YouSaid · the spoken record

Hayden Adams

lines on the record: 48
first: 2021-05-06
most recent: 2021-05-06
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I think that that will become a more valuable applications will become more apparent over time. I guess that's one other thing.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“And essentially, what that means is that in a single day, right, someone could basically spin up a new application, and they don't need, and they could source liquidity from Uniswap, right? That application, it might need exchange as a component, but they don't need to build their own. They can just access liquidity from Uniswap. And maybe they spin up and they use Compound for lending, right? And you could kind of build a new system that lends an asset on compound and trades it for another asset on Uniswap. And you can kind of create these sort of, you can kind of compose applications in this sort of really powerful way where things that take years to build outside of DeFi can be built in days. And one of the reasons that we've seen so much that it can be almost hard to even keep up with what's happening is how much is getting built and how quick people are building it. And there's kind of a lot of noise, but beneath that noise, there's like a lot of value being built.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“One really interesting aspect is what I would call almost like permissionless innovation and sort of the ease of building applications. Traditionally, right, if you wanted to build, let's say you wanted to build a margin trading platform, the kind of amount of things that you would need to build to do that, right? You would need to build an exchange. You would need to build a lending system or integrate with one. You would need to kind of sort of all these different things that you need to build, but in crypto, there's sort of this like what we call interoperability. Applications. You might have heard the phrase money Legos.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“And so the portion of trading volume that comes through the one interface is actually a relatively small portion. More than something like 75, 80% of trading happens on other interfaces or in other smart contracts, something we didn't really get into is that Uniswap is this, because all the liquidity exists on chain, it can be used very easily within other smart applications. And so a lot of trading on Uniswap doesn't even happen on any interface, but happens directly on chain in other applications. And so, yeah, maybe app.unis.org could be shut down or it could be kind of running away where it kind of restricts assets, specific assets. In fact, it already kind of does limit what you see in a way that is kind of designed to protect users. But there are alternate interfaces. And the code has all open source. And so people have even forked the interface and spun up their own versions that do other things. And we don't really have any.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“I can shut off uniswap.org, which is a well, app.uniswap.org is a specific training interface. Right. That exists on top. But there's also something like 30, 40 other trading interfaces that let you access UnitSwap.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“And it's a decentralized protocol that no one controls, right? And so the idea is basically that maybe, and I don't want to speculate where regulation should occur, right? But it could be the issues of assets. It could be you can build a token that's compliant, right? It could be the kind of, it could be interfaces built on top of it. It could be specific market. Who knows, right? Uniswap is kind of fundamentally decentralized. Someone could come to send me a letter that says, hey, didn't show off Uniswap. And I'd say, I can't do that, right? I have no ability to show off. I have no ability to.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not that. The idea is basically that much like the internet, right? People can do illegal or non-illegal things on the Internet, right? People can do illegal or non-illegal things on Ethereum. People can do illegal or non-illegal things on Bitcoin in that same way people can do illegal or non-illegal things on Uniswap.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Is still this sort of low level infrastructure and platform that supports regulated and that can kind of, people can spin up a regulated compliant market on top of Uniswap, right? And we've seen that happen. And there's still value in DeFi even with that being the case. And so I think that as the same way that regulators became comfortable with Ethereum over time, seeing it as this infrastructure layer, I think that all the same things, Uniswap kind of hits the same bars of decentralization that Ethereum itself does because it runs entirely on Ethereum and is entirely composed of Ethereum smart contracts, right? And so the hope is that in much the same way that Ethereum is understood to be infrastructure, it will be recognized that Uniswap is also.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I think that one interesting thing here, right, is you can almost look at Bitcoin and you can look at Ethereum as leading examples where I think it took time for regulators, but I think over time, regulators have slowly become more comfortable with Bitcoin and with Ethereum as these infrastructure layer, decentralized infrastructure layer platforms and sort of recognize that people can build regulatory compliant or non-compliant applications on top of them, right? You can build a compliant token on Ethereum and you can build a non-compliant token on Ethereum. And you can build, right? And Ethereum is sort of this lower level infrastructure underlying it. And Uniswap, while there are stuff like interfaces to it that exist on top of it, and those interfaces kind of feel more like traditional exchanges in terms of what they look like visually, the infrastructure underlying it, right?”