- Meeting Notes
- Publius’ thoughts on the bank run on FTX, and how does Beanstalk deal with bank runs
- How does convertibility play a role in a bank run on Beanstalk?
- Discussion around certain functions within the FDBDV contract
- Updates around Wells
- What is toxic flow?
- What are Aqueducts?
- Could Beanstalk issue Bean flash loans?
- Should Beanstalk the protocol or the Farmers act as the lenders for the Root loan?
- What will happen if Beanstalk outgrows 3CRV or the whole Ethereum Network?
- Are there plans to support multiple networks?
Publius’ thoughts on the bank run on FTX, and how does Beanstalk deal with bank runs
- FTX was not holding customers' deposits one-to-one, there was some credit being issued to FTX from their depositors.
- When there is a bank run on Beanstalk there will be some sort of decrease in value, this cannot be avoided in a credit-based system
- Beanstalk is a smart contract and someone can verify where the assets are
- Beanstalk will always honor its liabilities. Within the Silo, Farmers will always be able to withdraw assets from the Silo. Within the Field, Pods are payable according to a condition. Beanstalk will never default on Pods, it just might take forever
- Beanstalk’s liabilities are never mismatched relative to its assets
How does convertibility play a role in a bank run on Beanstalk?
- Convertibility in the case of Beanstalk means you can convert Beans into Beanstalk Deposits and back, but you cannot convert Beans into Dollars. You would have to trade Beans into Dollars
- Beanstalk Deposits could be seen as a loan to Beanstalk. Beanstalk can honor that obligation because Beanstalk is always holding those assets
- Lending markets built on top of Beanstalk is not an issue for Beanstalk as long as the loans are denominated in Beans
Discussion around certain functions within the FDBDV contract
- The normal FDBDV token has been audited and finalized, but another model was being discussed. It is unclear if the loan that Root is looking for has to be issued by Beanstalk. The idea was to have Root or any issuer of the Root token deploy a permissioned version of Root that has a credit component. Publius is unsure of the current plan.
- Publius is very excited to see Root launch and has been helping with various tasks to make sure the launch goes smoothly
Updates around Wells
- Beanstalk Wells v1 or v1.1 could reduce toxic flow for liquidity providers
- Publius is looking forward to getting the Ether pool live before a bull market
- A lot of the work on the Pumps is done, Pumps and Wells are going into audit soon, but things are moving full steam ahead
- Publius is praying that the Wells are ready in 2022. It would be surprising if it is not ready for audit in 2022
What is toxic flow?
- The concept is providing liquidity on an AMM is such that the price in the AMM, you expect to get arbitraged toward the efficient market price. What that means is any liquity pool that arbitrage which is repricing the pool is being charged through the LP. There is an exchange of value from the market makers to the arbitragers who are repricing the pool in a risk-free trade. The potential solution for this is you should be able to place orders on-chain that capture all of the data you want to capture for your position. The only time you would need to update your order is when there is a change to the algorithm that they are using to price different things.
What are Aqueducts?
- Aqueducts are an oracle that will allow anyone to quarry the price of any arbitrary abstracted asset in another arbitrary abstracted asset. Pumps will pump data feeds of what is within the Wells to the Aqueducts and the Aqueducts connect tokens to each other.
Could Beanstalk issue Bean flash loans?
- Currently, the Beanstalk contract does not allow for this but it is possible for this to be coded into the contract
- Publius is not too sure if this would unlock any use case for Beanstalk but thinks it could be really cool for Beanstalk in the near future. When the Silo withdrawal freeze becomes zero there will be opportunities for other protocol flash loans within the Silo. For example, someone could take a flash loan and deposit it in the Silo for some arbitrage and withdrawal for a profit.
Should Beanstalk the protocol or the Farmers act as the lenders for the Root loan?
- Publius is not a fan of lending to a centralized entity where there is trust involved
- Publius thinks a loan given by Beanstalk is very interesting but it does not make too much sense until there is more infrastructure on-chain to facilitate the loans to happen with much less risk to Beanstalk.
- All loans have risk
What will happen if Beanstalk outgrows 3CRV or the whole Ethereum Network?
- At true scale, the yield from Beans for providing liquidity should start to create demand for other assets. You might have some positive reflective cycle where the Ether price increases because that is the only asset that can grow infinitely on Ethereum.
- If 99% of the value trading against Beans, now Beanstalk does not look too different than Luna did
- One solution to this is Beanstalk issue negative Ether or anti-Ether at scale could hedge Beanstalk exposure to Ether
Are there plans to support multiple networks?
