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Ungovernable Podcast p. 21 – Derek Barrera
Recorded: June 26, 2025 Duration: 1:02:27Space Recording
Full Transcription
Thank you. Music Thank you. Thank you. Thank you. Thank you. Join the ungovernables.
No filters, no apologies.
This season, we're cracking open Uniswap governance.
Welcome to a new episode of the Ungovernable Podcast.
Welcome, welcome, welcome to a new episode of the Ungovernable Podcast.
Today, I'm joined by Derek, the founder of Steer Protocol.
Today, I'm joined by Derek, the founder of Steer Protocol.
Derek has lived every layer of the Web3 stack and now builds AI-ready liquidity infrastructure
across 30 different chains.
I'm Austin from Alpha Growth, your premier DeFi operations and growth firm.
Derek, thank you so much for joining us.
What else should the listeners know about you?
I think we might have got you on mute.
Wow. Great start. Been in the space since about... It's a great question.
Been in the space since about 2016. Started out in wallets, which is really exciting. This was
before wallets really had multi-chain built into them. You'd have a Litecoin wallet, a Bitcoin
wallet, stuff like that. We eventually built out one of the largest multi-chain wallets out there,
which eventually got bought out by Voyager Digital. And then I went off to become a CTO
and build out indexes and big data pipelines and everything prepped me for what my big build was,
what I guess was a steer protocol, which I'm very proud of. So excited to go through all the stuff
we do there. I love it. And to take us back a little bit further, when was the first time you
ever heard about Bitcoin or blockchain and what was your first interaction with it?
Yeah, it was interesting. So I worked in tech since 2008 and then eventually started working
at Capital One doing some of the stuff for them there. And that's really when I realized
like the intersection of like basically tech and finance. And I was like, wow, these guys are all
really rich. I should probably go into this. And that was actually right as I started like learning
more about money. And like when you get money in your savings account, they're actually making way
more money off of what you're getting in your savings account. And I was like, this seems weird.
And then I got introduced to Bitcoin and I was like telling the guys at Capital One,
like, oh, you guys should buy some Bitcoin.
They didn't do it.
They didn't do it.
But yeah, that was kind of the first thing.
It was around 2016, 2017.
Okay.
And then when did you make the jump from traditional finance?
Pretty quickly.
2017.
Yeah.
Basically, within six months, my friend, it's a funny story. My friend actually,
I know his girlfriend or now wife at the time. He was like writing on a whiteboard in his car
explaining blockchain. I was like, hey, I'd like to talk to that guy. He was working at the wallet
company during the ICO boom. And I was hooked. And so I joined them shortly after.
Okay. That's, I mean, that's definitely a journey.
It sounds like you've hit a lot of different areas in the blockchain space.
And it's great to have you on here.
I've seen that you have a background in political science, computer science and marketing as well.
So does any of that cross pollinate in what you're doing with DeFi today or kind of really change and guide some of that perspective that you have in the decision-making day-to-day at Steer?
Yeah, that's a great question.
I would say not the political science.
That did not pay off, but that's okay.
You can talk to my dad about that one.
Computer science, though, of course, I'm a highly technical founder, which is really, really helpful.
Just some kind of understanding, you know, what is a fad, what's not a fad.
If there's a competitor who's saying they're doing something, how are they probably doing it?
And stuff like that.
We've also built one of the most advanced and complex SDKs and infrastructure on top of Uniswap right now that people can basically build LP strategies
on. And I think all of that is just do that technical self. I will say marketing wise though,
it's great to understand network effects, you know, and traditional marketing standards and
like data driven approaches. That's been huge for us because if we didn't have that, we'd be
probably shooting into the wind. So it's nice to have those backgrounds as a founder and some trying to lead the company.
Oh, no. I'm sure too, liquidity, it almost has network effects on its own, right?
That's true. Rewards to APRs to, okay, do people feel comfortable enough to hop into a new protocol
based on the TVL that they have for signaling? So I'm sure that plays a lot into it,
not just in the marketing decisions
for what you're doing at Steer.
Yeah, yeah.
It's funny, we touch everybody in the stack
and I don't think I actually understood that
when we started Steer.
What I really thought I'd be going for
is really the end user who would be,
you know, providing liquidity on chain
and who wanted an easy way to just set it and forget it.
Really, it's kind of the thing. And then you realize that you're working with asset issuers and all the AMMs, and then
you're expanding on to, we're at 43 chains right now. I think we support about 50 AMMs. I think we
have the largest horizontal deployment of this kind of infrastructure in the industry right now.
So yeah, we're the places you'll go. Yeah.
And two, do you feel like you work with more institutional players, especially on the liquidity provisioning side?
Or how do you see, I think the evolution from especially, you know, your Univ2, it was pretty easy.
Hot DeFi summer.
Okay, I got asset A and asset B.
Put them together, throw it in a liquidity pool.
Forget about it.
With concentrated
liquidity, you can do so much more. And I'm kind of curious on your perspective, what kind of
players are coming into the space as liquidity providers? Yeah, I would say everybody, I think
is more the right answer. So like, let's say you have, I'll go all the way up and down the stack for you right let's say you're just a general
user then you're looking just somewhere to get yield right so there's that right if you're an
amm you have markets that need low slippage you would like people to be able to trade and it
should be a pleasant experience right and so for that you need the ability to kind of like automate
the liquidity so it's not stagnant and it's just like a healthy, you know, good looking, good looking spot. And then past that, you have the people who are like, you know, issuing those
assets on those chains and you find yourselves helping them. And then on top of that, you're
connected to the liquid funds or helping, you know, deploy the liquidity into those markets.
So it's really, I would say just about everybody, I think, ends up needing the infrastructure that
we provide. And it's, yeah,
that's what I was saying. I don't think I really understood the deep, like the depth of penetration
for this kind of need, but especially for end users, they're, I think, the main benefiter.
Yeah. No, I mean, I feel like that makes their lives a lot easier, especially with automated liquidity strategies.
For our new listeners who may have never LP'd before, how would you explain Steer in 30, 60 seconds?
