So such layered solutions are make always easy um just to just to distinguish.

A

Of this service, um unfortunately, I mean the full blockchain and the fire space is pretty much in the early stage, uh but later on I mean we might really expect some some layered solutions. uh It's like you know like the tcpip protocol, is basically build up in a layered sense and so on and so on. So I would expect that we will see like more such layered solutions.

A

uh So if you just uh take a look on the defined uh layers, uh we got like five five important layers, I would say actually three from them are important and one of them which is really considered as d5.

A

D5, basically, on the bottom, um we see practically the settlement layer settlement layer is pretty simple. I mean not simple, but settlement, but settlement layer does settlement actually executes transactions. So that's that's all what the settlement layer does.

A

It's not so simple, of course, from a technical point of view, but from an abstraction point of view, all the above layers are based on a decent price settlement layer which practically executes transaction for you and that's a lot of blockchain protocols that can be found. Basically here. The next layer is the asset layer. uh Asset layer is the whole tokenization. I would say so at the moment. It's just pretty simple.

A

We got like fungible and fungible and perhaps some hebrew tokens, but if you just go a little bit more into the details, then we might as well find a big variety of further tokens as well and there's there might be like, like future innovation and improv improvement as well.

A

What's important is that it's not the case at the moment, but on the long run I would expect that asset layer is pretty much defined independently from this settlement yeah.

A

So our idea, if in the long run we got a fungible token, then we could define fangible token totally independently of the exact or from the exact settlement.

A

They are uh that's not the case at the moment, because the whole field is very much very strongly are influenced by etlu moritarium-style networks so, like erc20, is basically a fungible token standard initiated by by ethereum, uh but perhaps uh on the long run I mean the field will be really further developed to cover this layer that architecture, so that's second layer and the third layer which is which is usually uh regarded as classical defined. That's the protocol layer of this stack and we got here like exchanges, I mean especially decentralized exchanges.

A

uh We find here like decentralized landing protocols, decentralized derivatives, uh asset management, all the yield, farming uh and and even sometimes like decentralized insurance protocols and so on, and so on and so on. But I would say uh this is just a layer of the of the full world uh which is pretty important and and very much I mean evolving at the moment. But nevertheless, this is just one layer, uh which is I mean, ideally uh that that is built up on the asset player and not directly on the settlement layer.

A

It's again I mean the word is at the moment, not so hierarchical, but I would expect in the long run, that we can just just uh define a decentralized exchange, just based based on a true er, on a tokenization asset set uh without worrying about what what is exactly the settlement layer.

A

Then we get the application layer application layer is the user interface, it's very important. uh Nevertheless, I would say uh people are just just getting used to using like their web free user experience. uh I mean just five years ago. Everybody just wanted to say like classical banking user interface for for such protocols, but that's not the case at the moment.

A

Nevertheless, it's a very important layer and on top because something is aggregation, layer, aggregation layer, aggregates practically uh different solutions, uh different different solutions, so I'm just stopping here for a second. If you have like very short questions, otherwise, what we're gonna do? I will have a couple of slides on each each of these layers.

A

Most of the slides are from the protocol layers, of course, and what we're gonna do we just take a look on these layers, uh one by one again, focusing mostly on the innovation part of the oil defy stack and and not on the on the regulation or on the or on the mark development side.

A

So on a settlement layer, I'm just checking if that's just like chat or something, but I'm not going to go very much deep into the.

A

Three slides because, as we mentioned, I mean d5 is mostly not nothing but interpreting on the settlement here, but what's important that this whole decentralized finance defy stack practically pushed forward a lot of like infrastructure level or settlement level, innovations as well and they're just worth mentioning are: they are highly complex and highly developed, partly, but and perhaps they would exist without like decent class finance as well, but I think it's important uh to mention these innovations as well in the default stack.

A

So if we speak about settlement, uh you know settlement does executes a transaction. This can be like a cryptocurrency transaction. I send from a to b money or cryptocurrency, or this can be a smart contract poll as well. um The major idea was of decentralized settlement. uh The first one is like uh layer, one scaling, you know, I mean in layer one scaling: you got practically the blockchain blockchain having like nodes transactions, public private keys, mining validation, smart contracts and stuff like that, and what airlock skilling does uh it tries to give something?

A

It tries to improve something on a performance, third performance side, so like usually better consensus, algorith, faster transactions, faster transaction settlement, more transaction per seconds, uh technically with like sharding or multi-chain, or high performance, and so on, and so on and so on. So that's all layer, one scaling, uh but it's happening actually without defy as well uh the things which are more related to defy.

A

I would say they are the layer, two solutions, um layer, two solutions. What's happening, you just bring some some transaction out of your chain uh and there are many ways of doing it. uh One is that you get something which is a state channel which is a general but not a blockchain, and you just bring transactions off chain, not offline, but of chain, and you send this transaction somehow of chain and then sometimes you go back to the original chain and make some anchor or final finalization transactions.

A

These are like the lightning network and radium protocols, for instance, uh another important concept of layer. Two solutions are roll-ups uh here you bring transactions again off chain, and usually you do either. You execute a lot of transactions uh together or a lot of calculations together, and there are two ways of doing it or two big directions. One is the optimistic roll-up um here the practically the execution is based on a on a human factor, so on a token tokenized incentive and there's the more important or more exciting, like zk roll ups.

A

uh Here practically you got cryptographic guarantee um in terms of zero knowledge proofs uh that your transactions executed off chain uh really correct and deliver the the correct result. Of course, the correct result will be written back into the blockchain and the third solution of layer, two solutions or third element that are side chains.

A

uh These are just sub blockchain blockchains, uh anchored back to the main chain so like uh like a couple of like polygon chains, uh just basically sub block chains under retellium, or that's that's having some some anchor positions in ethereum and there's there's a third thing, which is very, very exciting in terms of settlement of that interoperability uh on the one hand, as blockchain interoperability on the on the other hand, as as working together with something else which is which is not blockchain, and I must say I mean I mean these- these, these settlements, side side uh platforms are very important part of defy so like the first one is like this.

A

Of course, if you just need some data out of your blockchain, you need to have some record uh in an in a possible trustless way, uh which is not so easy to uh to realize. But there are some protocols like louisville and chilling and like oracle platform is uh platforms are used practically almost in every second d5 protocol. So that's an important part. Then technically we get some cross-chain protocols as well. I mean cross-chain tries to integrate like two chains, uh so not just oracle oracle might not integrate.

A

Two chests can be realized in a way as well. Chain really is something uh which is happening between two chains. Technically, you have something, certainly cross chain stops or cross chain tokens. uh What's most typical from a non-technical point of view are cross-chain bridges, uh they usually connect two chains, uh and then they usually do almost in a user-friendly way. I mean, of course, uh we speak of of web free users, but anyway it's getting to be user friendly and, of course we have something as general general purpose, interoperable operability platforms as well.

