GM, GM guys, thanks for making the empty spaces.
I know it's pretty early for some of you, it's pretty early for me too.
So I'm up, just having espresso, so ready to get this thing going.
So we're going to wait maybe another minute.
I think we're just waiting on someone from the Swell network, but regardless, we'll get
started in a minute anyways.
Okay, cool, let's get this thing started.
We have a fantastic cast coming in for this spaces today, we're talking about liquid staking.
We got people from Lido, Rocket Pool, Redacted, Viva, Swell, and lastly, it gets from EtherFi
So I think we're going to have a great discussion.
We're going to keep it pretty kind of free flowing, really want to get a good back and
forward conversation going.
But I think just to start off, we can do a round of intros, just introduce yourself and
Yaakov, do you want to start?
Hey everyone, my name is Yaakov, I'm contributor to Lido Dao, and my official role is Master
of DeFi in a protocol relations team.
So to explain that a bit further, a protocol relations team is a compliant way to say
business development in a traditional sense.
And Master of DeFi pretty much means that I'm responsible for all the on-chain utilities
of Lido's tokens, Stakedit and Repstakedit.
So to increase the utilization of the mentioned assets and tokens, there is an obvious need
and demand to expand to other networks, presumably layer 2s, which is why I'm also a member of
the network expansion work group and working on making Repstakedit available wherever it
Yeah, maybe I should get a more compliant title as well.
Alright, Nick, do you want to go next?
Hi everyone, I'm Nick, also known as Matt, I do marketing in community for Rocket Pool.
Rocket Pool is Ethereum's decentralized liquid staking protocol, and it dates back to 2016
and launched in 2021, making it the first permissionless staking protocol.
And what that means is with Rocket Pool, anyone can be a node operator.
So you can connect the computer to the Ethereum network to help keep the blockchain running.
And this is something that most other staking protocols live today will not let you do,
Along with many members of the Ethereum community, we believe that having node operators be permissionless
is critical to Ethereum's continued viability.
Great to be here today and looking forward to the discussion.
Abhi, do you want to go next?
My name's Abhi, I work as the head of research at Swell.
So it's a liquid staking protocol.
We launched last year with Sweet, a liquid staking token.
And we have most recently launched RSweet, a liquid staking token.
In terms of liquid staking, Swell's main missions are to build the liquid staking token that's
We have a super DeFi first and security first approach to liquid staking.
And I'm here to bring the most Ethereum-aligned version of liquid staking to the community.
Rock, EtherFi, do you want to go next?
Yeah, GMGM, thanks for having us, scroll team, appreciate it, and great to see so many great
My name's Rock, I'm the co-founder over at EtherFi.
I run our growth strategies and whatnot.
We are a liquid staking that I guess has turned into liquid re-staking space, and we natively
re-stake on Ethereum, and you get a token called Eeth, that you earn Ether staking rewards,
EtherFi points, and eigenlayer points.
And then you also maintain your composability to even to fund DeFi things.
So super excited to be here, look forward to chatting, like I said, a lot of great people
So I think we'll have a great conversation.
So thanks for having us, it's early on my side of the globe, but I appreciate the invite.
So I'm Colton, I'm the marketing guy at Redacted, we're the builders of Pyrex-Eeth, which is
a high yield liquid staking solution.
We launched around a month and a half, almost two months ago now, in December, right after
So I think we may be one of the newer participants in the market up here, but yeah, glad to be
And Kaldor, you want to round off the intro?
I'm a business developer for DeFi staking, and I've been for 30 months now.
For those who don't know, DeFi is an Ethereum liquid staking protocol, which is fully powered
by DVT, that aims to lower the entry value for operators to as low as one Ethereum.
Thank you, everyone, who is coming here today.
An extra thank you for those who are very early writers.
Well, let's get right into it.
So the first thing I want to get into is kind of write about the liquidity TBL yield, like
what your LST is really about.
So I want to talk about how you guys think about incentivizing and growing liquidity
for your LSTs or assets on different chains and in DeFi.
And you can think about that in terms of yield, how you're trying to attract TBL, about the
So for example, like Rocket Pool has the IMC with a certain charter with certain goals.
So you can really talk about any of that.
But yeah, I really want to understand what your strategy thus far and going forward is
going to be for increasing the usage of your asset.
And yeah, anyone can can go ahead and get started.
Yeah, I mean, I'm happy to kick it off since I guess for the new one.
So basically, the way we designed Pyrex Youth was actually with this sort of strategy in
So Pyrex Youth embraces a two token liquid staking design.
So there's one token that sacrifices yield in favor of earning yield throughout DeFi.
Then there's one token that earns pure staking yield.
And the reason we did that is because we wanted to be able to sort of maximize yields
on both end of the spectrum for users.
And so a big part of the strategy for the adoption of Pyrex Youth itself, which is peg
to eat, is to make sure that we go cross chain and are on as many venues as we can possibly
We're already starting on Ethereum, Mainnet, and we're planning to sort of expand to different
L2s as soon as possible through like Chainlink, CCIP, and a couple other solutions.
So yeah, I mean, it's a pretty critical part of our strategy, mostly because the design
of our LST lends really well to that.
And we have a treasury to sort of bootstrap incentives wherever we want to do so.
So yeah, that's how we're approaching it.