- If you mean other networks entirely, Publius has not focused too much on this, but cross-chain bridges are not ready for this
- Publius is very excited to get Beanstalk value on L2s
- Publius is hoping for some sort of L2 functionality in the next couple of months
what a day Ahmad it is um a big day an unfortunate day but it is a big day nevertheless Unworthy of a discussion discussion all right how's it going Publius well just uh another day hard at work on the farm beans are a peg life is good mod how are you all is well here I'm you know glad glad to hear that and definitely uh that everything is well uh on the farm so probably as you said big day to day um FTX the second biggest exchange um you know had the bank run and didn't it seems that they didn't survive it let's say um so FDX is completely different than being stock or let's say you know um generally different than being stuck um so so they had advertised so they had advertised sure but a bank run as a bank run um you know um what are your thoughts on you know what happened with FTX and then maybe um not not the comparison on you know on the differences between them but on maybe the differences on how each you know deals let's save the bank run Mark can you still hear me I can hear you now sorry I had to change out my headphones they died so uh could you just repeat the question sorry about that yeah so I was I was saying you know I started off by saying that FTX um had a bank run and it doesn't seem that you know they they survived that Bank Run um and while you know the comparison is not you know FTX and Beanstalk but I was thinking that maybe we can touch on a comparison on how you know being so deals uh with the bank account so one of together maybe a little bit of your thoughts uh first of all you know on the background FTX experience and then you know how does how does Beanstalk generally deal with bankrupts sure so in practice what what happened or at least as we currently understand it with FTX is that they clearly were not holding their customers deposits in the exchange uh one to one and so there was some credit that was being issued to FTX from the from its depositors not unlike uh a bank depositor uh receiving a bank deposit in practice but obviously in this case FTX had marketed itself as uh not not doing that and therefore when when when it experienced a bank run uh uh people people now don't have access to the funds that they thought they had and that's not just similar to how people think that a bank is going to always be able to redeem their deposits when they want or honor withdrawals but often commute so how is that different uh from Beanstalk well in some ways it's very similar when there's a bank run there's going to be a decrease in the value that people can receive when they exit the system uh that that can't be prevented anytime you have a credit based system but fundamentally the there are a couple couple differences one is that Beanstalk is a smart contract and exists on chain and you can always verify where the assets are and in practice when you deposit or when anyone deposits beans in Beanstalk uh Beanstalk holds those assets so whether it's beans or LP tokens those assets are never re-hypothecated now in the case of Celsius or FTX it seems like those assets were then used for other things and in the case of Beanstalk it's not unreasonable to think that in the future it will be possible to for users to use their their deposits uh in loans or in derivatives and other other Financial products but fundamentally Beanstalk as a as a smart contract is never going to take your assets and do anything with them Beanstalk is designed to be entirely neutral and so the question that becomes how does a totally neutral party Beanstalk in this case handle a bankrupt and there's really two the the related but the question is one how does Beanstalk treat each of the parties during a bank run and two how is Beanstalk designed to recover from a bankrupt because ultimately you can't prevent it and in the case of Beanstalk there's really two sides of the market fundamentally there's pods which are the creditors of the system potholders and there's the depositors in the system and in both cases based on how we've discussed being stuck so far in juxtaposition to a bank or FTX the primary difference is that beanstop will by definition always honor its its obligations or it's uh liabilities or there's a million ways to to think about it but in the in the case of The Silo that would be uh accounts that have deposited beans or LP tokens in The Silo they always have the ability to withdraw those beans or LP tokens uh in the case of the an exploit for example uh that could be compromised but the the contract itself is always designed to honor that and from uh the pods the pods are debt that is payable according to a a condition effectively and so Beanstalk is designed never to default on its pod obligation but simply it may take forever in theory to pay it back but it would never default so the depositors can always withdraw currently at the top of each hour those assets become claimable but uh there's an RFC on GitHub to get that down to zero uh instant withdrawals and the really perhaps to digress a bit the the fundamental question is what are the incentives during a bank run because if the premise is that there is a bank run and a bank run is inevitable and anytime you have credit it seems like a bank run is is inevitable the Publius go ahead before we continue to that I wanted to touch maybe on a point that you've you've mentioned so um in the typical Bank Runner let's say you know what FTX had right now is that their assets um were illiquid uh so we're not gonna you know or maybe we can later on talk about you know the value of those assets but what they had uh problems with is you know we don't have liquidity and then they had to pause with robots Beanstalk doesn't do that it's it's been sock never goes illiquid so you know deposit deposits can always