What's up, Chad Chad Chad's
Chad cow GM GM long time. No chat. No Chad long time. No Chad. Welcome back
Sorry, but so my voice might sound a little off just because I'm sick lately so that's the reason why
All good. I heard the the the intro music got a refresh too. That was that was chill. I was feeling that
There was pretty slick. Yeah, it sounds a lot better
It looks a little bit more slick
Yeah, I think they've added some some like the least ability. I feel like a little bit more stay away, which is good
But I noticed like in the title, it's just fortune spaces 83. I'm like, oh my god, it's been 83 spaces
Right. We've been doing this for years though
Yeah, it's been a while it's weird I'm getting a glitch right now though I can't I can't mute myself weird
Now it's working. Okay, false alarm. I'm good. Yeah, we got something special here. Like a door chain space is number 100
We got to do like something something interesting
it really depends on how you count it because
The numbering has been a little
Little wacky like it really depends on what you include
like there might be one or two of the discord stages included in there and
Yeah, close enough others are just not included set but you know ballpark 83. Yeah, right now enough
We don't want to be exactly precise, but it would be fun to do something fun for like the hundredth, you know, like
For sure. We definitely should we could do like one like in person. Yeah, it's funny
It's funny on one hand 83 feels like a ton but on the other hand, I feel like it's been like
It feels like forever that we did that we've done these things. So it's kind of on one hand. It's kind of crazy
That's kind of funny. Isn't it? Well, we do it once a week. It fits to you know, we could do weeks in a year
So it's good. It's gonna be like Joe Rogan someday. It's like 14 spaces number
My god, we'd all be so fucking old
Yeah, Chad will be dead by I'll be dead by that's a good chance of it Wow
Search out under the bus dude. He's gonna be living forever by that. Oh god, I'll be I'll be I'll be immortalized on the blockchain
You'll be converting ruin into like life extension drugs
You put on an Apple Vision Pro and you just see metaverse Chad there
To talk to you. Yeah, I'll upload my Apple persona from Apple Vision Pro
And you know, you know people can people can talk with my face
It's like it's like that AI we had this idea a while back of like the AI
Chad be like that. You could just ask any question, too
Yeah, like you know would be trained if he trained by this space. So so you'll be immortal on these spaces
That's actually like more practical than you might think you could actually take all the spaces upload them into
If you're the name that software
but like it's like a video audio editing software and then just converts it all into text like audio to text and then you
Can it separates voices by like the sound of their voice as well?
You pull them all out and then you just train a chappy chibi tea. It's actually much more practical than it sounds
Yeah, sounds feasible, let's do it side project for somebody who's your cell phone carrier again
So what's going on for chain language, yes, we just want to talk about
Well, there's been a couple interesting things and not door chain land
Yeah, I don't know if you guys saw those new Satoshi emails like that came out. Also. There's a backs block the halts total block
Halt, so like those are two interesting things. I was
Same here. What's that? Yeah. Yeah. I mean I just I've just been seen it a little bit around on Twitter
Guess it's just an early a very early contributor. Just had a big archive of
Satoshi emails which are not the previously public that are kind of out there now. I just
It's not anything like groundbreaking, but it's a little bit more
Lure and like early thoughts pretty interesting to read through some of the some of the emails
Did any did any points yeah, did any points like stand out to you or anything memorable?
Nothing that really jumps out of me if people like I think I was like just skimming through it
But quite before this space, but if anyone like saw anything really interesting from it
They actually there wasn't one one idea about like backing Bitcoin with with cash
Was like that. Okay. Obviously that didn't pan out
Just some like early ideas about like yeah, maybe the other way around. Yeah. Yeah
It seems that I mean obviously Satoshi was a pretty smart dude and like knew a lot about
You know bootstrapping this kind of network
I think he had his own thoughts about BTC scaling but like he also got to take it with a grain of salt too
because you know he's looking at it from way way back and obviously
You know just one person's opinion, so
There's actually was a guy a long time ago and people
Even before that I was in crypto, and he was hired to create the Bitcoin logo
Right, but that time like he didn't even know what Bitcoin was
He just you know some fucking graphic that to create like that had no idea and he completely forgot about it, right?
He hired he made this fucking Bitcoin logo completely forgot about it
And then like three five years later was the hell it was
Bitcoin started to be like talked about in the news and he saw like the logo and he's like that looks really familiar
And he ended up just like trying to claim that he invented Bitcoin years ago
It was pretty it's pretty fucking hilarious. This is like I don't know if it's like 20 2012 or something like this
Guess he didn't get paid in Bitcoin and that that would have been a
It'd be kind of like that story that the guy who painted the murals at Facebook and they ended up making like
200 million dollars off of painting like murals of the Facebook headquarters is something like that. Oh
That's right. Yeah, assuming you did not get anything for making the Bitcoin. I go yeah
The apex hole is there something that's you know, obviously
Interesting just because they've normally been a very stable chain
They don't live in an ad like a lot of issues in terms of like halts or or like major issues
So it's interesting that they they range their their their issue and of course it affects us
This is the ongoing cost of like as we add more chains
Whatever shit they're going through it kind of like splashes on us in some form could cause us to react and pause training or something
like this and like, you know deal with any kind of
Transactions to get stuck or like that just causes like maintenance issues for us as well
Yeah, it looks like they fixed it though and I think we unpause signing so I'm not sure if trading is back up online
just yet, but they're pretty quick on the response and it looks like it was some kind of issue where the their
Ava X nodes were like gossiping way too much
they were sending like millions of messages back and forth and just lagging the hell out of each other's nodes and
I kind of like them brought everything to a halt. So
how it looks like it looks like their their blocks are back up and running and
I'm not sure how long that response time was but there's only only a couple hours looks like I
Be curious to understand like the read the ports post-mortem because generally speaking in my view if you have a like a block halt entirely
Most of the time not all the time and most of the time
The longer that it takes to fix it the more decentralized the network generally is
right because you have to get more people to get involved and engaged and like
download this new software blah blah blah whatever the fixes and if it just I just did it in two hours and that just
To me that I mean, I don't look at the details to be specific. I'm not making any claims about Ava X
Whatever, but that at its face value. I've mixed me a little bit
You know, give me a little bit of red flag
Yeah, that kind of thing is probably hard to test like I'm sure they have a pretty comprehensive testing suite
But something like a some kind of gossiping error like maybe that's something that only comes up on mainnet
I mean we to be fair like we see stuff like that
You know where it's like only something that you'd see on mainnet, which is why like, you know
we have the stage net running and don't do testnet anymore because there's so many issues that only come up when you're actually
running the network like in
Right in you know in real time at scale right, but I don't I wouldn't pop up but even like it unless
If they release some sort of bug that fixes it it should take a long period of time
To people to like install it it shouldn't happen in like two hours because most people are fucking sleeping
Like you know around the clock
So it's just like unless the issue itself is transient like the issue is like oh something happened
Like I don't know in some sort of network segmentation or something like this and it's a transient problem
It's resolved itself without anybody actually, you know getting involved or doing any actions
Then it's probably the fight
I wouldn't I would kind of like you know, not an issue
But if they didn't really suffer update that require everybody to like download the thing and everybody did within two hours
Mmm to me. I'm like, okay, that's
In this case though, it's it's still halted right so that that's not what's happening, right?
