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Beanstalk University Class #27

Date
May 24, 2022
Timestamps
0:00 Intro • 0:55 Do we have more than a 20% OTC commitment? • 2:35 Will the OTC money be in the Barn Raise all at once or over time? • 3:15 Benji summarizing the discussion about scaling Beanstalk • 9:05 Publius’ thoughts on Benji’s scaling proposal • 17:50 Scaling the Pod Line discussion • 31:35 Permanent Silo deposits • 40:45 Is there a public wallet address where we can track OTC funds • 40:55 Has there been any modeling on how the weather function will work after Unpause? • 41:50 As Stalk vests does it earn more Beans? Do I need to claim it first? And if I do, do I forfeit what is not vested? • 43:10 Long term deposits with Root Finance • 46:00 Updates with Root Finance • 47:50 Is there a risk of 85x debt equity ratio? is there a path to more than 20% OTC commitment? • 51:20 Risks of investing in the Barn Raise? • 52:55 What happens if Beanstalk cannot attract lenders? • 54:30 Is it a problem for Beanstalk if the market cap to debt ratio is too high? • 56:11 Will all Fertilizer holders be paid equal percentage of the mint? or will it be based on the humidity it was bought at? • 56:50 Closing statements
Type
Beanstalk University

Recording

Notes and Questions

Do we have more than a 20% OTC commitment?

  • short answer is no, longer answer is that over the past week, there’s been progress on the ability to receive funds
  • for example, there’s 10% that is actually in the door and committed
  • the other 10% is still committed but unclear how much of that will come in before the Barn Raise start or after

Will the OTC money be in the Barn Raise all at once or over time?

  • Unclear, but our understanding is that they will be in the Barn Raise, before the relaunch

Benji’s Pod Line scaling proposal

  • see #ideas channel in Discord
  • the idea is to scale the Pod Line in order to preserve the same Pod Rate as pre-exploit, in the same manner that we are scaling the Silo assets
  • Pods could be “dormant” according to how much is raised in the Barn Raise, and they would unlock as Silo assets vest
  • Have a multiplier on the Weather that scales it based on the vesting

Publius thoughts on the proposal

  • Scaling the Weather based on the vesting, thereby implying that the Weather is guaranteed to increase as the debt is repaid, is a trap that ESD fell into. That breaks down the FIFO priority of the Pod Line. Lenders should not be incentivized to wait
  • Even scaling the Weather once pre-Unpause, we would be pretty opposed to
  • Beanstalk really doesn’t care what interest rate it has to pay in order to create an efficient market for Soil
  • If the goal of Beanstalk is to become a global issuer of money, the best way to prove the efficacy of the model is to put it through tough conditions

Permanent Silo Deposits — what if capital raised in the Barn Raise instead went to Silo Deposits that were not withdrawable?

  • Our inclination is that permanent deposits are not attractive at the protocol level
  • People having Stalk indefinitely without being able to withdraw is not necessarily the relationship that Beanstalk wants to have with its DAO members. You can’t participate in the DAO unless you have exposure to the stablecoin.
  • It could make more sense for a protocol built on top of Beanstalk to offer this.

Is there a public wallet address where we can track OTC funds?

  • Not at the moment

As Stalk vests does it earn more Beans?

  • You must manually claim your pre-exploit Stalk as more of it vests

Long term deposits with Root

  • Love the idea of making Beanstalk’s liquidity as sticky as possible
  • At Root, we are thinking about how we can contribute to Silo Deposits’ stickiness on top of the innovative protocol native incentives
  • You can imagine a world where Root has a rate swap marketplace and someone wants to lock in a fixed yield of 20% for 6 months. Someone else has to take the other side of that rate swap. At that point, capital on both sides is locked up for those 6 months.

Risks of investing in the Barn Raise?

  • Well there’s endless risks
  • Given the novel nature of Beanstalk, the Beanstalk governance model, the change in its economic model, etc, there’s a lot of uncertainty
  • The risk is total loss of funds. This is a highly risky protocol. Beanstalk is an experiment