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“They kind of changed their 12 nodes to running, they can kind of rewrite history, whatever, right? And so you sort of lose these kind of fundamental value. And so, yeah, you can always scale up by sacrificing decentralization. But what is really hard is scaling without sacrificing decentralization. And the main kind of solutions there, which are in the works and are coming are Ethereum 2.0 with Sharding, but also Ethereum Layer 2 solutions. Those are kind of the real solutions that are much more decentralized and retain more of the properties that I think are fundamentally valuable about DeFi.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Something that I said before is people don't care about the benefits of decentralization until it affects them. Pancake Swap essentially is saying, yeah, you get all the benefits of Uniswap except it's run on 12 servers owned by Binance, right? And so it kind of, and that sort of gets at this, like, what is the fundamental value of Uniswap? The fundamental value of Uniswap is that it's decentralized. And there are hundreds of people around the world working really hard to kind of scale up decentralized protocols, but it's a sort of long, and I think that some of them are kind of going to be coming to the market very soon, but it's still like a very kind of intense technical problem. And if you kind of just say, oh, well, we can centralize it and everything will be fine. I mean, some people don't, you know, some people don't care. And, you know, centralized exchanges probably will always have market share. But in the long run, right, they still have this same problem, which is that what happens if Binance decides to kind of change everyone's balances?”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that there's these sort of inherent benefits that can be built into the systems if the people who are building them care to do so. And that's sort of my hope.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Financial system. One really interesting example of that is incentive alignment. There's sort of this principal agent problem that we see. If you think about even the subprime mortgage crisis where a lot of the people who were kind of creating these risky mortgages, they didn't have personal risk and personal accountability if something went wrong. And our hope in building out DeFi as an ecosystem is essentially the people who are making the decisions. They're directly accountable financially for if something goes wrong. And the hope is that that kind of benefits everyone. Yeah, there'll be a lot of people kind of making money and in it for themselves. And, you know, that's sort of just part of how capitalism works.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“See these inherent benefits, right? So one thing to think about is time. Another is like centralized exchange hacks. A lot of the problems that DeFi solves, users don't really care about until it affects them personally. But when it does, it's catastrophic, right? And so a lot of people have held funds and not been able to withdraw them or your bank shuts you out or all these different things that happen, right? In the long run, people, if DeFi is successful, the sort of amount of these types of events should be much more rare. And users should have a much better kind of experience using financial tools in a way that they might not even think about it in the moment, but they're sort of benefiting it from it indirectly. And so, yeah, I do agree that it's incredibly important as we build DeFi to some extent, right? It's a chance to correct some of the wrongs that were made the first time in the kind of creation of the first of the existing.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“One thing that's kind of important is what infrastructure is the global economy run on? And right now it's sort of run on these kind of siloed centralized systems that people are bridging across. And there is these inherent benefits to running everything on this sort of shared globally accessible infrastructure. And there's still benefits. I'd say that DeFi, you know, in the long run, right, not everyone wants to self-custody their own funds, right? Plenty of people don't want to think about private key management, all this stuff, right? People many people want to use a bank, but what are banks using as their rails? Are they using kind of these siloed, closed off systems, or are they using this sort of global infrastructure that is kind of inherently accessible and shared? And I think that's part of the idea here.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“One kind of really easy example is people in kind of, you know, like we have this sort of nice advantage of living in the US and having at least mostly trusting our banks and having a lot of access. We still have pretty good access to financial tools, but there's definitely a huge portion of the world that doesn't have as good access and probably would love to even be able to open a US bank account. A very probably early use case that I could see growing is first off having a U of US bank account would be great, just being able to store dollars in US dollars. But then beyond that, being able to earn a return on them. And so these decentralized money markets that we're seeing along with these kind of decentralized stablecoins that we're seeing could give people in their world countries and in developing economies exposure to less risky assets and even yields on those assets, which I think will be a...”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“And these decentralized lending systems are far more used than other ones. But outside, it's still not, hasn't quite penetrated. And in the early days of anything, right, it's more as kind of die-hard users and kind of early adopters. And that's definitely the phase where we are. And over time, though, basically UX barriers will be reduced and the kind of security will increase and the throughput will increase. more people will be exposed to the very real benefits that underlie it. It's true that those are not all being accessed by a wide enough audience. And what we're expecting over the coming years is for that to change. And we're expecting for more people to get brought in. But that's an ongoing process. And we're still in the early days of that.