Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Rune Christensen: Maker DAO Ethereum’s Decentralized Central Bank

Episode Date: March 28, 2016

The challenges Bitcoin’s wild volatility represents for achieving mass adoption have made the necessity for stable cryptocurrencies apparent long ago. With Ethereum applications, the problem is even more apparent as many use cases from predcition markets to insurance are impractical using the even more volatile ether. Maker DAO is an ambitious attempt to solve the problem by building a bank-like system to issue a value-stable currency on Ethereum. Rune Christensen joined us to discuss the need for Maker and the complex system to guarantee stability. Topics covered in this episode: Why money is the most successful product ever What makes stablecoins are necessary The different components of Maker such as the stablecoin Dai, the token MKR and the role they play Why Maker needs insurance against black swan events Maker’s different planned stages of increasing decentralization The MKR token sale and its value proposition for investors Episode links: Maker DAO Maker DAO Whitepaper Maker DAO DevCon Talk EB60 with Robert Sams: Volatility and the Search for a Stable Cryptocurrency This episode is hosted by Brian Fabian Crain and Meher Roy. Show notes and listening options: epicenter.tv/124

This is Epicenter Bitcoin, episode 124 with guest, Rune Christensen. This episode of Epicenter Bitcoin is brought you by Ledger, now accepting pre-orders for the all-new Ledger Blue Developer Edition, a Bluetooth and NFC touchscreen hardware signing device. Learn more about the LedgerBlue at LedgerWallet.com and use the discount code Epicenter to get 10% off your first order. Welcome to Epicenter Bitcoin, the show which talks about technologies, projects, and startups, driving decentralization at the global cryptocurrency in blockchain revolution. My name is Brian Havain Crane.

And I'm Meher Roy. Today we are joined by Roon Christensen, who is the visionary founder of MakerDAO. MakerDAO is a stable coin system on the Ethereum platform that creates a stable currency called the Dai, which is pegged to the SDR. We're going to talk to Roon about how the system works. But first, perhaps we should start with Roon and Neh your background. So Roon, can you give us a bit about your background and how you got interested in this feed? Sure. So I'm an entrepreneur since I left high school, basically. My first

business was an expat, an expat HR agency in China, which I started when I was 20 after working there for a while. I've been studying international business, which I dropped out from university, and then biochemistry, which also dropped out of. And both of these have actually been useful in designing the maker system. So in 2011, I got interested in cryptocurrency from Lulsec. I still remember that. Like, I still remember the experience of discovering Bitcoin itself and, like, following, there's a weird Bitcoin address

and then finally figuring out what it was and understanding the potential blockchain. have and all this stuff. So I got into stable coins after I first lost faith in Bitcoin. After the great Bitcoin crash of 2013, right? I think, like the 2014, yeah, okay, but the great crash where I actually held a lot of bitcoins all the way down because I was so sure that it was the future and the next big thing. And then suddenly I just discovered this new old coin called Bit Shares, which until then I'd never like until but until then before then I thought all coins were all scams basically and none of

them were good but then bit shers actually had tangible benefits over Bitcoin and other blockchains one of them being the bit assets which became the like the inspiration for for the diet but another thing with with bit shares that really made me like drew me into it basically. It really made me see it as something special as compared to Bitcoin was the community which had like a very strong coherence and like this sort of decentralized collaboration that we are now trying to emulate and actually have already emulated pretty well with Maker and how we set up our organization as well. And so what was it about the concept of stable?

coins that you found so interesting. I mean, I get that from a speculative point of view, of course, you know, Bitcoin going down, not so fun. But why did that attract you to stable coins? So I think the killer app of blockchain is currency, I believe. And like, it's not just like a killer app. It's like a low-hanging fruit and so on, which is why Bitcoin, for instance, is a currency, right? That's the first thing to Tokyo made. And why it became popular and so because it's super useful, even when it's volatile. Like, even when it barely functions as a usable currency, it's still super useful and enables all kinds of things,

and it's extremely valuable. And, I mean, a stable coin is, in a sense, just Bitcoin done right, like I think. Like, it's just the logical conclusion of how you can use blockchain to make better money. And I mean, I know, it's, it's, there's only something I really started. Like understanding fully, like truly the value of stable points is actually only something I started to realize. After I really got into designing the dye and figuring out the mechanics of the system and so on.

But like the business model of money is just the strongest business model there is basically. So like if you had to, if you have to like decide what kind of business you want to do, and there's no one else doing money, then that's just always the best choice because it's like a product everyone needs, basically. It's the most valuable product, and it's completely vital for an economy. And, yeah, like, that was actually,

when I first wanted to do a stable coin on Ethereum, it was because I just recognized that Ethereum needed one, like it's just necessary for Ethereum to even function in the first place. There needs to be a stable asset. Yeah, I mean, some listeners may remember that we did a podcast on this topic before with Robert Sams on a white paper he wrote. I'm sure when you're familiar with it called Seniorish shares, which I thought was a great concept. I mean, he never implemented it, but it was an interesting idea.

And I think you have a lot of similar designs here in your concept. Yeah, definitely. In fact, I would say that our system is, in a sense, a combination of bid assets and then senior shares, like, tagged on top of it in the form of the insurance mechanism that ensures the fungibility between, yeah, the stable coins that are issued with multiple collateral types. So yeah, like senior shares is like another is like a great stablecoin project. One more thing here, because I phrased something in an interesting way, you said the business model of money is the best business model there is, which is an interesting way, right? Because most people don't think of money as having a business model. Can you explain a little bit more of what you mean with that? Yeah, just think about the dollar. Like the physical, the actual US dollar note.

That's the best product the world has ever seen. It's the most widely spread consumer product anyone has ever and could possibly imagine. Like, I mean, it's spread all over the world. Everyone knows it. Everyone uses it all the time, either in the physical form or like digitally, whenever they do any sort of international transaction or anything like that. And it is an actual service. Like, it's not just, money isn't just something that comes out of nothing and just works like that on its own.

There's, there's like a company behind the US dollar called the Fed, which actually makes it work and maintains its stable value and really just provides it as a product. And in return, they're allowed to take what's called a discount rate, which they don't actually use, you know, it's not a for-profit business. So it's not like they actually monetize, you know, in a sense. They don't try to extract profits from the fact that they have the best product in the world. They instead try to stimulate the U.S. economy and other public service goals they have. But really, money is just a product.