Transcript

awesome we'll go ahead and get started thanks everyone for uh for taking some time to join us for beanstalk university this week so um typically these are you know pretty open open floor to uh to talk about anything about beanstalk so a lot of times we're focused on the mechanics of beanstalk and kind of how things work and asking publius questions but given a lot of the recent changes in and being stock farms proposals that have come out recently obviously want to spend as much time as necessary kind of continuing to go into those uh those things so if you're new um check out the bfp 72 channel for some of the the recent discussion about an upcoming proposal which will likely uh go out some later today or tomorrow um from beanstalk farm so with that we'd love to jump in um as always please raise your hand uh in the town hall voice chat or drop a question in the town hall chat channel and we can get started uh so yeah we'll go we'll go to a question from harry who's asking are we at more than 20 commitments so the short answer is no the slightly longer answer is over the past week i guess now it's a new week but over the past seven days or so there's been significant progress on the ability to actually receive funds so the definition of committed funds has changed if that makes sense to the point of now uh we're only counting funds that are actually in the door as committed and that's a a very healthy safe definition so at this point in time around 10 of the total barn raise is in the door uh and that's actually in the door which is pretty cool so uh unclear on how much of that other twenty percent will come in the door over the next week uh or two prior to the actual barn rate start we're optimistic that uh prior to the barn right start we could get up to twenty percent but at this point we're we're uh we're we are at 10 which is pretty cool in terms of like in in in wallets or in bank accounts awesome uh austin mentioned that you know we'd love to hear from from benji and sync about their their ideas for the barn raise i know both of you have had a lot of comments uh in the bfp channel so this is a great time to uh to jump into that discussion so if you'd like to come up on stage please raise your hand and let's uh let's open the discussion floor here in the meantime we'll go to to jdubs who asks will the otc commit be put in the barn raise all at once or overtime uh unclear as i'm not the one who's uh the custodian of the funds that are in or the fiduciary or anything so i have no idea how they'll be deployed but my understanding is that they're uh to be to be in the barn raise and given that the highest rate of return on the barn races prior to the restart of beanstalk the assumption would be that they would be put into the barn raise at the beginning or prior to restart that is awesome uh benji i see you've raised your hand i'm gonna bring you up on stage uh let's uh let's jump in here just invited you hey guys can you hear me yep oh happy happy to to be here and uh answer anything regarding the proposal if there's anything unclear or anything further to discuss um rather than what was already written down yeah i mean maybe uh for the sake of the audience here and those who are new or listening in you want to give a quick summary of the discussion that's been going on um yeah i would i'll try to verbally explain it um it might be there is like a little bit of detail so hopefully i can make it as clear as possible um not the best speaker but let me try so the idea is to basically scale the system in a symmetric manner um that we're preserving the pod rate or basically we are scaling the debt that the system owns um in comparison to how much liquidity we are able to raise and the only objective to that is to basically preserve the healthiness or the attractiveness of being stock or it's its ability better say to attract lenders in the long term um the proposal itself is basically scaling the the pod line according to how much we can raise in the same manner that we are scaling the the silo assets so we are on board about honoring the obligations and not having anyone take a haircut but in the same way that beans will be unvested according to the amount that we can raise the same way baldline can be dormant in some way um according to the percent that we can raise so maybe that's not best explanation but um that's that's basically how how i would describe and benji just to clarify because i didn't understand this was part of your idea to also scale the weather by the vesting schedule or that part i didn't understand yeah so i think that you know if we if we're basically raising let's say 20 20 before we unpause that means that the active pod line will be 140 million right um approximately uh podline it doesn't make much sense to offer 6 000 weather right because if that is attractive when we have a 700 million line why not scale the weather accordingly and and offer like a much slower weather that way we can decrease the debt but before we get into the substance of it just trying to understand the proposal assuming assuming that you scale the the weather based on based on the initial raise what happens then so so yeah let's look at the weather um and break it into two two parts right we have the original function of the weather which honestly i'm not completely sure what's the exact formula right but the weather is is is designed to scale up and down according to the to the demand of soil right that's one thing that remains what i'm suggesting is just adding a multiplier on top of that value whatever it will be the original formula formula will keep working but we will scale it up and down also according to that to the to the overall scale of the system meaning that if we raise only 20 and the pot line is 20 of its original length we can offer um 20 of the original but after the restart after the restart if the vesting goes from 20 to 40 are you suggesting that the weather scales with that or that the weather just scale one time no it's it's continuously so so the parameters all the time adjust so for example if you raise 20 percent and pause and then after the on pause we have another additional 20 that are being raised then you keep the original formula of the weather and you just multiply it by another 1.2 right so so basically if the weather uh when you're on piles it's let's say um a thousand percent and you raise another 20 and you multiply it um by another 1.2 so so the idea here is if you let's say raise 100 right before you unpause basically you're launching with the maximum weather which is what you would do anyways and if you raise less than that then you are able to offer same attractiveness um the same the same offer basically in terms of like attractivity or however you pronounce that in english so it's not my my first language um but with a lower weather which over over a long period of time compounds to a total lower depth to the system and and i get your point about hey what happens if it suddenly jumps up or something like that but that's all the time according to to to how much capital you raised right so it's in proportion to that you have you have