🎙️

Beanstalk <> Cre8rDAO

Date
February 14, 2022
Timestamps
00:00 Introduction • 00:35 What is Publius • 01:44 Inspiration • 04:05 The team and associated organizations • 05:11 Reasons for anonymity • 08:10 Regulatory related issues • 09:36 Decentralized & autonomous • 13:46 Overview of Beanstalk • 15:33 Credit based stablecoin • 16:34 How Beanstalk plans to solve the stablecoin shortage problem in DeFi • 19:34 Plans to expand to other currencies • 20:38 Price history • 27:07 Price oscillations & incentives Beantalk creates to maintain its peg • 33:20 Inefficient human behaviour & how the community has evolved • 36:14 Roadmap • 38:34 DeFi/token integration for Silo • 40:01 Minting of Beans • 41:15 Plans for Stalk (gov. token) • 42:10 Farmers market • 43:10 Multichain plans • 44:33 Decentralization plans • 46:12 Audits • 47:42 Guidelines for people new to Beanstalk • 50:20 The community • 55:00 Beanstalk Farms • 57:13 Pods • 58:19 Education for the general public • 01:01:10 Who and what are you inspired by
Type
Ask Me Anything

Recording

Notes

What is Publius?

  • A pseudonym that the founders of Beanstalk use to preserve their anonymity. They are very big believers in decentralization and don’t feel that in the long run having doxed founders is helpful to the long-term success of Beanstalk.
  • It is a homage to the Roman Empire or the writers of The Federalist Papers who went under the Publius pseudonym.

Inspiration

  • They were greatly inspired by Alexander Hamilton, who was a major proponent of the central banking system.
  • The Federalist Papers were a series of articles arguing on behalf of a new political system and the Beanstalk White Paper argues for a better monetary system.

The Team and Associated Organizations

  • There are about a dozen people who are not associated with Publius who are working full time on Beanstalk, and another dozen or two working part-time in some capacity. Many of them are contributors to Beanstalk Farms, which is a DAO working to benefit Beanstalk, and also through Bean Sprout which is a Beanstalk accelerator. Both Beanstalk Farms and Bean Sprout were funded through an on-chain vote by the Beanstalk DAO.

Reasons for Anonymity

  • The main driver was what happened to Basis in 2017, who raised $133 million in an ICO and put together a high quality team and had a great white paper. They ultimately did a couple things that put a target on their backs and they were forced to shut down and return all of the ICO money to their investors by the government.
  • It’s important to prioritize decentralization and having a singular founder is a major impediment to a truly decentralized development project.

Regulatory Related Issues

  • It’s clear that the government is going to drag their feet on a path to a widely accessible dollar through blockchains, or particularly through permissionless blockchains.
  • Since stablecoin providers will be highly targeted by regulation, Beanstalk has been built to operate autonomously. In order to stop it from operating, you have to acquire a majority stake in its governance token Stalk and attack it on-chain through its own rules.

Overview of Beanstalk

  • A decentralized algorithmic credit based stablecoin issuer.
  • Bean is the first stablecoin issued by Beanstalk, and it’s pegged to the US Dollar.
  • The way it works is when the supply of Beans is too low or demand for Beans is too high, such that the current price on an a time weighted average basis every hour is above a dollar, Beanstalk can mint Beans to increase the supply and decrease the price. And when the price is too low, when there is excess supply or not enough demand, Beanstalk says it’s willing to borrow Beans on the open market, issue debt, and creditors/lenders that are willing to lend Beans to Beanstalk can purchase Beans on the open market and lend those Beans to Beanstalk. In practice, buying and lending those Beans to Beanstalk has the effect of increasing demand and decreasing supply, which increases the price. In this way Beanstalk is able to regularly cross the price of Bean above and below its value peg of one dollar.

Solving the Stablecoin Shortage

  • There are high quality peg maintenance models largely due to convertibility or collateral, however excess demand and limited supply results in high borrowing costs.
  • By switching from collateral to credit, Beanstalk has the ability to remove or almost remove borrowing costs. Beans can even be positive carry because you have the ability to deposit your Beans in the Silo and earn interest directly from the protocol.
  • The fact that there is now a stablecoin with much lower borrowing costs than any other stablecoin that currently exists has the opportunity to radically change the state of DeFi.

Plans to Expand to Other Currencies

  • Once you have a strong credit history and a high willingness for people to lend to Beanstalk, the specific denominations of its stable assets that are issued can be somewhat arbitrary as long as you have a good oracle solution for a given price.
  • US Dollars are the first being issued because there is by far the most demand for USD stablecoins at the moment, but the expectation is that in the future there will be a high demand for different assets pegged to different values and Beanstalk could in theory issue a wide variety of stable pegged assets.

Price History

  • Beanstalk had been growing slowly and steadily to around a $2.5M market cap at around $1 over the first couple weeks. Then Beanstalk somehow went viral on crypto twitter and Beanstalk went from a $2.5M market cap to a $40M market cap in a couple of hours, and over a couple of days, like $20M+ of Ethereum flowed into Beanstalk. The price went as high as $4 and the supply increased from about 2.5M to over 20M. When people realized they couldn’t exploit the protocol, there was a dump and the price dropped as low as 24 cents.
  • Following the dump, Beanstalk was able to raise its interest rate high enough to attract enough creditors to eventually return the price to $1 over the next month. Over the following couple weeks, Beanstalk was able to return the price to $1 a couple times, until it started to consistently oscillate the price above and below the peg.
  • At the end of November 2021, there was a large inflow that pushed the price up to $1.40. For a couple more weeks, there was a sustained inflow of demand. There were still some inefficiencies in the model at that time, and Beanstalk was willing to issue too much debt, and despite paying back a lot of the debt from the previous debt cycle, it ended up with more debt at the end of this growth cycle than it had when it started.
  • There was a two or three week period in December of 2021 where the price was a little bit below a dollar. Beanstalk was again able to issue enough debt to return the price to a dollar. There was an ETH crash and a bit of excess supply on the Bean side of things and that resulted in another dip below peg in January, but around January 31, Beans started to oscillate back and forth above and below a lot more consistently again.
  • Seems that November to January was a three month cycle that has more or less completed itself.

