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Layer3 x Reserve Protocol AMA
Recorded: June 12, 2025 Duration: 0:34:57Space Recording
Short Summary
In a recent Twitter Spaces discussion, Ignacio and Ivan from the Reserve team explored the launch of innovative index and yield ETFs on Layer 3, emphasizing their partnership to enhance DeFi accessibility. They discussed the challenges of crypto fragmentation and the potential for growth in asset-backed currencies, highlighting trends towards user-friendly financial solutions in the evolving crypto landscape.
Full Transcription
Thank you. Thank you. Thank you. so
jam jam guys we'll give it a couple of minutes to allow people to join.
We'll get things started. Thank you. Thank you. Thank you. Thank you. so
gmgm everyone welcome to this twitter spaces or Spaces. That was the new name.
Yeah, welcome.
Welcome to everyone today.
Well, I'm Ignacio.
I'm VP of VD in layer three.
Whoever hasn't heard from me before.
And today we're going to talk with the Reserve team.
We're going to talk about the existing campaign that Reserve has in
Layer 3 that basically covers on-chain indexes. We'll talk about DTFs, about the types of DTFs
that exist right now in Reserve, which are mainly yield and index DTFs. And then we'll wrap up with the long-term vision of the team.
So with that said, I'll start by introducing layer three very quickly, and then I'll pass the
button to the reserve team. So layer three, for whoever is not aware of it, we are essentially a platform that allows you
to kickstart your ecosystem, your chain, your app.
So it can be the zero to one moment for your team,
or if you're further along with the development,
it can be a way to grow the excitement,
grow the community,
educate the market about what you're building
and why it's different and
important and people should use it essentially. And then our key focus is on maximizing the
on-chain adoption of all these products. And everyone is free to all these users to
discover the different apps and chains.
And they're obviously not forced to do anything.
It's like a single entry point to crypto, essentially.
So, yeah, please welcome Ivan.
So he's from the Reserve team and he'll introduce himself.
So Ivan, please. Yep. Thank you so Ivan please yep thank you for for introduction
and thank you for having us here uh my name is Ivan and I lead DeFi at reserve uh as he uh nothing
will explain um uh we we are a platform to create index and yield ETFs. Basically, they're one-to-one asset backed and enable users to get exposure
to trends, to broad market indexes and to strategies that provide yield for the end user.
Yeah, nice introduction. So let's start by talking about the problem itself.
So let's start by talking about the problem itself.
So my understanding is crypto is obviously pretty fragmented.
There's many tokens, there's rapid changes between the different narratives and tokens
and which ones you need to hold, which ones become kind of obsolete or the interest fades
away very quickly. So, you know, it's pretty hard to keep yourself diversified, but at the same time, you know,
hold tokens that are going to be worth it in the long term, and they don't just fade
away.
So, I guess that's a problem from my point of view that Reserve really helps solve in
a transparent way, but keen to hear your thoughts on that.
Yeah, definitely.
You put it correctly.
As you all know, there's tens of thousands of tokens being deployed
and being created every day.
And if for crypto natives, it's extremely hard to keep up with everything and to do your research and be informed of what's new, what the new meta is.
Imagine for people that are not crypto native, but they are crypto curious and want to get involved in the space and get exposure to everything, to what they hear their friends talking about.
It's becoming more and more inaccessible
for those that don't spend hours in front of a computer
screen.
And what index they have tried to solve is exactly that.
You abstract away that complexity for the users.
You remove that barrier of entry and make it easy,
efficient, and accessible to anyone
by having assets that track indexes,
having indexes that track sectors, that track the market, and that can be curated by professionals,
that can be created by, you know, people that spend all that time in front of a computer screen
so that the end user doesn't have to. And that's the beauty of index ETFs on reserve.
And that's the beauty of index ETFs on reserve.
Right. So from where I stand, it's kind of similar to ETFs in chart five, but taken on chain.
Is that a correct parallel?