And that's one of the basics things with Maker. We just set it up in such a way where it like, I mean, our system is for profit. And we deliver this product that I die on the Ethereum. blockchain, but our profit incentives makes us strive towards maximal stability, because that's also how we make the most money, basically. So, Root, there have been, like, other stablecoin experiments in the, in the crypto space. There has been new bits, which is Bit USD, and on Bit shares, they have Bit C&Y, BitUS, and all of these other assets, right? And I've been interested in stable coins for like a year and a half

when I also realized that we do need stable assets. But it seems that the demand for any of these assets has really not taken off. Do you think there's a structural reason for it and how and why would the die or a stable asset on Ethereum break that trend? So there's multiple reasons for this and for how we will be different from those stable assets. But I guess most importantly, it is just that unless there's a very compelling reason to choose a stable coin for its own merits, it's not, it is really more of an infrastructure than a product in itself. For instance, like, we don't expect people to be holding, like buying into the die and holding

the die just as a like, let's say a Swiss bank account or something. in the beginning of the system. They will, like, people will probably use a die because they want to use some app on Ethereum, like some debt, right? Some decentralized application that they can't, that doesn't interact with fiat currency. And that's where we come in to allow people

to actually use just a debt. Because if you're not using a stable coin when you're interacting with a debt, you're actually doing two things at once. You're both speculating on the ether price and using the debt. So let's say if you're a gambler, you have to both bet on the ether price

and you have to do your gambling thing. If you're someone using a prediction market, you have to do ether trading while doing your predicting as well. And overall, that just makes for a very, very bad user experience, like almost unusable, in fact. And I mean, it's also one of the reasons. I mean, it's also one of the things with Bitcoin, where Bitcoin only really took off for illegal transactions

and other like things that current, like this fear currency just can't be. do it all. But as soon as you know, a business or like a business activity approaches something where you actually have to compete with Fiat, Bitcoin just doesn't stand a chance at all. Which among, like we can also show, we can also look at something like Microsoft removing Bitcoin from their store recently, which I again think, like, I mean, that shows that Bitcoin is actually a pretty poor form of money for like regular transaction things because of just the volatility. And that's where I believe in.

the long run with enough like development and enough network effect and liquidity and users and so on. The die could easily become like this day-to-day thing that you just hold just like money in PayPal or something. And then you just have it conveniently available and when you want to buy some stuff, then you check your accounts and oh, I have some dye laying around and spend that on buying this thing if the business takes cryptocurrencies, right, which is what I think will be. It's not like like there will be business will take all kinds of cryptocurrencies, Bitcoin die, whatever, ether, anything. And there's just a bigger chance people will be holding ether than the other cryptocurrencies because holding die than the other cryptocurrencies because die will not have the same volatility.

So it's more straightforward, less risky to hold. An interesting aspect there as well is that so the dye is pegged to this thing called SDR and perhaps you can briefly give some background about what SDR is. Yes, so the STR is the special drawing right, which is a basket of international, a major international currencies, specifically the US dollar, the British pound, the Japanese yen and the euro. And they are combined together to form this basket, which is controlled by the IMF or the IMF are the ones who govern the company. composition of the SDR basket. A reason, okay, so actually we are not pegged to the SDR directly in the sense that one die will always be worth one SDR. And this is actually because that's not even really possible with the pecking mechanism we use where we back it with other collateral types.

And that's because doing so, like backing one asset with another, like giving it the convertibility to another asset. at parity. So like if you could always exchange one die for one SDR worth of its collateral, it would actually be a free, what's called a free option. Like you would have, it would be like a trade that's always available to you. And that per definition always has a non-zero value, which means the value of the die in that case would always be slightly above the value of the SDR. And this is something we've observed.

We actually seen happening with bit assets. and Bid shares because this is the mechanism they use right now is one that enforces like a perfect peg with stuff like USD and C&Y and so on. And that actually results like that that that characteristic by itself means that the peg is broken in the sense because the assets become more valuable than the ones they are picked too. So we in a sense we embrace this like we embrace that the asset will not like but I don't know that doesn't make sense to me so so you have two assets that like, you know, some entity guarantees you can always change your energy of each other. So why would that become more, make that an asset more valuable?

I mean, especially if you imagine a two-way pick, then what you're saying wouldn't work, right? Because then both would be more valuable than the other one. Well, so a stable coin, it's not like a two-way pick in a sense that you have picks from like two-way picks or something where you move stuff from one blockchain to another, for instance. Usually, that's how it use. So, like, I guess in this context, it's more like, I guess it's more like a trade that's always available. You should consider it, like, the collateral is really,

the way it backs the price is that it allows you to always do this trade that makes you end up with liquid cash in an amount that just makes sure that you have your. your buying power remains stable. And that feature then makes the actual market price of the asset stay at a particular value. So we sort of, like instead, we don't even try to really, like we don't try to actually peg to the SDR because our goal is not pegging to the SDR or pegging to the USD or anything in particular.

Our goal is just stability. In fact, this is one of our ways we market. system is just we we just call the dye as like an asset that focuses on raw stability above all else and and because we don't try to achieve this one-to-one convertibility pick system we we can use some very advanced mechanics and some stuff that i guess in a sense like i guess you could you could argue it's ugly like it's it means the price of the the die will always have like it'll always be some Like in the same way that different fiat currencies are related to each other and they have some really obscure Exchange rate the die will have the same

characteristic of just always being like never having like a pretty pick to any particular asset But instead overall just have stability and like it's it's short-term movements as well as this long-term movements And then the link to the SDR is that the reference point of the die is entire like The dye system prices everything else in SDR, and this results in the day-to-day volatility of the dye being pegged to the SDR's volatility, I guess you could say. And this means we end up with like an asset that has very, like, very good short-term stability in line with basically or above even the top Fiat currencies in the world. Let's take a short break so we can go to Paris. I stopped into La Maison du Bitcoin, situated in the heart of Paris's startup scene, and I met with Eric Larchaveg, Ledger CEO, to talk about the Larger Nano.

The Ledger Nano is a Bitcoin hardware wallet based on a secure element. It is on a USB form factor that you plug directly inside your computer, and it will manage all your private keys. The signature of transactions will be done inside the secure element, thus never revealing the private keys to the host computer. It is compatible with our own ledger wallet Chrome app, which you can also use for multi-signature with Copay or Coincite and a large range of third-party applications such as Mycelium, Electrum, GreenBits, Green Address and so on.

The Nano also exists as a cool bracelet wearable, so you can always wear proudly your Bitcoins on your wrist. The Ledger Nano is an easy-to-use hardware storage option, which doesn't compromise on security. If you want to get a secure setup for storing your Bitcoins, go to ledgerwalt.com and use the offer code Epicenter to get 10% off your order. We'd like to thank Ledger for their support of Epicenter Bitcoin. So I think I understand what you're trying to say in that part. And I'll have something to add to this in the latter half of the section.

