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⚡️ VIBE CHECK ⚡️
Recorded: July 3, 2025 Duration: 1:01:36Space Recording
Short Summary
In a recent discussion, industry leaders explored key trends in the crypto space, including Robinhood's entry into tokenized stocks, the launch of Hydration's Giga campaign, and the evolving landscape of venture capital investment in blockchain projects. They emphasized the importance of adapting tokenomics to stimulate growth and the potential for innovative funding mechanisms to support ecosystem development.
Full Transcription
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. All righty.
Can everyone hear me?
Give me a thumbs up if you can hear me.
Alright, how's everyone doing today? We're doing something a little bit different. We're
calling it Vibe Check. So, just wait a sec. I'm getting feedback, Hold on one second.
Okay, sorry about that. Technical difficulties.
All right, so today we are doing a vibe check. We're just going to
talk about the industry in general. We're going to talk about things like the recent Robinhood Arbitrum announcement, tokenization of stocks. Does tech matter?
Where's Polkadot headed within the next six months?
Tokenomics and inflation and why it's important.
And we're gonna bring some people up here on the stage
to ask questions if they have them at the end,
but I do wanna introduce our speakers today.
We have Ben from Hydration and Flavio from Polymech.
Why don't we start with you, Flavio,
and just tell us a bit about what Polymech does.
Sure. Thanks for having me.
Let me know if my audio sucks.
I haven't done a Twitter space in ages.
But yeah, thank you, first of all.
I think VibeCheck, definitely an interesting format.
I just saw there is like another Polkadot VibeCheck as well,
so we might have stolen the name
but that's uh kind of okay um yeah so polymek is basically a decentralized funding protocol
um we call it also like the primary market settlement layer we are offering different
um primary market opportunities investment opportunities for investors on chain. Obviously, I think we will talk about it more a bit in a second, but also expanding
there to go multi-chain and some other fun stuff that we're going to offer very soon.
Thank you very much, Flavio.
And let's go over to you, Ben from Hydration.
So Hydration is all in one DeFi stack built on top of Polkadot.
So it combines swaps, borrowing and lending, and stablecoin all under one roof.
So by putting everything in one place, you can direct efficiencies towards making a better product
rather than just sort of lending those features off into other places.
So like general purpose blockchains can tweak, let's say,
the underlying block production to make sure that it provides
the best efficient environment for all users.
All right.
Thanks very much.
And before we dive into some of the topics today, just have to say nothing in here is
financial advice.
Always do your own research.
And the views of our guests do not represent the Web3 Foundation or Polkadot in general.
But let's start at the top.
So big announcement this week,
Robinhood, which is, I think most people are familiar with, a trading app for stocks,
announced their entry into Web3, in a sense. And they're offering the tokenization of stocks that can be traded, I think it's around the clock, five days a week. So during the weekdays.
And fractional ownership is something that's not new.
A lot of brokerages offer it already.
Charles Schwab, et cetera.
But Flavio, I just want to get your take on how this has played out and your view on the tokenization of stocks.
Yeah, what a week, right?
I think it was very interesting to see obviously Robin Hood quite
a big player in many different markets a lot of momentum tokenization of stocks in my opinion
has always been sort of an interesting topic but I never gave it too much attention I mean there's
a lot of you know other um projects that are doing something similar, like for example, on the finance, I'm sure there's more,
but you are sort of competing with a very efficient market.
So in order to sort of, you know, provide an alternative
that is very well three driven, you need to be quite big,
especially if you try, you know, to replace the secondary market.
So having Robin Hood come in, I think it's yeah 24 24 hours
five days they will if I'm not mistaken also go 24 7 in the next phase so this will be quite
interesting to observe they want to make it non-custodial I think they're doing their own
chain so definitely I mean for us know, much more in the primary
market, but we do, but also quite interesting. And if you look at, you know, set up structures
here in Switzerland, we're quite famous, I would say for those type of structures. So
very interesting. Got it. And it's only available in the EU as of now. But despite that, I still
think it is a sign of progress for the industry.
You know, regulators are sort of easing up and seeing the potential of this technology.
So I think overall for the industry, it's a great sign.
Is it US only?
No, no, sorry. It's EU only at the moment. Not in the US yet, as far as I can see. But
no, yeah, it's a derivative product. I mean, I think it is, you know,
one of the main use cases of this technology is the ability to trade anything at any time. So
I think we kind of, we're expecting to see something like this happen sooner or later.
Another, well, another even bigger announcement, in my opinion, this week week the giga campaign from hydration uh lots of
lots of crazy stuff being launched by hydration last week i'm going to hand it over to you ben
and just tell us all about it and what can people see if they go to the hydration website
and click around what's new on the site yeah so we've had two pretty big launches in the last week um so starting off uh the end of last
week we kicked off the polka dot giga hydration campaign uh which is essentially a six month
campaign where we're distributing the two million dot we received from polka dot treasury
um as giga dot um as incentives for various um assets so that kicked off, and we've seen a huge spike in TVL as a result of that.
