 I'm here to invite you guys to join us in a riot. So who in the audience have heard about dye? Raise your hands. Nice. So who in the audience has heard about rye? Nice. And who has used rye up to now? Yeah, two people. We need to work more on that, I guess. So rye is a fork of maker-dow dye. So with a bunch of differences. It has ETH only as collateral. It has a floating peg. So it's not one USD as packed to one USD as dye is. It's self-stabilizing with a PI controller. And it has minimal governance, too. That's what we call ungovernance. And we're pretty sure this is the future of finance. So here we have a quote by Nikolai. He's the technical co-founder of Maker. And the main architect or the main head behind dye. And I'll actually read his quote because it's very relevant to the presentation. Until this shit is in textbooks as a historical turning point for theory of central banking, we're still early. So yeah, suffice to say we're still early. So before I go into what the system is and how it works, I'll tell you guys a story, more of a personal story, actually. So let's do the interactive thing again. And please raise your hands if you have lived in a place with inflation over 100% a year. There's quite a few. Latam, right? So that's great. Kill those to the EF for making the event here. So keep your hands up if you've lived through over 1,000% a year. So yeah, a few of them, right? 2,000, 3,000 good times. So I'm Brazilian. And as a kid, I remember when my family got their paycheck, we would run to the store and buy stuff. Because if you wait until the weekend, next day, you've got less stuff for your money. Basically, prices were raising every day. In a peak inflation in Brazil, we had over 3,000% yearly inflation. Between 93% and 94%, the average yearly inflation was over 2,000%. So here we have the roller coaster that it was, right? It wasn't really smooth. After the military dictatorship in Brazil from the 60s till the mid-80s, they left with a really messy economy. So all the leaders that came in, they came in with a plan. Basically, the focus was, how do we deal with inflation? Some of those plans were disastrous, right? They involved freezing prices, freezing wages. In this one, the color plan, they actually seized people's savings and never gave it back. This is actually new to me. I learned this while preparing to the presentation. Here we have a graph of the number of people in the Monetary Council of Brazil, or the guys setting rates, and the inflation in red. So you see how they correlate, right? So the less people you have, it seems to be better, right? So yes. And this sharply decline in the inflation was in 94. It was called Plano Real. It was really interesting. I mean, they did some obvious things, right? Cut government spending, stop printing money, right? And they also did one thing that was not really obvious. They created another unit of value. So things were priced in this new unit that was called URV, or Unidade Real de Valor, or unit of real value. But they were still paid in the currency of the time. That was the, what's it called, Cruzeiro Real. And after a while, once people were free from the inflation mindset, URV became the Brazilian Real that we have to this day. This plan was mostly successful. So we went from over 2,000% inflation to mostly single digits since then. So now we think, okay, the US is exempt from this, right? So far, so good, but yeah. Actually, they seem to be losing control there. So during the COVID years, they printed 30% of the money supply. And they seem to have underestimated the resulting inflation from it. So they took long to act, and now they seem to be overreacting, throwing the whole world into a recession, right? And now going back to crypto. So we have like a speed run of what we're talking about, right? So we had here the Luna, USD, you know, fiasco graph. Let's do another one. Raise your hands if you lost money in Luna, USD. So yeah, lots of people. And yeah, please, the other ones should pay a beer, you know, to those guys. So yeah, I know it was painful. So Vitalik wrote an article recently about stablecoins just after the fiasco, right? Comparing Rai to USD. And the main takeaway for me at least was that if your stablecoin cannot contract, if it cannot win down, it's likely a Ponzi, right? So here we have, you know, the graph showing, you know, when Luna or USD had to win down for the first time, it was ugly. 50 billion was erased from the market in a fiasco. So that's billion with a B, right? So lots of money. Now think about what happens if the USD has to contract, the USD with a D, right? How would it work? So, but I'll leave this, you know, as an exercise for you guys to think about this. So here, having lived through hyperinflation, I can't help but wonder, you know, how do we get ourselves out of this dark age? So these are some of the questions we were obsessed when building Rai. So what if the humans are the actual main source of instability? What if our currency was honest? What if our currency was not a Ponzi? What if our money supply automatically expanded and contracted? What if proper central banking has never been tried? So here's a picture of Milton Friedman, he's a famous economist, and we're trying to achieve his vision here. So back to what is Rai, we will now go through, not that you guys know why I care so much about this thing, we will go through and explain each one of these bullets to you guys. So like Dai, Rai is over collateralized. You open a collateralized debt position by depositing ETH and minting Rai. We call it a safe. It's not to be confused with it, it knows it's safe. So the Dai CDP is a safe for us. If our collateral ratio drops below the minimum, 135%, your ETH will go to a liquidation auction. Just like Dai, we have an OSM there, so you