But first, I think we should go through the big picture of the die, because if we dive into the details, then our listeners would be lost. So give us like a big picture description of the MakerDAO system. How will it work and what are the major components of the system? Like what tokens are there, what kind of business model is there, etc. Give us a big picture view first and then we'll drill down into each of the components. Right. So it's cold, there is the dye stable coin, which which is the stable asset that the entire system revolves around.

And the die is stable because it's always backed in excess by collateral, meaning there's always enough assets sitting locked on the blockchain, ready to buy back the die and maintain the stable price. So if you hold die, you never have to worry about the price subtly dropping in a sense that you can do with something like Bitcoin or Ether. And the way this collateral gets, in the first place is like the big thing, right? That's what the various stable coin systems have different mechanics for. And our mechanic is called the die credit system, which is a

decentralized peer-to-peer credit market that anyone can join in use. And the building block of the credit system is the CDP, the collateralized debt position. which is a smart contract that anyone can create by interacting with the maker or die credit system. And it works by having someone put collateral into a smart contract. And then based on this collateral, they are allowed to issue dye. With a rule set that ensures that there's always going to be enough collateral to back all the die. They issue plus some more, right? Plus a buffer to protect against volatility of the collateral.

So as an example, if you have, let's say, $150 worth of Bitcoin or $150 worth of ether, it's probably a better example on Ethereum. So you have $150 worth of ether. You put that in a smart contract. And that allows you to issue, let's say, 100 die. So you issue 100 die that you now have and you can spend that on whatever you want to do. One of the main things you will do with it, the people you should do is leverage trading. so they will take the newly issued dye and they'll buy even more ether, so they get a higher exposure to ether.

But the cost of issuing this die is a debt, basically issue in its debt that then also becomes a, that sits in the collateralized debt position. And this debt is what enforces the sustainability of the system because you're not able to retrieve your collateral unless you pay down your debt. and this means that the supply or the die in existence all enter and exit circulation through these CDPs in a controlled manner ensuring that there's always enough collateralization in the system okay so let's let's walk through like kind of an kind of an example so first we assume like so let's assume that I want a stable currency and I I have today a volatile currency which is ether. And for me, like the maker system is a black box. The first assumption is it's a black box.

So what I can do with this black box is that if I have, say, so let's assume today the price of ether is $10 in ether. And if I have 15 ether, which means $150, then I can go to this black box, send $10 into the black box, send $10 into the black box, and I get 100 die and like 100 die is something you can think of it today is like 100 USD right and and and I get that asset now what happens when so I put like 10 ether into the black box now what happens when the value of that ether rises do I get something out like suppose it goes from 10 dollars in ether 20 dollars in ether do I get something out from the profit

or and what happens when it's the opposite like it goes from $10 in Ether to $5 in Ether do I lose money then?

What happens? So the important thing to to note is that you can like you own the CDP at all times so you own

all the assets in the CDP which in your case would be 10 ether but you also have to like you also take ownership of the debt in a sense right so you

you cannot retrieve your ether unless you pay down your debt again. So anything that happens to the collateral, so in this case, ether, will just translate it directly into profits or losses for you. Unless, like, and that means, obviously, if it's profits, it just means that you have to subtract the value of the debt from it to understand, like to get the total value of the CDP for you. So let's say that, let's say, you use some ether to issue dye with and then use this dye to buy even more ether.

That would give you a leverage position where you have higher exposure to ether than you have, if you just hold 10 ether, you can get even more exposure if you then use that 10 ether to issue some dye and then let's say you now have 15 ether or something like that. then if the price of either doubles, you end up earning a profit not just from 10 ether doubling value, but actually from 15 ether doubling in value. You still have to pay the debt, obviously. So there's still a cost for you. You won't be able to just retrieve the entire profit of the 30 from the 15 either that have doubled in value.

But you're just able to make more money. Like you're basically able to To increase your The amount of money you have available To play with in a sense And if it goes the other way Okay Yeah

So if the If the value of the collateral falls You also potentially take higher losses If you buy more ether For instance with your dime And There is also Like there's some additional stuff

To take it to consideration for the stable coin system when the value of collateral falls because we very much do not want to to see a scenario where there is too little collateral to cover the debt. And then we have mechanisms basically to deal with this that results in margin calls, which many people are probably familiar with from regular margin trading. And basically, like from regular leverage trading where you trade with higher amount, like with more assets at once based on borrowing funds. And this just triggers the same way in our system that it does normally.

So if a CDP, if a collateralized deposition that is issued that falls too low on its collateral, at some point it will be margin called and it will just be closed out instantly and you will realize your losses instantly in order to protect the system from your position, potentially falling into the negative. So how does that work? So I have put in some ether, right? I put in my 10 ether. And then I got some dye out.

Now, the ether collapsed in value so that my dye is actually not backed anymore by ether, right? Like what I've put up in the bank or in the system isn't sufficient to cover the value of the dye that I have received. Or let's say it's dropped as much that it's like, you know, basically the same. I don't have the security coverage anymore. How does that happen? How can my dice the merchant call? Isn't that just like a cryptocurrency that I'm controlling? How would you be able to sort of remotely take that from me?

Well, so the ether is held in the CDP, which you own. You own a CDP, but the CDP is a smart contract with special rules in a sense, right? And these rules allow it to issue dye. But it also means that. that it is vulnerable to a thing called a forced cover, which basically is if the value of the collateral falls too low. Like if it falls into what in traditional financial terms is called the maintenance margin. Like if it falls below that, then it becomes risky in a sense to the system.

And the system will allow anyone to just cover it by doing a forced cover, which means they go down, they go in there and they pay down your debt for you. And then in exchange for the debt they pay down, they're allowed to buy some of your collateral without your consent. Like it just happens automatically. You can prevent that from happening by having enough collateral, basically. So false cover only ever happens to people who leave too little collateral in their CDPs. So just to stand that, let's say that value of ether collapses and I'm in that mode.

So does that mean I should put up more collateral? Yes, that would be, like, that would be, if you want to avoid a forced cover, you should always keep your collateralized depositions topped up with enough collateral. Okay. Usually, however, you will actually get a pretty good rate. So it's not like in some cases, like getting margin cold or getting the equivalent of force cover in some systems, like on leverage trading on centralized exchanges, that sometimes results in getting very bad prices.

