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The Stacks DeFi Show #17
Recorded: May 7, 2024 Duration: 0:57:18Space Recording
Full Transcription
I'm trying to find my hotel, which I have found now, but it's not as smooth as I'd hoped.
So I'm very sweaty, but you know, all of that from the StaxDefi show.
So yeah, how's it going over there?
Good, not sweaty, and it's the morning, and just getting started with my day.
Is it hot over there?
I mean, it's always hot in Hong Kong, right?
It's really, it's not so hot, it's mainly humid, so I'm hot, you know, let's put it that
way.
Let's put it that way.
But yeah, let's see some familiar faces out there.
Let's see a hot down, and Philip come on soon, so that we can get to it.
You know, for people who are just dialing in now, you know, we haven't started yet, just
getting set up.
So I guess we'll be here in a couple of minutes, but I'll see Philip in the audience.
Philip is requesting to come up.
It's going great.
Maybe if I'm going into an elevator right now, Jacob, if you want to maybe quickly ask Philip
if he's up and see if his mic works and so on, and then we can get started.
Yeah, something.
Hey, Philip.
Philip, are you in Hong Kong as well?
Don't think I can hear you.
Don't think I can hear you.
Don't think I can hear you.
Don't think I can hear you.
Pic of all the dining room.
Jill Halls said he saw that.
You just give my mic back to California.
I'm going to a rabbit hole because I wouldn't know what it looks like after the
e-ε
ery here at the end of the day.
Rick-
Daily tΓ©lΓ©phone found a lot.
So you can wear your drum finger.
Hey, hey, can you hear me now?
Yes, sir.
Is that it?
Is that Adan Philip there?
Yes, it is.
How's it going, guys?
Great.
Good, good, good.
Well, apologies to everyone for starting a little bit later, but that also means that
you haven't missed any alpha, you know?
Always see it from the bright side.
But, yeah, just checking, I see Philip is laughing, so that means that he can probably
hear me, but if you want to give a quick shout for the mic check.
Yo, yo, yeah, I'm here.
That, that, that is Philip, unmistakably, unmistakably so.
So, yeah, amazing.
Well, I guess welcome to episode 17.
I mean, who could have thought that we'd make it to 17 episodes with people here being excited
about Stacks DeFi and, yeah, leading into the way of, you know, bootstrapping, you know,
Bitcoin DeFi more, more broadly, which I think is like a thing we'll be talking about quite
a lot with, with, with Jacob and also kind of reviewing like the events of the past week
and what's, what's coming ahead in, in Stacks, Stacks DeFi.
Stacks DeFi, but maybe just to, you know, before we kick off, like obviously, you know,
space is for information purposes only, right?
That's what we are sharing here.
It's not for investment advice or, or anything, anything like that.
And yeah, I think maybe before we want to kick things off, just let's do some brief, brief
introductions.
Of course, guests always first, right?
So, I'm very good.
I'm not sure if you want to, want to kick things off and then pass the Philip and Dan for
their usual intros and then we'll take it from there.
So, yeah, sounds good.
Thanks for having me guys.
I'm Jacob, founder and CEO of Hermetica.
And yeah, as we announced yesterday, we're building USDH, a Bitcoin backed interest bearing
stable coin.
And obviously we'll dive deeper into what that means and how it's done.
But yeah, that's, that's me.
Awesome.
Yeah, I guess I can go next.
So I'm Philip, core contributor of Architeco, which is a stable coin over collateralized.
It's a little bit like a lending tool where you post some collateral and can then mint
our stable coin USDA against that collateral.
So you're borrowing against it.
And I'm also a co-founder and core contributor at StackingDAO, which is leading LST on Stacks
around $120 million in TVL, 50 million give or take Stacks TVL.
And yeah, it's been a very exciting few weeks cycle.
84 of proof of transfer just got kicked off like three blocks ago.
And so super excited to see all those new signers and that whole network, you know, get bootstrapped.
So it's an important day.
And hi, everyone.
I'm Hadam, the BB Lead with the Alex Lab Foundation.
Alex is building a DeFi layer on Bitcoin.
So the Alex platform is a DeFi on Stacks, AMM Dex, the BRC20 order book.
We've also built the X-length bridge, providing cross-layer and question liquidity aggregation.
Lisa for liquid stacking.
And there's more to come soon.
So good to join you all today.
Amazing.
Amazing.
Yeah, very exciting to be here all together.
And yeah, I'm Tyco for a good order, co-founder of Zest Protocol, lending protocol built for Bitcoin
and opening in two days for lending on Stacks and also contributed to stacking down with Hither
to get that liquidity into Stacks DeFi.
But yeah, before we kind of talk a bit about, you know, events of the past week and things
like that, yeah, I mean, Jacob, if you want to give a quick, for people who haven't, haven't
had a look yet at like, what is USDH and maybe knew the latest thing, like, oh yeah, you know,
Hermetica is that, is that kind of, that thing with options or something, right?
Maybe for those people, like what, what, what, what is USDH?
Where does it come from?
How does it relate to what you've all been doing so far?
I mean, I know you've been working on this basically for a year and yeah, they're making
a lot of foundational progress there, but, you know, for everyone who sort of is kind
of a bit in the, in the dark yet, like, hey, did you pivot?
Like what, what happened?
How, how does this all like kind of, you know, line, line up effectively and, and, and yeah,
why, why is it so exciting?
Oh, you're, you're a little bit muffled, Jacob.
