DeFi leaders discuss protocols and the Optimism L2 expansion

0:01I'm Ashton Addison from Block West capital for investment pitch media and today on the crypto coin show we have puff from iron bank corn from yearn and Serrata from hamora V2 all working closely together in the D5 sector and I'm really excited to dive into the intricacies of D5 uh with all of you today because you know I I know a little bit about it but I know that you guys

0:26are a lot more uh expert than I am on it and um it's moving together so fast and there's a lot to talk about in recent updates as well so thank you all for coming on the show I would love to get a quick briefing of uh yourselves and the D5 protocols that you worked for you know in a minute or less to start off our conversation and then we'll Deep dive into all the industry details puff

0:52I'd love if we could start with if you and iron bank so uh thank you for having us on this show here I think it's great for us to have an opportunity to talk about the Partnerships we have as well as the exciting things over on optimism that's the first things first iron bank is a decentralized learning platform we're focusing on Capital efficiency of our

1:13differentiation working with protocols and individuals to supply and follow crypto assets so other ways we talked about this is that what were the role of things and and later on when we talk about how we work with our partnership I think that would be a little bit more clear mm-hmm sorry and corn yeah hi I'm corn and I focus on Partner Integrations for urine and if you don't

1:41know yarn yarn is a defy aggregator with a focus on security and risk adjusted returns and we find the most secure sources of yield in the D5 ecosystem and create strategies for anyone to automatically use them so they don't have to focus on yield farming every day and uh today over 80 percent of deposits come through our 32 partner Integrations they're all projects building on top of

2:09yarn and folks who need yield as a service or want their customers to have access to to your involts very cool and Serato hi I'm serada product lead at Alpha Venture dial managing homo rv2 D5 protocol and driving home as growth strategy Partnerships and business developments um so about more V2 is the world's first multi-chain lending and leverage of

2:35farming protocol and it's also the flagship product built by Alpha Venture Dell or previously Alpha Finance lab so we first launched a more back on ethereum in October to 2020 and gained about 2 billion in TBL at its peak during defy summer in 2021 and then we launched more V2 on ethereum then scale to Avalanche Phantom and now to optimism as well uh so leverage your farming in a

3:03nutshell for those who are new to the concept of a more V2 is it's a way of amplifying Youth farming returns by borrowing external liquidity to increase your youth farming positions so you can earn higher yields and trading fees and farming rewards from the underlying debts without having to Own auto capital and I'll pretty much um you can say it's you're farming on steroids yeah

3:28um and you know for I feel like there's definitely a few viewers watching that do leverage yield farming I feel like a lot of them are still sort of testing out the waters and figuring out the intricacies of just yield farming itself and you know I know Uranus had a great help in sort of aggregating things and I feel like most of the protocols now are

3:47great at aggregating uh making a lot of things in different silos making it easier to sort of see it all in one place from what I understand you guys have been working together or the protocols work together for for quite a while now maybe you could talk a little bit about that okay yep so uh for instance uh on rap teeth that strategy on mainnet for yearn the

4:17highest uh or most utilized strategy in that vault is the homura lender yield Optimizer and uh iron bank strategies are also used in tons of other uh yield strategies on yearn and more importantly on optimism right now we only have two strategies available and one of them is iron bank and I'm sure there will be more V2 strategy on there soon

4:47very cool and so what from what I understand the the D5 protocols you know they're working with ethereum but also Avalanche Phantom and these other blockchains uh for somebody who isn't familiar with uh the intricacies of D fire isn't following on you know which Protocols are sort of growing the most with their value locked is there a major difference

5:09in or are you seeing any growth Trends in where people are depositing their assets into defy or and is it just you know what's the highest yield or what kind of Trends are you seeing between the different blockchains and strategies um yeah I'll take that one we uh we we're seeing that there's definitely a lot of validation into uh maybe it's probably stronger but there's definitely

