Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Michael Egorov: Curve Finance – The Stablecoin Exchange Protocol

Episode Date: May 13, 2021

Curve is an Automated Market Maker (AMM) that lets users and other decentralized protocols exchange stablecoins (DAI to USDC for example) with low fees and low slippage. Unlike exchanges that match a buyer and a seller, users transact with the smart contract itself. By providing a flatter curve targeted for relatively stable pairs, Curve has established the lead position for these markets. Curve is also leveraging its own token CRV to incentivize long-term adoption of the protocol and decentralize control of governance.We were joined by Curve Finance Founder, Michael Egorov, to chat about why he created the protocol and his long term vision for the project.Topics covered in this episode:Michael's background and how he got into cryptoHow Curve works from the perspective of a trader and as a liquidity providerHow they came up with the stableswap designHow Curve compares to Uniswap v3Michael's take on forks, fork threat, and Curve's moatCurve's thesis on good governanceHow they keep the protocol secureAn overview of the Curve community and ecosystemThe long term vision for CurveEpisode links:Curve FinanceCurve ResourcesCurve on TwitterMichael on TwitterSponsors:ParaSwap: ParaSwap’s state-of-the-art algorithm beats the market price across all major DEXs and brings you the most optimized swaps with the best prices, and lowest slippage - http://paraswap.io/epicenter Solana: Solana is the high performance blockchain supporting over 50k transactions per second to power the next generation of decentralized applications. - https://solana.com/epicenterExodus: Exodus the easy-to-use crypto wallet available on all platforms and supporting over 100 different assets. - https://exodus.com/epicenterThis episode is hosted by Brian Fabian Crain & Zubin Koticha. Show notes and listening options: epicenter.tv/391

Hi and welcome to episode. This is episode 391 with guest Michael Eggeroff. So I'm Brian Crane and I'm here with my co-host, CK. Now before we're going to talk with Michael about Kerf Finance, which is one of the automated market maker protocols that's gotten the most traction. We want to just spend a minute to mention a few sponsors. So there's Pereswap and Pereswap is a great way to trade tokens on-chain. Paraswap just can.

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And Solana may well be the best solution we have at this point. So go to Solana.com slash Episunner and learn more about how to get involved in the Solana ecosystem. And the final one, Exodus. So Exodus is an easy-to-use wallet, which supports hundreds of assets and has native apps for all platforms, including iOS and Android. It's a fully non-custodial wallet. They're firm believers in that not your keys, not your coins, mantra. So go to exodus.com and give it a try.

Now with that, let's go into our episode. So Michael, it's such a pleasure to have you. Thanks for coming on. Maybe just share a little bit background about yourself, like what's been your journey and especially kind of like your journey to becoming involved in the crypto? space. So yeah, basically my crypto journey started in late 2013 with buying a little bit of Bitcoin. At the time, I was doing postdoc in physics after receiving PhD in physics.

And shortly after, I actually went to the United States to work in tech industry at LinkedIn at the time. And I've learned a lot about crypto at that time as well. And actually started a company which was not doing crypto called ZeroDB, which is now called Newseifer. And it's operating in crypto. So anyway, that's kind of how it started. And what I am doing right now is quite different. And that is because I actually become quite a heavy DFI. user starting from late 2018, I guess, with Makers-Aw. And I always had this problem of swapping between

stable coins all the time because I was doing that on Coinbase and that was not quite effective. And at the same time, I was doing some trading bots and this kind of created the idea how to swap between stable coins effectively. And that's what started Curve Finance. And in the beginning of 2020, I've finished implementation of my algorithm in Viper and the basic UI and started curve. dot phi. And basically what we have today is a continuation of that. Maybe let's start by diving into Curve directly here.

So do you mind for people who are not familiar with Curve, can you explain how Curve works, first of all, from the perspective of somebody who wants to trade? And let's say with your example of like, you know, swapping different maybe stable coins. Right, right. Yeah. So currently the primary purpose of Curve is exchanging between two coins of the same denomination. notably US dollar stable coins, like USDC and die, for example, but also there are BTC denominated coins. So you can swap between BTC and BTC and even if denominated coins.