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a really good question. And I think that that gets to what I was saying about it being in the early days. And so where DeFi is now won't necessarily be where it is in a couple years. I think that in five, 10 years, it won't be called DeFi, it'll just be called finance. So in part what we're trying to do is build better financial infrastructure that has inherent benefits to it that will sort of benefit the entire class of existing financial use cases. There is a lot right now. It is sort of living like there is kind of this almost closed ecosystem or closed system of crypto and crypto, like within crypto, right, Uniswap already kind of works better than most centralized exchanges, right?”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“From being able to do what it can do today, which is 10, 15, 20 transactions per second, to being able to do hundreds or thousands or millions of transactions per second. We've seen a kind of explosion in the usage of DeFi. So Uniswap didn't exist two years ago. Today it's doing $10 billion in volume. Six months ago it was doing per week. Six months ago, it was doing about $2 billion. And a year ago, it was doing about $50 million. So we've kind of seen this explosion. And I think it's attracting a lot of new users. We've seen a kind of similar explosion to users, but it's still in the like maybe 500,000 users range. But I think over the coming years, these sort of inherent benefits of DeFi Are going to kind of become more apparent, and the downsides are going to be slowly worked out.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think that it's something that's really important to think about when you're thinking about DeFi is how early on we're in DeFi. And DeFi is essentially what we're trying to do is modernize financial infrastructure. And so there's all these benefits that are kind of inherent. You might have seen stuff like very centralized exchanges, whether it's crypto exchanges like Coinbase and Binance or non-crypto exchanges like Robinhood or brokers like Robinhood or Ameritrade. They all have these sort of downtime. There's these like inherent benefits to DeFi, but it's also early. And so there's also sort of these early downsides. One way to think about it is we're in the early days of the internet, right? And so people, there's sort of transaction fees can be high at times. It doesn't have, it can't process them that many transactions in the early days, right? So it's kind of like AOL days where things are still a little bit slow, but they're getting built out very rapidly. And I think that over the coming years, we should expect DeFi and Ethereum to scale up.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“And so far, it's basically the main things that it has done is basically fund other teams and projects and developers, building on top of the Uniswap ecosystem. So there's other kind of teams building analytics platforms and other interfaces. And those kind of have been funded out of Unitoken holders who voted to fund that. So there's this community treasury. It technically has $14 billion worth of uni tokens in it. And so it doesn't necessarily need trading fees either because it can sort of use the uni tokens for disbursement. But in the future, it could theoretically collect fees.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, so UNICEF governance is a smart contract, and it's very broad in what it can do. And so definitely Uniswap token holders governance has this thing that we call the fee switch, which is a sort of built-in kind of fee that can be taken off the, you know, basically it can come out of liquidity provider fees. So right now, liquidity providers aren't 0.3%, but this unit holders could vote to add up to a 0.05% fee, which is a pretty low fee kind of coming out of that That could theoretically be kind of given. It's sort of a governance system. So it can do whatever it wants with the fees that it goes. And so, or whatever the unit holders want, or whatever the community wants. So the Uniswap governance system has its built-in treasury. And so it has kind of...”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Perfectly automated, or it can't perfectly rely on market incentives. That's essentially the role of the Uni token. And so something that's really cool is that Uniten holders Long term community ecosystem growth and development, there's a lot of value that can be kind of created by the Uniswap protocol. And there's a lot of sort of human work and effort that can be coordinated towards building value and growing the protocol. That's sort of the role of the Unitoken. So the only kind of, or the main kind of governance action that it's taken so far is basically spinning out this grant committee. So what the Uniswap governance is, is it's an on-chain governance system. So you need token holders can vote on actions from a smart contract. And that smart contract has a treasury.