5:35Direction into the layer choose optimism or other Trend and I think that's mainly due to the fact that the security properties of these reduces so making them some of the safest medium chains out there and so one one Trend that was happening for a while for the you know sort of the beginning of a cooling Market was the people were moving to uh cheaper change with the

6:00faster transactions to transactions and and I think what that's happening what that means is additional features that can be to the point where another users are on cheaper things or change that can react faster plus the gas prices will come down uh you know since the the usage is dropped after that so that's actually allowing now for um answering things to happen so much of

6:26the stuff that that these yield generating type transactional do we have a lot of gas that's definitely something that uh transitioning to a related to like documents that gets helped collaborate okay and and corn you also mentioned optimism there um from what I understand you know it's the defy on it is is newer than some of the other ones that have been around for a

6:53while what does that look like when an optimism comes into the picture afterwards and you know funds get moved around over to there um how does that affect all these protocols and I'm guessing it's a good thing for for defy in general yeah we had a Community member make a dune dashboard one day for where tvl is coming from for our three ecosystems today those were

7:20what were our three ecosystems mainnet Phantom and Arbitron and he found that on the non-mainet layers that over 80 percent of the wallets and user interaction were net new users so that's why we chose to go down the path with optimism and we're glad we did because unlike some of the other ecosystems that we were exploring or that people were coming to us and asking

7:48us to be part of um there were no good yield farming opportunities and on mainnet the reason why urine vaults have so much use is because of our foundational vaults that are single deposit of like wbtc or west or usdc or die and whether whether there are good farming opportunities um there is going to be high TDL and D5 and optimism has that today and we were

8:19able to make those five vaults from day one and I think that's why we're gonna see a success on there that's great to hear and with optimism you know as sort of a from what I understand it as a layer two to ethereum is it make a huge significant difference from you know the vaults that were on ethereum to to optimism I think it does in terms of like gas

8:48consumption sure we know that today sure the costs on may not are not that high but they will be again someday and the time to build on those secondary layers uh where things are cheaper and where we're going to like do more experimentation the the times now to do that and uh we also decided recently for our vaults V3 product that's coming out that's going to have more composable

9:17strategies to do all of the testing for that on optimism and not on mainnet so that's good to know and and Serrata you mentioned at the beginning about you know how the tvl was pretty large uh and and since you know you started and then it worked its way up to November 2021 uh with billions in in liquidity um I'm curious on your take on the liquidity now

9:46um and if you're seeing growth Trends in defy you know from the spring uh when when the markets have sort of been downhill uh is defy growing in interest from new people that are coming in or are are you I don't know if you can tell but are you seeing people pretty bearish and you know withdrawing their funds from from defy still uh where do you see

10:10it sort of sitting from here and you know to the end of this year in the next two three months sure happy to um insights on that so we do um see growing demand actually after um they there were times that um some of the users especially of our institutional users Park their money after the terror crisis and like the 3ac uh where things kind of sparked a lot of

10:39thought in the market but after that we do see a lot of institutional money flowing in back into um the protocol and I'd work a lot with many crypto hedge funds I use I'll um protocol frequently so we do see two inflows of capital coming in so on one on the lending side um where users are still looking to earn high yields on stable assets and Majors

11:07like eth or Bitcoin to still earn risk at a lower risk and high yields at a lower risk than that and on the former side what we are seeing more popular in this sort of Market are more of like Market neutral strategies or hedging strategies or hedge funds still earn yields while heading out on their risk and we see these populas becoming more these

11:35strategies becoming more popular on a farming side and also we're working more on growing homura into an integration Hub where we work with many ed5 protocols that built votes and youth strategies on top of more V2 and we also have some examples of pseudo delta neutral vaults building on top of Maura coming out as well and building on top of optimism also helps in reducing gas

12:02fee as well and we've seen a good sentiment coming from both projects that we work with and users that use our protocol and we anticipate growing demand as layer twos becoming more popular and also with more growing demand from institutional users as well that's great to hear and you know would it be safe to

