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Transcript

[Music] the very best [Music] far away [Music] oh gotta catch em [Music] the very best [Music] my realm [Music] is [Music] all right good morning everyone or good afternoon or good evening whatever time zone you're on i'm just gonna play the intro video so eyes on the screen uh watch the intro video and then after the intro video we will introduce uh publius from bean and small cap we'll get the episode rolling so let's roll the intro gm anon welcome to today's episode of market capping before we begin i just wanted to remind you that i'm not your mom and nor are any of the speakers on this show nothing you hear today is financial advice you should be a big kid now make your own decisions do your own research and assume every cryptocoin you buy will result in complete losses if you ever plan on holding anyone other than yourself responsible for your choices please navigate to the top of your browser window where you'll find the friendly red close button and now let the episode begin boom all right so um i think we have everyone here small cap can you hear me i can how's it going everybody perfect and publish you here how's it going guys boom all right i think we're good to go um so sup chad um i guess before we get started i just want to say if anyone thought that intro anita was kind of cute um breeding ends today so you might want to find a mate like her or someone else and the discord and little chippies will be made and you'll get air drop them as nfts so enough of my anita shill let's go straight into beans um small gap maybe you want to kick us off horse yeah super super excited for this one um i think i think beans uh something that i've followed for quite some time i want to say it's one of the more complex uh actual protocols out there so super excited to have i'm publius with us today so get to pick your brain a little bit talk talk about how um beans really changing the game and uh also like one of the better algo stables out there so it's not an easy thing to accomplish so looking forward to the conversation why don't we excited to be here say why don't we start with you telling us a little bit about this profile picture you have in the corner um you're you're being with white paper but there's some story here isn't there so as most things in the beanstalk world at this point this was something that came from a community member who we i think a general trend is that we are very hesitant to put ourselves out there as publius because the ultimate goal is for publis to disappear but in the very early days people were harassing us to get on twitter which obviously was a good move and i think there's a decent amount of good engagement that we are now a part of on twitter as a result and this was some community member made it for us uh to add to the twitter profile so a great evidence of uh how fun the bean community is yeah everything's coming together i love it um okay cool so for me like the big thing from this episode to figure out is how the [ __ ] beans works like i know i know it's a stable coin and you know i'm sure a lot of us have had it before and we've staked it and we've tried to farm it but like if i think if anyone tells you that they really understand how this whole thing works they're lying a little bit so i'd love usually we try to skip this piece of the episode where it's like what is protocol x um but i think in this case you really do want to go into what is uh protocol x so if you want um i have like a screen share available so i can bring up like the beanstalk app and whatnot and maybe we could just get a quick rundown on like uh what each each piece of lingo means like what is a bean like what is the pod rate um how does the weather work uh what is the silo what is a unfertilized bean and so on would that be cool sure so maybe before we get into the specifics it would be helpful to put stuck in a little bit of context and yeah to answer at least at from a thesis perspective uh how how beanstalk works okay and while you know i think you're right to a large extent uh the understanding of beanstalk isn't there yet and the more people that understand it the better if you come hang out in the beanstalk discord there are a decent amount of people that really have a great handle on stuff so that's encouraging to us uh but let's get into it so beanstalk is a an issuer of stable coin and the stable coins are called beans the value of beans can be thought of as coming from two different places the main place that it comes from is the credit of beanstalk now what that means is that anytime the bean price is too low beanstalk tries to remove beans from the supply by borrowing them and burning them therefore as long as the protocol is viewed as credit worthy by the market as long as people are willing to lend to the protocol beanstalk can remove enough beans to create price stability so we can get as deep into the the credit facility which is the field on the website we'll talk about it in a second as you guys want but that's the that's one answer to where the value of beans comes from so as long as the protocol is viewed as credit worthy the value of a being should over time return to a dollar now separately there's no collateral behind beans and so at any given moment the actual price of a bean is exclusively defined by whatever you can get on the market for it and so in practice beans currently trade against the recurve on curve prior to the april exploit they traded against uh ether as well as lusd in addition to three curve and the hope is to add a bean eat pull in the not too distant future in addition to lusd and other assets soon but the concept is that the value of a bean is whatever you can get in the market for it and so the sep the second side of the market if you will is the silo where you have liquidity providers and bean holders and in practice the trading of beans and lp tokens or the conversion would be more accurate between beans and lp tokens within the silo which also functions as the beanstalk dow that's the the other place that the beans derive their value from so to some extent there's a two-sided market here there's the credit side in the field and then there's the silo where uh the liquidity and the beans live now there's also the barn which was added in in order to recapitalize beanstalk after the april exploit and that's sort of a temporary feature so to some extent happy to get into any and all of these components as in as much detail as you would like but that's the that's the starting point yeah i think yeah i think i think made a lot of difference just something to hit on that i have a quick question i guess about is like the first time i really deep dove into bean was was around like um when the russia you can't ukraine war started kicking off and there were sanctions everywhere and i was like i don't know where i feel safe putting my my stable coins and the market was in a bad shape at the time so like and naturally like i've heard of being in the past and started like looking this route what do you see most of the people in the community like are coming to use being for is it to bore the decentralization um is it for like the actual earnings of lping or like what what do you really see i guess a lot of the community using the token for outside of normal stables so there's an ethos component here and then there's obviously an economic component so economically there's both a very healthy active market for lending to the protocol in the field so if you if you if you think about it any sort of debt based system the primary indicator of health is going to be the debt level right and in practice if you if you're if you go to the website and you look at the pod rate the all-time pod rate what you can see is that over time the yes if you hit all time on the right you can see that the pod rate has started to to well let's talk about over time right so uh when beanstalk originally was deployed there was a lot of inefficiencies with the system and the result was that even though maybe you can also at the all time on the bean price charts that we can see them uh next to one another but the concept is what you can see is that despite the fact that the bean price stabilized after the initial pump and dump in september and was relatively stable for a significant period of time until january despite the bean price being stable the debt level continued to increase dramatically and so it was only after significant improvements were were made to the protocol via governance that the protocol