- What is the Pod Marketplace?
- What is arbitrage in the Beanstalk ecosystem?
- What is Stalk?
- What is the Silo?
- Is Stalk liquid?
- Will there be a Stalk Marketplace?
- What are seeds?
What is the Pod Marketplace?
- Began as a community initiative to create a Beanstalk native protocol to buy and sell Pods, for which there was no existing exchange because they are unique in DeFi and traditional finance in that they are ordered; they have a place in line and where they are in line changes as debt is paid and they move closer to the front of the line.
- 6 million Pods have been exchanged for over 600,000 Beans in over than 100 transactions in the month since launch.
- Having a secondary market for pods makes Beanstalk more efficient overall.
What is arbitrage in the Beanstalk ecosystem?
- Individual actors making decisions in their own best interest ultimately make a more efficient market and provide utility to the whole system. Arbitrage reduces friction and opportunity costs for everyone involved.
What is Stalk?
- The governance token for Beanstalk. Users can acquire stalk by depositing Beans or any other whitelisted asset into the Silo. Stalk entitles holders to participation in Beanstalk governance and a portion of all future Bean mints. Whenever the Bean supply increases when the price is too high for a season, Beanstalk mints beans to alleviate the surplus demand. Half of new the newly created Beans goes to Stalk holders in the Silo, and the other half goes to holders of the pods at the front of the line. So if you hold Stalk, you will earn passive compounding interest.
What is the Silo?
- Somewhere between a bank account and a governance tool. A place to earn passive interest while retaining liquidity.
- Allows for anyone holding Bean to participate in and benefit from the growth of the ecosystem.
Is Stalk liquid?
- Stalk is currently not liquid, though there is a conversation about that ongoing. There’s a question what it should be worth, as a derivative on the future Bean supply.
- If it was to be traded, you would expect the price to never go above $1, because you can always receive 1 stalk for every 1 Bean deposited to the Silo.
Will there be a Stalk Marketplace?
- A liquid market for Stalk would be beneficial to Beanstalk, so one might reasonably expect for Beanstalk LP tokens wherever Stalk trades to be whitelisted in the Silo, such that you may be able to receive more Stalk for providing your Stalk as liquidity to the Stalk pool.
- You might be able to use it to take on some sort of leverage on your Stalk.
What are seeds?
- A way for Stalk holders to get more Stalk through compounding interest.
- When you deposit assets to the Silo, you receive Seeds in addition to Stalk. Stalk grows 1/10,000 of a Stalk every Season/hour from each Seed. If you withdraw your assets from the Silo, you have to forfeit all Stalk that has grown since depositing.
- It was created to create an opportunity cost for leaving the Silo, so that there is a reason to keep assets deposited even when the price of Bean is below $1 and no new Beans are being minted.
- With the linear growth of Stalk from having Seeds, the ownership concentration decreases over time while the opportunity cost for leaving continues to increase.
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 publius you've talked us through a little bit about pods and that first in first out process and the the percentage return what i'd like to pivot to is what we call the pod marketplace so individuals that buy pods if they're buying them now they may be a ways out in line they may be 600 650 even 700 millionth in line so a lot of waiting to do and if individuals aren't interested in waiting that long to get the return on the investment that the pods offer in their let's say like purest sense we've created this pod marketplace where individuals can take pods that they own and they can sell them and you know in turn individuals that are looking to buy pods can buy them at a discount and either hold them until they mature or or resell them would you talk us through a little bit about the the underlying principle there and how individuals have used that to to make really smart uh buying and selling decisions sure so pods are unique right you wouldn't ever trust a bank if they said to you yeah we'll we'll put your place in line down we promise we won't let anyone cut you in line and we'll let you know whenever we you know we owe you the money that we owe you there's no fixed maturity on the loan but we'll we'll let you know when we owe you like that doesn't really fly in a trust-based financial system and so the idea of having debt ordered having debt actually first in first out and not have any sort of fixed maturity uh is unique and accordingly there isn't within uh certainly within d5 uh a good mold uh with which to build a decks for pods off of because of the fact that they're ordered right you have a place in line or a group of pods that are spread out across a certain stretch of the line and as beanstalk pays off debt it may actually move within the line right because you move up in the line and so the question is how can you create an efficient exchange for pods and the the the farmers market which is the the marketplace for pods uh was a community-led initiative actually now beanstalk farms brought on the the main dev um who worked on the pod marketplace but the pod marketplace was a a community led initiative to basically create a beanstalk native protocol to exchange pods and in short uh you know there's a lot of future upgrades that can be made to make the pod marketplace even better and more liquid but already there's been like almost 6 million pods exchanged for over 600 000 beans and there have been like well