Price Oscillations & Incentives for Peg Maintenance

  • Beanstalk makes no guarantees about the price, it just makes it attractive to sell Beans when they are above peg and buy Beans when they are below peg.
  • Typically how you would get the highest pure rate of return within the system is by buying Beans on the open market and then lending the to Beanstalk when the price is below $1.
  • Beanstalk creates incentives for you to sell when the price is too high and the incentives increase as the price gets higher. It creates incentives to buy when the price is too low, and the incentives increase when the price gets lower.
  • Beanstalk does not encourage people to buy significantly above a dollar in any scenario.

Inefficient Human Behavior & Community Evolution

  • When the system was young, there was a wider spectrum of inefficient behavior, and its magnitude in effect on Beanstalk was much larger because of the amount of inefficient behavior compared to efficient behavior. Over the past couple months since that initial pump and dump, there hasn’t bean nearly as much wildly inefficient behavior. Much of the improvement can be attributed to the community and the quality of discussion on discord.

Roadmap

  • Focusing on improving the architecture now that the economic model has shown efficacy.

DeFi/Token Integration for Silo

  • Generalization of the Silo to allow for any whitelisted token to be deposited and earn Beanstalk native rewards.

Minting of Beans

  • Generalized minting of Beans will allow for Beans to be minted based on the state of different liquidity pools.

Plans for Stalk (gov. token)

  • Plan is for Stalk to become liquid, so that there will be a protocol native yield bearing token in addition to a protocol native stable asset.

Farmers Market

  • The decentralized exchange for Pods just launched a week or so ago. It provides a way to price and trade Beanstalk’s debt asset.

Multichain Plans

  • Crosschain is a really complicated problem, particularly to do properly in a way that preserves security and decentralization. It is something that is part of the larger plan and something Publius thinks about, but there are no concrete plans.

Audits

  • The Beanstalk smart contracts are undergoing an initial audit by Omniscia, and there will be another in the next couple months by Trail of Bits as well.
  • Once everyone is sufficiently comfortable with the results of audits, ownership privileges of Beanstalk which are currently controlled by a multi-sig will hopefully be transferred to the null address and there won’t be any clear single points of failure within the system.

