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The State of Cardano’s DeFi
Recorded: June 14, 2023 Duration: 2:06:15Space Recording
Full Transcription
Hi, Red. Thanks for hosting. Doing a sound check. Can you hear me okay?
Hey, Rick. Yep, I can hear you.
All right. Cool.
I'll bring up.
We're going to give it a few minutes. Let everyone join in.
Let's see if BigPay joined. How's it going?
Hey, Eric. Can you hear me okay?
I see your microphone go off, but I don't hear audio, so I was wondering if you were doing
a sound check.
Thanks, everyone, for being here so far. Vanessa, sound check. Can you hear me okay?
I can hear you. Can you hear me?
I can hear you. Yep.
I wasn't able to hear Eric.
Yeah, I think he's keeping us in suspense.
So, as people are joining in here, Red is getting us set up. Red is a researcher with Massari. He recently did that YouTube interview with Charles and Frederick.
That was a really good interview. You can check that out if you haven't seen it yet.
And we're going to have some folks in here today. We will have Pay, Dan Gambardello, and Paul as community YouTubers and Cardano fans as a Cardano DeFi space.
We'll have Phil from Akagi. He has worked on multiple DeFi-related products.
Steven Ward from ViFi will be here. We're expecting Pi Lanningham from Sunday Labs to be here as well.
And we have Eric Coley from Indigo.
Yeah, thanks for the intro, Rick.
So, while we're waiting to get started, we've got a couple minutes here until this thing was supposed to kick off.
But, you know, maybe you could give us, you know, I think everyone here might know you already, but give an intro anyway.
And then Vanessa as well.
Rick, Vanessa, you guys want to give an introduction on yourself?
Oh, yeah. Sorry. I was waiting for Rick, and it was very quiet.
Yeah. So, we're still getting some speakers sorted here and brought in.
I got Vanessa here as our DeFi Jedi.
She's co-hosting, and I'm going to ask her if she could tell us a little bit first about the – what are the top five best attributes of Cardano DeFi?
And what are the top five that needs improvement?
And maybe she can give us some comparisons to other chains because she has used DeFi on multiple different platforms.
She does YouTube videos on multiple different blockchain scenarios.
So, she has a very well-rounded experience on the use of DeFi products both on Cardano and other blockchains.
And so, Vanessa, while Red's bringing up our remaining speakers that we have here, can you give us a rundown?
What's your thoughts on this stuff?
Awesome. Well, thanks, Rick.
And I think, you know, a few folks know me.
You know, I've been a DeFi DJing for a while across multiple chains.
I've worked in Web3, but background in big tech primarily.
And I know beforehand, Rick asked me to get, you know, five things that are really awesome about Cardano DeFi and five things that need improvement.
I found three things that are really awesome.
And so, maybe we can start there.
I know I tend to be a little harder on Cardano.
It's still in its infancy, but I am here.
I am, you know, using all the tools.
You know, I think the first thing that some people may not appreciate about Cardano DeFi is that at the protocol level, ADA is liquid-staked.
So, in a lot of other protocols, when you use, if you're using, you know, Atom on Cosmos, for example, when you're using it in DeFi, you're not getting any of the staking yield, unless you're using something like a liquid-staked derivative.
Cardano has this built in natively.
We've got awesome apps like Indigo Protocol that have this liquid-staking just there, so you're getting your ADA staking rewards without having to do anything, without having to take on any additional smart contract risk.
So, I think that's something that's very special, that hopefully we'll continue to build on and see more dApps incorporate.
The second thing I think that Cardano's got going for it that not every DeFi community has is a vast amount of liquidity.
There's something that comes with being a top-10 market cap chain, and that is liquidity.
And it's one of the strengths that Ethereum has, but also one of the strengths that Cardano has.
And then the third thing I'd say that we kind of look at is just the number of decentralized exchanges that are starting to build up, the number of different lending tools, all the DeFi options.
We're building multiple different versions, but I think that's extremely healthy.
There's not just one that dominates everything.
And so, I think that's, you know, really something we can look to, we can be proud of.
There's a fourth one, but I hesitate to mention it.
And the fourth one is the track record that we have on security in Cardano.
As opposed to many other change, we've been very, very fortunate with security, but also hesitant to talk too much about this because security is a process that's ever-evolving.
Just because you haven't had hacks doesn't mean the next hack's not coming tomorrow.
So, those would be, you know, my top, I guess, four things that Cardano really stands out compared to other DeFi ecosystems that I've looked at.
Cool, thanks.
What are the things, what are some of the improvements that you would think Cardano needs the most based on your comparisons to other chains?
Is there UI improvements that are needed, chain response time, stuff like that?
Yeah, so I have a longer list here.
I'll try to keep it to a, you know, short list of five.
At the top, I'd say it's just in general user experience.
And there's a couple aspects where Cardano, I think, falls short in user experience.
Now, what I'm comparing it to are DEXs on Cosmos to Kajera, which is a Cosmos L1 chain, to the experience I've had previously using Luna as well as Arbitrum and various other chains.
The speed is just not there.
While it has gotten better since the, you know, early days a year plus ago when we first, SundaySwap first launched, you're still talking 30 seconds, a minute plus to complete some of these transactions.
I know some people are complaining about a 45-minute wait during meme coin season.
I haven't experienced that personally, but still, you know, it's not speedy.
I wouldn't say it's speedy.
There's other aspects of the experience which get rough.
So, you know, I know there's some discussion around collateral required and different wallets do it differently and different dApps do it differently.
I've encountered it more than I would care to like.
And it's just a blocker in the experience to have that constant reminder of what's going on under the covers.
I think, you know, that also leads to, I'm not sure if this is causing it or what the technical reason is, but there's a lot of failures that I experience trying to do lots of operations one after the other.
It usually means that the collateral is exhausted or the chain is busy.
I've seen this on Indigo protocol where I try and do too many things at once.
And then the other part of the user experience where I think Cardano is still working on is the transaction fees are very, very high.
You know, I like to do arbitrage across different systems.
And just having between the batch of fees and the Cardano transaction fees themselves, it's expensive enough that at the size that I'm moving, it's not worth it.
And so I think looking to have transaction fees be a little bit lower is something that will help with the overall user experience.
Now, outside of user experience, I think there's some other core things that Cardano needs.
The first of which is some native USDC that's not bridged across from another chain that is kind of one-to-one backed.
I know the Mahan folks are looking at something that's very similar to that.
But I think the lack of it kind of hampers the true growth of DeFi with all the other tools and they're great.
I love IUSD.
You know, I think Jed's there as well.
But there's a different level of safety to having one-to-one a dollar backed in a bank account versus having this governed by smart contracts and kind of liquidation queues and things like that.
So that would be number two is native USDC.
Number three would be just the general lack of bridged assets from other ecosystems.
So I don't see, you know, whether it's bridged ETH or BNB or DOT or Bitcoin in the Cardano DeFi space.
I think those are things that would really be important to unlocking that full set of liquidity and opportunities for people.
I do see, you know, so those would be my main ones.
Everything else I think is a little bit lesser.
The different types of DeFi experiences and how they incentivize people.
Some are great.
I'm a big fan of the tokenomics of Indigo, for example.
And some, like MintSwap, have very inflationary DEX tokens and it's not clear what the value accrual is.
So I see those types of strategies as being fairly short term.
Real yield is definitely the meta that we're moving to.
So to the extent that all of our DeFi dApps on Cardano can move to real yield accumulation of value into the token, I think that's something that I'd also be looking for.
And then, you know, the last one is just sometimes tough to tell which are real projects and which are just promises.
Every ecosystem experiences this.
But I think, you know, with the failure of Cardano and a few other ones, I have some hesitancy with new projects coming up.
And there's been some controversy over Meld as well.
And so that would be just something that's not unique to Cardano, but it's something that I am a little concerned about.
Thank you, Vanessa, for that brilliant and concise critique.
I greatly appreciate it.
I'm still looking for Stephen Ward to join.
He'll be here from Wi-Fi.
Zygomeb is requested.
I'm going to bring Zygomeb up, too.
He's in Optim Finance, and they have fully operational finance products over there in OptimFi.
So I'll add him as well.
And so we also have the YouTubers here.
Red, let me know if I'm talking too much, and I'll stop because I do talk too much.
We have Dan, Pei, and Paul here.
They've done multiple YouTube videos on different aspects of the Cardano ecosystem.
Gentlemen, feel free to jump in here.
Let me know what you think about Cardano DeFi.
What have you found to be the most intriguing, the best parts, and what are the parts where you would like to see improvement?
Thanks, Rick.
Appreciate it, Red.
I kind of had, I guess, my own answer, but following up Vanessa, it's just kind of like, first off, so well-spoken.
And secondly, she kind of covered everything.
I mean, I guess I'll highlight a couple points that she mentioned.
And overall, I just am really excited.
I mean, just along with so many of you here, it's just kind of like, we've waited so long.
We've waited years for this.
And, you know, it's not even like, we're seeing DeFi wake up here on Cardano, but I don't even think we're, I mean, we're just getting started.
You know, we talk about Cardano DeFi summer.
I'm just excited.
I mean, there's been so many naysayers, and I think it's okay to kind of celebrate just the innovation that is coming on chain and just how Cardano is proving itself to be ready for this.
But speaking to some, you know, negatives, positives, just to kind of echo, I guess, what Vanessa was saying, for me personally, just using everything, I've been really pleased and happy with it.
But I guess DEXs at certain points, especially with higher volume in those moments, I know we experienced a couple of weeks ago, maybe some issues there.
But I think that's kind of to be expected.
When you look back at when DEXs were just coming on the scene and just that early stage environment that we were in, we really had to deal with a lot and be patient for a lot.
The amount of progress that I think these projects and DEXs have made since then alone, and it hasn't even been that long, I think is really good.
And then the other thing she mentioned was the collateral, things like collateral being needed.
Those little intricacies, I think, can be a little complicated, especially for people that are just kind of starting to dabble with Cardano and Cardano DeFi.
And so maybe those things can just kind of be worked on.
But from a DeFi experience, you know, when I think of something like interacting with Indigo, for instance, which I'm a very big fan of, especially in the last few weeks, kind of just getting to know it.
But just utilizing it and working with it in comparison to something like DeFi on Ethereum, I've been really happy.
I think it's right on par, if not better, than a lot of what happens on Ethereum.
So I just think we're in the right direction.
I'm really excited about it, obviously.
And I'm really kind of curious to see what comes out of this, new projects and all.
I personally think the best things coming to Cardano DeFi are yet to come.
You know, extended UTXO is new in this industry and also writing informal languages is fairly new as well in this industry specifically.
So I think that, you know, a couple years from now, once developers have more time and there's more tooling for, you know, users to be able to easily pick up, you know, the dev tooling, I think we'll start to see more innovative products that we haven't seen on other blockchains.
And, of course, it takes time to prove, you know, that formal languages are going to lead to less hacks.
But I hope to see that in the next couple of years as well as, on average, you know, protocols are hacked less and people lose their money less based on the initial designs of Cardano.
Yeah, we're doing pretty good in that area.
Paul, what you got, buddy?
Not a whole lot I can add, really, to what was said there.
Just echo a lot of what Vanessa said.
Cardano DeFi is definitely still early.
It's great to see how much has grown in the last year in terms of the UI and the UX.
There's definitely improvements can be made in time.
Things like Babel fees, I think, will really help Cardano going forward.
I don't know when.
I've seen different talks on it.
Something like that would really help.
