 My name is Steven Valeri. I am a smart contract dev at the Ave companies. Been there for about a year and a half, have worked on some things like our cross-chain governance bridge, our v3 deployment, and most recently have been spending time working on our stablecoin project Go. And I'm really excited to tell you guys all about that. But before I get into Go, kind of want to take a step back and walk through the current stablecoin landscape. And in doing that I think that will give some helpful context as to you know what is Go and how it fits into that broader ecosystem. And I don't know if who else was here for the previous talk, but it was a great talk about Rai, which is a stablecoin. And I think it perfectly kind of highlights why understanding the landscape is important, because what the heck is a stablecoin? There's so many things that fall under this definition, that it creates confusion, it creates risk, and you know just saying that you're working with a stablecoin isn't sufficient to understand what the heck type of asset you're working with. So let's try to answer some basic questions around stablecoins and I think we'll pretty quickly identify why it's so challenging to understand what people are talking about. So what is a stablecoin? I think at the broadest level you could say a stablecoin is an asset that attempts to maintain a stable price. I think very commonly we're seeing peg stablecoins, so they're pegged to some other assets value. Most commonly I think and most dominant in the market is US dollar peg stablecoins, but we're also starting to see stablecoins that are pegged to other FX tokens. And there's also tokens that just aren't pegged, so again Rai as an example, it's a stablecoin, but it's not pegged to a specific price. So it's a token that aims to have less volatility. But I think generally at this point if someone were to say yeah I traded into a bunch of stables you would probably assume that they're talking about a US dollar pegged stablecoin. So how does a stablecoin work? We answered one question of what is a stablecoin and I think here at a second question it's pretty obvious that there's not really a straightforward answer. It depends. It's totally different depending on the type of asset that you're working with. And this creates some challenges and presents risks. If you just assume that the token that you're using is in fact stable and without understanding how the underlying stability mechanism works or other risks that are present in that asset you may be taking on far more risk in your portfolio or whatever you're trying to do than you're intending. So yeah again just these things are so different. You can't compare apples and oranges to the users here who know what die in USDCR if you were to ask them are these the same? People would be like no very different. And I thought this analogy played very well and I've just realized that I'm going to in fact be comparing stablecoins throughout this presentation so maybe not the best analogy. So let's take a look at the current landscape. As you can see here the one-to-one backed centralized stablecoins are totally dominant. You can see Tether USDC BUSD are in the tens of billions in terms of market cap just kind of totally far and away dominant. Next in line is DAI. So DAI is a decentralized over-collateralized cryptocurrency backed stablecoin. And that's really the next leader in the pack and definitely the leader in the pack in terms of this type of asset. There are other types. There are other assets in this category like MIM Magic Internet Money and then GO, AVE's native stablecoin which we're developing will fit into this category as well. Also here there's other stablecoins that have much smaller market caps but are using new stability mechanisms things like FRAX, things like RYE which we'll talk about as well. And these things are just so different that even having them in the same category presents challenges in talking about them and comparing them and trying to use them for the same purpose. So one other thing I'd like to call here and I think that's probably the biggest example of why this stuff is important is an asset that's not included here which is UST. So the stablecoin associated with the Tera project it was approximately 18 billion dollars worth of value at top market cap that has essentially disappeared. And that is comprised of users and people not really double-clicking into what is this stablecoin, how does it work, what are the risks, how does it compare to other stablecoins. So I think that's kind of the ultimate example of why we're even having this conversation around well what really is a stablecoin. We've talked about those top three. They're one type of stablecoin which is a centralized one-to-one backed stablecoin. Examples are USDC, USDT, BUSDT, true USD. In this case they are generally assets in which you trust a centralized institution to custody in the case of a US dollar peg stablecoin one US dollar per each stablecoin that they mint or issue. There's caveats around this though, right? You're trusting them to maybe hold about one dollars worth of assets in their reserve for each thing that they mint and you're also in some cases trusting them to hold about one dollar's worth of US dollar equivalents. So again per each of these institutions and their processes and how they work double-clicking into what this asset's actually backed by is it one-to-one, what are they doing, are they using treasuries is important. So here we can highlight some of the risks of working with an asset like this. Obviously it being centralized is to some extent counter to the general decentralized ethos of blockchain environments and in having this trusted entity we take on risk, right? We're trusting this entity to be managing their reserves appropriately, right? Like they aren't just investing all of that reserves into risky assets so that's very important. To mitigate this some companies are using audit firms so center with Circle. They hire Grant Thornton, top five accounting firm in the world to publish reports to give users confidence that they have reserves of US dollars, US dollar equivalents that are equal to or more than the amount of value they've issued on chains. Another risk you're taking with this trusted entity is just generally how do they function as a business? You could think of things like IT security, right? Who has access within their systems to make transfers for their reserves? This is something kind of basic but very important. And then IT security specific to Web 3, who has access and how do they manage their wallets that can make really important transactions or freeze users? Oh, one other point on the reserve ecosystem and getting confidence that these reserves are backed. True USD instead of having an auditor has introduced a solution with Chainlink called proof of reserves in which they have oracles that report the status of all of their accounts. So by doing that the system can never mint more than the reserves that they have. So that's another interesting solution and attempt to give users confidence that these assets are in fact backed and redeemable. Another risk you're entrusting this institution and entity is that these stable coins often have the