withdraw their assets the question then becomes at what price would those assets be convertible is this true so far yeah I mean we can be maybe a little more Technical and apologies for rambling a little bit but just trying to be more technical which is that in the case of Beanstalk it's assets and liability is uh excuse me maybe the best way to say is it's liabilities are never uh mismatched relative to its assets and if you think about the depositors or the deposits and the pods as liabilities pods are don't have a fixed maturity so there's no question of time duration mismatch and Beanstalk and mint beans to pay the pods whenever it wants and the deposits this is where FTX went wrong it had a mismatch in the assets and liabilities in terms of assets themselves and at some point the their liabilities started to significantly outweigh their assets uh it seems like because of a run on ftt the FTX token so that's in the case of of Beanstalk the depositors can always withdraw their deposits but as you said mod the question is what are those deposits worth when you redeem them so that goes into now the bank run question of what happens during a bank run which happy to talk about that but perhaps you have other questions as well first okay great so um of course you know Beanstalk might pause but bin stock never pauses because hey you know we can only um service so many with robots in a day in theory all you know um depositors can withdraw all of their assets and then the question becomes as again at what value so convertibility then uh problems how how do you think or how does convertibility play a role you know in in a bank run or in this in specific of a case of Beanstalk and I guess this brings back the you know the definition of what being is the currency that is you know being as non-convertible can you maybe touch a little bit upon that and you know what why is it maybe important or what role does it play yeah I mean convertibility in this context perhaps means more than one thing right in the case of beans uh the question is what are beans convertible to well you can convert them to Bean deposits and you can convert Bean deposits back to beans but you can't convert billions to Dollars you have to to trade them into dollars that's a market value and so it that's really the question is where is convertibility promised and that's where you have the asset and liabilities created and as soon as you have in this case FTX trading or changing the exposure of its of its liabilities to or of its assets excuse me to no longer match its liabilities that's where you run into a problem if there's a bankrupt uh so it indicates a beanstalk it it never does that by by definition yeah okay um maybe this brings the second part of of the question um so it seems um like and of course you know this is just from the gender understanding it could be wrong but it seems that what FTX did is that um it you know gave out a loan um and you know they say the loan was uh but you know irrespective of where the lawn was given to the collateral it seems was in ftt and then ftt you know wasn't liquid in that sense and then you had CZ uh where you know he tweeted uh two points or the first one was you know never use a token that you created as connected and Publius you co-tweeted there and you said you'd amend it to never use a talk in you created as collateral for a long denominated in another token can can you maybe share your thoughts on what what did you mean by that yeah well I feel like this is this is the fundamental Point around convertibility which is that let's take the the bean deposits for like for an example to some extent you can consider a bean deposit to be a loan to Beanstalk you bought your beans and now you've lent them to be in stock sort of like depositing dollars in a bank is is really a loan to that bank and so the question is Beanstalk how can it honor that obligation well it's because it's always holding those tokens and in a similar way the the pods that beamstock has issued uh it's a liability but it's a liability to nominated in its own token and therefore it's acceptable for the protocol to uh in theory acquire infinite liabilities that it could pay off now I think one of the key it you know it was meant to be a short tweet but if you dive a little bit deeper into it the other thing that's really important here is around time so even in the case where you have uh the ability to to denominate the loans in the currency of your choice let's say such that it's it's well matched if the let's say pods if and this is the way ESD ultimately or one of the reasons ESD failed uh but you have these these loans or these bonds that become payable in the near future then you have to roll over the debt and the cost of rolling over the debt is really how how you can go bankrupt so in the case of Beanstalk it's not just that the debt is denominated in its own currency it's that that debt doesn't have any fixed maturity date so it's it's even more complicated than that but uh the the concept is that and the other thing that we were kind of alluding to is that if you have lending markets in in the Beanstalk economy that's not necessarily a problem for Beanstalk uh such as so long as those loans are all denominated in beans where it becomes a problem is if the loans are denominated in other assets and then the decrease in the price of beans results in a complete default on all of those loans which is what we're we're seeing in the FTX instance so as long as the loans are denominated in beans a decrease in the value of the being price shouldn't shouldn't disrupt any of the borrowers at the end of the day it may disrupt lenders but only the lenders that then have their own obligations that are in the Beanstalk ecosystem are denominated in beings so that's really the juxt that's that's the gist of the Tweet which is that if the liabilities and assets are all denominated in the same basis which could potentially beans that that's how you get get away from