Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Alessio Delmonti: PieDAO – The Asset Manager for Tokenized Portfolios

Episode Date: October 19, 2021

PieDAO is is a decentralized asset manager for tokenized portfolios and enables anyone to create allocations for both crypto and traditional assets. PIES are non-custodial pools available to anyone in the world with an internet connection. PIES require no minimum deposits for users. DOUGH is the token that governs the platform. Token holders are given voting rights on all decisions.We were joined by the Founder of PieDAO, Alessio Delmonti, to talk about how the project works and why he is so committed to making wealth creation more accessible to all.Topics covered in this episode:Alessio's background and how he got into cryptoAlessio's views on 'financial inclusion'What is PieDAO and its missionA breakdown of the different components of PieDAONFTs in PieDAOUsing ETFs in their methodologiesKPI options and how that plays into governanceThe PieDAO OvenThe roadmap for the projectEpisode links:PieDAOThe OvenPieDAO DiscordGovernance ForumPieDAO on TwitterAlessio on TwitterSponsors:Gnosis Safe: Gnosis Safe is a smart wallet for securely managing digital assets and allows you to define customized access permissions. - https://epicenter.rocks/gnosissafeThis episode is hosted by Brian Fabian Crain & Sebastien Couture. Show notes and listening options: epicenter.tv/414

Hi, welcome to Epicenter, the podcast where we interview crypto founders, builders, and thought leaders. I'm Sebast Sincuizio, and I'm here with my co-host, Brian Fabian Crane. Today, we're speaking with Alessio, who is the founder of Piedau. And before we talk to Alessio, let me tell you about our sponsor this week. NOSA safe is a smart contract wallet for a securely managing digital assets. What makes NOSIS so safe different is that it allows you to define, customize, access permissions. Digital assets on Web 3 are usually controlled by a single private key, which, poses a challenge because private keys can get lost to compromise. On top of that,

users are forced to trust individuals holding single private keys to govern highly valuable assets and protocols. NOSISafe enables users to control digital assets with much more granular permissions involving multiple private keys, a subset of which is required for executing transactions, and these keys can be stored on different hardware or software wallets and even shared across multiple people. NosisSafe's extra layer of security and personalization makes it the most trusted Web3 asset management solution for individuals, teams and DAWS, which we'll be talking about today. Maybe they're using Gnosis SAFE. We'll find out. Who already use it to store more than 80 billion in USD today.

On top of that, Gnosis SAFE provides opportunities for developers to plug into the platform and build their own DAPS and permission modules. This is GOSIS das SAFE to learn more and to get started with your own SAFE. Alessio, thanks for joining us today. Hi, Sebastian. Hi, hi, Brian. Thanks for all right. me. Thanks for joining us. Are you using NOSSAF? Does the PaiDau use NOSA safe? We actually do. Yeah, we do have a bunch of different saves. Like right now, Piedault does use a combination of an Argon DAO together with a couple of different saves for managing ops and also some yeah, treasury operations. So, you know, great product. Shout out to Stefan and the entire team.

Yeah, I say you're also using Aragon and I wanted to ask you about like how, I mean, I, I, I, I have never used that product, but I've always been really interested in it, just from like a product perspective. Like, and I'm curious, like, how, how easy it is to like manage a Dow with Ergon? Maybe something we, this is something we can talk about later. But first, you know, tell us a bit about your background and how you got involved in crypto. Yeah, of course. Like, I'm, well, I've been a developer most of my life. SoftTuffe engineer, you know, started in Web 2.0.

I've been involved in a variety different to a startup, like from advertising, logistics and a couple of other things. And then eventually stumbled into crypto while I was working on a mesh networking project actually pretty early. Like at least I read the paper of Bitcoin, I think it was like 2013

and I was tweeting about it a little bit. But never got into the building until some point in 2017. So since then, I've been really focusing on building different things, mostly retail-oriented products from wallet solution and payment processors and eventually got into so EITED development. And then I ended up, you know, building PIDO. Like what attracted you to crypto and then what was sort of, you know, like why PIDO?

Like, why start that? I think that's a great question. I think besides having, well, like a little bit of an attitude against authority, like, and a bunch of other things, which are definitely relatable to a lot of crypto people. So I'm not going to get into that too much, but it's definitely a component. Most recently, well, most importantly, like, along the way, I kind of realized a massive wealth redistribution was happening within the crypto space. And that was potentially like a one life changing opportunity, not only for myself, but like for, you know, maybe the vast majority of people. Like we are in the in the business right now of creating a new economy effectively. Like we can impact potentially billions of people. And I always thought, okay, you know, what if this time is different, right? Like, you know, what is going to happen having this kind of global perspective? Like, and then when everybody joins, are things going to be different? And I think they are. Like, I've been, you know, for years looking in other internet communities, like even in the gaming communities and see, you know, 11 years old being like, you know, 10, 20x times better than anybody else, like doing what they do, right?