Yeah, yeah.
So, I mean, I think the biggest thing that actually causes people to leave AMMs is you go to the front page.
There's like a farm page or there's a yield page.
You click in and there's a bunch of options. You see one that looks nice.
You finally get to that page.
And then there's a decision that you have to make, which is where do you place the liquidity?
At what price ranges?
And those are too many mental decisions.
And usually people get scared.
I don't know.
And it's my money.
I don't want to lose it.
So I'm going to leave.
And so what we do basically is saying, okay, let's strip that all away so you don't have
to make less decisions. And here's a couple of different risk profiles and APRs that match that
risk profile. And you can basically decide where you want to go. And then from there, you deposit
in our assets and we kind of take it away. And that's about it. You come back and you can get
the yield that you accrued from deploying those assets. The one thing that the alternative would be that you'd have to go every day
and have that mental load of determining those ranges and updating that liquidity,
and it's just an operational burden.
So for us, set up to do this daily thing,
you can kind of extract the yield that sits on these chains.
For instance, on Polygon, we have like 10% yield on stable sometimes.
6% from us and 4%, I think think that comes off of Engel Merkle,
which is a rewards platform.
Wow.
So it's almost like a user experience layer,
an abstraction layer for those that want to provide liquidity
into any DEX, really.
Any DEX, any chain is kind of the goal.
So just think of a dex uh we so we
support about 50 dexes uh if not more now um across 43 chains so if it's evm based uh you'll you'll
hopefully find us there and if you don't let us know yeah and so i feel like that's got to be
difficult to just maintenance wise 30 different chains 50 different amms what's kind of the hardest part
for this omni chain infrastructure that's a really good question we have um we have a very
large node infrastructure uh steer built itself as an off-chain compute network first um that was
the that was kind of the weird thing that we did um eventually we brought in our first product on
top of the infrastructure which was was our ALM product.
There's others.
But basically, I think the biggest win was understanding multi-chain networks prior to coming into Steer.
I had built out a brokerage.
I had built out a wallet.
I had built out multi-chain AMMs.
So at this point, it was like, okay, we have to be multi-chain day one.
And once we did the first deployment, it was like, how fast can we,
can we do the second?
Luckily a lot of our stuff is automated and, and pretty, pretty on chain.
But for everything else, it's, it's really just, you know,
making sure that there's alerts and,
and making sure everything's kind of automated, which steer automates things.
So what better way to do it than with your own tools?
Yeah, exactly.
So, okay.
You said deer, the ALM portion wasn't the first piece. uh what better way to do it than with your own tools yeah exactly so okay you said
dear the alm portion wasn't the first piece can you talk a little bit more about yeah we we built
so the idea of steer originally was any chain any action uh any data um and that's where actually
that has made us one of the better alms is if we have a strategy that we launch for instance on base
that has made us one of the better ALMs is if we have a strategy that we launch, for instance, on base,
we can take it to all 43 chains at the same time.
Each chain has different data sets that they need to connect to, different data feeds, just different needs.
And so we have this data connector marketplace.
There's over, like, I think, like 250 different data connections that we can interchange within every different strategy to to help it you know
just work on those other chains so when someone builds on us you kind of build build for everything
okay so essentially you really built this first piece is almost like a way to automate
different strategies or create structured products and then you got into the the decks or the amm side of that with steer is that
do i have with with the alm product yeah yeah okay that's correct that's correct um yeah uh we
were originally incubated by sushi swap so there was a little bit of a nudge uh in in that direction
um but since then i have grown to support you know tons of tons of chains, tons of taxes. Yeah. So have you grown into other facets?
Like, let's say, like options engine, you know, perps trading.
Is it the primary focus with the AMMs or are you growing in any other direction as well?
Yeah, yeah. I mean, the biggest one is incentives and lockups.
I mean, that's just the second thing that came, right?
It's like, hey, now that we have these things, we should incentivize them. So that's why we have a fair share of robust infrastructure for incentivizing or helping teams who have like B33 DEXs to distribute those rewards back to those users.
actually are just wrapping up audits right now with a partner called Strike, who enables options
on top of V3 liquidity. So right now, when a team comes to us or a partner comes to us,
or even a user, because we're permissionless, comes to us, when they set something up,
it's always a spot market. And soon you'll be able to do spot and options with the same
amount of money. So it'll be really, really exciting to hopefully start having these options markets on really any asset on any chain.
We'll see how that kind of blossoms and see how that goes.
Yeah, it sounds like really an all-in-one hub to get everything set up.
I'm kind of curious too, are you like hand-holding people to create these strategies
or are you more providing that infrastructure to
let people create those, those strategies? Yeah. Yeah. We're unique. Yeah. We're uniquely
the only permissionless ALM in the industry. Um, everybody else, usually you have to go through
like some sales process. You can go to the app today. Um, there's actually a quick, uh, mode
or there's a more advanced mode, but, but anyone can do it. Um, some teams will reach out to us
say, Hey, what do you think is best?
Or help me with this tool.
But for the most part,
we try and be as permissionless as possible.
So we have about 20 different strategies
that you can start using in under about 30 seconds.
That would be the...
Oh, wow.
And what kind of strategies would those be?
Are there any...
Sure, yeah, yeah. For us, it's like there's so many. So it's like if you're doing like, let's say you have like a certain amount of assets and you want to T-WOP out or in, you can use like a more of a treasury based strategy.
because one of the assets is kind of gaining accumulation of yield.
So it's kind of got this positive skew.
We'll build like limit orders to kind of chip away
and gain more of the LST over time.
We have stable strategies that do like a bell-shaped curve,
which are really, really good.
That's why I think we have some of the best stable yield on AMMs right now.
And the list kind of goes on.
And it depends really on what you're looking for.
Some people really don't want impermanent loss, right? So they'll say, hey, on this side of the
asset, can you help me out? And then on the other side, I'll tighten up. I want to get some fees.
So we'll do directional and permanent loss. We can't get rid of it. That's not a claim.