Yeah, that's a correct parallel. The same way that you would buy an ETF to get exposure to the stocks in the semiconductor sector,
the parallel in default would be that you can buy a DTF on reserve to get exposure to tokens in the DeFi sector, right?
Or tokens in the GameFi sector or AI, right?
So it's a very accurate comparison.
So it's a very accurate comparison.
Yeah. So then the fees themselves, they are generated by the assets, right?
Yeah.
And then they float back. So if I'm a user and I create a DTF, then those fees accrue potentially to me?
Yeah, exactly. So the platform is very agnostic in the sense that it enables features that are very customizable. So one of those is the fee structure. Same way that we have flexible governance where you can use RSRS governance token or bring your own governance token and then direct some fees to that governance layer. On the fee structure, aside from the platform fee
that is taken and that is steered and goes down with the TVL of the asset, you can, as a creator,
you can decide to pay yourself or direct to yourself a percentage of the fees generated.
These fees are generated from two sides. One is the minting fee. Minting fee is simply something you pay one time when you mint the asset, not when you swap for it on the text.
So a lot of these volumes is being driven by, you know, MED searchers and our bots are being the pools.
And then you have the TVL fee, which is basically the equivalent of what a fund would charge for the assets under management fee.
Obviously, this is total value lock.
There's nothing being managed here, but it's a good mental model to see it as.
So the TVL fee accrues to the price performance of the asset over a period of time, over a year.
Right?
And those are the two sources.
And not only to the creator, but this piece and this revenue can be sent to anyone, any
arbitrary address.
Like you can reward like a non-profit or send it to a revenue distribution system to incentivize
pools on Dexys, anything that you want.
Right.
But that's the good thing that it has is that it's not really like a pool that you need
to bootstrap liquidity or anything.
This is kind of like a portfolio that you can, as a creator, spin up, but you don't
really need to worry about bootstrapping it, right?
Yeah, exactly.
So if you just want users to be able to mint and redeem through the Reserve app, and the token, once you create a DTF and indexed DTF, it's immediately liquid.
That means that it can be traded, it can be sent to others, and it represents the basket.
And being one-to-one asset back ensures that if people want to mint more, they'll have to provide the underlying assets.
ensures that if people want to mint more, they'll have to provide the underlying assets.
Obviously, this process is extracted away with a sapper on our side where you can come in as a
user with like USDC or ETH or whatever asset and then acquire the assets in the basket. The acquiring
the assets in the basket is abstracted away from you and you just reserve the index DTF, but yeah, that's exactly how it works. Right. So about the basket then, so this is, so I guess DTFs are kind of the creation basket
in the Chatfire world for ETFs, right?
Well, we like to say like, sounds like a motto that we want to be the sensor of BlackRock
and specifically that, the difference here that we want to be the sensor of BlackRock and specifically that
the difference here that we envision the reserve platform being fully permissionless in a way where
anyone can come and create their idea of an index or a strategy without you know without needing
permission from anyone and just having the tool at their disposal with a few clicks.
Right. So here, so here, basically the AP, the AP is the authorized
participants in the ETF world here.
They're not really needed because users would basically, users or bots,
I guess, would exploit the different arbitrage opportunities and they would mint the DTFs with the underlying assets one to one.
And they would be basically no intermediaries in that sense. everything that is behind closed doors in traditional ETF operations,
in DTFs, it's fully democratized.
So, for example, arbitrage opportunities reaching the DEX pricing
and the actual NAD or index pricing,
those are fully available to anyone, to any market participant.
Trades in the basket and rebalancing.
Let's say that I have a basket with ETH and SOL and BTC,
and I want to replace SOL for hype or something like that.
That trade is done as an on-chain auction,
and it's visible to everyone.
And anyone can participate in.
It's a competitive process, right?
Whereas this in the ETF world will
be done through a
tick of trade test that you try to place these slots to whatever buyer, right?
So, and that's, you know, at our discretion here, it's fully available to anyone
that is involved in the on-chain ecosystem. So that's sort of the beauty of next ETFs.