started to deleverage and since the exploit there was obviously a major debt issuance event in order to recapitalize the protocol as well as a scaling down of the bean supply so less supply more debt means that the debt level increased but the fact that people continue to actively lend to the protocol uh in an incredibly efficient fashion is very exciting and there's actually a secondary market for beanstalk debt for pods uh which uh you can also so the concept is that people are lending to the protocol and then going to a secondary market potentially and then selling their debt if they need liquidity and therefore lending to the protocol go ahead before i think i think we still like when you say when you say to me right now like um people are people are buying pods or we're selling pods like for me this word pod is still just like a word and i think we're a little too far ahead like okay let's just go through each term one by one so a bean is supposed to be the stable point in the ecosystem right yes okay so that's done then what is a pod okay so a and i appreciate you slowing us down here so a pod is a zero coupon bond with maturity represented as a place in line so what does that mean so at some point up each pod will become redeemable for one bean okay however so the the time go ahead i was gonna say so a pod is basically something i pay for and i'm oftentimes i can pay less than a dollar for and you're emitting them quickly and at some point it's going to turn into a bean is what you're saying and it has some expired date and if that date passes it won't there's no expiring oh there's no expense there's no expiring bean stock will never default on debt okay so this pod at some point will convert to a bean and that's how the bean supply grows by converting pods into beans well it doesn't the causal relationship is sort of reverse so the pods are are effectively ownership of future bean mints however when the beans are minted is not determined by the pots when the beans are minted it's determined by demand for beans so whenever the bean price is too high beanstalk mints new beans now and some of those new beans are used to pay back pods which means that the pods become redeemable for beans right okay and pods are not the only way to make new beans beans can come into the system in other ways as well like unripe beans becoming ripe or something like that so when it comes to new beans being created the only thing that actually mints new beans is beanstalk now beanstalk mints new beans when the demand for beans is such that the price is too high so when the bean price is too high on average over the previous hour beanstalk mints new beans now the distribution of those new beans goes to paying back pods goes to paying silo members it goes to paying a fertilizer in the barn so the beans are distributed to a bunch of different places but the beans are minted effectively exclusively as a function of the liquidity and time weighted average being priced over the previous hour okay that that makes sense and so then this pod rate what is what does this mean is this how fast you're emitting pods okay i'm glad we slowed down so this is this is this is great yeah um the pod rate is the well it's it used to be the beanstalk debt level now beanstalk has a another type of debt that it also issues uh in the form of fertilizer but you can effectively think of the pod rate as the beanstalk debt level when beanstalk is optimizing around its own debt level it factors in the pod rate it doesn't factor in fertilizer because fertilizer is like a one-time temporary debt issuance so how is what is the pod rate actually it's the total amount of pods outstanding divided by the total amount of beans outstanding ah so it's the debt relative to the supply okay that's great and when i look at this ground then i want the pod rate to be going down or up so beanstalk targets an optimal pod rate of 25 okay meaning that in a in a perfect world for every outstanding bean it only has 25 cents of outstanding pods now currently the pod rate is obviously much much higher than 25 that's a function of the early pump and dump the ensuing inefficiencies in the model but and obviously the exploit because prior to the exploit the debt level had started to decrease dramatically but instead of thinking about where the pod rate should be exactly which is almost it is in practice impossible to define what the optimal pod rate is the point is in general a lower pod rate is definitely better for beanstalk yeah well um dcf do you want to open the market and i think i think this shows it pretty well like this would be the otc market for policies oh yes okay you can kind of look at like the price for pods where the pre place in line is of when they'll actually be paid back so if you're buying very cheaply and then you have a very high pod rate like it might take a while for you to actually be paid out um on like at that rate but with that like uh you can also buy at a discount if you want to skip in line when i see this place in line like i see 4 million here now if i was to buy out these pods at 64 cents each i'm making the bet that five million more beans will be minted and if they are i will get 27 754 beans and be able to sell them for likely one dollar and for that right i'm paying 64 cents does that make sense so a couple things to to say one is that because only a portion of newly minced to paying back pods it's not just the four million in change you have to multiply it by three because only a third of new bean mints going go to paying back pots so you're really the the expected delivery is when there's a little over 12 million beans minted which would result in four million pods becoming our vegetable now as you said uh it's not even the right to the beans like you they're just your beans so they harvest there's no rush to harvest them obviously in an efficient market you're gonna harvest and do something with them pretty quickly but the point is that they're yours now the the interesting thing to note in your calculation is that because the beans are only minted when the price is above a dollar on average over the previous hour such that you can think that there's real price discovery and the price actually is above a dollar when your pods become harvestable they're worth at least a dollar right like you're being the bean price is above a dollar so it never whenever our vegetable yeah exactly so you you don't know when you're gonna get that but you know that when you get that it will be worth at least 27 754. now it could be worth more because the bean price could be a dollar one cent or a dollar and three cents but uh it would be a minimum okay and you said they don't expire but so then what is this expires in column okay so that's just for the the listing so if i'm listing a pod a a plot a plot being a series of pods consecutively in line uh the current structure of the pod marketplace is such that you can only list them for a single price and therefore you may not want as pods or harvesting and the place in line decreases for your pods to remain listed at the same price so it's this is just a function of when the the listing expires as opposed to the pods themselves never expire this is just the secondary market this is like secondary market field it has nothing to do with the pods themselves that's great okay and if i want to get pods how do i get pods like is the best thing to do buying from the market from someone else or is it to mint them myself okay so the if you click on the field the the field is where pods are created so at the top of every season in beanstalk an hour is the season uh there's soil in the field now you can see right now there's zero available soil that's because all of the soil at the top of the season has been getting sown now beans are sewn in soil meaning they're lent to the protocol so at the top of every hour at recently it's been very minimal amounts of soil a couple hundred at the most because there hasn't been much downside price volatility uh but the concept is that at the top of every season people can lend beans to beanstalk depending on the amount of soil the pods that are minted go to the end of the pod line the number of pods that you receive for lending to the protocol is a function of the temperature so the temperature is the interest rate so if you're just when go ahead yeah anytime price is below one dollar there would be soil that's when you can lend it to the protocol you get put at the back of the pod line and that's really how the field operates it'd be the opposite side correct exactly okay