Can't get rid of it. It's still there. It's just we try and minimize that in a directional sense.
And those can also be be be helpful for people who want to keep more of a ratio.
OK, if you had to recommend to somebody like a strategy that they they might want to start with, like a quick one to test out steer, what would you what would you?
Yeah, I think it's the tried and true. It's a tried and true channel multiplier.
It's our quick mode version.
It's the least amount of options,
questions for you to fill out.
It's how wide would you like to go?
And so you want 5%, 10%, 20% around the current price.
And I think the best rule of thumb is the wider you go,
the safer you are.
And so I always tell teams go as wide as the thing will let you. For people who really want to
put risk and really soak up maybe some APRs, then you can go for something lower. But I just always
give people a general thumb is wider is actually better in these senses. Okay. Yeah. And that makes
sense. And that's due to the fact that... Yeah. It's a very easy example. Okay, so you have Ethereum and I have USDC, right?
And Ethereum's going up and you're feeling great about it.
But I'm feeling kind of down about it
because Ethereum's going up, I have USDC.
So I'm going to buy some Ethereum from you, right?
And Ethereum's still going up,
but now you have less Ethereum.
So you're a little bummed now, right?
But I'm feeling good.
That's a permanent loss, right?
It could be that the price goes back down
and maybe I give it back to you, but you're losing it for a little bit of time and it could be that when you come
back it's actually gone that's why it's impermanent until it's realized and so if you can always make
sure that you're in range and that you're not giving away anything that you don't want to too
too fast um then um then yeah that's kind of the goal So that's why I always say wider is always better because
you're giving it away slower than a person who's tightened it up and is giving it away super fast.
Oh yeah. And I feel like with the past couple of weeks to the market movement,
it's like, okay, if you had a tight range, you're going to end up on one side or the other.
Horrible experience. And so that's not the first experience you want anyone to have.
You just want it to be where they come back and they're happy you know stuff like that so that's why i say yeah wider
is always better yeah and so i believe you have a one thing i've seen is a smart launch feature
sure sure yeah walk us through what what that is and what that flow is from a user perspective
yeah so this comes out of talking with a lot of partners. So
we work with IDOs, we work with AMMs. And the biggest thing is if you have a token that you're
launching, you really haven't thought it, you've been building something else maybe, and the token
is something that's supplementing it, unless you're a meme coin, that's just, that's all it
is. Right. But eventually though, you need to do something else with that token or that token needs a better marketer or whatever it might be.
A lot of times, even the simple create pool flow for users is very scary.
Right. It's just an experience that like, I don't know, it's just daunting.
It's just like it's like a tax form. It's like if you get this wrong, you're messing it up.
Right. And so what we basically said is, OK, let's let's stop doing that.
So what we basically said is, okay, let's stop doing that.
There's also some people who you see they go live and then they get botted or they get sniped or there's some kind of miscalculation or whatever it might be.
So what we said is, okay, let's help them do the create flow.
That's the AMM side.
And we'll also bundle that flow with the ability to pick pre-selected strategies.
that flow with the ability to pick like pre-selected strategies and not just one,
but like multiple diversified risk profiles for your LP that goes in as like the initial launch
liquidity. And that, and that's all basically bottled up into one little, one little UI.
Sometimes if it's like an unpriced asset and you're going to do it against ETH, we'll do like
three-way price or four-way price conversion against some of our pricing APIs to help you. Like another problem is like, let's say you're going to do a launching a
pool called Austin token, right? Against Ethereum. You need to figure out what that ratio is to set
the initial ratio. That's kind of the scariest part. And being able to do it in dollars, which
is usually how people think is it's just much better experience. And so we kind of help people
do the conversion automatically for assets that don't exist because you're going through a create flow
yeah yeah that makes absolutely sense and i i know from like back in early days it's like one
one zero one extra zero and you've messed up your whole token launch yeah i mean that's the sad part
yeah there's no take backsies right so if you launch
it at the wrong price and someone bots you and buys a good amount of your supply or you know
it's just and and a lot of people are building other products right they're building a whatever
it is right and and they don't understand this part of the of and that's okay right but you people
need tools so that they are more de-risked as they go into these decisions, basically.
Yeah.
How do you protect from bots or being sniped from initial liquidity?
I think that's always something that's interested me.
And I just never understood how you could prevent that.
Each chain is different.
Sometimes they're kind of non-existent because it's a newer chain and people just aren't
botting in that sense.
We do have the ability to do dynamic fees, which is really cool.
This is more of a V4 hook actually than anything, but basically allows you to do like a Meteora
style token launch with these gated time weighted V tiers, which is really the biggest thing is if
you maximize the economic risk for the person who's buying an 80% slippage, then they're probably
not going to buy tremendous amounts. And it allows the flow to naturally come into the market versus
just an onslaught of potential buys and sells. Oh, yeah. Yeah, that makes a lot of sense, too, because if you have so much risk on, it's going to
be somebody that's probably part of the group that's going to want to buy early rather than
an outsider seeing a random liquidity pool pop up.
Correct.
As it comes down, those people probably come in more than somebody who's just trying to
come in and get out quickly.
You're going to take 20% risk. You're going to take 30% risk. That's silly. You're probably not.
So yeah. No, it makes sense. It makes sense. And I want to touch on, I think you guys were
doing some very interesting stuff with the AI agent and AI liquidity provisioning
or automating liquidity management. Could you speak a little bit to that?
Yeah, those are actually, that was, that's pretty interesting.
Those are very interesting faults.
I will say that.
There was a vault that we actually just had to reach out to one of our partners about
and we had to recheck the APRs because it was just doing so well.
But basically what we've done is we've worked with a team called Allura and another team
called BitTensor to basically bring in their AI data feeds.
So we have that data marketplace I talked about, the compute network and all that other stuff to the side.
But that allows us to basically pull in both on-chain data as well as off-chain data as we run more data intensive algorithms that you'd normally run on-chain, which is why our strategies are very, very advanced. And so for Allura, we'll bring in their data feeds.