However, in our system that there is mechanisms in build that tries to ensure you get the best price possible if you are forced covered due to low collateral. So another question here, just to sort of understand how exactly that system works. Because, I mean, you talked about the ether side, which I understand, right? So I put it in this system.

that then controls it sort of on my behalf and you know those too though they can you know sell it and or do something with it but is the dye itself handled in a similar way so that you know maybe I have some public key in some contract that then has a list of all the balances of everyone of their dyes is that or how does the actual cryptocurrency aspect here work? So the dye works just like Bitcoin, I'd say. Like it's got a balanced database that has keys and balances and allows, and then it has, it allows anyone with enough, like with some dye attached to the key to send them to anyone else.

So in that regard, it's actually completely standard cryptocurrency. It's only when you start looking at how it's issued and how it's destroyed, that it becomes interesting. But it's not standard cryptocurrency, right? kind of cryptocurrency, right, because it's an Ethereum tap. Well, yeah, that's true. I guess I could say it's a standard Ethereum subcurrency or whatever the term for that is. Right. And so that means that there's literally there's just a smart contract that holds all the accounts of all the die holders and all their balances.

And then I can, you know, send a transaction saying from my account, give the Meera's account, five dye. and then the balances are adjusted in that smart contract. That's how it works? Yeah, that's exactly that works. You send a transaction to the DAI balance database in the center. You send a transaction to the smart contract system, and it checks whether or not you have the correct balance.

And if you do, it just adjusts the balances, just like in Bitcoin. Okay. One more question on this. One concern with Bitcoin has been, you know, the transaction size, and the cost of it. And I know in Ethereum, that can be a problem. If you have, like, contracts doing big things, it can get quite expensive. How will the cost of, you know, me moving, die to some other account

compare with me just sending a regular Ethereum transaction that's supported natively. Is the Ethereum transaction going to be a lot cheaper because it's computationally easier? actually at serenity so okay so the dye is what's called an ethereum standard token like it follows what's called the token standard which is like a way everyone implements their the cryptocurrency in Ethereum in the same way this is so everyone like so all daps can interact with all cryptocurrencies without needing extra code at serenity once the hard-forkerserity happens the ether itself is actually going to be changed to follow this token standard as well.

So right now, I'm not totally sure. I think an either transaction is slightly cheaper or possibly slightly more expensive. Well, no, I think it must probably be cheaper, but it's by like a very natural small amount. After Serenity, it's going to be exactly the same. And this is mostly like the vast majority of the gas that is used when you send a die transaction

or any currency transaction, is that you have to change the long-term storage of the contract. And then there's a few other operations, but they take almost no computation compared to the long-term storage. So that's, yeah, I mean, it's basically, it's pretty much as cheap as it can get in a sense computationally. So, for example, like if you do an Ethereum transaction, like a transaction with ether today,

it costs 20 gas, and you can specify the gas price. So you could say how much you want to pay for each unit of gas. And today, if you do a diet transaction whenever it goes live, it might be a bit higher than 21,000 gas. But in the future, these two values will converge to one value when serenity happens, right? Yeah, and the reason for that is just because it's so much better to have one standard when people, like it's annoying for application developers to have to both deal with the ether token and then all other tokens.

It's easier if they could just deal with only tokens and all tokens spoke the same language. And that's, yeah, I mean, at least that's, I guess it's not, possibly not official policy, but I've seen, I believe it's Vitalik that made an EIP for this. Okay.

So, so you've, you've kind of given a view of the system that you have people who lock assets into the system and they get the stable coin. right? The system as a whole, I tend to see it as like this big pool of different kinds of assets. So first of all, can I use different assets? Can I lock assets apart from ether into the system? Like you said, we can like ether and get the die. Could I lock something else like a gold token or maybe a future Dow share or something like that? Yes, so this is where the link to senior shares come into play. So we, we, um,

allow any asset in Ethereum to be used as collateral for the die. That includes, so it will be ether, it will be auger, reputation, DigiX global, gold tokens, our own maker coin, and other tokens, Bitcoin, even like US dollars from gateways or something like that. Basically any asset that can be measured with a market price and a stable, like a a stable market order book and so on. So we can ensure it's not something that crashes instantly. As long as you have valid collateral and we can measure the price of it in SDR

because that's how we measure everything in our system, then you'll be able to issue diet with some collateral requirement, basically. And Maker itself then guarantees fungibility between these, I guess you could say different dies, right, that have different types of collateral behind them. And the way this fungibility, like, the way fungibility is guaranteed is through maker insurance, which is like one of the primary features of the system. And what that protects against is black swanaments, as they're called, which are collateral pressures the result in undercollateralization of a, of a debt position, right? So bad depth in the system, basically. As an example, it could be someone

puts 10 ether, 150 USD worth of ether into a collateralized deposition. They issue 100 die, which is 100 USD at the market rate at that point of time. And then they sell off the die or whatever, spends it on something. They're just borrowing money from a system. And then suddenly there's a flash crash in ether, and it goes from $150 worth to $75 worth or something. So it goes below $100 worth. That makes the collateralized deposition undercollateralized.

So there's less collateral than there's debt. And that's extremely bad because it means that there's no longer an incentive to ever close the collateralized deposition, for instance, right? Because there's no reason why you pay down $100 worth of debt in order to obtain $75 worth of collateral. And that could potentially break the system if something like that was like that. allowed to just sit there because it means there's no longer this direct link between that the controls the circulation of the money where they enter the system through issuance and then they exit when you cover and pay down the debt again. So whenever there is an under-collateralize CDP, Maker simply steps in and just buys it up.

And we call that a bailout because that's essentially what it is. like if this bed debt maker is the lender of last resort that goes in and covers everything and ensures that the dye is always collateralized in excess. And the way this is paid for is, I mean, there's multiple mechanisms. So there's always like a small insurance vault, which is like a small fund of money that just is ready to pay, to perform small bailouts. but like the real mechanism behind it is forced inflation of the mkr supply so mkr is the asset that backs the die credit system in a sense it's kind of the if you consider dye as a coin then mkr is a share

so it's a share in the in the company behind the die you could say or the DAO behind it and it's exposed to the profits of the system in the form of an insurance rate that is that is levied on everyone using the system. And this insurance rate then mitigated, like, like, what is it called? It balances out the risk of this forced inflation that the MKR holders and Maker itself

has to take care of in cases. bad debt to the system? So basically, if I can replace that, right? So let's say now I own 10% of all MKR. And there is some sort of crash so that the MKRs are no longer sufficiently backed. And that's where that sort of system kicking is basically means that the company to say, you make a dollar says, we're going to have to sell additional. shares to raise more collateral to again be able to back all the die coins that are out there

