Halborn Flash Video w/ Publius

October 20, 2022

0:00 Intro • 0:28 What is Beanstalk and who is Publius? • 2:01 What's next for Beanstalk? • 3:08 How Beanstalk differentiates itself from other stablecoin protocols • 4:50 The future of Beanstalk DAO & community • 7:22 How Beanstalk approaches security • 8:37 A piece of advice to other DAO buidlers in the ecosystem • 9:48 'I wish I knew this' moment for Publius

Other Recording



Hello everyone. You're watching the Halborn Flash videos and on today's show we have got Beanstalk joining us in for a very brief chat to introduce themselves to our community. Thank you guys for joining us in. Maybe we can start a bit with who you guys are and what you do with Beanstalk before driving down further and discovering more of it.

  • Beanstalk is a peer-to-peer decentralized protocol. Who are we? We are two-thirds of Publius, Publius being the the pseudonym of the founders of Beanstalk. What do we do and what is our relationship to Beanstalk? I think at this point we spend the vast majority of our time and effort trying to put Beanstalk in a position where Publius does not need to exist. So Beanstalk is still in its experimental phase and there's a lot of work that the Dow is collectively doing to make Beanstalk as, as optimal an issuer of currency as possible. And we're excited to be a part of that as Dow members. But as, as Publius, we really view our role as trying to minimize any, anything that, any responsibility that Publius has, such that there is no leader of the currency or the system and things really do trend towards true decentralization over time. So, that's very much a work in progress. We're obviously doing interviews on camera, so a lot of work to be done on that front, but nonetheless it's still early, early in the in what we hope is a very long history of Beanstalk.
  • Right, thanks for clarifying that. And Beanstalk is a decentralized algorithmic stablecoin protocol but we really do want to understand it from you guys what's coming up next. So tell us a bit more about that.
  • We view Beanstalk first and foremost as an issuer of money and the money that Beanstalk issues is called beans and beans are designed to retain a stable value relative to some peg. So currently the stablecoin market has dictated that there's, by a very significant margin, the vast majority of demand is for US dollar pegged stablecoins. And so currently the, the stablecoin that Beanstalk issues and the original stablecoin that Beanstalk issued beans are pegged to US dollars or in practice some on-chain representation of US dollars because the Beanstalk price oracle is entirely on-chain and dollars obviously don't exactly exist on-chain. But in general, beans are pegged to the US dollar or, or Beanstalk attempts to peg the value of beans to the US dollar might be a better way to say it.
  • Right. And how do you in general differentiate from the rest of the stablecoin protocols out there?
  • So Beanstalk is the only issuer of stablecoins that the value of the stablecoin is derived primarily from the credit of the issuer. So if you look at all of the current other stablecoin models that are currently in practice, they're all collateralized to some extent. Frax being a fractional reserve model, but nonetheless, there's collateral, and there's significant frictions, particularly opportunity costs that affect the interest rates on these stablecoins that are the result of collateral requirements. So Beanstalk, instead of issuing stablecoins, through the maintenance of collateral, issues stablecoins based on its credit and Beanstalk, the software itself, is what maintains the system and it's the credit of Beanstalk. In practice what that means is when there's too much supply of beans, beans on the market, when the price is too low, it's Beanstalk's ability to borrow beans from the market, people's willingness to, to lend beans to Beanstalk, people viewing Beanstalk as credit worthy, that create the stability in the bean price. So what it means to be a credit-based system is that the credit of Beanstalk, the software itself, the issuer of the money, is the primary driver of the value or the stability of, of the currency.
  • Okay, very interesting. And what do you think is next in line for the community when they see Beanstalk's news and updates
  • The past couple of months, and this is how Beanstalk and Halborn started working together, was the result of, there was a, a much, a much written about or much discussed exploit that was at the time the fifth largest in DeFi history, where Beanstalk had something like $77 million of Ether stolen from it and in total around $180 million of value destroyed through this exploit and basically brought the protocol to zero. And going back to the main driver of stability of the system is the credit of the protocol or the credit worthiness of the protocol. After that exploit that happened in April, obviously there was a lot of technical work to be done and Halborn was very helpful in getting Beanstalk back up and running in what we all hope is a secure fashion. But from an economics perspective the protocol