We're now up to about $230 million of TVL,
so an all-time high on hydration.
And we're incentivizing assets such as TBTC, GigaEth,
which I'll get onto in a moment, stablecoins, Aave,
and a bunch of ecosystem assets so there's a mix of
sort of blue chip
large cap coins as well as
ecosystem
assets like favourites like
Astar and Glimmer and
of course DOT itself
so that kicked off on Friday
so we had an exciting weekend
seeing everything rushing through on that and off on Friday, so we had an exciting weekend, seeing everything rushing through on that.
And then on Tuesday, we launched GigaEth.
So people will probably be familiar already with GigaDot that we launched some weeks back.
So we've just now launched GigaEth, which is a sort of a token designed to simplify advanced DeFi strategies right so it's just a token that
anybody can swap any asset for but under the hood it's native ETH supplied to our borrowing and
lending in a pool with wrapped staked ETH which is a liquid staked version of ETH and then that's then deposited as collateral
into borrowing and lending as well. So you get yield from various sources and then we're
incentivizing that with more of the GigaDot incentives through our Omnipool. So that's
already GigaETH sitting at 4.5 million TVL.
So that's one of the most liquid assets in the Omnipool already.
And yeah, it's been great to see huge influxes of liquidity.
And some of those farms have still got very juicy rewards.
So yeah, please check it out.
Yeah, I'm looking at the site now.
So I mean, Aave still at 46% APR, which is massive.
Let's see.
I mean, Link 24%, Dot 15%.
GigaDot.
So why don't we just double click into GigaDot and GigaEth a little bit more?
So just explain why someone would, for example, instead of use their Dot for staking, why
would they come over to Hydration and get some GigaDot instead?
Can you just break it down a little bit bit more simple terms for some of the listeners
yeah sure so um dot yep you can stake it um but if you're staking it natively then you can't do
anything else with it i mean yeah you can vote um but uh your capital's tied up right so giga dot
um is attempting to solve a whole bunch of issues
that we have which is lack of native liquidity for liquid state versions of dot and also
increasing liquidity significantly of dot available in in borrowing and lending, right? So Gigadot combines these into a super concentrated liquidity pool
and allows users to immediately borrow against that.
So you can use that to leverage up.
You can use it to, you know, rather than selling your precious dot
at times when you need dollars,
you could instead borrow those dollars and pay those back in future
if you didn't want to get rid of your dot.
So it just means you can do more with your capital
rather than having it all locked up.
So it's designed to just be one-click solution.
So you just swap it in the UI as you would any other token and it does all of
this underneath the underneath the hood for you so simple one-click solutions there's obviously
no lockup so with staking you you might have you know 28 days of a lockup gigadot you can
immediately earn rewards just from holding it.
And then as soon as you swap it again, you'll stop earning those.
So it makes it much faster and easier to move around.
You're more liquid if you have GigaDot.
Because that 28 days is, I mean, that's a pretty long, you know, that can be a long time.
If you have GigaDot instead, as you said you can instantly uh redeem it or swap it so
i mean in the interface the ui is just super easy you just click on the strategies tab and
follow the instructions um oh and as i'm looking at the site here to 16 on stable coins which is
pretty crazy can you tell us the um just how did the proposal play out so you guys asked for i
believe it was 5 million,
and then you wanted to return 3 million to the Treasury.
And then this dot is, as you said, used to incentivize these farms.
Is there anything else you want to tackle on that subject?
Yeah, I mean, I wouldn't say I wanted to give back 3 million.
But yeah, so originally we asked for five million over 12 months.
And then we agreed with some members of the ecosystem
that actually it'd be better to concentrate on a shorter campaign
for six months.
And then in parallel to that work,
we're ahead of the Polkadot Hub launch,
work on a sort of ecosystem all-encompassing campaign
for after the six
months time so um that's why we originally uh went for five million and then scaled it down
um but yeah so the idea is to bring more eyes to polka dot um at the end of the day more more
liquidity means you can get more builders and more people interested because people want to build in a vibrant,
bustling ecosystem, right?
So yeah, 2 million for six months.
And then in the meantime,
we'll be working with Parity,
Web3 Foundation and Velocity to pull together a more ecosystem-wide campaign
that can encompass the Polkadot Hub.
Because obviously we're all very excited about that launch coming up in the coming months we want to make sure that it lands correctly and that
we can get a lot of cross-chain flows between hydration and polka dot hub nice yeah and as
you said the the whole purpose of these campaigns is to attract liquidity from outside the ecosystem
and i think i saw you post the other day or yesterday that someone had already sent like 30 ETH or something, had bridged in.