And so what Allura basically does is they'll run like 10 to 20 different AI models to predict the
price, let's say of like USD and ETH. And then they'll do an ensemble model, which basically
determines how well each model is doing and gives you a composite
of like the best predicted value. So you're like basically taking 20 models and getting one
nicely, you know, groomed up value. And that's what we go on chain with.
Okay. So you don't have these live models right now.
Yeah. Is the models in each ensemble live on chain or do you only do no off-chain
gotcha so this this will be off-chain on the allura network we'll grab that from the allura
network and then it gives us an eight hour prediction we can do a four hour a one hour
but we usually go off the eight hour just that's what we do and that basically said and we'll do a
four hour rebalance
so every four hours we rebalance to the predicted price in eight hours and what ends up happening is
majority of the time it's kind of right and so you're basically saying i'm going to sell you
my stuff where it's more expensive like a lot of times all the time and they end up just kind
of accruing the underlying assets. And because
they're just kind of ahead of what the predicted values are going to be. So they're very, very
interesting strategies. And some of our strategies are very like, they're kind of gradual, they don't
kind of like spike around or something like that. But when you deploy these like predictive values,
you find that the strategies actually end up very, choppy because they're making these like very you know interesting decisions so what do you for these on-chain markets
and liquidity markets what do you see are the primary use cases
for ai to get really involved here and who are the the end users
of these of these these types of models these models are like the like the
the ai liquidity management or the algorithmic algorithmic liquidity management in a whole yes
yeah yes yeah i would say the end user is is the well it starts with who's who's issuing the asset
right and and do i have the do i have the ability to even have the tools like this to to get on chain um but i guess that might be first user maybe not end user so the end user would
probably be the communities right it gives everybody um liquidity depth gives you the
ability to know that if i need to sell a thousand dollars of some token that there's a thousand
dollars that i can sell without massive slippage right that's kind of the biggest problem for a
lot of long tail assets.
Usually what happens is you'll have people who can go to an ALM that's not us, who's not permissionless, right? And it'll take them a fair share of means to get that stuff off the ground.
And so most of these long tail assets don't even have on-chain infrastructure to make sure that
their markets are healthy. And so the communities really do suffer because they have these assets that they can't trade. And that just kind of stifles the
entire thing. Okay. Yeah. I mean, that makes a lot more sense there. For, I guess, long-term
vision, because I feel like AI is relatively new, especially in the automated liquidity management space.
Where do you see us going in the future
of AI liquidity management?
Is this one of those things where it's like,
I have one token, I have USDC,
and I'm just like, hey, go figure it out.
I just want to know I'm going to have USDC back.
Or how do you kind of see that those,
the automation piece as well as the AI piece start to
improve and take over more of this space? Yeah. I mean, I think we were doing algorithmic
strategies, right? For the past couple of years until Allura and BitTensor came around,
which allowed us to bring in these dynamic outsourced, you know, models, which is, which is huge. But I think to your point, and I agree with this, is that there's really no way to say,
okay, well, maybe I shouldn't be LP in Ethereum right now.
I should be LP in Bitcoin, or I should just not even be LP in that at all.
I should just be in stables or LSTs or something like that.
Yeah.
That's another mental load that users don't want to know, right?
They just don't, right?
And it would be so much better if Allura had like an ensemble of that, right?
And we could go for that one.
But yeah, we have a product called Toro.
And if you're clever enough, you'll find the domain.
And it basically allows you,
it's alpha, don't put major money in there.
Basically it allows you to automate.
So we have all these data sets,
we have all these strategies,
we have all of the different DEXs and chains that that we're on so we actually have a fair share of infrastructure
that's just sitting there within our within our system uh we basically connected it as like mcp
tools within uh within a uh with a user interface you can connect a smart account wallet login with
you know your your google account or your face or your you know metamask or whatever uh and basically
delegate out you know different tasks like LP.
It can run our strategies in the browser locally.
So you can actually go deploy and do stuff.
So it's very cool.
But I think the biggest thing is that even past that,
people don't even want that, right?
They just want to be able to say,
I want my USCC in this thing.
And it should come back with more money at the end.
That's kind of funny.
I feel
like people just want to have things super simple, like a limited amount of options.
They don't want to have the decision fatigue. And if they can put asset in, get a certain APR out,
they're happy with it. And oftentimes I feel like a lot of like the retail users don't even check what APR they're really getting at the end of the day. Yeah. I think the biggest thing for LPing is more
risk profile. It's like, do you know what you're getting, like the risk that you're getting yourself
into when you do this? Some of them are riskier than others, right? And some, you can make a ton
of fees. Sometimes you could, you could not. And I think knowing that getting into it is just giving people a better chance of doing it more.
Do you believe that humans will always be involved on the risk side?
No, we know. No way. No, I can't be that way. Right.
Like it means it's kind of silly. Although I will say that, like, there's like the intuitive approach.
Right. Of like, hey, I know that Tesla is going to go up in a year from now so i'm going to put a part of my
portfolio right and then there's the the programmatic approach that might not see that
tesla is going to go up or hold it due to whatever signal that comes in and you know who knows who
knows what will win but i would say ai know what that might be versus you know running both and not knowing yeah or we just end up using ai every day and then our brain rots and yeah we're just
passing to it all the time i don't want to be talking to an ai all the time we got to get out
of that mode i love the i love it how it's working right now but it's just like i feel like this is
like the intermediary to like probably what we end up doing because it just seems it seems kind
of silly right now.
Yeah.
It's like emailing yourself,
you know,
it's like,
Oh yeah,
exactly.
It's like,
okay,
you're not even allowing the capacity to,
to let yourself sit there and mull over something.
Or you have to constantly figure out how AI can think for you rather than
you think for yourself.
Correct.
Yeah.
That's a,
I'm sure we can go down a pretty deep rabbit hole there.
But I want to know from you, Derek,
what are you most excited about for Steer and what's coming up with Steer?
Yeah, we have a bunch of really exciting
chain launches right now.
Just launched on PeakChain,
so a machine-based peer-to-peer payments chain.