got it this is making a lot of sense to me now and when it when i am uh buying these pods i can only pay eth like no take eath and then you use that eats to buy back um beans off the market to bring it back to one or what what happens when i lend this eats to the protocol so in practice beans are actually lent to the protocol beans are the only thing that the protocol borrows in the field in the field now the the the contracts on the website support in addition to going from beans you don't have to buy the beans in a separate transaction and then when the beans okay the protocol just supports going from eve buying the beans and then lending them to the protocol so it does do it but in practice the loan is in beans and it makes sense right because if you assume there's an efficient market for the bean price the and beans are being used in various places in order to acquire the beans to lend them to the protocol they they should be bought now you don't need to you don't assume a perfectly efficient market where that's happening every season but the point is it may take bean stock a couple of seasons a couple of hours to return the price to a dollar that's fine as long as the protocol is viewed as credit worthy it will over time return the price to a dollar by borrowing enough beans from the market okay and now if other people are willing to sell their um they're willing to sell their pods why would anyone ever give each to the protocol to create pods way way at the back of the line unless you give them this like retardedly good deal like right now is it wise for me to say like i think like 800 times three so like if i'm buying pods right now i'm betting that 2.4 billion beans get minted like who is making that bet or why would someone make that bet today if it fell below a dollar so a in practice the bet is a little bit different because at some point the minting goes back to half going to pods i don't have the exact number but it is definitely at least call it two billion i think that's a reasonable uh so it's still the point stands who who in god's name is valuing beanstalk at two billion yeah yeah exactly and so the point is there's a couple things to be said one is that the the temperature so if you go to the dune dashboard and you can see that the temperature is i don't know where it's going to be you're going to have to scroll a little bit uh it'll probably be in the field section though okay um yeah the weather okay so it used to be called the weather now it's called the temperature but you can see it's here to the top right so you can see that the that the temperature was actually much higher uh it used to be if you go to the peak it was at like 70 to 100 or anything and yeah something like something crazy like that and so the point is and this really is from a design perspective the point the protocol doesn't really care what interest rate it has to pay the only thing that matters is that over time the protocol is able to borrow enough beans from the market to return the bean price to a dollar now it's worth saying that had the protocol had the current implementation as opposed to the implementation that was rolled out a year ago and then was improved over time it's very unlikely that the interest rate or the debt level would have risen to the levels that they did but on the other hand we really do believe from a first principles perspective that the market sets the rate and the rate is the rate so the fact that uh right now people continue to lend to the protocol valuing it at 2 billion but at a 50 x return effectively uh means that people are saying well there's their expected value calculation is that there's more than a 2 percent chance that being stock reaches a two billion dollar market cap so that's the bet when you put it in that context it actually doesn't seem that crazy uh and we don't think it's crazy at all frankly uh but i mean but that that's that's like i was going to say that's right where frax is i feel like most of the time right at 2 billion i think dies dies like six i was just oh yeah it's not impossible definitely oh like possible first yeah and i mean you're also you're also making a bit of a short-term bet so like i believe it's at what beans beans at about a hundred million is that the case or i i believe so prior to the exploit the market cap was at a little over 100 million uh now the bean market cap i don't actually know what the current supply is it's like 20 million or something uh it's uh i don't even i don't even know the way around the website right yeah go to market 31 million yeah so there you go so that's the current bean supply what do i this goes to show how focused we are on the day-to-day metrics it's like now just got to get the theory right and so uh the the current bean supply is 31 million and they're trading at a dollar so the the market cap is just about 31.5 million as well well i mean so i i guess the way i would look at it too is you don't need the entire 50x if you're if you're gonna make a bet and say like hey i'll deposit ether i'll like blend to the protocol and like it won't be paid out until this does a 50x to 2 billion like you can technically sell if you think like hey like stable coins are being like hammered by like regulation the fed over the next like like i don't know six months you can make that bet now that more people are gonna join then you can sell on the otc market at maybe 25 x if you think it's going to grow just over those six months so you can still take your gains before you get clear back to i guess the 2 billion mark but you do need a buyer so um you might have to take it at a slight discount so if we go back to the market on the beanstalk ui you know it's unfortunate there's not a great graph up just yet to show how this works but the end of the pod line uh people are paying for pods uh at a premium relative to the current temperature meaning that the end of the line there's a race uh there's a race to lend to the protocol where people are are trying to lend to the protocol and then can just liquidate on the secondary if they want to do that arbitrage so the fact that the and if you look in practice the implementation of the pod marketplace which was uh like a community project uh was a major step in the the growth of beanstalk the fact that people started to have liquidity for their pods was a major risk-off event for pods obviously and totally changed the dynamics of the marketplace are we able to see just the pods changing hands like is there a ui or something where we can be like oh okay people are buying them this is how much people are paying for them so if i want to get some pods like i can see what other people are trading so maybe i should consider the same yeah so it's you make a great point there should definitely be a history on the ui there's it's a new beanstalk ui since replay so it's not there right now but if you go to the beanstalk discord uh there is a channel for the market and you can see all of the transactions happening in the in the market so if you go down to the yeah go up a little bit uh in the exchange i think it's called maybe it's go up to pod market there it is so the pod market is right below that yeah so that's the you can see all the activity happening here oh well people are buying them oh yeah there's a lot of activity i mean from like a i want to say a little bit more of a risk on like uh if i if i'm taking it as a stable position it's risk versus reward like i mean i think that's heavily um like heavily favorable if you're looking at like a 50x over time especially if the rate it's growing is super high um i think there's a very good chance that as like utilities added that it gets back to some of those levels um even if you do a two or three x in actual supply and eat up some of that pod line like i mean that's a huge gain from uh like i would say a stable coin perspective so i kind of like it so how do i figure out how i make money from beans like if i that you got to do for yourself [Laughter] like what i'm trying to say is okay i can buy pods for cheaper and i can bet that these pods become real beans and then i can get a real dollar for them okay that's one option two is what i can buy a bunch of beans and then once i buy beans i like put them in the silo and i earned more beans is that the the main thing here okay so yeah so let's wrap up our conversation about the field which is the lending facility with two just two side notes and then we'll talk about the silo which is the other half yeah so the first is uh today we just had a call with the developers that worked