And just double clicking there for a second, because you guys have two separate LSTs, is
there one that you think in particular will capture, will become more of say, like an
asset that actually gets exchanged a lot like money?
In other words, one that's maybe exchanged a lot and one that's maybe held more?
Yeah, we think naturally that Pyrex Youth is the one that will get exchanged the most
because it's peg to eat, and it's the one that will have the more sort of exotic yield
So it's the one that people will be trading on DEXs, providing liquidity for lending,
So I mean, in general, I think people will be using that more as money, whereas a Pyrex
Youth is more of a, you just kind of sit on it and earn your staking yield.
I'm happy to go next, man from Rocket Pool.
So one of the benefits of being permissionless is that there's thousands of Rocket Pool
node operators around the world.
This means that the Rocket Pool DAO is the largest and most engaged of any staking protocol.
And the nature of running an Ethereum node also means that the DAO members, they tend
to have a pretty good knowledge of the Ethereum ecosystem.
So that well placed to be the sole authority on Rocket Pool's entire L2 and liquidity strategy.
For clarity, I'm part of the team of eight people.
We're not involved in any way in any of this.
The IMC was referenced before, and this is a subcommittee of the DAO.
They do a really great job.
This part of the protocol's governance is highly decentralized, and the IMC handles
liquidity and L2 strategy entirely.
One less thing for us to think about.
Thankfully, Rocket Pool's REeth liquid staking token has very strong liquidity, and it's
also very highly integrated into the DeFi world, and it's present on some of the most
So REeth is a single token, very straightforward, and this is the approach that most large
staking protocols will take.
One of the main points of liquid staking after all is that it should be composable within
You can hold it, you can earn staking rewards, you can also use it in the world of DeFi for
Liquidity provision, other novel applications, and we can chat more about some of these things
They're a big part that is shared similarly with the L2 strategy when it comes to liquidity.
Same as with Reducted's approach.
There are two tokens, but they're different than what they have.
There's Stakedit and there's RepStakedit.
For those of you who maybe are still a bit confused, what is the difference, Stakedit
is a rebasable token, where RepStakedit is a non-rebasable token.
RepStakedit is still the one that you want to hold if you want to get the maximum composability
In my opinion, Stakedit is better if you're using Lido as a staking service because it
provides better user experience every day.
You can see rewards coming in with every rebase, the actual balance in your wallet changes.
Then when it comes to liquidity, it's a process.
Initially, during the time when Ethereum withdrawals were still not enabled, there was a big emphasis
on the STEAT pairing, mostly on curve, basically to allow for unstaking, fast unstaking, true
It was very convenient because STEAT and ETH are not pegged, but every STEAT has one
It was really easy and it was a really good opportunity for liquidity providers to provide
the liquidity inside a pool without worrying about the impairment loss.
Now with the withdrawals that are enabled, there's not a huge need for that pool, but
there is a need for RevStakedit to eat pools and there's also a need for RevStakedit to
One of the things that I would like to see is to have RevStakedit as a connector token
embedded in most of the aggregators.
The liquidity then becomes a tool.
The liquidity shouldn't be fully dependent on the external incentives, no matter who
is giving them either Lido or other projects.
The volume should be able to drive the liquidity itself, ideally, but it's not so simple, especially
not for stablecoin pools, which are bound to face big impairment loss risks, so you
need to somehow compensate with the APR.
When it comes to layer 2s, the situation is a bit different, especially now with all the
It's really not scalable to incentivize liquidity and all the layer 2s in the same sense, in
the same manner, and as I said, liquidity should be a tool, so the primary goal is to
tackle integrations, increase the utility for the token, monitor the traction, not just
for RevStakedit, but the general ecosystem traction on the specific network.
If the ecosystem is booming, if there's enough activity, then yes, double down on the utility
and maybe reinforce with some incentives to allow further scaling, for example, of
supply caps on many markets, which, for example, are proven to be one of the best strategies
for LSTs with leverage loops and leverage staking.
That's pretty much it, but then again, even these leverage staking strategies and providing
liquidity, it's not very trivial for regular users to do manually, so what's really important
is also partnering with protocols that abstract all of that, that provide single deposit,
a one-click experience, and then in the background, inside the strategy, liquidity management happens,
leverage staking happens, and users are just receiving returns based fully on the validators
taking rewards and the power of DeFi primitives.
Got it, got it, so when it comes to L2s, if I understand correctly, the approaches, you want to get
integrated everywhere where it makes sense when it comes to cross-chain or aggregated applications,
where it can be used as a vehicle for money, but then once you've seen enough deep liquidity,
then it makes sense to double-click and maybe incentivize a bit harder.
Yes, the problem, I mean, the challenge that I see is that you need liquidity, for example,
as I previously mentioned, to scale the supply caps on lending markets like Onave to get good
risk parameters, recommendations from risk stewards, but increasing the supply caps and
more utilization of the lending markets does not equal to bigger utilization of the underlying
pools that would be used for liquidations, unless the liquidations are not happening.