Transcript

hey everyone this is fugu here from creator dao and i'm here with publius from beanstalk how are you very well thank you for having us looking forward to chat today you guys are an old friend of creator dao and i listened to a couple of your interviews and you always explain everything so well so i'm looking forward to hearing you guys talk about what's happening at beanstalk and feedstock farms and all the developments that have happened lately yeah very excited to be here let's just dive right into things i wanted to ask you first what is publius so publius is a pseudonym uh that the founders of beanstalk use to preserve their anonymity uh we started beanstalk we'd you know we've been we worked on beanstalk for around nine months prior to deploying it on the ethereum main net but uh are very big believers in decentralization and don't feel that in the long run having uh doxed founders are helpful to the long-term success of beanstalks so it's a little bit of an inconvenience for a lot of different reasons and a little ridiculous um but we're doing our best to preserve our anonymity so publius refers to the the founders of beanstalk is it a homage added to like the roman empire or to the writers of the federalist papers who went under the public synonym yeah exactly it's more a federalist papers reference than a uh roman history reference although uh there are some good uh publius references as well in roman history why did the writers of the federalist papers inspire you guys to adopt this kind of as your name is there a parallel do you think between your project and the founding fathers of the united states well certainly not um we would not go anywhere close to putting the work that we're doing in the same league as the founding fathers but um we were greatly inspired by particularly alexander hamilton um but when you put the context of the federalist papers or you put them in context i should say and what what were they they were they were a series of uh articles arguing on behalf of a new system that should be adopted and it was a very articulate uh set of reasonings for the adoption of the us constitution but in practice it was uh just a set of uh reasons or articulations and uh in the same way uh peenstock or or maybe i should say the beanstalk white paper is hoping to lay the foundation and argue for a better uh monetary system perhaps and so uh then i think we also took i know we also took a lot of inspiration from the fact that alexander hamilton was a major uh proponent of the central banking system uh and had a major hand in the creation of uh the predecessor to the current uh banking system and uh given that beanstalk in many ways is modeled after a more traditional uh financial system and also the many of the principles that alexander hamilton wrote about and the epitaph of the white paper is a reference to some of those principles which is a national debt if it is not excessive if it is not excessive will be to us the national blessing it will be powerful cement of our union and so uh i think without being too too explicit about it uh there's there's a lot of different inspiration that we've drawn from alexander hamilton and throughout the entire process of trying to create and bootstrap uh beanstalk very cool that was that was really interesting to hear does the term publius encompass the whole team behind the project or are there individuals outside of the publius so at this point in time there are probably a dozen other individuals that are not associated with publius that are working full-time on beanstalk and then probably another dozen or two working part-time in some capacity uh on beanstalk a lot of that is happening through beanstalk farms which is a decentralized development organization working to benefit beanstalk uh and some of it is also happening through bean sprout which is a beanstalk accelerator uh both beanstalk farms and beansprout were funded uh through an on-chain vote by the beanstalk dao and so at this point in time there's a pretty uh sophisticated set of a network of different individuals and organizations working to develop bean stock into uh into money um or the issuer of money uh but published just refers to the founding team is everybody anonymous um there's a healthy mix of doxxed and anonymous people working on being stuck at this point in time but um the public's team specifically is anonymous to the best of our knowledge did you guys make that decision because you saw that there was a significant advantage in i mean there's maybe the inspiration from satoshi with the bitcoin project versus others with an open founder what what do you think are the advantages or disadvantages of having a anonymous team well candidly the main driver behind the decision to be anonymous is what happened to basis um which back in 2017 uh basis which was an attempt at a different algorithmic cryptocurrency or stablecoin uh raised like 133 million dollars in an ico and put together a pretty high quality team had a great white paper and raised all this money to develop a us dollar based stable coin and you know they did a couple things that might have put a little bit of a target on their backs but regardless um for one reason or another uh they were ultimately forced to shut down and return all of the ico money to their investors um by the government is our understanding and therefore you know the question kind of becomes well if you're actually serious about trying to create new money and a decentralized particularly us dollar pegged stable point where uh to start it made a lot of sense to have beans pegged to the us dollar given that there seems to be by far the most amount of demand for us dollars uh the question becomes well if you're serious about uh creating that issuer it seems that you really have to make decentralization as high a priority as possible and having a founder or singular founder is a major uh glut in the road to true decentralization and uh i think ethereum has been one of the rare cases where despite having a founder they've been able to decentralize development but nonetheless everyone's still looking to vitality for guidance on heath 2.0 and we we don't really want to be in charge at the lead of a new system of money for a variety of different reasons uh but you know in short we really felt like to give beanstalk the absolute best chance to succeed at becoming an issue of new money it it made a lot of sense to try our best to preserve our anonymity do you think because you're building an algorithmic version of the us dollar that you and other algorithms stable coins are going to be facing more regulation scrutiny than a project like ethereum well i don't know if it's about more scrutiny than something like ethereum but uh it's very clear and if you look at what's happened with libra or dm at facebook or meta too many names uh over the past two years for three years uh it's very evident that the government is going to do everything they can to drag their feats uh on a road to a widely accessible dollar uh through uh blockchains or particularly permissionless blockchains and so separate from the the specifics on how one particular cryptocurrency is being regulated or uh the specific actions on by one governing body within the us government it's very clear that stable stable points when providers in general are going to be uh highly targeted by regulation and so uh beanstalk from a first principles perspective uh is autonomous and there is nothing saved for an on-chain attack that can be done to stop beanstalk from operating and beanstalk was deployed a little over six months ago on the ethereum main net at this point and that is currently the case that the only way to stop beanstalk would be to uh acquire a majority stake in its governance token stock uh and attack it uh on chain through its own rules it's already at the place where you know there really isn't a single point of failure within the protocol within uh the developers of the protocol uh and so uh beanstalk is ready for that type of environment and is designed from a first from the first to be ready for that type of environment whereas you look at a variety of the other stable point issuers in the space and uh like maker dao last week uh announced that they are starting to consider kyc uh stuff like that is all you need to know to know where the space is heading from a regulatory perspective and it's also what you need to know when it comes to either being stock is a real alternative and that from a structural perspective it doesn't contain any of the exposure to the traditional