on the original version of the pod marketplace and they're almost done with a pod marketplace v2 which is going to support not just fixed price functions where people could say okay like these pods are being listed for x dollars or i'm placing a bid for x x cents of you know beans per pod it's now going to support dynamic pricing so people are going to be able to literally make a curve all along the beanstalk pod line on what they want to bid and list so we think that's going to be a major upgrade so it's going to be really cool so that should also make liquidity much deeper and further bolster how how the field works now one thing that i think we would just use this opportunity to say is that from an incentive perspective there's a couple things that make beanstalk attractive to lend to from a first principles perspective that it's worth saying before we wrap things up in the field so in addition to the fact that the pods never expire and are paid back on a first in first out basis and the weather excuse me the temperature doesn't change that much it basically creates an incentive structure where if you view bean stock as credit worthy uh the only calculation you're doing is what is the return that i need in order to buy beans and lend them to the protocol and in practice the lower the bean price gets the more the multiple gets for buying the beans and then lending to the protocol so beanstalk doesn't really focus on changing the interest rate changing the temperature fast in order to return the price to the peg ins instead it's willing to be slow and it accepts downside being priced volatility as regular and commonplace and just part of the part of the game and so the point is not to create zero downside volatility it's just to be able to over time attract enough lenders and the combination of the the slow changes in the interest rate with the first and first out payment schedule makes it such that if you view right now as a good time to lend to the protocol you're incentivized to do so immediately because otherwise someone else might and then you're going to be further back in the line and that is what creates the efficient lending market so that's how the field works and if you if you put it in perspective the first beanstalk pump and dump cycle in september where the price went as high as four dollars and as low as 26 cents that was the pro it took three months for the price to really return back to a dollar or at least a month and a half uh that was the proof of concept that the field worked more or less now it had a bunch of problems but that was the core demonstration that the the field works now we can shift to the silo and talk about the silo but the silo has really started to shine post december let's call it when the silo was upgraded to facilitate convert so unless you guys have any questions maybe we can switch from the silo switch from the field to the silo yeah let's do that gm add-on oops tell us about the silo great so the what is the silo you can think of the silo as sort of a beanstalk bank account but in reality it's the beanstalk dow so anyone who's holding beans or lp tokens that are white listed for deposit that in reality have been exposure can be deposited in the silo in exchange for stock and seeds now stock is the governance token it entitles you to participate in governance votes and also entitles you to a portion of new bean mints seeds grow more stock over time and we can get into how that the incentives around stock and seats work to minimize bank runs but the starting point is people can deposit beans and lp tokens into the silo in exchange for stock and seeds and anytime beans are minted uh a portion of bean mints currently a third are distributed to stockholders pro rata based on stock ownership does that make sense yeah and you so i get bean or i get um bean liquidity and i put it in the silo and then that's going to give me stock and then stock is what i use to vote and make decisions and depending on which asset i get i might get more or less seeds so if i put beans i get two seeds if i get put lp tokens in i get four seeds and it sounds like more seeds means more governance power like the seeds become stock is what you're seeing and then a third go to stockholders that's what i got so let's get a little bit more into the weeds on how the the stock and seed system works so stock seeds yield more stock over time okay and if if you withdraw your assets from the silo you have to forfeit all of your stock all of your seeds and all of the stock that has grown from your seeds and so the longer and it's like the deposit or correct i'm not familiar with whatever you just referenced but if you leave there's an opportunity cost associated with leaving in the form of all of the stock from the seeds and the the opportunity cost increases on a given deposit linearly over time because stock grows linearly from seeds over time now it's worth saying that newly minted beans uh those have the lowest ratio of uh st grown stock to bdb to being denominated value which means that there's basically no opportunity cost there is no opportunity cost associated with withdrawing and selling new beans so there is real price discovery every hour but assets that are deposited in the in the silo are incentivized and the incentive grows through an opportunity cost that grows to stay deposited longer now the the important caveat here is that that opportunity cost exists at the individual level because in fact the stock grows linearly from seeds the way the way it works is that your like let's say that i've been in the silo and my stock from seeds has doubled so i've been in for x period of time and my stock from seeds has doubled my original stock now you come in and so now we're both growing linearly by the time i've hit 3x my stock you'll be at 2x and by the time i hit 4x you'll be at 3x and so the relative benefit to me actually decreases this is decentralizing over time the ownership concentration decreases over time but individually the incentive is such that uh you're not incentivized to withdraw from the system and if we play if we play this out even further uh when let's let's play this out in in a bank run scenario as people start to withdraw and forfeit their their their opportunity costs in practice your relative opportunity cost becomes more meaningful right the grown stock that you've you've accumulated becomes more of the total grown stock in the system so the total premium that you're paid for keeping your assets deposited in the system relative assets increases in a bank run so it's highly anti-reflexive from that that capacity nice what is uh what is on right being so three being three curve tokens are the assets having to do with the recapitalization of beanstalk so people that had beans or lp tokens prior to the exploit in april they received unripe beans and unripe lp tokens that are over time being recapitalized yeah that makes sense why is there such a small amount in this in this governance piece like the total value deposited seems to be like all all four of these columns are sub 2 million but there's like 30 million beans wrong i think it's wrong yeah the this is something we've mentioned to the people working on the ux that it's a little confusing but the the the reason just to explain it is that the tvd the total value deposited for the unripe assets uh is currently being reflected based on the chop rate which is the without getting into the details of the barn because it's not that substantive the point is that recapitalized assets are subject to a vesting schedule which right now is like 99 point something percent and therefore like there's a heavy discount being being put on the actual deposited value i don't know how this 200 000 and 600 000 is being computed but the actual value of the unripe beans and unripe lp tokens than that in particular the unripe lp tokens i see okay that this makes this makes a lot of sense and where can i see like if i deposited a bean how many like at this point i will have this many stock or at that point i'll have that many stock is that just something i have to calculate myself so that's them you're on the silo page so that would all exist here if you had any deposits and then there's also a balances page that has more high level balances but if you wanted your silo balances this would be the page where you would see all of that okay your earned beans are the beans you've earned since the last time you claimed or interacted with the the silo your earned stock is the stock from seeds the plantable seeds are there's lots of