Is that true?
Is that correct?
300.
370.
370.
Okay.
Wow.
Okay.
So it is worth it.
Absolute size.
Yeah.
Okay.
Yeah.
And we'd had a few days before somebody had yeeted 10 TBTC as well.
Okay.
So yeah, people just full stacking a million dollars over and this is Snowbridge,
right? So this is using a lot of these pools are using Snowbridge, our light client bridge.
So finally getting some volume and TVL to Snowbridge. So I need to check on the Dune dashboards
and see how that's improved because we should see a noticeable uptick on that.
Okay.
Well,
exciting stuff. And for those that are not already following hydration,
go check out their Twitter.
I'll actually post the link to hydration here as well in the space,
but let's just shift gears now and talk about,
I see,
I see we have Jacob who is,
who is part of hydration as well.
He's actually the founder and CEO. He's, I believe, the founder and CEO.
He's here as one of the listeners.
So maybe he wants to jump in on the next topic.
But I was just curious, Flavio,
from your lens as Polymech,
what are you seeing VCs doing at the moment in the market?
Are you seeing new projects getting investment?
Or what are some of the trends that we see in the web3 industry and market?
Jakob is here to check on Ben, you know, just micromanaging.
No, but first of all, I mean, congrats to Hydration, obviously, quite significant. It's
great to see so much liquidity come into the ecosystem i think
this is exactly what we need and why we want to have those campaigns um now obviously as i mentioned
we are much more a bit of the other side of the coin primary markets new projects you know looking
for funding deploying capital which is a bit more, I would say, risk-on.
And I mean, the landscape is quite interesting, to be honest.
This year has been a bit crazy because you look at macro events,
you look at everything happening on the globe in terms of political conflicts, but also regional conflicts that quite affect, I would say, the appetite for people to invest.
We can also see it in general markets.
It's not a secret, I guess.
Just look at CoinMarketCap.
And that for us has always been something that we observe quite closely.
And we spar a lot with different VCs from different ecosystems.
And I think in the end, there's a lot of different changes
of narratives. You see revenue becoming, you know, sort of this new meta, because now you
have institutional players, financial institutions coming into the market. And it's not enough
to, you know, just have some ideological thoughts and beliefs, but you need to actually have some hard
facts like revenue roadmaps deliveries so I think it's it's interesting to see
this kind of shit now if we go back to like Robin Hood which we talked about
in the beginning sort of solidifies this thought that we're becoming much more
corporate especially if you look at you, tokenization is nothing but a legal setup.
I mean, on the technical end, it's not really that difficult, right?
It's much more about, okay, which intermediaries do you use?
What are the contracts, regulations and jurisdictions?
So it's a bit more the boring side, but it also shows you that there's a lot of confidence coming into the market from those large players and regulators to to deploy capital that's also
what we're seeing on the vc side there's always i would say favorites and narratives
that they're looking into i think right now this is definitely one of them so revenue you want to
see tokenization of everything, you know,
bringing capital markets, traditional markets on chain. That's quite interesting to see. DeFi will
benefit a lot from this. So I'm also curious to see or hear Ben's opinion on this a bit.
Yeah, I was going to ask whether it's Jacob, Flavio, Ben, like, you know, you mentioned
corporations are buying the industry now.
And is that in your eyes a good thing or a bad thing?
I mean, Bitcoin was in a sense a stand against Wall Street
and part of the Occupy Wall Street movement and so on.
So I mean, is this good or bad for the industry?
Yeah, hello. Can you hear me?
Yeah, we can yeah i thought you want some takes on the v2 landscape but can also cover cover this uh this uh corporatization of of crypto so it's obviously
uh i think it's like double sided on on the one hand. It's legitimizing our lovely space,
which had a big ugly stigma of being like space full of scams,
scammers and money laundering and other illicit activities.
and money laundering and other illicit activities.
And it's also, I think, what hold us often back
as an industry that ordinary users
and people are very suspicious when they are hearing
that you are working crypto,
you are offering some crypto based uh solution for them
right so this helps a lot uh it's obviously is obviously bringing more integrations it's obviously
bringing more liquidity on the other hand i need to highlight that people needs to people need to people need to understand that uh corporations are always all about
control and centralization same as uh big corporations are dominating their supply chains
and they're not often behaving nicely to to the smaller fishes uh in fishes in the ponds.
People need to get, especially like crypto natives,
needs to be very much aware of it,
that it's not just nice.