Speed-wise, yeah, when you come in from another chain and you start using Cardano.
So what's within Cardano?
Things have got a lot faster over the last year when you're making your swaps and interacting with DeFi.
People coming in from other chains have different expectations on speed.
But all of that will improve in time, I think.
I agree with what Pace said there on this.
I don't think we've seen the best of DeFi on Cardano yet.
Developers are still figuring out what exactly can be done with the EUTXO model and the advancements we can make.
Order books are very easy to do with it.
You look at what Optima have done with their bonds.
Things like that.
I think we're going to see more innovations and, like was mentioned, with Indigo, where you can provide ADA to the protocol and you're still earning your staking rewards.
That is a feature I really like about Cardano DeFi.
And I know Levy Finance, which the Ape Society are bringing out, they're going to be integrating that feature too.
And I'd love to see more protocols integrate that, that you do still earn your staking rewards because that will encourage more people to get involved in DeFi on Cardano.
Because right now, Cardano staking is too easy in terms of DeFi that it takes a lot to encourage people to start giving up their ADA to smart contracts.
Because you can hold your ADA in your own wallet, you're earning your staking rewards.
The only risk is you giving or losing access to your wallet or being compromised yourself.
So there has to be extra incentives there for DeFi.
And when you can have protocols offering that, that you still earn your staking rewards and the incentives on top of that, I think it's a really good feature to have.
And we're going to see a lot more going forward.
Yeah, we will.
Thank you, Paul.
You know, Cardano has a very wide selection.
There's at least 12 different wallets, 10 of them that we know that are pretty sure work with DeFi.
You have different categories of DeFi available in Cardano between the lending and borrowing protocols, the CDP, collateralized deposition type protocols, staking, and the DEXs.
We have MintSwap, Indigo, Liquid, Jed, Stablecoin, and Chen, ViFinance, WingRiders, MuesliSwap, SundaySwap, AIDA, OptimFinance, FluidTokens, 8X Pro, MeowSwap, and LendingPont.
All showing up on DeFi Lama today with a 502 million ADA TVL.
So well done, everyone.
Give yourselves a big round of applause for being avid participants in the Cardano DeFi ecosystem.
I think you all have done great.
Phil had his hand up there.
So if you guys are okay, we'll roll over to Phil next, and we'll get Eric and Pai in here talking.
So we're going to get on to the builders.
Phil, what you got?
Yeah, I just wanted to briefly touch on this.
I designed one of the, I designed the smart contract protocol for one of the top three TVL DEXs.
It's Power Ranger themed, typically.
And there's a few things that I've learned over the course of developing in Cardano.
And there's one big thing that I think is really holding Cardano back compared to other ecosystems.
And it has nothing to do with the Cardano blockchain itself.
A lot of people complain about transaction throughput and a lot of issues that are plaguing the chain.
But they're not actually inherent.
Most of them aren't actually inherent to the chain.
They're inherent to the apps that are released on the chain.
So right now, the blockchain itself can facilitate and support high throughput concurrent DEXs.
But the current DEXs that are live are basically exactly what was released the second that smart contracts went live.
They haven't changed most, you know, none of them are using Plutus V2.
And this isn't really a rag on the DEXs.
You know, they're all very, very smart people.
And they're all working very hard on something on, you know, their own protocols.
But there's not enough code sharing in the ecosystem.
If you look at Ethereum, you can go to the biggest, best DEX right now.
You can just copy paste Uniswap and then you can build from there.
And what this results in is the protocol is getting better and better and better because, you know, you have to if you have to start from scratch.
It's just impossible right now.
If a new developer wanted to come in to Cardano and compete with the existing DEXs, the amount of money that they would have to invest just to get where they are, it is just not feasible for them to do.
Whereas they can go to Ethereum, copy paste the leading DEX and then just, you know, make the improvements and push the ecosystem forward.
And I feel like we really need to sort of facilitate that mindset, right?
Right now, it's like each each protocol on Cardano is sort of like, let me grow my slice of the pie.
You know, they're keeping everything closed source, trying to compete with their competition.
And it makes sense.
But really, as an ecosystem, everyone, every single protocol will benefit 100 times more if instead of growing the slice of the pie, we focus on growing the pie itself.
With the caveat, just, you know, consult with your lawyer because Uniswap is BSL licensed.
And so if you actually go and copy paste the source code, you're probably going to be sued.
Right.
Yeah.
I mean, like you can go there and learn the reference implementation.
Yeah.
So, Phil, you bring up some good points there.
Moving on to Plutus V2 and stuff like that to get more performance out of the chain and better user experience delivered to the user and so on.
And, Pai, did you want to – do you have more comments on that?
Or do you want to tell us a little bit more about Sunday Labs, which is your most recent rebranding?
Beautiful work you've done there.
How's it going today, Pai?
Hey, thanks for having me on.
Yeah, so, you know, what Rick is talking about there, we've always been Sunday Swap Labs, and we've made the distinction between Sunday Swap, the protocol.
And so this is really just a – making that a bit more clear in our naming and our branding and things like that.
Sunday Swap or Sunday Labs is the company, and we do a bunch of stuff, the decks being our kind of number one focus.
And that's the Sunday Swap protocol, but it kind of just drives home the fact that, you know, the protocol is now a protocol that's owned by the community, and we just happen to be kind of the biggest shepherds of that protocol right now.
And Labs is like a separate kind of private company entity.
But, yeah, I did have some comments on what Phil was saying, which, you know, I think are really good points.
You know, obviously, all the main DEXs are still on Plutus V1.
There's kind of some historical reasons and practical reasons for that.
The main being that upgrading your contracts is a really, really big endeavor for a protocol like Sunday Swap or MinSwap or WingRiders,
in that essentially you have to convince everybody using your protocol to withdraw their liquidity and deposit it in a different protocol.
You're effectively competing with yourself.
And that can be a really disruptive event because now all of a sudden you're kind of splitting your liquidity.
Your users are going to get worse prices.
You have to have all of your infrastructure working, you know, perfectly to handle that transition.
It's just a really big event.
And, you know, one of the reasons that this came about, and, you know, I don't want to sound too critical because there were really good reasons for this,
but, you know, I think a lot of us building on Cardano back in, you know, December of 2021, right before Sunday Swap launched,
got the impression that the Plutus v2 or the big savings from things like reference inputs and script references and things like that were going to be backwards compatible and usable by Plutus v1.
And that turned out not to be the case for very good reasons, but, you know, Sunday Swap, for example, launched under that premise, under the idea that, yes, it's going to be painful now,
but this reprieve is coming in, you know, three months.
And so, you know, I just wanted to provide some context for both the fact that, you know, we didn't necessarily, and I'm speaking a little bit for what I assume is the situation for other DEXs as well.
We didn't assume that we were going to be in this position for as long as we are, and I just want people to have empathy for how big of an undertaking upgrading your contracts is.
That's something that Sunday Swap is working on right now.
We're working on a new set of Plutus v2 contracts.
We're nearing completion on that, and our plan is to take it to the DAO to vote on whether to pay for an audit and to kind of go through that painful event of asking the community to unbond all their liquidity and move it over into the new protocol.
But, you know, it was just a great opportunity to drive home how really painful that is to a protocol.
And then the last thing I'll say, just kind of tying it back further in the conversation, one thing, you know, I think UX around Cardano is one of the biggest ways that we can improve.
And I think that, like, for example, one of the big ways that the UX is pretty bad that I haven't heard talked about is the min ADA requirement.
So this idea that, like, a certain amount of ADA has to be locked up with any native tokens that you have.
And from a developer's perspective and from a user perspective, this has just been an absolute nightmare because getting all of the, like, finicky details of exactly how to calculate the change and ensuring that you have enough ADA for your outputs and things like this is fairly finicky.
And so that's another kind of area where I think Cardano has very good reasons for having that requirement, but it's almost like we've struck, we've staked out this ground on this highly purist stance.
And in a lot of our design decisions, we're, you know, taking the most ideal optimized stance.
And sometimes the developer in me wishes that there had been somebody with, you know, more practical considerations in mind in the room and said, okay, maybe this would be the ideal design decision, but we could have simplified, you know, 100 people's lives or 100,000 people's lives by, you know, taking a slightly less optimal position.
But that's just, you know, another example not to ramble of, you know, Cardano has really staked out this hyper-idealist stance, which I think as an operating system for finance is going to be the right decision in the long term.
But that's where the, a lot of the UX concerns in terms of collateral and min ADA and things like that come from as well.
Yeah, thanks, that's a good point on technical upgrades on how it's, it's really more than just, you know, writing a new smart contract, you also have the social effort of, am I going to fragment all the liquidity in here?
And, you know, as we can see with other DEXs that have done the same thing, and even, you know, people leaving staking pools that aren't running anymore, you know, not every user's on top of that stuff.
So there's really no way to do a clean transfer there.
Zygomeb, I don't think you've spoken yet.
Do you want to share a bit on Optimify and, you know, kind of your thoughts on where we are right now?
Oh, hello.
Yeah, absolutely.
I can give a lot of background and perhaps more, if not pessimistic, then realistic view of things.
It's not that others are not speaking true.
It's that I tend to see things without less optimism recently.
Anyway, let's take a step back and look at user experience.
This is the most important thing for a dApp to consider.
Is it pleasant for people to use your dApp?
If it's not pleasant, then it's not good and people are going to hate it.
Even if it's like the best in the market right now, if it's best in the worst ways that matter, it's not going to be good.
And one of the most important factors when it comes to providing a good user experience for a dApp is giving quick feedback.
At Optimfinance, we've sort of innovated this, sort of first wants to push this to mainnet, sort of.
It's not that the idea wasn't thought of before.
It's just that we kind of first made big use of it.
And that is transaction chaining on Cardano.
The idea is to provide near instant, quote unquote, feedback on finality when transaction has been accepted into the sort of ledger.
And this is, in many more ways than one, a lie.
Because on Cardano, there is no notion of instant or even fast finality.
And all developers have to effectively choose from how many blocks before now are we taking stuff at face value.
Even though the likelihood of a reorg goes down exponentially as we kind of move back in history, it's way harder to revert back this many blocks.
But it can happen.
And an application usually has to wait just, you know, 40 seconds, a minute.
In an ideal scenario, where it can confidently say, okay, now actually, we think this is a good time for giving you a confirmation.
Most of the times, when the chain isn't, like, you know, not used by anyone, there's going to be a much higher delay between input and feedback.
And the worst part about that is, as others have spoken, the concurrency issue means that a transaction may, if the app doesn't disintermediate between what the user wants to interact with and the user themselves.
Meaning uses a batcher or whatever else in the middle, which leads to less decentralization in the end and more opportunities for underhanded behavior, let's just say, such as reorganizing transactions, imposing huge fees and minor extractable value, which, to give a credit, a lot of the products with batchers have gone and done a decent job at monitoring the situation with their batchers.
It all leads to the fact that Cardano does not have immediate feedback on transactions, immediate confirmations, instant finality.
And this is what DeFi really needs to shine.
And, you know, to give credit, are things on the far out the roadmap for Cardano that would allow things, such as this with the Ledger combiners paper?
I believe.
I believe.
But I am not seeing that going to main it anytime soon.
So, to reiterate, I wanted to point this single fact that is wrong with Cardano that is a root cause of many, many issues that are currently plaguing it.
And that is lack of instant or even fast finality.
And this is a direct consequence of Cardano's consensus being the longest chain, Nakamoto.
And that is sort of number one thing that is a problem.