It seems like maybe there's a hand on the mic or something.
Oh yeah, that's, that's much better.
Is that better?
Yeah, my cat is, my cat is crawling all over me.
So yeah, USDH is, yeah, the combination of what we've been building over, over the last
year, year and a half in that it is using a lot of the technology that we've been building
for our other products to express a stable coin, a synthetic dollar for the Bitcoin ecosystem
and stacks and how it's done.
And, and why it is interesting in our opinion is that it's one fully backed by Bitcoin, meaning
the asset side of the protocol is Bitcoin and Bitcoin only.
And the liability side or what we issue against that is a token that represents the dollar value
of that Bitcoin.
Two, it is fully outside the fiat system.
So it's a dollar that doesn't touch fiat rails, doesn't touch banks, doesn't, doesn't touch
treasuries.
And it's, it is fully crypto native.
And the other very interesting part is that it has an inherent yield and we can, you know,
we'll dive deep into what that really means and what that, where the yield comes from,
because that's obviously an important question to answer.
There's a lot of ways to earn yield that might not be sustainable.
This is a way that is very sustainable and it comes from the short futures position.
So how it, how it works is essentially users deposit BTC into, into our smart contracts.
And then we hedge that Bitcoin with a short futures position, meaning we lock in the dollar
value of that Bitcoin and then issue a token that represents that dollar value against it.
And that short futures position, short perpetual futures generates what it's called a funding
rate.
Essentially, you can think of it like this.
The crypto ecosystem wants to be long the asset and wants to express that through leverage.
And in order to get leverage or for, for getting leverage.
And that's also like the principle behind Zest and, and, and, and Archdeco people want to be long.
Yeah.
Everybody loves leverage.
And so people are willing to pay for that privilege to have leverage.
And, and that is expressed to a funding rate and that funding rate goes to the shorts in the
system.
Essentially the, the users or the people that provide the long leverage to, to the other side.
And, and that APY or that yield can be very significant, especially in bull market, where
everybody's tripping over each other to go, to go further along, usually at the top.
That, that yield can go, we have seen in the last bull market, it going up to 26%.
That's where the up to 25% yield comes from.
This is not something that we just came up with.
This is the back test that we've run over the data that we use the last four years.
And it averages out on around 12% yield on an annualized basis in the bull market goes
to 25, 26%.
And the bear market is, it goes as low as three, four, 5%.
So you can essentially take the synthetic dollar USDH, you can stake it, and then you
receive a portion of that yield paid into SUSDH, the staked USDH version, essentially a liquid
staking token, very similar to state stacks that accrues value, not from staking, but
from the funding rates from the short futures position in the system.
I'll stop there and you can obviously like dive deeper into any aspect.
Okay, okay, okay, okay.
And, but you have, and this is based on the protocol that you built so far on stacks, right?
Which allows people to lock up assets on the stacks layer and buy options with it.
Yeah, so our liquid yield token product line is related, but is fundamentally different in
that we use option strategies to generate yield and that, and that, that trading profit can
go up and down, right?
It's like, you can think of it like a tokenized hedge fund, essentially.
And the principles behind USDH are very similar.
There is an asset that's get deposits, there's a derivative strategy that gets executed, but
the mechanics are slightly different.
Now, the, the biggest difference is that in order to access the yield, in order to access
the short futures market, that market is on centralized exchanges because we just don't
have the infrastructure yet to have futures contracts in the volume that we would need
on decentralized exchanges.
I think that's changing rapidly, especially also in the Decode Bitcoin DeFi system, Velar
is building something along those lines, and there's going to be a lot of protocols or
opportunities to express futures contracts on chain.
But today the volume on chain is not enough to express enough volume for us to do that.
So we have to use, we have to bring the Bitcoin into a custodial solution.
We use an off-exchange settlement service that essentially allows us to hold Bitcoin and
trade on centralized venues without holding that Bitcoin on the balance sheet of the exchange.
So you can think of it like a custodial solution that mirrors or expresses the asset Bitcoin on
the exchange.
You can trade with it, but if the exchange would go under, that Bitcoin is bankruptcy remote.
So it's completely outside of the jurisdiction of the, of the exchange.
So we, we go through our smart contracts, the Bitcoin flow through the smart contracts and
into a custodial solution that then allows us to express the trade on a centralized exchange.
And those yields then flow back from the centralized exchange through our smart contracts to the
people that have staked USDH.
So it is a very similar system, but there's a fundamental difference that I want to highlight
there to our current product line.
That's very interesting.
For what it's worth, I think that's a really great solution because people, they, they
throw up and shit, you know, on sex, it's a centralized exchange, but I think you need
to use the tools that are available and in the, in the, you know, the, the manner that you
can, and this is pretty efficient.
And I just like the pragmatic approach.
So first of all, kudos to that.
And then I had a follow-up question.
If you had maybe looked at the, the market that, um, on other, you know, Burbs Texas, perhaps
in other ecosystems thinking of the YDX, maybe TMX, something like that, or is the, the rationale
completely like that doesn't make sense.
So we need to go to a centralized exchange, you know, I mean, to be honest, I would love
to express this on chain, obviously.
Like, and there is a future that will see us express this trade fully on chain.
That's, that's the vision, right?
Because that allows us to basically keep all the assets on chain and have it in a non-custodial
fashion.
I think the trading volumes that we're seeing on others, decentralized exchanges are also
not at the level that we need in order to have scale in the system.