So that's sort of the beauty of next ETFs.
So out of curiosity then, how is the net asset value calculated?
Is it like done daily at close, like in transfer?
How would it work?
The NAV is calculated actually constantly.
It's not...
In real time.
It's real time. So the pricing that you see on the reserve tab, it's calculated in
real time. That's how the charge generated as well. There's an ATI that you can call and it'll
get you the latest price. It's basically NAB pricing, which for those that are not familiar,
you just have the price of the assets in the basket multiplied by their weight and that and that basically uh gives you the na the nad pricing of the of the basket
that's sort of how how these dts are these indexed etfs are priced yeah nice yeah pretty simple uh
but very important at the same time so i think um also an area that is interesting is the whole R token topic. So
I guess that basically represents the ownership in the DTF itself. So someone creates it. And if
I'm holding, let's say like ETF shares, I'll be holding the R tokens, right? Which are itself backed by the basket of ERC20s.
Yeah, I think a good way to see R tokens, and let me know if I answer your question in particular,
a good way to see R tokens is anything that is created on the reserve platform, right? So both
yield ETF and index ETFs are tokens. So
anything that is created in the in the reserve yield protocol,
it's a yield ETF, anything that is created on the index, in the
next protocol, it's an index ETF. That's the difference. Let me
know if you want me to go a bit more detail on the on the yield
ETFs in particular.
Yeah, no, it's, it's interesting, man.
I think this is so cool.
And I think there's very few,
there's not enough people talking about
the whole indexes topic, in my opinion.
I'm surprised.
You know, it's such an important area in ChatFi.
And it feels like, I don't know,
I think it's going to grow grow a lot but in any case yeah
i i'd love to dig in deeper into index and yield etfs so index etfs uh what are they and how are
they different to to yield tgs yeah uh so i'll i'll i've covered a little on index ETFs before I go into the actual difference. I'll explain what yield ETFs are. So the same way that index ETFs allow you to get directional exposure through a basket. So if you buy an index ETF, you likely want to get price exposure, right? What you do with yield ETFs is to get yield. So if you're looking for
year-in-one denomination, it can be yield in USD or yield in ETH or yield in BTC. You will go and,
for example, you can buy or mint ETH+. ETH is a yield ETF created on the Reserve Yield Protocol
that is a diversified basket of ETH LSDs,
so liquid staking tokens.
If you don't want to choose between LIDO or RocketPool or Stater or whatever,
you're basically buying ETH Plus for the peace of mind that you have.
This diversified basket that is professionally rebalanced
and governed by a set of stakers or RSR stakers
that will adapt the basket to the best liquidity and risk profile
amongst the LSDs.
So let's say that if an LSD use on-chain liquidity
suddenly becomes limited, so it doesn't become a bottleneck,
the set of stakers and those in the community
that can create liquidity analysis
will be able to adapt the basket to the best conditions
and to the best constitution at any time.
Now, yield ETFs not only provide the user with that easy yield in obstructing
with the complexities of managing positions in DeFi, but they also provide them with some
sort of like insurance, not only insurance, but it's a way, it's an over-cororization
from the stakers, which is an additional feature that is available in index ETFs.
And what this over-colorization feature enables
is that if there's a DPEG in the basket,
the user is protected because the protocol
will detect this DPEG automatically,
go into emergency re-colorization mode,
and it will replace this asset for a safer asset.
And if the yield that has been generated in that time period isn't enough to cover the slashing, it will take it from the overcorrelization layer.
So that's sort of like an additional feature that it makes sense for same-denomination baskets, but it doesn't really make as much sense for volatile baskets like indexed EPFSR.
That's sort of like the main difference.
Nice. Yeah, I wasn't aware of that security layer. So I guess to sum it up as well, it's like,
so the index DTF, it's like, I guess, I guess like sector tilts, which could be something like holding an S&P 500, which is more like, you know, I want to be exposed to or like NASDAQ to like tech, for example, and then you would buy an index ETF.