And, you know, as far as Cardano is concerned, it means that for users to have the user experience they deserve, rightfully, a lot of infrastructure needs to be built to sort of work around this.
And so just, again, batches, which take the transaction you make, and you don't sort of interact with other parts of the blockchain so that it's very local.
There's very little concurrency going on.
And you take that transaction and then actually deal with the nasty stuff yourself with the batches.
And, again, I don't believe that that pattern is the most suitable for a DeFi environment of the future.
And I believe it is most crucial that it is addressed in one way or another, but I simply don't see a way to do that without first addressing the finality problem.
Yeah, and Zygomep, I'm always a fan of your very well-thought-out criticism.
And it's good to look at the back end and how the chain is working because that's how these developers build the tools.
Now, I will say, to follow up, in addition to what Zygomep said, I have seen a lot of these developers, specifically SundaySwap, MuesliSwap, and Indigo, where they make the user interface so that the user doesn't have to worry about what's going on under the hood.
For, like, on the v2.SundaySwap interface is the one I always hop over to whenever I use that one.
And I get this little party popper whenever I know my transactions are done.
I got my swap.
I got the goodies I was looking for.
And so it gives you this little splash of party poppers whenever your stuff is done.
MuesliSwap tells you complete.
Dex integrators over on Indigo gives you a complete indicator.
So from a user experience, some of the developers have done a really good job of managing that stuff under the hood and letting the user know that what is the status.
For example, on Indigo, it has a step 1, 2, 3, 4, 5, you know, building transactions and so on.
So it helps keep the user situational awareness of the status of their interaction.
So good job on those that have managed it well.
And I suggest people go check out the ones that are doing good at it and try to learn from that.
Side note, Rick.
Now you can go to app.sunday.fi.
Okay, app.sunday.fi.
I was using the v2 dot, but now I can just go straight to app.sunday.fi.
And I'm there?
Yeah.
Nice.
Yep.
Nice.
Eric, Eric's been – Eric, give me a sound check.
Mic check.
Oh, you're good.
I hear you.
How's it going, man?
Cool, cool.
Yeah, I'm good, man.
How are you?
I'm good.
I'm a little bit FOMO Indie.
I'm a little bit biased here, so I'll let you speak a little more to Indie.
I've been having a lot of fun with it.
Pretty crazy with the liquidations last week.
I learned a lot from that.
Yeah, yeah.
We all did, right?
I mean, we can model and design and dev all day long, but until you actually have a real-world
battle test, like we saw last week, we don't really know.
And, you know, what was pretty chaotic for a few hours there into the wee hours of Saturday
morning, as the dust settled, I think we found a lot of silver linings with that experience,
right?
I put out an announcement Saturday, and we've only seen, so this is in there, we've only
seen ADA flash crash 20% or more in value, six times historically.
So I think in this instance specifically, it was more like 23.5% in a 24-hour period, which
the majority of which was more like a 12-hour period.
So we've long discussed, you know, what would happen in that instance, and while we did
have contention issues with users interacting with disability pools, and then the liquidation
mechanism was backlogged, everything still processed and went through within about a four-hour period.
And Indigo protocol stood up to the test quite well.
It wasn't always pretty, of course, but having nine and a half million ADA, what was it, 291 CDPs
liquidated within a really short amount of time, while the protocol remained solvent, in
fact, healthy, was for us, just observing it, and for the Indigo community, just one of the
best battle tests that we could have seen to date, if not the best.
We've had other instances where we're like, okay, cool, that, you know, we really need
to prove that piece out, see how that would interact, or how the protocol would function.
But this last experience, because it's such a rare event, really, really showed Indigo's
resilience.
But again, like I said, you know, the silver linings are where we can improve.
So as Zygg brought up with transaction chaining, we've actually already made some headway towards
that and had transaction chaining for our liquidation bot, yet we did not feel that it was
appropriately tested to deploy.
So transaction chaining will be deployed to the liquidation bot, first and foremost, as
a high priority item, as well as for transactions interacting with stability pools.
So those are two areas where we can make some improvements based on the lessons learned
from last week.
And that's really the best thing you can do, right?
I mean, is analyze real-world data, real-world experience, and figure out how to make your
data better.
And that's always been our aim.
So with regards to Indigo Labs, anyway.
And I was really excited to see how things stood up.
Like I said, it was really stressful, four hours.
I had gotten back home from travel last week.
And Friday, I think it was maybe 11.30 at night that everything, we became aware of, you
know, the flash crash and data value.
And so we kind of dialed in real quick and started community comms and managing, just
kind of monitoring, rather, you know, what was going on.
And I think it was up to about 2 or 3 a.m. with some of the rest of the Labs team.
It was a little bit stressful.
But again, as the dust settled, we kind of looked back and take a deep breath and say,
OK, cool.
We stood up to the test.
We know where we can improve.
Let's do that.
Those are the priority items.
And yeah, just really blessed in general, just to see, you know, the growth of not
just Indigo, but Cardano in general, the DeFi ecosystem.
Seems like it's definitely waking up, as others have pointed out here.
The sky's the limit, I think.
So we have a lot of improvements that we need to make across the board, no doubt.
I don't think that's lost on anybody here.
But we're early.
We're young.
I think a lot of people here are really diligent in making gains towards those improvements.
So that's the best you can do right now, right?
Just keep building, keep making things better.
I had just a follow-on question, Eric.
First, I want to say, you know, congratulations.
That was definitely a huge test and something I know people have been concerned about with,
you know, the throughput of Cardano.
But I am curious, you mentioned kind of four hours to clear the liquidation queue.
And that, from my perspective, does still seem like it's a fair amount of time where
there is an opportunity for bad debt to enter the system.
Where is the bottleneck coming from?
Is it core to the Cardano protocol?
Is there something else?
In a future where, you know, Indigo is not perhaps the only one doing liquidations,
where there's, you know, 5, 10, even 20 different protocols doing liquidations,
you know, what do we have to work on to ensure that it can all happen smoothly?
And perhaps a time frame that's not as long as four hours?
Yeah, absolutely.
Fair question and a good one.
Our observation is that transaction training will help that.
So we had one instance of the liquidation bot deployed.
So when a user's CDP is undercollateralized, it's promptly frozen.
It's frozen right away and put in a liquidation queue.
It was the bot's actual liquidation mechanism to expeditiously filter through all of the undercollateralized CDPs in queue.
That's where the bottleneck was.
So we're hoping that transaction chaining will not alleviate all of that backlog and contention, yet it will improve it.
That's about the best I can tell you, Vanessa.
Maybe Zai can talk a little bit more about transaction chaining and hopefully its improvements to the overall space.
I mean, it's something that I think he's been a champion of, as he mentioned earlier, but it's an area of focus of ours.
I know four hours isn't ideal, yet it's also better than, you know, days worth of backlog transactions that we've seen in the earlier days, right?
So I think we still have improved, but more improvements to go.
This is awesome.
I see a bunch of hands going up here.
Maybe if you could just describe quickly, like, what is transaction chaining?
We've got a lot of people here.
It might be a new term for some folks.
And then, Zai, we can go to you.
Yeah, I'm going to give that out to Zai.
So, I mean, I can explain transaction chaining because, I mean, Eric, do you want to do it?
No, feel free, but I think it's your baby, right?
I mean, not really.
It's kind of, you know, a collaborative effort over at MLabs, it was.
So what it is, is essentially taking a transaction.
So on Cardano, there are inputs and outputs to a transaction, the UTXOs.
Transaction chaining takes the idea of taking, essentially, a deterministic, fully deterministic output of a transaction that hasn't yet been confirmed on chain and takes it as an input to another transaction.
This way, we have, essentially, like, transaction on a transaction.
We chain them before the first one has made it into the ledger.
And you may see where this can be a problem.
And before, because if the first one doesn't make it in, then the second one obviously won't, because it's impossible to create the same hash of the UTXO as inputs to the second one without it being exactly the same as the first one, which means it's the same one.
So that's the first idea of transaction chaining.
And as long as there's no contention issues between UTXOs, eventually, those UTXOs and transactions will be processed.
And they can even be processed in the same block.
This kind of crumples down things, but still is bottlenecked by the network's throughput.
So without improving the throughput, we cannot process them.
But we can, for a single protocol that needs a lot of things happening right now, kind of push them and expedite them, which means that in the presence of a fee market, we could bundle things up and kind of make a block.
I mean, however, things end up being, but with tiered fees, we'd have to, you know, kind of up the fee on first one, up the fee on the second one.
But effectively, instead of constructing blocks, you're just pushing up the fees on transactions.
So, yeah.
But it will be possible in the future once we have tiered fees on Cardano.
So it's for a priority transaction in the future, you will be able to sort of make it.
And with more liquidations happening, it would be possible to then expedite the things.
So, yeah, I'm really glad that the protocol survived.
Some bad debt has made it into some systems, but nominal amounts.
Thankfully, ADA bounced, so it wasn't as tragic very quickly.
It dropped to $0.20 and then started going up really quickly.
So that's really good that it happened.
And I will humbly brag here that I may have saved Indigo because of my efforts to push up the minimum collateral ratio on IUSD.
So your bags are safe.
Thanks, Sammy.
Thank you, Zaya.
Rick, you had your hand up, and then I saw Pi in full giving a thumbs down to the fee transaction.
So maybe we can come to that in a minute.
Yeah, we will.
I just wanted to give a user experience feedback.
Similar to Zygomeb, I tried to help with the collateral there.
So some things I learned during the flash crash is, me personally, is if I think I need to add 20% more to a CDP,
it's probably a good idea to add 30% or 40% more.
That's one thing I learned.
And the other thing I learned, maybe someone here can answer that.
So I got two different Indigo wallets assigned to CDPs and such.
And on one of them, I didn't realize this, but I had it set in the single transaction mode, and the other one was not.
And the wallet that was not in single transaction mode is the one where I had a little bit more pushback from the user interface,
a little bit more pushback from the protocol on getting a transaction through.
Because I was up with Eric the same night, but in a different side of the planet, from 11 o'clock until 3 o'clock in the morning,
watching the price and slamming ADA back into them CDPs.
And the wallet that was set to single address mode seemed to perform better.
I didn't have as many problems.
And the wallet that was in normal, full UTXO, fracking mode, whatever, that one seemed to, I got a little bit more pushback from that wallet.
Does that kind of make sense?
Okay, so let's go back to, that was just a little bit lesson learned on my part during the flash crash.
Pi, what you got, buddy?
And then Phil.
Yeah, I just, I wanted to comment some more on transaction chaining.
I think Zygomed did a really good job of explaining it.
And he did mention kind of some of the risks and drawbacks.
But I just want to emphasize that because what I've seen is somebody mentions transaction chaining.
And, you know, maybe some of the less technical users see that as like a holy grail of like,
oh, yeah, we get, we can kind of build an infinite chain racing ahead of where Cardano is.
And I just want to caution anybody building and providing support for this directly to the user in wallets and things like that, that it's really risky, right?
It works for something like a liquidation bot or a scooper because, you know, if those transactions get rolled back or get kicked out of the mempool, you know, the automated process doesn't care.
It can just pick off where it left off.
But if you present that transaction chaining experience to the user, what the user is seeing is a bunch of economic activity that's going to get, that could potentially get wiped out, right?
So imagine I make a bunch of trades, I send a bunch of money to my friend, and I'm chaining those transactions on top of each other while the chain is under load.
And then they get wiped out and I don't notice.
