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THORChain
Recorded: April 4, 2025 Duration: 0:42:49Space Recording
Short Summary
Exciting developments are underway for ThorChain as the team gears up for the release of version 3.5, enhancing the TCY project with a three-week update cadence. Key integrations like EDDSA signing and the launch of Rooji products signal significant growth and strategic partnerships, positioning ThorChain for increased adoption and user engagement.
Full Transcription
Music Man, sorry, this is like really rough today.
I'm not touching anything my hands are off the phone
and it's still just like going black i don't know what's going on i think i think it's a
tariffs the tariffs are screwing it up yeah something's something's going on today yeah
really sorry about this guys it's probably really tough to listen to it's very tough to have a
conversation when it keeps getting interrupted every couple of minutes.
So I'm really sorry about that.
I thought the timing was great because Alux said, like, oh, everything's going great.
And then in that exact second, it got fucking rugged.
Fade to black.
Fade to black.
Yeah, if it cuts out again, that's just going to be it. Iade to black. Yeah.
If it cuts out again, that's just going to be it. I'm not starting
another one.
This is the last try.
Last attempt.
I will do my best to try and stitch
these together and upload them to
VRSS once it's done, so hopefully
there's some kind of coherent
conversation going on, but
bear with us.
Sorry about that.
Oh, yeah.
So the one thing that I wanted to say just about TCY and just the future releases going forward.
So the current release cadence is about every three weeks.
There's going to be a new update. We just released version 3.4 on Friday or maybe it was early this week. It was this week, I believe,
that we released 3.4. And so that means that in about three weeks, we're looking at the release
of the next version. So just so people get some kind of idea on what kind of time frame we're
looking at for, you know, just any new version really should be about three weeks after the previous one. But that's especially important for a TCUI being it's, you know,
just an important part of the network right now. And, you know, it's obviously affecting a lot of
people. So like we, we want to get it out as soon as possible. So just look forward to the next
update, which will be version 3.5, which will be in about three weeks.
So just look for the three-week cadence, and that's the cadence that new things will happen
at in terms of new features and things.
And again, if the space gets rugged again, that'll be the conclusion.
We can't keep doing this. So yes.
Thank you all for bearing with us on this,
on the technical difficulties here.
All right. What else we got?
I'm excited for 3.5 to come out and we can move forward with Tcy.
Like that's obviously the most important thing for us to be working on right now,
for sure by a good margin whenever there's like
whenever network's not in a 100 healthy state because something is paused or something like
that should be always be like the most important thing we focus on so i'm excited to say tcy
yep uh land and move forward so let's go through the roadmap which is going to be uh the what to
expect in q2 so we have a bunch of different teams spiking on a lot of different issues. So let's just go through one by one and say
what all of the roadmap items are and then who's responsible for each of them. So all
this will be published, by the way, probably on Monday. We'll be releasing the Q1 report
and the Q2 roadmap on the Nine Realms Medium. But this is what all the devs have discussed,
and it seems pretty solid right now
in terms of just like it doesn't seem like it's going to change.
So, all right, so going down the list,
first thing obviously we already talked about is TCY.
So TCY is the number one priority right now,
and that'll be out in the next version.
So we should get that before the end of the month here.
One of the other biggest priorities is getting eddsa signing so eddsa so i guess a little bit of context all of thorcheon was designed around ecdsa signatures
so there's a lot of background work that had to that has to and had to go into using a different
signing curve for eddsa which was necessary for Solana and SWE and TUN and Cardano
and a bunch of other chains that you might know and love.
So we kind of had to refactor a lot of how ThorChain manages its faults
and generates multiple different key types and all that.
So that is still ongoing and it needs to be delivered in order to ship the new
chains that we want to ship, which is obviously like Sol being the number one priority. But other
chains are in the pipe and some of them ready to go. So in terms of like chains that are ready to go,
XRP is ready to go, but that won't be shipped until after TCY. So I wouldn't expect that until the end of the month.
And once we get EDDSA, Sol is highest priority.
But other than that, we're also, the team is also working on Tron.
And yeah, any others that are currently have PRs up?
I think Stellar is getting scoped right now.