And those are pretty complex systems. So what happens when you open the gate, like, and everybody can build wherever they want? So I think, I think that's extremely fascinating. And, you know, building of that idea, we eventually ended up with part of the, you know, part of, an existing community, which was around thinking, how can we facilitate the process, how can we boost accessibility and most important focus on, you know, wealth creation for everyone and more importantly, automated wealth creation. So you said you guys ended up or you ended up with like a community, you know,

did you sort of like develop the original idea of Pai Dau and then, you know, community formed or was it sort of like a community first that then came up with this vision? Or like, can you tell us about the genesis? Yeah. So how, yeah, definitely the ladder. So like a community form. So there was like at the very beginning what compound V1 came out, right? There was like a little bit of a community in crypto Twitter trying to figure out how much you can,

push this passive income mean forward, right? Like, how much can you end up paying with those interest from compound and other sort of different protocols? Eventually, that formed into a telegram group, which was called Earned Dow, which was initially arbitration between defy interest rate through a smaller Dow, but basically manually through the Dow, right? Like then eventually some protocol came out into like, you know, yield optimizers and idle finance and all these kind of things, right?

But then as we have been working on that, like from that smaller Dow, which was called EarnDAO, eventually a subset of those people started thinking, okay, what's really missing in the space right now? And we started thinking in terms of what if we create an asset allocation now? Like, you know, sort of a group of people which is strongly focused on find different asset allocation, which are trying to answer different things. and, you know, the sign basically took a nice portfolio to some degree, which answered, yeah, have different benefit from different people. And that's how you all started. That eventually came out together into a forum post, which I read, yeah, I brought like one year ago, I think one year and a week ago at this point.

So we are, yeah, we can celebrate the birthday as well. And that's how Pidal started. I wanted to ask you, because I, I, I noticed in your website that you talk about financial inclusion. And I wonder if this is something that, because it's a term that gets used a lot in crypto. And what does it mean to you? And how do you define financial inclusion?

Right. I think that's, well, that's a great question. Like, I'm definitely pro the idea that people have to, well, first educate themselves, like, and, you know, put out the effort. But I would also argue that a lot of the operation that people do, which are a little bit more financially savvy, can potentially be automated, right?

And if they can be automated, it also means that, you know, you can create products which are designed for, you know, for the busy people or for the ones who don't need to know exactly all the needy-gritty of that specific strategy

or like all those assets the way they work, right? At the end of the day, people, you know, just go to the kitchen and open the fridge, like they don't understand how the fridge works, right? So can you do that for financial operation or more generally speaking for asset management? And that's really what we are focusing here. Okay. So in your view, it's more of a question about like knowledgeability about financial instruments than it is necessarily about having access to those services.

That's definitely one component. The second component is can we build tools that facilitate that? Like, you know, in terms of lowering the cost or making more convenient to people. And that's, you know, for instance, where the oven came out, like the entire idea of the oven, within the PiedaO ecosystem and serves the purpose of, you know, lowering the barrier for people to mint in pies. And, you know, we can talk about that, if you like. Yeah. Well, so let's talk about Pieda.

I'm curious, like, where all this kind of branding around pies and baking came about. Yeah, the branding, well, it comes down, it boils down to the fact that, as I said, like, we eventually spent a lot of time as a community thinking about asset allocation, and we were using a lot of pie charts, like, to represent those. So eventually, this entire, you know, this entire thing turned out into a meme is like, okay, you know, we're building pies, like, you know, we, it's the bakery. And then was adopted by the community pretty well. right now we actually have like almost a sort of a secret group for stakers which is called the kitchen right and our newsletter is called inside the bakery and we have been following along those lines since the beginning yeah it's definitely like a pretty cool meme and i think like memes memes help communities stay together and like it sort of gives them i mean like you should

think about you know anthropologically speaking you know like how like religion sort of like has all these memes that kind of keeps communities together. And I think a lot of good crypto projects have sort of taken on this approach, knowingly or unknowingly, but it definitely works. So, you know, what, like describe what is Pai Dow, like, sort of in a nutshell. Like, how does it, like, what's the vision for PaiDow? So if I have to condense it into a sentence, I'm going to say, we are a Dow that serves as a, you know, decentralized asset manager for tokenized portfolio.

with a mission to bring automated wealth creation to everyone who has an internet collection. Like I think that's a way, a good way to represent that. What that means is that PIDA offers a variety of different products at this point, mostly tokenized portfolio, which gives you access to, you know, curated basket of asset. You might think sometimes more, you know, about those things like ATF to some degree, but like on steroids, right? Because like this is crypto, like we are using Defi protocols.

So like you can combine not only the assets, but also create, you know, intrinsic productivity. And, you know, re-leverage all the different opportunities that Defi has to offer from, you know, lending to staking to generate yield. And even be a proxy for participating in governance into other DAWS. Right. One thing I'm curious about, like there are some other protocols, right? for example, set protocol, like, they've had their, um, there's some sort of like token that's, um, like this defy index token, I think, right? Where they're like is, how is it similar or how is it different from PIDO?