And, you know, my mom misses her rent payment because that one transaction that I was expecting to go through didn't go through.
And I wasn't, you know, because I had this false confidence, you know, I didn't, I wasn't checking to make sure that it goes through.
So I think transaction chaining is a great tool, but it fundamentally, like Zygomeg was mentioning, doesn't change the throughput of the chain.
It just makes your protocol maybe a bit more competitive against other protocols.
And so, you know, unfortunately, we're in this world where I think every protocol is going to have to, every protocol with like an automated role,
like liquidations or, or batchers is going to have to adopt transaction chaining so that they can kind of elbow other protocols out of the block space,
because otherwise they'll just get out-competed for that block space.
But just wanted to kind of, you know, provide the other side of it, provide the cautionary view of transaction chaining.
And, you know, it doesn't help with things like transactions that expire because they have valid ranges assigned to them and things like that.
Another kind of point, just while I have the microphone is I do want to kind of point out a bunch of people have said, you know,
we've gotten a lot better since those early days, right?
And while we've seen a few kind of protocol parameter bumps back in early 2022, largely things haven't changed, right?
What's changed is the usage patterns, right?
What we saw, you know, around the time of Sunday Swap's launch was like an incredible time-focused load on the chain
and a bunch of immature infrastructure around the chain.
What we see during MemeCoin launches is, you know, a fraction of that same load,
and we're still seeing these throughput problems.
And so, you know, to kind of mirror Zygomeb's pessimism maybe, we haven't fundamentally solved this, right?
Things have gotten better experientially to the end user, but we still have a throughput problem on Cardano,
and that doesn't come down to any one thing that any one actor can fix or do.
You know, it's not like a new dApp could come along and fundamentally fix that problem.
Even a protocol using Aiken and using script references and reference inputs and stuff is only going to get you so far.
We still have this really kind of limited tube in which we're all trying to fit our transactions.
And so I'm really looking forward to, you know, seeing those scalability improvements come through
and us kind of dramatically changing the nature of the equation for Cardano itself.
Things like input endorsers and things like that.
So just kind of wanted to provide that perspective of, you know, the experience has gotten better,
but, like, at the end of the day, not a whole lot has actually changed.
Just real quickly, thank you for, like, really iterating on the point that, yes, transaction chaining is really dangerous.
But fundamentally, what we'd really like is instant finality or, like, fast finality.
Anything but, you know, forcing us to use this with effectively a hack.
Yeah, I'm skeptical about the ability to achieve instant finality in a, like, open, permissionless, decentralized way in a decentralized system.
I think you'd just start to run up against, like, fundamental limits of the speed of light and causality.
You see, I think, all of the protocols I've seen that achieve instant finality and instant consensus make some trade-offs in terms of,
okay, we're going to have some amount of permissioning over who's the known set of validators and things like that.
Not to say that those aren't great trade-offs to make, but, you know, I just want to be, you know,
mirror your pessimism back at you for any kind of instant finality solutions.
Well, no, with the way things are, it's likely going to be a trade-off that's made.
And I don't want to get too deep into, like, the technicalities here, but I just want to,
because we have mentioned the determinism of transactions on Cardano.
And I feel like it's not iterated enough, just how double-edged sword that is.
For a developer, the fact that transactions are deterministic,
it means that it's way harder to build transactions to the user.
This is effectively why we have the concurrency problem.
The determinism, which we have, in my opinion,
not seeing the true benefits for what it costs on Cardano to the user experiences
detriment, is the root cause of the concurrency problem.
The fact that we have to know everything, and we can't just say,
call a function or grab this much from the account of the user.
We just have to say, grab this UTXO, do this, this, and that,
and those are the outputs, effectively.
And I think that's where Cardano's approach to chimeric ledgers,
and kind of the long-term thinking on the extensibility of that model,
where you could have, like, a subdomain that is making different trade-offs there,
is really interesting.
But, yeah, I absolutely agree, the benefit that we all extol,
that is, to some extent, a big strength of Cardano,
is also where a lot of these weaknesses come from.
Yeah, I can speak on this a little.
So, one of the projects that Ikigai Technologies is working on
is Gravit Marketplace, which is this on-chain auction protocol.
And, like I was saying before, like, there are limitations to the Cardano blockchain,
but the main thing holding it back is architecture.
And we've spoken with Meld and other lending platforms,
and if you look at the current model with this pool model,
where, you know, you have a liquidation,
you have to swap the asset, you have to deal with the pool.
Now, you're not competing with the limitations of the Cardano blockchain.
You're competing with the limitations of the architecture of that pool.
So, say it's using a batching model.
Say it allows 10 transactions bundled into one, right?
Now you're competing with everyone who's making transactions on that pool.
Even if you're, like, you have some special, you know,
I'm being liquidated, here's my token, I get to the front of the line.
You know, it's not helping,
because ultimately you're limited to 10 people.
All right, so what this auction protocol does is it's the same type of liquidation auction you see on Ethereum,
where instead of dealing with a pool directly,
when an asset is liquidated, an auction occurs for the collateral.
And the auction can have basically infinite concurrency,
because it doesn't have to deal with global state.
It just has to deal with each individual person.
And you can do this using, like, sort of new on-chain architecture,
things like on-chain linked lists.
You can use folding.
You can use resolution.
And what you get here is finality that's much significantly quicker
than what you would get from trying to swap on a DEX.
Yeah, Phil, on the discussion of architecture,
I mean, there are, of course, limitations and trade-offs,
no matter how you design your chain.
But one solution that other networks, you know, are exploring a lot,
like Cosmos and Ethereum, is application-specific chains.
And when you do something like that,
you have a lot more freedom to choose, you know,
what you want to work with than what you don't.
I mean, there are great parts of Cardano's architecture.
You know, things like native tokens, great for the user,
great for the developer.
But, you know, you might want to hybridize, like, you know,
certain things might be better serialized.
So that's one thing we might start to see more of
as we're seeing a few more sidechains start to pop up
and be in development.
I see Nico just joined.
Nico's with DC Spark.
And they do great work with Milka Meta.
So, Nico, if you want to chime in.
Hi, Red.
Yeah, I just wanted to comment on the previous discussion about instant finality.
So, related to that, it's mostly about the security properties about the protocol.
Usually what you have is Byzantine fault-tolerant, VFT protocols,
that the assumptions, it's not so related about having, like, a fixed set of validators
or being that centralized, but rather that you have two-thirds of the network
that they are going to accept a block.
And usually that's how you get to instant finality.
Cardano, right on that, to have instant finality,
it went for, like, having more decentralization,
so you can absorb, like, more powerful attacks.
So, it's, like, similar to Bitcoin that, on quotes, you need to have a 51% attack.
But, basically, I just wanted to add that trade-off.
And it's not so much about other type of constraint related to instant finality,
but sort of, like, that limitation.
And it opens up certain use cases.
So, like, for example, if you want to, like, if you worry more about attacks,
usually you will go for this.
But if you have other use cases where you want to have, like, faster transactions
or, like, gaming, sometimes instant finality is going to be, like, a little bit more important.
And, yeah, I just wanted to add that specific point.
But related to the other thing, I don't know how much you guys have been mentioning about Hydra.
And I think it has a lot of use cases.
But maybe, as you have mentioned, for some DeFi-related cases, it's not that great.
And the limitations, although you can have very fast through the channels,
you can transact, but you need to open these channels with the specific assets
and it gets really tricky to implement something like a DEX to transact on these assets
with the counterpart.
So, maybe, I don't know, different type of use cases are going to have different solutions.
And that's why me and some other folks at DC Spark,
we have been, like, trying to push a little bit more on research related to rollups
and how we can implement some of these technologies on Cardano.
Yeah, I just wanted to maybe chime in real quick to key off of what others here are saying
from a technical standpoint of, you know, some of the trade-offs of, you know,
that every blockchain faces with the famous TriLeba.
And, you know, at Optum, this is, you know, something we're thinking a lot about right now
is, you know, what types of use cases for DeFi, you know, are best suited to Cardano, right?
Is if you want, you know, very fast trading, which is most of DeFi right now,
is basically, you know, peer-to-peer gambling, right?
There are a lot of payments that happen on Tron, right?
There's a joke in DeFi circles that Tron has some of the best product market fit in crypto.
So many payments happening there.
But, you know, what use cases are there to, you know, try to capitalize on, you know,
Cardano's unique architecture and the decentralization?
And maybe that is not, you know, some of the use cases that we've seen.
But they are core primitives.
They're very important that we have them.
Everyone here has done a great job in building those.
But, you know, like to address Vanessa's first, you know, one of her initial points about,
you know, why isn't a stablecoin, a fiat-backed stablecoin here?
You know, CNTs, right?
A lot of people here know, but the CNTs, you know, since they're uncensorable,
Tether and Circle won't come to Cardano because, right, when the U.S. government says jump,
they have to say how high.
And you can't do that.
So, you know, hopefully USDA will come out and other stablecoins.
But if that happens, you know, what type of on-chain, you know, under-collateralized lending
and what can be done off-chain to, you know, capture some of the value-add of, you know,
increased efficiency of settlements and capital structuring can be done for certain types of lending
on Cardano that would benefit, that doesn't need really fast settlement, right?
That is value beyond trading and, you know, basically leverage and gambling and, you know,
farming different tokens, which is, you know, important.
But I think DeFi has been a shrinking market, right?
If we look at the past year, it was overinflated, but DeFi across all blockchains is,
activity is decreasing.
And I think there's a lot of soul-searching going on in other chains trying to figure out,
okay, you know, what is the value of the products that we're building for real-world applications?
And I don't know.
That's some of what we were thinking about over at Optum and designing some of our future products around
that don't necessarily need this very fast finality.
I'd like to follow up with that.
As a user, the kind of things that I'm looking for is how do I put my savings
in my 401k retirement account that was in old traditional brick-and-mortar stuff on chain?
Me, personally, I kind of figured out I have a CDP in Indigo to do that,
and how do I secure my savings and earn good return on my savings?
So, you know, I want to preserve my CDP.
My lesson learned from the battle testing we went through last Friday,
where I was up for hours trying to save that CDP and make sure that I preserved my savings,
here's what I learned, and I think this is very important.
As long as a centralized exchange is faster than the on-chain protocol,
the centralized exchange can dump the price of ADA faster than the protocol can respond.
So, knowing that information, I need to make better decisions going forward,
knowing that a SACS can dump faster than the on-chain protocol.
And number two, I also learned I still have zero failed transactions on Cardano
during the carnage last Friday.
I lost no collateral.
I lost no fees to transactions.
I didn't pay any transaction fees.
I didn't have to fight a fee market and pay ridiculously high prices.
I paid the same price for every transaction.
And when the user interface told me, now, I was in crisis mode.
I was throwing a lot of ADA at that frickin' CDP to make sure that baby didn't get liquidated.
And I was like, okay, I'm keeping this sucker.
I'm going all in, right?
And things actually responded kind of okay.
Not bad.
Could be better.
I think we learned from it.
I think we got a lot more work to do.
But I do have to say, I was rather impressed with the feedback from the user interface telling me,
hey, there's too many users trying to do this right now.
You're going to have to wait a minute.
And then I slammed it a couple more times, and I got it through.
And that was on a couple occasions.
I'd say about out of eight times I hit the interface, I probably did 20 tries,
eight tries successful, even under extreme load.
So I just want to provide that feedback.
Vanessa, what do you got?
Yeah, I just wanted to kind of add to what you were saying about wanting to have your 401k or your savings account on chain.
