/biz/ - Business & Finance

>>55135169
>Thank you, thank you everybody. Thank you for joining in at Consensus 2023 today. I know why we’re all here, we got a couple things going on. We have Sergey about to join us in just a moment doing a presentation and then that will be followed by a fireside chat, so make sure you stay tuned for both. So without further ado, I’d like to welcome Sergey Nazarov, co-founder of Chainlink to do a presentation. Let’s give him a hand.

>>55135177
>Hi everyone. Good to, good to see you here. Thank you for coming to the presentation, appreciate your interest in what we’re working on. I’m gonna kind of just jump into it.

>>55135189
>I think it’s gonna be useful for us to think about and understand what the fundamental value is of what we’re doing. In my eyes, one way to look at it is that the conflict of interest problem has been something that the global financial system has had as a part of it for a very long time. So as you know, the financial system, whether it’s the domestic one or the globally connected one, powers the global economy, the local economy, businesses, capitalism, and all of these things. So at the end of the day, the way that the financial system works really determines a lot of the quality of life we have and what happens in our lives and in the larger world. This conflict of interest problem is one that has existed for hundreds of years, many more years than even people like Adam Smith were talking about it in Wealth of Nations and then more modern economists like Milton Friedman, but really I think this problem is at the core of why things fail and why there is cyclical boom and bust cycles that basically take society for a ride and leave us paying for it.

>>55135196
>The two forms that this really takes in the modern world is data and market manipulation and over-leveraging. And once again, my strong belief is that if we can make the financial system work properly, then we can have a much better world both domestically and on a global level. So the first version of this problem is this data manipulation, market manipulation problem, which really thanks to technology and globalization is only accelerating in size and scope. So if before, market crashes happened locally and they were small, now market crashes happen globally and they are large and they effect very very large pieces of the population. This data manipulation, market failure problem is basically created by people who are extremely driven by the profit motive which is fine, what’s not fine is that they basically make society pay for it. Enron is a good example, the Libor scandal, which affected 300 trillion dollars in assets and had over 10 billion in fines is another example. Another recent examples are where traders, hedge funds, market makers, people gathered around places like the Chicago Mercantile Exchange and others, basically manipulate commodity and Forex prices, which actually affect all of us because commodity and Forex prices determine what the goods we consume cost and what we pay for those goods. So the first problem is essentially a market manipulation problem that’s really often a data manipulation problem because markets are driven by data.

>>55135202
>The second version of this conflict of interest problem is over-leveraging. Over-leveraging is basically bad risk management that’s allowed by the system and then it goes to a degree that causes systemic large-scale failure, which once again, society AKA we pay for. One good example is the 2008 financial crisis, since then the examples maybe have gotten a little bit smaller but they still continue and I think we’re actually going towards quite a big one again. Archegos is a good example where one guy was able to take billions from banks and actually closed down a few of his counterparties entire departments that traded with him. So one guy was able to do that because he got so leveraged. And then other more recent examples that you’re more familiar with are things like SVB, which is once again a risk management problem. So this second conflict of interest basically allows people to gamble to an excessive degree. And then, as you know, we pay. Not them, we. This model has persisted for many years because it isn’t possible to make it impossible. But now it is. So that’s really what we work on.

>>55135213
>We work on creating infrastructure that is tamper-proof, and conflict of interest free. So the key idea here is not just that the infrastructure is fast or secure or reliable, which it is, It’s also that it removes conflict of interest, not by virtue of the legal system or by virtue of asking very nicely or by virtue of making it socially unacceptable but by virtue of it being not possible. Basically making it so that people who wanna manipulate the system to steal money from, initially end users of the system, but eventually they steal so much money that it creates a kind of semi societal collapse mode. FTX/ Alameda is a good example, right, all sounds very logical. There’s FTX. There’s Alameda. Oh no, there’s FTX in Alameda, we’re like this close to a large scale blockchain crypto collapse, right? So that’s what I’m talking about when I say conflict of interest.