Actually, Robinhood is a very funny example,
because after the FTX fallout,
they deliberately sold user holdings of Solana token
exactly at the absolute pick-a-bottom of Sol deliberately,
because they were, I think, in the process of delisting it,
Sol or something, which actually, like, create crazy losses
to many users as Sol has this crazy comeback
from $8 to $200 or, I don't know, $150 or something right now.
So it's, yeah, I think it's not just, it's not everything just great.
it's not just
it's not everything just great
I think people need to be
aware that
corporations doesn't
share the same values
as we
well I think
that's actually an interesting sort of
philosophical question because you mentioned that corporations
you know
they want centralization and control
obviously in Web3 it's all about decentralization.
But at the same time, I've been seeing, you know, some people mention that maybe a little bit of centralization and organization is not such a bad thing.
I think Flavio actually has been sort of vocal on this topic recently on Twitter or on X.
been sort of vocal on this topic recently on Twitter or on X.
Did you want to kind of just, yeah, why don't you just elaborate?
Again, these are just your views as a private person,
not as, you know, the ecosystem as a whole.
But what was your idea there?
Yeah, I mean, maybe to also go a bit into what Jakob said,
you know, we're not that different to the people from try to fight we're exactly the
same the difference is that their industry is much more mature there's much more money behind it much
more power but they're just you know just as retarded as we are um maybe even more if you
talk about you know legitimizing crypto i would say that everything you can say is not legit about
crypto also happens in traditional markets especially i, that's sort of why crypto and DeFi is so important, right?
Because you want to bring much more transparency.
Decentralization happens on different levels, in my opinion.
about decentralized technology that's a whole different story compared to having business
units that are decentralized or you know having a governance that is decentralized i mean having a
decentralized network is literally what we require to solve those problems of control
but then decentralizing too much leads to chaos it leads to lack of coordination
inefficiency you start spending resources for no reason or even double and i feel like it's always
about having the right balance that's sort of what i was trying to say i was obviously also trying to
bait some people it's always fun you know um but i think that's that's that's sort of my key message
here that you can decentralize a lot of things,
you can build a lot of things, but it doesn't mean you have to, or you should.
Okay, so...
I'm going to get grilled by Jakub.
No, no, no, no, no.
No, no, no, no.
I just want to say that actually I'm preparing to release something about it because that's something
about what I'm thinking for
years, why
DAOs and decentralization is
failing. And I think it's
there is
people think or like people are often
criticizing DAOs that
DAO is a bad concept.
No, it's not. We are
actually not incentivizing in the right way people to take ownership.
And human nature is that people are extremely comfortable, lazy animals.
So when everybody is hand-waving with the term decentralization,
it's basically diluting ownership and leadership
because it's a huge blanket behind which everybody covers.
But what this space needs is a better incentive mechanism
that people can stood up and own various topics or vertical or problems.
Like the same as you even did with the socials, the same as we basically created Velocity to lead
efforts to integrate AssetHub and Polkadot into more custodians, to integrate Polkadot into more custodians to integrate Polkadot native USDT and USDC into more centralized
exchanges and on-rams and off-rams. Same as we actually did Amsterdam. Some OGs might remember
this lovely four-day conference in Amsterdam, which was basically grandfather of WebZero,
after which WebZero basically stood up
as a leader and owner of Polkadot events.
So, yeah, I just want to say that...
So, Jacob, how...
It's not about centralization or centralization,
I think it's about taking ownership.
And people can take ownership either by passion or having a fire in them
to do stuff and solve issues or actually also creating more fertile grounds and incentives
for them to do that. Interesting discussion around how leadership can emerge in a decentralized ecosystem.
Do you think, Ben
or Flavia, that leaders
within
a decentralized ecosystem
like Polkadot, they need
some level of authority to be able to
enact change? And how could
that authority be granted to people?
I'm happy.
Ben, go ahead.
Go ahead.
Yeah, I think the authority, the clout is important, right?
So usually that comes either in the form of you have a high-ranking position
in an organization that's deemed to be important,
or you just have massive bags of whatever it is.
So in this case, dot, right?
Those are generally the things that grant you authority.
Generally, people will follow those that are in one of those positions.
Usually somebody perhaps who's super technically minded
and can combat FUD in a really
efficient way, usually
they can grant a lot of authority
from that as well. But yeah,
not necessarily any
Tom Dick and Harry can necessarily
be a leader of the ECO,
but yeah, those
things certainly do help. Yeah, I think
authority can be ultimately
earned in just two ways.
Either by top-down, so someone appoints you as lead or chief of something,
or just by consistently good work over some time,
some time which i think was our case maybe to add my five cents to it jakub said ownership
which I think was our case.
is very important and that's why you want to have those but i also think that decentralization
is sometimes an excuse for accountability so because you know if everyone is in charge, then nobody is in charge.
And sort of if something that happens, nobody, nobody sort of gets fired, I guess.