Um, the open interest between centralized and decentralized exchanges is around like 10,
10 to 10 X.
So 10 X more volume is happening on, on centralized exchanges.
And so in order for us to really have the ability to harvest those yields and also have
the diversification that, that allows us to, to manage this trade, um, effectively, we need
to go to centralized exchanges at this point.
And, and yeah, we see it very similar.
It's, it's essentially a pragmatic solution right now that if you think about it, if you
hold USDT or USDC, you, you trust a bank, a bank account or a treasury in like a brokerage
account as the collateral asset.
And there is a very similar trust assumption in terms of custodial risk, but on top of
that, it's tied into the fiat system.
If the fiat system doesn't want that product to exist, it's going to have a fairly easy
or easier time to censor or coerce it.
Whereas this product has a custodial element to it and we're not trying to hide that.
It's very upfront and clear.
And, but it is not a bank.
This is, we're, we're talking about interfacing with players that are very much interested
in this ecosystem to thrive and evolve, right?
Crypto exchanges are at the heart of the, of the Bitcoin and crypto ecosystem.
If you want it or not, I'm obviously very familiar with that world.
I worked at Kraken for a while and, and know how these, they need the crypto ecosystem to
survive in order to make money.
And so there's a very different incentive system here.
Are we looking at other decentralized exchanges?
Yes, 100%.
And, um, and, um, definitely we'll probably have some volume going towards decentralized
exchanges, but again, the volume or the open interest is just not there yet.
Gotcha.
No, that makes a lot of sense.
Um, by the way, I don't know if you're on a farm or something like that, but it's, it's
a pretty, pretty interesting.
I have like, uh, probably three or four roosters, uh, and like, uh, and some other animals around
me and four cats crawling all over me.
That's awesome.
Um, yeah, it's, it's awesome to be honest, to be working in tech, but surrounded by nature
thing.
That's great.
100%.
Cool.
No, another thing I wanted to ask was, um, so you as the age, um, say I have one bit
going, then I want to give you a collateral that's about whatever, $65,000 today.
How efficient would the protocol be?
In other words, how much, uh, you as the age can I mint against that?
Is it one to one or how do you see the risk and what's my risk for liquidation?
Is there a liquidation risk in fact?
And yeah, can you elaborate a bit on that?
Yes.
Great question.
And so, yeah, the protocol is very capital efficient.
If you give us one Bitcoin today, we'll be able to give you a, a, uh, very close representation
of the dollar value you see on centralized exchanges.
Now it's not going to be exactly one-to-one because there's some slippage and there's some
fees for us to execute that, that hedge, but it'd be very close to it.
Call it 99, 99, 99.5% of the value.
Um, is there liquidation risk for the user?
No, um, there is no need for the user to manage liquidation risks, um, for their stable
coin that is done by our systems that maintains a one-to-one hedge at all times using the futures
contracts, which is, I think a very good user experience and, um, and allows us to, to have
a high capital efficiency on, on the conversion between Bitcoin and the coin.
Um, that's very cool.
And so just, um, your back testing, they go back four years, 25% more or less, give or
take, um, I understand there's no guarantees around that.
Like if, if the funding rates go, would go like crazy to the other side, I mean, there
would be periods that it costs you money or how do you see that?
Um, what, what's essentially the risk that you, you take as a protocol?
Um, yeah, great question.
Um, so yeah, we've, we've back tested starting 2020, January 1st, the average APY is 11.7%
in that time period.
The max is 26%.
And the lowest it was, which is the last bear market, it was 3.8% on an annualized basis.
Now, funding rates fluctuate and they fluctuate with demand for long leverage in the system.
So in a bull market, it's, it's very significant.
In the bear market, nobody wants to be long, right?
So it can also go negative.
There've been a total of 5.8% of the days in our back test period that were negative.
So not a very significant period at a time, um, 5.8%.
And, um, the periods are short and shallow when it goes negative, because there's inherent,
even in the calculations of funding rates on centralized exchanges, they always skew to
the positive side.
Like if there's, if there's just like a steady state on Binance, for example, it, it averages
at 11% positive.
Now those negative periods are there and, uh, and we have to plan for them.
We're building an insurance fund that can buffer those negative periods.
So if, if the protocol has a negative P and L, those, those, that insurance funds burns
USDH to, um, to maintain the peg essentially.
That's awesome.
Really cool.
Really cool.
Uh, I just dropped for a second, but just wanted to confirm, um, part of the yield is
then going to the user, I assume.
Or, um.
Yeah, so the, yeah, the user experience, there's two assets.
There is the USDH, which is the synthetic dollar and there's stake USDH, which you can
think of as a Bitcoin native bond, essentially, where you take your USDH, you stake it, you
get the staking token back and that staking token accrues the value from the funding rate
on a daily basis and, yeah, and essentially just, uh, gives you the yield in USDH terms
so you can unstake it and get your USDH back, which over the period of time that you've staked
it, whatever it is, there's a seven day cool down period.
But other than that, you can go in and out at any time and accrues the value that happens
between you, the moment that you stake and the moment that you unstake.
Very cool.
Very cool.
No, it's, it's a really interesting model.
Um, just some backstory from my end, uh, perhaps the first time I read about this model specifically
was end of 2020.
Um, and so that was from some read me's actually in Solana by a guy named Ben Sparango, who
is, and still is, I believe for Solana adding up the DeFi, um, efforts.