finance world that any of the other uh stable coins uh do at the moment uh or at least the traditional collateralized ones do um and then there's some very interesting stuff happening with uh tara and their recent sponsorship of the washington nationals so uh we'll see what comes of something like that um and we'll see whether poking the bear uh is a good decision or not in the long run but regardless i think things like that are an indicator that everyone uh in this space is aware that regulation is a given and it's really a question of how you decide to play it as opposed to whether or not it's coming do you think the main concern on the regulatory side is that that algorithmic stable coins are a threat to the federal reserve well it depends on the stable point in particular uh i don't think it it's very hard to speculate as to the cause uh or the inspiration behind a lot of the government's decisions especially when it seems like a lot of their decisions are you know hard to explain uh for a lot of different reasons but in general uh it's very clear that the federal government from a global policy perspective leverages their control of the us dollar and the us dollars position of as the global medium of exchange uh to to conduct a lot of foreign policy and so i think from uh from an overarching perspective the goal of the government is to preserve that that hegemony effectively now whether they're going to be able to do that is a fundamentally related question to how they go about regulating different cryptocurrencies and attempts at algorithmic stable coins but the fact that they are you know it's kind of eating your own tail when you're trying to cancel all the innovation that's happening within the country it's you know the fact that we're anonymous sucks so it's it's too bad that this is the situation but ultimately you know it's the government is doing what they perceive to be in their own best interest and in the interest of america and you know therefore it is what it is all right well just zooming out for a bit for those who are listening and don't even know what beanstalk is can you just give kind of uh a quick summary of what the beanstalk project is all about sure so beanstalk is a decentralized algorithmic credit based stable coin insurer bean is the first stable coin issued by beanstalk and it's pegged to the us dollar but beanstalk the way it works is when the supply of beans are too low or demand for beans are too high such that uh the current price uh on average time weighted average basis every hour uh isn't is above a dollar is above its peg beanstalk can mint uh beans to decrease the to increase the supply and decrease the price and when the price is too low when there's excess supply or not enough demand beanstalk can uh it's a it's a credit-based stable coin so beanstalk uh says it's willing to borrow beans on the open market issue debt and creditors lenders that are willing to lend beans to bean stock and purchase beans on the open market and lend those beans to bean stock and in practice uh buying uh and lending those beans to beanstalk has the effect of increasing demand and decreasing supply which uh increases the price and uh through through increasing its ability to bar or willingness to borrow beans and increasing or decreasing the weather beanstalk is able to over time uh regularly cross the price of one bean above and below its value peg of one dollar and so uh at a high level bean stock uh makes kind of a fundamental trade-off as compared to uh basically every other stablecoin model every other stablecoin model uses collateral uh and in some form or another uh has convertibility such that you can exchange your stablecoins for collateral and the stability of those collateralized stablecoin models is derived from the value of the collateral and beanstalk takes a fundamentally different approach to issuing stable coins it doesn't have any collateral and instead exclusively relies on its credit on its ability to attract creditors uh when the price is too low in order to regularly return the price to a dollar and so by making that fundamental trade-off of collateral to credit you you receive a wide variety of benefits like an uncapped supply so one of the big structural problems that is facing but the d5 space in general is a shortage of stable points so even though you have really high quality peg maintenance models largely due to convertibility the effect of exchange or collateral for a stable point or vice versa at the peg means that the stable cleanser do a pretty good job of holding their value back however excess demand and not enough supply plays itself out in really high borrowing costs and so the fact that there are supply shortages of stable coins and it makes sense right it's really hard to hold a trillion dollars of collateral in a bank account somewhere uh to mint stable points to minted trillion stable coins uh you at some point run into a supply issue and high borrowing costs and those high borrowing costs make doing lots of different things across d5 really expensive and cross-prohibitive and so what beanstalk does fundamentally by switching from collateral to credit is it has the ability to totally remove or almost entirely remove borrowing costs and beanstalk should be as opposed to basically every other stable point has negative carry associated with the high borrowing costs bean stock or beans are either neutral carry when they're being used and circulating because there's no tax or uh high borrowing costs associated with it and it's even positive carry in certain instances because you have the ability to deposit your beans in the silo in the beanstalk bank and earn interest uh directly from the protocol and uh a portion of all new bean mints uh when the bean supply increases because the price is too high are paid out to those depositors and uh in practice uh the the fact that there is now a stable point that in theory should have much much lower borrowing costs than any other stable coin that currently exists has the opportunity to uh radically change the state of d5 potentially and so uh what beanstalk is is a the issuer of a new stablecoin that we're very excited about um because beanstalk has now been in existence for a little over six months which is uh by far the longest lifetime of any attempt at an algorithmic credit based stablecoin uh and it's doing a pretty decent job of uh oscillating the price above and below a dollar so we're we're excited about uh what lies ahead did i hear you do a little alpha leak when you mention that bean was the first stable coin issued by beanstalk well uh depends how you consider an alpha leaf we try our absolute best to be as open with our thoughts in general so this isn't the first time we've mentioned it but uh in general once you have a strong credit history and you have a high willingness for people to lend to beanstalk uh the specific denominations of its stable assets that are issued can be somewhat arbitrary as long as you have a good oracle solution for a given price and so whereas us dollars are the first being issued because there is by far uh the most demand for us dollar stable points at the moment at least on the ethereum network it seems uh our expectation would be that in the future especially in a multi-chain world there will be a high demand for different uh assets pegged to different values and bean stock could in theory issue a wide variety of different stable pegged assets all on top of its its own credit history all right well you mentioned that beanstalk over the past six months or sorry the bean stable coin it spent some time above peg and below pig can you just share with us a little bit about its price history in the past three months or so sure and i can try to keep it mostly to the past three months but the so the beanstalk's gonna live for the past six months or so and uh the the main catalyst that kind of got this whole wild ride started was uh a couple weeks after launch maybe four or five weeks after launching uh beanstalk went viral on crypto twitter in mid-september and beans went from so for reference beanstalk had no pre-mine no pre-sale no pre-launch or anything of the sort and the algorithm uh to maintain the peg has been running uh as as normal from deployment and the first hundred beans uh of the bean supply which is now at 40 something million beans uh were minted when the bean stock contract was deployed on maine and so beanstalk had been growing slowly and steadily to around a two and a half million dollar market cap and supply at around a dollar over that um those