A

uh Sometimes it is, they are just called as layer 0., um it's like like cosmos, polka dot or in hyperledger. That's practically hyperledger captains. So these are the settlement level innovations again, if I just uh switch back to our most important site. This is our settlement layer and the next one is.

A

So let me just take a look at the tokenization part. Yeah just don't go very much into the details, but I hope I hope despite it is. uh It is understandable.

A

uh Speaking in details about these things, I mean each slide. Might you know I mean would require like like like a day or more than a day,.

A

So, let's see the next layer, the next layer is tokenization, so very fast. Basically I mean token is something it is not defined. Absolutely specifically, it is something which is which is like a poker chip, a big piece of jet owned or token pocket chip which is running on the blockchain and what's important that the ownership of this token is basically realized uh by by public public key cryptography uh and by the blockchain itself, and if I say ownership, I don't mean like legal ownership. uh This is like a physical or a cryptographical ownership.

A

Basically- and this is a pretty wild, uh uh pretty broad interpretation, so poker chips can be like you know, I mean you can imagine just like different colors different size, different amounts, different supply of different characteristics and so on, and so on. uh So there's there can be a really big, very variety of different, such poker chips and such such tokens. Again. What blockchain does uh blockchain, basically uh realizes with cryptography.

A

First, the I mean basically the transferring of these protocols and the exchanging of these protocols and practically the uh cryptographic ownership of these protocols and the implementation, of course, usually smart contracts. Sometimes there are just exceptions: for instance, uh most most platforms have something as native tokens and basically native tokens are are not realized by smart contracts.

A

So this is tokens uh what's more more important. How do we use these tokens.

A

If there are any questions, but if not, I would just continue so it is most important, basically in tokens how you use these tokens and which fields do you use these tokens, and these are like token types and token categories uh what we can consider these are the.

B

Classic uh so we can, we can.

A

Have like, or he keeps can types in fungible token. One token is exactly the same as another one: it is fully exchangeable or interchangeable with another one. It's like, if you consider like like money, uh one 110, you don't know what's to be exactly the same one as like another one or if you just consider like if we took a nice water, uh one liter of water should be actually the same as another liter of water. So that's like fungible.

A

uh We get like non-fungible tokens. um That's called nft as well uh in nft. Practically each token is, is totally different from another one, so they are not exactly exchanging interchangeable, not exchangeable with each other uh classical example. If you just like to to tokenize, uh basically um art fine art, so like mona lisa and picasso, um you can imagine that both these arts or paintings um are practically uh represented by an nft token, and the mona lisa is is surely not the same as sp, so uh they are.

A

They are just two different things, uh so they represented by two different uh nfts and we got some hybrid hybrid tokens as well. um So like one, one is kind of basically hebrew token. If you have like several classes of of fungible tokens, but the classes are basically not not interchangeable with each other.

A

So uh like one example, if you just have have a role playing game and the in your role-playing game are you have like swords and shields and you get like thousand swords and thousand shields and then basically, your thousand swords uh are fungible. So so once for this is exactly the same as another one but like once ford is is not in exchange. They will not interchangeable with a shield, uh so they represent like an nft token category or something.

A

So these are the major topic token types. uh There are some some more interesting innovation as well like you have like composible nft, or you have like uh token standards even uh for uh for security tokens as well and so on.

A

uh So let me just cover these three slides and I would just stop and then take a look if this question or if I just should mute a couple of microsoft, microphones.

A

So another characterization is how how we use this stock ass and basically, I would just say.

A

Like I just use these token categories, we might as well use some other categories as well. There are, there are different categories in the in the literature.

B

A

Okay, uh so one category is basically cryptocurrency uh in cryptocurrency. We use like a token for payment. It's like it's like bitcoin, practically, it's like rusty money. It's like uh like coin. uh It's like 101.

A

The major purpose of these platforms is to is to provide a decentralized payment solution. Then we got some platform tokens uh platform. Tokens are basically represent the major economic incentive of an open, blockchain platform.

A

So if you just consider like it or anything, you that's responsible for for operating and connecting your platform in an economical point of view, so practically uh people just paying transaction fee and the transaction fees collected by miners or an online validators.

A

So it means that the system is is up and running from an economic point of view, uh the media, something absolutely focus, I mean and utility tokens from practical point of view. It's it's again, there's there's some uh discussion like which is utility tokens, which is not utility tokens, but it's mostly legal um from a practical point of view. Utility token is something similar to a platform token. It provides like the basic, uh economical, instant, even working mechanism, of a decentralized application, for instance, so like, for instance, in firecoin.

A

If you consider firecoin, there's there's like uh people are providing uh uh providing storage and there are people are wanting to store something on that storage uh and then the two I mean this circular and demand are connected with the coin, with an economical instance. Even that's. Why going for instance, then, what's very good or very innovative thing is like governance tokens. um It looks that way. So these these decentralized applications or d5 protocols are not fully decentralized.

A

Usually, uh usually, there are like higher privileges uh can do something, um and there are many ways of of doing such things. uh One way of doing is such a thing that you can yeah. You can just have some privileged user or administrator or stuff like that, but it's not very much decent liaise. Decent lies so what's happening instead.

A

Is that, basically, if you want to uh just find your part of your protocol, uh then then that should be basically a community or based on a community voting community acceptance and then the easiest way to is to get such a community voting such a community acceptance is by a government governance, a governance, tokens, so governance governance. Token holders can practically vote for changing part of your decentralized applications.

A

Then we got some security tokens security tokens, that's rather a legal legal term, meaning like financial security.

A

So if you just uh tokenize like bonds, uh for instance or stock, that's gonna be like, like security token for sure and otherwise um stuffs like that, which are which are very similar to that things uh can be regarded as securities as well. Now we got some tokens representing natural resources uh like like erstochem, for instance, uh there are like initiative for for representing and trading with, like, like carbon and carbon credit. uh That's getting to be interesting at the moment and we'll ask please.

A

Like crypto, correct, uh collectibles like like nfts, uh they are just like tokenized baseball cards or like cryptokitties, or this central decentral uh or parts of your metabolism, basically, uh which is considered as as collectible or nft, and the last category is stable, cryptocurrencies of stable crypto asset. Here we got practically something which should be pegged uh to an external asset. uh Like most typical.

A

uh We get. We got a stable cryptocurrency which is packed to u.s dollar.

B

A

Just referring back to this slide, uh we just covered the asset layer, tokenization layer, and I would just continue with the protocol layer, uh which is probably the most exciting one uh and then but I would just stop for one minute if there's like some short short questions or if something doesn't work or if my screen is not visible or or anything uh yeah. So so you will get the uh so. The session is recorded, it is published on youtube uh and then you will get the slides as well.