For example, for example, if real Ethereum and, you know, staked Ethereum, staked with Lido, for example, that's also a popular use case. So, and. But, but. Basically, you could swap for a reason of, let's say, if you want to interact with MakerDAO, you probably won't die. And if you have USDC, it's probably a coin which is easy to redeem to your bank account. And that could be one reason to swap. Or, for example, if you want to go from your Ethereum to staked Ethereum, you could also do it that way. or maybe that way around. That's kind of from the trader perspective.

And on the other hand, there are users who deposit on intercurve pools. And they earn trading fees and also CRV tokens and maybe some subsidies by the protocols who sponsor the pools. And that's kind of the yield you get as a depositor in the pools. That's how the liquidity gets there in the first place. Yeah, I should actually also add this disclaimer here, which I'm into which is that I do use that. So we've been with my company kind of very involved in LIDO. So I'm doing exactly that at the moment, right, where I put a lot of my ether into LIDO and then got the stake ether out and then put that into the curve pool between ether and stake ether.

So and having that process also earned some CRV. so have also some of those tokens at this point. Now, with, I guess one of the essential things around curve, right, is that, you know, if you compare it, so, you know, you have basically this function where you're trading not with a counterparty. Like, so there's not like, the counterparty is kind of like a smart contract and then there is a function that determines the price. can you talk a bit about how that works with Curf and what's special in this regard for Curf? Yes, so basically what is common for many of the automatic market makers is that you have some liquidity in all the coins involved.

And let's say when you swap from coin A to coin B as the user buys a little bit of coin B from the pool, and the pool gets also more of coin A, the price shifts a little bit so that coin B, which gets bought, becomes a little bit more expensive. And then the so-called bonding curves, they describe how this pricing changes. Different protocols have different bonding curves. For example, Uniswop 2 has constant product bonding curve, which is where the pool basically rebalances the whole holdings. What we did, we, kind of concentrated liquidity around the price 1.0. That's where the liquidity is most needed,

but then it's kind of smoothly going down to as you get away from the price 1.0. So basically, when you are close to 1.0, you get the highest depth of liquidity. but let's say if the price changes a little bit, let's say it becomes 1.01, you have the depth being a little bit less. And there are pool parameters which define how tightly are you concentrated around this 1.0 price. Different assets may need kind of different concentration of this. It depends on the asset volatility. For example, stable coins like USDC and USDT, Yeah, very, very stable.

So you can be very, very dense around price 1.0. And something like Staked ETH is expected to be much more volatile. So we need to have liquidity a little bit more spread out, but still much, much tighter than kind of a universal relationship, which Uniswop 2 or sushi swap or balancer has. how did you come up with this design in the early days the stable swap paper it seems like a very elegant solution to specifically like low volatility pairs what was like the process from like ideation how did you realize this was a problem in the beginning because you were working on new new cipher at the time and how did you go towards the design you have now yeah as i said the problem itself is it was kind of easy for me to figure because I was a heavy defy user and I always had this problem of swapping between dye and usDC pretty much so that's that was one thing but the

question how how to come up with this mathematical relationship it was interesting as well because firstly it was it started from a graph like bonding curves can be represented by graphs. So for the simple constant product idea, which was already out, the graph is basically hyperbolic. And I first thought that the part which is close to price 1.0 should be flat. But not necessarily, like, completely flat. Because if it's completely flat, then you kind of, you have kind of infinite depth. So, And basically I first started graphing it on paper, and then I started thinking what would be the formula which corresponds to this graph. And also this formula should be not very complex, because if it's too complex, then I wouldn't be able to solve it in a smart contract and not eat all the gas.

And yeah, so that's basically how I came up with the design and the formula for this. So when you're looking for a flight, you go through a flight aggregator to see all the different places where you can buy the flight to get all the options and make sure you get the best price for your travel plans. And when you're making a defy swap, just do the same and use pariswap. It beats the market prices across all the major dexes because it aggregates them. And thanks to their network of professional market makers, you get zero slippage on your trades. So they just pushed a huge update that's even faster, more liquid thanks to a brand new algorithm. Paraswap is now multi-chain and has expanded the polygon and Binance smart chain. So go and check it out.