different assets we can get into them as much as you'd like but i don't know how helpful it is to to get into the weeds on all things like uh a lot of the time on what is beans actually basically all the time what is being so that was very helpful on like learning what it is um i think one of the key things i wanted to figure out now is say i like i think i saw a tweet recently that said because the bean price is one no new beans are being minted right now which means nobody is actually getting any new beans so there's not any yield is that true or how do you think about that so it's it's generally true from a high level but in practice it's not really true so the the result the reality is that the further the bean price deviates above and below the peg the more minting of either beans or soil to borrow beans there is now the tighter the egg the less beans and soil that need to get minted now the reality is that there's basically been no volatility but that's really a result of no new demand so it's a combination of there's not a lot of demand coming in and there's not a lot of supply leaving the system so from that perspective the system's just chilling at a dollar and that's great from beanstalk's perspective so the i think that the where it's not exactly accurate is that there is like a couple hundred beans minted not if not every hour but every couple of hours and therefore at the current scale i don't know what that translates to on an annualized basis but i bet it's actually a pretty competitive interest rate which is why i think people remain deposited in the silo right now in addition to their longer term uh interest and their the opportunity costs associated if i wanted to figure out what that rate is is there an easy way to do that not right now i think that the there's there's some work being done to get get some of those metrics up and running but because the protocol just replanted like less than three weeks ago uh it's not easy to have like a an apy or you can get it like a seven-day apy uh but not a 30-day apy and have it haven't yeah we're not inclined to like push the people running the the ux for example or the ui to to like throw those numbers up before there's a little bit more data and from our perspective there's no reason to rush it okay cool and uh sorry next question is you have you have a lot of you have like 30 ml beans we're saying in in terms of like that or minted right um i know because of there's like some of them in the lp and some of them are like slowly vesting and things like that of those 30 million how many are in like end user hands that could leave like what i'm trying to figure out is how much what's this yeah like everyone wanted out of beans like how low could this thing go right now if i'm a buyer of beans and i want to measure my like potential downside for today like before you started minting because right now you're not minting so hack victims aren't getting free a bunch of free beans so they can't nuke into the lp pool but uh if i'm buying and holding and earning my yields or whatever on them um how do i how do i figure out like my downside risk versus my first my yields what i'm trying to get at yes so it's i don't i don't know the exact numbers to a large extent because as we're as we're finding out on this uh this uh stream a lot of the data isn't quite at our fingertips yet on the ux but the from a high level if you look at if you're on the silo page you can see that there's uh 1.46 million beans in the supply in the silo and then there's also 1.2 million bdv in the right that makes sense yeah and then you play out the the unripe beans that's another 200k uh in value and then 600k in value from the lp tokens so you basically say one and a half mil plus 600 k gets you to 2.1 then the 200k gets you to 2.3 million and then call it another 300 000 gets you to 2.6 million so 2.6 million beans is the total beans supply roughly that could be sold right now and then if we look if you click on the top right and you look at the at the be in price you can click on the curve pool and go to the curve website and and put in what would actually happen if you if if there was a well there's 30 ml of liquidity so i'm yeah i'm sure there's no issues selling out like you know two million and half of this so like two or three mil of beans can definitely be sold and mostly get a dollar like that should be fine and you really should consider like like lping and like net new beans being dumped on the market because it's not really how it worked expect oh i mean when i played it it was more like beans three curve and then you're earning curve and really like you're earning um you're earning stock and um you're earning seeds so you're not really earning beans unless the price is above one anyway so it's not like there's a ton of new beans to dump on the market so i mean there is some out there of people who could dump like i guess what they have in lps but i mean it's only really printing your beans of one is there a curve right now like does this lp get curved okay no it's just being stuck native rewards and it is worth saying that there was there were a couple of larger additions to the curve pool and then withdrawals from the curve pool on the order of one point something million and 2.4 million or i think in separate instances and the price went as low as like 92 cents and then quickly returned to a dollar and the way that it did it is is through convert in the silo and so this is the one to go back to the original question you posed of how does beanstalk work in addition to the field the silo has turned into via bips via beanstalk improvement proposals the silo has been turned into sort of a major component not even sort of it is a major component of peg maintenance at this point so how does that work so if you if you're looking at the at the silo you see we have these being we have been in being three curve and unripe being an unripe bean three curve uh the concept is that anytime the price is too high people can convert their beans that are deposited in the silo or their unripe beans into lp tokens and if you think about it a bean is obviously a hundred percent beans but an lp token is not a hundred percent beans so in order to go from a bean to an lp token and it has the effect of selling beans into a non-bean asset which the cells like fracks the lp half backs the bean half or the the three curve half backs of bean half in a way it makes the peg better too and so by adding or removing beans when the price is too high beans can be added to the pool via convert and when the price is too low beans can be removed from the pool via convert all in a way that maximizes your stock yields in effect beanstalk is paying people a slight stock premium for converting to the peg the concept is people have the opportunity to buy beans below a dollar and sell beans above a dollar without leaving movies between the pools oh that's cool correct so they can start to perform peg maintenance arbitrage while collecting the scene image if i want to convert where do i do that is there a ui for it yeah so if let's let's see you click on the bean token yeah click on bean yeah oh and then there's a couple there's a convert right there you can do all the stuff i probably want to convert to three curve that way i'm selling but keeping all my stuff in the in the rewards when it's below i probably want to go from three curve to bean so then i'm kind of like buying back beans but keeping all my rewards yeah it's a yield maximizing strategy within the silo to do that yeah okay yeah that's pretty cool okay now you can do it as you claim i believe as well like when you click claim and i know you can't right now because you don't have stuff deposited but you can convert i see okay that's cool yeah that's a really your ui is like better and better okay so now where we're at is beans how beans work we know now we know how to farm beans we know how the three curve pool looks we know how much could realistically exit and leave on us at any given point now for beans to work and grow we need more and more um beans to be minted right because that's what's going to get hacked victims repaid that's when they're going to get the fertilizer buyers paid and that's what's gonna like get us to this like 2 billion plus supply what's your like bullish narrative or like what's the future of beans look like over the next year to get two billion beans minted like i'm sure you agree that if you just stay here at one that's not gonna happen we need people to want to buy beans so going forward what's going to make