Yeah. Like, so, um, from a protocol perspective, there are definitely like some similarities. Uh, since a set protocol is also sort of a basket making protocol in that sense. And I think, like, one of the things that we are trying really to achieve here, like, from a community perspective, is one, not limit necessarily the scope to baskets. So, like, that's one thing. We have been starting by making those allocations. And it's been working out well for us. But we're also more, a lot more interested in other type of tokenized portfolio. Like, you know, either that being, you know, single asset or even sort of more complex things like, you know, options portfolios or. or whatnot. Like, can we build, like, different type of funds, which perform different kinds of things within the Dow. And from my understanding, like, that's one key difference that is really sort of putting

these two things apart. Like, they made up, like, a protocol which is open for everyone to use, but they don't have that vision necessarily. They are trying to be more about like a black rock of crypto, if that makes sense, which which is very large indexes, not super, maybe innovative, just because of the nature of those indexes. So there is a difference in there. I also think like BlackRock is great, but like it's also pretty evil. So like, hopefully we are not going there with crypto. So what are the different components of Pi Dow? So like, you know, maybe just kind of to

break things up a little bit here. So you get the Dow and then there's a smart pool. the bolts and then the oven and I think there's probably some other components so can you kind of like you know break this down like there's if we go if you go to the the pie dow website

there's like a great chart there of you know all the different components kind of working together and I wonder it's kind of hard to do this with other visual but maybe kind of explain how all these components work together and who are the different participants

involved of course so yeah like at the very beginning there is obviously the Tao and the community which makes and govern all these different products. For the current line of product we are managing, there are basically two categories. One is our so-called smart pools and the other one are pie vaults. Smart pool was the very first line of product, which we implemented as a custom implementation of the balancer smart pools. So we were basically using this idea of doing LP, like LP tokens or like liquidity pools

in the form of basically index funds, which will be auto-rebalancing through trading and generating yield in the form of exchange fees between the assets. So that's been one of the first implementation that we pushed, like, and we still have a couple of those. BCP is a good example. So BCP, for instance, is an allocation which gives you equal balance between Ethereum, Bitcoin and Dify coins.

And at the same time, it's automatically generated. generating three layers of fees from basically the trading happening within the pool, either between, you know, BTC and if or if and DFI, but also because DFI plus, which is our defy allocation is also composed of two sub-indexes. So like we have been always focusing on this composability aspect so that we can create this kind of structure, which means, you know, BCP is earning that layer of fee, but also the the fees of trading between the two sub-indexes, D5 plus S and D5 plus L. So between that and PaiVolz, there is a fundamental difference.

Pi-volts are, there is no active trading happening within the pool. But you gave up that for, in exchange for a couple of more things, which is intrinsic productivity of assets. So those assets can be used within a lending protocol, can be used within native staking. For instance, we do stake, you know, sous. we do stake Wi-Fi, we can use wire and bolts within and whatnot. And they can also yield bounds between, you know, the most interesting opportunities over there. So if one single token within the pool is, you know, gaining more yield within another,

sort of another landing protocol or sort of another YBoltz, like the pool will automatically bounce to that. So it's kind of bridging together, like this yield bouncing concept. together with index bonds, if that makes sense. The PiVolts are, I guess, analogous to a sort of ETF, where basically you have got multiple tokens. When you buy one of these indices, you are essentially buying into the performance of multiple tokens. So, you know, looking here at the website, there's like the defy

large cap, which is like the larger Defi protocols, then you have the smaller cap. There's a USD pool, which are vault, which has like all the USD stable coins. And then interestingly, there's also like an NFT Metaverse Index, which has, you know, has

holds like several NFT projects. What are some of the, and there's just like strategies. So what are the strategies that are being deployed here for each of these indices. So I've noticed, for example, that if I take the defy large cap, I'll see that, okay, there's 20% allocation in Link, and that strategy, you know, it appears to be like lended on AVE, and then Uni, you know, it has like 15% and it's landed on compound. And some of them don't have. So are all of these tokens then just, you know, being, you know, staked and either or put as capital in lending pools, like, and then how is that

being managed. Whenever that is possible, the answer is yes. So like some of these tokens will, you know, it's possible to lend them mostly either in lending protocols or into, we use YVOLs quite a bit for generating yield in that sense. We don't do liquidity pools directly, since that will give pretty much like exposure to something else, which we don't want necessarily in the index. And yeah, so like, you know, wherever is possible. Like, in permanent loss, for example? Come again. Like impermanent loss, for example? For instance.

Yeah, and you will also need to like, you know, sell those assets a little bit in order to, you know, gain whatever is the other asset in the pair. So anything which is considered to be sort of almost risk-free in terms of landing, then we are going to do. Some of the strategies are also whitelisted, including a tokenized staking. That's the case for sushi, for instance, and X sushi and a couple of others. So far, we have been focusing really on. only white listing tokenized strategies, right? And the reason for that is that you want to create the situation where the index is always fully collateralized, and then in the worst case scenario, you can always exit in the tokenized

version of that token. Moving forward, we are actually going to probably go through the route of having also non-tokenized allocation and having a slightly more complex redeeming mechanism, but that will enable so much opportunities, right? And so I think it's well worth it. Okay, because like all of these pools are fully backed by the, by the tokens that are allocated. Is that that? That is correct.