And I have a very, I mean, for me, depends what you're trying to do, right?
I saw somewhere someone say that if you try to, you know, go for more for like a nation state model then you want you know people to have power and to
have decision power but if we look in the real world you always elect leaders and it's because
it's not because um it's fun but it's because it's much more efficient and if you need to
elect them in some way i mean it needs to be the best leader i think those are great but sometimes
it's also a lack of option you know right i mean if you have a business that generates revenue
and you have a ceo and you have a structure of experts in their field that is working on a
common goal you are much more efficient than if you have a lot of people that you know
are passionate about something and they want to support it but they might not be the best for it right and in the end
it's a business that's how i look at it if you run a chain or an ecosystem it's not a charity it's a
business and you need to have business structures especially everything around sales bd everything
that needs to be coordinated because i mean it's such a mess if you have so many parties and there's nobody sort of deciding.
It's just a circus.
Right.
And kind of interesting point.
I mean, just because you have a CEO doesn't necessarily mean...
I mean, the CEO's role, in a sense, is to just organize all of the people that are very passionate,
to give them direction and make sure things are being done efficiently.
And even if you look at, yeah, sorry.
It's also to take decisions, right?
I mean, sometimes decisions need to happen fast and you don't have time for a governance
vote to happen.
Sometimes things need to be less outside of the public. It all depends.
Do you want to do it for the sake of it? Do you want to be decentralized because, oh,
look at us. So cool. We are decentralized. Or do you want to achieve a goal? And if you
want to achieve a specific goal, then you need to work for it and not just dream about
something that is not attainable yet.
So what would you say is like, what would you like to see?
Just again, this is all from your personal perspective, not the view of the ecosystem.
But like, what would you want to see in the near future?
And I guess that's a good segue as well, where we see Pol dot heading and let's say the next six to 12 months
obviously polka dot 2.0 is um very you know it's essentially finished and then we have hub
launching shortly thereafter allowing for smart contracts on polka dot so maybe this is just a
good segue into like what does the next six months look like for polkaot yeah i mean i'm not you know reinventing the wheel here i mean
look around there's so many successful businesses out there huge corporations there's a reason
they've been successful right and sometimes in crypto we are so opposed to to the status quo
that we want to flip it upside down and we missed the opportunity to adopt
things that work you know even if even if it's a compromise and over time you can always start to
you know decentralize more you need to have a solid foundation a solid foundation of people
and that are incentivized to work and to perform i mean it, it's a business, right? If I hire someone and they don't perform, I fire them.
If I want someone to perform,
I need to have an incentive structure for them to do it.
Because again, they have families to feed.
They want to live a comfortable life
and there's goals they want to achieve.
It's not a sacrifice you want to make for the greater good.
It's not a charity.
It's a business.
And in every business, you have a leader. Why? Well, because it's the most efficient structure
to achieve your goal. If the leader sucks, then you just change the leader, right? And
you have a board that decides we have a new CEO now, because the other CEO didn't achieve
his KPIs. And, you know, this sounds super boring, but that's how it works right there's a reason apple is huge
it's not because they gave every employee a vote that would be so retarded i'm sorry but uh i mean
you know it's not rocket science yeah there is a there is a reason why we ended up with these structures after thousands of years of human civilization, right?
In governance and also basically in corporations, like corporations and companies is another
thing of 20th century, but way older stuff.
So there is a reason why it's basically, it's like, basically it's like, that is like Darwin, like evolution theory, basically the stronger model or space just you see this in nature as well.
I mean, you look at pods of dolphins or packs of dogs.
There's always an alpha animal or, you know, queen bee.
Things sort of evolutionary just fall into like a hierarchy.
So, I mean, that brings up an interesting question then.
Like, could you see a future where Polkadot elects a CEO or like an executive of some sort who is kind of like
the decisive decision maker i mean yes i think maybe i think what's i think what is more most
important is like if uh if it would be like permission less enough or if the process would allow to pick the right person.
So it has a lot to do with the current governance model,
but also like stake distribution, etc.
So I think everything is possible.
But that's the question.
Does it need to be permissionless, right?
I mean, it shouldn't vote for the most popular, you should vote for the best. Right? I mean, otherwise, you know, then it's a different topic that we can just do a charity and start, you know, giving away money and resources. But I feel like if you want to have a good leader structure, I mean, why do CEOs get huge bonuses?
It's either because they perform
or they performed in their previous job
and there's a competition to hire those talents.
It's like football.
Whoever pays the most gets the best, right?
And you need to have the incentive structures
long-term for someone to succeed.