Give Paraswop a try at pariswop.io slash epicenter. And from what I kind of understand of Uniswop v3 is that it allows you to recreate any graph in price space, including the stable swap graph. Yeah, in principle, correct. Yes. It does allow you to create such graphs piece by piece. Something like a spline where you basically, users can create their pieces of the spline and deposit liquidity into those pieces. And in principle, that's actually good. I actually had this same idea in early 2020 as well for volatile pairs. until I had some other idea which I'm currently implementing, which I think is fully automated, so it's better.

But even like if we talk about stablecoins, one key difference is that we are able to quickly change these parameters without users redepositing anything. For example, imagine that you have one graph. Well, just an example from maybe a week ago. had liquidity for staked eth with Lido being, let's say, spread approximately within like plus minus 10% from the price 1.0. But it turned out that STEth is actually very, very stable. So we are able to provide liquidity much better for it by concentrating it tighter.

And we didn't have to ask users to kind of to redeposit liquidity into whatever ranges. We just made a Dow proposal to increase this amplification coefficient, how we call it, a parameter, by factor of five. And over one week, this liquidity becomes tighter by factor of five, basically, as we speak. it does so very gradually in, if I remember correctly, 5,000 steps. That's absolutely kind of transparent to the user. So basically as we speak in this episode, the liquidity in that pool becomes tighter and tighter without transactions becoming more expensive

without anyone redepositing anything anywhere. So in principle, these analytical solutions, they allow to do that quite cheaply. so they are superior in that regard to uniswop v3 approach. Although I definitely can see that uniswop v3 approaches allows for very high levels of customers ability, maybe at the expense of being a bit less convenient for liquidity providers. So they should be quite professional, sounds like. Yeah, that explanation was really good.

So I think it's not easy to wrap your head around, you know, this entire like automated market makers and exactly how it works, right? But I think one way that I think it's interesting to sort of conceptualize, like why are automated markets makers interesting is if you take an exchange, a traditional order book exchange like Binance, then there are, of course, market makers there. And, you know, these are like professional firms, right? that are putting maybe bid orders in and ask orders in and they're watching other exchanges and they're updating them and they're providing liquidity that way and they're also earning money that way. But, you know, I can't do that because I don't have the knowledge, the infrastructure, you know. And so what you're, what, but then with curve, you're basically saying, okay, we have a program that does it and anyone can give money to the program and now you can be a marketmaker.

anyone can be a market maker. And then actually with the uniswop thing, you're almost going into, with the V3 thing, right, it almost goes into a little bit of this hybrid thing where, well, anyone can provide money to the market maker,

but there's a lot of parameters to choose and maybe to change and update so that, like, you know, you can do it better versus curve is still sort of in the, yeah. Yeah. So if you explain uniswap three,

in these terms, it's almost like a traditional, like a traditional exchange, but instead of having discrete orders, you have a continuous order book. So instead of orders, which probably date back to, to like ancient times where you had to write orders in an actual paper order book, you can actually have them continuous and that's how it should have been when computers appeared, but that wasn't the case until Uniswop 3, I guess. But really, I think this is an improvement over traditional audiobooks, but still, like the level of skill required to provide liquidity in general for volatile pairs over there is, I think, the same.

So you kind of, in traditional orderbooks, you just had to put, I don't know, a letter of orders, right? To sometimes, and on UNISWP3, you just have to spread liquidity from price A to price B for that. That's certainly an improvement, but to figure where to put your liquidity, there is a considerable skill required. And, like, just to give you an example,

imagine that I'm providing liquidity for Ethereum, right? let's say Ethereum price is at, I don't know, 3,000. And I've provided liquidity from, I don't know, 3,000 to 3,100. And it worked well while Ethereum was there, but then when price went up, I'm left with dollars. So, okay, I take dollars and provide liquidity in a new price.

But if I do that, I'm kind of losing on Ethereum going up. And the same with it going down. Let's say imagine I provided liquidity at 4,000 and then it dropped to 3,000. I'm left with ethers which were at around 4,000, maybe a little bit less. And then I was back holding those while the price drops to 3,000. So I'm losing again. So that's kind of what happens if you do everything naively. So it's a powerful tool, but naive liquidity provision probably doesn't let you make money over there. So that's kind of, that's a problem with that, but that's also a problem with centralized exchanges. But yeah, market-making firms are probably making money, so they are probably skillful enough to do that.

