Liquity <> Publius

Liquity <> Publius

April 29, 2022

0:00 Intro • 0:36 Publius Opening Remarks • 3:49 Beanstalk Intro • 9:09 Silo Whitelist • 11:11 Liquity Intro • 13:45 Liquity Integration In Beanstalk • 17:04 Farm Function • 21:03 The Exploit • 32:33 The Barn Raise & Replant • 46:25 Audience Questions

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So as I said, I'm I'm part of the liquid core team and also beanstalk user. And I actually managed to tape in just a few days for the exploit happened. But yeah, we won't dwell on that day because I wanted to talk to you two guys probably some nights from being stuck. So before we proceed or before I proceed with the overview of what we'll be talking about to you, just want to shortly introduce yourself.

Sure. So we're Publius. We're the founders of Beanstalk. The initial deploy was of Beanstalk, but at this point are just a part of the very vibrant and active beanstalk community. So since Beanstalk was launched just under nine months ago on Main that there's been a flourishing growth of of contributors and community around Beanstalk. And you know, at this point, whereas originally it was, you know, just us at this point, there's a whole, a whole set of people working on and around Beanstalk.

And to a large extent that's why despite the, the attack that happened almost two weeks ago now, Beanstalk, there's still a path forward for Beanstalk because the community has made it very clear that there's, you know, this is something worth fighting for. So I know you ask more about us, but we tend to identify very much with the beanstalk community and, you know, happy to talk more about us if if that's interesting.

Yeah, I totally get that. I noticed from the discord that it's really very engaged and very forward thinking and also positive. So. So that's awesome to see. For just for the liquidity guys or for basically everyone, I want to give some context on why we are having this space and what we would be talking about. So Beanstalk integrated USD that's liquid this Stablecoin about a month ago and usually when this happens we have some kind of coordinated marketing effort like AMA, how to guide, etc. which was not really the case this time.

Why? Basically because on the one hand Beanstalk surprised us a little bit by integrate includes the on their own the they didn't even get in touch with us which is actually great. It's it's awesome and very much appreciated and some people want to see more of but we couldn't really get our marketing efforts up in time. And on the other hand the other reason is because just shortly after being integrated, of course, the governance exploit happened.

So today we kind of want to make up for it a little bit and talk about on one hand why Beanstalk chose Alice or Liquidity, what ideas they might have to to expand on that partnership. And then also we'll touch upon the exploit and of course, the the fundraiser aptly named Bar and Race, which goes live on Monday.

So to kick things off, do you want to give a brief intro on Beanstalk what it is, what it does? And then I can do the same for liquidity. Sure. So Beanstalk is a credit based stablecoin issuer. What does that mean? So whereas the vast majority of other stablecoin protocols like liquidity, use some version of collateral, and in particular as we'll talk about liquid in the liquidity case, you guys use very decentralized collateral, which is wonderful, but nonetheless across crypto there's a shortage of collateral and that collateral shortage manifests itself in high borrowing costs for stablecoins.

And so fundamentally the goal of Beanstalk is to be able to issue Stablecoins without any collateral requirements whatsoever. And in doing so, the supply of beans, the bean stock stablecoin is untethered to the amount of available collateral because it doesn't require any collateral. And therefore, in theory, Beanstalk should be able to drive the borrowing costs for Stablecoins down to zero effectively over time.

Now credit based or non collateralized stablecoins uh, prior to Beanstalk, there have been a ton of different attempts, basis basis, cash, ESD, DSD, the list goes on, but they all had various economic issues. I guess with the exception of basis you could argue, because they didn't launch, but they all had various economic issues that resulted in the price collapsing and the protocols were unable to keep their stablecoin at their peak beanstalk.

While it's had a lot of volatility since it launched in its almost nine month history prior to being attacked, Beanstalk did demonstrate a pretty strong ability to regularly cross the bean price above and below its peg of adult. And over time the hope is that beans will start to be a major liquidity provider across Defi. And the reason for that structurally is that whereas the vast majority of other stablecoins have some sort of negative carry cost associated with them, the credit based model facilitates the distribution of being seigniorage in a somewhat arbitrary fashion whereby, according to the rules of Beanstalk, half of all being mints go to governance token holders.

And so if you hold beans, you can deposit your beans in the silo, which is the the beanstalk DAO and received governance tokens stock and stock entitles you to a portion of all future bean mints. And so in short, just holding the beans in the silo is how the beans receive positive care. Now, holding your business is one thing, but in practice the protocol would much prefer that you use your beans to provide liquidity.