So for that, there's also a big need to get these pools supported in the aggregators to have
competitive liquidity and the fees, so you can route as much volume as possible through them
and increase the APR for the liquidity providers above the purely staking rewards without
inducing a lot of external incentives, because if you pair up, for example,
rep-staked ETH with ETH, ETH is non-reward generating token, so you're pretty much sacrificing
half of the returns that you will get purely from staking. So that's kind of the lowest barrier
that we need to somehow surpass with the volume. Right, yeah, there's a trade-off for sure. Makes
sense. Yeah, I'll step in. This is Rock over ETH. Liquidity is, when you're in the place of
Rocket Pool and Lido, you get to a better place where things become quite a bit easier, but
when you're just starting, liquidity is super challenging, and finding good partners is super
important, and you basically just don't have the money to incentivize these pools and kind of get
going, and you can't compete, right, especially if there's no token. So it becomes really expensive,
really fast to incentivize, and you end up giving this mercenary stuff that kind of happens, and so
it's super challenging when you first start. So Colton, I can appreciate
what you're about to go through. I think we've gotten in a good place kind of over time. A couple
things as far as our strategy when we started. One was to make sure that we didn't fragment
our liquidity and just kind of kept it concentrated in a few spots and picked a few partners, and then
kind of let it run from there. I do think over time you just need depth in all these integrations
and kind of got to get across the board, but one of the things that, this is kind of our thesis,
and we haven't seen it much actually in the space, I actually think protocols should partner more.
So we actually just partnered with Swell, and super excited about this, but
we have their wrapped sweet, or sorry, restaked sweet, in our wrapped e-eath pool just went live
on curve. This is like the first, you know, liquid restaking pool, I guess you can call it,
but we're going to pair it together, and kind of like the Lido team mentioned, like, you know,
when you take wrapped eath, you're taking away from the rewards, so we kind of think that's not
great for users, this we think is super good for users, super user-friendly, you know, tends to be a
competitive space, but like, I think there's room for a lot of people here, and so, you know, we've
been talking with Swell about it a long time, really respect the team and what they've done,
so yeah, that's one, it's another thing I think that will also help users when they did that before
you can, as usual, you had sacrifice, you know, having a pair and turning one of those into a
non-reward accruing wrapped eath, but I think there's room for that on the move forward, and
yeah, it should be pretty good, so. Interesting, and when it comes to, like,
the benefit of partnering with other protocols, am I right in understanding that doing that allows
you to benefit from the network effects of each protocol, and perhaps, like, increase the
fungibility between the two assets? Yeah, I think there's multiple things about it. One, I think
first and foremost, I think it's good for users, right? Like, and then if you make your users happy,
like, you're gonna win over customers over time, so we always try to think of the user first,
and then kind of go from there, so yeah, like, for this one, I mean, I just think,
like, the restaking narrative is just so incredibly hot, and so, you know, maybe we're
cross-pollinating our communities a bit, right? We tend to be in a lot of the same conversations
anyway, kind of in, like, this up-and-coming group, right? Like, Rocket Pool and Mido have their
the big dog kind of stuff, you know, you guys in D.Va, you guys are getting your products out now,
and then, kind of with Swell and us, like, you know, we've been around for a bit, but, like,
everyone's kind of got their different things, so that was kind of the thought behind us, like,
hey, let's give it a try, like, we'll incentivize with our points, Swell's incentivizing with their
pearls, you can continue to earn staking rewards, so, like, I don't know, we just thought it was a
pretty good opportunity, but I can let Abhishek talk about his thoughts on it, too, because,
you know, he's been involved quite a bit on it as well.
Yeah, for sure. I can take to Swell's thoughts on liquidity. In general, Swell's journey in
generating liquidity for for Swith has been a pretty interesting one, I'm sure, as most people
hear, whereas Swell's been running its points voyage for quite a while, and it's been a key
driver in a lot of liquidity provisioning strategies, essentially using the voyage
as a way to direct users into the pools that are going to benefit the protocol most. This has
changed, like, quite drastically over time when it comes to, you know, do we need them in a stable
Swell pool, or do we want them in concentrated liquidity pools? Do we want them on Maverick or
Curve or Balancer? This sort of changes over time as the need of the protocol itself grows. For
example, we launched our pool with Etherfire just today, essentially, where users are able to get
double pearls and double Etherfire points, and I think something that, to touch on here, is that,
like, the main reason we decided to go with this for our liquidity is that we realize that
when users want to provide liquidity to an LRT, due to, like, the nature of a liquidity pool being
having two assets in it, there's a large chance that they're losing half of their ability to farm
eigenlayer points by providing liquidity and by pairing an LRT against an LRT. This sort of solves
that problem for the user and allows to liquid restating projects to collaborate, which is,
I think, a pretty cool way to both keep users happy and also grow together. But, yeah,
Sol's Voyage has been a major part of our liquidity strategy going through different
protocols, and, yeah, it's definitely been tough in terms of bootstrapping liquidity. I'm sure
everyone here knows, but, yeah, that's all about Sol's going about it.
Got it. Yeah, super cool.
Something that I agree a lot with what Roxette said, and it's about choosing your partners. I
think choosing a good partner is very important at any stage of the development of a project,
but it is something very critical in the early stages of it. We're going to say much things
first-hand about liquidity bootstrapping, since we're still on testnet, but we are seeing many
treasuries and investors diversifying with all the upcoming projects, us included. And
we just love to see the renewables on diversity on liquid staking.
For us and Diva, what we're doing right now is just bootstrapping liquidity through
DAO initiatives, for example, like the Ali Staker program, led by Enzyme, or the upcoming,
hopefully, upcoming reserve, which will enable Diva on base. But, yeah, it's still too early
for us to get very in depth in this topic. So, yeah, I agree mostly on all of the speakers here.
