• Recordings
• Notes
• What is the field?
• Is Beanstalk a Ponzi?
• Transcript

Recordings

Notes

What is the field?

• The field is the decentralized credit facility of Beanstalk. When there’s an excess supply of Beans or a lack of demand at the margin such that Bean is trading below a dollar, Beanstalk is able to create demand for Beans by attracting lenders; people willing to lend Beans to Beanstalk. In this way, Beanstalk should be able to remove enough supply to return Bean to peg.
• Soil is the willingness to borrow Beans. Each unit of Soil represents one Bean to be borrowed/lent and burned. The weather is the interest rate for lending to Beanstalk. When you lend Beans to Beanstalk, you receive pods. The quantity of pods you receive is dependent on the weather. The weather can change up to 3% ever season (hour).

Is Beanstalk a Ponzi?

• The essential aspect of a Ponzi is that new money coming in is used to pay earlier investors. The key thing is that you’re ingesting money and then the amount of money you have to spit out is purely a function of the money that comes in. That’s basically the collateral problem, which is the core problem that Beanstalk ultimately solves.
• Because Beanstalk can mint Beans, and in the future when there’s excess demand for Beans, Beanstalk can mint arbitrary amounts of Bean to meet that new demand. In reality it’s not that new money is paying back old money, it’s that the creditors are creating utility in the form of Bean stability and by creating utility for Beans they have a reasonable expectation that in the future there will be more demand.
• You can think of lending Beans to Beanstalk as providing a service in the same way Ethereum or Bitcoin miners are providing a service that creates a certain utility and then they receive a return ion the form of seignorage of their native currency.