B

uh May I ask a question all right: let's.

A

So is there any question, then yeah, please, please just go ahead.

B

um Yes, uh my question is about you know what is the main difference of private blockchain based on a tokenized? You know incentive mechanism and hyper ledger fabric. Something like this, because I think uh there is many similarities between private blockchain that we are using a token as an incentive and uh hyperledger. I would like to know what is the main difference of those two platforms: yeah.

A

uh So, basically, higher quality fabric is a settlement layer technology which is a so-called consortium blockchain platform, and then it already provides some some tokenization possibilities, uh so you can define like erc20 and drc21 and perhaps even uh basically uh erc 1155 tokens as well. So basically hyperledger fabric is is, is practically a settlement layer, technology, uh providing a consortium, consumption, blockchain platform and there's already some support in terms of assets and tokenization um did I answer your question.

B

Yes, yes, actually, I wanted to know that what is the main difference that one preferred to go to the private blockchain using some tokens or maybe on ethereum, and some of them go to the uh hyper ledger. uh You know technology.

A

Yeah, uh so um so let me put it that way: high bellager is is basically uh rather an umbrella organization uh for for incubating uh many many different blockchain platforms.

A

So it's it's not just one platform, but it's linux foundation, uh initiatives uh open source initiative, so anybody having like like blockchain ideas platforms, can practically contribute and there are many platforms and technologies in higher.

B

A

And in hyperledger, but hyperledger fabric is not the only one, so you find other high polisher technologies or initiatives as well. Most of them practically focus on a consortium level. Conversion level means that your network is running among different companies practically uh so so their usage is pretty pretty limited in terms of debt companies and the end users of that companies.

A

So that means that, up to this point, d5 was not so uh populated, I would say in in hyperledger, but I hope it's gonna be this gonna be changing uh practically on uh even on a short transfer.

B

A

Yeah, if you know, if I, if I didn't succeed to to answer it fully, then then I would propose. uh Let me just bring to the end and then uh we can just uh discuss it further. uh If you like.

B

Yes, thank you so much for your information. I appreciate it.

A

uh So let me just continue and again this one is getting exciting. uh So, basically, as we saw in the last layer, we got tokens. Basically, we got tokens for everything.

A

So, what's very interesting and what's what's a very core item of of defy that's exchange, so basically, uh most most of the core logic of your d5 protocol starts with exchanging one token to another. One I mean you can imagine, as as the word is practically represent, represented by different tokens. uh Core idea is just just to exchange one token to another one.

A

So for this uh one of the uh one of the uh most important uh part of of decentralized finance. These are the exchanges, more specifically the decentralized exchanges.

A

So what's an exchange in terms of defy or in terms of uh cryptocurrency, so an exchange changes one token to another, one um on a certain exchange rate. Practically, uh that's that's what an exchange does um so the good I. So the idea is that basically exchanges uh aggregate like supply and demand uh in a concentrated for formalized and controlled way, and then they provide better liquidity as well.

A

uh If we speak about like like non-cryptocurrency exchanges, then then it it usually worth mentioning that uh they provide like, uh like like customer protection as well. This is not the case in in defy or in with cryptocurrency exchanges or not so much the case. So they are partly a little bit like uncontrolled, unregulated.

A

um So, which means like I, like uh you know- I mean I mean customer protection is, is usually doesn't play a very high role. Basically what you get in exchange, you get practical orders, so usually you have something as a buy order. It's a saying that I want to buy an asset for a given price and again so in cryptocurrency exchanges. This price is is not usd, for instance, as most technically in any other blockchain or any other exchanges. But it's it's it's the other token practically and you got something that sell orders.

A

So you sell an asset for a given price and the game price is the other token practically, and there might be some some other orders. Slap.

A

Like like spot trading, uh which is just get me a prize that you want that you have and exchange my token in a sense, and we got some limited orders as well, so classical exchanges are working on whatever matching basis order. Book matching is something similar that you see on the right side. You get these buy orders and sell orders, and these they are just matched so practically.

A

If I want to sell 100 token 400 other token, and somebody wants to buy 100 token, that I'm selling uh 400 price, then these two buy and sell orders can be matched and it can be executed practically in a very simple. You know it's a very simple way.

A

um So, basically, uh this is the basis of most or something similar. Again, it's a very simplified version, something similar is the basis for most of the exchanges. We got an order book, we got an order book matching algorithm and then basically, there are just buy and sell orders that are matched together.

A

So most of the centralized crypto exchanges uh work with practically uh order book matching uh and there are initiatives as well uh having order matching uh in terms of decentralized service, and if you speak about dex uh d e x, that's that's practically means uh that's a decentralized exchange, uh and so let me just go to the next slides uh and the point is basically uh that the problem is that such order book matching is difficult to realize. Basically on the blockchain, it is because of the scaling problems.

A

uh It is just difficult to handle to store a big amount of order book on chain and it is difficult to do this thing. This order so like most of the initial like decentralized example, exchange implementation failed uh due to scalability problem problems. It's again the transaction per second transaction time, uh then, for instance in ethereum you get the gas and you get the transaction fee as well, which might be high as well.

A

There are, despite like decentralized exchange initiatives. uh They are usually like hybrid, hybrid solutions. So usually what you do you bring somehow this order book matching algorithm of chain, but you keep the settlement on chain. uh That's generally, the idea uh it was like the the zero x protocol does something similar similar. uh You have like different, aggregated off-chain order, books uh and and the and the settlement itself I mean the settlement means here, not the settlement layer of the d5 platform, but really exchanging the two tokens exchanging the two token ownership practically.

A

So this settlement layer is on chain practically and then there are other ideas as well. It's like like doing the order book matching practically in the blockchain protocol itself.

A

But I mean I would say that the the success of such solutions is unlimited a little bit at the moment. So, what's a very interesting and innovative approach, that's the so-called liquidity baseball distant flight, the exchange, so liquidity, police and classic exchange uh looks that way. As you see it below it looks that way. uh You get like like three three rows.

A

uh First, basically, you get a liquidity provider. A liquidity provider provides you a pair of token uh and this pair of tokens stored in a liquidity pool. So like saying, uh I provide liquidity for ethereum bitcoin pair uh and this ethereum bitcoin pair will be practically stored in a liquidity pool.

A

I can't provide directly bitcoin uh like on the ethereum network, but what I can do I can do like red bitcoin, so I can provide I I don't know I just give like 100 token in ethereum and hundreds token in red bitcoin and that's as liquidity provider. I I just lock it in this. In this liquidity pool and for locking that amount in, I will just I will just financially compensate it. So I will get some transaction fees and stuff like that.