first couple weeks and then beanstalk somehow went viral on crypto twitter and being stock went from a two and a half million dollar market cap to a 40 million dollar market cap in a couple of hours and over a couple of days like 20 plus million dollars of ethereum flowed into beanstalk and that resulted in some pretty crazy uh price volatility above peg the price went as high as four dollars and the bean supply increased from two and a half million to over 20 million and over the next couple days uh basically all of that uh well one of the members of our discord uh put it best what happened they said well when all of the apes realized they couldn't exploit the protocol they all left and so what they were referencing is uh some of the earlier predecessors to beanstalk like esd and dsd and basis cash uh kind of the name of the game was to get in as early as humanly possible independent of the price and they were our discord member was speculating that a similar behavior was predicted to be the most profitable by all these apes that founded on crypto twitter but quickly realized that was a losing game and then they all left the system and the result was the price went as low for as high as four dollars as low as 24 cents um but in the grand scheme of things uh that huge outflow of beans and supply allowed for the model to kind of prove whether or not it worked and over the next month beanstalk was able to raise its interest rate high enough such that it could attract enough creditors enough people willing to borrow beans to beanstalk to eventually return the price to a dollar and so over a couple weeks beanstalk was able to return the price to a dollar a couple times until it started to consistently oscillate the price back and forth below one again and so now we that's the the preface to now your question about the net the past three months or so so beanstalk started to oscillate the price of being uh pretty decently above and below a dollar until uh early or excuse me late november and around thanksgiving uh there was a pretty hefty inflow in a short period of time into beans and that pushed the price as high as a dollar forty uh and then for basically another week or two there was a large inflow of demand into beans and this time it was more sustainable demand for the most part um certainly by comparison to the first growth cycle but from a uh micro parameter perspective uh beanstalk still had some uh inefficiencies in its model particularly uh when beans are above a dollar uh beanstalk was willing to issue uh too much debt uh and therefore even though beanstalk was paying off a lot of its debt during those two weeks of growth and it paid back over 20 million dollars of debt uh and paid back almost everyone that went to it during the first uh dead cycle uh back in september and october at the same time uh beanstalk exited that two-week growth cycle with a higher debt level than it actually started it with which is never what you want um and because decreasing your debt level is uh one of the two things in addition to price that beanstalk optimizes around and therefore since you had that growth cycle in october uh where beanstalk uh didn't you know didn't leave that growth cycle in its greatest situation as you would have hoped then you had sort of a two or three week period in december where the price was a little bit below a dollar beanstalk was again able to issue enough debt to return the price to a dollar and then uh there was a little bit of uh an east crash and then also a little bit of excess supply uh on the bean side of things and that resulted in another uh dip below the peg in january but around january 31 uh beans started to oscillate back and forth above and below one a lot more consistently again and so it seems like that uh november to end of january three-month cycle has also more or less completed itself um and so when we take a big step back you had like a very big very violent uh let's call it month-long cycle uh in september october uh and then you had uh more of a three month less violent less volatile but slightly longer cycle in november december january and now uh beanstalk seems to have come out of that cycle so uh that's that's the high and the low of the past couple of months on uh how the price has been operating so taking kind of these extreme periods of being above and below peg as a practical example can you just tell us how a user can take advantage of first the price for example on september 15th i see the price was a dollar fifty or actually a dollar fifty nine how could a user take advantage of that situation and then conversely when it went all the way down to i guess like 25 cents what was the way that somebody could also uh benefit from that that situation as well so we'll do our best for a friend from giving any sort of specific financial advice but what we can comment on is uh the incentives that beanstalk creates so from a first principles perspective beanstalk doesn't make any guarantees about uh the price being at a dollar unlike a collateralized model that has convertibility beanstalk makes no guarantees whatsoever about the price of a bean instead it creates a series of different incentives that make it attractive to sell beans when they are above their peg and attractive to buy beans when they are below their peg so uh in general uh you know you ask well how can you take advantage of the price being too high for example uh well you need to be able to sell beans and sell beans when they're too high in order to sell them uh you need to own them so typically buying games when they're uh significantly above a dot is not a good move instead you want to sell them when they're above a dollar and beanstalk uh creates a variety of different incentives that encourage you to uh you know not necessarily sell your beans when they're above a dollar but certainly discourages you from buying beans when they're above a dollar as compared to when the price is below its value pick when beans are below a dollar uh beanstalk creates a lot more soil and soil is the willingness to borrow beans so in particular when the price is below a dollar uh you can buy beans on the open market and then lend them to beanstalk and that is uh how you get the highest or typically how you would get the highest pure rate of return within the system is by lending means to be stuck when the price is below one so i think the the long and the short of it is bean stock creates incentives to buy when the price is low and the incentives increase as the price gets lower and vice versa it creates incentives for you to sell when the price is too high and the incentives to sell increase when the price gets higher why do you think though that when you have these run-ups in price like it could get so far above one dollar why would somebody continue to purchase beans at a dollar ten a dollar twenty a dollar thirty well on the one hand it's difficult to speculate as to why people would do that that on the other hand um there are certain scenarios where uh the expected inflation that you'll receive uh because the price is so high is greater than your perceived cost and so even though you're paying the premium and you assume that you won't be able to sell your beans for more than a dollar you expect your inflation to be greater than that such that your cost basis will ultimately be less than a dollar and you'll still make a profit so there is some efficient behavior that uh could make that possible now beanstalk goes out of its way to make that behavior not profitable so um i think the short answer is why would you buy it a dollar fifty or a dollar sixty that's harder to say uh it's pretty irrational behavior as opposed to uh why would you buy at 1.001 uh that makes a lot more sense you know in the sense that being able to buy within a small percentage of a dollar a fraction of a percent of a dollar that is that's that's very attractive to people and particularly just you know if we talk a little more substantively about the mending schedule of beans uh beans don't mint based on the price or based on the total supply uh instead beans meant based on the time weighted average and liquidity uh weighted average excess or shortage of beans uh in the liquidity pool over the previous hour and so uh as the liquidity of the system increases the minting of beans can also increase uh even as the volatility decreases and so the rate at which the system can grow is not dependent on the willingness of people to buy significantly above a dollar and in fact beanstalk does not encourage people to buy significantly bit above a