Yeah, and one thing I wanted to add on the redacted side is regarding the expense of liquidity. So,
you know, we've been fortunate over the past two years that redacted has been sort of building
products that we've kind of grown a really strong treasury of convex or other governance
assets that actually have helped us bootstrap liquidity so that we don't have to flood the
market with our own incentives or anything like that, which definitely helps with the upfront
cost. And we've also built hidden hand, which is a piece of infrastructure that really many of the
teams up here have used to help grow their liquidity across different venues. So, I definitely
want to add on that we feel we're in a privileged position so that we don't have to put the bill
for a lot of the upfront liquidity expense, because it's definitely a challenge, especially
once you go across chain. Yeah, liquidity is expensive, no doubt about that. So,
switching gears a little bit, one of the big conversations around liquid staking protocols
has been the sort of idea around node operators, who can be part of the node operators, which makes
up the bread and butter of what the LST protocol is. And so, I wanted to ask all these teams here,
how do you currently enable or allow new node operators to join your protocol? And do you have
plans to enable permissionless node operation for your protocol? So, I know that for some teams it's
on the roadmap, for some teams it's already in the process, but would love to get an overview
from all of you. Yeah, my answer will be short since we're so new, but we basically handle all
node operations internally at the moment. So, we're still very much in a bootstrapping phase,
and we want to prioritize things in order. So, we're really focused on security first. We partnered
with Cubist on the back end, and we are a member of the secure staking alliance, etc. So, everything
right now is focused on scaling up the system and scaling up security and making sure that everything
runs smoothly, but we absolutely have plans to expand to a permissionless and distributed node
operation set up in the future. On DBA... From Lido's side. Oh, yeah, sorry, go ahead.
Go, go, go, go on. Oh, thank you. So, yeah, on DBA, everybody will be able to become an
out operator from day one. It is being created to be trustless and permissionless from day one.
You just need to look up your DBs or ETH, and in the case for those who don't want to go
through our receive token taxes, and just as low as one ETH that is going to be required to
become an out operator on DBA. And of course, the hardware that you use or the services that you go
with, such as bare metal or whatever. The DBA smart contract will just act as a bridge. You deposit
your ETH into the Ethereum consensus layer, where they are used to set up validators, and then each
32 ETH, the validator is operated by 16 DIVA keysers, which are distributed to different operators
who have posted an off collateral. Then the validator just need to sign its validation duties,
which is just two thirds of the keysers needed to come to consensus and sign in order to perform
any action. So, yeah, the advantages of being built in impurities.
On Lidos side, currently, the way to get on board as a node operator is to curated
node operator module. That's part of the staking router. And it's been like that from the
beginning. How it works in general is that there are publicly announced waves of onboarding.
Anybody can apply. And then the Lidos node operators sub-governance group reviews post
comments about the applications, creates a shortlist, and then ultimately the
DAO votes in if the DAO wants to onboard a new set of node operators.
What's in progress is pretty much not only relying on this module with the latest upgrade
of the staking router. There's an ability to add other modules to the staking router.
So it's a process. The following one, the next one is simple dbt module, which already
allows permissionless node operators, permissionless onboarding of operators
using a dbt technology. And it's only meant to be there temporarily until it gets replaced with
more robust community staking module that fully allows permissionless node operator
joining to Lidos staking router. When it comes to simple dbt module, I find it very important part
of the infrastructure because we are removing or minimizing the risk of failure on the
infrastructure level. Dbt technology is very important. The validators are not
a single entity anymore. There are multiple operators running and providing more resilient
infrastructure for the staking part, which ultimately reduces the chances of slashing.
And what it is also going to allow is to really quickly expand from the current number of 37 node
operators to more than 200 in the short term. So from the... Sorry, go ahead.
All right, cheers. You probably all know by now, Rocket Pool has had permissionless
node operators since day one, back in 2021. That means anyone listening in can join as a node
operator without permission. There's no review required. You simply join and start running your
node. Rocket Pool will always put Ethereum's health first by trying to be as decentralized
as possible. And that helps the protocol avoid some of the centralization risks that are present
elsewhere in the ecosystem. I'm sure we've all seen throughout the past couple of years
with FTX and Co, how damaging centralization risks can be. If nobody really cared about
decentralization, we could just run Ethereum on some investment bank server. It would be quicker
and cheaper. And at the end of the day, having permissionless nodes is really the whole point
of Ethereum. Without it, it doesn't really have much value. So if you're a liquid staker, which
tends to be the case more than node operators, you should really consider who is running the nodes
that power your liquid staking token. If they're permissionless, that's great. But if it's a small
curated set, you should have a think about whether you're willing to trust these people.
Yeah, I think that that's an important thing. You know, it's interesting,
Nick, you bring up a good point, or Mav. I think decentralization is super important.
But we've seen in crypto, it's one of those things that doesn't matter until it matters. And then
it's like the only thing that matters. And then people stop caring about it. And it's hard to
decentralize. And it's super expensive. So we are trying to do it, right? Like, and we're going
with the solo staking mechanism and leveraging dbt, where anyone will be able to kind of spin
up a node and hold the draw keys. We currently use permissioned node operators and do that,
that we do have permissioned stakers who are holding the withdrawal keys. So we do have that
benefit. But still, it's like, you know, it's a challenge. It's kind of like liquidity. And when
you first start, like, going fully decentralized is a challenge. So like, really, the diva team
really respect them and, you know, the mission they're taking on there. So it's, I guess when
you get 100,000 ETH at stake, that's a good head start for you. So, but it's a challenge, I think.