A

So practically the key key element of liquidity, pool-based decentralized exchange, is the liquidity pool itself, which stores pair of pair of tokens and what the trader does. The trader practically are transacts with this liquidity pool. So if I want to sell ether for bitcoin or if I want to buy it for bitcoin, uh these orders are basically delegated to the liquidity pool and basically the liquidity pool uh serves these elements.

A

So there's no order book and there's no other book matching, there's just one liquidity pool and then there's a liquidity provider, of course, which practically locks some amount of money, uh some liquidity in. So basically the traders uh can be served basically what's an important idea as well. uh So in like an order book based uh exchange, the price of an asset is is derived by the order book matching.

A

So if I just go back two slides, so this is like somewhere the price uh where the buy and sell orders can be satisfied and settled, uh but basically in a liquidity, pool based decentralized exchange. There's no such a thing, there's no order book, um so the price is calculated in an automated uh by the liquidity pool.

A

I mean more specifically: liquidity pool is a smart contract and you get some more smart contracts as well like providing other functionalities like deriving the price, and then this uh automatic price algorithm is called emm, which is automated market making and again, what's important. This fully scheme is is on chain and it works even with like, like a low, scalability, uh blockchain settlement layers as well, so like with ethereum.

A

So that's the idea of a liquidity pool based decentralized exchange, and it was pretty much hyped, basically um in the last two years, for instance. So this is like uh again in liquidity.

A

You get like several electors, hiding tokens and token pairs for different benefits, uh like commission or or liquidity mining tokens. You get the liquidity pool, which are smart contracts containing token pairs or more complex tokens. Perhaps, and the pricing algorithm is realized by a so-called amm, uh which means it's all an algorithm.

A

It's called an amm, automated market making uh or market maker as well, and that's uh that's the dax, that's uh that's a liquidity, so the decentralized exchange is the liquidity pool and some other smart contracts practically deriving price and giving like further functionality and trader. If there is anybody who wants to trade with your decks, uh anybody wants to trade with your decks, practically trades, with your smart contracts or with the smart contracts.

A

B

A

B

um Actually, if I find it, but let me just try to find it.

A

uh If my browser works, this is like so like uni swap, is a classical example uh just to show something in real life. So so this is like uni swap. I hope my screen changed basically, but this is like a uni swap app. uh What I'm having here, basically is a very simple user interface. I need to connect with my meta mask in metamosque. What I'm, what I'm having is basically like this is like ring buy. This is like test heater.

A

What I'm having here and the only thing what I can do for the first run uh is swap token. uh So, basically, if I say I want to swap a new point, one liter then there's a possibility to to check another asset that I want to uh uh practically exchange to. So let me say just maker and what's happening here, uh there's the the.

B

A

uh There's the fetching price uh which works in a way that it compares for all my pairs, all my pairs of tokens um and everything is on the blockchain practically, and it gives me the better the best changing price, basically for my 2.1 ether token. So that's all uh if I want to provide liquidity, there's like a pool uh uh pool field as well.

A

So if I can just, uh I can just practically uh select the token pair- and I can just put in this token paris, liquidity and I might as well compensated with some some extra tokens for them.

A

So that's the idea of a decentralized uh of liquidity based decentralized exchange, uh just one slide, just very briefly um so emm stands for automated market making and from a financial point of view, it's just not so perfect or optimal. It's an order book based exchange, um it's because uh so there's a slippage um slippage is the kind of a deviation from a price that you buy uh from the optimal price.

A

I would say- and it looks that way, uh that this slippage depends heavily on how many tokens uh you have practically in your in your smart contract and the ammo that you want to trade. So like, if you're having like, uh I don't know uh like like 2 000, 2000 bitcoin, in your liquidity pool and and 20 000 ether- and you just want to trade like like like one eater to uh to null point 0.2 bitcoin, then it means that the that the amount basically is is pretty smaller.

A

Your traded amount is pretty pretty smaller than the then the full liquidity of the liquidity pool. So that means you get a you get a pretty good slippage.

A

If you make three uh checks, points like 20 or 30 percent of the liquidity pool, then the then the slippage- that's practically the changing rate can be, can be very, very bad and very very far from uh from optima. So they are not perfect in this. In this sense- and there are that's some- that's practically an interesting like investigation and research. uh How such an amm automated market making are already uh can be realized in a way uh that it it. It is like, like more optimal.

A

So that's the x, that's the x, that's distanced by the exchange. um Another interesting concept is stable, cryptocurrency.

A

Again, the centralized exchanges are yeah, it's just a bigger topic, but covering everything would take like would take like days.

A

So let me just take a look in a couple of slides, another interesting, uh that's again, a protocol level, decentralized, spinal innovation and that's stable cryptocurrency. So the idea of stable cryptocurrencies.

A

Is that we want to practically keep the price of a token uh stable uh or packed to an external asset? So like we want to have like, like, uh like a like.

B

A dollar uh which, which birthday.

A

And then there are three ways of realizing a stable cryptocurrency. uh There's this so-called fiat fiat money, collateral based schemes. There are the crypto collateral schemes and there are the so-called algorithmic stable coins and they yeah. So sometimes they don't work like especially the algorithmic. Stable coins fell fair, sometimes, uh but they are interesting concepts.

A

Nevertheless, uh one thing uh that's worth mentioning, um so if we just speak about like defy protocols or like stable cryptocurrencies, um what you get here is basically a complex system uh and then um some of your system or some parts of the system are secured basically by cryptography.

A

So if you have like you know a signature with your signing key, uh that's that's practically cryptography and then you get something which is like a consensus mechanism.

A

It's again, some something different, but especially if we speak about about the peg, uh so this one to one ratio, ratio, ratio uh between your stable cryptocurrency and your and your and your underlying assets, so so with the u.s us dollar or something similar. It's important to know that this peg is usually not cryptographical.

A

uh This is like a market or this is like an economic guarantee which might work which might doesn't work, but it's important that it's not so strong than like a cryptographic guarantee.

A

So let's see these schemes uh one by one. So the the first idea is decree, fiat-backed cryptocurrency. um It looks that way. uh That's like that's like that.

A

That's an institution uh if you just send one one dollar to that bank, then one such that one such token is issued and if you just want to change back one uh one such token, you just burn that token. And basically you got back your money from the bank. uh It's important to note that here, your peg, so this one one by one ratio is, is secured by an institution guarantee.

A

So it's there's practically a bank uh finance taken in singapore, uh storing, storing practically your money uh or storing the money uh which is behind the protocol and then and then so it's practically a counterparty risk, uh as as any kind of uh such counterpart risk. That's an institutional guarantee uh that every issued uh tatter have.

A

uh Then we got some other scheme, um that's a so-called cryptocollateral-based, stable cryptocurrency. um It looks that way. That's more complicated.

B

So what I'm, having.

A

Here uh these schemes are based on call authorized that cdp could authorize that position or cdo call authorized that obligation, I'm not quite sure which one is which, uh but anyway, the idea is uh that you have to put put down a collateral.