And so one of their hackathon ideas was build me a stable coin that does exactly, you know,
what you're describing and have life now.
So it's really cool to see like these kinds of ideas go from just idea inception all the
way to implementation.
Um, famously, uh, Athena, um, which I suppose is some kind of competitor for you guys.
Um, I don't know how you see that, but yeah, feel free to comment first.
Yeah, no, it's certainly a competitor and, um, and has, uh, run this kind of protocol very
effectively.
Uh, there's a number of, uh, of other protocols also on the Ethereum space that do very similar
things.
It's not a groundbreaking new idea.
We focus it.
Oh, you just dropped for a bit, Jacob.
I think you're, something is in front of the mic.
Is that better?
This better.
Yeah.
Yeah.
So I was saying that, you know, certainly is a, is a competitor.
There's a number of other protocols that are doing very similar things also in the Solana
ecosystem.
We're, we're very focused on Bitcoin.
I think that Bitcoin space wants a stable coin that is fully backed by Bitcoin, not by
Ethereum or, or other assets like Solana, but just Bitcoin.
Bitcoin and that is native to Bitcoin L1 and L2 and, uh, and that's what we're building.
But yeah, this, this idea has been around.
Sweet.
Yeah.
So I did see, I think it was this morning or maybe yesterday that Athena now has a partnership
with BitGets, which, uh, allows them to deposit USD, I believe it is, as collateral and they
can like margin trade and all those things.
And it just sounds pretty interesting in the sense that you can deposit it, earn yields
and at the same time trades against that position or with that position as collateral.
Um, and that's why I actually asked if you receive the yield inherently by just holding
USDH or if you have to stake it, because that becomes some kind of interesting model where
I could just like, I don't know, hold the token or something and become seal bearing.
I can deposit it on Zest and I know it accrues some pretty insane APY, the 11%, if you can
maintain that, that's really good.
That's pretty high, I would say.
And so at the same time, borrow against that.
That's pretty interesting.
I mean, I suppose you can build that even if it's not in the USDH.
Maybe you can give stake to USDH and allow people to deposit that, or I don't know how you view
that, but that'd be an interesting news case.
Yeah, 100%.
So, I mean, the stablecoin has to be separate from the interest accruing token in our view,
because if it's not, it's not really a stablecoin anymore, right?
It's really hard.
Then it's floating up.
It's like the opposite of de-pegging.
It's de-pegging in the positive way.
And so they have to be separate assets.
Yeah, the staked version accrues the value.
And I think what you mentioned is a very interesting use case that I'm personally also very excited
about is that you can use this asset as a collateral asset for lending, for trading,
and essentially earn a yield and at the same time leverage against it, trade against it.
Yeah, as you said, if you can deposit into a protocol, you can earn yields from centralized
exchange yields and use that to pay essentially the funding rates that you have for trading
on decentralized exchange.
So you're netting it off.
There might be some differences there, right?
And the same with Zest.
If you deposit it into Zest, you earn 11% on your dollar, and at the same time, you can
borrow whatever you want, maybe at a lower rate and have almost a yield or a cost-free
borrowing experience, which obviously is really, really cool.
And I think one of the key elements that make DeFi so interesting, the composability aspect.
Yeah, for sure.
No, this sounds really bullish, really cool.
You mentioned runes at some point, I believe, either in the tweets or the documentation.
I can't really recall.
How would the system work specifically?
Would I get a runes token, or is this a stacks token, or what's the idea behind implementation?
Yeah, so we're going to be live on runes as well as stacks.
So there will be a stacks-native version, and there will be a runes-native version.
Obviously, runes is a lot more simple protocol.
You can just mint and essentially transfer.
So there's limitations there that we're still figuring out how exactly to do the staking
element of it.
Like the minting and redeeming element can just be transactions on chain, but the staking,
obviously, there's no smart contract to do that yet.
There's some cool protocols that are integrating runes that obviously are super early and still
very experimental, but we're closely monitoring them and experimenting with them.
And then there will be a stacks version that just uses a SIP10 token that we're all familiar
with and allows to execute the minting, redeeming, as well as the staking and unstaking through
a smart contract on Clarity.
Sweet, man.
Yeah, you guys have been cooking for real.
How big is the team, if that's public?
Yeah, we're six people now and I'm growing pretty fast.
We have four of them are engineers and then we have a marketing lead and we have an operations
lead.
And yeah, the team is growing, the team is well.
We're very engineering focused.
We've been really building behind the scenes for a long time.
Now we're more in the public and talking about it, but I'm super excited, obviously, to be part
of the ecosystem and been a huge fan of Deco and what you guys are building for a long
time and obviously excited to collaborate with you all.
Sweet.
Yeah, no, no.
That sounds amazing, really.
We should chat a bit more.
I think this model, as I said, is pretty interesting.
So I want to make this into a monologue.
So I'm going to give this back to either Hadam or Taiko if you have more questions or comments.
But really interesting stuff.
Yeah, I guess a quick question is, I know Athena wants to do something with BTC, right?
And also with Sol, I believe.
What's sort of the, what's kind of roughly, would they be launching new stable coins backed
by those?
Or would it be like their main stable coin is backed by all of them?
Yeah, I'm not, I'm not privy to the exact plans, but if you look at their composition
of their, of their reserve assets today, it's, it's partially Bitcoin, it's partially ETH,
it's partially stack ETH, and it's partially USDT.
So I think that they will have one stable coin, and it's going to be backed by a basket of
assets.