12:32say in sort of alluding to what corn was talking about with the major assets on optimism that a majority of the D5 users are sort of and with respect to you know how risky D5 could be playing it safe and sort of using those major assets like like wrapped ethereum and stable coins uh to sort of limit their risk as much as possible uh in D5 and that's

12:54where you're seeing like the majority of people I feel like a lot of people that got into defy um you know because of super high yields uh got burned on you know coins or some some coin that didn't really uh wasn't sustainable and then all of a sudden it crashed to zero and and they sort of left a bad taste in their mouth for defy but from what I understand the smart people are are

13:14using the large assets and sort of mitigating the risk as much as possible yeah I think another Insight I can add is that some of the strategies and growing the protocol and how users are using the protocols shifted a lot back from D5 summer where users were just ate been for my youths and um just move as it to like the highest UI they can find to now

13:39um users do care a bit more about like Risk Management hatching at risk um going for strategies that gives them little high yields a bit lower risk and just um users have been more careful about the quality of the assets um and they are more selective as well and yeah everyone is being a bit more cautious but still trying to earn high

14:07yields and homura V2 does support that because we offer um many ways that users can can um earn yields through lending through hedging uh through farming and users can earn yields in any sorts of market conditions and that's what we support that's great and did I hear that Amora V2 doesn't have an optimism strategy yet but you're working on integrating that

14:36in as well so at the moment um we are the first that provide leveraged liquidity providing on unusual E3 and there are many projects and partners that approach to us that are interested in collaborating more on providing more strategies on top of users of V3 and we're also exploring welcoming more Partners as well it's something we're working on and we're

15:02happy to share more once we have um something more solid in place okay sounds great and and puff I want to jump over to you about you know optimism from what I understand uh you're also making Partnerships with uh you know iron bank with optimism I'd love to hear how that approach is going in and how that affects iron bank moving forward so we work mainly as uh supporting

15:30liquidity for our partnership for example of E2 so when so when we make our decisions on where to move our work to deploy next we generally want to make sure our friends are there with us and uh so part of this launch as well was so we did launch into um Collective lands of phantom as well as Avalanche beautifully and with this launched um while it was great that uh we were

15:57able to line up at your name at the same time and then so we can uh you know have an impact here and it's worked out well because we for a while said that we're thinking about introducing this ID token um instead of to drive some initial feelings because one of the problems around me previously was thinking about how uh while we want to continue to serve well for our partners have a

16:21community to consider your uh itself as well

17:38okay great to know and corn we spoke about you know all the different Partnerships that you're in finance has and obviously having a lot of different Partnerships a lot of different strategies on different protocols in one place uh is a great competitive Advantage for having a good D5 protocol do you have any other notes on you know what are the important best practices

18:02for your D5 protocol and D5 protocols in general in terms of making it uh the best place to do defy in a safe and you know quality focused manner uh whether it's like the the price oracle's management of it um besides obviously having great Partnerships yeah uh safety is pretty much all we care about and having the best risk-adjusted returns in in defy and to

18:32do that we've come up with this eight metric risk framework and it's modeled after the aviation industry and it it helps us evaluate risk of all the Farms that we use so we evaluate the tvl impact so we don't make strategies for anything that has a lot of slippage we look at all the third party audits we do our own internal code review we look at the

18:59complexity of the actual strategy that we're making the longevity of the uh platform that we're going to be farming the safety that the uh Farm or protocol that we're farming uh has and our own internal team knowledge because we need to have multiple people aware of what's going on at all times and we also of course do our own internal testing so with that

19:26and with our safe farming committee structure uh like we've kind of developed our own best practice and I guess that's kind of why um when urine like makes a strategy for something we're kind of seen as like a seal of approval when it comes to D5 safety so yeah there's a lot of best practices out there to follow and of course like for users these are questions only they can answer