basically two components you have the first one which is the original formula and then you're just adding a multiplier so so if that if basically um we're over peg and we're minting and minting and minting and the original formula of the weather will bring the weather down and yeah the weather can go down and when we raise more we multiply that new weather by the multiplier so effectively compared to the scale of the system you're still lowering the weather it's not like a runway only to the upside okay so there's a lot here and first i want to say thank you this is very uh interesting thoughts and uh part of what makes beanstalk so fabulous is how all of the community members try to try to work together to figure out what's the best way forward there's a couple specific points that you raise that i'd like to address so first is the notion of scaling what we were just talking about scaling the weather based on the vesting schedule and that detail well to me that's more of a minor detail and perhaps in the scheme of your general proposal there a more reasonable uh solution would be to just cut the weather once and then let it run which we would still be opposed to but the concept of scaling the weather over time with the vesting schedule thereby implying that the weather is guaranteed to increase over time as the debt level increases that is the trap that esd fell into where they had a hard-coded interest rate as a function of the debt level of the system and as the debt level of the system increased the interest rate you'd receive for lending to the system increase based on the way that the weather normally works and the percent that it goes up or down which is pretty minimal up to three percent a season compared to the concept of scaling from twenty percent to a hundred percent of call it six thousand so uh uh basically from a 12x return to a 60x return that hard-coded return would basically crush the incentives behind lending to the protocol in the soil so that point i just i think that is a lot harder to get wrap our heads around as being something that makes sense but perhaps uh perhaps i i think we should focus our discussion on the concept of preserving the pod rate with either a one-time haircut to the weather or no haircut to the weather uh but the concept is that uh i i think scaling the weather arbitrarily with the vesting schedule that's very unattractive as a starting point yeah i hear you on that um i'm not exactly familiar with the esd um model but the way i see it is you can only get a better price or uh or a better price for the debt for being stock you cannot you cannot go worse than than default why is because if you launch at six at you know the default weather which is like 100 of where we stopped then you you're offering 6 000 anyway so the idea is to try to offer less not more than that sure and but but frankly beanstalk really doesn't care what interest rate it has to pay what it does care about is creating strong economic incentives such that there's an efficient market to lend to the protocol and this particular rule suggestion of increasing the weather as more people lend to the protocol that would not create in this inefficient market to lend to the protocol definitely not that's been tried in practice and has failed so so so i would try to understand why is that because when you when you oh it's very clear right if if i want to lend to beanstalk right now but this rule is in place i'm incentivized to wait for someone else to lend to beanstalk because the interest rate i'm going to receive is going to go up significantly and in practice go ahead so that's where i i think the missing part is because you're scaling the pod line um accordingly so so if that's the first and first country 100 this this is the core bean stock debt mechanism which is the first in first out uh harvest schedule outweighs the marginal benefit of the weather increasing but that only works if the weather increases a small amount like three percent if the weather's going to increase 10 percent 50 percent a hundred percent over a couple of hours that radically changes the value proposition of lending to beanstalk so the question you're totally right to some extent the additional minting of beans or pods as the vesting happens will make the first in first out even more uh emphasized but at the same time it's very unclear how that will balance with an exponentially increasing weather and that's where we get very nervous so so publius you will not be able like weather will not be able to scale 50 up without the pod line scaling fifty percent up that means that that's the whole problem people will not get the same offer people will it's not fifty percent though it wouldn't be fifty percent it would be fifty percent of the of the weather which is three thousand percent exactly so if you if you that's a lot different than 50 no because so if you launch let's say you raise 10 so your lunch was 600 and then you and then you able to raise another 90 then to complete that it would be still 6000 i mean the exact math would need to be figured out like how do you write the formula but the idea is that they scale accordingly so that the offer wait you're saying then the weather stays at 600 percent and doesn't go to 6 000 percent no no no what i'm trying to say is that so basically you have two parts um that need to be aligned right the the spot in the pod line like the place in the pod line and the weather so if you increase the spot in the in the pod line the weather needs to increase accordingly so the offer is attractive in the same way that's the key that the the key is that that can't happen you can't write into a smart contract that if if people lend to the protocol the interest rate will go up that is how you create a death spiral where no one wants to lend to the protocol that is you can't do that you cannot i would i would like to lend to the protocol because i will be much earlier in the line i also need to wait more so i'm not incentivized to wait until the weather will understand what you're saying and with the first and first out harvest schedule that's something that beanstalk does to minimize the effect there but if you're gonna hard the whole point is that if the weather is hard-coded to increase that changes the calculus as opposed to normally you have no idea if the weather is gonna increase or decrease it may stay flat for a period of time while the pod line increases so this is where there's a fundamental problem no well i think that needs to be a function um that will consider also the old formula so the weather still goes up and down um relatively to the demand of soil as usual the the other like the additional part is only a multiplier on top of that so let me just like ask you this way do you think that i will give you two two basically offers and tell me what do you think is more attractive to be um getting 6 000 percent weather for being 100 um in the line position 100 in the line or to get three thousand percent weather basically half and being number 50 instead of a hundred so you know you're basically getting the same return um and some would argue that the second offer is even