I think there's really two worlds, and some people get them kind of mixed up today, where a lot of what we're doing here with ID genning is stuff that Wall Street typically does.
Whether we're providing liquidity and helping to market make with LPs or taking the leverage and using the CDPs like you were using.
The regular folks just want to deposit a stablecoin and earn interest through a lending protocol like Liquid or invest in a basket of diversified real-world assets that is on chain.
I had a fantastic conversation with folks from Blend Protocol who are building on Kajera.
I haven't seen something similar on Cardano, but basically building like index funds that people can invest in.
And I feel like that's this consumer-facing world where if we can get closer to having those experiences built in as a default on-ramp for people,
rather than them having to find all these protocols and figure out like which part of it is good for me and which part is not,
just save, invest, and carry on with the rest of your life.
Nice. Thanks, Vanessa.
Red, do you want to switch to community questions?
We'll start bringing community members up.
We'll make sure we do speaker management so we can get – you want to switch over to that now, Red?
Yeah, it's a great idea.
All right. I see Zexen.
I'll bring Zexen up at a speaker.
And we can do up to 10 speakers we've got right now.
Yeah, we've got nine speakers.
So people would start requesting, and I'll try to keep track of who's up and what's going on.
Zexen, what do you got?
Hi, everybody.
So I actually just joined like five minutes ago, so I didn't really hear the whole conversation.
But I just saw a state of DeFi, so I figured I'd pitch in my two cents.
So me and my partner, let's say, are working on protocols, DeFi protocols, specifically peer-to-peer DeFi protocols.
We actually posted them, a few of them in the last few months, Cardano Swaps and Cardano Loans, and we're working on a few others.
We're actually going to be submitting them off to the Emurgo Bill Tackathon.
And I think they actually directly address some of the concerns here.
Like I said, I just joined in the last five minutes, but I heard you guys mentioning that CDPs are kind of risky, or you might get liquidated and stuff like that.
And one of the things that kind of puts me off about all these protocols, such as CDPs, or really the whole state of Cardano DeFi is, it makes me think of Moxie Marlinspike's post about like DeFi or Web3 not being really decentralized because of the underlying architectures.
Like most DeFi protocols right now, even on Cardano, are not that decentralized in that they don't really take full advantage of the power of eUTXO.
So like, you know, for lots of protocols, like trading protocols, lending borrowing protocols, you still have to go through like permissioned, certain permissioned actors, such as batchers, aggregators, like, you know,
that kind of stuff.
And there's this whole question about how to manage those entities, whether through a DAO or some kind of a central maintainer.
They usually have like DAP tokens that I don't really see the purpose of them.
Like they're supposed to be used for bootstrapping liquidity, but like, what is the sustainability of that?
So anyway, all of this is to say, like, I do think that there needs to be like a, or there's room for like a rethinking of how DeFi is done on Cardano in a more peer-to-peer sense.
So, you know, like I said, we're working on solutions for that.
So, for example, if you Google like Cardano loans fall on Icarus, GitHub, like you'll see it.
And in our solution, there's no such thing as liquidations because we divorce our, our protocol is an open protocol.
It's similar to Hydra, where it's just a platform of open Plutus contracts that you use to exchange with peers.
And there's, there's no chance for liquidations because there, there's no external prices.
Everything is entirely divorced from the external economy.
So everything is endogenous to Cardano, including price discovery.
Obviously that comes with disadvantages because there's no like oracles or anything like that.
So all price discovery has to happen from user volume.
Uh, but it's, it, I think that it really kind of gives, it's the first thing that allows Cardano to develop its own economy.
That's decoupled from the one that's external to it.
And I think it addresses a lot of these, um, challenges in the long run.
Uh, it has challenges of its own bootstrapping liquidity is a hard problem.
Um, when there's no, you know, yield farming rewards or anything like that.
Um, but, um, I, I do think that there needs to be a, uh, a rethinking of how finance is done, especially on UTXL.
So that's my two cents.
I don't want to go too long about this.
We'll, we'll be releasing a lot more in the next few weeks.
Um, but I encourage everyone to check it out.
Um, Cardano swaps, Cardano loans on GitHub.
Uh, yeah.
Sure.
Thanks.
And good luck with that launch.
Yeah.
Me as a recipient, I didn't mind other people's CDPs getting liquidated.
I was okay with that.
Yeah.
Yeah.
Well, uh, EP you're up next.
What you got?
All right.
Thanks.
Uh, I just want to thank everyone.
This is a great space.
Um, my question is, um, is, you know,
we have these SEC attacks, uh, recently and, you know, Cardano may be put under the umbrella
of, uh, security, or maybe they're just going to go after, you know, big centralized exchanges
like Binance and, and Coinbase for their custody issues or, um, what have you.
Um, but, um, nonetheless, Cardano's in the conversation.
Um, personally, I don't think they're going to be able to go after the L1 entirely.
Um, but perhaps they're going to find, you know, specific cases when it comes to, you know,
tokens or, uh, you know, exchanges for swaps.
So I just wanted to see if, you know, those of you who are running swaps, if you have, you
know, or if you're preparing in any specific way for, you know, coming into conversation
with, uh, the SEC when it comes to best practice, you know, best execution, um, and, and being
transparent with, um, you know, the, the swap transactions.
Um, it's not a conversation with the SEC right now.
That's one of the issues.
All right.
I understand.
All right.
I guess the question is if, if there were to be one, right, you probably have some sort
of, you know, foresight as to things that they might be looking for.
Uh, so, you know, what would you, what were you doing now to prepare for those sort of,
conversations?
Yeah.
Red's got his hand up.
So I think he might have some more information on this.
I also have some thoughts on it as well.
Red, what do you got?
That was on mute there.
Uh, I'll kick it back to you, Rick, because what I was going to mention was not SEC related.
Okay.
Yeah.
So mine is just keep pushing back on the SEC.
Um, the, the plan of attack here on the SEC is just pure chaos.
Everybody just hit them from every direction and they'll realize,
holy crap, this thing is decentralized as hell.
Cause we've got people coming at us from every single direction because it is at least
far as ADA is concerned in the L one, as EP had mentioned is, is these things don't have
contracts.
There's no contract.
Nobody here, nobody in this Twitter space, raise your hand.
If you do, does anyone here have a contract with IOG for them to pump your bags?
Do you have a contract with CF or EMERGO to pump your bags?
No, it's just the, the fricking ADA is out there in the wild.
Um, and the SEC cherry picked a couple of statements from way back in the day and they
ignored all of the other information surrounding the context of ADA being in a state of decentralization.
It's just kind of running in the wild.
ADA is more like, uh, it's partially a commodity cause you have to have ADA in order to manufacture
NFTs.
You have to use ADA in order to manufacture FTs and all these other products that are used
on Cardano.
You have to use it as a fuel to drive transactions across the network.
So there's all these properties that look like a commodity that look like a commodity.
And it also behaves as a currency because people can purchase all these different products.
You can purchase books, music, uh, NFTs, art, game components.
You can purchase all these items with ADA as it is a currency, right?
I can't go to Taco Bell and buy fricking tacos with Apple stock.
It just doesn't work like that.
So as long as everybody puts all their heads together and everybody makes their voices heard
and most importantly, write your members of Congress and write your senators.
If you're in the USA, make sure you write them.
All right.
EP, I hope I answered your question there.
Kind of not really, but yeah, sure.
Okay.
Sound good, man?
I understand.
Thanks everyone.
Yeah.
I want to add to that a little bit here if I can.
Um, it's an sec war path, but I think the end result is something that this space is
desperately needed and that's regulatory clarity.
Something we don't have that we've never had.
And with all of these actions, it's inevitable that the court will eventually have to have a
ruling on these tokens and give us that regulatory clarity.
Otherwise we're all in the abyss.
We don't know what the heck we're doing and how we're building and do we, are we complying
with this or that whenever there's really no written law, um, with all of these actions
against everyone, uh, that regulatory clarity is coming.
It's going to take years.
It's, it's not an overnight thing.
The, the reaction is overnight.
It's a 48 hour kind of thing usually.
Um, but then as the dust settles, things stabilize, the process goes on and eventually
the courts will have to rule.
And that's what we need, but also kudos to Coinbase for, for fighting the good fight.
Uh, those guys have really stood up and provided a lot of valuable content and, you know, they
have probably more ammo than the rest of us.
That's sure and true, but I'm, I'm for sure grateful for them and, um, the efforts they're
about to take on because we need it and we'll see where we'll see where things take out.
But, uh, the SEC, I think, uh, didn't expect to, uh, put themselves in a position where they're
eventually gonna have to fight so many fights that the court's going to, the court's eventually
going to rule and that's what we need.
Brett, I want to briefly say that there's actually some good that, that will come out
of this eventually because we will get regulatory clarity and it really looks like the direction
is going to be the Howey test and sufficiently decentralized.
And what that means is that people will actually be forced to build fully decentralized protocols
if they want to avoid regulation.
And you already see that with the protocols that have launched in the U S now, right?
For instance, Sunday swap, like we've, we've talked about batching and how there's some
level of permission, but Sunday swap, because it was released in the U S and done by a U S
entity, you see the amount of care and effort they put into making it decentralized, like
compared to the other DEXs, they don't run their own batchers.
They don't profit from their own batchers.
They have like community elected batchers and they've made sure to have governance.
And, and I feel like that's really going to push the ecosystem towards, you know, instead
of let's develop an app first, it's, you know, let's develop a decentralized app first.
Let's get governance out immediately.
Let's make sure we don't do a token sale for USD at launch.
Let's make sure we try to avoid having permissioned actors.
And I think that'll actually be a good thing for the ecosystem.
Yeah, Phil had a good point brought up in there about, so some of these ADA, um, as not security
to me, it looks pretty obvious, but you do have to be alert to all of the different types
of native assets and tokens that are launched on Cardano.
They can turn themselves into a security and unregistered security.
If they do certain things, like, um, if they pre-sell the token with a, with an increasing
scale of price as the token is released and they don't have a working product and the only
thing they have is a roadmap.
So if there's no working product and the only thing they have is a roadmap and they're selling
the token, there's a pretty good chance it's an unregistered security.
Not entirely.
I'm not the judge jury and SEC on that.
I'm not Gary Gensler.
I'm not going to say that for sure, but that's a pretty good litmus test if you want to kind
of gauge it yourself.
Yeah, something to add on transparency too, then I'm going to kick it over to Blockjock
to see if you've got your hand up, but not exactly transparency of regulators.
I wanted to mention this because I saw Parido General was in here.
They work on, uh, MinSwap and MinSwap decks put out a huge report on, you know, the state
of their token emissions and their treasury and all that.
And yes, much of this stuff is on chain or most of this stuff is on chain for almost
all the protocols, uh, that we're using, but it, it does a lot to, you know, take those
extra steps and create something that's a little bit more digestible for people that
don't want to dig through all that on chain data to be transparent with members of your
DAO or users of your protocol to see what's really happening, uh, and you know, where emissions
are going, what treasury funds are being spent on.
So, uh, saw that today, it just came out and that was a great example of how we really
should be more transparent, you know, even though there's not an obligation because, you
know, these aren't stakeholders, uh, these aren't securities.
So you don't get those same benefits that you do when you invest in a stock and, you know,
there's reporting coming out.
So it is pretty important to be transparent anyway, and really, you know, take an extra
step as a builders to make sure everyone knows what's going on and not make them do
all the work themselves to figure it out.