Think I don't know didn't come say that the person blocks again. No, I there. Yeah, they're going through blocks again
I think as of like like half hour ago an hour
Yeah, but generally speaking like long downtimes of a network is generally a good thing
Obviously, it's not a good thing, but it's also like a good thing signifying the decentralization of that right a lot of for example
like a lot of those nodes like
Totally and friends and whatever like they may have connections and relationships with people
Well, I'm thinking like call them up on the phone and push things along for us
So like we will we push out an update? There's no one to call
We just put out a notification and we have to wait for the rest of the world to like read it, you know
Yeah, that's also because we
like as a you know as a community
Valued the decentralization of the network and hold that above a lot of other things while a lot of other and I have to like say
today that's doesn't or anything, but
You know like like a lot of cosmos chains, for example, like it's just not the same type of mentality
And and we like obviously is needed more for Thor change as Thor change itself is as an exchange that is like
You know, it's completely different than you know, most other
Most of the networks where it's like, all right, whatever you're just gonna you just trust the nodes to run it and you could delegate your
Your coins to whatever node that you trust. There's like there's like ten of them
Was like there's like some cosmos thread going around the other day
We're saying like how many nodes are needed to stop like each chain
Yeah, you could haul pretty much any cosmos chain with like like four or five validators, you know colluding or going offline or something
It's pretty crazy, right?
Yeah, for us, it's significantly higher than that. I
Didn't I didn't know actually I think about a little Python script on my laptop that I they wrote just to like do it
Nakamoto score like analysis of fortune itself and figure out how many
Unique node operators there are and then what percentage of those you would need to be able to stop the network mobile block
Yeah, I haven't seen that that that ranking go around in quite a while, but I remember Thor chain was ranked quite high
I think Solana was too actually, but yeah, who knows it's like, yeah, yeah, yeah
But the problem with that is like even within the Thor chain like
It's hard to really get a good Nakamoto score to be
not so much like this it's hard to really know what the quality of a Nakamoto score because even me say I have like
say I have five million room for example, and
I can run five different nodes at five different addresses at five different locations like one in Sydney and one in
New York and one in like, you know fucking Singapore or whatever and
For Nakamoto score perspective that would be considered to be separate people
Right and that's the tough part is like even somebody that has a high score like Thor chain
It's hard to know whether that has that score the quality of that score because there's no way to know
If there are people running multiple nodes, but as separate entities, you know, I mean
Right exactly. Yeah, that's like what you're saying with like like totally your example
like even if there's a whole bunch of nodes, you don't know if like multiple are run by
Within like one or like multiple or good organizations or something
yeah, and for us are actually better than most in this particular regard because the way we do as guard sharding takes into account like you
Running say I say I actually have five nodes and I'm running all of the same address
It'll put each of my nodes in five different as guards which actually creates much more security for the network
There is like an actual incentive for node operators to run, you know
Those who run multiple nodes at least to run them under a single address
Because it actually increases the quality of the security of the network by doing so it makes it
much more expensive and difficult for somebody to simple attack a
Specific as guard dress or one as guard vault, right?
So there is an incentive in our network to do to to not, you know have five different identities for one person
That doesn't mean that nobody's doing that. Of course, I can't I just never I'll never be able to like validate whether that's
You know the case but there is an incentive to do so and I personally have encouraged
Operators in the past like, you know publicly and channel is to like run it all underneath one address because it actually improves the security of the network
Yeah, I was just looking at how many nodes are on the network I think we might have just
been at the most amount of nodes that have been validating throw chain blocks at
105 I think I don't know. I don't know if we've ever reached greater than that
but I think you just last turn we were 105 and now we're down to 104 again, but
The the spread of bond between nodes is like is
Super tight to like the the maximum is like a little over a million and the minimum
I mean the minute that the lowest note in has like 500 K and the second lowest is like
860 pretty much almost every single note is over 900 K ruin bonded
So like the spread like there's really no
real lopsided distribution of like, you know
Some notes have like a ton of room like some have have a little like it really does seem like the whole
push for like effective security and
Like maximum effective bond kind of it really works to distribute things in a pretty even way was naturally what we wanted
That was part of the goal
We don't want we want each Asgard vault to hold the same relative the same amount of security like give or take
Right, and if you have what Asgard vault has like, you know, 80% of the bond
Then you're gonna naturally overload that particular Asgard vault with too many inbounds and too many outbounds and you're not really using the full like
TSS signing of all the five different vaults
You're just like putting 80% of the pressure on one ball
So there's reasons why we like to have the bond be like kind of equal relatively like not to me like exactly equal
but like, you know within a
Reasonable vicinity of and all the economics of like, all right
You're not gonna make more money if you're beyond the effective bond and you're not gonna you're gonna get churned out if you're the lowest
Bonder and that kind of stuff that kind of pressure from the top and the pressure from the bottom
Just naturally kind of pushes people kind of towards the same place, which is what's what's what the behavior you want
Let's see, I was also like doing some math yesterday and I tweeted this out like a day or two ago
Just about like the split between liquidity fees like so when when someone makes a swap and they pay fees
Oh, where does it go? I was just you know, trying to figure out like how much so if there's $100 in fees
How much the nodes get how much do the LPs that pool get and how much to the savers of that pool get?
It's actually pretty interesting and it was less going to
Savers than I thought there was which is probably which I think is like really positive. Like I think it's a good
Balance that we that we have right now for how much go to towards like each different
Like actor in a pool. So so let's say you make like a swap through the the Bitcoin pool and there's $100 you pay in liquidity fees
Thirty two dollars of that goes to the nodes. So that's split between every single node of the network
Fifty eight dollars goes to the the Bitcoin rune LPs
58% of the liquidity fees go to the rune BTC LPs and then ten dollars goes to the BTC savers
So they're earning about six times as much as the BTC savers. Obviously, they take on the risk the price risk of
Bitcoin they take on the impermanent loss of those savers, but it was kind of interesting to actually like do math to figure out like
Exactly how much more that they're earning and the savers it was a much bigger difference than I would have would have guessed
Yeah, and that's at the current, you know incentive pendulum and savers
Utilization ratio, but that's that's kind of how things break out right now
Yeah, I just shared the tweet in the in the space here
Read more but yeah, I love this tweet like what well done cow. I'm writing this thing because there's a really great
Tweet that you put out there and like just my knee-jerk reaction like because I didn't know either like you you kind of inform me
Which is great and I love to see more of these kind of like data driven tweets from from the community in general would be awesome
but my knee-jerk reaction when I saw this tweet was like once was fucking awesome well done and then the other one was
This kind of ratio where how the funds are being divvied up between the different actors
It was relatively like right kind of where I expected or where I would like it to be right and it just kind of
Validates the the the design and validates the economics that it's the mathematical
Aspects of the network to produce the end result purely on market dynamics
For just the end result that I think makes the most logical sense, which is pretty crazy to think
Yeah, I agree. This is a great tweet
it's also interesting just because there's been like a lot of discussion about like how like how can LPs be like
Extra how can how can LPs be incentivized enough to like make sure there's deep liquidity and all that and
Seeing this breakdown. It's like oh damn like it already is
Like everything is kind of everything is kind of already weighted in a way that makes sense for everything to like balance out
You know it will actually we should do cow now that I'm thinking about it
Is it like we display to savers and to LPs like what you're what the yield is blah blah blah
But maybe it makes sense to like in to display like what is the relative yield between LPs and savers?