A

That's that's ether, uh usually and then, based on that collateral, there's one one like stable dollar uh practically, uh which is issued, um and basically it means that these schemes are called.

A

Than you get in dollar and you are somehow compensated for motivated or instant device for doing that, um and basically it looks that way that this collateral is monitored uh in terms of the of the underlying asset of the us dollar. And if there's, if there's a color cod ratio, which is too small, uh then practically uh this position will be liquidated.

A

So it means that in in each and every situation, uh there's there's more, uh it is guaranteed and it is visibly on the blockchain and it can be verified in the blockchain. Then then, you get just more more collateral logged.

A

So that's somehow the the idea of a collateral base uh stable cryptocurrency and we got the third one and that's these are the algorithmic or fourier, fully algorithmic stable steam cryptocurrencies. It works that way that in such stable cryptocurrencies, there's no collateral.

A

So there's there's you, don't you don't look uh practically in uh ether or or you don't have something which is like, like like fiat money on a on a bank account? Instead, uh what you do? Are you just try to play with the supply and demand of the of this of this certain stable cryptocurrency?

A

So if there's uh is, there's like a big demand, uh for instance uh for your stable cryptocurrency, you issue more tokens in an algorithmic way and then, if there's a declining demand uh for your cryptocurrency, you burn somehow indirectly uh such tokens.

A

So I like increasing, increasing your token supply, is easy, uh of course, decreasing. The token supplies is always like more difficult. There's like two major items or ideas. One is the rebase model uh which is based on on market. Decreasing your token supply and you got the uh no sorry. The rebase model is fully algorithmic and there's so called, uh uh which is based on.

A

Like uh like market conditions, uh there's usually another token, which is like kind of an investment or senor token, and that must be both and buying a token or your stable cryptocurrency amount will be decreased practically anyway. I'm not going very much into the details.

A

What's important to note so I mean I mean these schemes can be analyzed, uh of course, uh very much uh ins with a lot of science. But let me just take a look. I mean how how they just work. So if you just take a look on tether, uh we can see that it pretty much manages like the like the one uh us dollar uh there.

A

There were recently one crash for the flash crash uh that was probably uh at the at the collapse of of terra uh and it influenced tether as well uh indirectly, but nevertheless I mean it works pretty. Well, then we can take a look uh so now that let's die. So, let's, let's take a look. uh Let's take a look. We die first, let's die. That's uh that's a crypto called stable cryptocurrency.

A

It manages pretty well containing the bag actually with with one dollar, uh so that looks pretty well and again. So the bad example- probably you might heard about that's like terra luna, uh that's the that's a fully algorithmic uh stable coin and then, unfortunately, it collapsed and due to several religious prison, it was like uh sanyo raj, based algorithmic, fully stable coin and then in certain market conditions it just didn't manage to maintain the bag.

A

And again so it's important that, like I mean you get tokens, these tokens are running on the blockchain, so you get the crypto crypto uh uh cryptographic guarantee and you get the guarantee of the decentralized protocols as well of the decentralized consensus, but the peg itself.

A

I mean this one by one, changing rate was maintained or it is, is something which is an economic condition and then, even if you have like so even even if you can guarantee that you have your token in a in a cryptographic way, uh maintaining a peg and giving such an economic guarantee is something which is more complicated and more complex.

A

Okay. So this is like a negative example.

A

So let me have just a couple of mores and I just have like four more slides. I will be fast, uh probably or I I do. My best, so we can have some discussion at the end, uh so there are some other further interesting d5 protocols so, for instance, bombay decentralized landing. uh There are. There are like two big ways of decentralized landing, and I just mentioned like two, perhaps important uh ways of decentralized landing.

A

uh So so the first idea of decentralized landing is having something as uh again as a culturalized position, uh and this is again something which is which is overcall authorized so like. If I just want to have like I don't know, 100 liter, then I I I need to provide a collateral which is like 150 eater. In another token, basically, uh there are some some incentive mechanism. Why why?

A

It is a good thing uh for me to do it, but basically again um so this over call authorization basically guarantees that in each and every uh uh moment, uh there's more collateral uh in your full scheme uh than the than the loan itself. So practically everything can be paid back and there are mechanisms as well like interest rates or interest for supplying or for for for landing. The tokens and the classical example is like.

A

If protocol I'm, not sure if I can pronounce it.

B

A

It again it works similarly, as as as basically as we see basically see so uh so we got like like metamask, uh and then you can just practically communicate with the protocol in a fully decentralized way. So you can, you can put in your supply, uh which is your collateral.

A

um You even get some some some some personal digital of tokens or api for your collateral, and you can basically borrow borrow assets, uh and it depends on how many collateral you have again. You have something which is an over polarized position.

A

Another very interesting concept- and this is something which which can't be found like, for instance, in uh classical finance. That's the so-called flash loan. uh Flash loan is uh practically.

A

Or without any any guarantee or without anything, um but the point is this law must be repaid in one transaction, so you can practically get as big as big long as you want, but just for one transaction and the transaction guarantees that. Basically, if you don't pay back your loan, then then you then the transaction fails. So it works that way as you as you just didn't, didn't started the transaction. You didn't get that loan, so your transaction guarantees, the consistency. You're gonna guarantee is that you must repay your loan. Basically, um it's interesting.

A

It's usually like you get it for 12 seconds, but you can get like a couple of millions of dollars for for 12 seconds without just uh providing any quality or anything again. That's the transactional guarantee for for for repayment.

A

um It's typical like doing such such things uh use cases with that, like you can do like a collateral swap almost typically, it is used for uh for like arbitrage, um and there are just two interesting things which are still not typical but yeah, perhaps coming on the long run.

A

So one idea is like the under call authorized loan, so you get more loan that you provide, um and the problem is with that: there's a high risk of of for for defaulting, uh so for not paying backlog for your loan and the reason is for that that basically, your full full defined uh web free ecosystem is is seldom based on seldom accounts.

A

So for the first round nobody knows who's behind one transaction, who's behind one and count. So basically, if you get like more, you know them than collateral. I mean yeah people, just I might just you know, maybe the profit and so on. So uh what's like in the experimentation, there are like special purpose: loans, special purpose loans. You don't get your eater uh fully, uh so you do.

A

You can't do anything with your with your like loans, but uh your loan is somehow logged in a smart contract and there are just special things that you can do you do with it and that's one direction, for instance, and then another interesting idea is like using nfts collateral.

A

So um up to this point, if I say collateral, I mean usually like looking heater, locking bitcoin practically your smart contracts, but um so one innovative idea is just using nft as a collateral. The problem is, of course, it's it's pretty difficult to to value your nft. So so it's I mean having a valuation. How much it exactly works uh is difficult.