It's a 100% back and non-custodial from a user perspective. So like any time anyone can, you know, go and either mint or redeem, they're part for the underlying assets anytime they want. You mentioned that in the future you're looking at perhaps having uncollateralized indices? No, I wouldn't say uncollateralized. I just said not untokinized indices. So like some of the staking opportunities or some other defy opportunities are not necessarily in the form of a token. So in order to leverage those, you will need to have some sort of support that will enable, for instance, to, I don't know, stake on convex finance or something like that, right? Even if they don't give you a token back.

And so, so you, but if you, if you guys. to staking, for example, in a particular portfolio, and let's say there's some unbonding period or other thing, then like how does this redemption work, like for the underlying asset? Right, like we are not doing any staking, which does have a sort of a buffer time, like at this point. If we do, like what is going to happen is probably there are going to be either windows of redemption so that, you know, that can be done for sure within a,

a specific window of time, right? Or we are going to only deploy, let's say, 80% of the pool, like, and keep 20% for sort of a buffer pool, right, so that people can enter and exit through the buffer up to some limits. And that's like a very similar concept to the utilization rate, for instance, in lending pools, more generally speaking. So it will be everybody can basically exit at any time up to 20% for instance. And then after that goes through, like, you know, you need to work.

wait until the next rebalance event, you know, next week. That's interesting, eh? But like, for example, also you wouldn't have, what about NFTs? Can you have like portfolios of NFTs? It is actually a very, very interesting question because like there are right now two discussion happening within the community. One for having a floor, floor NFT found in place, which is called PFP. So, like, you could leverage the NFTX vault mechanism to basically create an index found of, you know, apes and punks and all the popular NFTs using their floor fund.

I'm actually designing like something slightly different, which is more of a curated NFT fund. Because I think the issue with the current design of NFT found is that they are naturally made to not old. valuable NFTs, right? Like they are only made to old floor price tokens, which are great, like, what's a floor price token? So like when you see like a collection of NFTs, well,

the definition of floor price is basically what is the lowest price anybody would pay for an NFT in that collection, right? So like if you, you know, look at, you know, cool cats or something like that, right? there are cool cats which are worth tens of if, right? But then the floor price is around 10th because the lowest NFT, which is currently being sold, is priced at 10th. So there are some funds which basically enable to, you know,

bring together into a basket all the different floor price NFTs and then put them together. Like we NFTX is doing that pretty pretty well. Like we've been working with them also for the play allocation. which you were looking at before, Sebastian. And NFTX is also like a token listing there. So we actually do have some of these funds within play. Like you can get exposure to punks, for instance, and some others. But the issue with that is that like those are floor tokens, right?

Like they are only the lowest price of an NFT you can get from that collection. But I think we actually want to get to a place where you get exposure to, you know, very valuable NFTs. Like the one you know, they will, you know, go up in price significantly because they are very rare. So in this play vault, are you guys actually holding these NFTs? We are holding the floor found which is holding the NFTs. Okay, right. Okay, got it. So you're not actually holding the NFT.

You're holding a token that represents the floor price of. Okay, I see. So it's like an NFT derivative. one thing I'm like here so you know you gave the analogy like of ETFs right and of course ETFs are like I think you've pointed out in your website as well like super widely used super popular you know many benefits to ETFs right I guess the main ones being there's a lot of diversification and and low costs right I think compared to like actively managed funds Now, in the case of an ETF, you know, I guess there's still some sort of manager, right, that like does this rebalancing.

And, and of course, also with ETFs, right? I think you have, you know, you have some kind of like range of, you know, maybe there are some things where it's like, you know, purely formulaic. And, you know, it's just about applying that formula. And I think there may be other things where it's a bit more, you know, there's more degrees of subjectivity. And there's still a bit of a role of like, you know, some kind of fund manager. And then of course, you can go to other funds, right, like more actively managed fund where there's maybe more of a reliance on, you know, somebody making some decisions.

Like, can you explain a little bit? Like, how, how does the decision making around, you know, what? what one of these portfolios invests in, when do a change is made to it? Like, how does that process work? Well, I'm going to say, the entire process looks like this, right? We are a community-based project as such.

Like, the entire community is basically responsible to, one, define a methodology that whatever the allocation we are talking about, let's say, is play, is going to follow through over the months and update that accordingly if, you know, things change. Like, that methodology can include a barrenological, variety of different input value. Like, you know, you can have constraints related to market cap or like liquid markets. You can make sure, you know, if we are in the slippage for a

determined like amount of 100K, for instance, is minus 1%, which is like all rules, for instance, we implement in some of the product we have, including play. And then, you know, you can also include all sorts of things in terms of, you know, number of holders, like and really create a methodology which defines the product within their unique characteristics. But as a community-based project, like the entire sort of due diligence assessment, right, once the methodology is set is basically externalized through the community, through contributors, and it's a pretty independent process, right? Whoever proposes a new allocation, like we are all incentivized to go in there, look into it,

we're going to have an exemptus criteria sheet, which gets updated frequently, and that determines whatever tokens are making the pass or not. Ultimately, each decision is up to the community, like, and even as much as structure it can be, like there is always a final vote saying, okay, we have been analyzing like these new 10 candidates for like a month. These are the reports of all these analysis. Let's have like a one final stamp of approval. for which one is going to be included or not.