more attractive because they get the money earlier right so they don't need like a long time horizon for their investment you don't need to explain it to me i understand why the first in first out is more attractive but the problem is if you tell people you you know for a fact that you can wait and and say well instead of at this is the problem effectively if you are hard-coding the interest rate as a function of the vesting schedule people know they can well but in practice it is only that because the percentage change in the weather from it going up and down normally is going to be a very small fraction compared to this vesting schedule change so in practice the main point is the vesting if you have that people can price out in advance in advance exactly where in the line they'd like to be at a given weather seriously they can't because you can say well at 50 vested this will be the pod rate this will be uh you can you can come up with a pretty rough guess it wouldn't be a perfect guess but you can come up with a pretty rough guess and that that's where the inefficiency comes in you have people that want soil but are willing to wait for it for a different price and that that is where the inefficiency in the soil market comes from and that's where you get into major problems with with the with the the model if you have an inefficient soil market that you have real problems so so maybe benji in the spirit of of continuing to have a fruitful discussion maybe we can pivot to discussing the the more the meteor point that you've raised which is the concept of actually scaling the pod rate itself as opposed to the weather right and whether independent of changes to the weather uh whether wow we whether or not to use the vesting schedule to affect the pod harvest do you want do you want to talk about that and argue on that point at all and make make your make your arguments for why that makes sense first or would you like us to go well honestly when i thought about it originally i didn't think that the weather would stay constant if you change the pod line because um let's say we launch with only 10 percent raised and we we do cut the the pod line right now it's super short and you're offering like a huge return so um i think it's a waste to sell you know so much but beanstalk is okay with that for what it's worth like beanstalk doesn't care what interest rate it has to pay or pays it only cares that there's demand for soil and i'd actually probably make the argument in general beanstalk is comfortable over paying for for soil like the model itself will overpay for soil on average if it's working maybe you're right i i'm not completely sure about that the only thing that i have in mind is that i want to survive years forward and i know that the more we increase the debt um we are unlikely to to be able to attract new lenders because it will not be attractive enough for them if they don't believe that we will survive so that's that's my own this is this is a great point this is the main point right and i this is what we wanted to get to but uh we we did have a fun little discussion there on the weather so the main point is whether and just to summarize benji's suggestion is to have the pod line and the place in line that you will be when you lend to beanstalk in soil be based on the vesting schedule so if if the protocol is 20 vested then when you sow to the lend to the protocol you will basically be placed at the equivalent of 20 percent uh in the pod line so if the pod line was 700 million your cell would go at 7 140 million and the rest of the pod line would effectively get pushed back which allows the opportunity to cut the pod line so the the main there's a couple issues that we see with it now it's important to acknowledge benji's point which is very valid that this would be a lower risk proposition to the lenders and the concept is that the ability to cut the line in this way in addition to cutting the line through the fertilizer which gets paid out immediately would de-risk lending to the protocol further from one perspective particularly in the short term and if the goal is just to have beanstalk over the short term survive this rough patch and get back up and running uh it is probably a safer strategy now we'd make the argument if at some point if you're doing the safer strategy that's where the haircut makes sense uh and if if the community wants to generally move forward with a safer strategy that's lower risk in the short term uh the haircut is what makes sense there now another version of this without the haircut is to do this gradual increase in the pod line over time but there's a couple problems with it the first is that the the pods one of the main value propositions of pods is that you know exactly when you lend to the protocol when you will get paid back and already the dao is voting to devalue that promise to some extent through the issuance of fertilizer where if your pods were going to get paid out at a bean supply of x uh that has now changed uh and is now higher than x so there's already some devaluation of debt but fundamentally i think the problem that you run into when you start to add these uh for a lack of a better word cockamamie rules to the to the soil mechanism or to the pod line is that it really does start to compromise the long-term integrity of pods and when we think about how again creating an efficient market for soil is the most important thing from beanstalk's perspective and attracting long-term lenders is the most important thing from beanstalk's perspective the concept of now really manipulating the pod line to such an uh an exaggerated degree sort of for a marginal benefit if you will uh that's at some point the attraction the the benefit the the risk return of lending to beanstalk has to factor in well the dow at any time may raise wave their wand and change what we're owed again and again and that's something we you know if we go back to there was a discussion the dow on uh building beanstalk in a permissionless or uh partly uh uh not permissionless excuse me a uh uh oh my god i'm blanking on the word uh but where the protocol cannot be uh immutable excuse me uh building a portion of beanstalk where it's immutable and one one of the core rules that people suggested would be part of the immutable portion of beanstalk was the 50 50 split of beadmints between uh stockholders and pods and this is already that just goes to show what a slap in the face this is to the core model and so the goal is to minimize as much as possible how much that is happening and think that if we're moving away from the haircut and being more aggressive and we'll comment on the benefits of potentially being more aggressive uh in a second but it's just important to acknowledge i think from a damage perspective to the model and people's trust in lending to beanstalk you really do want to limit the sophistication of the changes here [Music] sure so so that was a lot let me try to um answer as much as i can um everything that was mentioned so i would start from the end and i would just want to say that you know we're talking about you know honoring the promise of 50 50 and all of