was able to borrow from the market so far something like $17 million as part of its recapitalization effort which when you consider that the value that was stolen from the protocol was 77 million. It's a not insignificant start already for the protocol once again. And that all comes from the fact that the protocol is viewed as credit-worthy and independent of the ca-, recapitalization of stolen capital. Most importantly the bean price, which started trading again after the replant that happened on August 6th, so a little over a month ago at this point, the bean price has been quite stable at its peg of a dollar. So from a, a peg maintenance perspective it's very exciting the way Beanstalk has been performing. And therefore when you ask about what's, what's next, well the starting point is that it seems like at least for now, there is a future that the Dow and the community are gonna get to build on top of Beanstalk. And then the question becomes, well, what is there to build on top of Beanstalk. So, from that perspective maybe to explain a little bit of how, how building on top of Beanstalk is different than current implementations of DeFi and how that's all a result of the credit backing of the system as opposed to the collateral.
  • When you say you had all of this journey going on, what do you think you had in mind for security and how has that changed through the, through the process itself?
  • So the goal has always been for Beanstalk to be entirely permission-less and the governance system was one part of that permission-less system. In practice that required the implementation of on-chain governance, entirely on-chain governance. And that on-chain governance was what was ultimately exploited through a flash loan attack. The goal remains to return to on-chain governance that is entirely permission-less. At this point, there's a variety of off-chain parts of the governance solution or implementation at the moment that is far from optimal, but nonetheless is, we hope, and the the Dow has implemented it in a way that it is expected to be, more secure than the previous on-chain governance solution that was exploited. So the goal is nonetheless to get back to on-chain governance, but that's gonna be a, a, a process such that the risk associated with that process is reduced as much as possible.
  • Right. And in a time where Web3 and Dow specifically are always coming up and there's always everything going on in the build mode, is there any piece of advice that you have, you know, as creators to other Dows in the, in the ecosystem?
  • We, we're still very early on and you know, it's gonna take a long time to build this stuff and you know, unfortunately it's very difficult to build this stuff properly and securely and you know, quite at times it can feel like a quite daunting task. But, you know, just realize, you know, the the whole Web3 community is in this together and you know, we're truly all, you know have the same vision of, you know, a decentralized future here and you know, just to, you know, keep grinding through it and realize it's not at all about the money and whether price goes up or down but you know about creating the best product.
  • And value. Right. And is that something that if you guys reflect to everything that has happened in the journey thus far you wish you had an aha moment and kind of thought, oh, I wish I knew this before.
  • Well, I wish the there was flash loan resistance in the on-chain governance system, but to some extent that's really the wrong attitude because if Beanstalk is credit-worthy then in the grand scheme of things this will be a blip on the radar and really evidence that the protocol can create long term price sustainability despite really hostile exogenous circumstances. So perhaps it's, that may be a silver lining at the moment, but if the protocol continues to perform well in the grand scheme of things, it, it could be a a big part of its long term success. So we're glass half full type of guys or type of anons, if you will. And generally we're, we're just excited to to keep building tech that we think is gonna last. And even if the tech itself doesn't last you do it open source and you do it in a way where it's easy for other people to iterate on top of. And even if it's not the tech we implement, you know we really just hope to be one step in the right direction. So we're very excited about the opportunity to continue to do that on top of Beanstalk and we're appreciative of getting to share some of, some of what's going on with Beanstalk in general with your community. And we're, we're also very appreciative of Halborn and their, their part in at this point securing Beanstalk and auditing Beanstalk and auditing Bifs Beanstalk improvement proposals. We're very appreciative of the work that Halborn is doing and the Dow seems to be as well. So it's, thank you very much.
  • Of course. And on that pride and positive note we'll call this a flash video wrap. Thank you so much for joining us guys and for everybody watching, if you have a question feel free to drop it in the comments below and we'll get back to you. Thank you.