Anyway, though, I want to kick it over block jock.
What do you got for us?
Hey guys, first to comment, uh, just having to do with regulation, obviously, um, legislation
is going to be happening here shortly.
Uh, uh, Brian Armstrong has taken the position that their fight is going to be that everything's
a commodity, not a security, uh, they're going to wait it out on legislation.
And I think honestly, they're going to push it out and we've seen how long the XRP case
has taken, obviously that it's going to be a while.
So by that time, there'll probably be some new rules and laws in place.
And I think this is, you know, going to be, you know, something we're not even going to
be worrying about here shortly.
Um, but my question is surrounding, uh, it in each decks, uh, when you go into, uh, the
trade portion, uh, and you go to look at like, say the music slot, for example, which has
pretty much the best look as far as the UI UX goes on orders that are currently in the
queue or limit orders that have been put in, uh, but haven't been executed yet, uh, which
includes all of the pools, you know, rebalancing over and over again, which, you know, I talked
to Neil's about this, having some of that removed because it's, it's not something that
somebody who trades is going to want to have look why they're looking at all this stuff.
Right.
Um, but currently, and it sounds to me like we don't have real time, the ability to have
real time data provided unless you can, uh, use your own CLI and then look at the breadth
of the order book, uh, prior to making your trades, which in essence kind of gives people
a front run who know how to do that.
And I understand, you know, if you know what you're doing, you know, you've got an edge,
but it's really important that if we're going to level the playing field for everybody that's
trading, which includes myself, by the way, uh, I want to make sure that I have all the
information necessary to me to understand that there's a large limit order at a certain
price, you know, as a cell, or there's a large, uh, cell limit order at the bottom at a certain
price, you know, things of that nature, right.
Which is inherently important for somebody who's trying to make a trades on a regular basis
and, you know, make some shekels, uh, while I'm at it.
Right.
So I'm curious, is other people's opinion on this, uh, that develop and, uh, is this possible
now?
Is it something that's just a cost thing for DEXs as far as them putting it out?
Or is it something that we just don't have the ability to be able to do yet?
I don't know.
I've seen some of my trades.
I don't see what happens before the trade, but I see it show up pretty quickly on tap tools.
Um, unfortunately they're not here.
They're probably one of the biggest benefits, uh, to DeFi currently.
They're, but Rick, they're real time and they're actually about three blocks slow, uh, from what
I understand as far as information goes.
Uh, so that real time information is almost real time, but not really quite.
But what I'm talking about is like, when you look at Coinbase and you look at the order
book that's there, you see all of the orders that are in there, including the ones that
have yet to be executed.
Right.
And some of them outside are the mean value of the particular, wherever the token's at
price, uh, selling or, or trading at that price.
Right.
Uh, so that's what I really, what, uh, what we need when I'm talking about yet, we do have
people who are, that know how to get that info ahead of everybody else.
And that's really a problem for people who are trading, uh, because we, we don't want
the idea or somebody is in somebody's head that, you know, they, somebody could front run
them just simply because they know better than they do.
Right.
Yeah.
Is there anyone that wants to take that question or hit it up?
I can try.
Um, at, at the very least, um, if you, if you wanted to be able to do that, um, and not incur
a cost on someone else, like you would need your own, obviously.
And, you know, these people that do it, like if they had the motivation, you just develop
an open source, like UI tool that just tracks like the, the, whatever min swap contract
or the music contract, it's just like for a lot of, um, community tooling, uh, the problem
is like the incentive for their developments, you know, like, uh, usually swap, maybe they
don't have an interest in providing that because, you know, so far, like it's fine.
Plus it might be a cost for them.
Like it's a lot of, uh, whatever, like API calls or whatever it is like that they have
to like dish out.
Um, so a lot of community tooling, there's just, um, like, you know, we were lucky to
have companies like transaction pipe and stuff like that, that are, you know, doing great
work, but a lot of it is just, there's not enough incentive to create like open source
tools, um, that are quality.
Uh, so, you know, it's like Charles said, just grab a shovel, you know, if you want it, you
got to create it.
Um, so the techs there, it's just not able to, for somebody like me, I'm not a coder
and I don't have a shovel.
I don't have that kind of shovel in my, in my toolkit.
Yeah.
So ultimately I'm going to be relying on somebody else and I don't have to pay somebody in order
to do that.
But at the same time, there are those who were doing it.
So just, it becomes an unfair practice, uh, as far as trading goes.
And therefore then some will not get involved in, uh, in, um, DeFi in Cardano simply because
of that.
If you get my meaning.
Um, I don't, I don't know if it's unfair though.
It like, it's, um, if you don't have those skills and there's no open source tool, then
like it might, uh, seem unfair.
But I mean, if someone does have the skills to do that, then it like, then, then they deserve
that edge, you know?
So I think fairness can be objective if like, we say like anyone with the skills can do this
and then anyone can make a tool that would make it a lot easier for others.
So, um, I think, I think it's just a matter of, yeah, I strongly disagree with that.
Yeah, I strongly disagree.
I mean, that's like saying if you're smart in real life and you can scam poor people out
of their money, then you deserve their money, right?
It's like, as long as it's not illegal, okay, then go ahead and do it.
It's like, no, of course the average retail investor doesn't, you know, know how to program
and do all of these things because that's not what they're doing.
They're coming, they're coming here to use this, you know, web three, which is supposed
to rev, everything they've heard about is supposed to revolutionize finance.
It's supposed to, you know, bank the unbanked, connect the unconnected.
And then they come on here and get front run by someone doesn't feel like they're being
banked and doesn't feel like they're being connected.
But what I'm saying is this is not insider information.
Like this is, it is, hold on for a second.
So it is insider information, right now, currently, because a trader who goes on and trades on
a particular DEX does not have the information that, okay, for me, I'm going to use myself
as an example.
I can go on Coinbase and I can see the breadth of the order book, all the limit orders, buy
and sell.
I cannot see that currently in our DeFi protocols that we have.
Therefore, there is a front run and there is the ability to be able to take advantage of
somebody else like myself.
Well, I'm going to use myself also as an example because I bring liquidity to the market.
Some, maybe more than some, less obviously than others.
But I don't want to be swayed away from using it because I know that somebody else is just
going to front run my ass, you know, on a big buy or sell.
I'm going to have to agree with Blockjock.
If shadowy super coders dominate the market over the regular users, the regular users are going
to leave because they're like, well, someone out there is just robbing the bank when I'm
not looking because they have a two-second advantage over me.
But how is that different than traditional finance?
You have like $100 million algorithm machines like front running everybody on like any kind
of financial system like Wall Street.
No, but that's the whole point of Blockjock, is that we're moving away from market makers
and getting screwed over by people with inside knowledge.
We're trying to level the point.
That's not inside knowledge.
That's just good systems.
No, it is.
Tell me if you're unconnected.
You're some dude in Africa right now.
And you have, you know, you have never written a line of code in your life.
You're reading, oh, bank the unbanked, connect the unconnected, be your own bank.
You go on and then you're trying to buy a token and you immediately get dumped on.
Is that going to be a good first experience in crypto?
Are you going to stay in Cardano or are you going to leave and call it a scam?
So for front running, like if we take front running specifically as an example, like for
now, that's an issue.
But let's say we saw that where like all the DEXs have their breadth books and stuff like
that.
Now another shadowy super coder comes along and they develop a super sophisticated algorithm
similar to existing like Wall Street algorithms for like how to trade and stuff like that.
And next people are going to be saying, oh, I'm not a shadowy super coder.
I don't have these algorithms.
That's not fair.
But when in reality, it's not insider knowledge, it's just skills.
Like they're not colluding with muesli swap developers.
No, but it's not a skill.
There's so many people in the ecosystem with the technical.
I could have front run these meme coins.
I could list like 30 people in this chat right now that could have front run those meme coins
and they didn't do it.
Right.
Well, let's just say that most people in the world are not trading stocks actively and
participating in meme coins.
And when you connect the unconnected or bank the unbanked in Africa, their first inclination
is probably not to go to a DEX and buy, you know, some speculative tokens.
So let's just, if we're talking about that, if we're trying to.
So we're not doing speculative tokens here.
I'm talking about like blue chip tokens that are on Cardano.
So I am strictly Cardano native.
I don't go outside this ecosystem.
And I strictly have all my liquidity in Cardano and its DeFi projects and I support them implicitly.
So the main thing I want is, is support back from those projects and not somebody that's
going to say, yeah, it's cool because I know what to do and you don't.
And so I'm just going to front run your ass.
Not cool.
Not cool.
So I'd like to sort of take a step back here because what everybody here is just saying
is that it's hard to build on Cardano.
If you really just squint your eyes, it's hard to build because the builders look at it and
say, okay, cost benefit to improving it is too high for the benefit it would bring.
So we're just not going to do it.
And that's, that kind of is the problem.
And then, you know, from the first days of Cardano, it's the situation has massively
improved.
We can actually deliver things on Cardano, but it is tragic still, absolutely tragic.
And let's not, you know, beat around the bush here.
It is tragic how inconvenient and difficult Cardano is to build as compared to other more
modern ecosystem in terms of their approach.
Cardano, like in the past of this call has, for example, to quote Pi, has taken like a
very puritan stance on a lot of issues that have become extraordinarily inconvenient for
developers to deal with.
And a proper platform for modern finance takes care of this.
Founding entities who got a lot of allocations do build things to make it easier to build
so that people providing those services, building those dApps can easily provide those well-meaning
UXs.
And if, and it's all about lowering the barrier.
Hell, people have spoken about how Plutus and Cardano is secure, which for, you know, a lack
of a better term, it's better than Ethereum, but it's not great.
It's not great.
Plutus is too low level to achieve what it wants.
You can screw yourself over many ways.
We have notoriously found this in an earlier version of a DEX, one of the DEXs, that had
a vulnerability at launch because of double satisfaction.
And it's, you know, once you get, you know, over those initial inconveniences you can build
and there's tools to do so, smart contracts, once you have them, oh, actually, you know,
we can't decentralize this because you need the server to build the transactions and cost
them.
Oh, hold on.
How does costing work?
Oh, you need an active node.
And not just any node.
You need the node because nobody has built another node software.
And you know why nobody has built another node software?
Because it's impossible to do not doing it in Haskell.
It's impossible, actually, because it uses Haskell native deserialization of data types.
So, yes, it's very hard, let's just say, to do so from another language.
There's many gripes like that that builders have with Cardano and just how inconvenient it is.
If you want a platform that supports you and gives you like a nice overview of everything,
you need to make sure that it is very easy to build.
If it's not very easy to build, nobody's going to do it because there's going to be a lot
of costs.
There's going to be a huge cost of development and there's going to be an even bigger cost
of audit.
Fuck audits.
I mean, they're necessary, but they're so expensive, especially on Cardano, that it's
very hard for a reasonably funded project to have them.
And we spoke about, you know, the SEC and the sufficiently decentralized.
What sufficiently decentralized systems can we have if it's really hard to build systems
of any complexity?
If on Cardano, we cannot build proper governance, upgradability, and, you know, to give, for
example, give a shout out to Indigo, they've done a good job of ensuring they're sufficiently
decentralized by having governance like launch from the start, right?
And they're doing a good job at it.
But if it's super hard to build systems like that and build all the features you need to
have them, then builders who just want to deliver will not worry about that.
They will just drop something that's way less convenient.
They'll just drop something that's way less, you know, legal.
And, you know, we were speculating on the, you know, what's what's what's the what in
the legal or compliant.