19:53but uh the one that they should always remember and the one that like really brings us back to why defy and crypto even exists today is not your key is not your crypto and people need to really uh hammer that home and educate everybody else about why that's important definitely that's a great Point corn and it's great to hear about uh you know following the aviation standards I feel

20:20like that has to be safe uh you know for people not to die or in this case lose their lose their funds and you know we're still seeing D5 hacks here and there and you know we're also still seeing it in centralized exchanges as well um and I'm curious if you see you know a a pivotal point where more people uh join defy or you know will there be an aha moment where something crashes and

20:47coinbase finance or FTX and and all of a sudden people are gonna have that necessity to like hey you know we should really take this seriously that we should be getting into D5 it's it it could be some external event it could be something that doesn't even happen in crypto like I really don't know the answer to that and I don't know if it's going to be just one singular

21:08event but I can promise you that we're gonna find out together yeah definitely whenever uh there's anticipation of something uh that's sort of known and it's usually not that it's usually yeah Black Swan event that comes out of left field and uh yeah you know that's why it's always good to be proactive in obviously keeping control of your of your keys and your funds and

21:32not leaving your currency on on centralized exchanges for other people to take or or in C5 platforms like Celsius because you never know when you're not going to get it back yeah exactly yeah great and and Serrata do you have anything to add to that in terms of uh best practices and ensuring uh that people are always you know just confident that their assets are super

21:59safe and you know they understand sort of the yields that they're getting and when I guess one extra add-on to that question is um you know obviously there's audits on all of these smart contracts but I've seen people take the next step with protocols coming out of a defy insurance for losses and I'm curious if you think that's a nice added value or a necessity

22:20in D5 as well yeah sure um so under security aspect so um homura Vito um we place um high priority on that for users because we do understand we do serve a lot of institutional users as well as many retail users and that's one thing that we can help assure users that um like your their fund is in a good place so

22:46um we promise high yields without compromising security so you can users can find with ease of mind um so one thing is that we go through um review of smart contract very um like cautiously and also we have like internal testing and we have multiple audits as well for um each of like uh the homura V2 that we launched on um different chains and we

23:14also uh selectively list pools and assets that pass a screening criteria so we make sure that the coins on The Tokens The assets pairs that we can support on the platform have decent and reliable Oracle price Suite that's for sure number one priority and secondly is that I have the liquidity and decent traction real use

23:43case in order to generate real yields and I think that has been something that users have been expressing demand and strong demand um after a lot of the events in D5 and a lot of Cycles in the past that uses a looking for more transparent and sustainable yields more of the real yields so we do care about the qualities of the tokens and the assets that we

24:07provide and also um additionally I think um with the strong fundamentals and like UI ux as well we do have like breakdowns of youths in term of what they can expect to get and we make sure that users will get the best experience out of that and

24:36they will really get what we promised yeah that's great all right well we don't really have a lot of time left um but I really thank you guys all for your insight into the D5 world you know I feel like I'm a D5 newbie although I've been in crypto for a long time I'm just trying to dip my foot in and on all this Insight really helps and I feel like you know just as D5 is only going

25:00to get easier I would hope and you know the intricate parts that you guys as the experts are sort of making it easy for people to join into the protocols um corn I guess do you have any last remarks on you know why people that are just getting into D5 um you know over the next few years should be very optimistic that it's going to be something that's going to be

25:23around for a while I think uh today there are more people building in defy than there have ever been before and that trend is only going to continue to increase and we are only going to continue like sucking in Talent from the other Trad Phi side uh people think it's more interesting to

25:52work over here on the side of the fence and it is so um I think we're only going to continue to grow amazing well thank you so much all of you for coming on the show I will leave the links to to iron bank yearn and hamora V2 and a little bit about optimism as well in the description box below all the best in helping grow the defy industry and let's definitely

26:15follow up in the near future yeah thank you yeah