And the deeper the liquidity for beans, the more stable it is in the grand scheme of things. And so the and we'll talk about why the liquidity integration was so appealing. But just at a high level, many of the upgrades that the Dow made and voted to make on Beanstalk over the past couple of months were to generalized the silo such that whereas when Bean stock was originally deployed, the only assets that could be deposited in the silo to earn this interest, to earn the positive carry, to earn the bean senior edge were beans and LP tokens.

For the bean uniswap pool. But as we know, Defi doesn't just run on Etherium and it doesn't just run on Uniswap v2. Right? And so the concept is to continue to generalize the silo and to continue to generalize beanstalk such that people can interface and interoperate with other protocols and other assets through bean stop and earn positive carry through beanstalk.

Whether they're providing liquidity in the form of beans or in the case of LAUSD holders, providing liquidity to the being ether and depositing those LP tokens in the silo. The concept is Beanstalk creates a very symbiotic relationship between other protocols and demonstrating that proof of concept with liquidity was something that was in the beginning stages of happening prior to the attack.

So a little bit of a long winded answer for you there, but hopefully that's some helpful color. Yeah, that was that was awesome. And before I dive into liquidity, I just would have have a comment and question please regarding the fluctuations, the fluctuations of the price. I think it went down to 0.25 and up to up to 4 USD.

If I'm not afraid. And but it always returns back to back, which was quite fascinating to behold. And over time, those fluctuations when became smaller and smaller. So I think that's, that's proof that the protocol really works as intended. Um, one question about the silo or about the new assets, does it mean that you will be able to add any whitelisted assets or how does the selection work?

So there's a couple things. One is the state of being stopped prior to the attack. And then there's what Beanstalk could facilitate in the future. So prior to the attack, Beanstalk could accept, based on a white list, arbitrary ERC 20 tokens, and so that included beans and various LP tokens. However, the concept is that the silo could be further generalized to accept not just ERC 20 tokens and more generally to also facilitate the distribution of yield from other protocols.

In addition to being seigniorage. So one of the things that happened on shortly prior to the attack was that the being three curve or a pool was added to the curve gauge and therefore people could in theory deposit their curve LP tokens in the curve gauge, they could deposit them on convex or they could deposit them in the silo.

However, in theory and this was an update that was being worked on actively at being stop farms prior to the attack. The silo can facilitate the distribution of yield from other protocols, so you'd be able to deposit your convex B in three curve or your convex B now USD tokens in the silo and receive being senior edge in addition to senior edge from other protocols, if that makes sense.

And that's generalizable. So the concept is to make the silo super friction as frictionless as possible and as attractive to liquidity providers as possible. And so it's very, very enticing indeed. So before we continue with exploring this, I just wanted to give a brief intro on liquidity for the Beanstalk audience, so it would be wonderful. So liquidity is the borrowing protocol, which launched on Ethereum about a year ago, a bit more than a year ago, and it is similar to Maker.

That's the easiest comparison I can make. Meaning you can supply an asset which acts as collateral and can then borrow against it. And borrowing in this case means you are minting a stablecoin. In our case, LAUSD. However, we did make quite, quite a few improvements on that concept. For example, we are the cheapest way to borrow against Eve, so we just charge a 0.5% fee and nothing else.

There is no repayment fee and there is nothing else apart from that 0.5% fee, meaning if you if you borrow 10,000 LAUSD, you pay $500 and that's it. Very suitable for long term loans. Capital efficiency is another topic because you can borrow up to 90% of your collateral value, and usually that's just around the 75% range. So that's quite different.

And the last point I want to mention something that you mentioned already as well is the emphasis we put on decentralization and sense, which is the persistence of resistance. So to maximize it, we only use each piece collateral and we also do not run a frontend ourselves. So of all the dozens of contents which are out there, all are run either by community members or by friendly protocols.

And last but not least, I need to say that liquid is immutable. That means it cannot be changed by anyone. We don't have no admin keys and no way to influence it. There is no governance and basically the only way to take it down is to to kill the theory itself. So that's something that was very close to our hearts and to our ethos, so to say, when building it and we're happy that it's working as intended.