>>55135220
>So the first thing that we did when we created oracle networks is we solved this data and market manipulation issue by providing data that was truly reliable and able to resistant to manipulation and resisted this conflict of interest problem. Even if you were a very big actor with a lot of money, even if you’re a market maker or a hedge fund, you cannot go and manipulate the Chainlink data source in order to steal and extract value from DeFi. And this is why DeFi is an alternative to that other world that I just explained where that happens on a regular basis and then it happens so much that there’s there’s a nice big scandal and everybody loses faith in the system. So the thing that we have is not the ability to recreate the existing financial system in a little small form where the same people get to steal money from a slight different group of people. That’s not very interesting to me. I’m not interested in spending the next 10 years doing that. I’m much more interested in, there’s an alternative financial system where nobody can steal from anyone else and then when those people continue to steal in the traditional financial system and it becomes obvious that they are, and they are, then everyone will migrate to this conflict of interest free alternative. So that’s what we’re building. That’s what I think most of you are building. And that’s what I think this is all about.

>>55135233
>The second example is Proof of Reserves. Proof of reserves is a very good, very focused example, it’s actually a relatively simple product because it uses an oracle network to basically prove the balance sheet or the assets of a counterparty, an institution, or whatever is backing a stable coin or a commodity coin. But Proof of Reserves as an example was not so important or critical or valuable before FTX, right. After FTX, Proof of Reserves became an obvious solution for eliminating the conflict of interest that allows someone to manipulate a balance sheet to basically take your money. And even if they didn’t take your money, they screwed all of us because now we have to explain to everybody why we are not FTX or Alameda. We have to justify this for months and years to gain back the trust of institutions and users to grow our industry. So even if they didn’t take your money, you don’t want this to happen. What you want, I think in my opinion, or more importantly, not importantly but more accurately, what I want is a conflict of interest free alternative financial system. And from our point of view, we’ve started doing that by providing market data, which is the most common attack vector, then we provided solvency, not solvency, asset proof and balance sheet proof data through Proof of Reserves, and so far we have been able to successfully combat manipulation. So flash loans attack don’t work on Chainlink oracle networks. Direct attacks so far haven’t worked and other types of attacks haven’t worked either.

>>55135248
>So great news. We’re on the way there and DeFi grew to as much as a 200 billion dollar industry with our help. So far, the system has processed over 7 trillion dollars in transaction value. So there’s definitely transactional throughput that wants to transact in this conflict of interest free manner. That’s basically DeFi, that’s what drives this large number and my expectation, that number will go much much higher. So it’s been over $7.7 trillion in transactional value,

bump

>>55135260
>It’s grown to over 200 billion in DeFi as a whole and independent third parties have done on-chain analysis to show that the data that we put on-chain, which is manipulation and conflict of interest free, manipulation resistant and conflict of interest free, actually is the driver for DeFi, right, because once again you, you cannot built a tamperproof, conflict of interest free system if the data controlling that system or the automation controlling that system or even the cross-chain method controlling that system can be manipulated by someone. When you can manipulate one of the methods controlling the system, you can manipulate the system and your whole tamperproof, conflict of interest free value proposition goes up in smoke and everything becomes another market maker hedge fund trader manipulation Disneyland. That makes money for them but leaves us with the bill. So, that’s what, you know, we’ve been able to do so far.

>>55135274
>Proof of Reserves is also doing extremely well as you can see this thing is going almost vertical, for a very similar reason. Hey, FTX. Okay, Alameda. Ya heard of it, big deal. Two weeks later, oh no, my God, FTX, Alameda, what a nightmare, proof of reserves. We need it, we gotta have it. Conflict of interest, what a problem, so on and so on. That’s the recurring story, okay, it’s gonna be the recurring story. Frankly those of you building protocols that can just see a step or two ahead in the story and build a protocol that’s resistant to the next stream of attacks, we’ll have a very good protocol because people that don’t make themselves resistant to the next stream of attacks will have their money taken whereas your protocol won’t and so you’ll do better and our job is to give you the infrastructure to build that better protocol so that when the few people that try to replicate FTX - Alameda con in a DeFi format get found out. You wonderful people who build the alternative have a system that can reliably resist that type of manipulation and our industry has a leg to stand on.

>>55135286
>So while we started with data and the vast majority of all this value that I showed you, the $7.7 plus trillion is really just from market data and proof of reserves. There’s actually a whole other category of things such as computation and cross chain communications that can control these protocols as well. So basically we’re building the entire suite, the entire decentralized stack of tools and systems that developers need to build a conflict of interest resistant protocol. So protocol that no matter how big that participants are, they cannot co-opt it to trade against smaller participants, they cannot manipulate it. You cannot have an Enron in the system, basically, you cannot have somebody who can who can turn this into their market maker trader hedge fund manipulation Disneyland, which is what a lot of the existing financial system is. Which once again, is something I’m not interested in. I’m very interested in building that alternative. And I actually very strongly believe that the global capital markets are extremely interested in that alternative as well because the majority of these banking folks just want to take their clients money, make some percentage off of it, and store it securely and reliably somewhere where they get to get a percentage. Some of them want to do wacky stuff, many of them don’t, so if we can build a tamper proof, conflict of interest free financial system then the crypto thing and the tradition markets thing will just be one thing. That’s what they’ll be because you would never.. no real market participant, the one that isn’t trying to steal from everyone else and leave everyone else with the bill, no one wants a less reliable market. They don’t want that.