A

Then we got to very interesting uh other direction. That's that's distance rise derivative, so basically derivative is an asset that derives its value from the performance also of another asset. um We usually call it as underlying entity or underlying asset. uh This can be basically a blockchain, normal blockchain.

A

Options- and there are platforms providing you services for forward futures and options. uh They usually suffer a little bit from the same problems as like another basic exchange on the on the blockchain. So it's just difficult to realize them in an in an efficient way and then difficult to get enough liquidity into the protocol.

A

But uh there are like two pretty blockchain specific ways of of realizing like decent lies.

A

You know what uh derivatives one is, the so-called synthetic asset, that's like synthetics protocol and synthetic protocols works that way that you get it works like like die um like like maker, though, uh like the uh collateral based, uh algorithmic, uh stable coin, um you get something which is a collateral that you have to lock in your smart contract and then practically uh there's gonna be a new token issued, uh which reflects uh something uh which is an underlying asset and that underlying asset is uh is monitored by an external oracle, so just as basically as as die and and with uh us dollar.

A

But basically, here the your underlying asset can be anything so it can be like like a complex index of of anything, it can be even a token or or price feed of of some some, some totally external and non-blockchain tokens as well, and, of course, it works that way as well, there's usually an over qualaterization ratio and if it gets like too small.

B

Then your position.

B

A

There's like, for instance, synthetics there's, even a synthetic exchange as well, which works pretty in a pretty efficient way uh for some reasons, and just one more thing, which is usually regarded as decentralized very what if we get something as wrapped tokens um so like.

A

If you want to provide one token on the blockchain like you want to have bitcoin on the on ethereum, then we have wrapped token that works that work, that way that you lock somehow you're talking in one chain and there's gonna, be a wrapped bitcoin or a wrap token issued in another chain.

A

So it's again it's a big topic like decentralized derivatives, and actually there are many more such big topics like like the classical ones, liquidity mining yield farming.

A

They are strategies for getting more tokens, more cryptocurrencies and so on, and then there's way for decentralized insurance, for instance, uh in terms of like injuring your defined defy protocols uh and somehow uh defaulting like risk, and I get my last slides so again uh we covered pretty much up to this protocol layer and, as I mentioned, the application and aggregation layers are not so well developed at the moment, but they are coming um so basically uh in the future.

A

There might be like bigger focus on them, so I get just one slide on the application and aggregation layer uh so so presentation, sorry, our presentation, aggregation layer, so presentation layer is the is the user interface uh for the first one. It's like web free user interface, but what's like more typical, we get like specialized defined dashboards.

A

uh So, for instance, uh you can imagine if you just. This is like just, for instance, uh kind of uh uh defy dashboard. uh So if you just use this.

B

A

You can imagine that basically maintaining all of your thousands defy protocols or tokens or anything any parameters can be complex.

A

um So for this reason uh there are providers uh trying to give you basically solutions having a good overview on on on different device things uh so like here you get like an overview on on d5 and ft's and dow protocols, and you can have some swap and reach and so on and so on. um So these solutions can be really helpful, healthy possible and then they might come on the long run more.

A

And what is aggregation, uh at least last but not least, aggregations are basically protocols that work on the top level of your device stack so somewhere. Here, that's the elevation layer and the idea is basically that aggregation try to combine uh several different t5 protocols, um not just from the application layer or presentation layer, but from the protocol layer directly.

A

So one typical example is like this: this first or one inch or first inch. uh It looks that way. That's basically an exchange, uh a similar token exchange, uh then that we saw basically uh previously but the but the underlying idea that that the that it doesn't have uh like, like like order book order, book or kind of a liquidity pools, but it integrates a lot of other different exchanges and what's happening here.

A

I just can't connect because perhaps it's working just with the live video and I'm only buying but anyway uh so what's happening here- that if I just want to swap the token I get the price from like 60 different, uh further exchanges and then basically, if I just each or say exchange here, then it delegates practically further. My my call on my exchange to to the best.

B

A

To the best decentralization that is integrated here, so that's a pretty interesting aggregation level protocol, so I would say: that's it. uh I just managed to finish so I hope you, you didn't get bored and I would say uh now I'm ready and I I will try to answer all of the questions uh that might that might come in.

A

So I would say, let me just take a look on the chat uh uh in the meantime. You can just stop me if you have any question uh right right now, but what I'm gonna do uh is that I'm just reading a chat, I'm just browsing it and I will try to uh find, like you know, technical questions or questions that I can basically answer.

A

uh So that's hello, hello, everybody at the end, uh so that's gonna be recording uh on youtube. uh You can find on uh on hyperledger foundation, uh foundation, uh youtube channel uh and then the slides video, the best available as well um so yeah. um So just just uh I don't know just go ahead and and ask her questions.

B

uh If I may daniel it's miles.

A

Yeah sure absolutely.

B

Yes, I'd raise my hand there. uh Yes, just a a quick one. I had asked a number of questions, but the one kind of top of my mind is uh notrose protocol versus hyperledger, so I'm ramping up on the space and I'm just trying to understand pros and cons differences.

B

Are you familiar with notorious vis-a-vis hyperledger, and can you give a quick overview.

A

I'm not sure if I know the protocol of.

B

It uh it's such a rapidly expanding.

A

B

Every week, there's something new.

B

Thank you. Okay,.

A

Yeah, so uh anybody just uh want to uh uh wants to have a question, just just go ahead and mute yourself and ask uh the main challenge. Just I'm just browsing the questions uh and then and then just try to pick up uh which is like, like.

A

Yeah there's like yeah, there are like like many many, so the point is basically uh so this is is pretty much booming. I I would say, and there are many solutions, uh many uh like ideas and a lot of innovation. I don't know all of these innovations honestly. I just know the major categories and and some some like uh some some specific. uh You know I mean protocols and I would say so. These protocols that I that I showed you have are pretty much on a on a basic level.

A

So I would say, like you know, I mean the the these are the old-fashioned protocols. If I, if I, if I either say it, I'm sure, there's gonna be uh new ones practically on a daily basis. Like somebody mentioned here, radix radix dlt, uh I saw them once actually it's an innovative platform just for d5 applications as well. So I uh I.

B

Just never heard that I'm sure it's game.

A

So how to how to start a career in defy that's a very good question. Basically I I mostly do like programming, you know I mean just so. I did a smart contract but uh or sometimes teaching uh yeah, decent ricardo, no decentralized. uh Yes, so the pdf will be a very blessed uh tokenization. I think uh yeah, probably my voice was again I'm just I'm just checking the chat.

A

So if, if you have some, some questions are live just uh please feel free feel free to to unmute yourself and then and then just just ask a question. Yeah.

B

Anyways, just just like to appreciate your you know your presentation, it was great and thank you so much. I have a question regarding the incentive mechanism.