There's Oku over there as well.
So those who love the Oku experience for Uniswap,
come check us out. We also are launching on Saga Chain, I would say probably in the next two weeks
with support there. So if you are, again, an Oku user, we'd love to see you. We can help you out
over there. We are going to be launching on Ronin Chain, I believe also in about a month.
going to be launching on Ronin chain, I believe also in about a month. I'm so really excited to
to be part of that. And basically every month or every week we have some kind of yield program
running across our partners. So if you have assets in your wallet, which you're looking for yield,
we definitely have a home for them. Depending on your risk profile, there should be a bunch of
different options for you. My general preference, if you're going at it alone through our permissionless system, wider is always better.
And then once you get comfortable, it's not too bad to learn. So excited to see you.
No, I love that. A lot of exciting stuff coming up and definitely to remember to go wide
before you go narrow. I wanted to dive in a little bit with you derek on the uniswap
side so how is steer integrated with uniswap first off sure so we support uniswap on every chain
uh i believe that they're on um currently on every v3 deployment out there as well as all the oku
chains as well um so we're the widest i I think, deployment of ALMs in the space.
Supported them, supported Uniswap, I guess maybe two and a half, three years now on the ALM side.
And really excited to be also day one partners over on Unichain.
We have three hooks that we've developed, most of them currently on audit, but
we have some work that we've done to enable KYC AML pools for more enterprise customers
through Coinbase and Kraken, which is really exciting for people who have like Coinbase
One accounts and stuff like that. You'll be able to get access to those liquidity.
then we also have the ability for you to um provide tail of the assets when you lp one of the biggest
things is it would be great if the liquidity that's inactive would be active elsewhere maybe in lending
markets maybe in bridge networks and stuff like that and so what we allow people to do is connect
the traditional lp experience with additional yield sources that are generating other types of things for tokens.
So tokens have issues potentially getting bridge liquidity or sometimes having lending markets.
So you can basically connect those markets to the back ends of your AMM pools and basically get the best of both worlds.
So you pick the ratio of how you want the money to go.
And when the dollar comes in, we'll break it apart and we'll place it basically into those two places. I mean, that basically just frees up what usually
is inactive liquidity into those other yield sources. Okay. And so, okay, you said KYC pools
and this one is more of like rehypothecation. Yeah, we're not looping. I mean, that back and
stretch, it could be, hopefully not, but just for the goodness sake. But basically, yeah, you also for protocols and asset issuers, the ability to
kind of spin up those secondary markets. It's very hard. Let's say you want to do a lending market.
It's hard enough to get your liquidity for your DEX. You have to do the same thing for lending.
So this allows you to kind of do both at the same time.
Oh, wow. So what use cases are you most excited for with that?
Because it sounds like you can do a lot more
than just park it into a lending market.
Yeah, yeah.
We've had a couple people come out to us
and basically look for looping.
I think it's the biggest one.
Some are trying to basically use it
for options liquidity as well.
So basically take it from a steer strategy that's maybe for a spot market and then reuse
some of that to go enable a options market or basically provide liquidity for liquidations.
Um, that's another big one.
Um, if there's an asset that has a lending market, there needs to be like, like a depth
enough within the AMM market.
So there can be like a a like an efficient liquidation
um so you can basically help kind of break some of those edges over and give you a little bit more
depth uh to help in those scenarios as well okay that's super exciting i feel like we're just
starting to see a lot of these use cases review for hooks uh start to come out i think a lot was
vanilla and now we're really starting to see these very interesting use cases as you're talking about with the
or multiple rehypothecation to really utilize that liquidity completely.
And really start doing something with it. And I think the expressiveness of the hooks is really
what gives these developers the power. Yeah. And how did these like V4 hooks play into your other strategies for steer?
Yeah, that's a big one. So one thing I realized when we built the hooks, it was like, oh, we still
need the ALM. It's like, you still do. It doesn't go away. No, it doesn't go away because there's
other strategies, right? You need external data sources and you need to be able to just do some
compute. And that just doesn't exist on chain. So for a lot of the stuff for our hooks it's the same alm setup where you can do
kind of like any curvature into a market so we kind of curve liquidity um but uh but it updates
every swap so our alm doesn't have to be there to to basically be the back end which it which
it currently is for v3 so it actually makes all the markets that we do much much more efficient wow that's that's awesome so um i guess i want to ask if uniswap were to introduce
hook level fees how would this impact steer and strategy economics there are they thinking about doing that no i'm just kidding uh that's interesting um i will say that a lot of times a lot of uh a lot of people like dynamic fees i think that's
very popular topic for for a lot of people who look at ams right okay dynamic fees to me are not
good they just aren't good i feel like if you're in a stable pool and there's a fee that's 0.0001
that's crazy it just makes no sense where are you gonna make the money a stable pool and there's a fee that's 0.0001, that's crazy.
It just makes no sense.
Where are you going to make the money?
There's no money to be made to put your money in a USDC pool.
Eventually the fee is so low that you might as well put it into lending
versus the AMM because it just doesn't make sense.
You're just giving it away.
Because, I mean, one very spicy topic right right now which i don't even want to enter
myself into the ring i don't so that's not what i'm doing here so if you who hears this but right
now i think some guy from fluid i think one of the founders from fluid said something about bunny
finance and about bunny has this pool right now that has a geometric curve which is a bell-shaped
curve where the fee is set to like 0.00004 or something like that it's just like an astronomical
small number so they've done a lot of volume i think they've done like 0.00004 or something like that it's just like an astronomical small number
so they've done a lot of volume i think they've done like 28 million of volume or something like
that i saw or maybe double that i forgot the number but they've only made like 40 in fees
so it's like to the end user what are you really helping with here that's not that's not a
conducive environment it's just like you're just getting volume but but for what, for what? Right. So dynamic fees are just a weird, a weird environment.
I think, you know, having those static fees also gives the users the ability to say, okay,
when, when I route through this pool, I know that I'm getting a route with this kind of
fee.