So far. Fabulous. And a lot of those qualities like immutability and once you take the one time cost it to middle USD, there's no additional carrying costs. Those were two of the main things that made liquidity particularly attractive from our perspective to incorporate early on and to be in stock. And when you consider that the collateral that liquidity uses as a theorem, as decentralized as it gets in practice on the Ethereum network, that that was also something very attractive, right?

So for a lot of different reasons, although in Bienstock case it required on chain governance and the ability to upgrade itself, it's very nice that liquidity didn't require that. And that's one of the things that made it a low risk choice to try to integrate with Bienstock early on. And I did hear that you were a big fan of Makerdao or user of their borrowing functionality, I think at least so.

Was that the factor itself that we are a borrowing protocol or was the centralization more more of a factor, much more the decentralization in practice? The idea for the liquidity integration was a long time coming. One of our long time community members who then started working at Bienstock Farms, they incubate, who's fabulous. So those the think shout out to sink.

They have so many incredible ideas and one of their best ideas and earliest ideas was that liquidity would be a wonderful integration with the stock because of how well aligned it was with the ethos of decentralization and permissionless ness. And it was really great timing that as the silo white list happened in, I think, January, if I recall correctly, the first pool that was added was being three curve.

But then as Bienstock Farms was trying to figure out what other pools to add, that aligned with the liquidity stability pool reward haven. And I think you had a wonderful idea that Bienstock Farms should try to add a being LAUSD pool to the silo or get try to get it added prior to that happening. Now, in practice, the timing wasn't exactly perfect.

I think it was a couple of days off, but the idea was was certainly there and there started to it seemed that there started to be some movement of capital from the stability pool into the being LAUSD pool and into the silo. So it was still a small pool at the time of the attack compared to the other two pools that Beanstalk had at the time.

But nonetheless, as it was starting to grow pretty quickly and much quicker than the other two pools had grown original. So it was very exciting to see that. Definitely. I think things were really moving in the right direction and I personally was also very excited about it. So hoping that we can replicate that again in a couple of weeks or more in the month I guess.

But when I was going over your documentation and roadmap, etc., etc., I also found a very interesting feature and also think, Max, about it. This is the option to do one click transaction. Basically going from the E in your wallet, you could borrow on liquid to LAUSD and directly deposit into the silo. So that's very neat in my opinion.

Could you could you tell us a thing or two about that? Sure. So this is an upgrade that has been a long time coming to be in stock that was being called the farm, which is the ability to interact with other protocols through BIENSTOCK. So one of the currently one of the common transactions that people do or interact with Bienstock is to harvest their pods the debt that they want to be in, stocks that are now redeemable for beans and immediately deposit those beans in the silo, either as LP tokens or as beans.

And the concept as being stock manages all of that for you. You can just, you know, harvest and go into deposited beans or harvest and go into deposited currently being and eat LP but with the farm it could have been any of the LP tokens in a single transaction. However, the farm is a lot cooler than that. The idea, as you were saying, was in theory you could do things like harvest your pods into beans, sell those beans into eith deposit that eat in a liquidy trove.

Mint LAUSD against that liquidy trove. Add the LAUSD to an LAUSD bean pool and then deposit those LP tokens in the silo. And if there was also a LAUSD being in the curve gauge, then in theory you could in that same transaction, take those LP tokens deposited in convex for boosted curve rewards via convex and then deposit the convex being LAUSD into the silo.

So you could do all of that in a single transaction and that believe it or not, that was supposed to I think the bid for that was going to be ready for proposal in a week or two prior or after the hack or attack. So you know that that type of cool functionality is in the not too distant future.

Regardless, once Beanstalk is back up and run it. Yeah, I'm sure. I'm sure we'll get there. And I just want to mention for, for better understanding that when you deposited the pool, the beans which you earn automatically go to the bean pool as well. So they kind of out the compound automatically is my understanding. Correct on that. So the way bean seigniorage is distributed at the moment is that a half of all new beans minted go to paying off debt, go to paying off pods and half go to stockholders.

And the beans that are paid to stockholders are immediately and automatically deposited in the silo to start earning compounding interest. Now, you can take, you know, within the silo and convert your your deposited beans into deposited LP tokens. But the protocol doesn't do that automatically. It it gives out being senior it not LP token seigniorage. It's it's awesome.

Nevertheless because of the gas cost that that you earn bean automatically or on bean automatically and then you can do with it whatever you like later down the road once you earn the beans. Once you earn the beans, they're yours. Yup, exactly. So maybe we can touch upon the exploit now if you guys are fine with it. So it happened like ten, 12 days ago or something like that.