have a one-hour time delay to react in sharp price changes. And like MKR, we have FLX, so that works as a domain backstop if liquidations fail. And Rai is backed by ETH only. This is very, very important because centralized collaterals have a way of taking over if you're not careful. Dai is now generated from around 80% centralized collateral, the vast majority being USDC. So we all know after the tornado cash events recently that they can freeze any holder, including pools and systems. If that happens, Dai holders will suffer, Dai will lose most of the value. By only backing Rai with ETH, we want Rai to inherit the moniness that ETH has earned. We also made the decision to prevent, sort of like this actually prevents Rai from really scaling. Rai can only grow so much, and we expect that it will grow as ETH grows in value too. I'll get back to this towards the end of the presentation. So people often ask us, how is it stable if it's not one USD? So the way we see this, it's more like a foreign exchange, a foreign currency, right? So here we have the exchange rates of several currencies, the largest ones against USD. And the Rai redemption price is the smoother line in green there. So as you can see, it's not much different than a foreign exchange. We're doing about as good as China there. So peg stablecoins have a big problem, also highlighted by Vitalik. They're either pegged when everything is okay, or they're off peg and everyone is freaking out. What the fuck is going on? So Rai has one mode. It's always off peg, you know? That's business as usual. It's a matter of degree. So we're not getting out of bed because it's off peg, right? See how cozy this paper is. And here we go to the PI controller. That's the heart of the system, the coolest part too. So we have a graph here. The market price from Uniswap Curve is the red line over there. Redemption price is the smoother line in gray. So when the market price goes above the redemption price, or redemption price is basically the internal system peg, right? When the market price goes above the redemption price, the redemption rate goes down and starts pushing the redemption price down. The opposite is also true. So if the redemption price or if the market price goes below the redemption price, the redemption rate will go up. And here below we have actually the rates. The redemption rate is formed by two rates. We have the P rate in blue and the I rate in orange. The P rate in blue is instantaneous. So when the market price crosses the redemption price, it will immediately cross to the other side. We can see recently in the recent days, it's been the first time in a while where the market price went below the redemption price and the P rate immediately goes positive there. The I rate is towards the error of the last 30 days. So it's like a memory. It makes the controller stickier. This is why it's not yet positive, right? The I rate is a lot higher than the, or a lot higher to the negative side than the P rate there. Stability for right means balancing right supply and demand and not pegging it to one USD. So with right, you know where the yield is coming from when rates are negative, right holders are paying right borrowers. When rates are positive, right borrowers are paying right holders. This value transfer between right holders and borrowers is mediated by the PI controller we saw previously. And they, the controller actually incentivizes the balancing, the supply and demand for right. So we have a saying that the money God always wins. So we say this because it's pointless to fight against the money God. If you push against the controller, the rates increase exponentially against you and you burn money basically. You don't want the angry money God against you. So you wanna keep him happy. If you help him work though, you can make money out of it. Now on to ungovernance. That's what we call, you know, minimal governance. So the system has been controlled by the community since July this year. When we started, we started with the usual team multi-sig and we completely transitioned to the DAO now. So the team multi-sig is no longer active and has no control of the system. But before doing that, we actually locked down pretty much everything, you know, to prevent governance from being used as an attack factor. So unlike in DAO where the governance can do whatever it pleases, in Rai, governance cannot print Rai, cannot print FLX, cannot steal collateral and so on. So the only things it does right now, or it can do right now, is govern external dependencies like oracles, like saviors and some of the parameters the system has. I mean, some parameters, we felt we were not ready to set in stone like the PI controller parameters. Everyone's still learning. So the community can govern them through a vote. So we believe Rai represents the future of finance. Central banks in the future will be open source programs. The cost of operating a central bank will drop by a thousand times, even more, you know. They will run transparently and autonomously. So the way the Fed works today is like MakerDAO. They get together in meetings and they decide on rates. As autistic people, we know you don't need meetings to set rates. One day everyone else will learn this too. You know, today we treat currency management as a holy art that only Samarkand wizards can perform. In truth, the more we can demonstrate simplicity, the more we can dispel the illusions around how money should work. We believe in a future where communities can take ownership of their own money. Where the cost of deploying and maintaining a currency is as easy as deploying some open source code. So as Amin said there, we can stay autistic longer than they can stay retarded. If lords, you guys should join us, right? If you have ETH as a collateral in a