And that's how the process looks like. Yeah, I mean, I mean, if we again go sort of to the ETF analogy, right? In the ETF example, I guess you have like different, you know, different entities, different like fund managers, like determining different ETFs. I mean, here, you know, we were speaking about like different portfolios that are quite different, I probably have different types of expertise and different people would be better. But is it like one governance of the entire DAO that kind of manages all the different portfolios that are part of PIDA? Or do you imagine that?

Like, this doesn't sound very scalable to me. Well, the thing is like you can have working groups within the DAO, right? And then you can have a specialized team taking care of a specific index. But that doesn't mean they are outside of the umbrella. of the Tao. And I think that actually is the way to go. Because like the general Dow, we need to go like a little bit deeper into why, you know, the Tao is important and why, like, voting is important. Like, because you are correct. There are like some sort of specialized expertise which will be needed for specific product and more in general, like, it doesn't

make sense for everybody to make decision. And that's why you have sort of verticals. And I think a good example of that has been happening within the NFT space, where we are actually engaging with a different community only to take care of a single allocation for NFD projects, right? And that's because we didn't have internal expertise to do that on our own. So that makes the process a little bit more scalable, but it also creates the condition for them to behave and act within the DAO under the ultimate control of the token holders, which basically act as a sort of a subjective oracle if they made a good job or not. And in generally, we also like implement ways to incentivize that behavior

through this thing that we are using, which are called KPI options, which are basically related to the performance of those indexes so that, you know, verticalized group can, you know, are actually rewarded for what they achieve. To answer your question, everything happens within the umbrella of the DAO. There are sort of independent single working groups taking care of single products. And there are incentive structure for those single working groups based on performance of those products.

Yeah. So then, I mean, there was a post written about the methodology for how pies are built. And maybe that's a good segue into the governance aspect here, which I think is fairly interesting. and perhaps like one of the most novel things about this project, you know, at a high level, walk us through, you know, how, how pies are built like through these working groups and maybe, you know, from there, how the government, governance plays into that process, you know, particularly through the Doe and veto tokens.

Yeah, sure, and absolutely. Like, I think, well, in terms of the construction of new products, like it all starts within the governance forum of the Dow. Like either a group of people or someone comes out with an idea for an allocation, which is formalized into what we call a PIP, a PIP improvement proposal, which is basically like a formal proposal for the allocation. Different allocation can have different methodology. We have sort of a general rule of thumb for anyone who wants to, you know, gets into a market weighted allocation. So like we are going to look at a couple of things. that's exactly what's described within that forum post,

which is not only related to market cap, but also underlying liquidity. And that's necessary because we want to make sure that if large capital enters the space or enters the pie, like sleepage is under control. So we look at all these things. And once the models are sort of run out and the discussion has been going through,

we try to achieve what, you know, we like to think about us off-chain, let's call it off-chain, rough consensus within the community. So, like, the discussion will be going for a couple of weeks, sometimes a month for two. We will be looking at the product if it does make sense or not. We'll be looking at a different candidate. We will make the matrix of inclusion, like, you know, whoever makes the cut or not. And then we're going to do a final vote to make sure that, you know, comes to reality.

And then after that, if the specific allocation does, sort of include specific trigger for rebalancing, then that's where the rebalancing will happen. So some allocations will basically say something like, okay, if you, you know, if a single token is over 30%, then that triggers a rebalancing immediately, right? And this needs to happen. There are like another rule.

It depends on the allocation. But there are like a couple of different rules which can trigger the rebalancing. And this entire governance process, like happens mostly of chain, but then eventually it gets notarized either on chain or like through the snapshot platform, through voting by token holders. And most recently that, you know, went through a big upgrade. Like as we've been transforming the entire way the governance system work through the introduction of Vido. Yeah, the entire concept about Vido is actually very simple. Like we have been thinking a lot since the beginning of the DAO,

how can we make sure we balance short-term interest with long-term interest for token holders? And that's one of the key questions which I think every community is asking themselves and how to create that kind of long-term horizon in decision-making. And the reason why you want to do that is like, you know, they are simple to understand, but like they basically create, you know, the groundwork to have a mentality which is focused on impact, which is making sure that you are investing on the right thing, including innovation, which is eventually what is going to lead to success over time, right?

The capacity to sort of reinvent yourself as an organization and make sure that you don't stagnate. Taking all these things into the consideration, we've been rolling out a new governance system which does require token holders to basically, you know, declare their commitment to the Dow. And then say, okay, I'm going to stake

like my tokens from a time span which is of at least six months to a maximum of three years. And by doing that, I don't know this take, but that's the only way I can participate into governance. We believe that gives, you know, others a strong reason to take responsibility for

achieving the mission of the Dow and also pretty much act as an owner instead of a passive actor within the ecosystem. And then tokens, there's like some kind of inflation is given out to the governance participants to incentivize that? Not all. Not also. It's actually not inflation.