Do I see OpenGov electing a ceo no definitely not um do
i see someone stepping up maybe i think you know i would love to see it why don't you see opengov
why don't you see opengov electing a leader flavia i think it's two reasons one is because
i mean in the end it's whoever has the most dot votes and can decide right
so look at who has the most up and then you know who will decide so why is open needed in that
regard um the second one is that you know it's almost like telling me i should decide who is the
best i don't know person to lead, to be the boss of a bakery.
Like, I don't know shit about baking though. I've never baked the leaf of bread in my life.
How should I decide? But hey, apparently I still have a boat and I can just, you know,
share my opinion and vote on this critical business decision that will decide if we are
successful in the next five years or not.
But yeah, just for the fun of it, right?
Okay, let's switch gears now,
because I don't want to get...
Jacob, let's go to the next topic,
because I just don't want to get too hung up
on the same thing.
But another kind of hot topic
that we're seeing in the Polkadot ecosystem
is this discussion around inflation
and sort of the tokenomics of DOT.
A lot of different takes on it.
Jacob, what are your thoughts on all of it?
Yes, so I think it's pretty clear, finally,
that too high of inflation rate is just suppressing activity in the ecosystem.
Basically, as a DeFi builder or even any application builders, for you, the native staking is basically
hurdle rate.
That means that all the products need to generate more than the current staking rate.
So imagine that dot staking rate was,
or dot staking yield was even around 20% in 2023
or something.
It's impossible to beat.
It's even like, for example, even for PolyMech,
imagine that basically people needs to take into account that if the investment for PolyMech, imagine that basically people need to take into account
that if the investment into PolyMech offerings will make me more than this crazy number.
And the same way, who would be investing in stocks in the US or somewhere if the Fed
would set inflation rate or if Fed would set base rate 8%,
as we have currently in Polkadot, right?
But probably all money would flow
just into treasuries and bills,
and the S&P 500 would be half of the current numbers
or something.
So that would not clearly work.
On the other hand, there are good points
that we shouldn't do the wipe tokenomics
akin to wipe coding and analyze it best as we can
and just ask or talk with as much of stakeholders
in the ecosystem as possible.
So those are nominators, validators, ecosystem builders,
token holders, etc. How it would affect and analyze what would be the effects. Because
also short-term effects, for example, lowering inflation might be negative. So I can imagine that if we would drastically lower the inflation,
it could make some people sell their dot.
Because I know many people, until now,
they were treating dot staking as some sort of passive income.
On the other hand, I personally believe that it's better
to rip Band 8
sooner than later
because on the other hand
we are just subsidizing
crazy sell pressure
every day, every week, every month
and ultimately every year.
Ben, do you want to go first?
Yes, there's obviously the matter of the headline number and whether or not we cut that, but there's also more than that.
In my mind, it's about also how you're distributing that inflation.
So at the moment,
we've got, for example, 85% going to stakers and the other 15% going to the Treasury. You've got a lot of noise around Treasury spends and everyone fighting over this pot. And then there's the big
bad selling of staking rewards endlessly. But what we have seen is that stimulating the economy
through the means of incentives is super effective at getting eyes
and increasing attention.
So I think longer term, we should also be looking at, right, OK,
look, even if we had, you know, inflation at 8%
or whatever it is at the moment, yeah, we don't want to increase the Treasury spend perhaps,
so let's keep that at 15% of that.
But then maybe we want to fix 10% of that inflation
to go towards economic stimulation, right?
Rather than just it being a case of it goes to the Treasury
or it goes to stakers,
actually we should be funneling some of it
towards actually stimulating our economy,
which obviously can have other benefits outside of it towards actually stimulating our economy, which obviously can have
other benefits outside of overpaying drastically for security, which is obviously what we do at
the moment. Yeah, I think it's very easy. I think it's quite easy to do mental exercise.
So there's 120 million of dots being printed every year, 15 goes to treasury,
100 and something is going to stakers.
Like imagine that we would, I don't know,
cut 40 millions from the staking,
20 put into ecosystem incentives.
I don't mean necessarily just liquidity incentives,
but maybe for users of other applications, people
playing games, or mythical, whatever, and still cut something from the inflation.
I'm pretty sure, many other people, that this will actually help poker attraction way more
than just pay for the security of underutilized network because you need to secure something
right this is like i think like currently we are like spending for navy as a as a landlock country
you know and flavio go ahead yeah um i just figured out how to put up my hand um i think
you know i definitely agree with both uh both of you guys
if you look at monetary policy like the us dollar why why do you have inflation why do you have the
fed it's because you want to either stimulate the economy because it's not going well or you want
to preserve it because it's going really well right obviously you cannot apply it 100 to polka
but i think it's definitely a similar tool on other side, you also have validators that need to be compensated
for their work to secure the network, which is very important because I mean, one of the
big reasons why we build a Polkadot is because from day one, we have shared security, right?