Yeah, XRPp i think is also
very close to being landed um tron what else was it um i feel like i'm forgetting something
solana being the biggest one yeah i kind of i kind of want to hold off on like just like my own
like a hot take is like i kind of want to hold off on Solana because I want our first EDSA chain to be a smaller chain,
just in case there's some bug or some issue or whatever. It's much lower stakes,
in a matter of speaking, and let EDSA prove itself on mainnet for some reasonable amount
of time before we throw a larger chain like Solana at it.
Does that make sense? I think it could make sense, especially because Solana has like a different architecture just for scanning blocks because the blocks are so like
it takes longer to scan the block, to read the blocks and it takes Solana to produce the blocks.
So you need to use a geyser for Solana in order to get the data.
Yeah. Just to be able to read it.
So like there are other architectural changes
besides using EDDSI.
So it could make sense to ship Cardano before,
but I mean, I think that's still under discussion.
I don't think there's any kind of like solid,
which needs to come first,
but all of those are the chains that we want to get out ASAP.
Some of which are the chains that we want to get out ASAP, some of which
are basically done.
Yeah, and Cardano is not that big of a difference.
It is like Bitcoin's, what they call it, extended UTXO model or something like this.
It's very similar to what we've already seen.
Obviously, it's not the same, but I could see us like Cardano first and just letting EDDSA
have its own moment in the Sun to the bacon make sure it's all solid and not
any issues yep and strange love is taking the lead on adding some of these
new chains that they have XRP XRP is ready to go that's not gonna be till
after TCY so I would also expect that sometime in in May being able to add and chains that they have XRP, XRP is ready to go. That's not gonna be until after TCUI.
So I would also expect that sometime in May being able to add, and Jack is here now.
But yes, StrangeLove is taking the lead on all these new chain integrations.
So they have a bunch of chains that they're looking forward to adding.
If you wanna come up and talk about it, Jack, you're more than welcome.
Yeah, you're more than welcome. Otherwise, we'll just keep going down the roadmap list.
Otherwise, we'll just keep going down the roadmap list.
We also have the Bifrost Pura Pura Refractor that Strangelove is working on. So that's just
cutting down on bloat coming out of Bifrost. So Strangelove's goal is to drop down block times
from six seconds down to one second, which will make ThorChain just a lot faster. And that's something
that Strangelove is also taking the lead on. And ByFrost is where they're starting to do that. So
just cutting down on some of the observations that have to be made for each of the external
transactions that come into ThorChain and just cutting down a lot on just some of the, I don't
want to call it spam, but just the unnecessary things that are getting posted on chain, which just cut down, which make it so you can't really cut down the block times as much.
Yep, 100%.
Thanks to Jack and his team for all their work on those improvements to buy Frostbine.
Something I've been wanting to do for a long time, but just was never high enough priority to get around to it.
And I'm really happy to see it kind of finally landing.
So thanks to Jack.
Yep.
And then we obviously have Rooji, which is, you know, currently in the process of shipping.
So I think we forgot to mention this as part of the Q1 thing shipped, but we shipped, you
know, CosmWasm and token switching, which is currently ongoing right now. So node operators are voting to be able to
switch over tokens from their old chains onto ThorChain. So basically, they're removing the old,
I don't know the best way to say this is, but they're just moving from the old coin to a coin
that's now on ThorChain. So their native assets will be on thore chain
and um that's currently undergoing uh right now so the nodes are voting to allow certain coins to
switch into native assets on thore chain uh and that's the handful of projects that will be part
of uh of ruji and the app player so that's correct yeah if anybody knows if about there is a node operator or knows somebody's
a node operator i think we got like maybe 40 of the vote through this and uh we'd like to see
that kind of get across the finish line um so go ahead and do that one time here for i think it's
kind of like enable switch uh something with a uh token name at the end of it. Just do that a bunch of times and get that across the finish line.
That'd be great. Appreciate it.
Yep. So we still have an ongoing vote.
So if you're a node operator or if you know a node operator, please vote to let the
Ruji tokens merge and they'll be native assets on ThorChain going forward.
And the first products will start to roll out on Ruji as well.
So they'll be shipping a bunch of products,
including Ruji Trade, Pools,
and Likely Perps is the last word that I have on that.
If any of them want to come up and talk about Ruji,
I know JP is going to be doing a space later today
more focused on Ruji.
But if anyone wants to just come and explain
some of the Ruji things that are being worked on right now, or just share some things about Rooji, we are here to listen.