And I think they are the users, they would be the best liquidity providers for Uniswap 3. Let's get to our sponsor Solana. Now this is a special ad for me to read because I've been a deep supporter of this project since meeting the Solana team back in 2018. I invest personally in the project and my company, course one is super deeply involved in the Solana ecosystem, including running the biggest validator. So what's so cool about Solana? Well, we all know that scalability is the single most important issue facing the blockchain

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So go to Solana.com slash Epicenter to learn more. I would love to expand a little bit on this more generally. I listen to another podcast with you, where you said that you think, you know, automated market makers are, you know, this kind of like fundamental improvement, fundamentally superior to traditional auto book exchanges. You kind of like said a similar thing here.

Can you explain why you think that's the case? Basically, they are pretty transparent in what's happening. You pretty much know that they will do the right thing, what they're programmed to do. But also from my observations, automated market makers can be probably not worse than what traditional market makers can do. being not custodial so they can emmess much more liquidity and maybe maybe traditional market makers would argue that that their markets are more effective than than uniswop two or balancer which is true but for cryptos but also i think it's possible to do much much better

for cryptos at least at least we will try to prove it In that vein, what do you see as the long-term vision for curve? Where is curve in five years, ten years, and what use cases is it allowing? I think we currently started with stable pairs, but I think if we go a little bit beyond that, we probably would allow fully automatic creation of very effective crypto markets or foreign exchange markets and like who knows which like how much we can replace traditional order book approaches but I think that's that quite can happen to a certain degree.

Got it so do you see it like kind of going into Uniswop's territory a little bit of allowing arbitrary exchange between any pair of tokens? Yeah, I think that's, of course, a sensible thought. But because you are talking about five and ten years, we may talk about, I don't know, about stock markets, about foreign exchanges, about like all sorts of exchanges which are known traditionally.

because I think the story here is bigger than, you know, one DFI project versus the other. It's about whole DFI space capturing the traditional finance market. This is probably a good time to mention that I'm, you know, a disclaimer, also a curve user and token holder as well and have been participating and following along with this journey. Cool. So this is one of the things that I've also wondered about because with automated market makers, you know, like Curve and Uniswap, like getting these like enormous volumes. And when you've seen how they have taken, you know, a really substantial market share at this point from, you know, centralized crypto exchanges.

And, you know, centralized crypto exchanges are still like, you know, good products, right? Like they work well, like user friendly, you can make an account easily, deposit money easily, like so much better than traditional financial institutions in many regards. But like still you've seen on chain, you know, these automated market makers take a substantial market share from that. So I have also kind of wondered with like, is that at this point this kind of like breakthrough success of, of crypto and of blockchain that it has, you know, better market mechanisms. And you know whether that is going to be the thing that will really sort of drive, you know, the inroads towards taking more market share, you know, from traditional financial systems. Like, do you think that's the case or do you think there are going to be other drivers that will

be critical for this kind of transition? One thing I would say that it's not necessarily, I mean, indeed, like, like the blockchain activity kind of takes quite a bit of centralized exchange market share, but also we've seen Binance kind of successfully solving this problem with Binance smart chain, which is, yes, it is centralized, but it is centralized with the central authority being Binance and not the services which are built over there. So it's basically if you do it on a centralized exchange, you couldn't give some trading firm money to trade non-custodially. But on something like on an exchange chain, you actually can do that.

You can do money to trade to some decentralized service, and that makes a big difference, even if the chain is controlled by the exchange. And yep, still Ethereum is better in like my view. But as we can see, it's still quite successfully. The exchange chain can get some bit of market share. So that's kind of the evolution of that model. Awesome. Wanted to shift gears a little bit to maybe a little bit of a different direction.