Transcript

welcome to the beanpod a podcast about decentralized finance and the beanstalk protocol i'm your host rex before we get started we always want to remind everyone that on this podcast we are very optimistic about decentralized finance in general and beanstalk in particular with that being said three things first always do your own research before you invest in anything especially what we talk about here on the show second while you're doing that research try to find as many well-developed opposing viewpoints as possible to get the best overall picture and third never ever invest money that you can't afford to lose or at least be without for a while and with that on with the show [Music] so the next component of being sucked that i wanted to talk through with you is the field and um as folks interact with the protocol and with individuals that are involved with it um the field and and pods are usually one of the first items that are discussed and there's a lot of talk around things like interest rates and return on investment and so it's probably worth digging in a little bit and talking about those components so police would you talk us through the field in general and then pods in particular so the field is the decentralized credit facility of beanstalk now beanstalk is a decentralized credit based stable coin it's always the protocol is designed to be decentralized in many ways but decentralized credit is also part you know the phrase decentralized credit also means something in the sense that anyone can lend to beanstalk and so beanstalk in short when there's excess supply of beans when there's not enough demand for beans at the margin such that the price of a bean is trading below a dollar below its peg beanstalk is in theory able to create demand for beans uh by attracting lenders people that are willing to lend beans to beanstalk and so from a theoretical perspective as long as beanstalk is able to attract creditors under the credit-based model beanstalk should be able to attract enough demand for beans because it only borrows beans it won't borrow anything else if people are willing to lend beans to beanstalk beanstalk should be able to remove enough beans from the supply to ultimately return the bean price back to its peg so i want to stop you right there to talk about that just a little bit more and and this is a really common um has a hesitancy or um critique of the of the protocol and i think it's more of a misunderstanding than an actual issue in so when we talk about this idea of attracting creditors um i get the impression that there are folks out there that when they see that phrase they think oh so this protocol needs to attract creditors so what you're telling me is that this is a ponzi scheme because you know by attracting creditors it's using that new money to pay off existing debt and you know creating this ponzi cycle which i would say that those of us that are more intimately familiar with protocol would say no that's not at all true because of something you just said about that idea of of burning beans but if you would take just a second and and talk us through how this is this is not an indicator of some type of you know ponzi scheme where where new debt pays off old debt well the first thing to note is that and there's a lot of different ways we could talk for hours about uh what a ponzi scheme is and how beanstalk doesn't fit into that but fundamentally the core mechanism of a ponzi scheme is taking money from some people and then giving it out to others and telling the earlier investors uh that that the newer money that came after is where they're you know you're not telling them that but ultimately you're saying we we earned you some sort of return but in reality you're just paying the whole the earlier investors with the newer investors money and at some point that comes crashing down now the key thing to note there is you're ingesting money and then the amount of money that you have to spit out um is is purely a function of the money that comes in that is the collateral problem right that's the core problem that beanstalk ultimately solves and so because beanstalk can mint beans and in the future when there's excess demand for beans beans document arbitrarily amounts of beans to meet that new demand for beans in reality it's not that uh new money is paying back old money it's it's the creditors are creating utility in the form of b instability and by creating utility for beings they have a reasonable expectation that in the future there will be more demand for being such that all of their loans will be paid back and so you can think of lending beans to beanstalk as providing a service in the same way that ethereum or bitcoin miners are providing a service that creates a certain utility and then they receive a return in the form of seniorage of their native currency that they're creating the utility for right the bitcoin miners get paid in bitcoin so they're actually spending money they're spending resources in the form of electricity and physical they have to acquire physical hardware to to receive bitcoin so in the same way you have people that are lending beans to be in stock in the field uh in the in in exchange for pods which are the promise of beans in the future in reality of people spending resources that are not in beanstalk to consume and burn beans when they lend them to beanstalk in exchange for a promise of more beans in the future but ultimately if you don't believe that you're creating utility by by lending to beanstalk then there's no reason to lend to beanstalk right so the idea is when you're lending to beanstalk you're contributing to the utility of beans by creating stability and then you get to participate in the growth of beanstalk in the growth of the bean supply in exchange for creating that utility and again the fundamental difference there is because beanstalk can mint beans in the same way that the bitcoin protocol can mint bitcoin uh that's the fundamental difference whereas in a ponzi scheme there's a fixed amount of money and you you just have to redistribute that money in ways that reward certain people the ability to mint beans or mint bitcoin is what fundamentally changes that dynamic yeah that's and that's that's the point that i would really want to emphasize and it's what i wish i could shout from the rooftops some of these you know some of these tweets that i see that are less favorable where where there's confusion it's the idea that this is not a ponzi scheme because as you said it's not a situation where new money is paying off old debt it's a situation where new money is taking supply free floating bean supply off the market thereby creating a shortage which raises the price it's it's serving that function rather than paying off some kind of particular debt and then in return for that lender's willingness to take those those beans off the market and raise its price they get that larger return on their investment as a way of essentially the protocol saying thank you for you know lowering my free floating supply yeah and it's important to realize that uh the other thing is that this is all a hundred percent transparent right the the terms of the loan uh pods are paid back on a first in first out basis and so fundamentally each pot is worth one being at some point in the future but when you will get to redeem your pod for being is a function of where you are in the pod line and all of that information is a hundred percent transparent and open whereas in the case of a ponzi scheme you have some sort of expectation that someone's earning a return on your capital doing god knows what in this case everything is a hundred percent transparent and open absolutely true and not only is it open through the different resources that we have it's actually relatively easy to analyze now and that's that's information for another episode i'm sure we'll be uh talking to tabik or some of the other folks that are doing analytics for us and we'll be able to talk about how they make data both interesting and really beautiful but you were talking about being in the pod line and that first and first out um i'm going to talk about the pod marketplace with you here in a second but is there anything that you'd want to want to emphasize when it comes to that the pod line the first and first out components anything else you want to touch up touch on with that before we kind of pivot towards the pod marketplace so the only thing that might warrant additional clarification is what is soil so everything in beanstalk is farming themed as i'm sure you've gathered by now but soil is the willingness to borrow beans so beanstalk has to denominate in some capacity how many beans it needs to borrow right and so soil is the willingness to borrow beans so anytime there's soil beanstalk is saying it is willing to borrow beans and each one soil uh only accepts up to one bean in in the soils you can only lend uh the amount of beans to be in stock as there is soil and then the other term which we didn't mention but it's just people sometimes find confusing is the weather so the weather is the interest rate for lending beans to be in stock so anytime there's soil you can lend beans to beanstalk and when you lend beans to beanstalk you receive pods right so pods are redeemable for one bean in the future but the question is well how many pods do i get the number of pods that you get is dependent on the weather which is the interest rate of the system and the interest rate the weather changes potentially up to three percent every season every hour in beanstalk every again everything farming things so the hour is called the season every season the weather can be changed up to three percent yeah and i guess what i'll say in addition is this is a podcast so obviously we're limited a little bit by uh the methods of communication we have uh for those of you who are a little bit more visual um i'll give a quick shout out to all the folks that are doing development work on our behalf there are actually some really good infographics that have been developed to help explain things like soil and weather and pod rate and what i would do is invite anybody that has questions to either hop on to our discord or to reach out to somebody through twitter we have those resources available we can get them to you and certainly can answer questions so a lot of stuff going on there's some pretty complex mathematics and then the farming theme for what it's worth publicly has mentioned it like it's it's all there and you almost have to like kind of give yourself over to it once you're like good with it it's it's it it works really well but yeah to just to provide additional resources don't hesitate to reach out to us on twitter or or hop onto our discord