All these things, like in the crypto world, like there's these idealist, like idealistic states,
and then like the realities of running a business. And so I think making some of those things more
economical is like one of the challenges. So I actually think that's why, you know,
one of the things that we've seen with a lot of these L2s and, you know, you guys were talking
about like L2 strategies kind of here, like, I think it's super important to find ways to get up
to, you know, L2s just for cost efficiency and stuff. And then I think each of these L2s
are going to, you know, play differently. So we're planning on integrating with all the L2s
scroll team, we've been talking with like quite a bit. So, you know, look forward to getting stuff
going there and love what they're doing. So yeah, I think, I guess just to, you know, kind of fully
loop it, that the challenge with decentralization with node operators is the cost, I guess, to get
there and running a good business. So anyway, it's something that's been fun and worth certainly
doing. But I think we need to make that more noticeable and so that the FTX situations don't
end up like you mentioned Nick, where, you know, centralization can really take a leg out from us
as an industry. Yeah, and intention is everything, right? Like a lot of people in here are probably
users of liquid staking products. And so you should, of course, always use products that are
aiming towards, you know, maximum decentralization, security is important, but ultimately, you know,
working towards decentralization is also important. So always keep that in mind when you're looking to,
you know, find products to use in the space, because where you put your money is where you're
choosing to put your confidence. And if you put your confidence in the wrong people,
like FTX, for example, we all see see how that plays out.
Yeah, so hard. It's like the Lindy effect is a place, you know, so much in crypto,
and then you don't even like look at look at the security on these things. So yeah,
exactly. And as the users, and even as builders up here, like we're the ones who create the Lindy
effect. So always keep that in mind, everybody listening. I think in like the live team, I can
imagine like, I don't know, I'm just guessing, right? You guys created this liquid staking space,
tons of respect for the Lido team. You know, obviously, like the big knock on Lido consistently
is like how much stake you guys have and being centralized to 32 node operators, whatever.
I'm guessing that was just a function of like you guys starting and like being cost efficient,
or like, how did that start? And like, what was the thoughts? Because and then it almost gets to
this point where it's just like so big that you guys were running so fast. I'm curious to hear on
that. If you if you're open to speaking better, I guess. Yes, for sure. I mean, the primary focus
is security. And security somehow also bound to decentralization, obviously, because even if you
have, there's never like 100% non exploitable smart contracts. But even if theoretically,
that would be possible. Still, if you're centralized, there's like certain piece of
the infrastructure that can fail. So to when when Lido started, and when liquid staking started,
staking in general, when it started, DBT was not a thing. It was it was a it was a research paper
only. And to create a product that was pretty much never tested that that there was still no
demand on the on the DeFi. So it was not something that that was already validated.
From the business perspective, it didn't make sense to start with something that's
simple from technical perspective that can be done. That can be done as secure as possible
on the smart contract level. And decentralization is not a point. You cannot say you're decentralized
or not. You can say when you're fully centralized, obviously. But central decentralization is not a
point is a process. And that's a process that we are currently all flowing inside, hopefully moving
to the more decentralized infrastructure. But you can always when you're decentralizing, you're
pushing the centralization part somewhere else in a certain corner, and then you go to that corner,
and you can decentralize a bit more. So from that perspective, it's something that's happening.
It's something that's required when scaling up the technology. And obviously, also listening to
the community feedback to the user feedback is very important. That's why Lido and Lido contributors
actually are trying to be as transparent as possible. So all the analytics are available
on the Doondash boards. And out of these, out of that data, there's also a publicly available
scorecard. What is a scorecard? It's a scorecard that's placed on the Lido.py webpage, where pretty
much all the concerns, all the challenges, all the parts that Lido contributors and the community
feel like needs to be improved, which also includes the decentralization or decentralization
process is included there with data that can be verified, that can be tracked. So that's kind of
the approach that we as Lido contributors are taking. Let's listen to the market. Let's listen
to the community as well. And let's try to make the best of all words for everybody to make as
secure and as decentralized protocol as possible without obviously rushing. For example, for Lido
v2 development and deployment to the production, it took a long time. It could have been rushed,
but taking nine independent audits was really, in my opinion, a good move for a project of this size.
It's really not the same if you're starting a new project, if you're a startup, or if you're
handling or if you're deploying the production contract that would be handling
billions of value of assets inside.
Awesome. I love it when speakers ask great questions. It makes my job a lot easier.
Abhi, go ahead. I know you've been waiting. I'd love to hear from your side too.
For sure, for sure. Yeah, on a small side, Swole has a permission set of
a node operators at the moment. These node operators are distributed both in the
way that their nodes are set up and also geographically and in terms of jurisdiction
as well. This is sort of, I think Swole's in a similar position to both like E-Divide and also
maybe the early stages of Lido in that there is sort of trade-offs you have to make when it comes
to decentralization and efficiency in terms of how to actually choose your operator set to have
a set that is proficient but also that there are sort of trade-offs when it comes to
trying to get things towards decentralization. Obviously, this is a priority for Swole and it's
something that we look to ultimately move towards. But at the moment, Swole's operator set is
permissioned. Awesome. Yeah, I had a question about decentralization, but I think you guys
covered it pretty well. So I'll kind of move on from there. One thing that I've been thinking about
looking forward into the next cycle as we think about future institutional and retail flows,
what is your thought process around adoption? So from broader retail, maybe people who are not
crypto-native right now or from institutions, especially in context of like centralized teams
that's taking Coinbase, Kraken, Binance, who would arguably have stronger brands outside of
the crypto space and could probably onboard people pretty quickly. How do you guys think about that
sort of process of adoption and maybe be competing with them? Yeah, we'll have your thoughts on that.