dollar in any any scenario effectively if that makes sense well just looking at the chart it's very amazing how you guys have been able to last for so long and maintain an egg so close to one dollar yes it goes above and below for different periods but do you ever sit back and i guess one just be amazed about how this work i mean you guys can see the idea obviously but with such a high failure rate for algorithmic stable coins your plan is actually succeeding and then on the other hand i'm just curious how when you were planning the system you were obviously assuming that humans would act in a certain way when using it but we can clearly see there's there's periods it seems like a total irrationality almost with i guess you protect with the twitter hype cycle what are your thoughts on just like how far you've come until now and how has it played out like you expected i think it is important to have perspective and we do uh take the time to take a step back and think about you know how amazing it is the beanstalk still is alive and chugging along it's i think you said it quite well given the failure rate it is it is noteworthy and we're excited about it uh with regards to the comments about the the behavior that we've seen and i think particularly when the system was young uh there was a wide a wider spectrum of inefficient behavior uh and its magnitude in in effect on the on beanstalk was much larger uh because of the the amount of inefficient behavior compared to efficient behavior however over the past couple months since that initial pump and dump there really has been uh an amazing thoughtful curious community that largely exists in the beanstalk discord that has really change the quality of dialogue around beanstalk to such a high level that there isn't nearly as much wildly inefficient behavior as you would typically expect uh or certainly what we saw last cycle and it's very encouraging to see that people are starting to learn the mechanisms and play it more efficiently there have been some arbitragers that have started to enter the system and just buy low when it's below a dollar and sell high when it's of a dollar which is pretty cool uh it's ultimately uh more and more arbitragers like that uh that will enforce a a really tight peg you know we do still have some inefficient behavior like there was one uh farmer that withdrew a ton of their uh assets from the silo burned a ton of their governance tokens and then sold all their beans when the price was at like 80 cents um a couple weeks ago or 85 cents uh so sort of at like the local low and then redeposit all those assets again uh back when beans was added to peg again a couple weeks later and that's you know from an efficiency perspective the exact type of behavior that beanstalk tries to discourage and so uh it's not to say that uh that behavior doesn't still exist it still does but the the thing that's interesting is the rate at which the inefficient behavior exists is pretty low and continues to stay low even as the community uh expands which is you know i think unique uh particularly for cryptocurrency where the name of the game is much more to act the way we saw people act in september uh in the pump and dump uh whereas thoughtful curious investors are a lot harder to come by in crypto at least in our experience so it's been very interesting to see that high quality community forum and at this point i think there is a a lot more sophisticated thoughtful actors within the system than the other nice well it's really interesting to hear how being stock is evolving and speaking about evolving you guys just released a road map would you be okay to just go through some of the major items and talk about why they're important and their impact to the platform absolutely absolutely so at a high level beanstalk as it was deployed on the ethereum mainnet six months ago was really designed to maintain its peg and answer that fundamental question of whether it will be able to oscillate the price of a bean above and below a dollar and the core of the economic mechanism was designed as such uh the code was written as such but now that we're six months in and beanstalk has made a very strong answer uh that it it can regularly oscillate uh the bean price above and below a dollar the question now becomes well how can we uh update the architecture of beanstalk as it's implemented on chain to facilitate a wider adoption and integration of being its coin uh and a variety of other different things within beanstalk across d5 and so uh maybe and this will require us to get a little bit more specific because the roadmap is a little bit more bean stock specific but some of the high level uh items to hit are that the silo which is again like the beanstalk bank uh which currently supports deposits for beans and lp tokens for the uniswap uh bean eath v2 pool uh is is being generalized so uh what does it mean to be generalized uh if we talk about beanstalk fitting into the larger defy ecosystem uh each of its components and there are a variety of different components within dean stock being uh plug and play uh for other protocols to start to integrate into or fit into is what it means to be generalized and so one of the most exciting things happening to beanstalk uh over the next couple months and there was the first beanstalk improvement proposal proposed uh over the weekend to get this silo generalization started is that uh any token based on a white list will be able to be deposited in the silo and it starts with we're starting with fungible tokens uh and the first other token that will be possible into the silo will be uh lp tokens for the b3 curve pool but from a macro perspective there's a ton of other tokens that could be potentially integrated into the silo and earn beanstalk native rewards so creator dao you know you guys have expressed interest in uh launching a bean creator lp or liquidity pool and as an example of a potential use case for the silo is that those lp tokens for the bean creator pool could be uh added to the silo and earn being stuck native rewards and so uh it's very easy to see how this generalized silo is going to make integrating with beanstalk really simple for a wide variety of different protocols and then those protocols will be able to potentially earn beanstalk native rewards as well which is really cool uh and should open up beans and beanstalk to a wide variety of different actors within the the ecosystem of the d5 ecosystem now uh taking that generalization further one thing that we talked about a little bit further or a little bit earlier excuse me is the minting of beans so we mentioned that beans minting is a function of the time weighted average and liquidity weighted average excess or shortage of beans in the pool or pools over the previous season so season is an hour right now beanstalk only mints based on that bean eat unislop v2 pool but going forward other pools like for example the b3 curve pool will be able to be used in bean minting and that should uh greatly decrease the the need for the bean price to deviate from the peg to have a similar amount of mint so that should the combination of the generalized silo and the generalized minting should greatly increase the utility of beans and beanstalk than d5 and decrease the volatility necessary to grow uh to meet that potential new demand and so when we talk about generalizing bean stock to integrate with d5 at large uh the road map lays out a variety of different generalizations that that fit into that um another thing to maybe highlight which is uh slightly different but a major part of the roadmap is that stock which is the governance token of being stuck in is uh what entitles you to your uh portion of future being mint so anytime the bean supply increases uh half of new bean mints go to pan stockholders the other half going to paying off debt but stockholders currently stock is e-liquid but in the next couple months stock is going to become liquid and that that will uh increase the ability for beanstalk to be integrated with a variety of other d5 protocols because now there will be a protocol native yield bearing token in addition to a protocol native stable asset so those are some of the high level stuff happening that we would highlight from the roadmap there's lots of different cool stuff uh that's happening for example the farmers market which is a decentralized exchange for pods the beanstalk native debt asset just launched uh a week or so ago uh and there's that that to us isn't really on the road now because it already happened but is a major step towards having