that stuff at the end of the day we need to recognize that you know it was never planned to get hacked we're basically at a very very unique place that with all due respect to what was planned before we're we're in changing that we are changing that time yes yes yes exactly so so it's a little bit unfair to say well we can change all of this stuff but this specific thing will will ruin our reputation and credit worth right so so that's one thing and it's true that we're basically splitting instead of like 50 50 to third third third but in the same way also silo members are getting only third and on top of that split they also are uh you know subject to how much funds we raise and on top of that is how much these of um um people that that lend to bills um basically bailed us out will get paid first so so i think you know at the end of the day it's it's it's a game of like give and take and we cannot ask for everything and not pay any price for that if we want you know to to not get a haircut and we want to to get back and not you know start from scratch and just forget about everything that happened that will have a price and siloam members are paying that pod potline will also need to pay that you know in in in some way now i i totally agree with you that you know if we that we we need to try and and you know stand up to the promise as much as possible and minimize the the intensity of the manipulation to the pod line and that's why i came up with the weather idea it might be difficult to implement but if we can sell debt for cheaper then not only you're reducing that that actually now i understand where the thought came from sure you you you also reduce how many people can can like how many pods will cut into the line because if you can sell them for like 100 why sell them for for six thousand percent right just an example and then the old pulse line will get paid earlier so i really think that you know at the end of the day we need to find a balance in between how much we we want to pull and how much we we can pull right it's it's we need to compromise something here so totally and i think at the end of the day this is where it's important to have the macro discussion of well what about taking the no haircut and taking a more aggressive approach so the the the long and the short of it is that the protocol needs to perform in very tough circumstances in general and that doesn't just apply to the short term that applies to all circumstances in perpetuity for as long as beanstalk is running and given the very tough uh macro economic environment and crypto specific market environment in addition to the beanstalk uh native issues as a result of the attack uh the there's really something to be said for taking a conservative approach taking a haircut and just getting the protocol back up and running but there's also really something to be said for if the goal of being stuck is to ultimately become a global issuer of money and for people to trust in the model i think that putting the model out in the wild and thrown to the wolves in the most adverse of situations that is really the way to to convince people that the model is good and it works and it's worth trusting and so this is where uh separate from the the issues of how to actually get the incentives right to implement a scaled down pod line as you're proposing benchy i think having the model just turn back on and the pod line be the same length that it was uh and the weather be the same that it was and we see what happens uh the weather may be too high it may be too low the weather may need to increase it may need to decrease we have no idea but the concept is having the model just work in the most adverse environments we think that's it's a real opportunity for beanstalk to convince a lot of people and so that's the that's the cost benefit analysis of there's a lot more risk significant more risk associated with the we don't know how attractive it will be to lend to the protocol at 700 million in line whereas to your point benji at 140 million in line think it's pretty attractive right so uh it's it is a it is a a question of just to to haircut the pod line or not and if you're not going to haircut the pod line then to to have put people at the end or put people in the middle also unclear so it's a very fair point that you're raising and it's very important that everyone's on the same page about the additional risks associated with uh the no haircut strategy laid out by bfp 72 and really do appreciate you're trying to alleviate some of the risk here but frankly don't think that don't think that under the plan that you've proposed that's actually achieved and i we i think we'd have to put our heads together a little bit more to figure out how to make how to make that work and to that point uh we are we are getting very short on time with the goal of having the barn race start uh in like 10 days or something so to some extent uh we we are starting to to turn into a race against the clock here as well sure so so look i i'm i don't want to take too much time also from from this call um but i would just want to clarify one thing i am all against taking a haircut if if that was like not clear when you say cutting the the the pod line i don't see it like that i'm i'm heavily invested in bean stock and i would hate to have her a haircut even though i think it will might be benefit you know beneficial for for the health of the of the protocol long term i think that if we take if we raise only in the bank 10 percent and we can potentially get a haircut of 90 no matter how likely it is i think the interest of all of us will drop 90 when we launch so um the way i look at it is not a haircut per se it's a temporary um haircut that allows the the protocol to have higher chances of surviving and easier let's say um life in in the short term but still honors all of the obligation and all of the money that all of us lost together in the long term and allowing it you know at the end of the day it doesn't matter how much aggressive we want to be or how much we want to show off or how much we want to preserve what we lost the only thing that like if we cannot survive long enough all of that doesn't matter so that's that's the only thing that that i would add to that and um you know whatever the community will decide in both that that's that what would be so yeah thank you sir we appreciate you very much thanks benji thanks for for taking the time to come up here and chat with publius um sync would love to to hop over to you uh i know you've been having a discussion in the uh bfp 72 channel and other places about uh the idea of permanent deposits so i don't know if that's what you wanted to talk about here but if you'd like to hop in um yeah let's get started do you hear me okay silo yep sounds great all right great um just for the sake of discussion um you know at this point like publius mentioned i think we're in a race against the clock so um just so everybody can follow along with me i'm gonna share this in the um in the town hall chat so you can follow along with what i'm saying so uh this is not necessarily even exclusive to the barn rays the barn