But yeah, that's I just wanted to give perspective here on just, you know, from a builder's perspective.
This is why things are bad.
This is why upgrades aren't happening.
This is why it's moving.
Things move super slow.
And it's all.
Man, let them speak.
Yeah.
Hold on, David.
All right.
Zygomab.
Thanks for the input.
Okay.
David, get mute.
Put your hand up.
Fortune.
What do you got?
Hey, guys.
Appreciate y'all for having me here.
Just wanted to ask two questions.
One, I remembered you guys touched on why we don't have USDT.
I'm sorry, US Tether and USDC.
If that's the case, how is it possible that we're going to have USDA and it be regulatory
compliant with whatever?
I can speak to this.
So Ken from Emergo, who I know well, has been working extremely hard, like 10 hour days
every day, meeting regulators in the US, going through the process.
It is an insane grind and it is not worth it for coins that have already launched in
other ecosystems to do this because our liquidity is so low comparatively.
But, you know, for all the shit Emergo gets, USDA is the one thing that I promise you that
they will deliver and that it's going to be great.
Awesome.
And the second part question I wanted to ask is, with the mean season that just went by
and, of course, what happened this past week with all the liquidations on Indigo and whatnot,
what lessons have we learned and how are we going to improve before the year ends?
Like, how are we going to make sure that congestion is not too much of an issue when we have these
rallies with mean coins and DeFi summer or DeFi winter, whatever you want to call it?
Like, what is Cardinal's position to do to overcome some of these bottleneck issues that
we came across?
I don't mind taking that question.
We could probably increase block size a little bit more than what it is currently.
However, increasing block size just for the sake of mean coins is probably a bad idea because
so far, I don't have exact numbers, but we've only experienced about 20 to 24 hours of actual
congestion the entire year so far.
And it's almost always during mean coin or certain NFT launches.
And the congestion only lasts about an hour to two hours.
And so the way to fix that is stop doing it, like stop forcing people to exceed the speed
of the blockchain until the blockchain can hit 92,000 transactions per second.
You're always going to have this problem.
And right now there's no blockchains that can do 92,000 transactions per second.
And so where do I get that number from?
Well, that's the world population divided by one transaction per day.
OK, so the more users you have and the more degenerate activities you have, the more congestion
you're going to have that has nothing to do with the actual use of the blockchain.
So Fortune, I was trying to answer your question kind of like from a common sense approach.
I know I really didn't answer your question, but really, that's kind of how it is.
The congestion occurs because people are forcing the congestion to occur in order to drive
the price of the FT or the NFT, in my humble opinion.
Hopefully that kind of answers it.
From a technical standpoint, I can briefly touch on this, that it, you know, following Charles,
you know, he typically says it's change it from we will be good to we can't do evil.
And and that's what all of these platforms are in the process of doing.
And like what Zyko Meb said, developing on Cardano is evil.
It is insanely hard.
But once these things are done, such as permissionless launch bowls and permissionless
taste tests, that will basically should solve the front running issue for for things like that.
Yeah, I do have to give a shout out to Minswap with the launch bowl and Indigo for using it
because it did not force people to race.
It allowed it allowed me time to look at it and think, you know, and it allowed the
protocol time to establish a baseline price.
So launch bowls.
Thank you, Zexan.
I think Alan had his hand up next.
Red, how long are we going for?
We good for another half hour?
What are you thinking?
Yeah, I think we can run this thing till the top of the hour.
Sounds good.
Alan, what you got?
Hey, guys, I think Gold Rush was before me, but I'll totally go.
I don't know if I'm wrong about that.
I don't know.
Yeah, Gold Rush was here longer.
I apologize for that.
Gold Rush, you want to give it a go?
And then we'll shift over to Alan.
What you got, Gold Rush?
Sorry, guys, I'm at work.
I'm trying to find a quiet spot here.
So earlier I heard you guys talking about a transaction chaining as a way to speed up
finality.
And that would improve the user experience for people who had the collateralized assets,
right?
It would not necessarily stop the de-pegging, right?
Because I don't want to rub it in, Rick, but while you were pulling your hair out trying
to get your collateral right, I was actually buying those iassets at a discount.
And so I just want to make sure that that trade is still going to work.
Yeah, I was thinking of that option too, but I can't answer your question.
I'll find out next time.
So just to kind of correct here, it's not increasing how fast the finality comes.
You still have to wait for the blocks to come in and properly confirm it.
It's just that you can get more transactions off the same sort of chain of logic.
You want UTXO for a link, a transaction output of another, et cetera, et cetera, like three
transactions in a sequence.
And you can do that, for example, in a single block or just kind of push it out.
But it doesn't lower the finality in any meaningful way.
And I want to do, while answering that, also mention that IOHK will not address things as
block sizes any time in the future because Leos, Ouroboros's perhaps next iteration, is
not fully ideated.
It is not set in stone.
So any radical changes like that would have a butterfly effect on the entire system later
down the line.
So that is one of the reasons why they are not addressing things right now.
And also perhaps because, you know, Genesis keys something, centralization, something, security.
But, yeah, that's it.
That's the answer.
All right.
Thank you very much.
All right.
I learned something here.
Buy those high assets at a discount.
Eric, you had your hand up.
Yeah, I did, actually.
So I guess shameless plug here.
While we were on this space about an hour ago, our 21st, Indigo's 21st, rather, on-chain
proposal for our technology working group just concluded and passed.
That's important, as Phil was bringing up, you know, decentralization earlier.
It's a huge effort towards really just showing and being an example for Cardano DeFi and just
dApps in general on Cardano, right, is decentralization, open source, all of that, which Indigo is.
And, you know, Nico here, Pi, who had to drop, unfortunately, but Conrad and Andrew Westberg, you
know, four power players in this ecosystem that are some of the most well-respected figures
have been approved, ratified on-chain now by the Indigo DAO as members of the inaugural
technology working group to represent the Indigo DAO in a manner that is, you know, focused
around the technological advancements of the protocol.
We already have the protocol working group stood up.
You know, Zygg, thank you for being there, along with four other members of the Indigo
community.
But those are just an example of where Indigo protocol is going and Indigo DAO with regards
to decentralizing the efforts towards enhancing and moving ahead Indigo protocol, right?
So it's not a labs game.
It's not any, nobody owns the protocol.
The DAO controls the protocol and standing up various working groups and getting collaborative
ecosystem to eventually the open source code, which I would really refer to as source available.
As Ply mentioned earlier, right, we have the BSL license, which is a two-year license to Indigo
protocols source code.
These are efforts that we make and try to be an example towards the rest in the ecosystem
for decentralization and open source.
So congrats to Nico, Andrew, Conrad, and Pi.
That's really cool to have that happen while we're on this call.
So excited to see where that goes.
I just want to plug that real quick.
Thanks, Rick.
Yeah, I'll plug that as well.
Those are some of the most well-respected and, you know, the most innovative people in the
ecosystem.
So it's really nice to see a project pushing to decentralize that quickly.
Right on.
Okay.
So just really quickly on the topic of setting an example to the community, could you, Eric,
just tell a little more about just exactly how those working groups work?
What power do they have over the ecosystem?
Are there any smart contracts involved?
Is there any delegation of power, any multi-sig that they do?
Great question.
It's really important to, like, you know, cause the decisions thing.
Yeah, yeah.
Great, great question.
So the representatives of the DAO, there is no ownership of multi-sigs, no financial ownership
of any DAO treasury protocol working group, technology working group, any future working group,
perhaps the protocol outreach group that is soon to be proposed.
They are simply representatives of the DAO.
Neither has control or superiority over the other.
They are peers, again, representing the DAO to work alongside labs to, you know, further
the innovation of the protocol.
Indigo Labs, I mean, early on, there's a collaboration effort which will stand for the foreseeable future
between labs and the working groups, but the working groups have their own voice.
I mean, Zag, you've been in the working group now since it's...
Oh, yeah, I know.
And I've been in your own voice.
But I just want to be able to sort of, you know, exactly what they are.
Yeah, exactly.
And you've made a lot of good suggestions, but that's the value of the working groups,
right?
To be their own voice.
Labs does not at all in any way, shape or form control the working groups.
There's a collaborative effort.
There is, you know, some earlier, you know, early days assistance with labs to stand these
things up.
But as the decentralization efforts keep going forward, as the, I guess, the life of these
working groups really begins to show, then they become more powerful on their own.
But nothing, no working group will have any superior control over the protocol.
They are representing the DAO.
And yeah, so they're a benefit.
The DAO constitution strictly says that these working groups can be formed.
There should be no real limitation to them.
They need to be providing value to the DAO.
The DAO can choose to remove any working group member at any time.
So, again, a true decentralization effort, but no ownership over the protocol, no multi-sig
access, no treasury management or anything like that.
So, representatives of the DAO.
I hope I answered your question.
Yeah, yeah.
No, most definitely.
I mean, I could have answered it yourself, but I just kind of wanted to push you in the
direction of, you know, talking about it, because I really do appreciate, you know, the efforts
you're pushing for Cardano and in the decentralization.
We're taking baby steps towards making this more decentralized, more secure, and more, you
know, diverse and distributed.
Yeah, for sure.
It's hard work, right?
So, really quick thing, really quick thing before you leave.
Any sort of motivation behind choosing it?
Because you've used, like, the no ownership of the protocol.
So, is this sort of to give people security for, like, feeling good about it?
So, that they don't feel legally bound to it in any event of a suit or a...
It's really not that either.
It's to show that there is no centralized authority or ownership over the protocol, because there
is none.
The protocol just exists now.
It's on-chain.
It's source-available.
The DAO controls it.
It does not own it.
No one owns Indigo protocol.
It's decentralized and decentralized by governance.
So, that's why we put these efforts and wheels in motion towards working groups, towards
contributors, as we source available slash open-source the code.
From there, where we build is this contributor ecosystem to Indigo protocol, where we have
truly global contributors to the code.
That's a baby step, like you said, Zag.
That doesn't happen overnight, but it happens.
And it happens with a lot of thought and planning towards the structure of how that goes to comply
with the Constitution.
That's why we put so much effort and focus towards those things.
So, yeah.
I mean, that's really what it is, right?
If regulators ever come knocking on Indigo Foundation's door, asking about who owns the
damn thing, we can confidently say nobody owns it.
It is just an existence.
It's a being of its own, the protocol.
It is in the wild, and it's contributed to by many.
That's the idea.
For non-technical users, I think it would be good to just point out that doing things the
right way is extremely hard.
So, you know, you might look at it and be like, why isn't there on-chain governance immediately?
And why isn't, you know, global contribution?
Anyone can submit code and affect the protocol.
Why doesn't that exist?
Even with things like Agora, it takes thousands, tens of thousands, sometimes even over hundreds
of thousands of dollars to get these things done.
So, I just want to say that, yeah, what Indigo has right now is already a role model and extremely
impressive.
Nice.
Thanks.
Hey, we got Alan next.
What you got, Alan?
Good stuff, guys.
Hey, guys.
Thanks for the space.
Awesome space.
Hey, to bring down the energy, I just want to go back to what Zexan was saying a bit,
just about the front-running situation.
I just think it's important, that's all.
Especially the framing of it.
Because a lot of times, and I totally agree with him that, you know, what's fair is fair.
And, like, what, you know, what the protocol allows, you know, anybody should be able to
So, that, but I think that's kind of a false framing of the whole situation.