B

Yeah yeah, you know uh for incentive mechanism. Let me say my video is not work. Okay for incentive mechanism. We know that uh in in d5 we we need to design a token or using the the the the the tokens or the currencies that already uh deployed on the blockchain, for example ethereum or uh bitcoin.

B

But the main question is: uh is there any other incentive mechanism to create blockchain efficiently, because in some cases there is there are a lot of fluctuations on the token uh market and uh actually, in some cases there is no uh resources that uh you know that you know support support the token. So I would like to know if there is anything that can change the incentive mechanism and blockchain in the future.

B

For example, if you want to use it in blockchain in supply chain or other areas or maybe define system, can we use any other incentive mechanism because we all use token or tokenize the incentive mechanism? Thank you.

A

Yeah, um it's a good question. uh So uh yeah instantly mechanism is a is a big topic uh and the the innovative part here is to use like tokens. I mean you can have the classical incentive mechanism as well. So, like one incentive, I in one view of instant incentive is that you know I mean if, if anybody anybody does anything with the network, uh you just pay them uh pay them in fiat. uh That's that's one classical incentive mechanism.

A

Another classical incentive mechanism is like gamification in gamification. You don't pay for anybody anything it's just you know. I mean they just get some some some points or some veggies or something which are tokens for the first one and they just like to do something or contribute something.

A

um So these are the two classical ways of of incentive mechanism, but the point is actually and that's, I think, the one of the most innovative part of blockchain that in blockchain block, of course, uh these these fields are are combined basically, so it means uh you can get token as intensive incentive and then um it's a question is what's what's this token for uh and there are, there are many ideas so like.

A

uh If you have like a decent liquidity pool based decentralized exchange, you just you just set up some liquidity, you might as well say hey uh you get some transaction fee in in like either or bitcoin. So it's almost as you as you get like money uh for your contribution.

A

uh The other way saying is like um we don't we don't give give give you like a traditional token, but what we give you is like a badge. You know I mean you're, the you're, the hero of the protocol. um It can be done again with me with a video token, for instance, that can be like a non-tradable nft token, and you can get this. You know.

A

After after a year of contribution, you can get like the hero of the protocol badge, uh it's more likely more like a gamification direction, and what's what's perhaps interesting, you can. You can have like something between the two. uh So a lot of protocol has, like you know, I mean, or have like uh liquidity, mining or yield forming solutions.

A

So so they just provide the token rewarding people uh without even saying uh what this token good for or what's what's what what you can do with this token and people just contribute, I mean I mean it's again, so in gamification uh you, don't you don't get rewarded explicitly by money, but by something else, so it works as well and people just getting having like like tokens uh without even having the possibility to to exchange them. uh But basically I mean some of these incentive instances.

A

Solutions go further, so they might issue some tokens for the first round. But as a second run, these tokens might have some some meaning, and it can happen that these tokens can be traded basically and as soon as it they can be traded as well. There's a huge usage of the tokens. So practically, if there's a liquidity as well, then then people will eventually, uh probably just just exchange performance. But again I mean I mean this.

A

That's the spectrum, I would say one side of the spectrum is like giving something which is a cryptocurrency which is as almost as money. uh The second one is is like giving a non-tradeable nft, which works as a badge and works for the same reasons as gamification and and between these two two edges of the spectrum.

A

You can have anything so any combination, any any idea uh can be used, which one works better. I have no idea, but I mean the technology provides all the possibilities yeah. I really appreciate it.

B

Just one just my last question uh about the regular future of regularization uh about the you know, d5. Thank you.

A

Yeah, I can't I can't really answer like regulation questions, it's like, for instance, uh uh I just so I'm not a not a legal guy. I have some. I have a lot of technical and some economical background, but I don't have like legal background. um I think, like I saw like the mic regular regulation uh from the from the european commission. um It's like a couple of months ago.

A

The guys were still not in like nft, so there there was no. There was no like an ft, basically um in the in the proposition um and in the meantime there are some ideas that you know. I mean all of the all of the non-custodial models to be actually uh registered, which makes the whole device space impossible and so on and so on. So so I don't know our regulation is is very difficult and I'm not an expert in that.

A

In that I will would say that I mean I mean, even if the regulation will be pretty negative, uh these uh these innovative ideas will survive. Somehow you know, even if not not exactly one by one or not such uh with such platforms, that you see, but I mean considering to the key ideas is, is is not a waste of time.

B

Thank you, um daniel yeah, all right.

A

B

I have a quick question on um crypto back by fiat right so in in the case of like the stable coin uh itself being burned. Does that mean like the reserve or the amount that is stored in the bank? Accounts will also need to be reduced and how do a currency like tether, uh maintain its pegging by fiat? Maybe can you share a little bit on that? Thank you.

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I don't know the the the.

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But the idea is the following solar and then you have like two two directions: one you want to. You want to exchange one dollar to one tether, for instance, or west dc usd, if I'm not mistaken, but you want to exchange one one dollar.

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To one token, that means I mean the in a very easy way again: it's not what that does one by one explicitly, but the the scheme is the following: you want to exchange one dollar to one token, then you pay this one dollar to the bank and on the token, on the blockchain one token is issued.

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That's that's one way of exchanging uh the other way of exchanging. If you want to exchange back, it means that basically, you you just burn or not burn but like um burning, can be done in a way that you transfer this token to a specific address that belongs to the bank and on that address that token will be, will be burned and as soon as the bank gets your token back from you and it's burned by the bank, then practically uh your one dollar will be will be transferred back to your to your account.

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So that's the that's the original idea of the scheme. um Of course it's like um a little bit like complicated by tatter, but I'm not quite sure. If I can summarize more in detail at the moment.

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As a follow-up to this question, um how long did the typical mint and uh redeem process take? In other words, how long does it take to convert your fiat to a stable point and uh back with a difficult anchor this typical uh sort of stability provider?

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Is it it's not instant pathogen right the day or the now or.

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I'm not like you know, cryptocurrency trader, as I mentioned, I'm a software architect, uh programming on blockchain. So uh what I did like I I bought like uh stable cryptocurrency uh from from bitcoin atm. um There are a couple of bitcoin atms like around me. uh They have like, like uh bitcoin eater usdt.

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He finalists they can even even die as well. So it's with a bitcoin atm, it's pretty pretty simple. I just pay the money and practically I I get the token. So that's all, but I mean I can imagine if you want to like you know, like trade, one million dollar. uh It might take more time.

B

Okay and thank you, I have a. I have a couple of questions, um so the first one, first, one being hyperledger fabric, has a couple different service offerings right. um So is there any in particular that you would recommend um looking more into specifically for d5, that's number one and number two is I personally, and maybe I just haven't, dug deep enough, but I personally haven't seen anything like an example of something built on hyperledger fabric, so I've I've written a couple.