rays could be a different format entirely this conversation around the permanent deposit um was really just to lay it all out there for everybody i mean if you all recall the night of the exploit when we had that big conference call publius i'm all for the no haircut strategy i think i was very clear on that approach from day one um but with a give and take mindset um even before what happened with tara uh i thought at the time that the best uh strategy would to attract new capital would be to uh essentially uh provide some assurance that they wouldn't be exit liquidity uh for pre-exploit depositors so um you know i've been seeing seeing the discussion about concerns regarding uh the pod pod line and the format of you know uh adding to the debt and um i just thought about how would this barn raise work if we looked at if not from a debt framework but from an equity framework where by the capital that's allocated to the barn raise would be allocated to a permanent deposit silo again under the present one-third split except that this would be in perpetuity and in that sense uh you wouldn't be contr you wouldn't be we wouldn't be adding to the debt load of the of the protocol uh new capital would essentially be um have permanent skin in the game uh they would have voting power so the the the kind of uh catch to this is that pre-export style depositors would lose 50 of their voting power but in exchange uh we would get um not just potentially more more interest from outside capital but out but pre-exploit depositors would not be precluded from participating in the permanent deposit silo such that new capital over time would also be diluted in that so you know this is just something i've been thinking about again in broad terms instead of looking at the barn rays from a debt framework from an equity framework just the thoughts on you know on that and um you know we've been having this discussion in economics primarily because i don't want to derail what's being discussed in bf72 you know if the barn raise format is proceeding as it is that's no problem um i think a permanent deposit silo uh you know that idea is still of interest to some community members potentially even after barn raised capital were to be paid under a debt framework um so just wanted to kind of touch on that and see what you what you might have had to say about that so lots of thoughts the first one is as as we've discussed many times our initial inclination is that uh permanent deposits are not attractive at the protocol level in the sense that one of the core principles of beanstalk is that beanstalk doesn't take any market actions so if the people don't own the liquidity if the deposits are permanently owned by the protocol and people then just own stock permanently that's not really uh necessarily the relationship that beanstalk wants to have with its uh dow members per se one of the key differentiators between beanstalk and other protocols is that the members of the dow at all points in time need to have skin in the game exposed to the stable coin itself and the stable coin and the exposure to the stable coin is what entitles people to participation in the dow you can't participate in the dow unless you have exposure to the stable point now that's lessened to some extent when stock goes liquid but if people are selling their stock on top of their deposits that actually creates the stickiness that is very similar to permanence without having it at the protocol level now with regards to other protocols building something permanent like the protocols built on top of beanstalk have a permanent deposit that may make more sense than to do it at the protocol level if that makes sense now if we if we take a step back and think about your your comments on thinking about things from an equity perspective as opposed to a debt perspective uh in general what makes beanstalk so unique is that it's a debt first protocol and we would push back on the concept of leaning into its equity side to recover from the the attack given that the core and this goes back to what we were discussing with benji the core thing underpinning the long-term success of beanstalk is people's willingness to lend to the protocol and so ultimately the the attraction of the debt and the proof of concept of how attractive beanstalk's debt is and how beanstalk is able to return the bean price to its peg in all situations through its credit uh that's really the thing to focus on or to use this opportunity to highlight from a model perspective so uh think in both at the micro level there's something wrong with permanent deposits at the beanstalk protocol layer although we have been thinking about it a lot more uh recently and uh if anything are less compelled now than we have been in the past on how important or how permanent deposits may play into being stuck but still feel like that's probably not the case at the moment uh don't have any fully fleshed out thoughts to share at the moment but have just been you know this is stuff per your comments incubate we think about endlessly as well so uh yeah at the moment though don't think it makes sense for within the barn raised context or for beanstalk but who knows what the future holds okay yeah great um and you know just to really just to be clear um this is all a thought exercise i just want to throw that out there um and with regards to the idea of this being protocol and liquidity i i wouldn't see it as that it would be more so as if a user deposited to a liquidity pool and lost the keys to their wallet and um you know that is more explained in an economics channel for those that are interested feel free to practice but the question is about convert right how does convert work so um that's a good question i don't know if it would be uh feasible between the silos or within the permanent deposit silo i would imagine we would want to encourage it from the withdrawable silo to the permanent silo i'm just not a developer so i can't speak to what technical limitations there may be additionally with a permanent deposit silo there would be no need for seeds uh you know you would get i guess something i'm just saying who converts like convert is one of the most important parts of bean stock the withdrawable deposit silo so that's why under my thought process and i think also to defy chad's uh discussion so the permanent deposits could not be converted yeah that that's unattractive i think we'd have to figure out a way to to incentivize people even if they have a permanent deposit to convert yeah i don't know if they i don't even know if that's technically possible if it is and by all means anything's possible okay yeah so you could just have a deposit without a withdrawal function you know okay something something like that right there's ways to implement it that's not the issue the question is whether you want to do it right right so you know to the technical points i'll defer to developers on that but um yeah thank you for uh taking the time to speak on this and i just wanted to give others an opportunity because we look like we have about 15 minutes left here so thanks everybody zink thanks as always for for jumping up