It's more that, you know, like the social layer itself as well is something to be answered
And so, my whole particular issue with the whole, you know, situation was that, you know,
this is somebody who works for a prominent company in the Cardano community.
And so, it's kind of like somebody, like, shaking somebody, you know, their hand while,
like, stabbing them in the back at the same time.
So, it's, sure, anybody can do whatever they want with the protocol, but you also have to
answer to the people using it at the end of the day.
So, I just, you know, any sort of framing about what's, like, you know, fair and what's
not, it's not so much about that.
I don't think anybody at the end of the day is arguing for, like, changing the protocol,
so you can't do that.
That would be nonsensical.
No, but to some extent, they are in the sense that, like, you know, it shouldn't be don't
do evil.
It should be you can't do evil.
And that's where things like permissionless taste tests come in and alternative methods
for launching tokens.
Yeah, like the iAssets.
I like the iAssets because it's just me against the math and the market, and there is no custodian.
There's no speed limit against me or nothing.
Great stuff, guys.
Nico, you got your hand up.
What you got?
Okay.
Yeah.
So, I just wanted to add a little bit about, like, the part about finalization of transactions
and that chaining is actually not related to that, although, Sai, I already talked a little
bit more.
Maybe I could go a little bit deeper.
Maybe sometimes it can get confused because when you send a transaction, you're going to
be waiting for sending the second one, and at least you need, like, a confirmation, or
if that confirmation, like, rolls back, your second transaction maybe is going to be in
another fork.
So, that's why chaining works because that way you can send more transactions faster.
But the part that could help with finalization, and we have worked on that in this part, and
we open-sourced the project, and I'm going to talk about two things on that.
It's that basically how autobots work is that it's normal to have forks, and you can have
multiple ones, but if you send a transaction that's part of, like, all of these different
forks, you have a higher assurance that this is going to be included because if the
there is, like, two or three different, like, lanes of forks, and your transaction is already
included on all of those, your finalization could be, like, much faster.
This is one of, like, the tricks that we are using on Milcomida, and it's, like, very handy.
That's why we open-source.
But then it comes to the second problem, like this, and we have multiple improvements.
For example, another one that's kind of cool, that we were able to improve UTXO management.
Now, so we talk about that, and we open-sourced, and actually, we are with the most used UTXO
management right now.
I think we have almost 10x improvements, and when we talk about this, it's funny that
people start saying, like, what is going to happen to validators?
They're not going to receive that much money.
They need to be sustainable.
But if we, in the other end, the trade-off is we are already hitting, like, almost max
usage multiple times.
Most of what we use is not transactions, because some transactions could be heavier than other
ones.
At the end, a block is filled by information.
So if we're able to use less UTXOs, then transactions could be less heavy, smaller, so we can include
more transactions.
So there's, like, multiple strategies to, like, improve the chain, and even there's another
ones that are related to Plutus, because right now we have different version of Plutus.
And actually, we could even say that we have three different virtual machines right now
in Cardano, and they cannot talk between them, which is kind of crazy that we have three different
virtual machines that are not interpretable, and that one is Plutus V1, V2, and V3.
And we put a CIP, so through scripting, you could talk and include, like, scripts, so they
could sort of, like, talk between them.
But a lot of things sort of get dragged along the way.
So I wanted to put out there, do the centralization comes with this problem of the, that nothing
gets, like, sort of added?
And sometimes maybe you are going to spend, like, I don't know, three months putting effort
to create a solution or some improvement, and then you need to do lobby for, like, three
to five months, and is this something that, if it's open source, is this, like, an extra cost that
whatever, whoever has a good idea needs to, like, just go for it and push, and, like, how do you
account for this if you're a developer and you're not, like, an, unquote, lobbyist?
How does this happen?
Because sometimes I think Cardano has a lot of space to improve, and even further, for
example, for having more transactions, maybe even having, like, a RAS node could be, like,
really good, and it could be really cool.
But then we need to have, right now it's not very possible to do, not because technology
is not quite there.
It's because maybe some specific things are not well defined, although we have specs with
this CDL, and actually we know this well, because we have this library that reads, like, the
specs, and we generate this library that could be used in multiple languages.
And fun fact, one of, I don't want to name whom, but one of IEG developers was complaining
about the naming in our library, that, oh, it shouldn't be this name, it should be this
other one.
And the answer was, like, this is coming from the formal, for the specs.
It's, like, we didn't come out with the name.
And so you can create, like, processes that are, like, very, like, good, and they follow
the structure, but there's other things that are not well defined.
And, for example, in Solana, they're, like, very fast, but now they're doing another
implementation that's in C++.
That's, like, way, way faster.
So maybe another solution, if we get to actually be able to specify everything correctly, maybe
the RAS full node, if it's done well, it could be, like, way faster than the one in Haskell,
because one of the advantages of UTXOs is actual parallelization.
But actually, that parallelization needs to be done at the processing level.
And if we still were computing all the information and all the state of the blockchain, like,
sequentially, we're not taking advantage of the parallelization, because we could use
multiple cores to, like, separate and go faster.
And this, for example, is something that Fuel, VM on Celestia is doing.
And they can get, like, really, really, really good speed.
And it, like, sort of, like, surprises me that we in Cardano, we have been pushing for this,
pushing for this, but then at the time that we need to implement things, we don't fully
do it.
And I feel like there is so much extra use that we can get from Cardano, but sometimes
it's, like, I don't know if we need, like, a benevolent dictator that can, like, make decisions
and maybe the community pick, like, this new entity or whatever.
But sometimes I feel a lot of things are said, but from multiple parties, because we have
multiple teams in Cardano.
They're, like, pretty smart.
They have good ideas, but they never convert to anything.
So I don't know if Voltaire could get there in some capacity, but even, I don't know, in
our experience and also seeing, like, the work from others, a lot of, like, ideas.
Yes, yes, don't get there.
Some of the things that could help to develop other things to improve speed, also don't
get there.
So, yeah, that's my, sort of, like, grand explanation.
I hope IBM went too far.
There is the...
You know, I hope everybody here, through Nico and Zyg, hearing this, like, invaluable information
from a developer's perspective, I hope you guys can appreciate this.
This isn't an easy thing to develop on Cardano.
And having developers and innovators such as these guys, guys, take a bow.
I mean, really, because you're an inspiration, really.
I hope it doesn't sound cheesy, but it's so true.
We take a lot of examples from you guys and your leaders in a lot of ways.
Man, YouTube, MLabs, DC Spark, find me some more impactful and powerful dev shops supporting
the Cardano ecosystem than those two.
I mean, I'll wait, because I probably won't find them.
Yeah, thanks to you both for what you guys are doing.
Yeah, I wouldn't mind if Nico and a bunch of people got together and decided to build a
Rust implementation, even if it's got minimal functionality, act as a block producer or relay.
I'd be perfectly happy with that going through Project Catalyst or any other means.
I wouldn't mind.
Rick, you know, that's funny, man, because I met with Nico a couple weeks ago in Austin.
We were talking about that very same thing, and I'm not going to tell you what Nico said,
but I don't know if that's going to happen.
That's funny.
Nico, say it.
Tell us what happened.
I think a Rust implementation would be super cool, and it could improve a lot, and even
maybe it can make Cardano faster, because if you can process things faster and you can
have the blocks ready faster, maybe we can push up the block size, because one of the
issues about block size is not just transferring the information across the globe, but also it's
like processing that information.
And that's also why, for example, when we have some specific upcodes for Plutus, it's
important to know how much computation it requires, because maybe, like, the information
got distributed, like, very fast, but computing that information can take time.
And for example, I know, let's talk about how to spice things up, transparency.
How are we calculating, like, the upcodes for Plutus right now?
What is, like, the computer that you're using to calculate this upcode is, like, five times
more expensive than this other one?
I have no idea what is this computer, and how are we doing this?
Like, some things are so transparent, so out there, it is amazing.
But other things, like, why is this so, like, I don't know, obscure that no one has any idea?
Like, what are we doing this to ourselves?
Like, so some stuff, I know, you have, like, really smart teams, really smart people, but
then when you have, like, most of the stuff, open source, but not everything, you get, like,
you kind of finish something.
It's like, you're stuck because you still need to know this information.
And for example, previously, I don't remember who said this, but it was so spot on.
Like, some stuff cannot be implemented in Rust because it's not well-defined, and they
just use, like, the normal stuff from Haskell.
It's like, oh, whatever, let's go to use, like, these type of things in Haskell that's
not compatible with other programming languages.
And, like, if you want to implement another full node, go figure it yourself.
You have to reverse engineer this type of Haskell and figure yourself out.
It's like, why do we do this to ourselves?
Like, so, yeah, that's those were the non-developers here.
Yeah, well, I wasn't going to say it, so thanks, man.
The, there, most of the blockchain is transparent, but there's something called the costing model,
which evaluates the cost that you'll pay for using a smart contract, and that's private.
So we can't, like, if you add a new primitive to Plutus, you can develop the whole thing,
and you can try to add it to the blockchain, but you can't actually run costing on it because
it's on some, some private special computer somewhere.
So definitely ask or beg IOHK to, to fix that, please.
Very interesting.
Oh, I learned a couple new things in this space.
Can, can I just ask a quick question, Rex, sorry to interrupt, but, like, why, does anybody
have any idea why?
Like, what's the motivation for, um, IOHK, I guess, keeping that private?
Someone else, when I asked about this, because MLabs had developed, again, great job to MLabs
and DC Spark and TXPype, please vote for these people in Catalyst.
They will make your, your bag go up.
Um, but, yeah, the, the reason that they gave was that it's not IOHK who's hosting this
computer, it's some third, third party that has this special computer that does costing,
and they're, like, under NDA or something, I don't know.
Sounds pretty insane, honestly.
It's, like, this whole entire thing that can just be, like, I don't know, like, that, that's
one point of weakness right there, it sounds like.
Yeah, let's not unplug that machine.
So, I think we've got one more speaker in here who had a question they wanted to ask.
David?
All right, maybe not.
Well, in that case, I'm going to wrap things up here.
I want to thanks, uh, say a big thanks to everyone who joined in to listen, to everyone
asked a question, and, you know, our speakers and our hosts as well.
I learned a lot in this talk.
We definitely had some big brains in here.
Yeah, so, thanks all for listening.
Catch you around.
Yeah, Red.
Hey, Red, thank you for hosting this.
Everyone, give Red a big round of applause.
Give him a follow.
And, by the way, Red, Red, do you know, do you know Bo, do you know Garrick?
Do you happen to work with Garrick?
Yeah, I know Garrick.
Okay, Garrick's kind of a folk hero around Cardano, too.
So, we're glad to have you around.
We're glad you hosted this space.
And, um, if you do some more again in the future, hit me up.
I would be more than happy to jump in on the space with you.
Yeah, totally.
I definitely want to do more of these in the future.
You know, I think this is a great way to engage and, you know, learn a lot from y'all and
kind of spread some education as well, because a lot of good people have things to share.
And, you know, a shared platform is a way to do it.
So, you know, I'm getting more involved.
I write quarterly reports about Cardano on behalf of Masari, but those only come out every
three months.
So, I'm looking to do some more regular things with the community, with all y'all, and just,
you know, kind of share this collective knowledge.
Hey, thanks for the space.
It's been great.
Awesome.
Awesome.
Thanks, everyone.
See y'all.
Thanks, man.
Bye.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
See ya.
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See ya.
See ya.
See ya.
See ya.
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See ya.
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See ya.
See ya.
See ya.
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See ya.
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See ya.
See ya.
See ya.