over 100 transactions in the market since it launched just about a little over a month ago i believe uh and so in short uh anyone can now come and sell their pods in a trustless fashion or bipods from anywhere they want in the line uh in a trustless fashion and that liquidity that's offered by the pod marketplace also creates some pretty cool opportunities in the sense as you were talking about rex where you may have locked in this really high return but now for whatever reason you need some liquidity uh whereas before you were kind of stuck holding your pods now there's a decent amount of liquidity in the pod marketplace such that uh you know you're not necessarily locked in and when we think about creating an efficient market uh for beanstalk across the board uh and creating an efficient market for soil uh for beanstalks uh you know anytime beanstalk is willing to borrow beans the goal is to have as an efficient market to lend beans to beanstalk as possible having a secondary market where there's liquidity for those loans for those pods is really awesome and if we go back to what we were talking about before about like well what else might get built on top of bean stock the pod marketplace which is uh sort of built on top of the core mechanism right it doesn't directly have to do with how bienstock maintains its peg um there's all sorts of other stuff that in the not too distant future will hopefully get built on top of the pod marketplace to facilitate even more uh cool innovation within d5 so one potential use case for the farmers market for the pod marketplace to shed out is fiat dao which is a protocol that facilitates uh borrowing against zero coupon bonds in a decentralized fashion uh they're interested in accepting pods as collateral in in their protocol to borrow against so uh the fact that now you have a liquid secondary market for pods actually facilitates uh lending markets to to be built on top of uh pods as an asset as well and so when we think about what are all the possibilities uh that can get built on top of beanstalk this is just one example of something that we didn't come up with one of our community members said hey you guys got to talk to fiat dao and set up the whole relationship things like that are really really encouraging yeah so you gave the shout out to fiat dao which i was going to which is awesome i'm going to give another one um so i'm going to give a shout out to olympus dao the omes watching some of the the traffic on twitter this week it seems like uh we've got a handful of friends in olympus dow that have suddenly seen the opportunities in the pod marketplace and um the the term that i'm going to use kind of has a has a kind of negative connotation in traditional finance that the terms arbitrage but they have identified this arbitrage opportunity where they can buy pods at a specific rate hold on to them for a certain period of time and then resell them never having been part of either the origination or the final harvesting just making margin in between the two and i think that's going to be an opportunity that we're going to see more and more and to talk about arbitrage for a second i mentioned that it's you know usually seen as kind of a negative thing in a system like bean stocks it's it's very useful because it creates efficiency around utilization of the assets and so where in so many instances people talk about arbitrage in the sense of one party taking advantage of another even though the loose definitions still kind of makes sense for us in beanstalk that taking advantage creates a more efficient frictionless system it eventually creates a really efficient place where transactions can can take place that's just a a great example of how individual actors that are acting in their own self-interested capacity looking to profit are actually creating utility and creating a more efficient market in a more efficient system within beanstalk and that is a good indicator that the incentives uh that beanstalk creates and the structure of beanstalk are working right because that's ultimately the goal of well-designed trustless protocols is to incentivize exactly that independent actors who are just doing their own thing to ultimately somehow in some fashion ultimately coordinate to create real utility for for for users of a protocol all right we've talked about the beans themselves we've talked a little bit about the field and how individuals can get involved on the debt side let's talk about the silo so for those of you who are unfamiliar the silo is really the way that i describe it is somewhere between a bank account and a governance tool and so i think what we'll have you do publius is um if you would the the silo breaks down into a couple components stock and seeds how would you start us out by talking about what stock does knowing that there are a couple different things that it does and it's a little bit complicated we just just start us off talking through that that concept sure so at its core stock is the governance token of beanstalk and for reference anyone can acquire stock for themselves by depositing their beans or various other white listed assets like relevant lp tokens uh into the silo and anyone who owns stock is entitled to participation in beanstalk governance and also entitled to a portion of all future bean mints while they're holding stock and for reference anytime the bean supply increases when the price is too high for a season uh and there's excess demand for beans the beanstalk uh the bean supply is able to increase to meet that demand arbitrarily and half of all beans that are minted go to silo members uh stockholders in the field a silo member is someone that holds stock and half go to paying off pods paying