um awesome well uh as a reminder to everybody here feel free to raise your hand if you'd also like to hop up on stage and and discuss something here i'm going to move back to the chat and try to catch up on where i was previously with some questions so let's see uh canadian bennett asks is there a public wallet address where we can track otc funds uh not at the moment from uh from not sure has there been any modeling done on how the new weather function from uh bips 9 and 13 will work during a debt cycle uh not in the not like an excel model or something like that certainly not but the the implementation they were obviously thought of and discussed about how they would work in all cases so lots of thought but in general the approach to building peenstock has not been one of building uh xl models and sector or or any set of any sort of models uh and i'm using excel models to be kind of obnoxious as to the usefulness of the models in this case because ultimately the main question is what's the demand to lend to the protocol and what's the demand for beans and that's impossible to model at this point in time next question from alex as stock vests does it automatically earn me more beans do i need to claim it first and if i do do i forfeit whatever's not vested or can i keep claiming stock as it vests you need to claim it and to add on to that alex uh as you claim you're not forfeiting the remaining stock so as more of it becomes vested you can claim additional stock correct there's a difference between oh go ahead austin i was just going to say just to drive the point home there isn't any notion of forfeiting when it comes to stalking seeds all right i think i've reached the bottom of questions again so don't see any hands raised please feel free to throw your questions in the chat now manifold i don't know if you're uh at a place where you can hop up on stage but if you'd like to to hop up and mention uh you know the comment about root and and longer term blocks seller deposits uh please feel free to hop on up hey guys can you hear me we can cool so just want to give sync a shout out because um i love sync i love where your heads at brother like i i i love the idea of you know making bean stocks liquid personally making bean stocks liquidity sticky and as long term oriented as possible um and i think that's probably alluded to um you know there there could be an opportunity for protocols building on top of beat stock to do this um if it's difficult at like the protocol native level and so you know totally aligned with that and you know one of the thoughts where we're kind of um spitballing and working through at root is you know how can we kind of contribute to beanstalk's um you know silo liquidity uh and its stickiness and kind of add another layer of of um you know long-term oriented capital on top of already what we think is like really really um innovative incentives um at the silo level and so with root you know you you can you can imagine a world where you know if if there's you know rates that say root has a rate swap marketplace right where you know sync you know just talking to you directly you know let's say you want to lock in the fixed yield um with your silo deposit right and and you know you want to do a six-month term and lock in 20 let's call it um for six months right um and you can you can kind of deposit into root into that tranche um and lock in that that guaranteed rate effectively but someone else also has to take the other side of that of that rate swap where you know i can say hey you know i'm willing to you know be the reserve force incubates deposit um you know i'll pay sincubate 20 but i'll also have exposure to you know any added or additional capital um that the silo generates um during that six month period um effectively you know having a rate swap between participants um but at that point you know sync your capital and my capital is both locked up for that six months so that's kind of just one one simple idea of you know how there can be marketplaces and use cases and utility built on top of beanstalk in the silo that kind of lend to you know stickier capital and more long-term oriented capital if that makes sense awesome thanks manifold uh well while you're up here um any other updates you'd like to give on root you um you know we're we're busy building um we're we're kind of working on design um and kind of the tokenomics of the protocol and the incentives we we we're frankly coming from from a stance where we we we're not really bullish on most of d5 to be frank um and kind of how governing structures of today are outlined we we pretty much feel like beanstalk's one of the few protocols that is actually innovating in d5 and offers um a sustainable kind of tokenomic and an incentive engine for for long-term growth um and so you know we're kind of hard at work right now just just trying to think through you know what sustainable tokenomics and and liquidity and and utility in a protocol look like and so you know we're really kind of at like the first principal design level but with that being said you know we've been we've begun coding um you know we are we we have pretty much all of our capital from our vcs effectively committed at this point um but you know we're opening up the round for a few more checks um if they want to come so we're solving capital conversations uh but all in all you know things are looking good we're we're obviously following beanstalk very closely um and hoping to have you know a v1 launched uh not too far after uh you know beanstalk restarts um hopefully by fall 2020 uh two let's call it um and and you know be a value add to the ecosystem right away awesome thanks so much for for the update thank you sweet we'll move on to some more questions in the chat okay so nexo from jams as a base case a ten percent raise gets eight million with 680 million of debt is there a risk of an 85 x debt equity ratio um and the second follow-up question there is is there a path to more than 20 commitments based on discussions or would 20 be the ceiling i definitely wouldn't use the word ceiling uh ultimately as i think most people know with this capital until it's in the door it's really meaningless and we've had people commit and pull out uh and then come back in and pull out so uh there's you know this is why we like the new standard of what's in the wallet is in the wallet or in a bank account otherwise it's all chatter so don't don't know where we'll end up certainly don't know where we'll end up on june 6th versus whenever the protocol restarts early july so yeah a lot of also a lot of people have indicated to us under the new structure whereas prior they were intending to participate otc they now intend to participate directly and therefore that may affect the number we're presenting even if the total number is up if that makes sense so we're just talking about more otc checks that have come in and more some of the participants in the community that are more uh directly involved in beanstalk that might have otherwise done at otc they're now going to do it direct so that's another reason why the the exact number is very unclear to us i'd say my