And that will include Bitcoin, it will include Solana, and Ethereum, and others, potentially.
And yeah, I think that that is interesting and makes sense.
I think that there's obviously a huge use case for what they're doing, and they've been
extremely successful.
Again, I think that as a Bitcoiner, I myself want to have just Bitcoin in a stable coin that
I'm using, and not other assets, because I think Bitcoin is the Apex collateral asset
and the strongest reassurance.
And that's what we're building.
Makes sense, makes sense.
So just with BTC, I guess using Stacks as a way to sort of get the BTC locked, and then
be able to, you know, capture the funding rate on centralized exchange, and then minting
the USDH token as a RUNES token and a Stacks token, which is sort of interoperable through
your protocol.
That's right.
Yep.
Exactly.
Boom.
Boom, boom, boom, boom.
And then potentially other L2s, obviously, there's a lot happening, right?
I don't have to tell you, but many interesting protocols coming online, and we're monitoring
all of them, and obviously also with Alex and the X-Link bridge, it will be very easy to
bring the assets to other ecosystems and use them over there.
Yeah.
Makes sense.
So I think, yeah, and we're, listen carefully, everyone.
It's probably the first that hear all of this.
But, yeah, I think very exciting, and, yeah, going to be very interesting.
It's a question of execution, really, and from a smart contract perspective, it's maybe
not the most difficult thing in the world, which is also nice, right?
That's what you want from smart contracts.
You don't want them to be the most difficult things in the world.
Absolutely not.
Yeah.
It's simple as possible.
So, yeah, that's great.
That's great.
That's great.
That's great.
That's great.
Yeah.
Rodan, any thoughts from your side hearing all of this stuff?
I'm sure you've maybe been chatting with Jacob a bit to offline about all of these things.
No, definitely very exciting to hear.
Yeah, as you mentioned, through X-Link, we definitely look forward to making those assets
interoperable across the Bitcoin layers and across other blockchains.
In fact, if you go to the X-Link bridge now, we've connected to CoreDAO, and I think we
should be publishing soon, but we were planning to about link to an additional Bitcoin L2 every
week, one a week for the next several weeks.
And so, that's definitely a ball that's going in motion as well.
So, really excited to see all these pieces come together and see that momentum build up.
Yeah, really good work.
Yeah, and we're very excited about being able to use X-Link to go to other ecosystems.
There's obviously a lot of really interesting tech being built, still very nascent, and there's
a lot of experimentation.
But to have the ability to go from one ecosystem to the other, especially also because X-Link
is very Stacks-native, Stacks-centric, that's what makes it a lot easier for us on the technical
side.
Very excited about that collaboration and partnership.
And yeah, I mean, another thing to mention is that we're going to be live within the next
six to eight weeks, and then there's going to be a point system that comes along with that
that will incentivize people to use the stablecoin and the staked stablecoin, the bond, to do a
number of things across the Stacks ecosystem and the Runes ecosystem.
And that's probably very interesting for the people listening here.
Stay tuned.
If you want to be the first ones to use it, go to our waiting list at hermetica.fi, sign
That's always going to be the first people that are going to get access to anything with
rollout.
And obviously subscribe to our Twitter to get the news there.
But there's a lot more coming.
This was the announcement.
There's obviously the actual product coming very soon and then a whole bootstrapping of the
ecosystem around it and the whole Stacks ecosystem with it.
Hopefully we contribute.
Amazing.
Amazing, amazing.
Final question.
What's, you know, there's the SDX faults, right?
The staked SDX faults on hermetica for the structure products.
What's the plan there?
Yeah, great question.
Yeah, so there's a SDX earn, the tongue twister, that is live.
We have ROGs deposited.
There's roughly a million dollars in there, give or take, fluctuates obviously with the
price.
And we've been executing trades against that.
We are on trade number three.
And yeah, it's going well.
I think the technology works.
The trade execution works.
And that's really exciting to see.
That's, I think, a primitive that we're still excited about and especially will be even more
excited about when we have SBTC and can express that through Bitcoin.
So you can like get yield on your Bitcoin through a trading strategy that you wouldn't be able
to access otherwise and completely uncorrelated to the rest of DeFi.
It's going to continue to be a part of hermetica.
And we are in the process of deciding how the rollout of that exactly looks and interfaces
with USTH.
But I'll be there.
And if you guys are interested in that, you know, come join our wait list as well and hit
us up and we'll give you access eventually when the time is right and when the systems are
fully baked.
Amazing, amazing, very cool.
Yeah, I mean, a lot of a lot of things have happened in the past week, right?
I mean, obviously, the news on the Nakamoto rollout changed, dropped, right?
Also, Nakamoto was activated on Monday or instantiated, I suppose, the week before Monday.
So it was like instantiation window where people are, you know, where people are stacking
their SDX again and the validators are coming online.
Yeah, like, any sort of highlights you want to share from the last week, you know, when
it comes to, you know, Arcadeco stacking now, Alex, you know, Lisa, more things like just
as sort of a way to kind of recap a bit, like what, what happened?
Sure, I'll, I'll jump in quick.
I'll see if I can post the, the tweet to the top of the spaces.
But I believe we just announced today that with, with, with Lisa from, from liquid stacking,
where we were also, uh, creating, uh, Lee Alex.
And so this will represent, uh, an upgrade to, to auto Alex, uh, effectively auto Alex, uh,
version 3.0.