So the thing is like we are going to redistribute. So there are like a couple of components. Components number one is the commitment part, which happens through the staking and gives you access to governance power. And then once you have governance. power, right? You need to exercise that. And then we like to call this concept as governance mining. And the basic idea is that, you know, the Dow over time will accrue a bunch of fees and it will accrue a bunch of different revenues, also coming through a totally different working group, which is the Treasury Group, which does active farming with the assets within

the Dow. And that's actually pretty substantial. So we want to make sure those revenues are redistributed to the people who work to make that happen. And then that's how we define the idea of participation. So active participants will receive like a slice of the rewards, either coming from the pie or the treasury farming in the form of a basket of tokens. What that means is that rewards are not actually given within the Dole token itself and they are not related to the price of dough, are instead a collection of different fees.

made of different tokens. So like the very first distribution next month, which is the very first distribution of Slice, will be comprised of a variety of different token, including, you know, Ball and CRV and CVX, and all the different things that the Treasury has been actively producing through Treasury management. I actually think that is probably the first time,

like people are rewarded for participating in governance, not within the token, with the same token of the governance itself. And I think that's pretty noble. Yeah. And practically speaking, what have been the effects of this? So, like, I'm curious, actually, like, you know, an broader question is, like, how big is this community and, you know, what kind of

governance participation are you seeing? Like, what's the percentage of, you know, token holders or, like, of tokens that are, that are actively participating in governance? So, like, this entire program has been starting this month. So, like, we are now 13 days. Actually, no, nine days. in because we started on the fourth and we have seen over 26% of the circulating supply being staked, roughly like 5 million, a little bit more than 5.7 million. Actually, I need to

check. Like it's going pretty fast. And so far we count 140 different token holders like within the new governance system as the world is spreading. Like this is sort of getting bigger, especially as people realize like sort of the order of magnitude of the payout, which is obviously like a big incentive to get in quick, right? Because we are actually now like the entire distribution will be related to everything which is in the treasury accumulated so far. So I think it's across like next to 1.5, 1.4 million right now within token holders. And in terms of the impact we have been seeing,

It's actually quite interesting because since we have been rolling out this new system, we have been, well, seeing like the entire community come alive, you know, once more in a completely different way, they all shifting mentality, like in this idea, okay, how do we make sure, by the way, the vast majority of the tokens are now staked for three years. So it's a pretty long commitment. And that's generating like a variety of different initiative on now we can make sure, like, after those three years, like the entire value of the Dow

will be way larger. So yeah, like we are going to actually do the very first governance vote next week after Monday 18th with a new system. So I'm pretty excited to see like sort of the participation rate.

I expect that to be close to 100%. So I guess we will see. I'd like to go deeper into KPI options and the role that they play in determining, for example, like allocations in a vault. Right. So the KPI does not have anything related to the allocation itself.

So let me briefly explain what a KPI is first, right? So it's basically this idea pioneered by the UMA team of creating tokens which are following a key performance indicator. And that can be pretty much anything. In our specific case, we are using those in either two ways. One, which is we are going to incentivize liquidity, which is staked within a single product, and then the number of TBL within that product, it's what's used by the Oracle of the UMA KPI option to basically do the settlement.

Or more specifically, as for today, we are doing a KPI option which incentivize people to find new stakers, like can expand the community. And that specifically is actually running out also this month. And the way it's going to work is, you know, we're going to have six months of time. And then we're going to look at the total amount of token staked. And then it depends on the outcome. Like that KPI option will convert up to $5 million Doe token, which is the token of the governance we are using in a pretty asymmetrical way, which means that there are steps

in the middle, like, and obviously within the three steps, like, the last one is the largest one. So, like, if you can manage to get to that one, like, everybody gets, like, another big additional payout. And that's a similar way we're doing for PIs. As we engage with different groups, or like, with specific working groups, we want to make sure those people are incentivized, you know, to do a good job in accruing, well, in collecting, you know, value for the product, right? So you can design a program which is basically saying, okay, you're going to release this, we're going to release the epicenter product, right?

And you guys are going to manage an allocation. You guys are out of the cure of nobody are doing. And the way we're going to incentivize that is once that's come out, like if that product gets 1 million TBL, then you're going to get this much, like 100 token or 100,000 token, let's say. But if he gets like 5 million TBL, then you're going to get, you know, three times that. and so on and so forth.

So you can create sort of a step function to make sure people are only paid for results, if that makes sense. Yeah, that makes sense. Yeah, we could start an epicenter vault that has all the projects that we have on the podcast. See how that plays out. Bullish, I'll buy it.

But I think that's actually quite interesting, a sort of compounding mechanism to just governance per se, right? And that comes out to what you just said before, Brian, Like sometimes, you know, you cannot let everybody decide for everything, right? Like, you will need to have specialized expertise to make sure things function. And I think, you know, you can even think about that in terms of, you know, the prices low, right? And then if you look at the prices law, they say, like, that 50% of the work is done by the square root of the total number of people who participate in the work, which basically means 10% of the people have 50% of the result.

So, like, you want to create incentives which are. targeting those 10% of the people, right? And make sure they are yeah, they are basically incentivized based on the results. Yeah. Yeah, I mean, I think they're bullish on KPI options. I think they're going to be great. Yeah, no, totally.

