sessions to go. I want to start off with

bringing on Martin from Zurket to tell

you all about new ways to think about

Defi and security. So, please give

Martin a big round of applause.

>> Thank you for coming. Um, and this is

Martin. I'm from circuit and I will be

talking about platform specifically

about how we build it and how it works

itself. So

this is define TDL how it was developing

over time. This is where we are standing

at four

weeks ago. So we had in total roughly

130 billion deposited in D5. But I think

that it always is interesting to sort of

pause and reflect and sort of wonder,

you know, how did it get right? So since

we now have 300 million in stable coins

and $175 billion of D5 that didn't

happen on its own. So how did that

happen? So I will go in this talk

through some brief history of defi and

some significant events that were you

know created or maybe also destructive

and in the end I will tell you what's

happening in circuit and what our

response to uh you know is the defi

these days is so the best spot to start

is actually talking about the very first

protocol and for me this is actually the

origins of maker they reach into 2015

that's why actually I call it the first

protocol spider wasn't uh you know

deployed until 2017. Laker is a

collateral debt position protocol. So

what it meant especially at the

beginning 2017 is that user were able to

deposit a single volatile asset that was

e and mint stable coin called die

against that asset given some

volatization ratio. So uh D was the very

first widely openly mintable decentral

stable coin and maker for us was the

protocol we were using as a leverage

engine because we had liquidity in ETH

we didn't want to sell that ETH but we

wanted to use our money so this is what

maker uh at the beginning of the

existence maker was single plat

eventually we developed a little bit

more multiplat and so on when I talk

about default I I essentially categorize

defi into three verticals. One vertical

is stable coins. The other vertical is

lending and the third vertical is

trading. So let's take a look at for me.

The very first D5 protocol focuses on

lending is actually it was a

peer-to-peer based protocol which

operated on request matching. So you say

hey I have so much and so much ET and I

will lend it to somebody or somebody

could submit request hey you know I have

uh the need for so much and so much I

want for platform will match you and the

would be realized when I talk to people

about they tell me hey I've never heard

of which actually might be true but what

they definitely did care about is the

successor so in 2020 regretted to a

right now is at least for me the

actually like so really really big

project. Um a is also responsible with

this upgrade uh of the system for some

innovations. Uh they chose their design

through pool based lending which I'm

going to talk about in the next slide

and they you know introduced something

called flash which uh if you have been

in DeFi for a few years you have

suffered some hacks or if you have been

looking at the smartwing field it's not

a new term. So [snorts]

uh this is implant.

Shortly after implant uh started

operating uh a competitor emerged and

that competitor was called compound.

Compound didn't operate on this uh

request patching peer-to-peer type of

basis but they had a design based on

tools and they still have design based

on because these protocols still exist.

So LPS would deposit the funds into the

pool and then the pool would calculate

some kind of interest rate and whoever

would come given some collateral all

these other tools they would be able to

borrow uh assets from the markets. What

compound is responsible for and why they

are really really important feature is

because this was actually the first

widely used skillbearing tokens

implementation that has existed in DeFi.

So co-ound is really important for us

and they are actually important for a

few more things. Finally the third

vertical for me here is uh trading. So

Athereum as a network is responsible for

the ERC20 standard right. Uh so if the

ICO we created an abundance of tokens

there always hands you trade it for that

stable coin you trade it for ease but

implementing dynamic portable which was

actually really really difficult back

then for multiple reasons. It was the

gas cost and it was also the speed of

the network right because blocks were

mining within the range of 12 to 15

seconds over time. So you know this is

probably the interval that you would be

able to update your your order the book

uh at and that's very very slow work. So

this was difficult and therefore the

researchers at bank were actually came

with a new concept called automated

market making which was also based on

trading. So inside of an automated

market maker, parties deposit liquidity

into the pool and then anybody can trade

against the pool and the tool prices the

asset based on some mathematical

formula. While Bangor was the very first

automated market maker uh actually it's

not the most popular automated market

maker. The next one that came a little

later was sort of took the glory and

there are a few more decisions

particularly for based on the formula

and the way how they price assets and

based on some

the bottom line is in these early days

of E5 and that's why I actually have a

TVL chart in there you can see that the

adoption was significantly lower than

what we are used to uh these things we

can actually see that up until 2020 that

line remains sort of flat compound

didn't develop significant liquidity

gains receiving $100 million until 2020

and the whole uh deal itself didn't

exceed 5 billions until 2020. So

something needed to change but before

something changed, Black Thursday came

and this is actually an example of the

very first sort of destructive action

that I'm going to go through. So what

happened on Black Thursday? Black

Thursday happened on March 12th, 2020.

Both Bitcoin and Ether back then priced

in price by 40% within the scope of one

day. This is how it looked on Coin

Gecko. Honestly, it's like every Friday

this year uh back then we call it back a

black.