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“To act in a good way, or they're losing money. That's another version of decentralization, an incredibly important one. But when you talk about a decentralized ecosystem, but there are still things, there are still sometimes decisions that can't be perfectly made and don't have perfect answers from a market incentive standpoint, right? Those types of decisions are still important towards building out this decentralized finance ecosystem. The way that I think about Uniswap, the Uniswap token, which is a governance token essentially its role is taking on decision-making in the best way possible, in the most decentralized way possible, making decisions that can't be immediately automated and can't be, you know, it's essentially coordinating the human element of the decentralized finance movement and of Uniswap, which can't just be”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“So people who put their tokens in, they're not trusting any third party. Like if you deposit liquidity into Uniswap, that liquidity, the sort of right to claim, that liquidity sits in a smart contract. And that smart contract is not controlled by anyone or anything other than kind of Ethereum's consensus. Your private key, right? If you have an Ethereum private key, that gives you the right to claim your portion of the liquidity. And no one else can claim it, and you're not, you don't need to trust anyone else. This type of system, right? That's the most important version of decentralization. But there are things that can't be decentralized in that same way. Another way of achieving decentralization is relying on almost market dynamics. And so a really good example would be like proof of stake in Ethereum is basically achieving decentralization and proof of work, I guess, in Bitcoin is achieving decentralization through economic incentives, which is essentially, you know, people have an incentive.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think that it might even be helpful here to back up and give some added context about what are like, you know, the value of DeFi and the value of Uniswap is in its decentralization. Decentralization, there's kind of a lot to even unpack in that word, right? Does it mean that no one controls it? Does it mean that there's no kind of central points of failure? And there's different ways of achieving decentralization, right? One way of achieving decentralization, and we've seen a lot of people talk about it, is through kind of automation, right? And so what that means is basically relying entirely on code essentially, right? So smart contracts can have logic that's built in. And that logic can basically lead to a very decentralized world, right? Where you're not relying on any people or any company to follow its word, you're just relying on the code to execute as defined. And so, you know, this edit's core, Uniswap is decentralized in that the logic for Uniswap, the protocol is entirely in these on-chain smart contracts. And one of the benefits, right, is that it's non-custodial.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Would always be Ethereum for these types of things, but the long term value is in the network effect in the community that build up around it. And so the idea here is essentially to kind of protect the Uniswap community in the short term and in the long term there'll be this sort of massive network effect built up around it.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“I think that it's truly decentralized in that it's all completely verifiable. It's all no one controls it, right? There's still this no control, even the kind of license, there's this sort of this community governance system that I haven't even mentioned, we haven't gotten into, but the community governance system actually does have, and so the Uniswap community does have the ability to kind of grant exemptions to that license or even reduce the kind of two-year period where it's can't be forked. One of the kind of funny things is that there is this sort of community of users and developers around Uniswap. And when we were releasing the Uniswap v3 code, there was kind of this feeling of what would the Uniswap community want? Does it want to be sushi swap day one? Does it want to be sushi swap day two? Or does it want to have time? They're kind of long-term moats almost, if you think about it, of decentralized protocols. The best example.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, correct. We're using something called the business source license, which essentially, you know, all the code is public. It's all verifiable. People can build on top of it and integrate it. And for the first two years at a maximum, it could be less, but two years is sort of this hard cap. Essentially, you can't fork it in a production setting.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“For some context, right? I had been working on this project for over three years at that point. So the first two years was I was the only person working full-time on Uniswap. And then I've kind of built out a company over the past year and a half, two years. Someone came along, right? And then probably in five days, they created a new token and they forked the entire protocol and said, hey, use this one instead and have a huge portion of those tokens were reserved for the people who created it. This open question in DeFi generally, right? Which is like, you know, how do creators capture value and are creators rewarded for their efforts? And there was this element that was maybe a little bit personal to it. But at the same time, that's also part of the fact that it was open source. It's also fair game, right? It's part of the ethos is the fact that you can kind of have competitors spin up. And then in the long run, it's worked out.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Basically, they migrated all the liquidity over to their own system. The actual result though was funny enough a huge increase in Uniswap's liquidity during that period of time.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“And they released a new token and they basically said, you know, anyone who uses our version of this protocol will be earning sushi tokens. And so they kind of incentivize people to basically put their liquidity in sushi swap instead of Uniswap to kind of try to compete with Uniswap and grow their own liquidity. And for a while, that had an effect where there's a little bit added context here, which is that when you create liquidity on Uniswap, you get a token that represents your portion of that liquidity pool. I had kind of mentioned that, you know, if you're earning, if you're 1% of the pool, you're earning 1% of the fees. There's actually a token that says, you know, I own 1% of the die and USDC in this contract. So what Sishi Swap did is they basically incentivized people to deposit their Uniswap liquidity tokens while they were deposited. They were earning fees. Basically, they were earning sushi tokens. And then at the very end of this, I think it was like a 10-day period.