So we can have big volume on a big like high transactions on chain that are secured
by the market cap and also by the consensus algorithm right now here I think you know it's very arbitrary which number is the best like is it seven percent is it six five I don't know
maybe we should figure out what what is what makes more sense definitely all the arguments that you guys mentioned make sense in the in this uh
in this case right um but yeah it's all about figuring out what is the best for the
to stimulate the economy um what makes sense and as you mentioned you know eight percent inflation
means you need to outperform perform eight percent on your assets to be not even and this is a lot and i think
sometimes it's a bit too much i mean it's nothing compared to the 20 we used to have i agree it was
crazy but that's why it's always a hard to look back it's even the yield is even bigger because
only 50 percent of tokens are uh staked so the inflation is like 7.5,
but the yield is 10 or something.
Yeah, it's 12% currently.
As Flavio mentioned,
that we need to pay validators
is obviously a legit point,
but also I would like to highlight
one not so nice fact
that many validators of Wofeld
isn't anyhow aligned
with the Wofeld success, quite opposite.
As for example, exchanges, which are some exchanges, which are big popular validators, and they have like tens of validators.
They are actually building competing blockchain ecosystems.
So you can very easily imagine what they're doing with their staking rewards.
like very easily imagine what are they doing with their staking rewards or there are like
professionals validator companies who are also building their own blockchains or contributing
to other blockchains way more to polka dot so i i think we need to find i think we need to find
model where we can like better target validators and nominators who are aligned with success of polka dots and not
and not overpay like pretty much commoditized service of of literally our competition
super interesting points from everyone i mean what would it take i like that idea of
breaking up the inflation into not only the treasury and staking rewards, but incentives for the ecosystem?
What would it take to make that happen?
Probably a governance vote.
I mean, that's literally all it takes.
But even going further than that, I mean, like organizing people to like, you know, maybe, yeah.
I mean, but you know, look, in the end, it's a, it's a valuable resource
that you're distributing and you're diluting.
Oh, sorry.
If you want.
No, I just want to say I would give a word to Ben, because he was actually working on it
from the last year.
It's very unfortunate that such mechanism
actually passed as wish for change and surprisingly silent ways there was like no bus and or like
there is even like almost like zero knowledge about this uh this vote passed and which is which
is like a little bit crazy because for example Beta Chain
had something similar
and at least initially
it brought them big success
I will not comment where the network now
I think it's because of the other stuff
common in crypto industry
but yeah
I would give a word to Ben
who was actually working on this and contributing to this a lot.
You're talking about optimistic funding now, is that right?
Yeah, because that's basically the mechanism for it.
Yeah, go ahead, Ben.
Yeah, so it was pretty simple, really.
We used to have the council model where people would vote for um representatives
right that made decisions um this used a similar model where basically uh dot holders could could
vote and in conviction lock themselves up to decide which projects provided them the most value
so projects would get white listed um so they could be one of these
ones that get to get voted on and essentially the the more of that dot stake you have um sort of
voting for you then the higher portion of uh inflation you would you would receive as well so
it was a way of rewarding the projects that provided the most value to the ecosystem. So you could set it at 10% of inflation goes into this pot and then that pot gets
distributed up amongst projects that have votes for them.
So small projects would get less and bigger projects that provide the most
value for dot holders would get more.
And so that was a wish for change that did pass and then what
happened to it? Yes it did pass and then the years since then we've been trying to get it implemented.
There was a guy from PBA who did spend a lot of time implementing that and in recent months somebody
from the fellowship did start to review that. Unfortunately it i sort of come to a bit of a stop at the moment um but yeah it's it's it's there it's sort of humming in the background
but it's certainly not um let's say had the drive behind it that that some of the other
projects do get whereas it can actually have a huge impact and you see constantly i see it on x
various other projects i think that avalanche
were talking about it recently doing the same thing where avalanche voters would decide how
much of inflation is going towards these projects so a lot of other ecosystems are looking at similar
models and we had the idea first but might not be the fastest on execution let's move on to the last
topic now as we come up on time and I just want to get
everyone's take on decentralized voices. So it's a program that, gosh, is it like a year old now?