And now I know it was Sunday because I was about I actually just came to my mother in law for lunch and and as I was literally about to sit down at the table, my friend paying me with this call said, Hey, boy, it was beans, talk to us hack. And he sends a nice screenshot with a big fat zero liquidity from curve And yeah, that's was not too much fun.

But yeah, maybe maybe you can give your, uh, your view of what went down there and how the, how the exploit happened in first place. You really similar experience finding out, you know, we're, we're on a little earlier time zone so it was waking up and seeing a similar message and then checking the liquidity on curve and uniswap and you know, how many more additional data points do you need to realize?

Fuck. So which was also your first, which is also so for interrupting, which was also your first post on this called Past post the Exploit, which I think is that we're fucked or something along those lines. Yes. And, and at the time it really felt that way. And we're we've always tried to be open and honest with everyone.

And that's certainly what it felt like at the time. Now, at this point, it does not feel that way one bit, but that was that was a low. So what actually happened in practice? There was a governance exploit via a flash loan attack and the attacker used a very sophisticated, uh, basically strategy to obscure as much as possible their malicious intent up until the very moment of attack.

So how did they do that? The attacker proposed to be in stock improvement proposals. Uh, on Saturday. So they bought and deposited a little over $200,000 or beans in the silo in order to acquire enough stock to propose bets. And they then proposed to bets and the the bibs that they proposed were almost identical. The first BIP, uh, referenced in Etherium address that was blank and prior to, to that point in time had no history whatsoever.

And then the second bip bip, there were two bits bip 18 and 19 bip 19 looked identical, except it referenced in a theorem address that did have a history. And at the address the BIP 19 referenced was a file that was registered on Etherscan as bip 18 dot salt and bip 18 outsole proposed donating 250,000 beans to the Ukraine and so it looked pretty stupid and ensure, you know, made it appear like the original proposal was a mistake of 18 was a mistake that referenced the wrong address.

And then they really proposed it as BIP 19 to reference the correct address. And then 24 hours later, because there was a 24 hour pause in the protocol between when bips are proposed and when they can be committed, which the original intent behind that was that people would have the opportunity if there was a bit that they didn't like to acquire stock and participate in governance.

But after the 24 hour period before it can be proposed via a supermajority of two thirds of the total stock. And so after the 24 hour period, the attacker borrowed via a flash loan, $1,000,000,000 from of a used those billion dollars to acquire enough LP tokens and whitelisted assets to deposit them all in the silo and acquire more than two thirds of the total stock.

And that facilitated them to pass whatever you know, both both are one of the BEPS if they wanted to. And in practice what they did was they use their supermajority stock to execute and commit BIP 18 and at the exact same time as they took out the flash loan, they deployed the malicious code to the previously blank Etherium address referenced in BIP 18 using the CREATE to OP code.

And in short, that allows for the deployment of code at a deterministic address and therefore they were able to deploy the attack to the address referenced in DEP 18 that prior to the attack was totally blank. And so the malicious code itself was only deployed at the moment of attack and the malicious code facilitated the withdrawal of all of the assets from the silo from Bienstock, which then the attacker was able to withdraw all of the liquidity and the non in-stock value and then washed it through tornado cash almost immediately.

So that's in a nutshell how the attack happened. And obviously the result is that Bienstock is currently out a little under $77 million of non bienstock value. Right. Thank you. Thank you for the deep dive. That was quite indeed the Trojan horse. One more say, but better understand it. I want to ask a question from a different viewpoint.

What should have been done? What could have been done have been done to catch this process and to prevent it? Was there something or what do you think about it? Well, in hindsight, it's very hard to say, right? Because at this point in time, it's one of those things there's potentially an infinite number of different things that could have would.

And so the reality is, you know, I think it's a more productive conversation to talk about going forward, how to prevent anything like this from ever happening again. Right. And even Vitalik was weighing in on Twitter around this discussion and basically said that token based governance is not a good solution under any circumstances. And we take criticisms like that very seriously.

And so the point is, for the short term, we don't think it makes sense. And this has been a discussion within the community generally. There doesn't seem to be any desire to rush back into on chain governance over the short period of time. So in the short term, beanstalk will be governed by a community run multisig. And the hope is that over a longer period of time, a more robust decentralized governance mechanism can be implemented.