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“So funny enough, the siphoned off thing is really funny because before Sushi Swap launched, Uniswap had $300 million in its liquidity pools. And after Sushi Swap, it had about $1.6 billion. And today it has about $9 billion. It definitely hasn't siphoned off liquidity, but essentially Uniswap is a decentralized protocol, right? And something that's sort of core to smart contracts on Ethereum is this idea of open source software. Uniswap was basically built entirely open source. So all the code is publicly available so that people can verify the kind of workings of it. But basically the whole idea, right, is users don't need to trust anyone with their money. They're just trusting the code that's being run. And so all the code of Uniswap is publicly available. And so essentially what we saw is with Sishwap was someone created a fork of Uniswap the same way we've seen forks of Bitcoin and forks of other crypto platforms.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, how do we, and I'm barely exaggerating there in the numbers. Essentially, all the creators of that asset need to do is they basically can deposit some of one token and some of another token into Uniswap, and there's immediately a trading pair that people can trade against immediately. So it's kind of one thing to think about, one analogy is almost like the user-generated content, like Netflix versus YouTube, but for liquidity. Netflix, you kind of have this limit in the amount of content you can create and they sort of, whereas this is like user generated content, but for liquidity.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, basically. But it could crash and it could still be profitable in a world where enough fees have been collected One thing to think about here is if you're thinking about maybe the biggest market pairs in the world, Uniswap still can compete on these, but as I kind of highlighted before, let's say some new asset gets created. It just got created today, let's say. And they can't immediately just reach out to a professional market making firms. And say, hey, we created this new asset. We're one of 5,000 assets that got created today on Ethereum.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, so there's risks to being a liquidity provider, right? Being a liquidity provider is similar to being a market maker, which is that you take on price risk. Basically, you take on risk in the divergence between the two assets. Because you are putting up two tokens and you're getting out two tokens, but you're not getting them out at the same ratio if there's been a price change. And so Uniswap is constantly being arbitraged against other markets. If there's a very large price movement, you might have sold some of your token. UNISOP essentially sells on the way up and buys on the way down. And so if you, there's a very large price movement, you might have sold some tokens at a suboptimal price and lose some money there. But you're earning fees along the way and very frequently or very often that makes up for it.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“And there's no exchange fee, right? The whole point, right, is it's decentralized. And so you have participants who are creating these liquidity pools. And then there's this spread essentially, which is what the 0.3% is, which is collected on every trade, and those are paid out to liquidity providers, proportional, pro rata proportional to their portion of the liquidity pool.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“You are now 1% of that liquidity pool. And so you are earning 1% of the trading fees on that pair. And so in terms of the profits, right now there's a 0.3% fee taken on every trade. And there's about 1.2%. So today's volume was 1.2 billion dollars. And so 1.2 billion times I can just do the math right now. But so it's a 0.3% fee, you're getting about 3.6 million dollars in fees today on Uniswap distributed to liquidity providers. And so one way to think about is, you know, if a pair is earning $1,000 in fees per day and you're 1% of that pair, then you're earning about $10 in fees per day if you're 10% of it, you're earning $100 per day. And so the returns are very kind of different across different pairs. There's tens of thousands of different trading pairs, and they're all doing different volumes. And so, you know, returns have been all over the place.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“You'd lock it up for as long as you want, essentially, right? So you can lock it up for a second, a day. Well, I mean, the time is a block. So 15 seconds is the minimum or a day or a year, however long you want. And while you're”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so what's really interesting is in a traditional order book structure, essentially all market makers are competing against each other. Basically the first person to put up an order is executed in an AMM or an automated market maker, it essentially pulls liquidity across thousands of different liquidity providers and together they function as a single market maker in sort of sharing the same strategy in this automated market maker. And so you might put in $100, someone else might put in $1,000, someone else might put in $100,000. And that's all pulled together and market makes as a single unit. Uniswap basically has built-in fees. And so every time someone makes a trade, there's a fee taken on that trade and that's paid out to liquidity providers, as they're called. And so liquidity providers are taking on some price risk because the automated market maker is managing their liquidity for them and buying and selling tokens and there is some price risk being taken off.