this and at the macro level I feel like we're very much witnessing that play out in dollars where there's a major liquidity crunch across the board but the result is that everyone needs dollars because everyone has agreed to denominate all of their liabilities in dollars so the problem wouldn't be that people are borrowing beans uh in fact if you had some sort of uh credit Branch within the bean economy you'd expect that to actually result in more beans being minted which is what you'd want at that point because there's a need for more beans so it's hard to say exactly how this will all uh play out at scale uh but but that's really the that's the main point yeah a lot of the characteristics that you've described are unique I'd say to a money issue if you are not uh you know the entity that's in control of the of the currency or you're not the currency issuer then you don't have um you know the leverage or or the capabilities and abilities of of what you described foreign yeah and sorry I feel like we're rambling uh a little bit more than usual and not particularly coherent but that's just because it's such such incredible data and still processing it in many ways so sorry for not being as articulate as we'd like not at all I think you've been very clear and answered um untouched you know on the questions I'm told audience if anything was unclear please you know drop it on the town hall chat or join us on see you again you know maybe share some thoughts of yours okay um this may not be a question or started the question and then there was a discussion uh going uh back and forth about it and it have it has to do with um you know the fungible depositor the FD bdv and I think through it uh Bacchus and selfie uh you know uh Backus was asking if there's any protocol that was like you know working on the of the abdv and then they shared the soil uh or root.sol contract and in it uh they commented uh about the inclusion of some functions let's see in the contract uh and one of them is you know the Border loan already pay loan and I believe and it does the contract owner have the ability to let you know to to mend uh FDB dbv that's not that's not backed probably first of all maybe did you read um or scan through the questions and maybe you can share an answer to that or how you know how will uh first of all why what was the intent of having those functions in the code and then how would it work on the contract and then how would it work sure so so kind of making this up because I've not had a chance to review the contracts or the latest version but our understanding is that the normal uh fdbdv token that has already been audited and has been finalized and for the Dow discussion from last Thursday another model that had been considered was from an economics perspective it's not clear necessarily whether the loan actually needs to be made from Beanstalk and so believe that the idea was to potentially simply have root or any issue of the root token uh be able to effectively deploy a a permissioned version of root that has a credit component and not not sure that that to be frank don't know what the current plan is on that front so don't know if if the plan is to use that for for the the World Cup stuff that's happening or or not but the concept is that there's already the root token code which has been audited and I think that that's all supposed to get published in the next week or so and the credit based model uh that that is being referenced don't know what the plans are with that but that's effectively unrelated or in addition to the normal fdbdb uh as we currently understand it but again not not a hundred percent up to speed on that so uh could be speaking at a turn okay but in theory um let's say the risk or all of you know what's what the FDB dbv is um contained there so you know it doesn't impact uh non-fdd holders or just like being stuck in general is that correct yeah I mean to be perfectly candid after a day like today it's very hard to be enthusiastic about a model like that where now the the issuer itself is effectively being relied upon to to do a good job with those funds which creates exactly the asset liability mismatch that we were talking about and given that root or the issue of the the credit backed Roots because it's permissionless anyone could do this uh now you basically have a centralized issue of credit I feel like that's that's very much the problem that is trying to be solved by beam stock and a lot of the tech that's being built here so don't don't know if that's moving in the right direction but I think that at least from an economics perspective it is very interesting and certainly points us all in the right direction on where we're heading even though I think we all kind of know where we're heading which is how to get real markets and credit on chain and not just credit for for Beanstalk as a as an entity as a whole but even get as close to competitive if with off-chain credit for individuals and entities on train as we can so it's definitely neat but don't have too much knowledge on plans to actually launch it but thought it was uh at least as we understood it was more of a a proof of concept and the root devs are are pretty awesome to be frank so uh not sure that there was much uh intent in them just whipping that up as opposed to just you know it it it's pretty trivial so uh with that in mind wouldn't at least from from this end haven't haven't heard too much about it since the last down meeting so uh don't wouldn't wouldn't expect too much there but but perhaps we could be wrong yeah um that's my understanding as well uh with uh manifold shared that through it was exploring other other opportunities and during the the code anyways it was mentioned that it wasn't the only plan you know the the rude token itself uh we're very excited about it and what it contributes to the Beanstalk ecosystem we've been working closely with route to to try to get it as right as possible and there should be a formal