Right as a way of like expressing to them to a regular LP
They're like you're you're getting more yield than than they are and here's how much it is blah blah
Yeah, that's actually a good idea like some kind of metric that's just like a
You know you know how like we've the pool share the pool
Share ratio for the incentive pendulum so that's how like how I calculated this and it's only available like one spot like it's like
It's not easy to define if you don't like know where to look so like I think maybe working with some of the ui's and like
Servicing some of these metrics might be a might be a good idea like I might talk to Thor swap about like getting this
Yeah, I mean it might be need to be available in Midgard first and all the data sources
But like I don't think it'd be you know
Think we can add it to like, you know
Thor node or mid guard to make it easier for the ui's and we can call it like the LP premium or something like this
or I don't know what be that's the wrong term to use but
Something just to convey to people this because it's really because yield as we all know fucking go enough with yield
It's just like really problematic for a whole host reasons
It's always just kind of misleading in one form or other other misleading
Yeah, they're misleadingly low and this is actually more like a real kind of thing to look at
yeah, but I think the I think the hardest part to convey is like
What actually happens in in the reality of holding an LP position because that like that yield is kind of assuming the prices stay flat
right where it's really LPing is like this complicated thing where prices are moving or like
Rebalancing constantly so it's like a must much more
Sophisticated investor something that really understands what they're going to like
You can't just have people see like 58% or 10% click the higher one
you know, like that's actually like like that's like that that's gonna steer a lot of people the wrong way cuz like you can
You you can perform worse if like the assets like like it's a strategy, right? So people understand that. Yeah
Right it you're right. It is kind of complicated to be an LP
There's a lot of like moving parts in a sense and that was one of the motivations to build savers was just to have a
Very simple thing that people could like you don't need to understand a lot
You can do something. It's cognitively low-load in a sense to understand savers and you can just get some yield and it's simple
And you don't you know have to be a fucking math expert in a sense
Yeah, exactly it's just too hard to put the LP yield into one
Metric, you know, like there's no one metric that can just say like this is what the yield is because it's like yeah
I mean you earn this but then you also take on
IL risk and then you take on the IL risk of the savers or which can be either positive or negative
so it's like, you know, there's so many moving part it just can't be captured in one metric, which is why like I
advocated for moving away from the luby based thing because it's just like it's just so confusing towards
Towards users say I like I think it's important. Obviously, it's important for LPs to understand like what risks they're taking
But at the same time like it doesn't really properly capture like the revenue that they that they bring in from fees
Yeah, which is a lot and the reason I even looked into this in the first place because on Thorchain.net on the homepage
How much LPs and nodes are bringing in on a daily basis and LPs
I mean this is as a whole not at not any individual pool, but like every day for the past like
But every day since October or something
LPs have been earning like 150 K a day or something like like a pretty big amount and nodes
Comparatively less so I was like trying to see what like, you know
How is this actually breaking down because I you know, I see people complain about like LP rewards and like obviously when they don't gain
The value that's because of the IEL and savers IEL and things but I was like how much are they actually
Bring in it's it's quite a bit in just like pure earnings
Which obviously has to offset the you know, the risk of IEL and things to make it worth it to LP
yeah, if I was looking back now like and thinking thinking much about it in the beginning because
LPing was kind of already established in the industry in some sense, but
Like if I was gonna build a UI that does LP, you know, we're kind of like a force opera whatever
I think I would it wouldn't give you like an overall yield. I would just say like here's what you made in fees
Here's what you've lost from IEL like and then have two different graphs
kind of show them over time these two things and so you'll see that the
The fees is constantly going up into the right because it's only at only additive, right?
It's only going is adding more and more the value and fees that you're collecting
The second one's gonna go up and so they go downs and you're up and down is gonna fluctuate one direction
The other depends upon market conditions and prices moving and that kind of stuff
And then the third one you can you can add them if you want to be extra about it
It's just like the monetary value of like a dollar form and how that's shifted over time of your position, right?
Is it okay for me to speak up real quick go for it what's up, um
So I've had a suggestion for perhaps a new way to think about APR
I think luvi is actually a good idea. But the issue now is that it's just looking at such a small
slice of time what I don't know how computationally expensive this would be but like
Theoretically, we can measure every LP position in a given pool, right?
And so then you can just use the luvi metric on each position and then do a weighted average of
those positions over like say the last 30 days and then that is a good representation of how
That pool is doing because even if LPs are making good fees from swaps
I think what you're hearing from the community is I think a lot of people's LP positions is those
those gain the yield from the swaps are getting eaten up by IL and then the IL to the sense in the savers and
So that was just my idea of a perhaps a metric that better tracks the actual performance of the pool for the LPs
Yeah, I mean that's something like that would be possible
It would be I probably fairly computationally expensive because you probably just calculate once per day
Looking off the L all the current LPs of the networking with their statuses are and that kind of stuff
the problem is that luvi itself is a little bit problematic because
Because synthetics exists because synthetics kind of play with the math of an AMM
You can have a negative luvi and it's legitimate whereas if you don't have synthetics and you have luvi
It should never go negative unless there's something wrong with the map of the the aim of itself
So I think if we were to get rid of synthetics one day like hypothetically into the future or whatever
I mean just decide they removed it whatever reason
Then that would be much more practical
But until then the synthetics would probably fuck with the numbers it wouldn't be as as like a lie to reality
Well, but my understanding is I mean luvi isn't fucking with the numbers
synths can enter and exit and it's like
LPs are losing like I mean they're in the the luvi calculation sub thread in the Thortem Jev
Multi-parity when he looked at a theoretical Bitcoin rune
LP position from like last January to this past January. So a one-year
Bitcoin or rune outperform Bitcoin by like 55% and still that LP position
Lost 2% compared to hodl and like if I mean if you're LPing for a year and rune is outperforming Bitcoin
And you're still losing money compared to L to holding then there's no incentive to LP instead of holding
And I think that's dangerous for the network
Well, that's that's that's the thing with
That's nothing about fortune. That's about AMMs in general
Whether we talk about uniswap or any other hundred hundred that he just if you are LPing in a pool
Where you know in some time times time span the yield that you generate in one year
Let's just say is less than the price movements of between asset a and asset B
Then yeah, you will be like a negative 2% to use to use number
Or change a little bit. What makes us unique rather than you know
Relative to a uniswap or somebody else osmosis or whatever. Is it because of our slip based female?
It's much more effective in the sense that it produces more fees and then you know
A uniswap would with the same amount of volume whatever so it's we are a better position than most AMMs in this space
impervious to the results of
You know one asset outperforming or out underperforming the other in an AMM pool
That makes sense. Yeah. Yeah. Sorry. Thank you for taking my question. That's yeah that all checks out. Yeah
Also been great thread on on lending well written thread everyone should give give you a follow and keep the post coming
Doing good. What's up? Ah, quote me of God. I didn't request to speak. Oh
The other thing that happened was that the 200% CR chains that we had
Yes, sir, so yeah, so lending ADR 12 is started to be enacted
So that means that CRs are for lending are 200% you can get alone with 50% LTV and any door chain interface
Yeah, it's live right now. So the the 60 million rune of
The 60 million uncirculating rune burn it didn't happen yet. That'll happen on the next door node update
I think I think it's version 128. So I would expect that probably sometime next week
Or so like some time in that order, but there's still space in lending
So it really doesn't make a difference whether you know
If you want to get a loan now or later it all that burn does is create more room for the lending protocol
It's not a burn of circulating supply
so ADR 12 is already effectively enacted and then that that rune burn will take place and create even more room for lending and
It's it's a ton of room. I think it creates
You know somewhere between 20 and 30 million rune of space which is like somewhere around 100 million in space for lending as a as a whole
So it's gonna be a ton of space for the lending protocol at a flat 200% CR 50% LTV. So
Yeah, pretty pretty awesome. I've been we're pretty excited about that. What are you guys thoughts?