And if you want something, I guess, more income generating and you want to hold kind of money market funds, then you would go for your DTF.
kind of money market funds, then you would go for your DTF. And in the backend, you have,
as you said, all these bunch of LSTs in staking, or it could be related to lending.
And there's like a bunch of strategies. So yeah, I guess that's correct, right?
Yeah. Sorry. I was, I muted myself. Yeah. So that's, that right? Yeah. Sorry, I muted myself. You're muted.
My mistake.
Yeah, so that's exactly correct.
Basically, the Money Market Fund and Anology is a very good one.
For example, some of the other strategies I mentioned is ETH Plus for the ETH denomination. But USD denominated, you have USD3, which basically is composed of USD strategies.
Basically, stable coins lent out on lending markets,
on Bluetooth lending markets.
Like you can have like Avid compound,
like Morpho, Fultz.
So these are some of the options
that you have available with your ETFs.
As you mentioned, yeah, on the index ETF side,
the equivalent is, the analogies is pretty natural, which is indexes like the S&P 500.
And it's actually, you mentioned it briefly earlier, how you're bullish on index investing.
It's pretty baffling, right?
Because in TradFi, we've had indexes for many, many years now. The ETF industry is hugely successful.
A significant part of all assets, of all stocks, are part of ETFs.
Whereas in crypto, that number is under 1%.
So we're still very, very early.
We have a lot of ways to go on index investing in crypto.
But the same way that someone with a 401k or with a retirement account, a pension, something like that, doesn't go and pick their individual stocks, someone that wants to participate in the stock market doesn't pick individual stocks, it's more likely they'll buy an index.
We believe and think that that will be the case in crypto as well.
Why would you be doing all this research when you can just buy an asset?
That's the research for you, right?
And that's the goal of Indexed ETFs and what this platform is trying to solve
and the gap that it's trying to fill,
especially as we think index investing group that will become more and more
prominent in the coming years.
Yeah, no, totally.
And I think, you know, I think and everyone in chat will tell you that,
that, you know, passive investing is way bigger for a reason.
It's, you know, historically it's been measured.
It brings like basically the best results for like an average investor.
And at the end of the day, you know, in crypto, I think it's even more difficult to hold cryptos
that are gonna, I guess, exceed the returns from an index or even Bitcoin. So I think in general, having indexes makes a lot of sense, especially
in crypto, where half of these just die from one day to another. So yeah, I think it's a seriously
important area of crypto that's underdeveloped as of now. And it's just going to keep growing a lot.
developed as of now and it's just going to keep growing a lot.
But yeah, that's, that's just the way I see it.
So, yeah, I think the next part for me,
that's interesting to hear from your side is, you know,
what is the long-term vision of the team?
What, I guess you want to become kind of a decentralized BlackRock or what is
the broader vision? Yeah, so that's one I want to say that that's what defines the long-term
mission best. Our goal has always been since our inception. I can give you a little three lesson of reserve here. But the main goal is to buy inflation. The reserve was created, a stable project initially
to fight inflation and hyperinflationary economies with some success there through the retail arm.
And that continues to be the mission.
Now, what that looks like today is different
than when we started at the beginning.
Basically, in order to create the next reserve currency
of the world, you need to develop the tools to do so,
but not only the tools you need to get attention
and make it aware to users and to the potential
creators that these tools are available to them.
If the next reserve currency in the world won't be easy to mint without providing the
underlying assets.
We think that currencies need to evolve and that the dollar went south and
currencies go south when you can mint more of them and issue them out of thin air.
So basically, as we've seen since the dollar is not back, it's not back since the 70s when
the dollar was back by the going for nox, the dollar can be minted out of thin air.
And that's has led to the inflation figures that we've been experiencing and we've seen the past 50 years, right?
Whereas before, this wasn't as prominent.
The same, we think the same should apply to the next reserve currency.
We think that currencies should be fully asset backed.
In order to mint more of them, you need to provide the assets that back them.
We believe they need to be hard asset backed.