But seeing uniswap and sushi swap, how do you think about your mode? What do you think about fork threats, forks in general, or projects that are very similar, like saddle, when you think about curves long-term success? Yeah, there are many ways to establish this mode. One is if you look at how quickly forks were created, it took some time to understand the mechanism how the market making works on curve. It was a little bit harder to understand that constant product. And this gives a little bit of time to like before forks start appearing. I think probably Uniswop 3 because it's quite a bit less understood by people who may fork,

so maybe it has some of this mode as well at the moment. Another way is probably good token economics. I think our token economics is probably good for kind of keeping the competition, way as much as possible. And another thing is it's probably it's probably good to allow the forks, but in such a way that they benefit the protocol. We tried to do that with a few forks. We'll see how it goes. But yeah, that's another way. So yeah, but it's still kind of experimentation phase. So we are looking at different ways to either preserve the dominance of the protocol or to get it done so that if forks appear that the same people pretty much own part of the forks, stuff like that. And we will see what works out.

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They have support for over 100 different crypto assets. And from within Exodus, you can easily change one different asset to the other. They also allow you to buy crypto with Fiat. And they even have a great offer where you can buy up to $500 worth of crypto through their iOS app and pay just $1 in fee. So go to exodus.com slash epicenter and check out their wallet. We want to thank Exodus for their amazing support of WebCenter. So you mentioned token economics as a mode for curve.

Like what is it about, you know, the curve token economics that you think gives that kind of mode? Well, I think it's kind of probably quite easy to understand. In a naive way, you can have pools earning all the fees for themselves. So let's say you deposit into the pool and all the exchange fees go to you as a liquidity provider. But, you know, market is not very stable. So sometimes these fees can go up by factor of 10, then drop down. That we've seen that. So it's good to introduce some sort of inertia there.

And we introduce that by doing basically token emissions. So some of the token emissions go to the pool liquidity providers, but some of the fees go to the DAO, which means basically the token holders, or well, token lockers, if to be more exact. So we have this loop where CRV gets fees, and those who would have basically paid part of those fees, they get CRV. if the volume, trading volume goes down temporarily, well, users still get CRV, but when it goes up and CRV gets more fees, so this allows the protocol to operate with a higher long-term stability. But, you know, we still would need to see how it goes over, I don't know, over a bear market. We still haven't seen that.

Yeah, because you basically have the fees that are like volatile and then you have the curve rewards and the curve rewards are based just on like the volume in the pool as opposed to the trading volume. No, actually not that. Curve rewards are split proportionally between liquidity providers and the amount of curve rewards is determined by the. DAO with so-called weight voting. But anyway, the speed of curve rewards coming in doesn't depend on the volume which happens in the pool, but really it's voting of the DAO which indirectly is inspired by how much volume the pool is making. So basically, imagine that some pool is very popular and it gets a lot of trading volume. And then, let's say

DAO participants say, oh, looks like this pool is earning quite good money for the DAO, we probably should vote for this pool to get more CRV. So if it gets more CRV, more users will put money into that pool and, you know, it will get even more volume because there is a high demand and we get more fees. So that's kind of how it works. It's not a very fast feedback. back, but that's actually good because this makes basically returns for liquidity providers a little bit more stable. Kind of going back to a little bit of an early discussion that we had earlier was about kind of the future of curve. What's the next step? Like, when do you think that you'll have, like, kind of your response to uniswap v3 or Curve v2 or do you have any plans currently? Can you give us a

sneak peek of what might be in that as well? Well, I guess it's not changing anything for stable coin pools. These stable coin pools are probably good as they are, but we probably would need to expand into different asset classes. And actually the work over there is very close to to launching that. So that's, yeah, basically expanding to volatile pairs. And we want to do it in fully automated way. So not requiring liquidity providers to do that much of the manual work. And it's a challenging thing. So we will see how it works.

And it's challenging because you probably may find a lot of research where people tried to do automatic market making in like non-defy world. And it's hard. It's hard to do effectively. And we kind of what that research tells you is that it's almost impossible to do to do it too much more effectively than what we've seen with uniswafee2 or balancer. That we want to kind of defy this common wisdom which existed. before and show that it's actually possible to do it much more effectively than before.