For us, the big focus is maximizing yield on both sides of the equation. So we have PXE and APXE.
The whole idea there is to sort of offer or allow people to tap into high yields on the DeFi side
and then APXE to allow people to tap into high yields on the staking side. And so one thing we
know from these sort of centralized teams like Coinbase and Kraken is they just simply cannot
offer yields that are competitive. So I think CBE right now, for example, offers 2.8%, which is
lower than pretty much every project up here. And so while they have an advantage from a brand
perspective, they don't have an advantage from the perspective of how much value they could offer
retail and then how much value they could offer sort of institutional clients. And so our goal is
obviously, I can't leak everything that we're working on, but behind the scenes, I think we're
starting to make the connections necessary to make sure that we offer our product to the people we
want to get it in front of. And then from the retail side, it's about making it as easy as
possible to use. So that's kind of the only advantage that Coinbase, Kraken, and Binance have
is that they're generally where people first begin. So I think it's all of our responsibility
up here to find a way to onboard those people more quickly onto the DeFi side. Whether that
comes from providing better user experience on the DAP interfaces or providing smart wallets
that are more easily accessible, whatever it ends up being, I think ultimately, all of the teams up
here win long term because these centralized entities just can't compete when it comes to
offering the most value to users. I think that the thing that Coinbase, I guess specifically,
like Kraken had their fuck up, but Coinbase has pretty much been able to toe the line. So that's
been good. And I think it's a huge challenge for all of us. When I have conversations with large
institutions, they don't give a shit about decentralization, honestly. And they'll give
up 50 bits of rewards for security. So the Lido guys spoke about that. Security is of utmost
importance on this too. And it's weird, right? Because you need to figure out the decentralization
stuff. And over time, I totally agree, Colton, that that's the way to maximize rewards.
But security becomes so important. And with how many rugs there are in DeFi and stuff,
it's one of the challenge. The only way this industry grows too, by the way, I think, is
getting into institutions. We all have the same whales that have kind of gone between our things
and kind of go, but you've got to get up market, I think, or the crypto market just doesn't get
larger. So I totally agree with you, Colton, I guess. And it's almost like the Coinbase stuff
is a good on-ramp, or Binance, or Kraken, I guess. But it's like that second tier of what do
they do next? And if they can get into DeFi, I think, Pendle. The Pendle pools are so sick right
now because it matches institutional stuff who want fixed yield and know what they're going to get
with the crypto degen retail stuff, who loves the upside. And so it's like these Pendle pools with
points are just like the perfect product market fit right now. And I feel like it could be like a
good onboarding thing. So anyway, that's just my two cents. I think it's, again, I just don't think
people give a shit about decentralization, but we have to get the institutions on board, or it's
just not going to work. And they're not going to go ape in the pool. So the liquid staking token,
I don't know if it matters as much. That's just kind of my high level thoughts. But I'm curious
what other people think. Well, first of all, like Coinbase, Kraken, Binance, these are all crypto
brands. But there's a big difference in mission and vision between these entities and like,
for example, what Lido DAO is doing and what Lido contributors are trying to push to,
which is a benefit of Ethereum as an ecosystem. Where for these brands like Coinbase and Kraken,
it's purely business. It's like, let's try to extract as much profit as possible,
which is also visible through the returns and through the fees.
The second part is that Lido DAO contributors are already working with the biggest names from the
institutional space. If they touched blockchain and Webtree in any way, it's very likely that
they utilized Lido's assets in one way or another. The approach is pretty much individual.
Let's talk to them. Let's put a lot of effort on educating the difference in certain approaches
for staking. And let's try to design a custom tailored product that is designed specifically
for the needs of a certain institution or entity. And the results are saying that we are
on the right track. Yeah, I wanted to add on to that regarding building individual relationships.
I mean, it's really an educational effort, right? If you're an institution or if you're a big fund
or whatever else and you choose to go to Coinbase or Kraken or Binance and earn way lower yield
than you could if you were even solo staking, you're most likely doing that because there's
an educational gap. And so the responsibility falls on a lot of the teams up here to do a lot
of individual reaching out, educating and letting people know that these systems on the long tail
can be very risky. But a lot of the teams up here spend a ton of time on security and we work with
teams like Cubist and we work with all of these big auditing firms to make sure that funds are
as safe as they can be. At the end of the day, Coinbase, Kraken, and Binance, they're not immune
to things potentially going wrong. I mean, FTX is a good example of that. So just because something
is centralized doesn't necessarily mean it's safe. And yeah, I think there's a lot of responsibility
on the people to reach out and make sure that people are feeling confident in the products
that they're using. And I think it's not only about educating about the difference between
certain LSTs. It's also educating about the difference between regular traditional way of
staking and staking with LSTs because maybe they can get better rewards by doing native staking,
especially if they're running their own validators, which again is unlikely for a team that is not
veteran native, but they could be using some services for doing that. Where the educational
part comes really important is to explain additional benefits that comes with LSTs,
which is like first of all, liquidity, and then second of all, composability, which also comes
with liquidity. And that's something that is really not easy to explain to entities,
institutions that are non-webtree native. And there are also like complications that come with
regulations. There's still a lot of work to do, not only on the DeFi side, but in general,
webtree, webtree space to reach to the point where we have a framework process to get
institutions on board to this product. Yeah, I completely agree. And once we get there,
I guess Coinbase cracking and finance don't stand a chance.