What it resulted in we know from these

days very easily, right? It resulted in

a series of liquid relations, network

congestion and the gas prices spiked up

on the network. So you know it was

problematic to submit transactions and

that again became quite problematic for

maker in that because maker had all of

these laws right minted. So it hit some

faults uh with ETH because price went

down

under collateralized and those bolts

needed to be auctioned off. And this

didn't go easy because despite maker

providing some kind of software for

running bits for an auction if the

auction was secured that software

actually only had static gas pricing

strategy and because gas prices were

rising very very quickly uh bitcoin were

mining and there were calls with lot

that were being auctioned for $0. Really

really beautiful day for some people. So

overall, Black Thursday, it was actually

the very first example of some systemic

problems and it was systemic problems

that were caused by leverage, by network

congestion and weird execution

conditions resulting in lack of

participation. Really interesting.

So as I said something needed to change

for D5 to actually take off and that is

what uh sparked sort of uh the D5 summer

and what changed is compound inventing

liquidity mining. So somebody at

compound realized hey uh we have these

people who are depositing liquidity to

us and we are rewarding them with

something for us but you know we can

also create other tokens and you still

they will have some value. We can you

know put them on the market right

liquidity is to develop more that the

value will be there and we can

additionally distribute these tokens to

incentivize protocol uh participation.

So this was called liquidity incentives

and people were liquid buying it and

this mechanic actually became the most

prominent incentives for protocol

participation all the way up until it

was replaced by various points campaigns

uh in uh 2023 and 2024. So another very

very cool innovation from compound and

uh I actually was lazy you know just to

just justify my claim that uh this was

really really significant I asked GP to

list me some protocols that ran uh

refining campaigns in 2021 2020 uh and

you can see the list on the screen uh

you can see some pretty big names and

the list is actually short and you know

it's much more comprehensive if you ask

liquidity mining was a mechanic that

created created something else. It

actually created a lot of activities.

The problem with liquidity mining was

that people wanted to compound their

positions. So they were always trying to

collect their rewards. What those

rewards were additional collaterals and

deposits and you know amplify their

position, right? But that costed gas and

you would always be doing math. Hey, you

know, is it actually profitable for me

to collect my rewards, liquidate them,

really? So uh some projects came with

the idea that uh this can actually be

done through smart contract and if we

pull all our funds in this effort we

will save on gas we will offload the

overhead to the smart contract. We will

remove the learning curve because it's

the smart contract actually to be very

very aware of the uh underlying mechanic

of the integrated D5 protocols and we

will essentially automate the whole

thing. So this was super convenient.

Very first uh yield farming aggregator

was um it was uh shortly followed by

farmers and this is when the D5 TVL

actually started picking up really

really hard. So everybody was farming

and these uh yield aggregators were

really big because they managed to

develop their own ecosystems. Here I

have an example of urine. So in June of

2021 year actually consisted or somehow

through series of mergers and

acquisitions affiliated themselves with

whole bunch of protocols. Sushi as their

deex cream as a lending platform. Pickle

that was like a farm for me covered

insurance protocol. propolis some kind

of governance platform taking you know

uh stealing all of these and there was

also something called iron which was

like lat platform which was protocol

like the uh kind of intended so

aggregators were really big everybody

was using them and they are sort of

responsible for introducing into our

field something that we call normal but

maybe it is not entirely normal and it's

called loop so here I have an example of

a yield loop that to provide it by earn.

You could take your USDC, you could

deposit them into Europe, you could uh

turn that into yield bearing your USDC

and then someone implemented called

Apracadabra which was also

collateralized that position. So you

would take that USDC deposited into

Apocracadabra. They meant something

called magic internet money which was

also a stable coin back to US dollar. So

you would want to one swap it for USDC

and then you would rinse and repeat as

long as the collateralization factors

would allow. So this is what deal

looping is. And now this yield looping

combined with other mechanics actually

led to whole bunch of uh bad things in

D5. So this is not entirely moving but

the very first or second example of bad

are sort of senior controls uh really

bad invention. So two protocols to

mention one was empty set dollar. The

other one was basis fast. They both

issued an unqualized stable coin and

said hey this will cost $1. And if it

ever costs less than $1, then we will

offer to the people to burn these stable

coins uh and mint for them some coupons

which you know if the stable coin or

when the stable coin again reaches $1 or

exceeds and price $1, you will be able

to burn and you will be able to get

yourselves more stable coin and some

sort of next bonus. What they failed to

explain

was uh why this issue had ever happened.

It was purely a reflexive mechanic

hoping that you know at some point an

interesting stable coin will be spark.