my guess my guess is day one june 6th uh you know there's there's there's at least eight figures uh in on on the very first day and then we'll see what happens for from there so how how high in the eight figures who knows uh obviously our range is maxes out in the eight figures so uh i don't know whether it'll be 10 million or whether it'll be uh 77 but we'll we'll see fingers crossed and the fingers aren't crossed the beanstalk is gonna it's gonna strut its stuff no matter what happens louise do you want to address jams's first question which was uh i think he's sort of implying that a 10 raise would get us to 8 million in the bean market cap which i think is not not correct maybe you can help with the math there uh 10 raise would get us to a 10 or 11 million dollar market cap i think okay but i guess if you're talking about equity as he's defining it because it's really bdb in the silo at ten percent you'd be at call it 20 mil on the silo which still isn't great though so like a 35 x makes sense awesome we've got a few minutes left here uh any other questions let's see we've got a hand from nps nps i'm going to invite you up to speak hello uh can you hear me yes okay can you talk about risks of investing in the boundaries what are the risks if somebody decides to put money for that well sure there's endless risks frankly uh and given the novel nature of beanstalk given the novel nature of the beanstalk governance model when it relaunched as with a community-run multi-sig and whenever it eventually moves back to on-chain governance uh given the change in its economic model basically everything about beanstalk is uncertain at the moment and as is the case with basically every other cryptocurrency there's a chance that any money that goes into it goes to zero any money that was in beanstalk it's currently worth zero so that's the the risk is total loss of funds uh and it's very important that everyone recognizes that this is a highly highly uh risky protocol and beanstalk is an experiment this is something i think anyone who's been listening to this call should be aware of no one knows the right answers here we're all working to figure them out and if collectively we get it wrong uh then then likely this is a zero and so in short uh the risks are infinite and uh it it's a highly highly uncertain environment that beanstalk operates in from a million different perspectives so is it possible that somebody may not be really available to lend to the protocol at a later time when the bean is traded below one dollar can you repeat that so can there be a scenario at a later point in time that nobody is it is ready to lend to the protocol to basically bring the value of bean back to dollar one if it is uh for sure for sure and that is in many ways that's both from a short-term perspective how the bean price depends and over a long-time horizon how beanstalk enters the death spiral so there have been multiple periods of time in beanstalk's history where there has not been demand for soil to lend to the protocol and that has resulted in the bean price depending uh if there was a permanent period where there was no demand for soil that is in a credit-based model the equivalent of dying so that's very uh possible that that happens uh given that there is no lender of last resort in the beanstalk ecosystem and it purely relies on market participants and uh there's no guarantee of of who or at what rate people will be willing to lend to the protocol or whether that rate will be sustainable okay thank you awesome thank you nps uh i'll move back to some questions from uh from chat here let's see all right from the guild foil asking for a follow-up on jam's question is it a problem for beanstalk if the market cap to debt ratio is too high well this is where the whole risk comes from in terms of not taking a haircut and i would make the argument that whether or not you have neural virus you're cracking us up that's funny stuff uh i i would make the argument that this is where the opportunity for beanstalk to prove itself really comes from despite the large outstanding debt whether or not beanstalk can survive attract lenders and return the price to the peg even in such uh difficult circumstances that really is the main question and i would just note that from my perspective given that this is the first time the protocol will likely face these types of change and closer to a bear market circumstance with convert live very excited to see how the protocol plays out and so the point is if beanstalk works uh i think we're we're all inclined to figure that out sooner rather than later and so this goes to the core principle of throwing beanstalk to the wolves and a crazy high market cap to debt ratio that is very much the wolves now there is a little bit of wiggle room thanks to the fact that beanstalk did deleverage pretty significantly in a couple of weeks prior to the attack but nonetheless uh that that is where the risk comes from that's what people need to be evaluating awesome next question from mod will all fertilizer holders be paid an equal percentage of the mint or will be a bit or will it be based on the humidity it was bought at is it possible that fertilizer bought at the barn raise gets fully paid off after one that was bought at let's say 20 yes that it is possible so the concept is all of the soy all of the fertilizer if you have one fertilizer and there's x fertilizer you will receive 1 over 3x of all bean mints until you're paid back okay i think we've uh we've reached through all the questions and we're about at time here so thanks everyone for for spending some time with us going through this tonight publius any last comments you'd like to throw out here uh before we head out yeah i'll just re restate that we don't know what the right course of action here is it's very clear that a haircut is a a lower risk action in the short term what that means for the long term success of beanstalk is unclear but the same can be said for the higher risk option of a no haircut uh to benji's idea of having the pod line scale uh it's it's a very compelling idea and would have to think more about it but we are kind of in a race against time here and so uh there is endless as we all know there's endless improvements to beanstalk that can be made as well as to the barn ray structure and so we do need to pick and choose on what is the what is the what are the important the important things and there we are in a race against time and so uh with that said the intention is to have the bfp 72 go live for a vote i i don't know on the exact timeline but my understanding is pretty imminently and hopefully we'll have the dow vote on a course of action uh i think if yeah we'll see it's a higher risk higher reward play over over a multi-year horizon uh over the short term it's definitely higher risk [Music] awesome all right thanks so much everyone for for joining in terms of uh keeping an eye out for the bfp we will certainly post it all over uh discord as soon as it's out but believe you can expect it in announcements amongst other places so keep your eyes peeled uh and we will see you guys for the dow meeting on thursday