I mean, I think in the end, right, what you're having here is, you know, you're trying to do something, like trying to produce, like create products, trying to create, you know, get used. users build something in a decentralized way, right? So of course you have to have people who then contribute to it and get rewarded somehow. And I mean, that's like a challenge in a centralized traditional company. It's not easy to sort of say, oh, who contributed by how much and compensate people fairly. And now if you have it in a decentralized context, of course, it gets, yeah, I mean, it's probably

even trickier at this point at least, right? because we don't have a lot of the tools. So, yeah, I think the KPI, you know, that makes a lot of sense, I think, as a sort of, yeah, a way of incentivizing and rewarding people. Of course, tricky too, right? Because often maybe you should, maybe the KPI can be slightly off and then sort of, you know, then, well, if you have a KPI option, right, people are going to try to like optimize around that KPI.

And if that really matches what you're trying to accomplish, great, right? But if it's like slightly off, then you're correct. Like people will definitely optimize for that KPI. And that opens like also an interesting question, which is like within a decentralized organization, which has, it's, you know, leaderless. Like you have to make decision, you know, almost based on on the advice process instead of the chain of command, right? Like token holders are not like, you know, they are not going to decide where to go.

Like it's more like, you know, you have a community of people, uh, want to implement different things, right? And you need to have systems to make sure those people have that opportunity first. Like you can see like it's important that there is like a governance layer on top because otherwise you don't have any good point of intervention before things get too far like on they're going, you know, badly. Right. But that's pretty important because that opens a wide opportunity for people to experiment and also create a whole lot of different things. I think you were mentioning sort of traditional ETF before. And I think one of the main difference that we're going to see between traditional products

and on-chain products is that the cost of production is extremely minimal when you see at on-chain products. Like rolling out a regulated ETF will take millions of times. only in compliance, right, without even talking about, you know, licenses and all this kind of things. But on chain, that takes minutes, right? And peanuts from a cost perspective. What that means, though, is that, like, you might end up with a bunch of different products

which are not really working out great. And that's why you need to optimize for specific, you know, performance indicator. So in that sense, I think that works, it's going to work out pretty well. But I do expect to see a lot of experimentation. In that sense. I think we are just so early on to see what what is going to happen. So let's talk about the oven a little bit because this I think is a really interesting piece of this product. Describe what the oven does and how people are using it. Right. Now, the oven is, it's basically this comes like we have been looking at how people were using pies. And eventually we realize that minting pies might not be accessible.

accessible to anyone. Just because the cost of the gas is going to be so expensive, right? Like Ethereum right now, the block space within the Ethereum blockchain is in very high demand. As such, like gas price will spike pretty often. Now, since these products contain like a, basically a large amount of different tokens, like that will become a little bit costly over time. As such, we have been pretty much designing a batching mechanism. And you can think about that as a,

using your own car versus getting into a bus, right? Like it's going to be just cheaper, like if we get 10, 20 people into a single bus and then, you know, make sure they all go to the same place. That's what the oven does. You deposit your if into it. When some threshold is basically crossed, then the oven will bake. And then by baking, we'll create the pie for everyone and then give it to the people. it's a similar concept of our roll-ups work or sort of other L2 to some degree.

Okay, so essentially, by having you use the oven, though, there's a time sensitivity, you can't be time sensitive, like you have to be prepared to wait the time that this batching will happen. And like, how often does this batching happen? It actually happens based on trigger. So like, there is a minimum requirement of 10 if within the oven to start baking. And then the gas will be subsidized by the Dow, which means that the users only pay the gas to deposit into the oven, to withdraw if they want to.

But like the entire baking is subsidized by the Dow. It depends on the moment, right? Like sometimes you would be baking happens within hours. Sometimes you can take a couple of days. But in any sense, like I think we are estimating right now that if you do bake through the oven, you have up to 72, 70, 70, it depends on the number of tokens. cost savings in doing that.

Wow, that's pretty impressive. So, you know, before before you get to, you know, talking a little bit about the future of Pieda, like, I'd like to maybe take it to a more practical side. Like, so, you know, someone who's holding ETH today, you know, can choose to old ETH and just gain from like the increase in price of ETH. what are some, you know, strategies for, you know, optimizing the returns that you can get on that eth? And like if someone say, you know, very plainly, like someone had 100 eth, what would you recommend as, you know, like low, medium or high risk strategies with regard, like, as far as PIDAW is concerned?

Right. So like I think you can look at it from a perspective. Like I was mentioning before that we do pretty intense work in treasury management. Right now, by the Dowlake is sort of managing his own treasury, which is I think close to $18 million or something, and that's where the yield comes from. And we do employ a variety of different strategies

within sort of the if exposure. We consider to be sort of base, like risk-free exposure, sort of staking for if 2.0, either through tokenized platform like Lido or something like that, We consider that to be sort of the base benchmark. And then we do employ, you know, a couple of other strategies into that.