But, you know, there's no there's no rush to implement that and have that have anything like this happen again. And so anything that would be implemented as decentralized governance, hopefully in the not too distant future will be once, twice or thrice audited prior to anything ever going live on Main. We're well, and apart from the Multisig, what measures or what things are going to implement want once bienstock relaunches so well in practice, it's important to note that the exploit itself was an exploit on the governance, the decentralized governance of Bienstock.

And so temporarily the whole of orange governance has been removed, which to a large extent removes the vast majority of potential attack vectors and certainly the vast majority of potential deadly attack vectors, if that makes sense. So in the grand scheme of things, from a risk perspective, the short term is that there's at least in theory, a dramatically different risk profile now that there's not a on chain governance for the time being.

And I think that that should you know, that should be a very good short term solution. Now, it's also important to note, even though obviously it wasn't enough, BIENSTOCK has been audited and there is something to be said for the entire the vast majority of the code has been audited. And therefore, you know, with the hope of there's a halberton audit starting in a little over a week, there's a trail of bits audit starting in a little over a month.

The hope is to get a lot of different data points that people can start to feel confident in the in the security of the protocol. But in the long run, you know, the only thing that can really give true, uh, data points that the protocol is secure is being out there in the wild with a lot of value and survive it.

Right? And so this is, this in practice, no number of audits can necessarily give people the, the, you know, any sort of guarantee. This is, you know, this is this is kind of the nature of the beast of having open source technology and open source systems. So so, you know, this is the way it is. Right. Let's to not dwell on that anymore any longer than necessary.

And I want to look a little bit towards the future, towards the towards your fundraiser and just give a brief intro before I pass the work over to you. So after the exploit, after I finished my lunch, I logged in onto this code and we had the usual the usual comments of Deathstroke, Deathstroke, well done for, etc. etc..

But to my amazement, that was just for, I don't know, half an hour, 45 minutes. And then all of a sudden a group of users emerged and really changed the tide of conversation towards a much more productive, productive area. So to say, and I don't know the same day, but I think the same day already the idea of a fundraise came up and the VC money and whatnot.

But I just wanted to say that I was I was really positively surprised by how the community handled it and the. Yeah. What what's your take on on how this came together, the fundraiser and what is the fundraiser in first place? Yeah, and we would echo that and say that we were similarly surprised and heavily enthused by the reaction from the community and the idea for the the barn raiser.

I don't know where that name came from, but in practice it was very clear by the response from the community and many of the people contributing to Bienstock prior to the attack that this was something they were not willing to let die. And so the question then became, well, what what is a path forward? And there was a lot of discussion of a lot of discussion over the first couple of days.

A lot of it is recorded because it was town halls and indoor meetings or whatever. And there was a ton of questions and debate around the best way to structure it at the time and the incentives and yadda yadda. It's endless what was discussed. But ultimately over the the week or so, people came to a general consensus of a structure and it was put to a snapshot vote.

The Dow voted, I think, unanimously. I think it was 100% to approve the proposal for the barn raised, which is really cool. And the barn raised is scheduled to start Monday, so April, May 2nd. So that's, you know, coming up in a couple of days. So what is the barn race, you ask? So Beanstalk fundamentally is out $77 million or so at the moment.

And so the hope is to have the protocols, ability to attract lenders, which is the core to its ability to maintain, peg or keep the price at its peg, lean into its ability to attract lenders and try to recuperate or recapitalize as much of that $77 million as possible. So, in short, the protocol is going to issue over a ten day period of time, which it's called The barn, raised a, you know, the equivalent of $77 million worth of debt, effectively, that people can lend to the protocol in exchange for pods and for reference pods or the debt asset of being staff and pods are typically paid on a first in the first out basis

in this. So just to recap, sorry, people will be able to deposit an asset and they will get pots in return and there will be some interest on that bought, right. Well, I don't know if I would call it a deposit because you can't really withdraw. It's more of a, you know, a alone in the sense of your lending assets to the protocol.

And in exchange you're getting, uh, you're getting pods. Does that make sense? Makes sense. And do you already know which token can be used or will be used for it? It's unclear at the moment. Uh, you know, there's a couple of conversations being had around what are the best tokens to raise this in potentially and, you know, unclear at the moment.

And I think the ideal scenario would be to deposit some E into liquid the borrower adding this thing which you would then of course enable for the bond raise. But that's a different topic. Just, just mentioning, by the way, what I wanted to mention as well as the bond raise will be for ten days, right? But there will be two phases.