If an additional fee comes on top of just real quick, if an additional fee comes on top
of dynamic fees, you're taking a sub penny out of a sub penny.
It's just, it doesn't make sense. I fees, you're taking a sub penny out of a sub penny. It's just,
it doesn't make sense. I see where you're coming from. Maybe you could school me on this because from my understanding, dynamic fees were to help with impermanent loss.
So if the market's moving in one particular direction pretty quickly, you're not able to
rebalance or remove those positions. Seenlessly,
you're making enough fees that, hey, it's okay that you aren't capturing that value in other
ways. So it's protecting against impermanent loss. I kind of see what you're saying, but I would love
to hear your take on that. And then I'll have another point. Sure. I mean, fees never account
for a permanent loss. They just won't. Right.
So like you're going to sell one asset, right? Let's say you say one within a range, right?
Yeah. The fees that you make are not the whole, never the whole. Because when I do a swap,
it's always a portion of my swap. Right. So like a directional fee, right. Even for an IL perspective,
it's never going to pay off the IL.
So you're just kind of like maybe helping the situation, but only if there's like really good volume.
See what I'm saying?
It's just it might not actually do like as much damage to the actual damage that's been done kind of thing.
It might not help as much as we think.
I mean, I know that there's studies and they've done the math.
I've seen the charts, but I've lived it and I just don't know about that.
Well, and I guess I see the economics behind it too, right?
If you're the lowest one, you're going to get most of the volume.
But as soon as you're above the somebody, that different pool, the threshold, the pool that doesn't have dynamic fees,
they're going to capture all the volume. So you're only capturing enough volume and really hurting everybody else for fees and not so much capturing more fees than everybody else.
Than everyone else. Exactly. And that's why everyone makes less money on these dynamic fees.
And it's just, but the thing is, it's really the LPers who need to make the money
so they keep LPing or they're not going to LP.
So how do we-
But then you have Uniswap X, right?
Which sometimes fills with other pools
that aren't the LP pools of Uniswap on the chain.
That's not cool, right?
Like if I'm an LPR,
I don't want to be the last person that's used.
I want to be the first person that's used.
And that's the same dynamic fee problem where it's like, I don't want to be the last person that's used i want to be the first person that's used and that's the same dynamic p problem where it's like i don't want to make less money i want to
hopefully make a little bit more money because that's everyone says lp is hard everyone says
lps lose money everyone's like always down on lps just like well don't hurt the situation like you
know help these guys make more money how can we do that because i feel like what it's a slippery slope right if lps aren't
making money then that hurts the rest of defy can't have as high of caps in lending markets
the other markets within the defy ecosystem aren't going to be as effective because you have such low
liquidity or they have higher risk now because you can have larger, I guess,
bad actors coming into the space and damaging some of these different protocols. So how can we help
liquidity providers make more money? Yeah. I don't know. I'm trying to solve it.
I think the biggest thing is the way that we do it. I think one is the strategies that have
the impermanent loss kind of inside its mind where it's like, okay, the asset's going up.
I shouldn't be selling it as fast, right?
That's the biggest one.
It's like, let's widen the range if it's going in a direction where I think like if it's USCC ETH and ETH is going up, let's sell ETH slower, right?
Let's not give it away so fast.
it away so fast that i think is the biggest one for people because if you can like minimize to
a point some part of the il that way that's more material than the than the dynamic fee that you
were talking about for sure 100 then the second one is like this incentive wheel that we're all
on is horrible and i started in 2017 when i joined and we're still doing it and i've just accepted it
i think everyone else has accepted it's terrible though terrible though. Like, why are we doing this?
So we have a product called Smart Bonds,
which allows protocols basically to say,
hey, look, I have a governance token.
If you have a dollar of liquidity,
I'll give you a dollar five, right?
And so after I'm done renting this liquidity,
which is what's being done right now,
you'll end up actually with some liquidity
within your treasury.
So then you can maybe narrow those ranges.
You can take that risk, right?
You can go do whatever it is to hopefully support that liquidity structure within your
market versus right now, they stop doing the incentives and it goes away.
And so more incentives get poured on.
And now it's an incentive war between protocols, right?
So I think it's letting people get off that hamster wheel is one part of it.
And the second one is trying to help LPs with like better strategies than like a 50-50 mix.
You know, up and down.
That's not the strategy for sure.
It's very much game theory.
If one chain, one protocol is doing incentives, then everybody else is losing.
So it's like we all have to stop at the same time.
Yeah.
And you see it with a lot of L2s, right?
A lot of L2s, TVL graphs are like bell-shaped curves, right? And there should be less of that, right? And so how do you kind of
have that everlasting liquidity on those chains versus letting it all drain out? Yeah. Okay. I
appreciate that. I wanted to touch back on like the V4 hook building process. What were some of
the underutilized resources you're like wow i
really wish i would have known this at the beginning um from that and then also what do
you feel like is missing to really help builders build cool before hook projects or the next killer
killer app that's a good question there is the uh there's like the V4 hook DeFi dojo. I would say it's a
telegram group. I'm not too sure how I got added to it, but I'm really happy I did. It's a lot of
DeFi V4 hook builders basically talking about V4 hooks. If you follow me on Twitter, I will find
out after the show and then I will tell you on Twitter somehow how to get there. But basically
very, very good resource. So if you have an issue on before development, there's Uniswap guys in there,
there's other supportive teams that also worked on before hooks are willing to answer your
questions. I think that really is like a treasure trove of just like real people that you can go
talk to and get support. So that right there I think is number one. Number two is there are a fair share
of GitHub repos out there that have shown off. Here are some examples. The examples are okay.