Well, yeah, one of the fun things was to watch happened and I suspected this
I think we expected this was like going up and but it was
weren't sure what the numbers were they kind of end up being in reality was that the idea that like a lot of people who
Opened up their loans at like, you know a 300% CR or 350 or whatever the hell the number was
Like they can now close your loans and then reopen it and then you get a higher debt
You know, which is a much better deal for them, right? Which is great
We actually want that activity more training more swaps, you know more interaction with the network
and also you kind of upgrades all those loans to be, you know into a into a
Safer safer state right safe for the for the protocol
So I was curious to know like, you know
How will that look like would there be like a mass exodus and then a mass reentry on Monday one or like?
people would withdraw I mean like come back in blah blah and
In reality, I think we went from like 90 percent or 95
I think it was like 90 percent full and then we withdrew down till around 60 percent. We lost like 30 percent
Before we made the change to 200 percent CR
Which was I would to people were doing this like preemptively which is kind of fascinating
And then once we set the two percent
CR people started to like enter in you can see like a graph of like this kind of up into the right kind of graph of
Like all the people kind of re-entering and more loads being open. So we've gone from like in the last few days
Gone from like six and sixty percent
Kept capacity of the cap to nothing. We're now like eighty four eighty five percent, right? So we're almost back to where we were
Before we did this the CR change after a few days
Which is kind of cool. And by the way, that also means that
The amount of loans that entered and came back
Is not one-to-one. It's it's kind of more. It's probably more closely like
1.5 or maybe two depending upon some things because when you close a loan at 300% CR with a lower debt
In the end you're gonna like you're gonna you're gonna use up less of the cap space when you come back in
Right because because the net all by and burn the network will be less
When you come back in so when we go from 60% and then back up to where we were before that that's not like a
One-to-one like oh everybody left and then but it came back in technically, that's not correct
It would be everybody everybody left and then they all came back in plus the more capital came back in, you know
Whatever amount that might be so it's we did see an engagement so far and all this is it's early
Like it's only been like a few days obviously, but we've seen a lot of people leave and then come back in paying fees to do
So getting a better, you know deal for them
But also safer for the protocol at the same time and where the utilization of that cap is almost back to where it was
So the benefit of the protocol has been basically the same as it was before
But now it's safer because it's 200% CR
But the cap that we've been using is almost the same as it was even just after a few days and I kind of proves
what my thesis was or my hope was that when we went to a 200% CR the increased demand and lending look will make up for
the losses of each individual loan getting like a less of a value from the protocol's perspective and
Then we're at the net result is all the borrowers are happy because they're just getting a better deal, right?
There's no real downside from their perspective
Really and and for us we're getting you know
We're still getting all the the benefit that that that we want to get
We also got a bunch of loads closing and opening which caused a lot of you know
Swaps to occur and fees to be generated right and trade volume to increase for those, you know
Last few days, which is good. And so like I felt very good kind of seeing that kind of validation in the market
Right, and then also what did you take that even a step further like in this scenario like let's just say
Bitcoin's pumping right? It's doing very well. It's like stationary or whatever
there was a kind of a concern that some people had you know, even within like the devs of
Like, you know people are gonna close their loans. They're gonna take take profits
They're gonna blow blah, which some people will definitely for sure do that
But the activity we've now seen is that like is that people are also key to like just improve the quality there of their of their
They're keen to close and renew and they're open to paying the fees to do so to do so and they'll and they'll get the higher
Debt and get more money in their pocket, you know instead of like just dumping the situation and like some some of the dick
Whatever it shows that there's an interest in that kind of activity
Within the community itself, which is a kind of a validating signal that we saw the last few days in general
I was very kind of bullish what I saw
One thing to keep in mind I think with the funding is
So with all the activity a lot of people opening closing
I think there was a bad band thread. He said it's the the biggest, you know, couple days of door chain lending
I think a couple million and loans being opened and closed and per day
that the derived asset pool depths have been
Having shrinking because that's that's the way they're designed when there's a lot of lending activity
Those pools contract and that means there's more slippage going in and out and it also
Kind of nerfs streaming swaps as the derived pool depth shrink is less streams you can do so and be and there's remember when you
Take out a loan. It's something like four swaps to to get to the
To get your debt out, right? So
without without streaming at all
It just make sure you're checking your slippage before taking out a loan and if slippage is bad
That means it's it's better to just wait. It's it's flat 200% CR
So there's really no benefit to you know, taking out a loan now or later besides just like the general price of Bitcoin
So like just just keep in mind that
Really shrink in high activity and if you're trying to take out a big loan, especially then or repay
Then it might be best to just wait if you're experiencing a lot of slippage
Was that because people a lot of people are closing loans or does just opening loans also shrink the depth?
Both do it because anytime you're so
It's not the opening and closing loans that caused the derived asset pool directly to the shrink
It's just the swapping of the layer one pools themselves and because what more loans are being open and close
It's just more swapping with the later one pools inherently. So and in particularly
the stablecoin pool the tor pool
It's it's a lot more shallow relative to Bitcoin
At least it was before we actually added some new anchors to the pool to make it even more deep to deepen it even further
But it's this relatively speaking to Bitcoin for example, it is considered more more shallow
But it's getting you know, half the volume trade volume of Bitcoin, right? And so it's just natural and it's
We're doing Bitcoin or a theory on they're both trading with like the stable coins and in a sense of like doing them the
Tor stuff so it's just like
It's just that that activity just kind of caused specifically a tor pulled it to fall quite sharply, you know
To a low low depth. It should recover on its own eventually
We'll keep an eye on it. Of course, but but yeah, that's an interesting result
To stable coin pools were added
So we lost be in the USD the other month because that's obviously being deprecated by by Binance and Paxos
So that's not really a thing anymore and that was a really deep stable coin pool
But we do have two new stable coin pools that are in the tour anchors now. So that's
Binance smart chain. So I also believe that means both of those should be open for savers as well. So
Is she those are just open tour anchors now?
So that those will both add to the depths of the of the tour anchor, hopefully
Brought up paradox Prince what's up?
Actually was a first time lender today on on tour chain. We are shapeshifts
I miss the first boat because the CR fell so thank you for bringing it back to 200%
one of the things that I just want to say as a
My expertise are options and I'm not the first one that actually mentioned that actually mentioned the similarity between this land
I think and the in the money options and I
Actually opened the loan to hedge some of the options positions
But I think tour chain might be in the future in a great position to be the first
Decentralized options protocol with native Bitcoin by actually mimicking or utilizing a very similar model to what they are doing on lending
so just an idea and writing options could also
help fix the impairment loss of
Of the LP or six day for example decide to provide at the same time
liquidity for both options writing options and
Yeah, I'm open to exploring
Content those kind of concepts ideas in general. I'm kind of open to exploring kind of more professional trader
Tools and the first one we're talking about is limit orders for order books
Which is kind of the most simplest and probably the hell heavily most heavily used a pro trading kind of like
Mechanism we're also talked about like perpetuals and you know like leverage in that sense
We can talk about options like you're saying as well
Like we can take it we can take a look at other kind of ideas of primitives. We see
pro-trading circles of crypto to kind of create like
Bitcoin native perpetual is a Bitcoin native limit orders of Bitcoin native options and which as you pointed out
Lending is in effect like like a put option, right?
and so you there's a lot of
possibilities there and there's a lot of capital that can be an activity and usage that we can we can kind of like
Utilization of our network and utilization of our pools like you remember like most everything we do is just all just
Trade volume to the pools in one form or another
So I'm totally open to explore those things into the future with the rest of the community
Thank you very much. Yeah, Oh looking forward to
Kenton what's on it? Okay. Good congrats on episode 83
These are fantastic guys. I don't always tune in but I always listen to the recording so so thanks for doing them
Just want to I thought I'd go over my reasonings for kind of why I'm against lending
This concept of innovation has come up as kind of an excuse to justify it and
I get that well, we're all in you know, that's why we're all here
But just like, you know adding a new chain to trade comes with some risk. Maybe it's not worth it
You know that we're not gonna get the trading volume from it. It increases the attack surface, you know, that kind of stuff, right?
So maybe it's not worth it. I think that's just you know, the people are maybe kind of against lending
they don't see it worth the risk and
to me the risk is, you know, how does it how does it unwind and
And I'm kind of curious if everybody who's in you know in favor and support a lending
Are they gonna hold their rune through the next cycle?
You know, or is this or is this just you know, kind of a D gen way to pump the price and then everyone's gonna exit
You know, I don't know and I can't you know, I'm hearing from people that's how they're gonna trade it
So so that's my concerns is how does lending unwind?