I don't know. I think it's maybe coming up on a year old, but essentially different DAOs can get
delegated tokens and they vote on both governance proposals. What's everyone's analysis of how it's played out and where do you think
it's headed? Flavio. That's the favorite topic, governance, right? I think, you know, there's a
reason why it was implemented. And I think that's also the beauty, you know, we initiate things,
we observe them, we adjust, we see what we can do. Same with inflation, right? I think that's also the beauty you know we we initiate things we observe them we adjust we see what we
can do same with inflation right i think that's the beauty of polka dot um now for decentralized
voices specifically i think it's been an interesting experiment such as opengov in general
right i mean that's what we need to look at it how we need to look at it because you know we're
sort of the only ones that have either made
it this far or gone through all those different um cycles of implementing it having uh those or
you know different people that are able to to vote on those topics definitely is interesting right
you almost have like different political parties similar to how you would have it in any nation-state that they are given power to take decisions I think
it distracts a lot right I mean you know its governance or let's say the treasury is a
valuable resource resource the distribution of it is very important because as you know, you know, it's
a resource, so it needs to be sold. So people need to finance things for it. It needs to
be handled efficiently. And, you know, you want to have the best people possible to do
it. Right. And I think that's similar to what I said in terms of leadership in the beginning.
That's the only way to work on the business you hire the best people you have the best people come in either they earn or they buy you know
enough stake to have this power or they need to earn it by having a track record and you know
proving that they can do it so it's an experiment i think it's an interesting experiment to look
but it's politics again it's so much politics right and it as in any
political system you have political games that are people are starting to play and it distracts from
the actual objective of improving things by replicating exactly what we hate about current
government structures but just on chain so I think it's interesting am I a big fan of it I
don't know I don't have a big opinion I don't really look much at opengov to be
honest I think the other guys are much more experienced than I am but yeah
those are my two cents I have a feeling Ben wants to say something about this
topic I think it's time to sunset it.
There's the whole decentralized voices thing. You spend more time
negotiating with these non-elected bodies who are presiding over huge amounts of vote power.
They all have their own politics, their own agendas, of course.
But this is obviously just gifted to them.
So it's, yeah, it's a bit of a strange one. I think we agree with Flavio, like we spend way too much time
circling around the Treasury and, yeah, ultimately,
the dot holders should be the ones making decisions about that,
not just arbitrarily selected randoms.
It doesn't really make that sense.
It doesn't align incentives well.
And I hear of many cases of genuine dot holders deciding to up and leave
because their voice is somehow drowned out
by some randoms who've just been given the keys to a Ferrari.
Yeah, I think people should earn their power or voice
by good work.
So I agree, like less of arbitrary choosing
and handovering, but yeah, more meritocracy.
Interesting stuff.
We are up on time.
We have four minutes left.
Flavio, do you have any closing words or any of you guys, if you just want to leave us with one message, what do you got?
I mean, I sound very critical
when I talk about those topics, so
I hope people don't take it the wrong way
because I think this is an exciting
experiment in general.
For me, governance is a tool.
That's what it is. It's never been
the reason that I
got involved with Polkadot
almost five or six
years ago.
It's a tool. It's an amazing tool.
It's a tool that is important, you know, to give power to the people.
I agree with what both the other guys said, but it's just a tool.
And for me, it has gotten way too much attention,
especially considering that we have so much other cool stuff
that we can, you you know be famous for I
mean there's a reason why we all built here and there's a lot of cool things we can do especially
now also a bit the launch of the hub coming it opens us up to basically conquer other ecosystems
and you know provide the technical infrastructure that we've had for so many years to others that
might not even be aware of it
so for me governance should take a step back it's great i understand why it's very popular right because you have a huge treasury and people want to get money from it for certain things and but
we should have incentive structures to make sure people can become in them independent right because
again it's not a charity it's a business but yeah you know step by step
that's how it goes we cannot rush things this is an experiment I'm very hyped
what's happening in the next couple of months so that's my closing statement
anyone else before we send it off I mean I yeah I just want to double down on
Flavio there is more productive stuff to talk about than just governance.
Yeah, it's like talking.
I can't imagine having so much governance talks,
like for the internal in high direction or something.
It's either works or non-work.
And what matters is attracting more users and building
better features so like hope to see more also on polka.site
well i just want to say thank you to all of our guests today i mean yeah super interesting stuff
i mean it's um i have my own opinions of course but but I'm here as the host, so I have to be neutral, but I'd love to continue these
conversations in other places. Yeah, we talked about inflation, we talked about the Robinhood
announcement and what that means to the industry, talked about Polymech and what they do, as well
as the Giga Hydration, the Giga Campaign on hydration. I've linked to that campaign here at the top of the
space so anyone can just click on that tweet and get more information on it.
But yeah this was really good let's do it again guys and maybe next time we'll
do a live stream we'll get some video we can always you know share your screen
on there as well if you want to show stuff so thanks for joining and let's
do it again soon. Let's do live stream I want to show stuff. So thanks for joining and let's do it again soon.
Let's do live stream.
I want to see your beautiful faces.
Let's do live stream next time.
Perfect.
Especially Jakob.
Cool, guys. It was a pleasure.
Thanks for having me.
Take care, everyone.
Bye.
Cheers, guys.
Bye-bye. Thank you.
