Brent Xu on Umee's cross-chain DeFi protocol

0:01i'm ashton addison from block west capital for investmentpitch media and today on the Crypto Coin Show we have brent zu founder and ceo of umi brent welcome to the show and thank you for taking the time yeah thanks for having me really great to be here likewise i'm excited to dive into your insights in the defy industry and the solutions that umi is working on i'd

0:23love to just kick off the conversation by hearing an overview of sort of the main solutions that your team have been working on for quite some time now and then we'll dive into all things d5 yeah certainly so happy to give you an overview of umi so umi is a cross-chain d5 protocol that interconnects between the cosmos and the ethereum blockchain

0:48and we're building out a suite of d5 tools that can fit into the broader money lego z ecosystem umi is a base layer protocol it's a blockchain in and of itself it's built using the cosmos sdk it runs tendermint dft proof of state consensus and i'd say that i can separate what umi is building into a short term medium determined long-term vision

1:12Short term we're building cross-chain barn and lending so basically you have the ability to leverage assets on one blockchain and borrow another for example you leverage assets on ethereum borrowing cosmos leverages on cosmos boron ethereum et cetera et cetera we want this to be a universal protocol something that expands to the avalanches of the world the solana's the

1:39the polygons as well as just just any protocol the goal is that you deposit any asset and borrow any asset from any chain on a universal platform so that's crashing bar and waiting for umi midterm we want to rebuild some financial primitives for example we want to rebuild things such as a yield curve which is known as a term structure of

2:06interest rates for borrowing and lending a yield curve is very important because this is a tool that is used to price opportunity costs and effectively price time value in different aspects of finance and you know as a barn and lending hub is going to be building out some of these primitives and long term we have the vision that we think that the entire debt markets the

2:31debt capital markets can be rebuilt using crypto technology we think that it can be rebuilt more efficient it can be re-implemented and every part of blockchain and crypto is able to replicate every other aspect of the of the global debt markets and i'd say that's their definitely our long-term mission and what we want to build very exciting visions brent and thank

2:54you for that intro and i can imagine you know in the long-term vision once all the debt markets and most of the capital markets move to blockchain you know the market capitalization of cryptocurrency is almost nothing compared to what it will be when that happens so a lot to look forward to now let's dive into more of the present moment and you're talking

3:17about the short-term vision on having cross-chain lending making it really easy to leverage your assets without having to you know move them to another blockchain or to sell them and move them around how long has your team been working on this and where are you right now in making that vision a reality certainly so we've been working on this for a little

3:41bit over a year so we launched umi back in may of 2021 and so far we've made some tremendous progress so we right now on the umi blockchain is currently launched it's mainnet launched it the blockchain is running is processing blocks and processing transactions running tournament bft we have a network of great validators out

4:08there as well as you know a fairly tremendous community that's building different tools and infrastructure to support the blockchain we have a barn and lighting protocol on ethereum right now and right now you're able to deposit a cosmos asset borrow stable coins and you're also able to deposit stable coins and borrow things such as cosmos atoms using this

4:33Using our existing application we have a mainnet upgrade in about a few weeks this mainnet upgrade will add a cosmos sdk based leverage module to the umi blockchain and what this will allow is ibc transactions that will facilitate this barn and lending so this upgrade is being tested right now in testnet format in our test net

5:02we have an incentivized test net running it's been running for about a month when we have a faucet affiliated with the test net the faucet distributes about a thousand dollars worth of either juno osmo boomi or atom every day in a 24 hour period and so far in our test net we've accumulated close to 40 billion worth of tdl

5:30roughly 120 000 unique addresses interacting with the test net as well as 30 million transactions so we're hoping to build on some of that positive momentum as we're going to be upgrading the test net to mainnet in a few weeks wow that's incredible to hear and 40 billion tvl on the test net is huge already you know i've i've seen some of the top projects that just on

5:58their main net you know they really don't have that much yet but i feel like a lot of the c5 still has to come into to defy and sort of lock in their and their value into these protocols where do you see you know the cosmos ecosystem and defy and capital being locked into the cosmos ecosystem overall in terms of you know trying to make it

6:24into the mainstream of people that are just holding crypto so with cosmos i think it offers a few things that will help get more mainstream users into the crypto ecosystem so in order to make this stuff really useful in order to really replicate you know debt capital markets and you know existing systems in a d5 format i think

6:52three things are necessary one is one is scalable transactions so scalable transactions with a protocol like ibc ibc lets you send tokens from one blockchain to another blockchain really fast like five to seven second finality to ten second finality that's pretty fast and if you could you know if you could apply the concept of payments to an ibc

7:20transaction i think you can think of a lot of permutations for how it can be used so scalability is important the other is interoperability so being able to connect between one blockchain another cosmos you know specializes in that and the third is privacy which i would admit on the cosmos side of things is not as heavily developed there's a few great projects

7:46like secret network and nim that are looking at the privacy side of things but if a protocol can encompass those three factors or not even a protocol maybe a collection of blockchain protocols then those things will be able to onboard a lot of the mains main mainstream adoption into an existing crypto ecosystem because you're essentially replicating an entire

8:14financial infrastructure that being said we're still a bit early days in the cosmos space right now we're looking at a set of d5 tools such as you know indexes like osmosis sift chain crescent you know barney money protocols like ourselves and i think you know we're still early days we're still working to get tdl into the system we're still

8:39working to get adoption i think bridging ourselves from you know d5 1.0 to d5 2.0 you know that you know next set of logical integrations is going to be you know our next challenge and we're looking forward to taking it on definitely and you're right we are early days and you know looking at the midterm vision and the long-term vision that you talked about in the beginning