I would say the best bet is you really got to dive into the Uniswap code. And biggest information
is that the docs don't say everything, but the code does. So go read the code, don't rely on the
docs. Yeah, that's fair that's fair
what what do you feel like might be missing to help these v4 hooks projects grow could it be
you know a repository of different v4 hooks or like a separate front end that that showcases
these v4 hooks like what do you feel like would be a great way to help some of these projects grow
i will say that we're we're in development we have we have not listed on on the uniswap ui so a lot of the stuff is basically in audit or in preps for
audit um so but from what i've seen so far is the biggest thing is once you get done with your hook
you know the the ability to get listed within routing is is the biggest challenge right because
if you don't do that you're really not going to get any flow um and so the biggest thing i would say is the biggest
challenge right is is that for a lot of teams and i feel like finding a way to get it permissionless
or democratize it some way better right so it's just less of a burden maybe on the foundation or
the labs i'm not too sure who deals with it but i know that that's been a kind of a struggle for
some of the other some of the other protocols and i think that for, for the next people who come on board,
I think is the next step just because it just allows for flow to start
hitting those,
those hooks.
Oh yeah,
exactly.
And how do you,
cause I know there's been a,
like one vulnerability with one B4 hook.
How would you're in Uniswap shoes?
How would you like deal with that?
Straddle that balance because right.
You want to have,
I will say they do have the Uniswap security fund,
which you can apply to.
It's a monthly occurrence.
You can apply through it.
It's managed by a company called Aretta and they provide audits for,
for hooks basically.
And it's,
there's a,
there's a verified vendor list for V4Hook auditors.
I've talked to a fair share of them, and they're all actually pretty good. Some really,
really understand V4Hooks. One of those is like Balasek. Those guys over there, I sent them our
code and they're just like, wow, we can go through all of this. And they really had very,
very valuable pieces of information they could share right off the cuff.
So I think for, for, for Uniswap,
they already have a really, really good security fund.
I have heard that they're also doing a potentially like secondary reviews
just in their core team before they let hooks go live.
Cause I think cork happened and sorry,
the other protocol happened and they were kind of like,
let's see if we can just tighten the hatches.
So I think from what I'm hearing,
they're doing all the right things, right?
So yeah, but I will say like audits
are never a silver bullet.
That's the kind of a hardship of an audit.
It's a very expensive thing to do.
And once you get it,
you never know if it's like, if it's fail safe.
So yeah, it's a tough one.
It's a tough one.
I will say that our protocol has worked with like Nexus Mutual and OpenCover.
So you can buy insurance on any of the assets that sit within Steer.
That would be for contract risk for any of our contracts.
I think that's the, like there needs to be a solution, right?
So like if that's the problem, right, what's the solution, right?
So you can buy insurance on certain contracts.
And I know that a lot of insurance providers would back a hack of Uniswap or something like that
if you were to go buy coverage there.
No, I feel like that's a great solution
or even like a open bug bounty
for different V4 projects
where you have people actively,
you know, double checking constantly
because things are going to be evolving.
Markets are going to be evolving
all these different integrations
and it's going to be hard to cover all your bases
and expect no vulnerabilities to come through.
You're really only as strong as your weakest link.
And when it comes to having people build on top of you,
it's just something that's hard to contain.
So totally get it from the side of like,
hey, let's wait to turn the switch on in terms of routing.
But I think a lot of you4 projects have been asking about it.
I see.
I see what you're saying now.
That's a fair statement.
That's a fair statement.
Yeah, I don't know the solution there.
I don't know the solution there.
I just feel like that if you pass a certain test,
you should just get listed, basically.
It's kind of the thing.
Like for Uniswap, the big thing for Uniswap V2 and V3 and V4, right,
is that any asset can list and they have their life right it was the
permission list of uniswap which made it so beautiful right so you can't have a permission
list a permission system for developers to onboard themselves as as developers onto your
expressive network right that's that's a tough one right because now there's a worse process
for builders than there is for asset assures
yeah that makes it tough because if you really want to be more of an infrastructure product
rather than a dex you have to you know lose a little bit that's what i'm saying i think there
should be a standard right there should be audits there should be a fair share of stuff but i feel
like one eventually you need to you have to kind of like let them go
it's kind of like you know apple in the app store right if you hit check all these boxes you're on
and then it's almost hey we're hands-off liability and it's not like it's uniswap's fault if if a
uniswap pool was hacked right with a hook with a hook in it that's not uniswap's fault it's just
not right so it's like blaming eth Ethereum for a hack on on mainnet.
Yeah. Yeah. I mean, I mean, if I thought, yeah, it's an unfortunate event. No one should ever get hacked. That's the worst. Right. But yeah. Yeah.
That makes sense. And Derek, I'm kind of curious, do you participate in governance at all? Because I feel like, you know, you have all these relationships with different blockchain networks, different DEXs, AMMs,
different protocols. I feel like that would just be something that Steer yourself would be
participating in, but I don't know if you have enough time to be doing that as well.
No, I don't. I don't. I always, it'll be like every quarter, I'll think to myself like, okay,
let's get into some governance. I just haven't done it we've done some for arbitrum that was really really good for us um uh usually we are part of other people's dow proposals just
as like a back like we're part of the engine or something like that um but no i don't i if you go
to a you won't see derek uh as a as like this active voice in the governance but it should be
and so maybe maybe i need to be do you feel that v4 project should have an active voice
in the dow on the dow yeah for you to swap dow oh that's a weird one i mean
no probably not okay and why is that i'm just curious uh just because um
i don't uh i don't know if I should be controlling any of those decisions.
I understand that it's a DAO.
I understand that.
But if you open that door, a lot of people will be selfish about it.
They're like, oh, well, then I'm going to push this.
This is what it's going to be.
I'm going to king make myself or whatever it might be.
And by not allowing that door to be open,
it allows them to just not have that influence.
And I think that that's kind of better than,
than having potentially like this lobbying policy that could maybe get you into like certain, you know, voting patterns.
That's fair. That's fair. Yeah.
It could be very easy to collaborate amongst V4 projects.
And that's kind of like giving Apple stock to app stores.