And that will, um, allow those who are, who are, who are, who are staking Alex and supporting
the ecosystem to do so through also a, a rebasing, uh, liquid token, um, and, um, you know, on the,
on the article highlights, uh, some of the, some of the benefits that, uh, uh, Lee, Alex will,
will provide.
Um, and it's also, as we see it, a first step towards a more generalized liquid staking, both
for, uh, for, uh, staking assets on the Stacks ecosystem, uh, and potentially in the future,
uh, across the coin L2s.
So, uh, we're excited to roll that out.
And so, uh, for those who have been, uh, staking Alex, um, you know, this will be, this will be a
nice, a nice update.
It'll be a one click upgrade from, uh, from auto Alex, uh, V2, which is where it currently
is after the Stacks 2.1 upgrade, uh, into the, the Lee Alex version, which, uh, which again,
just like Lisa, can also be wrapped into the Lee Alex later for, for DeFi uses.
And so, yeah, we're excited to, to announce that.
And those articles are, are on our medium.
That's really cool, by the way, Hadam, um, just saw the tweets.
I hadn't seen it before, but, uh, the Lisa stuff, um, I do think it's,
it's very valuable to build generic infrastructure for maybe other teams, you know, who want to
do some type of liquid stacking or rebase token or something like that.
We've had several attempts at protocols doing, you know, staking with rebasing as an example.
Uh, it's now defunct, it's got shut down, but Lydian was, was another example who had a
rebasing token.
And so I really applaud it to, to make it easier for, for other developers who want to
join the ecosystem.
So appreciate that.
Um, good stuff.
Awesome.
I think, yeah, no, you're, you're welcome.
Um, I think, uh, the, the, the ecosystem is evolving really rapidly and I love to see
all of those things.
Um, on the Arcadeco end, uh, it's a lot of parameters, right?
It's a very dynamic system that, that evolves and changes all the time.
So a few weeks ago, about a month and a half ago, we set our borrowing rates, what we call
stability fees to 12% to react to all the bullishness in the markets.
We've seen a little bit lower, you know, activity in meme coins and across chains, because when
we set something to 12% to borrow, we also need to look beyond stacks, you know, because
it's possible to bridge stuff.
And then we need to make sure that doesn't create this negative feedback loop.
But so now it's been a bit calmer and so there will be a governance foe to lower the stability
fees again to 9%.
Um, it's still pretty bullish, like the market as a whole, but not as crazy as like a month
and a half ago.
So we're adapting that too.
And this will be an ongoing process, you know, where we look at risk and how much it
should cost to borrow.
So that's one thing that we're, we're doing with Arcadeco, um, among them, some other,
you know, kind of quality of life upgrades, like all them just smaller things.
Like removing the cool down on staking, making everything a bit simpler, um, you know, to
borrow in a potential future against ECO and STDECO.
Um, so yeah, so there's a lot of gearing up towards that for Arcadeco.
And, um, it, it seems like the protocol is, is in a good position to, to scale this thing.
So that's, that's pretty good news.
Um, and then on the stacking down side, yeah, I mean, we've been scrambling to get everything
up, right.
For cycle 84.
And I'm super happy to see that we already have yield coming in.
So cycle 84 started about seven, six, seven blocks ago, Bitcoin blocks and stags blocks
because they're in sync.
But so we already received yield.
I just saw on our, uh, Bitcoin reward address.
So the signers are up and running, they're functional, they're signing blocks, it seems.
And, uh, yeah, proof of transfer is, um, it's doing its thing.
So I'm pretty happy and relieved to see, um, you know, that, that everything is working because
you never, you never know a hundred percent, right.
Until it's working in production, it does its thing.
You can test a crazy amount of things, but, um, yeah, the machine has to do its thing in
production.
So we've just confirmed that.
And yeah, I'm, I'm super happy just to be collaborating with all those signers.
Uh, there are seven external ones and stacking down signers.
So eight in total.
And that was a heroic effort to just make them coordinate all together and set them up and
delegate all that stake.
And so if you would go to app.stackingdown.com, so to our app, and now you will see a,
a little analytics staff, it's pretty simple for now.
It just shows you a pie chart, but it does show you the distribution among all the signers
that we collaborate with and how we delegate stake.
And that's easy for a user to then keep updated, um, how we decentralize the network because we
do not want all the stacks to be stuck in one or, or, uh, you know, a little amount of, um,
of signers of pools.
And so you will see our efforts there in real time.
And I think that's a very big, you know, transparent feature that we shipped to start
today, in fact.
Um, and yeah, go, go have a look at it.
The analytics staff should be visible on the app and, uh, yeah, super excited for the next
weeks and months as we activate Nakamoto.
Yeah.
And, um, and, um, and, um, and all the, all the STX has been, been delegated now from,
from StackingDAO, um, to, to, to, to all these, all these signers.
Yeah, correct.
So I have the tab open here on my browser.
And if you do it through the same, so again, app.stacking.com slash analytics, you would
see them in a table and the least amount of stacks that has been delegated to one single
signer is 6 million stacks.
Um, you can do the, the math in your head.
One stacking slot today is a hundred thousand stacks.
So you divide 6 million by a hundred thousand that translates to 60.
So each of those signers, they get 60 proof of transfer slots delegated, um, from within,
uh, stacking now from the people that deposit stacks and make their stacks work to secure
the network and hence, uh, decentralize it.
So yeah, anytime that would change, that's a smart contract thing.