system that has risk from centralized collaterals, you should move, right? Deposit ETH, like borrow Rai, spend it, no long Rai, short Rai, do basically work with the money God. This is a tweet interesting one from Curin. It talks about a position Vitalik has in the system. So Vitalik in the recent months with the negative rates, he made $75,000 by shorting Rai. So he's helping the money God and making money. You guys should maybe try it too, you know? Also join us on Discord, meme the dream, right? Help us write explainer content. There's a really interesting research channel where people discuss monetary policy, control theory and whatnot, and list also in our dev reserve force we're building right now. And there are plenty of bounties available there also. But not only technical, you know, there's bounties for everyone, so check it out. And lastly, we're also building the money God League. So what do we call the money God League? Basically, we know Rai won't scale. So instead of envisioning one huge table coin to rule them all, we envision a future with thousands of Rai-like systems. So as you can see over here, let me get up front. Makers discussing becoming a Rai-like system now, right? Abandoning the peg so they can get rid of USDC. So maybe they join us in the future, you know, by getting back to the original Nikolai vision there. There's also H2O from Ocean Protocol. It's a fork of Rai that is collateralized by their data tokens. There's also a group working on Tai, which is a multi-collateral version. And maybe you should join us too, you know. If you have an idea, you wanna build another flavor of the system, come talk to me, join our Discord, we're happy to help, you know. The more systems out there, the better, right? Sort of like the Hydra vision of the thing. We don't need a huge table coin. We need several smaller ones to contain failures too, you know, and allow for experimentation. So this meme was made by Charlie Neu from Paradigm. It's some true VC value add here. So I'll leave this running here while I take any questions from you guys. We still have eight minutes left, so. So good morning, Fabrizio. Two questions. Could it be like a PID controller, instead of just PI controller? And other, could it be checking the price of that corrected by inflation, or that's like impossible to do? Yeah, interesting questions. I mean, we started with a P-only controller, actually. Now it's a PI, I don't see why not could be a PID too. So it needs experimentation, right? There's still room for a lot of experimentation. With Rai, we try to make it as pure as possible. So only ETH, minimal governance. Now with the forks, you know, I mean, there's a ton of possibilities. We see like Ty, for example, the guys explained that for a multi-collateral version, you need more governance, right? To onboard new collaterals. And their goal is, of course, to try to keep it to decentralized collaterals. Onto the other question, I forgot what was the second one, please remind me. The price could be checked by corrected by inflation on USD, not just USD. Yeah, so pegging is a true challenge, right? By having no Pag, I mean, I went through like the advantages of it. So if you're pegging to an inflation index, for example, you have the same problems of a Pag currency. I mean, it could be done, but then the negative rates could not be applied to price as we do, right? They could maybe be applied to the stability fees, right? Or the borrow fees people pay, you know, on their borrowed amount. So yeah, I guess it could, you know? If you feel this is a nice idea, I guess, you know, come join the Money God League, and yeah, build it, working to help. So. Hi. Thank you. Since there is no Pag, when does Rai fail? And under what scenarios will this happen? What are the failure modes? Yeah, that's hard to say. I mean, there's no Pag, and I mean, there are a bunch of failure scenarios too, right? I mean, we could, as in the Black Thursday, you know, maker failed to liquidate CDPs. This could happen. Regarding the controller, you know, there are some cases in control theory where the controllers go crazy too, right? You've seen like robots going out of control and spinning like crazy and then destroying. Yeah, that's a PID controller failing. That happens. We would need to global settle the system. As Maker did with Sai, we had a proto-Rai before Rai too, we global settled. So if the system becomes unsustainable, it can still be closed down, and then everyone, both safe holders, safe owners and Rai holders can go back there and get their ETH back. So it's not a complete loss. But we have to keep an eye on this. This is also an experiment, right? So we're trying to be conservative, but I don't know, in future iterations, it could be that not on Rai. Rai's pretty much closed down, but I mean, on other money God League members, this could happen. I don't know. We just have to keep an eye to see if, you know, controller is not going crazy on us. Thank you. Yep. This summer, during the, where are you? Over here in front of you. Do you hear right? Okay. The summer when it was, when the market and redemption price were different for like months and we were seeing like 30% difference rates, it mean, it kind of struck me that why can't the system tolerate some sort of steady state error where market and redemption price are just like different for a while instead of the eye just punishing us more and more and more. Yeah. That's actually a good point. This happened at the time. We're not sure why, you know? Nikolai claimed we were being attacked by some actor, you know, trying to prove us wrong. Some people think, you know, because of the UST fiasco, then because of the tornado cash thing, you know, a bunch of people market bought right and then the money got, got mad, you know, and