white paper and stuff that we've also been uh uh working on with them as well coming out uh in conjunction so all of this should be pretty pretty well documented and therefore uh yeah the the at least to our knowledge the credit based model uh which is being referenced in that in the that latest contract there that's not there's certainly no white paper or anything to go along with that so would be surprised if that's that's where things are going at the moment but but could be could be in the dark there 12 days away from the World Cup we you know everyone here is rooting uh for Ruth I'm pretty excited uh to see to see it you know come clean action or be live same here same here very excited all right um just given that ft excellent exchange um a lot a lot of people highlighted you know um how decentralized exchanges um and specific you know Wells are needed now than ever and you know Harry Smith uh shares the sentiment and asks you know the typical or usual question of one Wells any any updates there uh Publius or you know expectation on how that's going yeah so in fact in in the general chat uh a couple days ago we were responding to the when Wells question and well I guess we said when West would be really the the right thing the right way to characterize what what happened and a couple a couple things one we we then clarified that Wellesley one wouldn't really fix these problems whereas well as being too wood but as we think more about the architecture and continue to implement it are getting more potentially excited about even Wells V1 or Wells v 1.1 so something that could be live very shortly after the the first couple pools go live could actually start to really reduce negative or toxic flow would be the the technical term uh for liquidity providers in a variety of of ways and getting pretty excited about it so don't don't have any more of an update on timeline definitely agree with a lot of the sentiment that it would be really cool to to to get the eat pool live uh as it continues to get routed as opposed to after it's back up and chugging during a bull market uh so don't don't have any more updates on timeline but totally aligned with the sentiment that this is high priority and on this end getting very excited about what it's going to look like but in order to get it get the architecture right uh such that it can facilitate all this all the stuff that that we think is really going to help move D5 forward it's not it's not the most trivial so a lot of the work on the pumps is already done uh a lot of the work on the wells is almost done and so therefore the pumps and the wells are hopefully going to be ready for audit in the next couple weeks and then in order to get things live there will still need to be other work done on aqueducts and a couple of other parts potentially so not sure exactly when everything will go go live on chain but it it things are things are moving ahead Full Steam on the wells uh from from from this end yeah and I think um maybe a lot of the excitement around um or some of it let's say not uh not a lot of it is around maybe capturing uh the price of it as you know as it rises but you know today is an as an example of no one can really predict maybe some could have uh but the majority or the market in general can't really predict you know uh what's happening and we see we see the price of eth you know reflecting that Wasabi had a question um on you know what you described as toxic flow what what did you mean by that probably yes so maybe there's some good with the threads that we can try to drop I don't know read some good stuff recently but the the the the concept is that providing liquidity on an amm as they currently work is such that the price in the amm you expect to get Arbitrage towards the efficient market price and what that means is for basically any any liquidity pool that Arbitrage which is repricing the pool to the correct price is really getting charged through the lp and so there's a a an ex an exchange of value from the pool itself from the providers of the pool the market makers to to the arbitragers that are are repricing the pool and doing so in in typically a risk neutral or a delta neutral or a risk-free million ways to characterize the trade but uh the point is they're getting paid for taking on very little risk to reprice the pool which is sort of valuable to the pool but not really at the cost of market makers and so that's the that's the toxic flow problem and the concept is well how do you fix that on the one hand it's really hard to fix the core problem which is that orders for different assets on chain need to be canceled or updated when there's new information and so it's really hard given the the constraints of uh chain transactions uh transaction throughput and the nature of sequencing transactions where you have Mev basically the concept is that if you don't have Fair transaction sequencing at best uh there's Mev to to perform this Arbitrage so it's literally impossible without Fair transaction ordering assuming the current LP model to get around this and so the the potential solution which is effectively the direction that Wells are going and again not sure that it'll all be ready with with Wells 1.0 but the idea is that in theory you should be able to place uh orders on chain which again you can't frequently update so how do you make it such that you don't have to frequently update it well in a single order you should be able to encapsulate or capture all of the data that you want to capture your position and and maybe even that position can change in real time based on certain data from oracles maybe so the idea is that Traders can update their order where the order itself is like an n-dimensional it's an n-dimensional set of functions or orders to exchange different assets for one another according to different parameters and therefore the only time that anyone would need to update the order is when there's a a change to the algorithms that they're using