It will automatically get picked up.
And so maybe some signer in the future gets penalized, then their stake goes down or some
performs better.
Their stake goes up and you would automatically see that reflected in that analytics page.
Um, so yeah, make sure to, to keep an eye on that.
If you're interested in how the ecosystem evolves, we'll keep updating that page also with more
general data about proof of transfer, not just, uh, solely about stacking now, but the
ecosystem as a whole.
So it's kind of like your one stop shop for, um, yeah, for all analytics and data around
proof of transfer, I'd say.
All right.
All right.
All right.
All right.
All right.
That's very exciting.
So let's see, um, yeah, everything go in that, in that kind of direction of, um, I guess
becoming that, that sort of full, full stacking, stacking hub as it were.
Um, yeah, I guess from, from my side, I mean, very, very exciting updates too on, on this
protocol.
So two, two days from now, the, the, the grand opening is, uh, is, is, is happening.
So the audit's been, been complete.
I think the final touches on the, on the report are happening now.
So that should be, uh, should be live any, any moment.
And, um, um, um, and yeah, then, um, you know, everyone will find their, find their balances
on, on this protocol and, uh, um, and, uh, and, uh, and yeah, can start earning yield
again on, on STX, STSTX and, and, uh, UA, USDC and, and more, more assets coming.
So, um, so yeah, that's going to be, going to be a big one.
And we'll make an announcement around the, the Genesis NFT as well.
Um, there's a special Genesis NFT for everyone who, uh, who participated, um, in, uh, in Zest
protocol over the past months, but also like a new one for, you know, for the first, the
first kind of cycles ahead, so to say.
So, um, so yeah, that's going to be, um, going to be exciting as well this, uh, this
week.
And of course, like here in, uh, in, in Hong Kong, right.
For, for BTC Asia.
So, um, yeah, it's, it's very impressive to see like how, you know, the community here
is like embracing building on Bitcoin and like, uh, in a pretty, pretty epic way.
Right.
It's kind of like the, the only thing that kind of builders here are, uh, are, are thinking
about.
And, um, yeah, it goes to show like the kind of power that, that, that Bitcoin has, right.
Especially, especially outside America, right.
Like, or, or in some ways, like for some reason, like in, in, in the culture of Silicon Valley
is always like making everything, everything, everything better.
And maybe not, not, not so much like, uh, you know, maybe respecting great, great protocols
that, that, that have been built and, uh, and, and still stand, you know, whereas, uh, I feel
there's something special in Asia about this kind of, uh, you know, Confucian, you know, respect
for the old and authority and something like that, which, uh, you know, finds itself in
a, in a respect for Bitcoin in a way.
So, um, so yeah, going to be, going to be a very exciting, um, couple of days.
I mean, if you can maybe hear my voice, I'm a bit, bit tired.
It's like almost 11 PM here, but, uh, but yeah, so definitely waving the, waving the Zest
protocol and, uh, and Stacks, Stacks flag here for, uh, for all of us.
But, um, but yeah, I see Hiro has requested in the mic, so we'll just see, uh, if he has
any, any questions, um, Hiro Gamer from the Stacks Foundation.
Maybe one thing, I think, just to note, like, Philip, how much, there's 300 million SDX stacked
or something, right?
Like, now that, uh, now that, uh, the proof of transfer new cycle has started.
Yeah, correct.
It's a little bit lower than cycle 83 and 82, where we had 420, 450, now we're at 306,
307, so, um, yeah.
Okay.
Okay, so whoever is holding that 120 million SDX, like, uh, go stack it.
Like, uh, just stack it, man.
Like, uh, it's very important for the network.
There's a lot of great options out there.
Pools, delegates.
I see Davide from ReStake also here.
You know, new, new, new, um, new pools coming, coming online.
I'll go, you know, stacking down, Lisa, make sure, make sure to do it.
I'll go look at my wallet in a bit.
Sorry, I forgot about that one.
Oh, okay.
All right, yeah.
Good, good.
Well, 120 million SDX and Philip incoming is, is good to know.
It's good to know.
Now I can go to sleep, uh, carefully.
That's, uh, with a good, a good, a good heart.
But, uh, yeah, Hero Gamer, what did you, uh, or are you the one with 120 million SDX?
Is that what you wanted to say?
Yeah.
So I just found my new, my, my old wallet.
Nice.
Nice.
Nice, nice, nice.
Yeah.
Actually, I just had a quick look on that analytics page.
It's actually really, really good.
Um, I posted a tweet about it.
Uh, yeah, I, I, I really recommend everybody go and take a look.
Um, yeah, it's good to see, like, the spin, you know?
All right, great.
That's the spin.
That's the spin here.
Hero's tweet.
StackDiva show.
So everyone can look at it.
Pumping, pumping the follower count.
But, um, but go for it.
What did you want to, what do you want to say?
Oh, I'm just here to, uh, remind everybody that, um, that there, there's a, well, we're
hosting, uh, D-Grants after this decentralized grants program, um, for D5.
And if you guys know anybody who's interested in sort of like running this little pot of
money or contribute to running, um, sort of just let everybody know and have a chance
to come in and sort of be the, uh, the lead in helping to allocate the, the grant money
because it's sort of a community treasury, if you like.
And if you guys, I think earlier you mentioned, like, if there's any, like, unlocks you, you
guys think that we should do, you know, like the liquid stacking that we did.
Um, if there's anything else like that, I would love to hear from you guys.