That's interesting you're saying that. So I was under the impression that actually all the market makers have only really been used in crypto and in defy. So have there been, I don't know, significant usage or research into AMM outside and in in what areas? Of course, of course. I mean, they're called trading bots. And trading bots are quite there,

but you don't really want those trading bots who, I don't know, who look at some crocodile figure on the graph and decide that it's time to buy. But you actually, you're more thinking about trading bots who create markets. And there was, I'm sure market markets,

making firms use those. I mean, that's just, I guess that's the way. But also there was a lot of public research about that. And if you read that, you probably may get an impression that it's super hard to create anything useful. And yeah, we will see if we can do better than all of that research, if what we created is better. Another question that I had was, what is your thesis on good governance? So, you know, the curve token is both a way to incentivize good behavior in the protocol, but also like fundamentally a governance token. And different projects have taken different kind of views of what good governance is like.

I think, you know, Uniswap is kind of like trying to governance minimize and make sure that any governance improvements are really vital and key and important. And other protocols, maybe urine, are much more kind of move fast and break things, it seems. What do you see for curve specifically as like ideal governance and the ideal Dow structure in the long run? Well, I mean, the current DAO is specifically designed to be, to be, you know, a good DAO in the long run. One of the ideas is that you probably want the voice of long-term token holders rather than those who can buy token vote for something and then immediately exit. So that's why we have so-called vote-lock mechanism where you vote-lock CRV and you get,

you know, the higher governance power, the longer you'll lock for and you can lock for up to up to four years and that's what most people actually do and we kind of think that participants in the governance they are actually aligned with the future of that platform long term another thing is that our system is quite modular so you can replace certain modules based on the governance vote But at the same time, you cannot change the code. So you just, even if governance wanted to, it wouldn't be able to take users funds. So user funds are sacred.

You like, even governance cannot even plausibly get to those. But governance can make decisions about like, I don't know, including future pools and some modular functionality which we allow. Not everything we even used. So some things are kind of programmed in to be used in the future. So it's a kind of a mix of immutability and flexibility. Like ultimate flexibility would be replacing any code, but we kind of think it's unsafe to do even for the governance.

So we are taking the approach where. the code is immutable and you just, you know, governance votes for new things. And users can think whether they want to ape into new things or not. What about the curve, like community and ecosystem today? You know, what does it look like? Is there a lot of participation or people, you know, are there places to make like governance proposals as well? and like what's your vision for how you want the curve ecosystem to evolve?

You mean governance-wise? Yeah, governance-wise or just sort of in, you know, in the way you want the community to organize and to evolve the protocol as well. Well, for evolving the protocol, it would be, of course, good to expand to other chains. It's a good question if governance can expand there. but having different pools on other chains and having all the money flows going across chains,

that's definitely possible and that's definitely something about what governance can vote for. And yeah, so I think that's one thing. Would you see CRV having the kind of same function even if curve was deployed on several chains? Yes, yes. But I think there still should be one place where all things concentrate. Currently, it's on Ethereum, right? But like, let's say we can have pools on, well, we actually do have already

a pool on Polygon, right? And also a couple of pools on Phantom. And we just got admin fees from Polygon back to Curved Dow. and it worked. And we can get CRV from Ethereum to Polygon. And that can be controlled by the Dow, like how much that pool gets. Dow can leave on Ethereum, but the pool is still

over there on polygon. So that's an example. And this sort of scheme can work with multiple chains, multiple layer twos, or like whatever will be used for scaling Ethereum. shifting gears a little bit wanted to talk to you about your thoughts on like the kind of security of curve you know this is a long-term project with billions of dollars i think like more than seven billion dollars of tvl so how do you think about security and especially in like the decentralized context where code is being written by many different people how do you think about security and ensure that the code is always extremely high quality, readable and secure? Yeah, that's a good question.

We took probably the approach different from what some projects have. So from our observation, most of the errors in the code are coming from the developer. So it's really up to the developer to get the good. code quality. Yes, you can say that auditors can help to get code quality better. That's true to some degree, but also auditors don't see absolutely everything and they can miss things. So how to prevent that? I think the best way is to have all the code very, very well readable so that like it's, you know, the focus should be on readability. And for that we use, Viper language, because like Viper is much, much more readable than solidity, by humans at least.