so that, you know, we can again have, we can have that peg maintained. And so that people aren't going to say, well, for this die, it used to be one dollar, but now it's only backed by 70 cents worth of collateral. So I'm not going to pay a dollar for that. But of course, then if shares of that company are sold to raise more collateral, then I can say, okay, I'm still going to pay a dollar because all this collateral is coming in through the sale of new shares to ensure sufficient backing. And for me, as a shareholder, of course, it would mean dilution, right? It would mean that maybe before I owned 10% of all this company. but let's say now they had to double the number of shares to raise sufficient collateral

to again have all this backing. Now I only owe to 5%. So it sort of got punished there in a way that makes sense, right? Like if I'm a shareholder of a company, the company messes up in a big way, which would sort of be the case here, then the shares, shareholders get punished. So it seems to be a mechanism that makes sense to me. Yeah, and so exactly, so like if the die, if there's not enough money to back the die, then Maker is basically the backer of last result, right?

So they all, Maker always has to step in and ensure that the die is stable and pegged and so on. And that relates to to many types of collateral because then we can be a little bit more adventurous with what kind of stuff we allow to back the die with, right? Because we can we can have either and gold and all those things put together. And even if we chose some smaller projects, like let's say there's some small debt, that has a token and we decide to allow that to be used as collateral for the dye. If it then turns out the fail and the CDPs that were collateralized with their token suddenly become worthless, it will not impact the wider system because Maker will just step

in and perform the bailout. And this means, as you say, there is significant risk to MKR holders. They risk getting diluted in order to cover the bad deadness. system. But the difference, I guess, in a sense, that makes this risk a little bit more acceptable and more direct also is that unlike a company, Maker is a DAO that is directly governed by the shareholders. So it is like the shareholders actually are the ones that decide if we use some specific asset as collateral for the system. And so if there is a, if there is an event where a CDP becomes undercollateralized, it is actually directly the shareholders

fault and they're just basically paying for their own mistake. And this is one of the core concepts of the system also where the people who own MKR, they regulate the system and they also insure it completely. And if they regulate it badly, they're the ones who end up having to pay for this for the mistake. It's not the holders of die or the issuers or anyone else. It's just always MKR holders that sit down and do the overall strategy. for how the system works.

And then individual traders only have to focus on their own profitability. And dieholders don't have to worry about anything. They are just backed by the collateral as well as insurance. So that's a very interesting system because what it's doing is it's merging bit assets and Robert shares senior schemes. And it's like a hybrid child of these two, right? Like you could almost think of it like that. and what's very interesting is like there's these two coins the stable coin maker and this

volatile share sorry the stable coin die and the volatile share which is maker and when when there's not enough collateral backing the die then the volatile share gets like expanded and that expansion is used to bail out the the stable coin die so so the maker coin if i'm a if I'm a maker shareholder, then I'm exposed to the downside. My downside is that maybe there's going to be a crash in certain collateral types, and I have to bail out the dieholders by dilution of my share. How do I profit from the system? So if there's no collateral crash, what's my upside?

Yeah, so since the risk of MKMAT, MQI is a really big, so there's potential forced inflation and dilution, so on, The upside is also very, very big to make up for this. Specifically, there's an insurance fee charged on every single CDP that's outstanding. And all that money from this insurance fee just goes directly to MQR holders through a mechanism we call Buy and Burn, which means there's literally a contract that there is like an insurance vault where they earned die from the insurance fee are temporarily parked. And then from there, they are just used to buy up MKR.

just permanently destroy them, which over time reduces the supply of MKR, making it lower and lower. And because of microeconomics, when you reduce supply and demand states the same, then price goes up, meaning that if you hold MKR and over time there's users of the system and no crash, your MQR will just steadily increase in value. So I had a question that was sort of puzzling me a little bit before. And I think it kind of relates a little to how our financial system works as well. So let's say MakerDAO has started and I am the first user of MakerDAO. So I'm going to put in that 10 ether we talked about before.

I get, you know, 10 die. But now I owe, so I owe the system 10 die to get my, my collateral back out, but I also owe an interest rate. So essentially I would mean, you know, I have to get, die from somewhere else to pay not only what I originally borrowed, but also the interest rate to the NPR holders. But if I'm the first, you know, user, there are no other die, right? So it essentially would mean that I'm never able to fully take out the collateral. Is that correct?

Well, yeah, we get this. A lot of people notice this. And I guess intuitively, it seems kind of strange. So it's important to understand that the insurance rate, like this additional die that has to be paid back, immediately interest circulation again because it is used to buy up MKR. So the die just goes to whoever is holding MKR and sells it to the buy and burn. And as a user of the system, you then have to basically approach, like if you're the first user in this, no one else, then you'd have to approach whoever ended up selling their MKR to make her for the buy and burn, and then be like, hey, can I buy a die for some, I guess you'd have to give them some other asset,

obviously, like, because there's a cost to borrowing money. So it will cost you more money over time to issue. That'll always be the case. Okay, I think that kind of makes sense, because of the die essentially. So does that mean? So I also read somewhere that the dye is deflationary. So that it's over time it will cost less or well, relative to the STR, yeah, STR, it doesn't sort of remain a, you know, let's say one to one peg, but it was actually going to become more expensive over time. Why is that?

This is actually what I talked about earlier, where this free option that you get when you have a stable coin that is backed by collateral means, among other things, that the stable coin will be very valuable if, let's say, the collateral increases in value over time, for instance. And I guess the best way to explain the deflation is actually to not look at this as deflation, but still look at it as an earlier mechanism of the system, which we was yield, where instead of like where we were actually able to peg, you can actually pick directly to the SDR if you just pay yield out to people who hold the die. So they would receive like a continuous payment.

And this was when we really wanted to compare our system. to like a bond market. So you can compare the dye to like a bond where you put some money into the bond, which basically means you lend money to borrow us, which in this case means you're a dieholder. Lender right, you put capital into the system and die issuer is someone who takes capital out of the system because he issues die, sells it off and use that to buy some other liquid asset. And there is a cost to this.