off debt in the field and so if you hold stock you can passively earn interest in the form of new beans and those beans are automatically also deposited in the silo and earn stock and therefore earn compounding interest so the silo is as you said sort of a bank account in that people can earn passive interest from beanstalk and on top of that because stock is the governance token of beanstalk anyone can also uh participate in the governance of the system they don't have to necessarily because there's no requirement to vote but that's how stock works in a nutshell a point i'd want to emphasize is that much like a bank account and and we can junk suppose this a little bit to pods you're in the silo if you're if you're using beans to buy stock or if you're using heath to buy stock you still have liquidity i feel like that's an important distinction to make as individuals are looking to interact with the protocol and they're thinking oh you know i'd like to get involved should i buy some pods should i buy stock what are seeds you know to be able to offer stock as an option for passive interest while an individual still maintains that liquidity i think it's really special and it um [Music] to look back at the comparison between collateralized coins this is another place where bean kind of flourishes because that that neutral carry cost that um the fact that an individual is not essentially losing value by holding onto a coin gives it that extra utility that that will make those future transactions and those future places where bean can be used it makes those systems much more easy to create and sustain than you know the idea of having usdc or usdt which you know every minute that you're holding that and it's not being lent to someone else you're really you're sacrificing value you're trading that value you're losing out whereas with bean you can you can have your value move in and out of that silo and as i'm sure you'll mention you know there's an incentive to keep it there through the seed system but at the same time if you want that liquidity you can use it and you're not you're not losing value just by holding it yeah i mean there's so many ways to go with this but if anything you highlighted it rex which is the fact that you can hold your bean still own your beans and earn interest and participate in the growth of beanstalk that really is the core differentiator between bean and any other stable right so even let's take something really innovative like terra which tara figured out a solution to the collateral problem because they use luna as their collateral and luna the value of luna can float freely it's a protocol native asset there's nothing capping the value of luna and therefore speculation on the future demand for uh terra or ust which is their dollar pegged tara um effectively results in growth in luna in the price of luna and therefore the growth of the available collateral which increases the stability of terra the stable coins but ultimately if you're holding the terra there's no way for you to participate in the upside in the growth of that system now they've created anchor which is a way for basically luna holders who are receiving all of the upside in the senior rich all of the growth of the ecosystem goes to them for them to hand out effectively some of that upside to the ust holders to create like the what what effectively amounts to the facade of utility right you can hold our stable coin for us to give you a handout in the form of a little bit of interest but in reality whoever holds luna gets the vast majority of upside in the system in the case of beanstalk because stock can only i mean you can buy stock on the open market but the only way that stock is minted is if if someone deposits value into the silo and anyone can do so there's no monopoly on there's no concentration of ownership of uh the upside in the system and anyone that holds beans can also participate in the growth of the ecosystem and that is what ultimately fundamentally sets beans apart when it comes to product market fit and when it comes to utility yeah so it seems like that system that stock system has a couple unique components and something that i saw on one of the recent youtube videos um some some content creator put out just over the last few days that actually talked about beanstalk was they talked about the idea of eventually stock being being liquid and i don't want to get too far ahead because i think we're going to talk about this here in a couple minutes but having a governance token that both has the interest component and that governance functionality as the protocol and the and the organization evolves being able to transact with that i think we'll add a whole new layer of functionality into how beanstalk is governed and then in turn how how we create value through that really particular um that particular passive interest option stock is currently not liquid there's a question as to why what should stock be worth right stock is uh some sort of future on or derivative on the future bean supply and in practice when you have an asset like that that is primarily a function of future interest the question becomes so how do you value that future supply now the the issue is that when you when you try to price stock it's it's very tricky to figure out what is stock worth or what should should it be worth but one thing that's really cool and when we talk about how like any time there's a future a growth in the expectation of uh the terror supply that results in a massive growth in uh the value of luna right the value of luna goes up in the same way you might expect future expectations of bean supply to grow to result in an increase in the price of stock and so in that way stock