to price different things as opposed to changes in the prices themselves and so taking that leap where the orders themselves can start to capture all that information makes it such that you won't actually need to update your orders nearly as frequently and so that's how you can start to get away from toxic flow uh now you are going to have to potentially introduce some oracles into it so for example you may need uh the eth price coming from somewhere else in order to price your orders in the b e pool so there's some question of uh centralization being introduced at some oracles at the Oracle level uh for these orders but that doesn't really affect Beanstalk uh if that makes sense so you can have these these Wells or the orders have have very sophisticated inputs some of which are centralized data feeds but but therefore you have these very sophisticated orders that don't require frequent updating so that's basically the idea uh for how well deal with toxic order flow or can deal with toxico order flow so thank you for that and to our listeners have you know I had more questions or any of that wasn't clear please um not sure but in summary Publius we're looking at you know creating some sort of an order book that is relatively automated or doesn't require you or doesn't require the user to constantly update it Harry Smith uh follows up on the wells and asks do you expect it uh to be done you know in 2012 2022 or do you think it may extend beyond that um on this end I pray I pray uh I pray it's done in 2022 but it's hard to say uh I think from this end it would be very surprising if it's not ready for audit uh in 2022 uh unclear how long all of this will take for audit and so uh more and more recently I've been trying to break break things up for audit into smaller chunks so maybe Wells and pumps will go into audit sooner and then uh in the meantime aqueducts and anything else that's necessary to be audited will be uh developed or finalized and then uh it you know it may be a little bit of a revolving door I'm getting multiple things audited so not sure on exactly when everything will be ready for a beanies pool deployment which I guess will be the the the the actual first implementation but certainly hoping for 2022. but you can't rush it you know and take all you can do is just work hard so on this end it's certainly a focus and we're very excited about it and it's potential for being stuck but also just not not in a we don't feel like it makes sense to to rush anything given that beanstalk's doing pretty good Bean stocks in a stable State and the only thing that can really at least from our perspective get Beanstalk off of its current track is another exploit or a problem with the contracts and at least at its current state obviously anything can change but that's that's where things seem to be at the moment and therefore not inclined to to rush out a a core piece of uh Beanstalk in the future what we hope serves as a core piece of Beanstalk in the future uh particularly with its own native Oracle system that isn't isn't as close to perfect as as it can get so uh with that said certainly hoping for 2022. okay so a priority um but you know um as as long as it needs the co requires so the soonest but uh but as long as it didn't Backus then asks what are aqueducts so we're kind of getting lost in the all the terminology but the concept would be that aqueducts are effectively I I mean maybe it's better if uh Publius wants to hop up here and give you guys the the real technical spec not sure if they're in front of a a microphone because on this and won't be able to do it do it totally Justice uh maybe I'll give him 10 seconds before I'll I'll give you guys a butchered answer oh what's up dude here we are how's it going Publius can you hear me I can hear you awesome it's going well guys um so you know Aqueduct is a Oracle registry system which will allow anyone to query the price of any arbitrary you know obstructed asset in another arbitrary abstracted asset and when it comes to things like determining the bdv of a token or converting tokens into a liquidity pool for all these things to be kind of you know added automatically without having to write custom code all of these things require some kind of work in the case of depositing the side log the question is what is the value of the token I'm depositing in the case convert the question is how far you know what's the Delta B industry um and when it comes to things the question is what was the average still at the beginning if we want this stuff to truly be able to scale to you know you know liquidity with end tokens you know all on the minting convert and you know simple weightless we need an oracle system that's you know included when we abstracted so that we can you know any you know any you know if a token gets white listed and Oracle doesn't need to be added alongside it it can just be really awkward out and you know kind of from the metaphor perspective the thought is that you know we have these wells and in these Wells or you know a bunch of different tokens you know the liquidity and we have these these pumps which are oracles that are pumping information through the data feeds you know kind of relaying the data of what's you know in the wells function of its own up to the aqueducts and then the aqueducts connect different tokens allowing people to kind of determine what is one worth the other um so you know kind of I guess if in short it's an oracle registry that allows any protocol to query the price of one token in the you know denominated in another thank you Publius um and like I said I hope that was uh that was clear okay um let's go to some questions from wasabi and they ask three questions we're gonna start with the first one so asari says I understand flash loans are still a pain spot for us but as being stock can issue beams as needed with a bean specific flash lawn you know where the user can mend infinite beans and then you know return them will it one work