There's a cost of borrowing capital. And you can levy this cost in two ways. You can either have it as an explicit cost where there is actually like an interest rate that is set based on, I mean, and then that has to be set based on the market, whatever the market rate for borrowing money is. But we have just for simply, purely to simplify the system

from a both from a coding perspective and from an accounting perspective and for some other reasons, also actually legal reasons. We just have this implemented as deflation, basically. So the deflation rate of the system varies according to market, like to the market price of borrowing funds, basically. And if you issue dye, the die you issue will go up in value over time because the people who hold die, they will demand,

like they want a profit from holding down because they are putting capital into the system and they want they want a yield on this capital and so you that that results in deflation that means when you pay down the debt the debt will be the same but the value of the debt will just be more in in dollar terms or sDR terms as well as the insurance rate which you also have to pay and the the difference between the deflation and the insurance rate is that the deflation is the the cost you pay to the capital providers. So the people who inject capital into the system and hold that. An insurance rate is the money, is the cost you pay to the insurance basically, right?

To the infrastructure itself. I guess you could say it's the price you pay to basically, like kind of like a middleman fee in a sense. Like it's a price you pay to maker in order for maker to mediate this financial transaction that happens between the diet. issuer and the dieholder because the trend tank can only take take place if there is fungibility and fungibility can only happen if there's insurance that insurers that all collateral types are treated equally in the eyes of the system yeah yeah that's that's that's a very interesting point and i think like if i could restate it like if i actually own sDR uh let's say you know then if i i would expect like some kind of annual interest on that sDR right like if i have franks i want

0.5% interest. I'm used to that. If I'm SDR, I don't know what's the interest rate for SDR, but maybe there's a certain percentage interest. Now, when I'm holding the die, I do not get direct interest out of the system, but I have a cost in terms of this insurance fee. So, ideally, I would

like to have some kind of interest, and because the system itself doesn't have a mechanism to give me new interest, it rather pays me through this deflation. right like so my die is pegged to like 0.73 sdr today but tomorrow it will be like 0.75 sdr or 0.77 sdr and that in effect is like an interest for me right so the holder of the die does not pay the insurance room it is the issue that pays it but then other than that you're completely correct if you hold die you expect like if you if you hold money in any sort of account you expect an interest in that and in our system that is just paid through the deflation

Today's magic word is stable, S-T-A-B-L-E. Head over to let's-talk-B-C-B-C-C-B-C-C-B-C-N-T-N-T-R-N-T-R-E. Enter the magic word and claim your part of the listener award. I mean, that's very interesting. And I'd like to point out to our listeners that this seems like quite an involved mechanism. There's a lot of financial terms behind it. But Maker has a very elegant white paper and a couple of blogs that explain this mechanism through scenarios. Like, you know, Alice and Bob depositing money and those kinds of easy scenarios.

So check their white paper out to, you know, walk through the system again if you're so inclined. But we'd like to also cover how you plan to distribute the maker shares because, so as you said, like the system has two tokens. the stable coin die and one is the maker share which together controls the system. So how do you plan on issuing these shares and distributing them to the market? So the basic is that we have already distributed 42% of the total supply of mkR. So the total supply is 1 million mkr and 420,000 of those have been distributed before this system has even launched. And this distribution has happened mainly through founder allocations and then public and private sales through our forum and various channels.

It's been very, like we've been very much off the radar. And the sales have been, I would say strategic in a sense that we have tried very carefully to choose stakeholders. And we have actually deliberately made barriers to entry because we did not want we didn't want to just get any random person to throw money at us because of the extreme risk that's involved with stable coins and also just the experimental nature of the project since the beginning basically.

It's actually only very recently that we have really, I mean, even ourselves have fully decided or started to fully feel like that it will work for sure, basically. And even then, I mean, even now there still is a risk that you can lose pretty much all your money because of the forced inflation that's inherent in it. How much money have you guys raised where we're selling these mKMs? In total, we have actually only raised about $200,000. We have been running on a very low budget.

And right now we have an extremely low burn still. We don't need too many resources because we only really making contracts. and Ethereum is already there. The entire Ethereum infrastructure is already built for us. And, yeah, I mean, a lot of our supporters and a lot of our stakeholders just have, like, I mean, they have just received stake rather than salary, which has been fine for them. Because I guess they've been able to see long-term value and so on. And, yeah, I mean, we are starting to ramp up.

up now. So the thing is that we have distributed these 42% I guess privately without much fanfare. But now like the real the real how to say it like the real phase begins where we start to actually go out and then we launch an Ethereum and we start to really market ourselves to everyone. The remaining 58% of the total of the total MQA, so 580,000, are held in a smart contract called the fund, which is controlled entirely by MQR stakeholders as a DAO. And this fund is then responsible for funding all future development and marketing of the system, as well as distributing all the remaining MQR up to stakeholders. So does that mean that as founders, like you are one of the founders, your founder's stake is part of that 42% or part of that 58%?

Because if 58% would be used for development, then... The founder's stake and all stake that is outstanding, so to speak, is a part of the 42%. The remaining 58% is all, like, MKR that has yet to be distributed and that will eventually be sold off, potentially, over a very long period of time. Because we have long, I mean, this system is designed to actually be permanent. And like there are very expenses to pay over time with it. And for that reason, we have ensured that the fund is extremely strong. There is a large amount of assets available in it.

And actually, if you go by, I mean, even at this point in time, the fund is already approaching the size of the Intherium Foundation's fund, which is very useful, right? just allows us to really do long-term planning and ensure that we really actively bring a maker to its full realization. So what do you mean with the fund is the largest the Ethereum Foundation's fund? So you said you sold $200,000 worth of MKRs. So wouldn't that be the most that can be in that fund?

or how exactly does that one? Well, so the 200,000 is our, like, burn. That's money we've already burned. So we spent 200,000 already. We only sell off MQI exactly as we need it. And so we run on like a very, I guess, a short-term budget where we only just sell off MQI as we need it for like this short period into the future. But we have a ton of MQI and we have a lot of demand.

And because there's so few sales. the sales are handled this way. At all times, there is buyers available to buy at a lower price and whatever the current price is. And then if you go, like right now, we are trading on Bitshares, which is, yeah, it's a blockchain and they have an exchange and we have like an IOU running there. So it's kind of like, we're using it kind of like a centralized exchange, even though the engine itself is decentralized.