And I don't think any of us, you know, we truly don't know right? There's no really really a way to know
You know for me personally my you know
My interest or the reason I'm against lending is just because I mentioned I'm interested in the long-term survivability of of the protocol
So that's it. It's not about being against innovation
Let's have a couple more more comments to here
Yes, let's deal with those first comments first before you go into sure add more comments
As in general I wouldn't use it this term innovation as an excuse
Innovation is an important part of like this industry
It's what we need to do be able in order to move forward and build more powerful more flexible, you know
More valid systems in a sense. You have to try things to know what works and what doesn't in a matter of speaking
Don't think I would push against is like I would not consider lending to be a D gen thing to be honest with you
I consider to be quite the opposite like to me
Our lending model is the least D gen lending model out there
Just because the use cases of why you would use this lending is to not necessarily D gen
You're like lever up yourself on like 3x long mean you can't if you want to it's you can use it for that
Case if you want to but where it really thrives or where it's really kind of adds value to to to people and societies
It's not for D gems to like leverage position themselves, but rather to allow people to like, you know
Buy a car or go on a vacation. My sister was actually talking to me
I spent some time with her in LA recently and and you know
She was thinking about using our system to lending protocol to be able to go alone and you know
Acquiring a new car for herself, right?
And she was interested in that because she had to worry about interest rates
ballooning up to crazy amounts or losing all of her Bitcoin in a friggin liquidation scenario or all this kind of stuff
So I actually consider this to be like it is an experimental concept in terms of mechanisms and how it works
Totally agree with you or Matt. I'm not I'm not denying that but what I'm saying is the product itself is pretty anti D gen
In my in my view does that make sense?
Yeah, totally and I do believe that's your intention
But the same time you can't none of us can control how people use it
Right and there is you know
It's not gonna take long for people to figure out they can 2x long their Bitcoin and Ethereum
And so, you know in my opinion that'll be the majority of people using it
and so they're gonna look to unwind that trade near the top or you know as an ex bear market starts and
You know not when they're trying to pay back a car several years from now
But I mean neither me nor you can we don't know how it's gonna be used, right?
So, okay, this is nothing to in discord somebody asked well
Same way before before you go out a new point. Let me just trust one more thing. You said
The other thing is that I was like, how does it unwind right? This is a kind of a topics you brought up
Yeah, which is a very valid and a very good question to ask, right?
We it's a very very valid thing to have a topic about
So it aligns in the sense in the same sense of how it spins up
Right. The question is it can it unwind back to zero absolutely can 100% and you perfectly find
I'm not worried about unwinding back to zero if you wanted to kill lending tomorrow
So he said I could do any more community voted. We're gonna get rid of lending. Well, blah, blah, whatever
If we take the choice to do so, that's actually to be not a problem
We'll like, you know mint some room to do it
But we burnt the room to get there being with it
You kind of like kind of equates itself out
The problem comes into place is when you unwind it at a high rate of like you just like rush fucking unwind it
I mean like you there's a bank run of some kind or like, you know
We're telling people you got, you know, one week to unwind your loan or you're not getting it back at all
blah blah blah or whatever
We wouldn't do that, of course like that. I mean, I wouldn't advocate for that for sure
unwinding by itself to me is not necessarily a
Problematic thing, right but I would also say that like that the number of loans that will unwind
Even in the scenario where we're actually gonna like shut it down or whatever the number of loans that will wind wind down
Will not be 100% I will guarantee you fucking right now that will not be 100%
That is the case almost every blockchain in history
you can literally go to like bitcoins blockchain see how many UT XOs are been like older than 10 years old and
Blah those probably even a majority of those are like lost Bitcoin
Do you mean like we will always have some about even within block fight even with an anchor like not?
You almost never get a situation where 100% of those loans will be closed even this area where you're trying to fucking close it
so like even if we did do it we can we'll have an additional buffer because I
Don't want to throw a number because I have no basis to say any real number to be honest
and I don't want to mislead the community, but
I'm not concerned about that particular scenario what I am concerned about is some sort of like bank run fucking scenario where like somebody
You know the communities like rush exit to the door and there's mechanisms in the code to protect us from that right with the virtual
Which we just saw kind of happening in the last few days right with all the increased activity all that kind of stuff, right?
The question is if we decide to actually end it because you know
We saw some signals or whatever happened that convinced us that this funding doesn't make sense in the long term
When we make the choice to end it
We're not going to pay people's debts back off for them because that would be well with us the community or the Treasury
Pay money to make a bunch of room. That's just
Fairly fairly fairly city silly
And and what will happen is people will just kind of end it on their own time
And we'll in the one thing we've learned by looking at the loads so far
I'll see it's only been six seven months whenever as they've been incredibly sticky
They they open they don't really close that quickly at all
And so it's weird ended people would end over
Multi-month most likely multi-year time frame and I don't mind that at all
That would that kind of slow burn of the of the feature to back to closer to zero
Doesn't have significant effects of a price doesn't significant effects, you know on the protocol itself as a whole it
To me that's not too much of a concern. The only time it's concerned to me is when there's some sort of like
Rush to do so and as we're very closely down as a protocol
We're not gonna like tell people to rush immediately cause that would be bad for the protocol
It's like take your time come back when you when you want to and close your loan when you have the money or whatever
You know, whatever whatever happens the thing that's important is to make sure that people don't run for the bit run for the for the exits
Yeah, I agree. I think I'm not worried about a death spiral cuz um
when you have a bank run, there's no friction on withdraw right like with
Silvergate Bank and Silicon Valley people who just wire their money out in one day, right?
There's no cost to do it and they just that's how they collapse
Yeah with with lending you got to pay back your loan, right? That's friction. They come up with the catch to pay it back
And I understand the virtual pools. I get that so like I'm not worried about a death spiral. I'm more worried about like a
Slow spiral, you know over the course of a year or two. Just this constant grind of inflation driving the room race down
But then you would have the the inverse would have to be true as well. We've had a constant growth of
Blood to open up all these loans and now we're just having inverse also happening this in a slow roll back down
And if that's the case, it's basically like it
I wouldn't call it neutral because it depends upon circumstances below blah
But like more or less it's basically neutral. We tried it. We got benefit didn't work out. So well
We got that, you know, the the spiral back down the slopes this low spiral door called that and it's just slow spiral up
Slow spiral down. It's more or less, you know neutral
Let's follow along with what you're saying. We've come back to where we started which is which is kind of my my push
There's gonna be one giant round trip
Yeah, but if we're if we're back where started then, you know, no harm. No foul in a sense doing it. Sure
Then what about the people who write it up and then okay
Well, I don't want to go back down and they want to sell so let's look at
Runeholders selling, you know front-running this
maybe to be like a slow spiral up and a slow spiral down like
That kind of long-term buying or burning a rune. I don't know how much of effect that hasn't got market psychology. I'm not a fucking
Trading market psychology expert to be honest with you
But I would say is that like to if it's slow spiral up and down and it's more or less neutral in terms of different those things
The value of what is we're trying to achieve in terms of the protocol and now it's different from everything else
Powerful like for change should fucking win a no a Nobel Prize if this thing works the way I think it's gonna work
Right, like this project should fucking win a Nobel Prize for this shit because it like we just fundamentally change it change loans forever
Right even within the defy space to offer something incredibly powerful and useful for the entire market market market to use
That's pretty interesting and that's to me worse that will slow spiral up and the slow spiral down and have that neutrality
I don't disagree with you on the innovation of Thor chain. It's pretty awesome
Okay, let's have another scenario. Let's say nobody's redeeming loans
Yeah, and there's this huge and the liability but the light so I understand if nobody redeems the loans the best thing for Thor chain
however, the liability still stays it still stands and
You know nodes any other rune holder looks at this liability growing
Everyone's gonna watch the ruin the Bitcoin ratio
Where we at where are we at in the cycle and they might look different run that they're like
we don't we're not even gonna wait around to see anybody redeem we're just gonna sell so in the sidelines and
Having a bank run on loans being redeemed. What if we have a run on
Say nodes are pulling out. They're selling their rune and network becomes under bonded
And basically just like what we saw with
Let me finish that networks under bonded. We're going into bear market
Training volumes are going down. The yield is down
The pool to reach their cap, you know, the fun of the rune price fundamentally can't go up
We're kind of stuck and as a rune price keeps going down. That's increasing the liability. No one's redeeming
But the but the potential liability keeps increasing and this is exasperating the rune price going down
the effect of the rune price is relative to the the liquidity of the asset and
The amount of liquidity passing through it on a like a you know per day or per week or you know
What over time for him you want to pick right?