in theory to unlock use cases for Beanstalk and 3B overload beneficial or negative to the means of ecosystem I think maybe the first question is is the bean contract does the bean contract right now allow Green Flash loans and then not currently but it does work okay so in theory if the bean contract allows you know users to take beam flash loans what do you think um about that would it unlock use cases for Beanstalk and then would it overall be beneficial or negative to the mean soccer ecosystem so the short answer is it's unclear whether it's just a bean loan or whether it would be bean and stock and seeds what are or any bean stock native asset that in theory if you can just borrow it for an instant and return it uh that that could and at some point likely should be facilitated by the contract uh yeah not sure exactly what use cases it unlocks for Beanstalk per se it would depend on the implementation but in general feel like flash loans are going to start to be pretty cool for Beanstalk what uh what again all security aside just from the the notion of let's take this fungible bdv token for example uh particularly once Doc is trading uh instead of there's typically going to be some slippage associated with minting these fungible bdb tokens because you have to get the the average season of deposit in line with the average season deposit of the contract itself or there's some slippage so there is very clearly some benefit in being able to take out a flash loan to to borrow the right seasons of deposit for example from the contract such that there's less slippage for users again the specific implementation details are a little bit fuzzy but at a high level feel like flash loans are a very cool piece of technology uh you know wouldn't necessarily call it uh still a pain spot what doesn't kill you makes you stronger but uh yeah it's uh certainly something that is a cool feature but probably not top of mind to implement but once you get the withdrawal freeze down to zero you get a lot of the benefits from a flash loan from other protocols because you can uh borrow assets uh and deposit them in The Silo perform some Arbitrage and then immediately withdraw for a profit and then return the flashlight so The Silo becomes a lot more arbitable and in theory that whole Market should start to become even more efficient so big it should be a positive development in theory to get those Silo freeze to zero and then you get the the benefits of flash loans from other protocols even if it's not implemented in being stuff yeah and I think generally speaking as long as one has the ability to take a flash loan of an asset that's traded against being indirectly or you know if you if you could take loans against everything in Australia against means then you know and directly order the top of beans or a bean flashlight um the second question then is in in and they're referencing the Dow or less Dao's meeting um with you know uh when Roots flow to the possibility of applying uh for a loan um they ask what do you think um is you know uh more beneficial or makes more sense is it for the protocol and in this case being stock to act as the lender or for Farmers themselves to be the lenders so to be perfectly ranked not really a fan of the concept of lending to centralized parties where there's trust involved in general it's it's not perfect uh from an economics perspective feel like the I the idea to have Beanstalk lend Capital to parties it's very interesting but in particular feel like it's it's probably not appropriate until there's a lot more infrastructure that exists on chain to facilitate these loans to happen with much less risk to being stuck so what that would look like in practice perhaps is if if a loan was made to to root whether it's from Beanstalk or from Silo depositors and and again the economic idea of having Beanstalk make the loan is very compelling the concept would be those beings should be held in a contract uh call it a a a I guess it's not a CDP because there wouldn't be any collateral but it would be and you could call it a CDP because the beans are the collateral where again once the loan is made into the CDP the assets and liabilities are matched the point is there could be some on-chain restrictions on Behavior Uh or or accepted transactions that the CDP allows such that at most at any given point the liquidation value of the CDP could only at most uh you know decrease by let's call it ten percent so there's some wiggle room where Beanstalk is willing to accept some loss it if Roots unprofitable in Market making uh but at a base layer uh it it would facilitate route to use beams that were borrowed to make markets and the contract could ensure that the value in the contract is basically up only within some margin for error and then the real thing that you have to figure out is how to prevent uh assuming that you can get a Down Below where there is some margin for error how to prevent leakage where root doesn't just you know say it's a 10 just take 10 percent of the loan send it to some some contract or some wallet that they own and then you know get liquidated for the other ninety percent let's call it so there certainly would have to be some restrictions on the CDP and what what are valid transactions but high level feeling it's a pretty cool it's a it's a cool idea to have beanstalker be the lender and then the question is how do you facilitate the the safe use of those loans where there's no or minimal risk to being stocked so that's yeah probably not a fan of doing it to centralized parties per se uh but but was definitely a fan of the idea from an economics perspective and feel like it's it's collectively pointing us all in the right direction so I hate to use that twice in the same class but there has been a lot of really incredible data recently that that does serve as relevant information to guide us on where we should all be going and what we should be building here so uh definitely want to shout them out for for