Yeah. Yeah. Yeah. Yeah. I mean, I, I don't like, I think you should make,
you could do fee revenue shares. You could do a bunch of other things,
but to allow them to,
I guess I would say that the Apple fee would have been brought down a lot
faster. So that's true. Yeah. Maybe nevermind.
faster. So that's true. Yeah. Maybe nevermind. Okay. So maybe I want to touch on treasury
aspect that you brought up smart bonds. I think that's a very interesting model with protocol
on liquidity being something that, you know, either DAOs or treasuries or liquidity providers can really
focus on to, or protocols themselves to really focus on to get that liquidity rather than
incentivizing it. How do you think the Uniswap DAO could possibly leverage this?
Oh, sure. I mean, look at Unichain right now, right? I mean, a lot of people are talking about
the massive extent, like incentives that are going on there. Right. And the sustainability of it. And we're on like 43 chains.
So we've seen the lifecycle of chains over and over again.
And there is a certain lifecycle that happens depending on the each decision put you on a different path.
But eventually there's there's like certain paths these people go on or these these chains go on.
And I think the biggest thing is if you have a lot of
volume and you have a lot of people active in your community you should try and acquire some of that
if you look at like uh polygon they have a new chain called katana right uh well even prior to
that you had bear chain and before that you had blast but the idea basically was that the p33
style situation give ownership to the to the users to be able to vote and then let's also
um try and have some chain on liquidity or some like pre-deposits or something like that that
allows you to have some kind of just like pol or protocol on liquidity um some call it pol some
call it col or chain owned for katana um that is pretty good because you know that that liquidity
is going to be there after the hype
cycle, right? And for Uniswap, I think the biggest thing for them is, you know, if you use smart
bonds, right, or you were to use your assets to maybe pair with other assets, and then if those
assets go, you know, in certain directions, you could then, you know, I don't know, do buybacks
or whatever it might be, that allows you to start accumulating treasury and stuff like that versus right now i would hate where the incentives end and there's nothing to like that that they
haven't accumulated some some of the well some of the underlying lp right like if i mean they're
doing massive amount of incentives like you're telling me that at the end of the month you don't
have at least one million dollars of lp which you've accrued from those incentives. Right.
Because if you don't, then they're just going to leave when those incentives leave.
Right.
So that's my biggest worry.
And I'm sure they'll think of a solution there or they can come talk to us. But that, I think, is the biggest thing.
It's like, how do you make sure there's sustainable liquidity after these incentives run out?
Yeah.
I mean, I think a lot of chains have seen this, this problem happen where it's
like, okay, we're going to release these incentives. And then once you turn off the
faucet, everything leaves. So especially with the Uniswap treasury too, you're really the only token
that's in there is uni. So how can you start to diversify a little bit and have your own protocol
liquidity for uni chain and be able to park that?
I think that's a very interesting solution.
It's been a weird dynamic for a lot of years because a lot of AMMs have had their own token and had to incentivize teams away from Uniswap.
Because Uniswap has always been the purest and cleanest place to launch.
Whereas if you look at like another
AMM, they're going to give you 20% incentive boost from their own native token. And it's just this
very competitive nature of like, okay, well, there's another AMM, it's going to give you 25%
if you list on them. And it's just like, oh, geez, Louise. But, but Uniswap has always had that,
like, well, I should probably go Uniswap before I really think of other ones, just because of that,
that brand equity that comes along.
Oh, yeah.
It's a place to be.
People know how to use it.
They're not afraid to be able to swap their token.
Or there's a contract change or something like that.
Yeah.
Exactly.
Okay.
Well, I want to ask a couple more questions, Derek. I appreciate everything that you've gone through so far.
I want to look at Steer's future vision.
Let's say we're in 2027.
What KPI are you guys
shooting for and what's what's if you had a magic wand what's going to be happening for steer in
2027 sure that's interesting i mean i think the biggest thing that we found is we started with
spot markets we dab we started to dabble in options so that's going to come live soon we
started helping with a bunch of etf products chain. So different like baskets and stuff like that. So Reserve Protocol, I think is
the biggest one on base that we currently work with. There's a clanker index you can go check
out for the clanker guys who are into base. And another one for like Altcoinist and there's the
Bloomberg 30 and stuff like that. So those are like real indexes that have been licensed by Reserve.
Those are interesting. And so there's these traditional style infrastructure pieces
that are starting to look like the traditional world, right?
Of like traditional finance.
We already see it with the options
that we're doing right now.
The ETFs we helped out with around Eat Denver this past year.
That was rather interesting launch
because we launched like 47 individual market strategies
before that before that
launch we work with all the underlying asset markets as well as the the actual like index
market that itself um to help that on on uni which is kind of cool uh and so i think for us it's
really trying to bridge that gap when you kind of see that with our coinbase you know aml pools
and then the kraken stuff and trying to bridge and say, okay, there's a lot of traditional assets out there that need to come on chain, right?
They don't have any tools.
They don't have the ability to take it out of the qualified custodian on chain without
like losing chain, like, you know, custodial command.
So all of that stuff needs to be like basically figured out.
And luckily we were on enough chains and stuff that we can, you know, talk to enough
people and kind of figure out how that's done.
So for us kind of bridge that gap and hopefully be the backbone liquidity layer for most
the blockchain industry. Let's see.
Yeah, bridging the gap. Oh, I love that. And Derek, thank you so much for coming on. Where can
people best follow your work?
Oh, sure. You can at me, Derek Barrera. It's just my name. Very easy to find. And if you want to find our protocol, we're Steer Protocol, at Steer Protocol on Twitter or at Steer Finance online. But I'd love to love to hear from you. Please check us out. Again, we're on just about any chain that you can think of in your head, hopefully. And if not, please let us know and we'll come support that chain as soon as we can.
please let us know and we'll come support that chain as soon as we can.
Well, thank you so much, Derek. And that's a wrap for another episode of the Ungovernable Podcast.
Again, thank you so much, Derek, for sharing your insights. And for our listeners, don't forget to
subscribe to us on Spotify and YouTube. We're dropping new episodes every single week. Be sure
to follow us on X at Grow Uniswap to stay updated. This was another Ungovernable podcast.
I'm Austin and see you next week.
This was the Ungovernable podcast by Alpha Grow.
Watch all our episodes on YouTube or Spotify or weekly live on X.