And I'm curious to learn about some of this stuff too, but some of the new products and fun new things are coming out. and you know it'll be a fun experiment I think in seeing what we can do with
seeing what we can do on ThorChain and just expanding the capabilities of the
chain as a whole so let me bring up Mark here and Pragmatic Monkey from the
Rooji team what's up guys okay go ahead go ahead i just became a speaker i uh i just became a speaker so i just
jumped in but yeah thanks uh thanks cow uh to uh set the stage uh we are indeed in the midst of a
We are indeed in the midst of a vote to migrate and merge over the old, quote unquote, assets and tokens from primarily the Kodura chain, but obviously also the Levana team and token is building perps, or UGPURPS.
for Rooji Perps. This is the first contract, the merge contract and the migrate contract that we're
bringing over. So with the vote going through, we will effectively have an app layer on ThorChain,
which is obviously super exciting. It's something we've been working on the past nine months.
And it will open the floodgates for all the different products, contracts that we have
in store and worked on for the past nine months starting with
well obviously the staking of revenue contracts so people can not just merge their tokens into
ruchi but also stake their ruchi and earned earned the the fee revenue going to the to the app layer
and then of course what everybody is waiting for, I think, with anticipation, is the order book DEX, the RUJI trade product, together with RUJI pools.
PM, I know, has been working a lot on this, so he can speak more to this.
And then shortly after, we have RUJI perps.
So really, all the sort of classic trading products is coming live as soon as we can, really.
We have all these different contracts audited already,
so they're really locked and loaded, if you will.
So yeah, super exciting times for us.
Anyone listening who's a node operator, please go in and vote.
I can drop the tweet that I did, for example, myself
for the different MAMIR updates that you need to make
if there's any questions. but yeah uh exciting times yeah anything to add yeah if you
want i can dig a bit into uh rudy trade and rudy pools uh don't know if uh if it's there's an
interest on this call so just uh just let me yeah yeah i think uh let's go for it i think we're curious to hear okay cool so so that's uh gonna be really much the the flagship product
uh of the app here of course there are much more apps coming but this uh other book decks
roji thing so it's it works a bit differently from most of the IMM DEX people are familiar with, including
TorChain, which effectively is both a DEX and an IMM at the same time, meaning inside of each pool
you have a given bonding curve and price is distributed over this bonding curve depending
on the quantity of token A and token B in the pool. And it's just following the constant product AMM with a slip fee that makes it a bit different from other AMM.
On Rooji, at the APO, so Rooji trades, you get the DEX that is separated
from the market maker, the automated market maker.
So the DEX is just a place, an order book, where you can add liquidity in a given pair at any possible price level you want, just like a traditional order book in traditional finance.
And then you get the IMM, so what we call Gucci pool, which adds liquidity to the other book. And so it will start with a very simple strategy.
So we'll start with just a standard XYK strategy
to get things started.
So pretty much the same as what your family are with
on the base layer.
But after that, we are going to expand
to a bunch of other strategies,
which will allow us to add some more liquidities
that will leave on the app layer,
most likely in most cases paired with USDC,
so the secured version of USDC from Ethereum,
given that the token stablecoin has the most liquidity on the base layer.
And we can start to add more concentrated liquidity type of strategies
or even directional strategies, anything that will add economic activity.
And one of the first strategies that we will ship
after the XYK will be a strategy that virtualize
the liquidity on the base layer order book.
And so that's the way it works effectively.
Imagine you have a user who has 10K USDC and want to buy BTC.
So the issue we are having, even if the app layer lives inside TorChain, it shares the same block time, same consensus.
But given how swaps works on the base layer,
they are always happening at the end of the block,
and they are ordered by slippage.
So that means that we cannot have atomicity,
transaction atomicity on the app layer by default.
So we created this.
What we want to be able to do on the uh on the after year is to have
like complex uh strategy you want to be able to have like a smart contract that come do something
then do a swap then do something else and keep going in in one block in one transaction and so
we needed a transaction atomicity uh and how can we achieve that when we created this virtualization
strategy that effectively works this way
so you
have a user who comes with
10k USDC, want to buy
bitcoin
the IMM
will be able to
go and query the base layer
and say okay, if I want to buy
how much bitcoin will I get?
If I were to do a swap now with 10K USDC,
okay, this is the amount you will get.
And then the IMM will be able to price
at a slight premium to that.