beanstalk as a protocol more widely integrated with defiant uh also evolving into a more sophisticated financial ecosystem in its own right and having a market to price and trade its debt asset is is pretty cool so might be rambling a little bit here but lots of different interesting stuff happening uh on beanstalk at the moment and beanstalk farms which again is the decentralized development organization is uh doing a great job of coordinating a wide variety of actors that exist sort of all over the world to get this done in a timely and efficient fashion i think i heard you hint earlier that you guys are also planning on moving potentially to other chains are there any plans in the works so crosstrain is a really complicated problem and it's particularly complicated to do properly in a way that you preserve uh the security and decentralization of the individual chains that you operate on but can still at least in the case of beanstalk leverage one big credit history and so a multi-chain architecture is certainly something that we think is part of the bigger plan for beanstalk and we did mention it in the roadmap as like a a high level thing to work on uh but less there's no due date associated with that because of the scope of the project uh but in general uh developing a multi-chain architecture for beanstalk such that uh beans can be used on a wide variety and not just beans beans stockpods uh can all be used both within bean stock and other protocols on a wide variety of different blockchains and layer twos it's uh very important to be in stocks long-term success so certainly uh in in development in in the loosest sense of the term um but a long way away from anything actually happening on that front and before the interview we were chatting briefly about decentralization what what are your decentralization plans in the near future well decentralization is uh a spectrum it's not really a binary and so the the goal of beanstalk is to increase indent decentralization continuously over time uh decentralization can be viewed as single points of failure it can be viewed as a distribution of ownership of the governance token uh it can be viewed as uh kind of the diversity of the core team or the the how many different people are working on the project and on all of those different fronts the goal is to have beanstalk continue to uh increase in this decentralization so already there there are a wide variety of different uh smaller teams within bean stock farms starting to work on different projects uh so front end middleware development back end development the multi-chain development those are all somewhat happening independently and i think that's that's a big part of developing things in a decentralized fashion is to have everyone kind of working independently but coming together at certain points to coordinate to make sure uh we're all heading in the right direction and then from a single point of failure um the the beanstalk smart contracts are are undergoing an initial audit right now by omnisha um and there will be another audit happening uh sometime in the next couple months by trail of bits as well uh and the hope is that uh once uh everyone is kind of sufficiently uh comfortable that the audits have been uh completed and carried out uh any of the suggested changes have been carried out uh ownership privileges of beanstalk which are currently controlled by a multi-sig uh will will hopefully be able to be transferred to the null address um and at that point there really won't be any uh clear single points of failure within the beanstalk uh system and so that will happen hopefully in the next couple months but even today because that ownership privileges owned by a multi-sig uh you know it's not that even that is arguably not a central point of failure so again decentralization is a spectrum and i wouldn't say that uh you know beanstalk certainly has a long way to go on the spectrum of decentralization would maybe be a better way to say it uh than a negative version of the term but or of the phrase but i think even where beanstalk is today is uh at a really high level of decentralization as compared to a wide variety of other uh protocols per se very cool i just have a couple of questions on the practical side of things for those who are who are convinced by your product and are fascinated by it and want to get using it but are not very financially literate or just don't want to get into the complexities of the all the farm terminology and you know putting it in the silo putting in the pods what's the best way for i guess a noob to get involved with beans so the short answer is at the moment you know it's still in general everyone should do your own research right there's no cookie cutter way to say here you should do this and then that's it um one of the things that beanstalk does is by creating the silo and the field uh which is the bank and the credit facility respectively that have really fundamentally different uh liquidity profiles risk profiles return profiles that is designed to create uh some sort of bifurcation in the market and there's a benefit to having different ways that different market participants can uh play beanstalk and benefit from it potentially so there is no cookie-cutter answer to whether you should participate in the field or whether you should silo your beans uh or lp tokens um but what i would say for those that are a little bit you know you said the phrase noob i would just say uh curious to learn more uh the beanstalk discord is probably the best place to go uh there's it's actually kind of amazing the amount of uh helpful uh people that are there to just answer your questions and want you to better understand the protocol and that's 100 organic uh and done by the community uh like late saturday evening uh someone asked uh in the general channel this weekend like you know i don't understand this protocol and within an hour you have like eight different responses offering resources and trying to answer questions and it's just like you know it's it's amazing the amount of different people that are willing to help people get over the hump um now with that said uh not everyone has the time to do that and so one of the main projects that beanstalk farms is working on is putting together uh a more complete set of educational resources that include uh videos and such to make uh going through that process of learning about being stuck a lot a lot smoother easier and quicker going forward well that's probably just a good time to segue right into the community does your community have a name um i don't you know maybe they're going to kill me if i say this but not to my knowledge you know a lot of different projects i think of a different pun or some sort of thing and by working with so many projects i've noticed that a lot of them end up with the same names for their communities but do you have different ranks like the ogs than the new people or anything like that you know it's funny i'm really not the best person to talk about this but i mean there are some roles in the discord um we're not really into hierarchy on the bean farm i think a lot of people call themselves bean farmers on twitter a lot of the bean farmers have like a a bean or a sprout and then a money thing so it's like bean money in their twitter handle um but not a lot of hierarchy in the community uh and instead it's more just uh everyone helping each other uh kind of get to the same place but uh i mean looking at the roles we have like journeyman farmer expert farmer uh bean scholar so it's you know there's some theme to that but uh i don't think there's like a being farmy or or more like a general name for the bean farmers and how did you guys end up attracting such a large number of people that wanted to participate in the community [Music] yeah i wish i knew honestly fugu um i think a lot of it was through creator tao um maybe a couple months ago there was an initial beanstalking creator community and that that honestly was great at attracting a lot of this community uh caesar's videos and stuff were uh a big help on that front um but in general you know we published have really just tried to put out high quality material across the board that is consistent and honest and truthful and fortunately it has seemed to attract a similar set of people that are all really interested in working on something a little bit more sophisticated and interesting uh and potentially meaningful uh towards the larger device space and are willing to take you know take the time if you will to do things the right way so uh