>>55135294
>So the world we’re trying to build is the one where there’s many different contracts, by all means on many different chains, have fun, enjoy, but at the end of the day they’re connected in a secure reliable way, so there’s no attack vector and manipulating the connection. The data driving the markets is reliable and conflict of interest free and tamper proof and the automation and some of the key computations are also resistant. So it’s not just about making a blockchain, then a lot more blockchains and putting things in blockchains. It’s about making sure that the things that the contract in the blockchain relies on also meets this very high standard.

>>55135304
>And if we continue to do this, we will have a nice architecture like this, and this nice architecture will be the future of the entire global financial system and it’ll actually create nice local domestic financial systems in places where they don’t even have a legal system. So it’ll be simply wonderful and I’m very very excited to get there but in order for us to get there, we need to do a couple of things. We need developers to keep building great applications. We need users to become educated about the security dynamics that they’re engaging in and ask for greater security and greater reliability and lack of conflict of interest and conflict of interest free inputs. And we need it to be built securely so money isn’t lost. So if we can do these things and we can avoid replicating the FTX Alameda, oh my God it’s so obvious, but it wasn’t obvious two weeks ago situation, within DeFi, then we can be the way the world works. And that’s what we can be. If we do all that. Now, one of the things we need to do in order to arrive there is actually protect this architecture from various attack vectors. The attack vectors that initially have started out years ago, that Chainlink has been resistant to, have been things like directly trying to attack oracle networks on-chain or off-chain. And oracle networks, at least in Chainlink’s case, have so far resisted those attacks. Then the next attacks that happened were something called flash loan attacks, which we talked about a few years before they became a real problem. And sure enough, they became a real problem. And basically a flash loan attack is about manipulating data. So you go to the data source, you manipulate the data source, the data source input is under the control of essentially some market maker trader hedge fund guy. The market maker trader hedge fund guy steals the money and then the protocol dies and everyone else loses their money, right?

>>55135310
>So that’s what flash loans were, luckily for us and for our users, Chainlink networks have resisted flash loans. I am seeing more and more various attack vectors popping up because I think people are realizing that if you can’t crack the contract, you want to crack the systems that control the contract, the systems that create valuable inputs and very valuable connections between the contracts, namely oracle networks. One of the attacks that I've uhh rece...witnesly started to... uhh recently started to witness and see start happening is what i'm calling the wolf in sheep’s clothing attack. So basically you have a few people who are making oracles now, and they’re saying “I’m a nice reliable oracle, you can trust me.” But really, they are wholly owned by a trading firm or a hedge fund or maybe they’re just a private trader themselves. And then what they’re doing is they’re going out, they’re presenting this oracle and saying “Hey, I’m a nice reliable oracle, please let me completely control your market. I’m nothing like the FTX Alameda scam, nothing like that here. I’m such a nice guy.” But then it turns out that the nice guy is a PSYCHOPATH who only wants to steal money from the protocol.

>>55135324
>So this is actually how commodity traders do this in larger markets, they’ve done it in various commodity trading settings in various Forex settings, and they continue to do it today and there’s many many cases of it. There’s other attack vectors where people are more actively trying to exploit flash loans, gain access to data, so on and so on but as the value continues to rise we will see these attacks increase. As these attacks increase, what’s important that users understand the attacks and make sure that the protocols that they’re using are actually conflict of interest free because the more money you put into a protocol that some PSYCHOPATH hedge fund market maker trader can steal from, the harder that protocol might fail, which will be bad for all of us, plus the more money you would lose which, I don’t know, it’s your money. We actually have to be educated about private key security, about the inputs into the system and also about how those inputs are created in order to demand that the systems that get built aren’t these replicas of the traditional financial system that make a few people rich, but make the rest of us have to explain why we replicated the FTX Alameda thing within our industry. Which once again, I won’t have to explain because we’re not doing that. We have no plans and no systems and no way to go and trade against anybody but it’s just something to keep in mind that this is the architecture that we have to protect and that everybody has to be informed about and make sure that the systems they’re putting their money into are actually run in a way where no third party can go trade against them and steal their money. And that’ll actually make the whole ecosystem better.