9:02i feel like having you know those improved yield curves and just more tradify sort of financial products that are going to build in dapps and protocols on top of the cosmos ecosystem should hopefully bring in a lot more capital from traditional finance and to be able to utilize it in different ways is the protocol foundation built in a way that will be not too

9:28hard you know with time to develop in you know once you've built in this interoperability to take that next step is are the foundations already laid for that yeah certainly so i say that for things such as the yield curve you know where we're we're trying to build the libor of crypto we're trying to build a term structure of interest rates for

9:52crypto i'd say that the foundations and cosmos are good that being said we want to be a fairly universal protocol and by universal i mean that we don't really want to distinguish like the eventual goal is that we don't even distinguish which blockchain we're on like i see a world where you know five or you know like 10

10:20years from now you know when it comes to normal people using this tech they're not going to know okay that's blockchain that's avalanche blockchain that's the polygon blockchain that's the uniswap blockchain etc etc they're going to say well i just want to take my asset use it and somehow i get this other asset back and we think that in the future

10:44a lot of this will be abstracted away from the protocol level where user interfaces will just be able to you know have a very fairly significant ease of use and to answer your question about the yield curve we envision building this on many different chains we think that ethereum has really good infrastructure for facilitating

11:09this cosmos itself definitely as well as layer two scaling solutions like you know the arbitrage the zk syncs of the world the optimisms as well as side chain architectures like the polygons avalanches etc etc to kind of circle back to the main point i think the key is more

11:37not necessarily how we build it but more just getting people to use it getting people to adopt it as we've seen in this you know current current barrier sentiment you know having logical use cases is the key for success for a lot of these protocols you know sometimes they say build it and they will come and sometimes they say you know some people are ready some

12:02people are willing and some people are waiting and some people don't just don't even know about it you know and part of it is just bringing more awareness to hey look this is an amazing product that has a lot of benefits and it's sometimes it's hard to get the message out especially when you have you know traditionally very code dense and like technical barriers

12:23to entry that people don't understand that things are getting easier you know each and every day for people that don't understand programming and finance to start getting involved now you mentioned there about you know incentivization we spoke about it a little bit i'm curious just tying into like an umi governance token or the token tokenization of the

12:47protocol if that is used as an incentivization for sustainability in the protocol or if there's specific functions and how that helps grow the ecosystem yeah so regarding the incentivization of the ecosystem you know device summer really really you know showed a lot of innovation showed a lot of ways that protocols can use to bootstrap their users

13:17and you know with only we absolutely are taking lessons learned from from from the past in terms of being able to get more community involvement get more adoption of a protocol and so the umi token itself will also be used for liquidity mining incentives and other opportunities for folks to participate in the network and to showcase

13:42some of the use cases of how this protocol works that being said you know we took note of sort of this d5 1.0 time period where there was a you know ridiculous yields out there where yield farming got a little bit too too wild and you know the way that we want to build a protocol is that we don't

14:10want to you know have something that offers like you know the highest yields or that just you know completely illogically you know offers some sort of front-end loaded incentive mechanism you know from you know my perspective of looking at current structure of interest rates and you know having been a bond trader you know for over half a decade

14:34prior to joining crypto i'd say that we're not trying to create the high fields we're trying to create the pure shields the ones that are most mathematically pure and the ones that most closely follow the truth of how people should view you know risk and return when it comes to their perspective of you know some of these crypto assets so that comes back to why we want to

15:00build a determination of interest rates we think that it's a important tool that's that's actually missing from from d5 right now the reason why d5 went a little crazy is that there wasn't a term structure interest rates there wasn't a way to price risk there wasn't a way to price opportunity cost and therefore value had misrepresentations but we think that

15:22If we're able to add some of these new tools we'd be really bolstering the logic that can be applied to some of these crypto assets very well said brent and you also spoke about you know upcoming towards like a main net launch can you give a little bit more information on you know what needs to be done from from now until then for sure so our test net is running

15:55It's been running for a little bit over a month and before we're main net ready we actually want to test a few more assets on testnet so this includes adding so we actually tested tara on the test that and the test that withstood some of the dramatic price drops we look forward to adding more cosmos assets like the secret networks of

16:21the world the comdexes and other other assets that could be used for bond lending the cosmos side we also want to test some ethereum because you know we're a protocol that wants to strive for this universal cross-chain status and so adding ethereum assets is a big piece of the puzzle after ethereum and in the future we're likely going to

16:46want to add things like you know solana-based assets or other other side chain or l2 assets so after we test out all these these these new features we'll be ready for mainnet you know we take this part the code very seriously we've had you know you know quite a few audits of the code you know auditing is a big piece of the piece of the puzzle you know

17:14trail of bits conducted a audit on our leverage module you know very thorough audit we released that a few months ago and runtime verification is also completing one right now so we're looking forward to releasing those audit reports out into the wild for folks to just really put an extra level of scrutiny on the on the open source code definitely good to hear and i'm looking

17:41forward to seeing those other blockchains and assets integrated in there for the viewers that want to follow along with those updates and learn more about the test net and however else they can get involved what is the best way for people to learn more certainly so definitely follow us on twitter it's a umi understore cross chain our twitter also includes a

18:04link tree to all of our relevant links including you know discord telegram white paper all the necessary information information for understanding umi and being part of the community yeah we're really grateful for folks out there who participate and interact and the easiest way is you know twitter you'll you'll find all the information

18:30there sounds great brent and i will leave the description in the description the links for that as well to make it easy for the viewers i appreciate you taking the time to come on and talk about all things cosmos defy and umi and all the best towards all these test net updates and in the main net and let's follow up in the near future thanks so much really great to be here

18:52Thanks for having me and looking forward to continuing to build out there