presenting it and yes it's a pretty cool idea yeah and you guys were coming you know full circle here um with all loans uh have a risk and in today's example or an FDX and specific show that even you know collateralized loan may not really you know have value all right the last question from Wasabi is say that Beanstalk grows to scale and it becomes a de facto stable you know of D5 um and here he says that you know since being stuck or being there are this value from three curves what if you know if it outgrows and he says usdc but you know this is three curves how how would them be in stock you know if it outgrows it where would it bring its value from and I think this maybe brings us to the you know the same discussions or similar discussions that we've had earlier is you know what happens when Beanstalk outgrows you know the whole ethereum network yeah so there is some sense that at true scale and again this is all in theory and we could be totally wrong and none of this could may happen but if you play it out in theory the yield from beans for providing liquidity should start to create demand for other asset and we're at the limiting case where there's we run out of other Stables uh Beanstalk has run out of stables to attract to provide liquidity and so there's lots of eat there's steak to eat that is being traded against beans as well and so you may end up having some sort of positive reflexive cycle where the each price increases significantly because that's sort of the only asset that can grow infinitely on ethereum is the the value of ether itself or the aggregate value of ether itself and so if there's demand for beans in excess of the market cap of ether and all the value on ether and you assume that converts are well incentivized uh you'd probably expect that aggregate Bean demand to to translate into demand for ether and so then you have a positive reflexive relationship between beans and ether and to be frank if if 90 or 99 of the value at true scale of of of the value trading against beans or liquidity trading against beans is ether itself now Beanstalk doesn't really it doesn't look much different than Luna did and that's kind of ugly to say but it's true that then then a lot of the value of the asset itself is derived from some closer to an equity token that is the value comes from future expected demand and from transaction fees and if demand demand for eth was from Beans and now it looks like beans are collapsing uh that's in what could be a reflexive positive cycle certainly you'd expect it somewhere to reflect to unwind in a down reflexive way and so one of the ideas that has been floated previously in class or previous class is the idea of having Beanstalk issue or a complimentary Beanstalk uh like a different Beanstalk itself but probably would be the same Beanstalk issue negative eat uh or anti-eat that had some some way that at scale could actually hedge beanstalk's exposure to Ether itself uh that idea isn't totally fully fleshed out but these are these are the types of things that need to be thought about at truth scale and it's unclear how how that will be resolved okay the next question comes from mixer mixolite mixolydian or mixolydian and they ask is there plan support for multiple networks to spread being elsewhere yeah so I've been talking a lot about well first off it depends what you mean by other networks uh do you mean like l2s or do you mean salon uh if if you mean Solana why not answer both yeah so if you mean other other chains entirely other other networks entirely uh at least on this end haven't haven't focused too much on that feel like the frost Network bridges are quite quite a ways away from being at the place where you'd really be comfortable and again it's not up to us anyone can can build the tech and and try to deploy it and get the data approve the necessary changes but from our perspective not in a rush to to expose Beanstalk to the Cross Network risk uh across network bridge risk we're we're not inclined to spend much time working on that but if you ask about l2s we're highly enthused about getting uh Beanstalk value on l2s and not sure exactly when that will happen but for example there's pipeline which has been under audit the hope is to deploy a version of pipeline in the next week or so to help facilitate a better ux around the the World Cup stuff that Roots working on so we recently were kind of asking the question around what would it take to get pipeline live where you can start to do stuff to and from uh I guess really from L1 into L2 through pipeline in a single transaction and it would require I mean there's some development that would be required around that but it's it's within grasp and so the hope would be to have have some sort of L2 functionality in the next couple months let's call it I mean don't think that's out of out of the realm of possibility not sure exactly who's going to work on it but on this end I've been starting to think about how that would be architected and happy to talk to anyone that wants to build it or uh you know on this end we may get around to building it at some point as well but just definitely feel like uh getting bdv on l2s as possible sooner rather than later First Step L2 later on being chin yeah Bean chain is Geez Louise we'll we'll look back to this day or you know these discussions maybe later um okay we are at the end of the questions in the town hall chat uh let's give it maybe a minute see if others have other questions and you know and in the meanwhile a reminder to everyone uh you know who's here or maybe they would listen to this uh class later is that bit uh 20 uh 29 is live and it's around 10 million uh stock uh uh shy away from um from passing um so you know if you haven't voted uh you know this is the time to do so and the 29 is uh version 2 of the Pod Marketplace all right thank you all for joining us in this class Publius as always thank you for taking time to answer all questions and we'll see you all next week