may trade as a proxy for the future expected growth of beanstalk over a certain period of time if there's more expected growth in the short term maybe stock trades higher than if there's less expected growth in the short term but one thing that's important to note is because you can always deposit one being in the silo in exchange for one stock by definition the price of a stock should never exceed one bean because if it did you could deposit your bean in the silo sell the stock for more than one bean and then deposit those more than one beans in the silo and do that until the price of a stock had returned to at least or at most the price of a b and so while it's hard to know how stock will trade uh from an economics perspective one might expect the price of a stock to be capped at the price of a b oh okay all right so knowing that can you see a scenario where there would be an opportunity for a marketplace rather than uh that was specifically focused on pods instead being focused on stock and ways that that individuals could really take advantage of kind of the compounding opportunities with liquid stock the only thing to note is that when you have stock having a liquid market for stock is beneficial to beanstalk so one might reasonably expect for being stock lp tokens wherever stock trades uh to be whitelisted on the silo whitelist in order to be deposited in the silo such that you may be able to receive more stock for providing your stock and beans as liquidity to the stock pool and so what you might be able to do is roll over your stock and take on some sort of leverage on your stock so right along with this idea of stock are these other things that we call seeds and seeds are essentially a way that a stock holder can get more stock and there's a compounding mechanism and there are a lot of a lot of pieces that go along with this and other know that especially for individuals that are new to the protocol this is probably one of the places where there's the most confusion so publius you want to just just talk for a couple minutes about how seeds work and what they do and maybe even the future of them whether or not we'll use them in the future sure so when you deposit assets in the silo you don't just receive stock you also receive seeds and seeds as you said entitle you to more stock in the future over time in fact stock grows 1 10 000 of a stock grows every season every hour from each seed now why is that you might be asking so the silo is the beanstalk dow and there's all these assets deposited in this and the the main reason for people to deposit assets in the silo is to receive interest right other than participating in governance it's to receive interest and the real interest the senior ridge of beans only gets minted when the price of a bean is above a dollar and so you have this naturally reflexive aspect to bean stuff or when the price is above one you want to be in the silo but when the price is below one there's no real natural incentive to be in the silo and that created in similar systems like esd uh real runs on the bank where when the price of an esd was below a dollar there was no incentive to be in the dow and so in the case of beanstalk beanstalk needs some way it can't mint beans right because if it minted beans when the price is below one that would create more supply and cause the price to continue to go down beanstalk needs some other way to incentivize people to remain deposited in the silo and so what beanstalk does is it rewards more stock over time for remaining deposited in the silo now one thing to note is beanstalk tries really hard not to disproportionately reward earlier investors going back to that ponzi question even though instructors fundamentally different one thing that beanstalk really does uh try to try to stick by is a low concentration of ownership and in order to facilitate that uh you can't excessively reward earlier investors into the asylum but at the same time you need to offer them some sort of stock reward to encourage them to stay deposited in the silo even when the price is below a dollar and so from a rules perspective when you withdraw assets from the silo you have to forfeit all of your stock all of your seeds and all of the stock that grew from your seeds for that deposit and so in short there's an opportunity cost introduced in the sense that if you were going to if your plan was to withdraw and then deposit your assets back in the silo again in the future when the price was back above one you have to evaluate the opportunity cost associated with those actions against all of the stock that you have to forfeit for having already spent some time in the silo and so by rewarding stock over time beanstalk creates an opportunity cost for leaving when the price is below one now the other thing to note is that because stock is rewarded linearly this this incentive effect really has the most effect on at the individual level meaning if i deposit today uh roughly if i deposited beans today roughly every 200 days or so my stock uh would would increase by the amount of stock i originally started with so after 200 days i would have 2x stock after 400 days i would have 3x stock approximately and if we think about how this plays out uh with multiple participants even if you deposited 200 days ago rex so you now have double the stock that you started with in 200 more days you'll only have 3x the amount of stock that you started with whereas i'll have 2x and then in another 200 days you'll have 4x and i'll have 3x so the amount of upside that you have over me for depositing sooner decreases over time whereas at the individual level the incentive the stickiness uh the opportunity cost for leaving the silo uh that increases over time