So what the index protocol enables is for people to experiment with different baskets.
And aside from tracking broad market indexes,
aside from creating strategies for specific sectors,
aside from creating strategies for the hottest meme coins.
Aside from that, the platform can be used to index any asset together.
So you can asset that we use the sort of the slogan of index the world because that's exactly what you can do.
The goal is that as more assets are tokenized in our broad on chain, let's say real estate,
let's say stocks, let's say more and more money markets, private credit, all the assets
in the world, commodities like gold, silver, right?
All the assets in the world will be able to be tokenized and be available on the blockchain
for anyone to include in baskets and to experiment with what
a next world reserve currency might look like. Now, this will not be pegged to the US dollar,
but it might include a combination of different assets so that the composition of this currency
resembles that of the world GDP, if you will. So that's sort of the goal behind it is to provide
the technology for anyone to index things, index everything, and as more things are available, people will start to be able to experiment with different reserve currency, different currency compositions.
And then it'll just be like market forces and dynamics and competition that will yield which one of these is more more is more adopted right and in the end of winning
or many that end up winning the long term yeah that was a that was a great a great outline of
the vision you guys have i guess quickly on these last few minutes i want to because it sounds to me
like reserves mission goes you know way beyond it captures like you know goes, you know, way beyond it captures like, you know, anything, as you said,
from like tokenized real estate, like RWA's, you know, stable coins, whatever. But so as of now,
indexes, you can kind of compare them to, you know, stable coins in a way, I guess, because stable coins,
there's some of them that they are, you know, they're simply T-bills. Some of them are, you know, structured products, you know, with, with,
it depends what they have in the back. Right. But I think that's the closest it gets. Uh,
but like, how would you differentiate what you guys are doing as of right now, uh, compared with
existing structure products? Uh, like for example, you know, as you, well,
USTE, for example.
Yeah, I mean, in this case, what we're doing is a layer above, I'd say.
I don't, I don't, I don't consider reserve the platform to get the same layers uh stablecoin issuer it's a platform that enables you
to create stable coins um and create index products uh and asset backgrounds these offer
for the existing tokens on the blockchain so it's the the key differentiator here and the key
features in the indexing part uh right like you're Like you're not tokenizing anything from scratch.
You're enabling users to take those tokens, those structured products, whatever you want.
For example, you can take Athena as USD and put it in a basket and that's a structured product, stablecoin, however you want to call it.
You can put like tokenized money markets in a basket, and then you can put traditional yield bearing stablecoins like SDEI,
or you can put USDC Lend out in Aave,
and then you can take Maples, Syrup, USDC to get some of that off-chain lending in the basket as well.
And then all of a sudden, now you have an index of different sources of yield
that sort of like hedge against market dynamics.
So like if T-bills are high,
and if T-bills are high but DeFi yields are not as high,
like the yield will even out, right?
And will be diversified and you get yield sources from different parts.
That's sort of like the power of it, not really creating like a new product
or tokenizing anything, but more so being able to index those products that already exist.
Wow. Yeah, that's very, very cool.
So it's kind of this metal area above where you can build any index product.
It can contain literally anything
from stablecoin to our WAs,
what we mentioned before, LSTs, you name it.
But yeah, well, I think we're pretty much
at the half past mark.
I don't wanna make it too long for people,
but yeah, thanks.
Ivan for sharing here your vision and talking about reserve.
It's been a pleasure having you here. I've really enjoyed this chat and I hope everyone did too here.
So yeah, thank you guys.
It's been amazing.
Yep.
Thanks so much for having me and having us.
Thanks everyone for joining and listening.
Any questions, feel free to DM me. Do my best to answer them. And yeah, have a great day everyone. Happy
to be collaborating and partnering with players three on this campaign.
Yeah, excited. Excited for what we have running. If you want to DM me as well for anything
related to this campaign or their three, also feel free to DM.
Thank you, guys. Have a nice day. Bye-bye. Thanks for joining. Bye, everyone.