>>55135334
>And once again, if we do this we have this great outcome where we would be able to be the alternative. So how do we really go from this world where you have one and half to two trillion dollars in crypto value… I mean, is it really that we replicate the existing financial system to shave the same sheep a different way? Is that really how we’re gonna get to an industry with hundreds of trillions of dollars in it? I don’t think so. I don’t actually wanna do that. The only way we’re gonna get to a world where there’s hundreds of trillions of dollars in our industry is that when all the sheep over there get shaved and realize it and there’s another Libor or another SVB or another Enron or another whatever, we are the reliable, real, conflict of interest free alternative. And then once again, we will become how the world works. Because it’s better. So there’s actually quite a bit at stake here between if we replicate the existing financial system, where people with certain advantages, in certain predatory instincts are able to lie to us and trick us, and through our work and through our protocols, steal from users, make money, get caught, and then we have to explain to everybody why, “no no no, it was just one thing, it wasn’t, it wasn’t us”, right? “We’re not FTX, they’re FTX”. Or, we could be smarter, we could avoid that, we could build an alternative that actually creates an alternative to conflicts of interest and really build something extremely useful and important for how the world changes. If you haven’t guessed, that’s what I’m trying to do.

>>55135345
>We’re doing two other things to make this possible in addition to creating the technology. We are creating a very sustainable and incentive aligned infrastructure that basically basically makes more money and creates more revenue into the system to pay for more security as the various protocols that get powered by it continue to succeed and make more fees. So our economic system is not powered by giving away data pretending to be something we’re not and then trading against people and stealing their money and then being caught and then having everyone else explain why DeFi is actually not that thing. Our system is to provide you conflict of interest free infrastructure and to create an incentive aligned relationship so that as the protocol that used that infrastructure secures more, it has to pay more because it has to buy more security and that the security scales with the protocol. And the incentives are aligned in a way that doesn’t create conflicts of interest, and there is no conflict of interest. There’s just a sustainable reliable infrastructure.

>>55135356
>This is being done through the BUILD program for dApps and protocols very successfully, since the last time I talked about it I think that program tripled in the amount of participants and is growing quite rapidly. For blockchains and ecosystems, it’s the SCALE program and most recently we had very good development with GMX, I think at the moment the largest derivatives protocol basically passing a community vote with over 96% support to utilize Chainlink data to power their markets. For the reasons that I told you, that there is now a conflict of interest free alternative to generating that type of market. And I think that people who continue to do that will build the protocols that are the alternatives to broken markets in the traditional financial world and to the few people in this world that decide to replicate the FTX Alameda relationship in DeFi, which once again I think is a really bad idea and what we all want to do is put our money and put our attention into building something that isn’t run in this manipulated way.

>>55135371
>The final thing that we’re doing in addition to providing the technology and creating proper incentive alignment without conflicts of interest is we’re generating an interface for capital markets and banks to properly interact with blockchains very efficiently. So my very strong belief is that as long as we can keep the technology conflict of interest free, secure and hyper reliable and we can continue to grow it in a sustainable, economically justifiable ways so that the cost expended by it grow with the security it provides and that it continues to provide security at larger and larger scale. Capital markets’ participants, namely banks that have trillions of dollars, will continue to use it more and more. We’ve already seen people make stable coins from banks, large banks actually create their own stable coins and put them on to chains and we’ve seen more and more of them start to talk with us about building more advanced applications. We are working with an increasingly larger amount of banks and some of the things I’m seeing there suggest to me that things will move beyond a proof of concept into a pilot and into production. And just to be clear on what moving into production means: Banks have trillions of dollars, so if our industry is gonna grow, yes it can grow from you know prop traders, institutions and whoever wanting to use it, but it ummm, it really does need large institutions to decide to become part of it because it’s a superior system. And for us to do that, for that to happen, we need it to be a superior system. So the final thing that we’re doing is working with large capital markets’ institutions to enable them to access these conflict of interest free, reliable and tamper proof alternatives and offer them to their clients in large volume and in a very usable way.