I think we are all super aligned with this, and it actually makes me very happy.
I think that this kind of centralization is very important being a single point of failure.
Just look at what happened with FTX. It's just risks. And I think we should fight that and take
responsibility and make good products that can actually fight them. In Diva, we are fighting to
be super resilient and one of the most decentralized alternatives. So the use of the Progo can just
leverage truly decentralized and resilient alternatives. So people don't feel the need
to go to decentralized or semi-decentralized alternatives. And I think that we get that through
education and just building good products. We love education. Yeah, we do. Yeah, Nick,
Abi, do you want anything?
Yeah, Joe, I would say on the civil side, I think we tend to agree that, at least for me personally,
I agree with what the ECHO said about, I think for institutions, it's the main education that
actually needs to be done is the, well, we'll see actual use case for an NLST for them specifically,
for the actual benefits of being able to be liquid, as I feel like a lot. Either use
decentralized solutions like Coinbase, Kraken, Binance, or they sort of spin up their own nodes
when if they were to use an NLST, they could get a lot of the same benefits while being liquid.
But I still feel like there's a lot of convincing that needs to be done on the DeFi side,
because that's why I really feel LSTs shine as a building block for DeFi itself. And if
institutions don't have the education on, maybe it's not of an education, maybe there's the
confidence in DeFi itself as a financial tool, and that's our job to convince them
about the actual use cases of DeFi. I think that's really when institutions might start picking up
LSTs, if they're not going to use the liquid aspect, then I would say it makes sense why
they're going for centralized exchanges or just doing it with their own nodes at the moment.
So you might not be surprised to hear that Rocketball tends to focus on the node operator side in
general more than the liquids taking side. This is because node operators are the protocol's main
constraint, both in the short term and in the long term. And it's also because it's the main
way that we can help to increase Ethereum decentralization. It's the best use of our
resources to approach the problem this way. And a byproduct is that it helps to get R-ETH,
the liquid staking token, in the hands of more people and help it to become more accessible.
The more node operators we can help to get up and running, and the more efficiently they can operate,
the more R-ETH can be minted. And Rocketball has spent years at the forefront of lowering
this barrier of entry to node operators for solo stakers, for small and independent node operators
running equipment in their homes. There are more Rocketball node operators in some small
countries like Singapore than most other protocols have in the entire world. What this means for the
liquid staking side, we're fortunate that there is some pretty strong latent demand for R-ETH.
As we help to improve the node operator side of the equation, that latent demand can be fulfilled.
The demand is strong for the reasons we've touched on previously, strong liquidity, presence on L2s,
some pretty great integrations, for example, with the Coinbase ecosystem and Metamask,
and liquid stakers also appreciate the lower risk profiles, thanks to the high centralization.
And Lindy Effect has been mentioned previously as well. One of the benefits of being live for so
long, that unfortunately for some of the newer protocols, isn't that easy to replicate. To be
honest, we feel that people who are willing to stake with centralized exchanges, they're a quite
different market to what we're looking at. Realistically not one we can afford to spend
too much time on. Our main priority is the node operator side. Again, that's the constraint that
we have being a decentralized protocol. Some protocols that are more centralized in having
a smaller set of node operators, they don't have this constraint. This is something that's quite
unique to a permissionless node operator set. We feel the best use of our time is tackling that problem.
Awesome. And keeping the eye on time, I'll probably wrap it up with one last question.
I know one or two of you may have to drop. You can say goodbyes now.
Yeah, I'll have to drop in two minutes, so maybe I still have time for a quick question.
Awesome. Cool. So to wrap it up, thinking about your guys' future roadmaps. I was thinking,
how do layer twos and rollups in a rollup-centric roadmap fit into your plans for LSD? Maybe do you
envision native minting of your assets on layer twos? That's one thing that's come up. But also,
generally speaking, what does your roadmap look like going forward?
We talked a lot about pushing for later decentralization, but when it comes to
expanding to layer twos and to other networks, I would say, for me, it's mostly about focusing on
Ethereum ecosystems. So those would be Ethereum layer twos that have a native bridge. For those
of you who are following, there are a lot of networks that are being proposed to Lido to expand
to using the native bridge. Hopefully soon there will be also scroll. But currently, that's only
about bridging the reps they need to satisfy the demand for DeFi. In my opinion, it should be more
than that. It should be things like using LSTs as a gas token. It should be also native staking
from layer twos, so to push everything that is currently happening on mainnet, also layer twos,
to make it fully accessible to everybody, and also be less bound on the liquidity. For example,
on mainnet, if you do leverage staking, you can actually stake the ETH that you borrow and then
use it as collateral. There are layer twos that is not possible. You're still bound to liquidity
because you can borrow ETH, and then you need to swap it and then use it as collateral. So things
like that, I would really like to see improve with the introduction of native staking. It's
not so simple. It probably requires Lido v3 upgrade. So it's currently in the research,
there are multiple different approaches being researched and simulated and tested.