But so we have MQR trading there. and because of the recent ETH explosion, we also saw our own asset just increased dramatically in value. And currently is like sitting at, it's like jumping around between 25 and 37 or something. So if you just go by that, which of course, economically this is wrong. But it's like a, it's still like, I guess it gives a good ballpark in a sense. If you just go by this low liquidity market price that we're seeing on bid shares, and then just say the price of one MKR times the amount of MKR that's sitting in a fund

that can be sold off over time to raise funds for expenses. Then, yeah, we actually have something like 10 to 20 million or something in the fund, which I think is more than the Ethereum Foundation currently has. Of course, it's still nothing like. I mean, it's not in liquid funds. Like, it's not in US dollars in a bank account, which is like a significantly safer, I guess. Like, it's significantly better from like a stability point of view

to just have it in dollars sitting. But another thing is also every time the fund spends money and every time we invest in development, the value of MQI increases and correspondingly the value of the fund itself. So like two months ago, the fund had maybe one million worth of MQI and now it has 10 million right and then this this growth could potentially continue if the growth of Maker continues the way it currently is and if you compare that to Ethereum right then you have like the Ethereum Foundation if they

hold let's say 5 million ether I mean if they hold like they hold like a small percentage of the the ether market cap right and then they hold 5% of the ebb market whatever some random number right and then the ether market goes from 100 million to 1 billion, then they actually still just go from 5 million to to 50 million. Actually on this, yeah, okay, now that I'm thinking about this, like, think about a little more, okay, we probably don't have more than the Ethereum Foundation considering the 10x ether made.

That depends on how they made the cells. But it's more like what I'm trying to say is more like that we, we. like the market cap of maker has like a very strong influence on how much money we have available. And as we grow at a time, like the amount of money we are able to actively spend will potentially be like very, very high. Because it'll be something like half of the entire money. Right. Because you don't do it away sort of the Ethereum Foundation date, which was selling it all off front and then see how the price goes. But you sell a little bit. it's being traded at the moment and then you sell a little bit more and you know you can sort of sell it

according to the price where it's traded at and so if that price keeps going up then you know you'll have to sell less and less of your mkr's to cover expenses right right and also just like the I mean we sort of get to to reap the benefit every time we make an investment every time we sell off from the fund, we receive some tangible benefit in form of development of marketing. And then that, in turn, becomes even higher, like high price. And that in turn, and that in turn, the fund. So it's like it allows us to actually, like, run it in quite a sustainable way where we just have to sell off less and less mk hour time and can, like, really set up the system

to be like as economically strong as possible which really is our goal like we just want to make an economic entity that can credibly back you know a major stable coin which is

ultimately what that's going to be all about is just pure money right it's just going to be we will need to have the the capital available if we really want to be taken seriously when we say that you can hold a die and feel safe

with your money there cool One last question on the sale. Like, now that you have 58% left and you've never done a crowd sale, even if you had that option in the future, would you do it? Or would it always be private sales? So we were actually considering this just very recently. But so from my perspective, a crowd sale is entirely like a marketing thing.

And then like you combine it. So the interesting thing with like a public auction style crowd sale is that you sort of forced liquidity out of the market. Because if you have a crowd sale and there's no people that buys it to it, there's at least going to be like one guy that gives you like one Satoshi so he can get the entire stake. Then someone else sees that and he puts a little bit and it's kind of like a regular auction where you just start with a really little bit and there's no matter what, there's

going to be someone who's going to put some money in there and so on. So it's also a bit risky. If you don't do good enough marketing before crowd sale, you risk like, you risk. getting a terrible price. And that's all, like, we were considering a crowd sale in the beginning as well. And we were just, like, we didn't want to focus on marketing. We wanted to focus on research and figuring out if it was even feasible and so on. And then at this point in time, it just looks like, like, again, like, if we did a crowd sale now,

we might be able to get more liquidity right away and so on. But it would be, like, it would require like a major operation from us. And we'd rather just spend that energy on improving the system itself, basically, and improving. And also just like focus on core marketing things. Like just like getting our market, like something like starting to set up social media and, don't know, like doing more interviews and like more media outreach, none of which we have actually done at all until now. Okay, cool.

So one final thing is, one final thing is, you once made a Reddit post on, on I think R slash East Trader and this red post concerned the nature of Ethereum itself and I found it a very interesting post because it gave me a new perspective

on Ethereum I shared some of these ideas but I had never been able to put them in such a nice form so I'm just going to read out that post and have your comments and about the core value proposition of Ethereum

so when I go back to the post you said some you said this the core value proposition of Ethereum can be summarized in a single word, synergy. Each project on Ethereum becomes a multiplier on the existing value of every other project resulting in exponential, rather than linear gains in the system. Every time any one project on the Ethereum network gains a new user or somehow grows in size, it ripples across the list of other projects on Ethereum and positively impacts all the others.

And because of this nature, Ethereum becomes a... what can be described as an ever-growing snowball in time. So I've kind of modified your comment, but it's, it was mostly, it had mostly this tone. Can you explain this in your own words differently and walk us through? Yeah, so this was actually a little bit like an attempt at marketing maker itself, because what I was trying to explain was just how strongly maker is going to benefit from all the other projects. on Ethereum. Because I guess one of the main reasons is that a stable coin fits into everything because everything needs a stable coin. But also, like, what I think is really fantastic about

Ethereum is this common standards and like common interoperability between components. Like every component on Ethereum, every smart contract and every dab on Ethereum has sort of native integration with each other. Like they don't just know how to talk to each other. They like are like right next to each other in a sense. In fact, like, I don't even think, like, I think it makes sense to talk about Ethereum as like one thing and then Maker as like a component of Ethereum rather than a like a standalone that built on the platform just because of how like type the integration between something like Maker and the die and let's say Auger for instance is where like

they don't even have to like we don't even need a relationship with Orker. for them, like for us to, to interrupt. Like, we can use their token as collateral in our system, and they can use our stable coin without ever even, like, us collaborating on this in any way at all. It's just automatically works. Like, they just have to, they use the token standard, and we use the token standard, and we use, like, the same type of ways of interacting with smart contracts. And they just have to write some simple code, and it just works automatically.

The only interaction they have to do is just figuring out where we are in the blockchain. and they can get directed to us. And this means that not only do we get to benefit from every project that's going to launch alongside us in Ethereum, but we also will benefit from every future project that's ever going to launch at Ethereum, assuming that we have, let's say, the best stablecoin, right? Because they will just look at Ethereum and they'll see,

oh, yeah, this is a great stable coin, the great prediction market, this is a great decentralized exchange, there's a marketplace, there's other stuff, there's all these things that we can use. So we're going to launch our own thing here. here and then our thing interacts with them in some way. And we don't even have to like get let in by their, you know, little elite group or something.

It's not how it works. It's just they just write the code. They deploy their contracts. And then they just, they will use the dye. They'll use etherX. They'll use auger automatically without ever having to, to do anything more than just deploying Ethereum.

And yeah, this extremely low barrier to entry is just, it's why I describe it as a snowball where like the more. projects that already exist on Ethereum, the more incentive there is for a new project to go to Ethereum and plug into this existing network effect. Yeah. Yeah, it's like all of these projects like kind of connect together and form a web of applications, right?