So in our case like last time I look I haven't looked at a lot. So forgive me if those numbers are off
but last time I look like the the
Trade volume of Thorchain is like I can't remember. It's 200 million or 200 rune or something like this
But it's a lot either one of those numbers are pretty pretty large
We're like the I don't know if we're like the top 30 largest traded assets in crypto like we're something like this
We're pretty we're pretty like we love liquidity
And if we're gonna sell off, you know
The amount of rune that would need to bit back the net the net like mint
Which right now is you know in the current moment, it's probably like
Probably close to like I'm guessing that I looked at I don't think in front of me
But I'm gonna guess it's around 2 million something like this
2 million in the context of 200 million isn't you know
Gonna really push the price significant one direction the other right now, we're gonna 5x
We're going to go from the current situation, which we're gonna burn the 60 million standby
We're gonna increase it by 5x. Obviously 5x is a lot larger than 1x, right?
So the larger we get, you know that this plays more into that
You're you're you're thought you're thinking your process plays more into the effect of this and a smile
I don't want one X or even you know at a at a
25 million rue out of the
Of the supply 500 million, whatever it is. It's like 5%
It's not it's not it's not gonna break the bank really like in one direction the other we're just trying to collect data collect metrics collect
Market behaviors to understand if how people
React and interact with the system before we like go for fucking broke in a matter of speaking that
Freaked my my my phrase there, but
I don't really I'm not really worried about what you're worried about
If we get to a place where like there's no caps on lending and lending scales from you know
Five percent to like something larger. I don't know. I'm gonna say 50% or whatever it is
then I would then your your thought process is a little bit different because the amount of room as a percentage of the
Supply or a percentage of the you know trade volume per day per week per month. Whatever
Is much more significant. They're much more, you know, it's a smaller ratio between the two of those things
So then then what you're what you're concerned about it has more validity to it
But I would argue that in this particular moment and of the capsule they are not that you're worried about it. I
Agree with you in a moment. Absolutely. Yeah, I am talking about like an uncapped scenario
Basically, if we're gonna if we're gonna grow and let lending grow to a point where it can positively impact the price
Inversely, it can negatively impact the price right and as far as I'm concerned, that's the ultimate goal, right?
We're expanding the capsule ending right now see how it goes that we're gonna expand them again, right?
Then eventually that's the goal is to have this positively impact the price
So yeah, but yeah, I'm not talking about right now this right on second
I mean, I would also say that about us to say is that like
We each time you want to we talk about we discuss the idea of increasing the caps
We will have more data than we did the previous time
We'll have more information. We'll have more data collection
We'll have like, you know
We'll have more market scenarios and show themselves where tokens had gone up or down or whatever, right?
A rune had a bad fucking day where I went down 15% in a day or something like this
Like we'll have more of these scenarios. So when we make the choice to increase the caps to go larger. We're more
Confident and we're more secure about the design work is secure about what is we're trying to do and the odds are less likely
wind it back down to zero because we're
We're making more and more informed choices and in the form decisions as we go up to up to scale
So the likelihood of us scaling it down to zero in my opinion is less likely the higher the caps get
Then it is when the caps are lower
Exactly. Now, that's why I was against
That's exactly my position. That's because I know fee the more we expand it the more downward road to the art
We are more likely to continue
I think it's not about say we're lucky to continue not because work
We're just kind of degenning our yolo our way up up the fucking scale
But we're lucky to continue like we're less likely to do so because we're more informed and we have more information
We're making educated and informed choices about what's what's positive for the protocol. Okay, sir. Yep
Have you guys thought about like?
Waiting a full cycle, you know bull to bear before
You know trying to max out the caps and lending
Yeah, or is it or is it sorry or is the goal to try and uncap it
Before the bull type thing or before the bull end or something
I'll be I'll speak for myself
I'm not speaking for anybody else here
My viewpoint is this is that I want to do the 60 million rune burn thing. I want to give that some period of time
I don't know how much we'll just maybe six months. I'm throwing our random number there, but
Give that time time to see how the market reacts
We may want to throw in like a hundred fifty percent CR at some point during that process just to kind of see
You know if we like to go above and beyond what everybody else in the market is doing like come on
I'll be so forth and so on
We give them the people have much better deal that we can and every attribute and respect them with their currently getting
How much can we kind of pull from compound I've ate to influx it to us
But I don't think I'd be on that point of that 60 million like it makes it my personal opinion is not to go ahead
Burn more room like as we did in this current moment. My personal viewpoint is that we can implement
The derived asset cap, right?
Which is which which means that we can with the dried asset cap
We could be much more safe about scaling up further because it's not we're not gonna mint rune beyond the five of them
We're never gonna grow even now
We wouldn't make it into the reserve right and take 10 30 40 50 million room from reserve and put more risk on the protocol
And so because of that I feel a little bit more confident more
Securing and scaling above that point and to be honest like after it after we go through the whole cycle and we've seen the bowl
We've seen the bear we've seen how it fares and the ups and the downs and everything that and we have at the full breadth
Of information that then make a really informed choice
Assuming everything goes the way that I that I think that I hope that it goes
then we can just remove that fucking cap and then we can actually really take it off because now now that it's it's it's like
Now we prove that lending works in the way that it's supposed to that's designed to work
We don't even need that necessarily that that cap necessarily anymore other than if you want to protect against like a heavy scenario or top
Heavy scenario or the draw that says it's worth more than the the root asset itself
Market capital dry that says it's higher or a large percentage of the market cap itself of a room
Other than that kind of like that that cap right there
We can remove the cap of the derived asset because we know that
Lending is working at that point
Right and we can take away any concerns that a borrower may have like oh, I may get you know
I'll roll back because you know, the room prices down relative my Bitcoin or whatever the fuck it is
Yeah, yeah, that'd be cool. That'd be great to go through a full cycle before maxing out the caps
Okay, I just have a couple other kind of points this kind of things I've jot it down I want to kind of bring up
So in in discord somebody asked isn't this the way block phi
Throws capital and FTX collapsed and then somebody else replied saying
No, it's because there's no transparency and they're rehypothecating and I gotta put I gotta push back on that a bit
The transparency of a trade has zero bearing on its risk of failing
Rehypothecation it's not the truth transparency of the trade. It's the transparency. What's happening with that Bitcoin?