Yeah, same. I'm going to jump in about a minute or two. I'll give a quick answer on this one from
the Swell side. Yes, Swell's super excited to jump to L2s. Recently, we're going to be integrating
with Chainlink CCIP. And then from there, moving on to all the L2s. I think what we're most excited
for on L2s is that just due to the nature of L2s and gas fees being lower, L2s tend to be maybe
a more inclusive environment for users who just kind of fold the mainnet gas fees and also DeFi
instruments themselves sometimes can be more creative on L2s just because you can do a
lot more with the smart contracts while keeping gas, I guess, reasonable, which makes L2s,
at least for me, super interesting from just a DeFi instrument standpoint,
and then being just a lot more creative and innovative just because it's a more flexible
environment. Agree, L2s are a big part of our strategy at Redacted as well. So obviously,
the easy solution is just to make sure that it can be bridged between all the Ethereum L2s and
can satisfy DeFi demand like they're talking about on the LIDO side. So we want to make sure
that PXE can be used on any layer 2 in a cheap and efficient way and people can earn yield in
all the different venues that they want to earn yield on. But outside of that, we're also
interested in this idea of sort of like having layer 2s stake their bridged ETH within Pyrex
so that they can pass down yield to their users, basically increase yield across the board in their
layer 2 ecosystems. This is something that we've been really focusing on on the partnership side,
and we also know it's a big part of people's sort of like layer strategy. And then lastly,
as far as native minting goes, this is something we're really stoked on and something we're already
working on and we want to have a solution for soon because there's been a lot of demand for
people to mint PXE or PXE natively on some of these L2s. I think people don't want to spend
a bunch of money on fees anymore. And if the option is there for them to mint on a layer 2,
then they'll choose that option. So we're definitely looking to service layer 2s as much
as we can and make sure that people can use our stuff without breaking the bank.
Yeah, I think we can all agree that the more possibilities, the better. And DeFi is not all
there. So in DBIT, we want it to be accessible and widely distributed. So we are actively
exploring cross-end deployments with our partners. For example, the pre-launch initiative that I
mentioned before with Reserve that would put DBIT on base very soon. We also participated
on the Polygon C-giving DeFi campaign, which will end up with DBIT on CKVM as well.
Yeah, I think the end scenario here is that we see RLST where the community wants it to be.
And about minting DBIT on layer 2s, this is a vision that aligns with the commitment we
have with providing seamless and cost-effective experience for users. And the way to do that is
just leveraging the benefits of layer 2, just the scaling, faster transactions, lower gas,
and the overall performance of DBIT, I believe.
I guess we can all agree that L2s are not only very important now, but will only become
increasingly more so into the future. When it comes to future plans for the Rockable Protocol,
there are a couple of big upgrades that are currently underway. One, just finalizing
the auditing process, and it's likely to launch in a couple of months or so, and that's called
Houston. The main goal of that upgrade is to improve the decentralization and resilience
of the Rockable Dow governance. There's a future upgrade called Saturn coming later in the year.
The main goal of that is to increase the ability of the protocol to scale significantly, again,
focusing on the node operator side, which I've referred to a couple of times now.
All of this development work in these protocol upgrades are driven by the Dow members. They
provide the direction in which the protocol is heading, and there's a process right now of
working on the upcoming upgrade later in the year, Saturn, to see what will be included there.
As for minting on L2s, it sounds like there will be increased interest going into the future,
but there is a lot of great work that the protocol can do to improve the accessibility
for node operators. It's likely in the near future that that is going to be a priority,
but at the end of the day, again, the Dow is really in the driving seat. We're in a great position
with the thousands of node operators who are really well-informed and plugged into the Ethereum
ecosystem have full confidence that they'll be able to drive the direction of Rocket Pool
Awesome. Rach, do you want to finish the space off?
Yeah, appreciate you all having us. Super great chat. I think there's awesome stuff that's
happening in the space, so yeah, just really excited for the next 12 to 18 months. That bear
was tough there for a while, so I appreciate everyone getting the other side here. The
troll team, we're super looking forward to working together. I think L2s are going to have
just a lot of play in this next cycle here, so super excited to work with you. I think
it should be a fun little go here. Diva, looking forward to seeing you guys get up and going,
redacted you guys too. Rocket Pool, keep up the good fight and hopefully get your Twitter
account back. That has to be brutal. I'm sorry you're going through that.
Yeah, just brutal. Come on, Elon, are you listening? Are we popular enough? Listen to us.
Anyway, yeah, thanks. Really, really good chat and thanks for putting such a good group of people
together. Yeah, no, great conversation, guys. For all the listeners out there, if you're not
bullish on liquid staking after this conversation, I don't know what to tell you. This is super
exciting. A lot of great people here. Yeah, for all listeners, please do check out Lido,
Rocket Pool, Swell, EtherFi, Redacted, and Diva, all the assets they have. If you're
interested in securing the future of decentralization, you should consider being a note
operator too. Thanks again to all the speakers and listeners for joining in. It was a great
conversation. See you guys around. Thank you very much. It was a pleasure. Cheers. Thanks, guys.