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“The price updating, the rebalancing, and then people can immediately start trading against it. And so you're not matching up buyers and sellers. You'll have this smart contract, which will always buy and sell in either direction in either asset. And then people who trade against that. And so you're not coordinating between people, but you're actually coordinating people to a smart contract.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Anyone can basically create new assets. You can also create new assets on Ethereum very easily. So anyone can create a new asset on Ethereum, and then they can add that asset to Uniswap. And in the same way that Ethereum is decentralized and permissionless and can be accessed anywhere in the world, the same exists for Uniswap markets. And so anyone can create a new market by calling what's called a factory smart contract, which deploys a new market for two tokens, and then they can create liquidity in those two tokens by basically depositing some of two assets into that smart contract. So you might deposit some USDC, which is a stablecoin, and some ETH. And then that creates a marketplace between ETH and USDC. And then very different is that rather than having just market makers posting bid and asks, essentially the smart contract manages the market making for you. So you just deposit capital into the contract. The contracts automate the”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Essentially, each market on Uniswap is a smart contract on Ethereum. What that means is it's a little program, it runs on Ethereum. And something that's really interesting about smart contracts is its code that can hold funds. And it's code so you can basically create arbitrary logic and then that logic dictates how the funds stored in that smart contract behave. And so an automated market maker is a way of coordinating market participants within Uniswap. So there's two classes of users, right? We call them traders and then liquidity providers or takers and liquidity providers. And then there's also, and creating a new market on Uniswap is incredibly easy. The same way that anyone can kind of create a new account on Bitcoin or on Ethereum, and anyone can deploy new code to Ethereum, and anyone can transfer value on Ethereum. Anyone can create a new market on Uniswap. So there's basically a smart contract that dictates the creation of new markets.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“It's not worth it for them to maintain inventory or to bootstrap longer tail markets because one way that they think about it, right? It's only really worth it for them to kind of market make on the largest, most popular assets. And so with Uniswap, it adds what's called automated market making, which allows basically anyone who wants to create these markets and deposit assets into a smart contract, and that smart contract will automate the process of market making for them, such that for them it's basically a passive experience. And so in two minutes, someone can spin up a new market, create liquidity in it, and they don't need to be extremely sophisticated. They don't need to have this market making background. in the creation of liquidity.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think that what's really interesting about Uniswap is it makes it incredibly easy to create new markets and trade on markets. And so it ends up being extremely good for the long tail of assets. And that gets into this kind of unique infrastructure that Uniswap. So, you know, Uniswap is not a traditional order book exchange. Uniswap is what's called an automated market maker, or it uses automated market making. And what that means is it essentially allows anyone to spin up their own market. So in a traditional exchange, you essentially have two main types of participants. You have professional market makers who are constantly putting up buy and sell orders, and then you have retail traders or takers who are executing against those orders. And it can be extremely hard to create liquidity in the long tail of assets because the professional market makers that are necessary to the function of order books, they don't necessarily”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“And we can take some of what we've learned from Bitcoin and apply and build systems that have some of the properties that we care about in Bitcoin to this broader class of financial use cases. That's essentially DeFi. Uniswap is a DeFi application living on Ethereum. It's the most popular application and it applies basically this to decentralized exchange.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“History that no one controls it and apply that to other types of applications. And it does this with what are called smart contracts. And smart contracts is essentially code that is run on a blockchain. And so the same way that every Bitcoin node verifies every transaction on Bitcoin, every Ethereum node verifies the execution of every program running on Ethereum. And so DeFi is essentially the idea that finance goes far beyond just money and storing and transferring value. There's entire other world of lending, borrowing, exchange.”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source
“I think a good place for starting talking about DeFi is Bitcoin. Bitcoin is this decentralized system for storing and transferring value over the internet. So you can think about it as magic internet money. And it has these properties that people care about and people like about it. It's provably fair. It's secure. There's no single centralized party that controls it. And it's this global system that can be accessed from anywhere in the world. It's also still limited in being money, right? It's limited to storing and transferring value. And early on in the blockchain days, people started to think about what are other applications of blockchain. And so Ethereum was born. And Ethereum makes it easier to build various other applications that have some of these properties people care about Bitcoin that is provably fair, that anyone can audit its entire”
2021-05-06 · Odd Lots · Hayden Adams Explains Uniswap and the Rise of DeFi · IDENTIFIED FROM THE TRANSCRIPT · source