them want to buy them so to some extent the bean supply was growing exponentially prior to the exploit and was over a hundred and something million and it was largely just due to speculative demand for future growth in the bean supply which is fine but not great and so to some extent we're not really concerned with whether or not just by staying at one that's enough to grow to a couple billion and uh reach the current supply of the other stable coins even even usdc or ustt uh from our perspective it i mean to answer this question it's good to take a step back and and you know if we have a minute to digress on why we actually started working on beanstalk in the first place so currently there's no real businesses that are running on d5 if you're going to try to build your business on decentralized primitives you're kind of an idiot because there's at least at one point in the stack there's going to be a piece of centralization that totally ruins the attempt at decentralization and despite that there's so even if you're going to try to do it there's a huge cost associated with doing stuff on chain in addition to the transaction fees which are hopefully getting solved over time there's a major economic cost in the form of uh non-competitive carrying costs associated with doing things on chain so why is it that a business built on bitcoin or a business built on ethereum can't compete with a business built on dollars it's because the cost of using on-chain dollars is totally non-competitive with the cost of using off-chain dollars and why is that it's because the the federal reserve heavily manipulates the car the interest rates by buying bonds uh with senior rich and the point is that the seniority of the u.s dollar is what in effect facilitates these really low interest rates and businesses built on fiat money have seemed to be able to out-compete businesses built on uh hard money like gold or bitcoin because of the the borrowing costs and beanstalk is able to offer really competitive borrowing costs uh because of the distribution of bean senior rich and because the being senior is is distributed totally transparently uh the carrying cost over time can be really competitive with the carrying costs on uh off chain dollars so what does that mean in practice it means that people that are in the silo are earning this competitive carry and are now looking to do things so if they have to withdraw their beans now there's that same opportunity cost associated with using any other stable coin and there's no real reason to to do anything and so the thing that gets us excited is economic activity starting to happen within and on top of the silo so people have all of these deposited assets that are earning positive competitive carry in the form of being senior age and then they want to do things with them they want to start using these deposits as money and so what we're really interested in and excited about is the formation of a complex and sophisticated real economy on top of beings within the silo and we think that for the first time real businesses that are just trying to run a business can build on top of beanstalk or integrate beans into their balance sheet as a way to out compete current businesses and we think that economically that's something that it's going to take a long time to play out at scale but is something that can start to happen at a smaller scale sooner rather than later and we look at root uh which uh i think you mentioned earlier uh is they're building prediction markets on top of the silo they recently announced a nine million dollar funding round in order to develop uh prediction markets and uh interest rate swap markets on top of the silo so that's just one example of what you can start to do on top of the silo things as simple as betting and maybe maybe to illustrate why this is so powerful with an example with with the on chain betting example so right now and we've had for a long time agar and poly market and people don't use them why don't people use them it's because the cost of the dollar is on chain to make markets on auger and poly market they're just way too expensive uh in order to compete with vegas to compete with traditional uh betting markets the the cost of capital it would need to be much lower people are paying three five ten percent to borrow usdc on chain to make these markets on prediction markets they simply can't make lines that are competitive with traditional vegas betting markets whereas if you're making a betting market with your deposited assets on top of the silo there's no opportunity cost associat whatsoever with making a market and therefore people can participate in that growth participate in the upside in the ecosystem while performing real economic activity and that's really where you get the best of both worlds so so i this one this one excited me like when i saw this example because i mean i'm a bit of a degen so i i gamble and everything else so i saw this and i thought it was very interesting but if i i just want to make sure i understand correctly so if i'm trying to make a bet on say the super bowl that's what like months away you're probably talking like five six months out so if i do that on top of or through root protocol on top of the silo because of the interest earned on the actual cost of capital like um there's a lot less i want to say downside for both parties um and it's a little bit more efficient than doing it through like a vegas market but i i would say like um if a building if you're building that on top of the silo where does where does the yield go or what happens if like it doesn't make uh like i want to say if it doesn't make it clear through um the silo by the time the bet ends like what what exactly is that look like um just trying to understand where i guess um the benefit lies from like building on top of the silo there sure so in the case of let's take the super bowl bet as an example there's a couple ways that you can do it so let's say you and i both have deposits in the silo and uh i'm a giants fan so let's say that it's the giants against who do you root for i guess it's got to be a c team all right so it works out so it's the giants and the steelers and daniel jones against all odds has led the giants to the super bowl let's say that the the odds just to keep it even uh to keep it simple are even uh vegas is pricing things as as a coin flip so you and i uh can i otc and do it through a route but more in practice there's going to be a an order book where people can make bids and make offers on this bet people can offer uh a given line so i can say i have a hundred beans in the silo and i want uh you to anyone can match me and take the outcome i'm betting on the giants anyone can bet on the steelers if they're willing to put up 100 beans and then so let's say our 200 beans are now locked in a route over the next six months until february those 200 beings are going to compete at their senior age now something that's pretty cool about betting and is that they're implemented in a in a way that is sufficiently flexible which in general that's one of the building ethoses around the community and people tend to build things that are highly flexible people should be and generalized in addition to flexible people should be able to not just bet the beans themselves where you and i settle uh the original capital where if the giants when i get your hundred beans and if the steelers win you get my hundred beans we can also choose whether or not to bet the senior ridge if that makes sense so we can also throw in hey i'll bet you the hundred beans plus whatever we earn on it or i wanna keep whatever i earn on it in the meantime but uh but i'll i'll bet the hundred being underlined if that makes sense so all of that like a rebate i guess if you would all of that customizability is going to exist that's cool i was thinking no i i was just going to say i was thinking more like person versus market or person versus vegas than pvp but it makes a lot more sense in that example that you just gave like that's so much more queer than i was i was thinking but go ahead dci i was going to say like olympus really tried to do this a very similar strategy right where they were like okay we're building the own economy around geom and people are going to be able to build all these apps and then they can do whatever they want with their rebases and keep their original thing there was like olympus give where it was like oh you could uh come use our app and the excess rebases will give to charity and you keep your original home or there were like