And then any new application is just kind of plug into this web of all the other applications that are already out there. And you don't need any special contracts or special business deals with all the existing applications to do that. Yeah, exactly. That's that's kind of a very interesting property that I really haven't seen like it's almost like the internet right like when I think of it like Facebook is very interesting like Facebook is fun because there's YouTube right like if there wasn't YouTube then people wouldn't be able to share videos and my Facebook experience would be much poorer but because there's YouTube and people can share these videos out here my Facebook

experience is richer. And similarly, like, there's New York Times. My Facebook is experience richer because New York Times exists on the, on the web, right? So all of these kind of applications on the web sort of link to each other, but they link it to HTTP. But like with Ethereum, what you're saying is like any applications on Ethereum are financial in nature, which HTTP is not, and they link to each other just like just like the normal web. And that's a very powerful property that conventional banking systems don't have at all.

Yes, and I think it's also, like you can say in a sense that a user of one Ethereum debt very easily translates to users of other debts. I mean, for us, it's the most apparent because any debt that uses us as a stable coin just automatically gives us one user for every one user they have, right? because we will be a core component of their system.

But it's also just very easy, like it's the same, you know, you use the same clients to interact with Ocker as you use to interact with EtherX, for instance. So it's very easy for you to switch from one to the other. And, yeah, same goes for every doubt. Cool. No, I think that's definitely exciting. I mean, in that way, it is a very, very interesting and unique app. Now, just before we wrap up, what's the timeline here? When are you guys?

Because it's not functional at the moment, right? So when is it launching? So it's launching very soon. I mean, we've been saying soon for the past two months, and now we've transitioned to saying very soon, basically because we actually have, like, we've actually had the entire thing sitting on Ethereum for a while.

And just, we've been doing, like, testing on the, on the live deployment. We also finished our security audit, which was posted on Reddit, I think two weeks ago or so. However, we're still doing, like, some last-minute upgrades and are actually going to redeploy, like, the live thing we've had sitting in order to get, like, the perfect starting point for when we launch. So the launch process will actually just be us taking what's already there and already been sitting on the blockchain and then just initializing it, sending out all the MQR to everyone who bought in.

So the 42% that's been distributed. And what then starts is what we call the die alpha, which is like a heavily crippled, centralized version of the system. That's not really indicative of the full implementation of it. But what it does allow us to do is like at least introduce a dye to the market, for instance. So we will have a die stable. point. But it will have, like, it will basically be much more dependent on the governance by stakeholders directly. And a lot of the processes that will eventually be fully decentralized

and fully autonomous are going to be manual at first. And we will then, like, the system is built so it can be upgraded on the fly. Like, it's fully dynamic. It's able, it's actually possible to switch and upgrade every single component of it in the beginning. And that's going to be how we transition from centralized die alpha to fully decentralized and fully insured and fully working die credit system. One component at a time, actually. So the first thing we will add is just to see the collateralized deposition component without the insurance. So that will be the first step. And then later we will add the insurance and then we will add direct voting.

And then eventually we will lock down the system completely. so no further drastic changes can be made. And this is done in order to just secure the system. So stakeholders can't suddenly decide that they want to try to steal funds or something. However, even during the beginning, stealing money from the system still isn't easy because everything is secured with a time delay, basically, giving everyone a warning.

if they see like an action that might maliciously impact them. Cool, fantastic. Thanks so much for coming on. This has been super interesting. I think this is one of the... Actually, I was just going through our old episode list before because we've done quite a few episodes about the theory and going far back.

But this is the first time you've sort of purely done one on that app. And I think this has been a great app to start with. because it's definitely a sort of fundamental component that could have a huge potential and a huge significance in the ecosystem in general. So I think that's really exciting. And yeah, I'm certainly excited to see where this is going to go and when you guys launch. Maybe one last time if people want to get in touch or maybe people want to purchase some D.K.R. How can they do that? So our website is makerDAO.com.

from where you can see the white paper and then join a Slack. And in general, I would say the best way to get involved with Maker and get into the community is to either join a Slack, which is open for anyone to join through a website. Or recently we started a subredited, so R-slash Maker GAO on Reddit, which has a lot of useful links and it's also a great place to start. And yes, thanks a lot for having me. Yeah, I guess I still need to learn how to like verbally explain the system. At this point in time, like I have a lot of practice in doing it in writing, but this is the first time.

I guess I've tried to like explain the entire thing through voice. And it's difficult because it's very hard to like manage where to start and where to go and stuff. But yeah, like you said earlier, I would definitely encourage people to read the white paper. Like one of the things we've made it that we have always Try to really like Ensure that people understand is that you should It's not something you should get it like you should not get into buying or trading Mkr Unless you know how the entire system works from top to bottom

Because of this immense risk of forced inflation It's not something like ether that you can just buy and hold and like go and read it and see everyone else saying yeah, it's great Yeah, okay, I'm gonna buy some I don't really understand how the EVM works but I'm just gonna you know hold someone in exchange and it's going to be good. With Maker, you actually have to, like, actively be involved in governance and have to understand what's going on because you are the regulator itself like you are. And you ensure what you're doing with your regulating powers. And if it doesn't, if it isn't done well, then you stand to lose a lot of money.

And if it's done well, then you stand to gain lots as well. So like our community is a bit special in a sense that it's, it's, it's, it's, it's, it's, it's, it's, tight-knit and it's like people who are, it's all people who are specialized into this very thing and who have spent time in learning how it works and who I guess strategize together and really try to to look more like a company or more like a coherent organization rather than many of the other communities because of our reliance and governance. Yeah, absolutely. I think that's a great point and important point.

And to be honest, I think he did a fine job. It is a complex thing to explain because it is a complex structure. And I think in your guys' defense, there probably isn't a simple way to accomplish the same thing. So I think the complexity here is just something that's necessary. So thanks so much for coming on. I think this was really interesting. I hope our listeners enjoyed it as well. Thanks a lot.

And thanks so much for a listener, for listening. as always. So Epstein of Bitcoin is part of the Let's Talk Bitcoin network. You can find all the shows at Let's Talk.com. And you can also subscribe to Let's Talk Bitcoin using any podcast app or you can watch videos on YouTube.com slash episode of Bitcoin. And if you're a loyal listener and you want to support the show, you can leave us an iTunes review. Send us an email at show at episode of bigpoint.com and we'll get a t-shirt sent to you. It really helps new people find the show and we appreciate it a lot. So thanks so much and we look forward to be back next week.