>>55135384
>So I really appreciate everyone’s attention. I think we have another part of this session that I don’t want to monopolize, so I don’t wanna monopolize the time too much, but it’s been, it’s been a pleasure speaking with you. Please be aware of the security guarantees of the protocols that you’re using. Please be aware of how they’re secured. Please be aware of where the data’s coming from and please be aware of how that system is working because at the end of the day your decisions about what systems to use will also inform how this industry evolves. I’m very excited to build it together with all of you and thank you for your attention during this talk.

Sergey speaking at Binance conference - Feb 1
>>>/biz/thread/S27393406
ETH Denver- Feb 9
>>>/biz/thread/S28228337
Brave New Coin, Sergey Interview- Feb 15
>>>/biz/thread/S28820382
Random interview of Sergey - Feb 16
>>>/biz/thread/S28912024
Ari’s favorite type of contracts
>>>/biz/thread/S29095594
Chainlink Hackathon - March 16
>https://archived.moe/biz/thread/31131685
Lex Friedman Podcast - Part 1, 2 and 3
>https://archived.moe/biz/thread/35297357
>https://archived.moe/biz/thread/35532716
>https://archived.moe/biz/thread/38453674
Consensus - June 5
>https://archived.moe/biz/thread/37042320
Swift- June 22
>https://archived.moe/biz/thread/37979913
Global Defi Summit - June 26
>https://archived.moe/biz/thread/38176354
IC3 Blockchain summer camp - July 28
>https://archived.moe/biz/thread/39431937
Sergey Smart con #1 speech - Aug 5 (Part 1 + 2)
>https://archived.moe/biz/thread/40105114
>https://archived.moe/biz/thread/40217635
Sergey and Jonathan Ehrenfeld smartcon #1
>https://archived.moe/biz/thread/44879835
August 28 2022 twitter spaces
>https://archived.moe/biz/thread/51167233
Smartcon 2022 - Sergey keynote
>https://archived.moe/biz/thread/52729887

Dude… thank you

>>55135169
>>55135269
thanks for the bump fren.
>>55135469
based 69s are a very good sign for me personally. thanks for being here

Based transcribe anon, thank you

Thanks anon, you should've been hired.

>>55135538
thank you for being here!
>>55135596
thanks fren, it would have been cool to be part of the team

based autism anon

>We’re doing two other things to make this possible in addition to creating the technology. We are creating a very sustainable and incentive aligned infrastructure that basically basically makes more money and creates more revenue into the system to pay for more security as the various protocols that get powered by it continue to succeed and make more fees.
>The final thing that we’re doing in addition to providing the technology and creating proper incentive alignment without conflicts of interest is we’re generating an interface for capital markets and banks to properly interact with blockchains very efficiently.


Chainlink good coin.

>>55137096
based

>>55135177
>>55135233
checked, god bless transcribe anon wagmi

>>55135169
based, thanks OP

https://youtu.be/cwkqvPBH4wE

hours elapsed from the time you posted all that copy pasta and no replies nobody cares cuck nobody cares

Blessed thread

>>55135494
Thanks for being here too, fren. This is a fun read.

https://www.youtube.com/watch?v=w5PsVhtyXX8
did you see this interview? it's a little old now, and the whole thing is probably not worth transcribing, but at the time I thought there was alot of interesting stuff in this interview that got overlooked.

>>55137841
cool vids, fren

based transcribe anon, reading really does make a difference when it comes to processing information

>>55137630
THANK YOU and God bless
>>55137841
you are most welcome my fren
>>55137862
>copy pasta
boys he doesnt know...
>>55137868
thank you for being here, its even more blessed now
>>55138994
based
>>55139075
agreed, definitely worth a watch. Overlooked by the majority like most of his interviews I'm sure!
>>55139329
thank you fren. I am very glad to this day that people still appreciate the format!
Thanks for keeping the thread alive overnight frens

London Posters - free drinks at free blockchain event tonight at 8pm. Free tickets still available.
https://4techmix.com/2023/05/31/free-tickets-to-london-blockchain-event-31-5-2023/

You are a…MANIAC

>>55139465
transcribe anon as always you are a gentleman and scholar. Appreciate the thread, hope you are well

>28 PBTID
Kek how heavy are those bags

thank you, i can't stand his voice and the constant yelling

>>55140808
SO ARE YOU
>>55143082
thank you fren, doing very well and same to you.
>>55143811
checked
>>55143882
different strokes for different folks, as they say. thanks for stopping by