gaming apps or like people had all these ideas right but the own economy never it never really took off people didn't build on top of it even though it's like a far bigger market cap than beans like what do you think you're doing differently that will make people say yeah let me build my business on top of uh beans today so i think first we're less focused on today and think that from a lindy effect perspective this is a long battle and becoming money and something that businesses can use as money that's a decade-long blog so i think that the starting point is not how to get that done today the point is instead how to just continue to build out a really robust censorship resistant truly decentralized and permissionless tech stack that is going to create the most bean price stability with the lowest amount of debt and if that platform exists we think that from an economics perspective and this is something that i think goes to like core economic theory and it's not something that we claim to be an expert on uh but we we think that the competitive carrying costs in addition to price stability uh those are really the two things that determine uh the utility of a currency and the i think that i think that we'll have to see how it plays out but with sufficiently low volatility and sufficiently high interest rates uh in the form of silo yield uh or you can think of it as competitive carrying costs uh however you want to think about it we think that businesses will in in the spirit of capitalism we'll just figure out that this is better to build on so you if if economically there's money to be made we assume people are going to try to make that money and the structure of beanstalk is by definition there's lots of money to be made through all these different incentives the beauty of how beanstalk works is aligning a lot of different people that don't give a [ __ ] about one another that just want to make money and somehow create something with low volatility and competitive care and costs and a low debt level and that's the point and so it's not a question of like right now it's bound to happen if the system works it's gonna happen and therefore we're less focused on making it happen today and more just building out the the product properly yeah i agree with that like if enough people hold beans like if there is like 100 million dollars of people with beans and they put them in the silo and there's nothing to do what's in the silo businesses will naturally build around getting that capital to do other things because it makes their business good and there's nothing else to do with 100 mil so those people might as well use these businesses that totally make sense so the step before that that is how do you get 100 ml to go into the silo without those businesses existing for me it just feels really chicken and egg like so many people told me oh you should get some beans but i'm still so stuck i'm like right now i have let's have a million usdc why would i convert it would make a lot more sense if there was an apy on the on the website yeah i just feel like i need a reason to get would be my advice i i think that the point is that at this stage of the game there is some speculative aspect of holding beans because there's no businesses that accept beans now it is just it should be said beanstalk grew from 100 beans when it was deployed in august of 2021 to something like 120 million beans which is the range of what you're talking about in a little over eight and a half months prior to the exploit in april or under eight and a half months and so the point is beanstalk was just redeployed like two and a half weeks ago it could take eight months it could take another year like sure that's totally fine so we're not in any rush but it also should be said that if you look at the size and liquidity of beanstalk three weeks prior to the exploit it's smaller than it was right now so we're really one growth cycle away from that scale and therefore we're we're really not focused on it at all and i i think it is just worth saying to to uh finish the businesses building on top of the silo there's a significant friction associated with going from fiat back into crypto and vice versa if you have businesses that are choosing to operate on top of the cylon have some or all of their uh cash and their their business happening in beans they're going to be willing to offer slight discounts in order to get around the friction of going from fiat to beans and back and forth to people that are willing to pay in beats and at that point using beans actually does have real utilities so there will be a market that forms here just because of the economics it's just a question of when and there do seem to be lots of entrepreneurs in the beanstalk ecosystem that have started to realize there's stuff to build here and businesses to build and we we are hopeful that if the protocol continues to demonstrate efficacy at peg maintenance uh it's just a matter of time i i mean this is just my thought process too is it's almost a good hedge as well like if you're thinking like hey what if something does happen to usdc or there is a big freeze and it screws over die and you're somebody with like high six figures seven figures even eight figures in like die in usdc if you pick up like even i don't know 10 to 50k in in beans and something like that does happen you're gonna see a ton of money flow from those stable coins into beans and like say two billion dollars does flow in um in a pretty short period of time because like there is a big freeze or regulation happens like if you put 100k in and you get a 50x on it that's a 5 million and even if you got screwed on a different stable position like you were hedged by being in bns money flows into the decentralized option so like i almost kind of look at it as like a hedge on some of the like regulations that could happen as well i mean it doesn't mean it will happen and like there is risk involved with it but if you are a massive stable coin holder like i feel like it's a good way to take some of the risk off the table um of like some of the regulations that are out there just kind of my thought process though yeah for me my take there is like i feel like it's very like if usdc died i don't know if everyone would be like all right beans is the beans are an underback stable is the solution like it i i feel like it is some sort of like backed by eath money would be the next best solution but and i also think that from last time it's like beans grew really quick because we could all we all believed in under collateralized stables but now we have to fight the narrative of uh the ust unwind and we have to fight the narrative of this thing is starting at negative 70 million so i agree with uh with publius when you say that you have to really take a long-term stance here and think if we build the right mechanisms and we can hold the peg and we can do it dollar by dollar then we get there but i don't i don't think you'll like overnight have like a few hundred mil uh milk created out of nowhere unless you can create this like new type of ponzi that we haven't seen yet in crypto it's just like yeah i mean i agree with that and i'm not saying like i don't think that there's going to be that much usdc regulation that happens but you kind of never know like there's some big scares with dye like what a week or two ago everything's blended together at this point but like what if i mean i mean it's a pretty big what if but what if they decided like hey like we'd rather have our treasury backed and beans something that's decentralized because they were talking about going entirely to eth but like you have to kind of consider like that there's a reason for that like me even if they want to go partially to eth like why not use something like being if if you trust it and it builds it over time that probably won't happen tomorrow but the point is like it is kind of a bet on decentralization compared to a lot of the centralized stables that are out there because they they all depend on each other whether it's through the liquidity pools and curve or like what their actual backing is done by like like it dies mainly backed by usdc which presents some problems for it so like i'm i was just thinking like as a way of like there's being bigger bets on decentralization and kind of hedging some of the risk like i do think it's there but like i agree like i don't think you're gonna get like two billion dollars of growth overnight like it is a long longer term play but um yeah i think you know we're 15 minutes over so not a lot more