So you can think of it the same way as a front-end,
a touch-chain front-end that will add an affiliate fee,
except that it's a different mechanism.
But you will have little premium because you cannot have
entire certainty that by the end of the block,
the price wouldn't have moved.
And depending on the transaction inside this block,
you may end up having a slightly worse price
than what you were expecting.
Or maybe a slightly better will never happen,
but it can be slightly worse.
So you will cut, the IAM will cut at a base layer price plus a small premium.
Then we'll borrow just for the time of one block the BTC from the BTC landing vault
that will leave on the app layer.
And then use that to give the BTC to the person that wanted to do the swap,
get the USDC, and then at the end of the block,
swap the USDC back for BTC on the base layer and repay this loan.
So it's just like a one block duration.
So you take a very little risk.
People will be able to LP in those vaults.
Effectively, that's an arbitrage strategy.
So it democratizes access to arbitrage for anyone that wants to participate.
And the cool thing is it's a single-sided strategy.
So it also means that you don't get exposure to EL with that.
And it allows us to virtualize the liquidity that exists on the base layer,
on the app layer, have transaction atomicity.
So we can do all sorts of things inside the block without being blocked by swaps on the base layer on the app layer, have a transaction atomicity.
So we can do all sorts of things inside the block
without being blocked by swaps on the base layer.
And it's great for both the app layer and the base layer
because in that case, every single dollar of volume
on the app layer executed via this IMM strategy
generate $1 of volume on the base layer.
So that's a strategy that will launch shortly after
the RUG trade and RUG pools are live.
This is when things are going to suddenly get more exciting
because we'll be able to then create pairs
for virtually any combination of assets
that live on the base layer,
but have that in another book on the app layer.
And that's where we should start to see much more volumes happening on Ruggira.
And then after that, we launch a lot of different other strategies.
We have some, so we want to do some Uniswap V3 concentrated liquidity strategy.
We want to have a way to stream the yield out of the principles,
just like you're offering the same user experience as what people are used to on UniV3.
We have some very special order types unique to Rojira, which are called Oracle orders.
So it works a bit the same as a limit order, but instead of setting a price that is effectively a fixed price, like just for a simple type of usage,
you could think that if you want to swap large amounts,
similar to a streaming swap, but even faster,
you could just put an order at a slight premium
that is enough to cover the base day of fees,
so let's say at 16 or 70 bips,
and then you will have arbitrage at every block.
We just feed you order, add this little premium
to the base day of your pool,
and you can get a fairly fast execution,
probably faster than what you would get
in the Sundar Swap fee,
and all of that generates volumes
for the base day as well.
So a lot of, and then we can use that
to build more advanced market-making strategy.
And the beauty of this is that then you can have
this market-making strategy with Oracle orders
that effectively change their price every block.
That's a trade against the market-making strategies
that use fixed limit order.
And then as long as you have volatility,
which is kind of the only thing we have constant in crypto,
you end up making money and generating
a strategy trading once against another.
And so that will be stuff that we want to launch relatively soon
after we have a pull-and-trade.
And that's eventually how we want to drive like a lot of more volumes on the appear
on the base layer a lot of more fees and we want them to once we can showcase that it's a very
strong value proposition for institution or anyone effectively telling people that you can come and
trade with native assets in the form of secured assets, secured by Torchain technology. You can trade native Bitcoin, make markets for native Bitcoin,
and do that in a fully decentralized way without having to use a wrapped
or version issued by some centralized intermediary
or a bridge version issued by a third-party bridge
and adding non-necessary exonational risk to the system.
You can do all that only on the Torchain app player
with Mojira products.
And we want to attract other people to come
and build their own strategies and start with really
build up this new economic activity on top of Torchain.
So those are the two big products in the pipeline.
And of course, then you also have like the best product
built by the Levana team that hopefully we also
had some nice volumes as a scaler.
And for that, it would be great if I don't think
there is anyone from the Levana team that is present here,
but it would be good at some point to also get them
on a call and they can tell you a bit more about that.
Yeah, for sure. Just to round up and then i'll
pass the mic back to you uh cow um a lot of potential as you can hear guys uh 50 just to
repeat is going back to uh to for chain uh for paying for economic security so there's a lot to be gained for everybody involved,
including the node operators, obviously.
And just a personal take,
I come from the Forging community predominantly,
and I know there's some 4 or 5 trauma still lurking back there
in the back of people's minds.