we're very excited by the quality of the community uh perhaps more than more than anything other than or even more than the the performance of being which is really cool as well yeah it's funny some people compare creative doubt to wu-tang you know we got a big squad of people everybody has their own different thing going on but we all roll together but you guys maybe are more wu-tang than us because when we set up a group for you in our discord you guys came with your whole crew you had like the whole the whole bean thing going on they all had the bean nft avatars and uh and yeah you guys you guys roll with a big crew a bunch that really uh i mean i just the thing that to me is most noteworthy is how collaborative everybody is like the the lack of ego and maybe this is the wrong place to advertise because if you have ego now you may hear this and want to come hang out on the bean farm like better not to um but the the lack of ego on the on the bean farms is kind of amazing and that may be the most noteworthy thing of all words like everyone is collaborative and kind and thoughtful and when you do have people kind of uh blow off their top it's met with kindness and i mean it's it's it speaks volumes about the quality of people working on beanstalk that that's the case because as i'm sure you know a lot of internet forum are are very uh quickly quickly disturbed for sure well maybe the bean is a great image for you guys because there's a lot of parallels between the image of the bean is kind of an inconspicuous legume not very pretentious it usually comes in big bunches and um and yeah you guys you guys seem to take a lot of your inspiration from the bean as an actual uh as an actual lagoon which is which is really cool just curious about how the community is run do you guys have different guilds or do you just how do you organize things so the short answer is beanstalk farms is the the development organization that employs people that are working full-time or part-time um but then uh that is kind of intermingled in discord with more general community initiatives and so uh the structure is largely uh happening through discord and notion uh which is where a lot of the communication and documentation and stuff and work actually happens um but in short the structure of the community is more or less project based for anyone that wants to work on a given project uh can kind of hop on and contribute in whatever capacity they would like to um and then beanstalk farms tries to fill in the gaps and help kind of get get the process moving in whatever way is necessary to to get things over the finish line but in general it's collaborative between uh beanstalk farms which is again more paid members of of the community that are actively working and full of part-time capacities and then non-paid members of the community that are helping on whatever they want to help and these paid contributors do they get paid in the in the beans or they get paid in stock so beanstalk farms uh was uh seeded with a 1.2 million bean budget for q1 by the beanstalk dow and beanstalk farms uh employees or people that are working on being stout farms to probably not employees um can either receive their payment in beans or so their beans in advance to receive their payment in pods or do any combination of beans and pods that they would like so from an alignment perspective you know because most people choose uh all or a large portion of their payment in in pods uh a lot of the people that are getting paid to work on bean stock are actually getting paid in debt um so then they're very long term aligned with being stock as well when you get paid in pods how long typically on average do you have to wait for your pod to become at the front of the line so pods are paid out on a first in first out basis uh they're non-fungible and therefore it's hard to give an estimate um the first set of pods or the all the vast majority of pods that were issued during the first dead cycle from september to october were paid out over the next growth cycle in november so that was a couple months um however beanstalk has issued a lot more debt since then and so uh it's very hard to speculate as to when uh that debt will become redeemable for pods um but one of the cool things about the farmers market the decentralized exchange for pods uh that just launched is now there is also some liquidity for pods even if they're not uh redeemable or harvestable for beans got it regarding the platform and the way that you want to express yourself i guess to potential users one of the major things to take into account is education and to make sure that people actually understand the protocol and how it works um how how do you guys go about educating people and how do you plan to make people understand the platform on a wider level so to date we've gone out of our way to try to maintain the white paper as a living document and so the white paper is currently on version 1.7.0 uh it's we're working on version 1.8.0 to reflect the generalized silo we were discussing and uh by keeping an up-to-date living white paper uh there is kind of a single source of truth through which people can reference uh and learn about the protocol um the hope of the next couple months is to incorporate the white paper into and transition that single source of truth to a git book uh which will be open sourced and the hope is through that git book to kind of be that central place uh even though it will be hopefully uh stored in a decentralized fashion uh you know and hosted in a decentralized fashion host all of the resources and that single source of truth in a centralized location for people to come and learn about being stuck so one of the major projects that was highlighted in the white paper or excuse me in the roadmap was to improve the documentation and educational materials around beanstalk so that that's a work in progress and to do it of the quality necessary uh is is time consuming uh but but it will you know it's one of the things that beanstalk farms is actively working on and in a previous interview you mentioned quotes the real goal is to attract people that are curious and people that are really interested in putting in the time and you know i don't say this lately but the people that come in that came in and then quickly with the system last week are kind of the opposite end quote have you attracted the right kind of people into the community since then it seems like that quote was from uh shortly after the pump and dump it's it's funny uh looking back at that period of time and i think the answer is affirmatively yes uh or i guess it's strong strongly yes um the certainly curious certainly intelligent certainly curious uh yes very cool and just one closing question you mentioned earlier alexander hamilton as being a major inspiration to you are there any more people uh characters fictional or non-fictional that inspire you or you really admire and why there's so many different places to take inspiration from and i think i try to look in you know in the daily the daily nonsense to find inspiration and you know i would highlight somebody like lex friedman who over the past two or three years has really created a new uh space for thought and innovation and dialogue that didn't previously exist and has done an incredible job this is his podcast the lex friedman podcast of um creating an environment where you know somebody like francis collins uh the director of the nih can even come and tell his piece uh and be met with uh kindness and uh curiosity and an openness uh i mean that's that's really inspirational and so when we when we think about the type of community that we're trying to foster within beanstalk uh you mentioned that you know a couple months ago we highlighted that we're trying to attract curious thoughtful uh intelligent individuals it's like uh i think the the way to do that and the mode to communicate oneself uh in an honest fashion you know lex sometimes says he's naive but i would push back on that um to attract the right people that's really inspirational very very cool well i'm excited to work with uh with beanstalk and the project at large and i'm sure the rest of people incredible are as well and i'm sure the people who ever listen to this interview will definitely be on board because it's a really really cool and innovative project i'm really impressed of how far you guys have come so far and you explained everything so well very eloquent speaker so happy to speak to you today and yeah good luck on everything in the roadmap thank you very much for having us fugu