punished everyone and Vitalik made a bunch of money. That's the, so yeah, we're still discussing this. There's actually, there will be a proposal to tweak this. We do feel the item right now is too strong, maybe. It could be punishing less. You know, it make it less sticky. So yeah, please join the discussion. You'll like it. There will be a discussion in the forum soon. And until the end of the year, we will tweak the programs. We try not to tweak them really like with a lot of, with a, I mean, too quickly. So we see the results, you know, we see the thing how it plays out. But yeah, there will be one change in this year. It's been like that for over six months now. So, and it, I mean, it withstanding some pretty big shocks in between, you know, we switched from raging bull run to a bear market, right? And then things collapsed and then there were, I mean, people tried, started valuing decentralization more. So yeah, I guess let's see if next year it's more stable too with new programs and we will see. The idea is to tweak less and less and on a smoother way, you know, like until we can set the programs in stone and just ungovern the controller too. What are the incentives for executing liquidations and maintaining the system health? Like for example, like Maker has this decaying, you know, auction where like Ave, you can have, you'll find out that there's a lot of people that should be liquidated that are not liquidated but Maker, everybody eventually gets liquidated. So what's the incentives and how is that maintained? And what telemetry do you have into to see what needs to be liquidated? So when we started the Colletter Auction House was a fixed discount Colletter Auction House. So it provided a fixed discount on ETH, you know, against the market price. Then after six months or so, even before Maker liquidations 2.0, we started with an increasing discount auction. So it's pretty similar to Maker. I mean, the implementation is completely different but the mechanism is the same. And where decentralization freaks too, so every call for keepers in the system is incentivized somehow. Actually, the system right now for the keepers out there is grossly overpaying calls. So you can make a lot of money by helping the system. There will be a proposal soon to lower the rewards because they were adjusted for gas prices from the bull run too. And now the network is, you know, a lot, I mean, block space is cheaper so we can lower the rewards and you know, the system can save money until it's needed to raise them again. For other things, I mean, for everything, there's an incentive there. I mean, it depends on the call and on what you're doing. Hello, what's the point of using Rai instead of straight ETH if it's free-floating and it's just backed by ETH? Yeah, Rai is supposed to, I mean, it's free-floating but it's way less volatile than ETH. So while it is free-floating, it is a stable coin, right? It's kind of like the Euro against the USD. You know, of course, it's gonna oscillate, right? Tomorrow it's gonna have a different price but it's not gonna go crazy on you and crash 50% from today to tomorrow, right? So Rai is a very dampened version of ETH, basically. And early on, it's actually quite interesting because we didn't wanna call it a stable coin because everyone called stable coins, you know, the one USD thing. And now we're sort of reclaiming the name. So we feel Rai is the only true stable coin and all the other ones are what we call pegies or pegged coins, you know? So yeah, that's it. So if you need a stable coin that retains, you know, the moneyness of ETH, there's Rai. That's the goal of it. Yep. As the money got grows and adoption grows as a currency. What do you see or what do you expect from central banks and other institutions trying to corrupt or crack down on coins like Rai? So yeah, the more decentralized you are, the harder it is for them, right? So we're taking our precautions from day one. The idea is to have it almost trustless in the future. So yeah, they can try to stop Ethereum. I mean, it's gonna be hard, right? And yeah, our main goal is actually, you know, some central bankers are actually noticing this. So we feel that central bankers should not be setting rates, right? Cause they're people and they're like subject to politicians, you know, making pressure and influencing them. So in the future, as we see, you know, they need to be very predictable on setting rates. So in the future, as we see, they will have a software, right? Might not be ours, might be theirs, but you know, they will have a set of, you know, an algorithm setting rates. And then central bankers, instead of monthly setting rates, they will just tweak the parameters, you know, until they perfect their own controller, right? Yeah, isn't there a danger though in where there will be crackdown, let's say on the use case and then the attention towards stable coins like Rai's will just... Yeah, I mean, there is. I mean, everyone is noticing this, right? We feel Rai is last in line, though. The risk is there. I mean, I agree with you. But for example, if you look at DAI, they have USDC inside. So, you know, there's one action from Circle from being frozen. They also have, you know, a huge governance thing going with lots of people that can tweak and that can do many things in the system. We prevented that. So we try to close these doors. There's also another thing, right? When you look at stable coin regulation, we're lucky that regulators think stable coins are all packed to one. So I think they're overlooking still, you know, like how Rai works and how stable it is. So yeah, I guess this is gonna happen eventually, but we feel Rai is the most resistant of all, you know? And we're keen to improve it too, you know, with new designs, new iterations of it. That's amazing.