Could you explain that a little bit? Sure. So the first phase is the bidding phase whereby people can place a bid for an amount at an interest rate. And the concept is that, uh, the protocol will start to accumulate bids and the bids are effectively locked in. So the more bids that the protocol accumulates, the more capital that's committed to the barn raise.

And, uh, that will happen for seven days. And the main incentive to bid being stock will give a bonus the earlier that. You bet. So I think the first day of the bid is 21% or the bonus is 21%, and then it decreases by 3% each day for seven days. So 21, then 18 and so on. So that's the bidding period.

And then the concept is that the next stage is the three day selling period whereby two things can happen. One, the weather will start at 20%, the interest rate will start at 20% and increase 1% every 10 minutes for three days, up to 452%. And the idea is that as the weather, the interest rate increases, the bids at each weather will fill and get into line.

So if you bid 100% whenever the weather gets to 100%, the bid will fail and you'll get placed in this line, which is again, first in, first out. So the people that bid a lower amount are closer to the front of the line. Now, the second thing is, as this three day sowing period is happening, people can just get into line independent of whether they had bid previously or not, such that, you know, you'll have these bids, they're expected to clear in a couple of minutes and people can then hop in front of one.

So there's an incentive to participate in the bidding period. There's another separate incentive to participate in the selling period. And the hope is that between the two being stuck will be able to recapitalized as much of the $77 million as possible. So that's the first the barn raises, the first phase, if you will. Now, the way we like to think about the structure of the relaunch is there's really three stages or phases the barn raised.

Then you have the haircut. So one of the core principles of the barn raise structure, as we understand it, is that the protocol needs to be in a good position to succeed going forward into pennant of the capital that it's able to recuperate. And so if it only raises 10% or 20% or 50% or 80%, not the 100%, there needs to be a path forward for buying stock.

And the concept is that the entire state of being stock prior to the attack will be like scaled by the percentage of capital that the protocol is able to raise. So this is the haircut. So there's the barn raise, then there's the haircut and all of the beans, all the stock, all the seeds, all the value that was deposited in the silo, the LP tokens, all the pods, the entire state of beans stock prior to the attack will be scaled by whatever percent the pot raised is able to raise.

And that does a couple of very important things. One, it sets bean stock up to succeed going forward no matter what, because prior to the attack it was in a very healthy, at least economically speaking, a very healthy position. And so the idea is that the protocol will be in a very similar, albeit perhaps scaled down version, but a very similar state.

And secondly, the idea is if you're at the beginning of the line, you don't have any guarantee or you're one of the first bidders, you don't have any guarantee that somebody is going to bid after you and come in behind you. And there is a concern that if you're you've only got a million or you're at 10 million of the 77 that you're now bailing out or trying to come and recapitalize this whole huge, massive system.

And it's too small. Right. And you don't want to be the one bailing out the whole system. So in practice, in order to align the incentives between the people that are coming and lending to the protocol and recapitalizing it with the the the long term, you know, the long term success of being stock independent of how much capital it's able to raise, That's that's what haircut does in practice.

Does that make sense? Yeah, absolutely. And just to mention that the fundraiser is also meant to to make whole the LP providers which were in the silo before that. And I think also the bond holders is is that correct? So those people have an incentive to to that it succeeds as well. Exactly. Exactly. And the more that the barn raise raises, the less of the haircut.

Now, there's also third phase of this, which is the the vesting. So one of the big questions and it's a very reasonable question, if you're lending to the protocol now, is, well, you know, if if somebody had 100,000 or $1,000,000 in the protocol prior to the attack and now it's worth $0, and all of a sudden it's worth 100% again, you know, people may be very well inclined to take their money and leave, if you know what I mean.

And so the question is, well, how how to align the new lenders with the old beanstalk members such that they're not providing exit liquidity. And so in addition to the haircut, there's the third phase, which is the vesting schedule. And the concept is that the liquid assets in the system, which are the beans, the deposited beans, the deposited LP tokens, these assets that were in the system and were valuable but are now valueless after the attack that are being recapitalized, they will be subject to a vesting schedule whereby the percentage of the assets that people can claim according to this proposal is a function of the percentage of the debt.

The pot does that are issued during the barn raiser that have been paid back. So let's say the barn raiser issues 300 million pots. If 100 million of those 300 million pods have been harvested or paid back by the protocol, then the beans or the deposit of beans with the deposited LP tokens, if they want to claim and exit the system, they they're entitled to a third of their value.