time publicly is there anything like specific else you wanted to touch on did we lose him well oh there he is thinking think in general this has been like a very thorough overview of beanstalk and its two main components the silo and the feel maybe the the thing to finish on is and it goes to your conversation about die there's lots of fees that are currently being taken all across d5 and in general we view fees particularly on open source code as a real race to xero and when you think about what beanstalk has been able to do or demonstrate it's an ability to attract liquidity without fees it's attracting liquidity through seniority and so the tech stack and all of the products and protocols that are built on top of beanstalk are likely and hopefully in a trend very quickly towards being totally fee-free in terms of liquidity separate from the gas fees that's a separate question do you think they'll just take part of the silo mints like as fees instead who's that like the app builder or whatever that uses my beans in the silo i won't charge any fees so there's no fees but i'm gonna take part of your like silo rewards is that how you see it working i don't who's who's using your beans like the business so i make a business and that business says oh come use your beans that are in the silo to um make bets on the nfl and you're saying i don't have to charge any fees and there are no fees to bean to keep the to keep the stables in there so how does anyone make money then like i would imagine they take a piece of the silo as their fees or you think they'll still charge fees and beans for themselves why i think that the money to be made and it is kind of a like a revolution from an economics perspective is not in the the fee from people using the software it's just in the use of the software itself so instead of charging a fee you can just provide liquidity on an order book and there's some vig in the in the form of a spread through market making so people who are just using the protocol are going to make money from using the protocol and providing liquidity so i think that the cool thing is people can develop tech that they want to use and then just by using it there's alpha on top of the beta of having assets deposited in the silo so there's no need to charge a fee for using it because just by people using it you'll have more alpha because you'll be a participant in the the the system that you've created that was very big brain i feel like i need it i've repeated to re-watch this episode to hear it again slowly i mean just the idea behind bean and like the math like reading the white paper i remember the first time i looked through it and i was like god damn this thing is just so big brained like it's very impressive that you guys put this together like i don't know if you've public with what your backgrounds are but it's it's insane that you guys have been able to like put something this complex together that works not only that but also how you've handled the hack like i feel like after the hack you didn't just give up wrap up and and say call it a day but you made like this really cool mechanism that gets the people helping save you paid slowly it helps the people that were hacked still get possibly make all their money back if they stay aligned with beans and say helping beans and they are incentivized to make it grow and even put in the work to make like beautiful new eye new uis improve the mechanisms etc etc so i think like seeing how you handle the hack gave me a lot of trust in the team itself and now it's just like i feel like if you can better advertise the yields maybe or build like a good curve pool or have a good utility or reason to use bean like that's the last missing piece to get people to mint them and then i think like some strong like backing against why this isn't like ust or like helping people understand what their downside risk is and how that would work if there was a bank run those are the pieces that are scaring people it's not really like a few months ago nowadays in crypto where it's like everyone's willing to try everything and like we love to take on risk nowadays it's very like how am i getting [ __ ] here and i have to get proven that i'm not getting [ __ ] uh it's just like the vibe i get from general crypto twitter nowadays or a fee that's a pretty healthy attitude right the assumption i think to to some extent people are very comfortable and and to some extent the the structure or status of the current financial system is that it's got a lot of bubble wrap and it's very safe and one of the things about the space that we're in is it really is the wild west and in addition to it's unclear whether mechanisms are good or bad we don't know which mechanisms are good or bad uh it's unclear as a result it's very hard for people to determine whether like the people working on the mechanisms are good or bad or their intentions are good or bad uh whatever good and bad means but i think to some extent it's quite clear in the case of markets there's a lot of people that are grifting or looking to to to take advantage of things and the while it's unfortunate that the exploit happened uh we appreciate the kind words and that it was an opportunity to demonstrate that uh we are we believe that the the stuff that we're working on is really important and serious and not worth throwing away because of an issue with regards to the governance and we do view it primarily as an economics problem that's being solved here and the the governance is is something that we think it's a lot easier to solve than the economics is so the fact that we're we're on the right track with the economics leads us to be encouraged that the the the rest can can be sorted out so we're encouraged that there's an incredible beanstalk community that's all trying to figure this out and asking the tough questions and taking part in this development and the community is amazing i don't know if it's just because they love beans or because you've really aligned everyone that beans has to work for everyone to to make it all back in more but your community just what's the difference that is true they are they're um working hard they are very active um and it's like you know i told the bear chain guys the same thing that this is a community that i never see stop talking they're like responding to tweets they're always chatting and discord they're always helpful so i recommend anyone that's interested in it um just like jump into the the discord and there's like a particular member mod 323 um but last time i had questions i came in there like he dm'd me he was willing to do anything to help me like really understand it so if you have questions or you're stuck like i'm sure he'll help you out on discord tag you in you guys have a lot of really cool bots and things like that so discord is probably the best place um to just like get all cut up and and there's a lot of stuff we didn't cover so be sure to ask about like the unripe beans and the fertilizer and like those kind of things as well yeah i i would i would just add like to the community piece like i feel like it was one of the best kept secrets of defy before the exploit like when it actually happened the amount of like just absolute chads on on crypto twitter and like just around that said like hey like i was in bean and like like like let's figure out how to fix this like i mean it was all of the best people that i knew like were all in it and i think it's just as it hasn't been talked about as much because it is a little bit more complex than your average protocol or to be able to explain a play to your average user so i think it goes a little bit more under the radar but like the people that are using it are all just like top tier d5 members so i mean i know that you guys have a like a bunch of beasts in the community that are really pushing it forward as well so we call it the beanstalk brain trap we don't know how it got created but somehow there's just a bunch of really smart people that spend their time on being round beans explaining beans it's pretty cool it is pretty well and it's a fun name and it's fun memes and everything like that um so yeah i really gotta go sorry guys um yeah i'm already hella late but thank you um i'm gonna end the stream and the stream here but thanks for having us and i'm really excited to see beans uh continue to grow and and hopefully we do get those two billion minted and maybe i'll mint some pods uh at the end of the line just in case they happen peace guys well thank you thank you guys for having us yeah no worries bye