So, like, you could, besides, like, just putting that stuff in Lido, you can participate into the equity pools and then have that on curve, for instance, and even stake those positions into something like convex finance, which will yield you an additional layer of fees, or additional layer of tokens through the CVX incentive problem. that's already like kind of in the medium risk strategy like but it will yield a little bit more and that's a pretty interesting one otherwise you get to even in a more complex stuff like setting portfolio of options or which is something which we also do within the paid out treasury working group so like the good thing about all this stuff is that you know you have one under the flag and then you have to decide all this different sort of risk profile you know which allocation put in each one of the risk profile. And then there is a lot of research involved, right?

So we kind of abstract this entire process for dough holders to some degree. Because like when they get into the dough staking program, like they get the benefit of all of this, right? Because we manage the treasury. We do the research. Like the community does the research, employs the different strategies, and then people just get the payout. Which I think it's quite interesting. Like you can even think about that as all. almost getting a carry from a fund to some degree by working on it.

Where it usually happens only for the GP, like this happens for each one within the group. So different strategies on if, you know, you can low risk just like, yeah. Yeah, very cool. Yeah, one thing I'm curious about, I mean, pie. So far we've always talked about like Ethereum. do you guys have plans to extend Pai Dau to like other blockchains or like, you know, kind of include assets, like non-Etherium assets? Right. Like non-ethereum assets are, well, first of all, like we need to have them bridged into Ethereum somehow, like for that to happen.

And that would be like one of the first thing. But it's definitely something we are interested into like can you can up in a variety different way, either through synthetic. asset or wrapped version, right? And that's the case. We already used WBTC after all, like in a couple of different locations. So that's definitely possible. There is a lot of talking within the community of going into a variety of different L2. And I think that's something which is going to happen pretty soon.

Yeah, the moment like we find out what is sort of the best formula for doing that. Because what I find particularly interesting about Pi-Dow in L2 is that you can provide to L2 users, like a layer of additional fees that they would be getting on L1, which they cannot, right? So you are kind of double yielding, right? You get a pie, which is already yielding like 10% APR because it's using so many strategies,

and then you bridge that into an L2, like, and then you don't only give the exposure, but you can use that in a variety of different protocols over there. So I think that's the direction. we're going to go for all that regards as to a different change. So what's the future here? I know you've got a roadmap, sort of roadmap for the next few quarters post up on the medium. Walk us through so the things that are coming up in Pi Dow.

Right. So, yeah, like the very first focus right now is to, well, we want to get to a very large percentage of the network's take. I think that's like potentially one of the most important thing that we are all working as a community towards to because it's incentivized

but also because it's good for the community itself. There are a couple of different products which are going to be pretty exciting. One gives basically full vertical exposure to all the different L2 solution and it's called scale and it will give you stuff like, you know, optimism, like

or polygon and whatnot. So like you can make a vertical bet on all the different scaling solution without having to pick one. Same NFT founds, something we've been thinking quite a lot, and we're looking forward to have them making into our reality. By the way, shout out to the Winter Bear community, because the Art Club is being very helpful in defining that allocation as well. And more generally speaking, I'm looking forward to see tokenization of some of the

strategies that the Treasury Working Group has been working on within the couple of, you know, the last few months. Like, they have been extremely effective in generating yield and then they outperform the benchmarks by, you know, by a lot. So, like, I'm very excited to see that being tokenized into their own, sort of their own strategies. And that's definitely happening very soon. from an organizational perspective, we have been working on, yeah, pretty much creating

all the different structures which will enable the organization to scale and have, you know, more and more full-time token older get on board, like, and make sure they can make their best work. So I'm quite excited about that. It's been a long process. Like, it's now working pretty smoothly. And also, like, I want to shout out to Adrian for, like, leading most of these efforts. And yeah, so like a lot more products coming out, a lot more related to, you know, benefit to the VDOWs takers, which is, you know, they, they will see very soon.

And, yeah, and a couple of new PISN online. And where should people go to find out more about Piedau and perhaps get involved? Like, what, what are some of your calls to the community here that you, you know, people to check out? Yeah. So like first thing first like you definitely go and check it out our Discord. Like it's a pretty active Discord. You can find it in PiedaO.org. Like just going to the footer area like you will find a link to Discord.

And regarding getting involved like we recently wrote out a completely new bounty program which is enabling you to earn some more though and then participate actively into the community. That's like probably the fastest and more interesting way to go deeper. into the community and get into an actionable stage, earn your way through the DAO, like earn a reputation. So definitely go and check out

like the bounty board. Like there are a number of tasks which are both, you know, for technical people and non-technical people. So feel free to just jump in and participate within the community. For all the rest, there is a governance forum,

which is at forum.com. com.com. When you're going to see all the governance happening for the vast majority and what decision are made. And I think otherwise, like, hit me up on Twitter, like, and then, you know, I will guide you through. Cool.

Thanks so much. Well, we'll link to all those resources and definitely to Pieda and your Twitter. Thanks for joining us today, Alex. Thank you very much, guys. Like, it's been a pleasure. Like, good job on the podcast. I'm a fan. Off to speak up soon again.

Yeah, thanks so much, Alex. Looking forward to it. Cheers. Thank you for joining us on this week's episode. We release new episodes every week. You can find and subscribe to the show on iTunes, Spotify, YouTube, SoundCloud, or wherever you listen to podcasts. And if you have a Google Home or Alexa device, you can tell it to listen to the latest

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