I can be funded.
Yeah, that's, that's cool.
I mean, obviously, yeah, stacking now came out of a grant from the Fax Foundation, right?
So that's definitely something to, um, it's a highlight for everyone here who's looking
to, um, who's thinking about building something, but, um, um, but yeah, so just, so there's,
there's grants for DeFi primitives, like, um, um, do you give, how much money was allocated
again to that, to that hero?
Um, we, it's only, uh, I think, um, we always got a separate pot.
I don't know if it has like DeFi specifically, but you know, some primitives could go in there
or, uh, at least from a sort of community managed or community decided treasury, there's
9k, um, to allocate.
Yeah.
I see, not 9, 9k per grounds, uh, unfortunately, just the total pot is 9k, we had to split
out 50k, uh, there's the total pot is actually 50k to split, and then we split into five categories.
And so we have each category category only 9k, um, yeah, so that's the current sort of experiment,
if you like.
So I'll treat it as a sort of early experiment community sort of decided.
So it's for DeFi, we're thinking 9k for the total.
Um, so yeah, there's like probably allocation for like one or two project or three, something
like that.
Yeah.
I see.
I see.
I see.
I see.
I see.
I see.
Yeah.
I think the idea is like, if it goes well, I think we can grow the treasury for our night,
maybe double that.
Let's see, I don't know.
Um, so like to see how the community owns this category.
If it, if it, if it can own successfully and decide and vet things successfully by itself,
then, um, yeah, I think that's the hope that we can continue, continue to grow this ground.
Got it.
Makes sense.
Makes sense.
Makes sense.
Makes sense.
Makes sense.
Makes sense.
Um, yeah, I think, um, sort of slowly coming up on, on time, maybe we should, um, sign off,
share where people can find more info about all the great things that people here are working
Um, but, um, yeah, Jacob, do you want to start and then, uh, pass it to Philip and Hadan?
I'm not sure if Jacob is there.
Maybe Philip or Hadan just wants to go.
Yeah, sure.
Um, so you can follow me here.
I tweet every now and then about defiance and stuff that I, uh, just think about.
And then we have our critical finance.
That's one word and stacking now stacking now also one word.
So yeah, a lot of stuff all about defiance stacks and Bitcoin layer too.
So if interested, just, uh, drop a follow.
Yeah.
From, uh, our side, um, yeah, follow the Alex, uh, social accounts, follow X link, follow,
uh, Lisa, uh, plenty of news coming out in the coming weeks.
Again, we plan to connect, uh, a Bitcoin L2 per week to X link every week for the next
coming weeks, uh, new articles out, uh, Lee Alex.
So for those who are, uh, staking Alex, uh, that is now a liquid rebase token, which improves
upon the existing design.
Um, and I think, yeah, I, I think that about, uh, covers a very, oh, and also we'll also be
at, uh, a Bitcoin Asia.
So, uh, if you're, if you're in town, uh, I believe we're a booth one 18, uh, be sure
to stop by and say hi.
And most of the team will be there.
And it'd be really good to see you.
Thanks everyone.
Yeah.
Yeah.
Yeah.
All right.
I think we have Jacob connected.
Yeah.
Hey, I think I lost you guys.
Can you hear me?
Yes.
We can hear you guys.
We can hear you now.
Awesome.
Yeah.
So really awesome to be here.
Thanks for having me.
And if people want to keep on top of what we're building, just come to our website, Hermetic
IFI and sign up for our waiting list.
And also I would highly recommend to join our discord.
Uh, you'll, you'll find the links on our website and, uh, we'll, we're rolling out.
We actually just rolled out our first galaxy campaign to our discord users.
So if you want to start earning points and be part of the community, join our discord
and you'll find all the information there and yeah.
Awesome.
Amazing.
Amazing.
I'm, I'm back.
Um, yeah, I guess, um, sort of final, final words here, but yeah, definitely, um, make sure
to follow Zest protocol on, on Twitter, um, and, uh, bringing lending and leverage to
stacks starting, uh, starting again into, uh, two days from, from here.
And, um, um, and yeah, some, uh, very exciting, exciting things coming, coming from there.
Right.
It's the definitely the most, the most audited protocol on, uh, on, on stacks right now.
And, uh, yeah, got some exciting, uh, very exciting announcements also coming in, uh, in
the next, next few, uh, few weeks that I think, uh, will probably surprise, surprise a bunch
of people here.
So we'll, we'll leave it at that.
We'll leave it at that.
Um, obviously we're back 10 AM ET every Tuesday.
Um, and, um, so yeah, that's Tuesday next week.
It's Tuesday next week.
We're back or at least Adan, Philip and me are back to chat about Stacks DeFi with, uh,
with new guests as always.
And, um, and yeah, until then, like, uh, let's, let's keep crushing it.
All right.
Got a, got a little opportunity here in this, uh, in this market environment to, uh, to,
to play around and maybe, you know, accumulate on things that we, uh, we missed out on and, uh,
and, uh, position ourselves for, uh, for everything that's to come.
So, um, yeah, stay, stay strong and then, um, we will, we will, uh, chat very soon.
All right.
Thanks everyone for joining till next week.
Take care.
Yeah.
Thanks for coming.
Thanks for coming, Jacob, and, uh, explaining all this to us.
It's been great.
Yeah.
Thanks.
My pleasure guys.
See you guys.
Take care guys.
Bye.
Bye.
Bye.