The app layer is fundamentally very different.
And there's a lot of other capabilities that we have.
But to me, the thing that really distinguishes
the app layer, Rajira, the most
is that you can just go,
if you just go on rajira.network.com
slash portfolio,
try to connect your wallet
and not just one wallet wallet connect all your wallets
it regira and the app layer really allows for fortune to grow beyond the affiliate model
fortune has nailed native swaps and the affiliate model and has you know a lot of the success comes
from from that regira allowsain to grow beyond that.
We basically have all these different wallets that you can connect to.
MetaMask, you have Leap and the Cosmos wallets, Kepler, you have Brave, you have OKActive,
all these different wallets that are not necessarily affiliates.
All of these interactions that users make from these wallets,
obviously using secured assets, they
ultimately go into fee generation for 4chain. And that's something that we can't do just on the
base there. So yeah, that's just a personal take from me. I'll close it off there and pass it back
to you, Kyle. But yeah, exciting times. I see those coming in already, which is great. Anyone who is talking to their node operator,
get them on your DM or whatever, and get them to vote.
Thank you, guys.
And maybe I'll add one more thing for node operators.
This security model for Torchain is not,
by what we're trying to add here,
it's not adding any extra risk
for uh tor chain uh all what this the smart contracts can do on the app layer is just the
same thing that any uh person uh can do with the standard eoa uh wallets on the base layer so it's
uh like when we talk about creating product with a leverage and
debt it doesn't add any extra risk to the product there is no minting of room involved if you have
a leverage this stay on the app layer and this is taken by landers on the other side so it's
will be a peer-to-peer money market and anything that the smart contract do is the
exact same thing that what a normal user would do on the base layer so really uh no no no security
concern there same for economic budget with the the current votes at least uh what we are asking
for here is just like uh transforming transforming existing exogenous assets
into native Torchchain assets.
So it will be nothing to secure externally
once the switch is done.
Those assets will be burned forever on their origin chain,
and will only exist on Torchchain IP here.
So there is no external security concern here.
So please, node operators, vote and give us the opportunity
to show that we can add value to your nodes.
Cool.
Thanks, guys.
And yes, if you're a node operator,
then take a look at the vote.
Chad, maybe let's get into maybe one last topic and then we can wrap it up.
I think that's pretty much everything for the Q2 roadmap.
This will all be published, available to everybody on Monday to look at.
So I guess the last thing to mention is just the economic security posture, which we kind
of touched on a little bit, and that's something we'll need to address
before releasing any new chains
or continuing with the app layer thing.
So do you want to talk about your PR
and just like the economic security posture going forward,
which is something that the nodes
will kind of have to think more about and the community will have to agree upon the way to go forward with economic
security and maybe some context about like economic security as well, just like why it
exists in the first place.
Sure.
Yeah.
So we've always, from the beginning of the third, we've always talked about economic
security.
There's only two ways you can secure assets.
Ellie, let's go. Come on. Sorry, my daughter.
There's only two ways you can secure assets, either through trust mechanisms or economic incentives.
And we were the only ones, to my knowledge, that actually pushed for the economic idea of building a trust-based system.
And to this day, I think that's still true, except for maybe some forks of the blockchain,
possibly.
But we've always pushed for this, historically speaking.
And the question now is whether we want to continue to have that kind of mentality or
not, or what.
And so, once again, as I was talking earlier about how the root price is down low, and
therefore, as a force to ask questions questions we don't normally have to ask but the question is
because since the bond value is relatively low to its history we have less security available to us
and so the question is how do we want to deal with this we've been going through like a raise
the bond thing for the last uh for the last couple weeks and um which is great can kenton's been
working on that with the community and they've raised a lot of room which is great more nodes coming in excellent work by by kenton and crew um so i'm just crossing the
street um so at some point that's that's we're probably gonna run out of steam in that sense
which is just expected and perfectly fine uh the next step is to i already want to change
our security posture? And that's
a debate for the community in general to talk about. So the current PR that's now been open
and will hopefully be merged into 350 will give the ability to switch the cap on our TVL
to be relative to the total bond of the network and represented as basic points.