Yeah in block fights case a and in FTX case
They were just like they would just take that Bitcoin and they would just use it somewhere else and some sort of like gambling ish
You know, you know sitting area or situation or whatever and they just lost a lot of fucking money
But it was the gambling in that and the bet they're making the reason they lost it. It wasn't because they hit it to kept
They could very well done a prudent trade and done something smart with it and then just fine
It was kept secret. We didn't we didn't know what the fuck they were doing with that
And then a rehypothecation this is this is lit the bar change lending design is literally the definition of rehypothecation
It's a it's a practice where custodians
Such as banks use assets that have not that have been posted to them as collateral for their own financial gains
Such as borrowing money or making other investments
So Thor chain is taking collateral and selling it to make their own investment into ruin
So it's this lending design is rehypothecation
This is exactly how these other firms collapsed and they've been tradify
You know, we're we're basically shorting Bitcoin and
You know, we're going along the ruined Bitcoin ratio
Well through the capital they they were along the GBTC Bitcoin ratio and you know went against them
So but at the end of the day, we're shorting Bitcoin is basically what we're doing and
You know, could you imagine a tradify bank shorting Bitcoin, you know
People's market they laugh at it and I'm getting this from investors, right? I'm out. I'm out there
I'm trying to sell this you guys I'm talking to retail to institutional
They're crypto savvy. They're normies and everything in between
and I bring up lending and
It's just such it's a boner killer. So like what do you what are you guys doing?
You know that doesn't make any sense, you know, why why would you want a short Bitcoin like that?
You know, it's like I'm speaking for what I'm hearing
I'm hearing the market tell me and I'm relaying this to you guys that this is the way people like I've had
I've met two institutional investors already own ruin
And they're like, oh, yeah luna 2.0
Like, you know, this is how they're already viewing it and trading it. So
It's yeah at the end of the day this design we're shorting Bitcoin and that's
Eventually what all rune holders will be down the road and it's gonna be a question as a rune holder or a new rune investor
do you want to buy into a bank that short Bitcoin and
Don't think a lot of people are gonna want to say yes to that
So it's gonna limit the demand people that want to own and invest in a room
Yeah, okay, so a couple things
When people are opening up loans the protocol is using that capital to drive as much value into itself as possible
Right. That's why it's doing it
Right if we were just to take a loan if we were to do a lot lending in the typical sense, right of compound
Not anywhere. Yeah, it's over
Collateralized and it's liquidations and all this kind of stuff
It wouldn't really drive any purpose or value into the protocol
There's nothing I can think of out my head. It's not at least not in any kind of significant way
You know I mean and so lending here is trying to provide a really really significant value to the protocol itself
It's just a new value to to swappers and it's a new value to
Rune holders now you want to label that as we hop up at that. We have public dedication
Okay, sure. You can you can apply that label if you want to right?
But that's what we're but any any bank does in any scenario and tradify or up elsewhere
From some ex some ex person you utilize that capital to be able to drive value into yourself into your bank
Into your thing or whatever right? Everybody's doing that
So if you want to say that fortune is doing something wrong because it does the same thing as like every other fucking market
Okay, and that's I find that a little bit. I find that a little bit odd, right?
But well, it's almost extra. I didn't say for changes something wrong
I'm just correcting a comment in discord saying this is not re-hypothecation it is
And I agree with you. It's the whole thing and it's done properly. It's a fine practice. Nothing wrong with it
It's it's try flies been doing it for the first century
But it always question the question always remains is what is that trade?
What it what are you doing when you're re-hypothegating?
And that's it's those when these firms blow up is because they're taking they're making crazy trades with other
Assets, right and I'm just trying to highlight we're shorting Bitcoin and that's you know
Hasn't worked out well over the network from the network's position
It's not necessarily shorting book Bitcoin is trying to use Bitcoin to drive as much value into itself as possible
And by doing so the room price Oh inherently, you know
I'm a hair relationship by doing so the room price, you know is affected by the mass
Loans of being open directly with one point in the future, right?
It's not so much that the network is like trying to short Bitcoin
This is it's just they know that it has capital that is ex onus to itself
And when I utilize that capital to drive value into itself meaning that the root has in our particular case
Yeah, it's half the trade it was shorting Bitcoin and we're going longing ruin. That's that's the trade
And so as long as the ruined Bitcoin ratio cooperates, we're good. We're fine. We're dandy as soon as it goes against us
Like that's the question right? That's that we don't know that that question mark
I feel more confident about say you seeing you don't know when it's fine for me
I don't I don't say I don't know and the reason I mean, I don't I can't say it with assurances
I can't say like I was a hundred percent blah blah
Obviously, I'm not gonna say that but what I can say is that every piece of data of historical, you know
Of runes history and outside of runes history of crypto history
aligns to the viewpoint of
All the data fucking supports it like I don't there's edge cases
You can point to like all this in this particular cases particular coins particular moment
but like 90 something fucking percent of time is completely aligned with what we're
My personal viewpoint is the question the thing that really kind of drives the point here about like when we
We think that Bitcoin will outperform rune is really most likely gonna be in the bear markets, right?
that's where the danger is right of a net mint of room and there's a whole series of what a reasoning of like
Bear markets are boring and nobody's really trading or opening loans or closing loans or doing fucking anything because like the whole market
Just falls asleep for a couple of years in a sense, right?
We're talking about being a 200% or 150% LTV means that money's won't want to be closed
And even if they when people do close it before it kind of reaches that kind of cusp
The amount of room that needs to be minted back is out less because it's it's not much
That difference between those two points
Do you mean so there's a whole series of like factual logical reasoning of why a bear market has less risk to the protocol than a
Bull market does and we're a loft-sided to the bull side
We're asymmetric to the bull side and we won't know this for certain until we've actually like gone up through a bull
Gone through a bear which were that that's what we're doing, you know effectively now
But I personally have a high degree of confidence not 100% certainty. You'll never hear me say that
That it goes in the direction
We want what you want to go because all of the historical data of rooted other assets in the industry as a whole all support
Okay, so I'm gonna push back a little bit to
ILP I kind of viewed like default thing on a debt
that's part of reason why I wanted to keep it is it remind us that you know, we're gonna pay off this liability and and
you know before we take on new liabilities be cautious because
It was underestimated that ILP would get a control like that. So we had to cancel it
Excuse me, that is not the case. It was not it was not ILP got quote out of control. It's not that
We had to cancel it because of blah blah blah. That's not the case at all
Alright, the reason why LP was was canceled because we provide something else called savers that allowed you to get yield without
Risk and so the benefits of ILP to the protocol got significantly reduced in a matter of speaking
now you can argue that the the liability risk in the bear market got to you know 15 17
It was the highest at its point which by the way was a lot of fucking better than bank or who implemented a simple concept
So similar but different idea where they fucking cancel the entire thing because more more ILP was paid out in like three days
Then the entire fucking like two three years before like combined in a very short period of time and fucked them over in a very significant way
Ross that was not the case. Did we pay a bunch of ILP out in the bear market?
That's absolutely do it. I don't know the exact number top man. I'm gonna guess it to be like
Three million four million. I don't know that I tell my I'm gonna guess what to do that, right?
The liability got large but the law liability also went down back down to zero
Prove that the system actually did work that my ability expected liability to go high and we expect liability to go
Not in the same way for loans loans a little bit different because like the liability actually decreases the further you go into a bear market
Point of like a certain cusp of the reason why I thought I'm not gonna go to now because a different topic
But like the library expected liability go high, but people didn't withdraw loans
I mean it did like some small amount
But overall people didn't even though the yield of time was quite low like LP
It was low people had all the reasons to fucking will draw and they still didn't fucking do it
And we didn't actually pay out like some massive crazy, you know amount of room in the end
This is not in my opinion. Maybe even different opinion that so the reason why we canceled is because we don't actually need
I'll keep I'll pee anymore. We already have a non I'll option
We have additional yield going to LPs to counteract the aisle the dial that the Sabres
Regular piece are earning right and ILP went to basically zero
I think it was like sub 100,000 whatever the number was and it's like we got out of the situation without it
Collapsing the zero we waited until everything was healthy and good state proving the entire system fucking work to begin with and then we said
We'd actually don't need this feature anymore
I'm gonna argue again the liability is underestimated there because now there's talk about negative interest rates, right?