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You know some chain code in hyper hyperledger fabric and able to execute the those chain codes uh to do what they need to do. But I haven't seen any examples of like: let's say you create a token using chain code on hyperledger fabric.

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um Is there any examples that you know of that show how a user could use a wallet to actually purchase that token, like I haven't, seen anything on hyperledger fabric and I'm sure it exists, but where a wallet is incorporated so that a user can make a purchase on chain um through a wallet.

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Yeah uh so yeah I mean it's, it's a little bit difficult topic. um This define hyperledger uh because, like so one of the mainstream application, hyperledger fabric is not really meant for d5 or not at the moment. uh If we speak about hyperledger fabric, I mean fabric itself, that's uh that's a consortium blockchain on the settlement layer and the and the main idea. Is uh you don't use like end user wallets in hyperledger fabric? uh What you what you use is like institutional wallets. So basically your notes are running at.

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Different companies and basically companies having like keys and transacting with the network that was like the original idea of hyperledger fabric. I think perhaps in the latest version you can do already something which is which might be similar to an end user well, but the original idea was with fabric not to use like like, and user wallets, but yeah, but like using like, like institutional wallets, basically or something similar, and so again, this fabric is mostly the settlement and there's already something on a tokenization level.

A

I've I've never seen anything on the protocol level, so I've never seen like fabric exchange or endings.

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Or anybody's or anything.

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There's some tokens tokenization. If you just take a look on fabric samples.

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Just give me a second that's fabric samples.

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And then you can find here like tokens already, uh that's like erc 721 20 11 55. So these are like the basic tokens and one other thing that you find in hyperledger for sure that I know I think, there's a hyperledger lab, which is which is kind of uh it's. I think it's kind of an abstract organization framework, I'm not quite sure if I find it, uh but there's there's an initiative uh we in which you can define like probably this one. This is like a hyperledger fabric, token sdk.

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um You can define tokens in an abstract way. uh They are running only on fabric for the first round, but you can define these tokens with like uh several uh like, like privacy guarantees or or perhaps even with like several ways of executing and so on and so on.

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So I would say: uh hyperledger is pretty much at the settlements and there are some initiative in the asset layers. uh I don't know anything anything above and and hyperledger at the moment is mostly on on consortium ledger. So I don't know real defined initiatives, but again uh it might change in the future.

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So these are like the two things I'm just I'm just.

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Writing in the chat.

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So this is like decay, and this is like fabric samples.

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So let me just cover it with like more questions.

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I'm just browsing the chat, uh but if you have like any questions, you know, I'm just feel free to admit yourself and then to just start coming here.

B

uh I have one question related to ethereum 2.0, so with the ethereum 2.0 and the beacon chain um going to release and the upgrades are almost there. So um what impact do you see in the d5 and uh what changes do you um foresee in the architecture you shared today.

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Yeah so good question, uh so what I expect basically from ethereum 2.0.

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Is that that's gonna be for the personal settlement layer uh change so, as I know, uh anything which is running at the moment on ethereum uh will be running on ethereum in the future as well. uh What we could expect is that ethereum will be scaled a little bit more, so it means there might be a possibility to to run like like something more on a protocol level uh on the long run.

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So on a short run, I I would say uh everything should be running on ethereum and then perhaps you know, I mean one of the blocker for for this protocol layer elements uh implementing on ethereum uh was that implement. Ethereum was was not so fast or not fast enough, um I mean not scared enough for didn't, have like enough transactions per second.

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uh What I would expect that this blocker will be perhaps will not be just just just disappear, but uh this blocker will be smaller, so perhaps in the future there might be more and more like uh uh further protocol innovations, even on the ethereum network, uh which which are which are still did not implemented uh due to these scalability reasons. So that's that's what I would expect from from ethereum 2.0.

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Let me just uh browsing if you have like more questions uh uh and there's there's a question uh if there's scholarship uh at hyperledger, as as far as I know, there's something as as as a university university, perhaps even scholarship, but it doesn't mean like money. It means like like sharing information and providing something, uh there's truly, something which is a hyperledger university program. uh But I would say uh probably david can answer.

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Yeah, I was just dropping a link in the chat. There is an annual paid mentorship program, so if you want to get some support and both in the financial sense, as well as just the the learning sense, the the mentorship program pairs you with somebody in the community involved in the project who will help you get up to speed on using and contributing to that project. So just be aware, if that's something you're interested in that takes place again, it takes place every year and the applications open up early next year.

B

So if you look at that link on the wiki that I just dropped, we're wrapping up this year's mentorship program right now, but next year we'll run a new one, and people are certainly encouraged to apply for that.

A

There's there's one one question at the at the end, almost uh which, which might be interesting and and yeah uh it's it's the question of cbdc, uh which might seem to be actually exactly the opposite direction to defy, uh and then it's the open question of what cbdc can done done.

A

What cbdc can do with defy? If, if there's a possibility at all- and then I would say- I mean the these two words are going to two separate directions at the moment. So you know I mean the central banks can say like no 44 45 for the person.

A

uh D5 is still a little bit like like a cryptocurrency or like a kick to anarchist, so they don't like central bankers, uh but there are already some some brainstorming as well up that combine these two things uh and then one one idea is that, like like use cbdc instead of stable, crypto cryptocurrencies, so instead of stable tokens or stable cryptocurrencies one one again, it's a very innovative idea. So it's not a mainstream idea, but one idea would be used.

A

Cbdc uh because I mean, as you see like the the terra osd crash, uh these stable cryptocurrencies might not be stable enough. um That can actually bring down the whole whole segment, uh which is not so much practical. So if you use cbdc instead, uh the full defined space would be more stable and probably more regulated. So it can be actually a point of of regulation as well. That's one very innovative uh way of brainstorm, brainstorming on the cbdc and bd5 combination.

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The second very innovative ways is metabolism.

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If we say like metaverse, we don't usually mean just by the virtual reality stuff, but what we usually mean is that metaverse should be based on a very very instance of tokenization and and even defy so. An open question is what should be actually the payment in metaverse and it's probably not credit card payment but kind of a tokenized fiat money, perhaps and that might be against cbdc as well. So again, these are two different words at the moment, but there are some interesting points how they can be combined.

A

So I think, basically I finished finished pretty much the questions uh in the chat. So if you have any further question, then let me just let me let me just know. Let me just go ahead and ask the question.

A

If there's no more question, then basically, I would like to thank you very much for your attention. uh I it was taking a little bit longer than I expected, but it is usually the case uh if I present the topic first time so again. Thank you very much for the 40 40 for the attention and then yeah just see you next.

B

Thanks time, thanks everyone, thank you. Daniel have a great day thanks. Thank you very much, daniel.

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Much daniel, thank you, daniel.

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