So if we wanted to, as a community, we could vote and say, okay, instead of being what's called the economic effective security, which is the bottom two-thirds total bonded room,
it would be the complete amount if we didn't tap out the basic business points we could do less we could do like 60 60 700 or 67 percent
uh we could do that we could do more than 10 000 um whatever the community wants to do is basically
we'll be capable in that particular moment um so we're gonna have that conversation probably
after three five out three five zero comes out to figure out if we feel comfortable expanding the kind of security posture to a more pragmatic approach or not.
And if we choose not to, then we won't have space for the app chain and the new chains coming in to add liquidity.
And then it becomes, well, how do we want to solve that problem?
Which goes into a larger conversation.
Yeah, so I think the most important thing here
is just getting the tools into the node operators hands.
Give them a multiplier and say like,
hey, you can vote to increase this up
if we ever want to expand the cap for liquidity,
like the amount of liquidity
that we can have on the network.
It's something that most,
pretty much any other network that I know of
does not limit the amount of liquidity on their network. They'll just take on unlimited funds
secured by however much security they have. So I think just putting it into the hands of
the node operators to make the determination whether to increase, whether to stay at one
level. By shipping this in 3.5, this will give us the ability to let node operators vote and decide whether to turn it up, how much to turn up economic security.
So that way we're not just like completely disregarding it and breezing past it.
But at the same time, we're not just handcuffing ourselves to the radiator and not letting us ship new chains, not letting us deliver new innovative products.
So I think that just getting the tools out there to let the nodes decide, that's always
what the developers have done is just get the tools out there for nodes to then decide
and just let consensus really form around these ideas.
So I think some kind of, like my personal opinion is some kind of moderate increase
makes sense just to free up enough cap space to start delivering some new things and get some
momentum going. Because right now it doesn't make sense to just keep handicapping ourselves to the
same economic security bits, which have caused us trouble before and are currently stifling our
ability to, especially like releasing new chains like Solana and all the other chains that we've already mentioned that we want to ship. It's something
that we need to address before that happens because it's not even possible to add liquidity
right now if we wanted to. So yeah, just creating the tools to give those to the node operators and
decide whether to increase and how much. That's what we need to do. So after 3.5, there will be
some kind of vote. We'll share our opinions about how much to increase. And we'll try and form some kind of community consensus around economic security. And that'll be the tack on that going forward, which I think is one of the more important issues right now to address, especially considering it's blocking, you know, a number of major developments on the
network. And it and especially like the growth of like new chains and app layers is easily the
biggest thing. So something we need to address soon. And thanks, Chad, for taking that on.
That'll be a very interesting conversation when we're ready for it.
Yes. Yeah, I'm writing up some of my thoughts on it right now
and just like a lot of context about like
why things are done the way that they've been done
and, you know, how we've kind of evolved
our security posture over the last, you know,
three, four years.
Because things have changed a lot.
Like we used to, so ThorChain used to be
under the assumption that everything would be
in the pools, which is why Thorify existed in the first place.
Thorify and derived assets and synths all existed to keep all assets within the pools.
And that's what created these crazy dynamics that led to where it is today.
And so then we started doing trade assets and securing assets outside the pools, which is then leading into the app layer.
So like the posture of the chain has changed a lot.
So I think our security posture needs to change along with it, but in a sensible way where
we're not just saying YOLO and just let as much, you know, someone can deposit, you know,
a hundred thousand Bitcoin into the protocol.
That wouldn't make sense.
But you know, just doing something doing something sensible, like understanding
where we came from, but also, you know, being able to evolve
and just move into the next stage of door chain, I think
that's what that's what we need. So yeah, I think we'll have
that conversation when we get there.
I think one thing I was gonna say, because I don't think
anybody's thinking about this particular angle on this
conversation, is that to think about what happens when we switch from a bull market to a
bear market, right? So maybe we increase the cap from the effective bond right now to, let's just
call it 100%, the active bond, hypothetically, right? So we've paid a lot of assets in the
network, secured assets, trade assets, all these kind
of things.
And then the bull market happens, and we get more liquidity coming in because there's more
space for security at that point, because the room price is going up theoretically.
And then we go from a bull market to a bear market, and the secured assets or the trade
assets don't go anywhere.
They still stay in the protocol.
Versus like before, when the room price goes down,
we naturally eject VDC and ETH and all these assets
just from arbitrage, right?
To ensure that the value of the pools
of the thing we're securing is worth less
than the value of the security.
So it's kind of an interesting thing.