Savers was supposed to be a feature without impermanent loss. You don't have to worry about it
Well now we've got some underestimated the leverage savers has in the pools. So we have to have negative interest rates
So this is where I'm going is it that
And it's fine, but this is that question where it's it's impossible
Like I'm trying to say is over to now on estimating liability and leverage. Oh
Okay, what what what collapse have we seen?
What thing are you what is the oh, what is it? What is the oh, oh like?
It's like your work. Yeah. Yeah, it did great
And then it proved itself through a bear market to survive and do well
We could have to go up really wanted to but we just made the choice not to because it's not worth the extra risk
there's already a mechanism to deal with that now savers is a little bit different because in savers case we
Decided to later on add stable savers and once we added stable savers to me
That's a signal of a significant
We're making the choice to add more risk to the protocol that was originally talked about in the original design
And once we did that we said let's now because we're adding was more risk to the protocol because we added stable savers
Which had a 10 or 20 extra, you know down in a bit in a bear market relative the dollar
We need to make some sort of mechanism to better suit and take on this additional liability
There's digital risk that we're taking on with stable savers and ever since we launched that feature
I've been talking publicly that like you need to solve this problem at some point in time
So we don't get ourselves up into a danger some could be be over
So now I want to say over separately we we added more risk without thinking through of the results of that
And I'm trying to talk through for for a while to convince the community that we need to do something to maybe
Maybe it's negative interest rates. Maybe it's a haircut idea which is the floating around. Maybe it's forced ejections
I will have different ideas and which one I feel is better or worse
And even would be with suffice and even which it would take away the risk from the protocol and we wouldn't worry about in a bear
Market, you know savers, you know encompassing all the LPs and take it taking all their, you know positions or not
But you hit the nail on the head out of the feature without taking into account the risks
I think that's just let's just suggest of I'd say that I'm assuming them the way the minority feels about lending
We just don't know the risk yet. So
Kind of just go to this 25 million cap write it out for the next full cycle. See how it goes
That would be fantastic. Then we generally
Genuinely would have enough data to decide to be uncapped it that that'd be great
But I guess if I think I can say it'd be great compromise for at least for me
Anyway, that is worried about you know, winning in the long term
And and just to be clear to you like, you know, I want to be I want to hold a run for the next few decades
You know, I I view rune as the ultimate running nose as the ultimate passive in complaint
We're going to the next phase of the technology adoption cycle that the s-curve where you know
The majority of the population is going to come in
The normies are going to come in and ruin is exactly what they're looking for. You know, it's an easy sell
So it's it's an ETF on crypto. They can earn yield on it
You know even in the top 50 for them that's going to be considered a high risk, but this is what they're looking for
For me with lending it just it it removes that it makes it it makes it risky for them
And then for me and it forces me to sell at some point or to trade it
It turns rune from investment into a trade and so for me speaking selfishly, I want to be lazy
I want to just buy and forget my rune
Just have keep it in nodes for the next few decades in fact yield
But now I'm like, you know what this leverage and liability I get to trade this
I got to keep an eye on it. I get a look to get out and send the sidelines for a year or two before
That's my concern. That's that's why I'm bringing all this
And that's and that's a valid concern to have right and I think your concern is is one that other people share as well
Like I'm not trying to dismiss. What is what you're saying valid point, right?
So we're gonna nodes have already noted. We're gonna burn the 60 million
Yeah watch lending over the next
Six months or whatever the time frame is whatever it's going to be and then you know one day we'll have the caps again
that's I hope that's the case and
Then we'll the network will have to determine what they want to do
And in my opinion if we're gonna go further beyond where we are now in terms of the caps
I'm this moment at least I'm open to changing or
Looking to new viewpoints or information
But is to change the cap system to have a derived asset cap
Right so that we we protect the amount of like net room that can't exist like holistically in the sense of
Doesn't matter and then we create the incentives for people to leave when we want them to leave to create the balance
We're trying to create in a sense
So and you can vote at that time with your dollars or your room rather and your nodes or whatever it is you do
Vote against that or vote for it or whatever, but that's definitely gonna be a worthwhile conversation
At that time whenever that's gonna be
For sure. Awesome Charlie. Appreciate you going over this with me and I'll get off. What was somebody else talk?
You're welcome kid. Well, yeah, thanks for coming on Ken
And also like yeah, I mean it is pretty early to be talking about it like completely on
Uncapping lending and just going forward and like, you know, just not not going it
But just like removing the training wheels off because it is a very new feature
And this is really the first like foray into really scaling it that we're seeing
So there's a lot of data yet to be collected on this and like, you know
obviously like things are being implemented in a very
Conservative way where we already have this lending lever that only puts up
a third of the the total rune cap into the amount that can be they use this collateral for lending and
obviously like look raising the raising the CR or
You know, I'm saying but lower lowering the CR also does that does the same thing in
Removing risk from the protocol and then of course like what Chad saying about the derived asset cap
That that like what that does and that's something that I've been really looking into as
Feature for what I wouldn't really call a safety mechanism for lending and
Making it so that the the borrowers are really taking on some of that
That risk where they're not just like well if you're entering at an inopportune time for the protocol then you can do that
But it's you know, it wouldn't be advantageous to you might not get your full
Collateral back so like doing just making more safety mechanisms and like really just validating the data
And we're gonna get over the next scaling period which will probably take you know
Many months to you know, get up to any kind of cap there and just like validating that and see where it's gonna go
It's like the most you know productive way
to go forward and of course like
You know, we're always having the discussions about how to keep features safe and like, you know
Not over scale the protocol on you know
Things like savers and and lending is obviously like I totally agree with you Ken
Like I mean, I mean I feel personally the same words like yeah
I just want to buy ruin and you know
Keep earning earning fees from all that trade volume going through the network and you know people actually using it to do cool things
So totally in agreement with you there
Yeah, I just want to say thanks to Ken for coming I kept it for coming up and and praising his viewpoints and ideas and and having
a good harder conversation
And debate on the topic and I do appreciate doing that like in a space because like it's hard to do that shit on Twitter
140 characters one vote and it's even it's also hard to do it in discord because it's like 12 people talking simultaneously and it's just
So I do appreciate doing it in a form or medium where you can really I get like I'm really good conversation going
Cool cool anyone else got questions want to send in any requests
Or you guys have any other topics in the meantime
guess so the only other thing is so like this whole blending thing was brought about because
you know this the scaling of lending protocol is already kind of happening right now with the CR being lowered and
The standby reserve will be burnt to the next thornode version and with that we're also gonna see
trade accounts trade assets, so
that's something to look forward to in the near future probably the next like two weeks or so and then we'll see our I'm starting to
To trade assets which obviously it takes no fees to get in and out of trade assets and if they're twice as capital efficient
So that'll be a cool switch to
Moving from the current synthetic asset model which uses dual liquidity and to the trade account model, which just uses
extra space under the liquidity caps
Yeah, we kind of went into it a lot on the last space so many people want to like learn more about
Trade accounts trade assets. I would just go back and listen to the last one
Yeah, unless anyone has any questions or you know, let's talk about anything else
Yeah, I don't think anything else I have to talk my mind at least
Yeah, and eat Denver I pinned up the
Event that we're gonna do the happy hour. That's we're doing it in Denver next week on the 29th
We're going to the Catbird
Hotel rooftop from 538 30
mountain time a local time there in Denver and so if you guys if anyone's gonna be out in East Denver then
Definitely just RSVP on the Luma and let's you know, let's get the community out there
There's already time people that already signed up and much people from different protocols and you know wallets and like, you know
People that that we know in the space and like obviously be great to have the 13 community out there
We got some we're gonna have some good good food music and drinks and company. So it'll be a good time
Yeah, see I'll see you all there anybody show them up I'll see there as well hang out and grab a beer again, sir
Right, sounds good. Well, we'll call it here and we'll see you guys next week in Denver. Yes. There you guys see you guys