And that ensures that we ourselves can see things in our code. Still, sometimes we don't see them immediately, but we can notice them much faster than if everything was in solidity. So that's one of the things. And of course, solidity is a much more mature language, which with more tools. So in that regard, one could argue that as a language, it could be safer. But given that most errors,

they don't actually come from the compiler, most errors come from humans. The focus should be on readability. And of course, which true for all projects, there should be very good test coverage. So automatic testing is the must for smart contracts. In fact, I think smart contract code takes maybe 5% of all the lines of code, maybe less, and everything else is automated tests.

So for those we actually do quite advanced things with Brownie. For example, you could basically enumerate all the actions which smart contract, or maybe external contracts can do and then you can let this tool to select different actions at random with random parameters and explore this parameter space trying to find some violations or basically some errors something which you don't want in your behavior and if if that happens it kind of raises a flag and you say oh there is something in the code the code which we need to fix. And I think this way actually is able to come up with flash loan attacks, for example, like these sandwich attacks. They are actually simple, so I think proper

automated tooling can find them automatically. One last question I wanted to ask was kind of legal and regulatory, you know, how do you think about the legal and regulatory questions around curve, whether it comes to like securities laws for like curve token itself, you know, allowing people on different jurisdictions to use the protocol? And also just like, how do you think, like, what are the biggest risk you see to like general defy regulatory landscape as well? Right, right. Yeah, so that's a very good question as well. There are different themes which are going in regulatory space. In the past, it was mostly activity by SEC and security tokens.

And I think with CRV, well, at least in my opinion, it's quite simple. The CRV token itself is not doing any function which is looking like a security. But if you lock it, you get something called VE CRV, which is which allows you to vote in the DAO, it receives profits from the DAO, so it's kind of, well, feels like a security, but VECRV is not movable. You cannot move it, you cannot trade it. It's like only sitting in your wallet. And when it unlocks, when it becomes CRV again, then it doesn't have that functionality. So in my opinion, VECRV is a security, but because it's movable, it automatically satisfies all the security laws. And CRV itself is just, I think, a utility

token. But yeah, but SEC, I think, is quite friendly to crypto projects these days. There is also a question about international mining transmission initiatives like FATF, that could be tricky for defy because they are trying to regulate what is not very much possible to regulate. Probably some common ground will be found over time, but yeah. So like, for example, if they say that all projects should filter users or whatever, it's just not possible to do with everything deployed. So everything deployed just continues to exist and nothing can change that. They could as well call Vitalik and ask him to do that and he couldn't do anything, right? So if we think from the basics, what are the goals of that?

The goals are to protect users and to prevent criminal activity. When it comes to protecting users, I think the biggest threat in Defi is very different from traditional financial world. In traditional financial world, the biggest risk is counterparty risk. So let's say, basically, if you put money in a bank, how can you make sure that this bank doesn't run away with your money? Of course, very heavy financial regulations are there to ensure that. With Defi, if, well, it's, of course, a risk if it's a custodial protocol,

if the team has admin keys which allow to take the money. But if it's not the case, the biggest risk is actually the code quality. So, and I think eventually we will see a lot of regulations around the code quality and how the projects can ensure that users are safe on that front. And with criminal activity, that's actually also interesting, because actually blockchains are very transparent, and it's fairly easy to see where everything goes. and that probably doesn't make cryptocurrencies the best tool of criminals. They do try to use that, and many of them fail at that.

And I think at the moment, at the moment, cryptocurrencies involve less of a fraction of criminal-related transactions than traditional financial system, or at least I've seen that kind of information published. Anything else that you kind of want to add here or you want users to know about curve or before we sort of wrap up? Well, I think we quite covered everything. And yeah, I think it would be pretty exciting time now. We have a bunch of new stuff to publish. And, yeah, if the listeners can follow that, they probably will hear quite a lot of

of interesting things. Cool. How do potential listeners and users, how do people get started and learn more? Of course, they can go to curve.5 and just start using it. We have also resources.curef.5 with all the guides, how to use curve for one or other purpose. I think those would be the best places to start.

Cool. Thanks so much, Michael. 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 episode of the Epicenter podcast. Go to Epicenter.tv.com.

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