So if they had $1,000, it's recapitalized. So they have $500 and now they want to claim it, they would only be entitled to a third and that they'd be entitled to 500 if they waited until the full 300 million pots were paid back. And that assumes a 50% haircut. So that's just one example of how this could play out.

But at a macro level, the idea is that the vesting schedule makes it such that the it's highly improbable that there's any significant sell pressure from the previous holders into the new lenders and those people who do leave. What happens with the leftover funds they leave behind? A great question. It is going to be basically distributed to the other people that are waiting.

So there's a nice game of chicken here where the people that are getting recapitalized and believe in the long term success of Beanstalk, they're inclined to just wait it all out because they're going to get maybe even a bonus for other people. Rage, quitting effectively. All right, cool. And I have a lot of question about the race itself.

So we are looking or you guys are looking for 77 million and there will be a building. So a competition going on. If the round is oversubscribed, theoretically, you could not get anything right if your bid is too high. Correct. All right. Just wanted to make sure. And one last question about about the first phase, about the bidding phase.

For example, if you join on day two, you would be entitled to 18%. If you then later change your bid, does that decrease your percentage or is that locked in? It depends. If you change it on a later day. If you change it on day two, it doesn't. But on day three or day four, your bid would your bonus would reset.

Yeah, I meant on the little day. Okay, cool. That that makes sense. Yeah. I mean, that was it from my side. Would you maybe want to share anything or should we open it up to the audience for any questions? Let's open it up briefly. We do have another call at the top of the hour, which we can be a little late for.

But let's let's see if there's a couple of questions. Okay.

Bojan, I gave you you're now a co-host, so you can invite anyone up to speak, anybody who raises their hand. I believe you can. You can bring them on stage to be a problem for you. What's up, Cesar? Hello there. And most favorite stablecoin projects. At the same time, I've been a long, long time fan of Liquidy and I've been a fan of being since.

Were they? They've arrived. So I have a question more for you at liquidity, and that is I was wondering about any of the feedback about how were how is your community feeling about the ability to migrate from the stability pool to the being ecosystem? Did you get have you did you hear anybody speaking about this or any feedback in this sense?

And you know, you get the question. I think. Yeah. So thanks for the question. One issue is that our integration happened just shortly before the exploit itself. So as I mentioned at the beginning, we didn't do any any marketing efforts, etc.. However, we do have a couple of long term liquidity supporters who did bring up being stuck on on our discord.

So things were picking up slowly as probably as management, but unfortunately we were cut short a bit prematurely. But once things launch up again, I'm positive that we'll things going again. Awesome. Thank you. And that's it for me, guys. So thanks, Cesar. Anyone else have a question? Want to come on stage? Hey, or not at all. I'm from France.

I use liquidity to to use the LP and USD beans and I would like to know if the bean token will be paid. Go. You will launch a new stablecoin. It will have to be a new bean token. So it'll be a new new VRC 20 topic. Oh, okay. Thanks. Thanks for the question. Yeah. I think it's Twitter himself now.

Yeah. Hi. Yes, I recently I saw the tweets from Binance saying that they had frozen funds from the Ronin exploit and I just saw a tweet from Davis Dao saying that Binance froze funds from their exploit and both of those exploits the attacker is tornado. So I was wondering if you'd contacted Binance. Well, the short answer is we're we've reached out to a lot of different exchanges and we're also trying to coordinate with a lot of different trackers and funds.

And if there's any news or relevant evidence that the funds have been transferred to exchanges, I think that will, you know, that'll be addressed when that happens. But all that's being taken very seriously across the board. Okay, cool. Yeah. Anyone else have any questions? Feel free to ask.

All right. That seems like that's all the questions, but this was awesome. This is super informative. Bojan, I don't know if there's anything that you wanted to add or plug from the liquidity side before we wrap up, but this was, this is really great. I mean, not really. If, if the store guys have any questions about equity, they should just come over to our discord.

We were very active there. And if our users have any questions about being stuck because the terminology is indeed a bit of a handful, they have nice dogs and friendly people as well. So just just come by. Totally. Yeah. Anyone who wants to learn more, feel free to hit us up on Twitter. Join the Discord. Yeah, always happy to share more.

Awesome. Thanks very much, guys, and good luck with with the race. Thank you, sir. Thank you for your time talking to.