You can go ahead and expand things now, and that's kind of all well and good. But you have to think about what happens in the next
bear market and are we okay with that scenario? Right. And I mean, this is the right tool for
that where we can always scale it down. You could use this tool to scale it up or scale it down
and kind of pause things where they are. So it's the perfect tool to just get us to where we need to be.
And also like to, just to point out that like we were using a hundred percent of the nodes bond
before we switched to effective security around two years ago. So this was something that we did
previously and now I've switched back and now we can, you know, using this new functionality,
we can, we can kind of flip-flop back and have more
discrete control over it through votes rather than having to do a bunch of code changes.
So, yeah.
That's about it. Any final thoughts that you guys want to share before and then we'll wrap it up?
Good for me.
Maybe just one thought on the security budgets. thoughts that you guys want to share before and then we'll uh we'll wrap it up uh good for me
just one one uh thoughts on on the security budgets uh so yeah i don't want to to go into a deep conversation now it's i'm sure it will take a bit more time to get there and for now what we
need is um some room to to uh to prove the app layer but for certain products especially if you
start to include a leverageaged product in there,
I think even the possibilities that effectively people
using those products are at the mercy of node operator
to be able to repay their debts in case market drop,
I don't think is an acceptable user experience that
will allow us to scale.
So imagine if you take a loan against your BTC
and suddenly the market drops.
Now you want to repay some of your loan
so your LTV stay compliant and you don't get liquidated.
But suddenly because market price drop,
ruined price drop, and now we reach the cap the cap and you cannot bridge in USDC secured USDC
anymore to repay your loan then you get liquidated that I think it's just it's not an acceptable
user proposition and we won't be able to scale with that and so I think it's important to keep
that in mind and of course it's also
important to to to discuss uh if there is any merit in the current security model or not and
i i can totally see how did it come from when everything was uh just in the pool and we wanted
to do um everything smack security but reality is also like for now you you assume that effectively you need two dollars
of rune to secure one dollar value but in the case of a market manipulation if somebody was to drop
a lot of rune suddenly your your rune price will not always be equal to one dollar it will drop faster
than whatever is the value of the secured asset on the other side so it's already like
not that it's directly related to secure asset but there are a few inbuilt assumptions that
that don't really tie together and it's also assumed that the bonds the people who deposited
And it's also assumed that the bonds, the people who deposited the node operators,
effectively the one that put their capital at risk, 100%.
But the reality is you can have people who bond with node operators.
So node operators will even try to manipulate already the price
with a fraction of the capital that is in their node.
So there's already much more, I think, optimism
in the security model today
than what it looks at first glance.
And so I think that also make,
I mean, it should be taken into account
that it's maybe already quite optimistic
and therefore further securing,
further relaxing the rules will not change much of the real security.
Another point as well is we don't track the average entry price of node operators.
So it's possible that nodes have been accumulating routes
at a much, much lower price,
and we'll only go live with that when price goes much closer up,
and we think everything is secure, but actually they have been able to get in at a fraction
of the cost and they can extract much more value by just being suddenly malvolent in
the governance decision.
So there are a lot of different points's makes this what looks like a very very
robust security model may actually not be uh that secure anywhere already fairly optimistic so
i just hope we can uh little by little uh get the community uh understand that and rally against a
more forward-looking approach to security where the way
at least for the app layer we pay for security is in the form of future cash flow from the
economic activity we generate and that's what people value and that's why people are
want to buy either run or rougie and participate in this ecosystem
into this ecosystem.
Well, yeah, so, yeah, once we get those changes actually shipped,
then we can, like, have the discussion and, you know,
we'll definitely have some community spaces around then just to, you know,
get thoughts and there will actually be, like, a vote to increase it.
Because we do need to do something in order to get things off the ground.
So, like, we can always adapt as things go, but we, you know, something needs to be done sooner rather than later to, you know, get this stuff off the ground.
So it's definitely something we'll have to keep in mind going forward.
But, um, cool.
Let's let's wrap it up here and I'll make sure to, sorry, we got rubbed like twice on these spaces. So I'll clip everything together. And as always, this will be posted on our RSS feed,
which goes to Apple Podcasts and Spotify
and wherever you get your podcasts.
Also to YouTube.
And yeah, thanks everyone for coming.
Thanks for bearing with us.
Catch you later.
Peace, Kyle.
See you.