So it didn't work. Then we had another

example of something similar that was

called D. They are actually inventing

something we call protocol for liquidity

and uh they help program uh for their

own because purely inflation program uh

and they try to community that uh you

know you can hold their you can stay

them to get more old or you can sell

them if all of us stay them based on

some prisoners dilemma is actually best

outcome for everybody. It's the 33 that

signifi signifies the big scary outcome

in here that is going to be great for

everyone. But all had no derailers. It

was purely inflationally token. It was

just being released into the system. So

this mechanic also did work and

eventually collapsed because you know

once you [snorts] exited the system you

materialized your gains and projected

losses for everybody else. And an

absolute expert in these reflexive

mechanics amplified by the looping was

the block Luna and their stable coin

USD. Again, they had some volatilized uh

depth position protocol where you could

take Luna volatile asset. You could uh

take uh USD uh or mint USD by burning

Luna. So Luna's price was going up and

the demand for it was going up as well

because cost price is going down and

there was also something called anchor

protocol that was actually offering

really really high APYs to USD which

really amplified this higher USD spark

more demand for USD leading to water and

prices going down and that sort of you

know kind of worked up until it didn't

because all the trust sort of

disappeared from the system and USD

defect that means that USD get under

volatilized uh Luna's prices dropped. Uh

that meant that USD is actually more

under volatilized and created this like

exploding imploding loop and that

actually followed progress and all

activity in for a very very long time.

Here you can say that this is how long

it took for us to develop this liquidity

or this TDL and this is the spot where

it just you know single dropped. So

really just started event later D5 was

actually revived uh by the merch which

was also the event that developed the

staking for their state. So when

Ethereum merge happened uh they had a

way that immediately after staking your

piece you couldn't unstake it. The uh

unstaking functionality actually wasn't

introduced into bacteria up until one

year later with the shell. So that

clearly created ground for tokenizing uh

stake ether and those were the protocols

of bio with a rocket to them and uh you

know later taking in all this huge field

of staking and restaking by like buffer

rental and actually and this is what

helped us revive uh DeFi for where we

are today. So where are we today? We are

probably on par with the peak of D5

summer or the year 30 of D5. We're still

not the state of it and probably you

know if you have been following markets

we are actually a little bit further

from there but we still you know went

through a long long long journey. We

have many chains all of them have

different features. You have many

protocols all of them have different

features. Some of them provide E5

landscape themselves. Some of them adds

privacy. Some of them add some utility

and uh you know provide options. We have

whole bunch of SDKs, development tools

and we have amazing interal

infrastructure. A year ago I was

actually complaining about the existence

of whole bunch of chains. This year I'm

super super excited. We have a whole

bunch of cloud chains that we can build

with because that interop is so good.

Despite that, we have deployments of

protocols that are isolated on multiple

chains. Here I'm showing a screenshot of

various uh dropdowns selecting what

chains uh do what chain do you want to

operate.

We also went through some

standardization. So we have an ERC 4626

uh for tokenized ws.

We have the consensus or agreement uh or

you know prevalent opinion that some

prevails in D5 actually reach maturity

and they might be themselves the primary

product market fit for Ethereum. Defy

and blockchains

internally intersect with our own life.

Right? We have Ether many other

companies actually that offer uh credit

cards. You can operate with crypto on

PayPal and you can actually use it to

make purchases on all Shopify stores and

as I said before we have $300 billions

in stable coins and we have $135 billion

in defy applications and deposits. So we

really went the long way. Is there any

space to innovate still? I say yes

because we went so far and we have this

you know landscape of things that can be

integrated we can actually build better

products. I still strongly believe that

it is a responsibility of a defi

protocol to protect their users. However

you know over time the secondary threats

have been evolving together with the

field even from bugs over market

manipulations and platforms to hacking

bridges. These days when people are

using blockchain more and more we have

the many many fishing impacts and we are

responsible for you know a lot of

damages and all of that actually

aggravates and adds up finally I

couldn't ask for more innovations and

transparency and managing risk and more

responsible defi in general especially

in the light of the risk events with

street finance

what is our response to that and here

I'm switching to the national for

finance So at circuit we are blockchain

at random hacks on uh from the chain uh

and we are launching new flagship

product. It is a response to the state

of defi. It is uh yield product that

exists on multiple chains. It builds on

layer zero. So you can deposit funds

into it uh you know on any block where

the vaults are deployed. system base of

liquid and uh primary. Okay. Uh all

these vaults they are going to be

generating yield. The yield will be

based on lending. Uh the lending is

going to be combination of D5 protocols

such as a morpho and um C5 opportunities

and as I said we have strong focus

security. So all will be protected by

our system called sequencer level

security and data both in the future.

This is currently uh in the private

interface. We are working with our

partners. We are bringing it into the

platform. But if you want to get in uh

as soon as uh possible, secure your uh

spot on the wait list uh on find.com.

And that's everything that I wanted to

tell you here. If you have any

questions, if you are interested in D5

or building something, please catch me

in the back and I will be glad to talk

to you. Thank you.