ability to freeze and address or it could also be a pool. And in doing that you could potentially lose access to your funds at the discretion of these institutions. Of course there are times when this makes sense, right? In the most recent B&B hack, Tether was quite early to freezing the hackers funds. But you're dependent on this institution making the appropriate decisions in the future which you might be hesitant to do. So the next type, decentralized, over collateralized crypto backed stable coins. The most obvious example of this is DAI. There's also magic internet money. Each of these tokens gets minted. That's minted is backed by crypto collateral. This can be Ethereum, Bitcoin, other one-to-one stable coins. And in order to mint them you need to deposit your collateral to a smart contract. So this is a clear difference from the previous example. This smart contract is on chain. You can clearly see and have confidence that the smart contract holds enough assets to collateralize the stable coin which has been minted. You also have confidence around the rules in which the system works. It's controlled by a smart contract which is open source software. You can see the code, you know how the reserves will be handled. So you have confidence around how that will work. In addition to the smart contract, in some cases you have certain parameters within the system that can be configurable. Or it could in fact be an immutable smart contract. So once the system is deployed there's no configurations to change. I think more commonly most of these systems have a few configuration variables at least. And these are often set by DAOs, which is a decentralized set of token holders. Hopefully incentivized to maintain the stable coins peg. And this encourages and helps de-risk the fact that and not be dependent on one single entity for the stability of the system. That being said these also have a lot of risks. Just because you move away from some of those centralized concerns, there's still risks with this different type of asset. So first of all there's the stability mechanism. How does this token maintain its peg? So some common ways in which this is done is an oracle within the system that's responsible for telling the system how much this stable coin is worth gets pegged to one dollar. And that's regardless of whether the market price is above one dollar, less than one dollar. And by doing that it creates arbitrage opportunities in which which helps stabilize the token. And if we have time later we'll talk through some examples of that. Additionally interest rates can be used. So you can help manage the supply of the asset based on interest rates. With high interest rates people will be paying back their positions which will decrease the supply impacting the price. Same with low interest rates. If you have low interest rates more people will be interested in taking out positions increasing the supply again impacting price. Another risk here is the collateral that's being used for this decentralized cryptocurrency backed stable coin. The stability of the token and its collateral is dependent on the value of its collateral. So in some cases all the risks of the collateral come through and are present within the stable coin. So for example we said we've de-risked these types of coins by removing the centralized entity and how the system is controlled. But that being said while there's collateral that backs a decentralized stable coin which is a one to one centralized stable coin you're still exposed to those risks of how that centralized entity is managing their stable coin. Additionally you generally don't want volatile assets. You would like assets that are relatively stable in order to minimize the amount of liquidations that are required and reduce the possibility of having undercollateralized positions within the system. I think that gets to flash crashes again around the price of your stable coin when you have an overcollateralized stable coin you need the collateral to be worth more than the amount that you have minted. Over time generally if assets if the price of assets decreases that are your collateral that's okay there's liquidation processes in place in which someone can come they'll pay off your debt and they get your collateral and the collateral is worth more than your debt so they make out a little bit of extra money. Really where a risk comes into play is if the price of your asset crashes the collateral asset crashes so quickly that liquidators do not have time to perform those liquidations. In that case you result in undercollateralized positions which likely result in a deep peg of your coin. Again we talked about there's different aspects of these protocols that are configurable so making sure that A it's configured appropriately and the person or the entity or DAO who is configuring them is knowledgeable in the space and is making informed decisions is important. And then finally there's smart contract risk right there's always a risk that there's going to be a bug in the code. You can do as much as you can to try to eliminate and mitigate this risk from responsible development practices internally internal reviews external audits which I think we see throughout the space. Yeah so you can do as much as you can to try to reduce the risk of smart contract bugs but at the end of the day they'll exist in the space. So briefly other types of stable coins I think we already can see there's a huge difference between one to one backed centralized stable coins decentralized over collateralized stable coins and now a couple of others that I hesitate to even try to name what type they are because they're so different and function very interestingly. So one is Frax Frax is a stable coin that is partially backed by collateral and then also partially maintains its stability through algorithmically. Obviously that's quite different than a die or USDC or you could look at Rai which is a stable coin that is not pegged to any specific asset and its stability mechanism works through understanding the reduction rate. So how often are people taking out positions how often are people repaying their positions and based on the rate under which that is occurring the price of the asset will slowly vary one way or the other. And this isn't to give you a full understanding of what these systems are and how they work but it's to say these are totally different types of assets that we're talking about in the same category of stable coins and now if you go to think about stable coins or work with a stable coin you should say what is the stability mechanism how does this actually work is it pegged is it not pegged it's more to kind of promote that thinking of what are the risks of this coin and is it actually going to maintain its stability cool. So now I get to talk a little bit about GO which falls into that category of decentralized over collateralized crypto backed stable coins and it will fit natively into the Ave market. So one thing we recognize that Ave looking at our existing liquidity pool protocol was that there's a lot of functionality in our general market that would be required for this type of stable coin. Things like depositing collateral things like liquidation processes these things exist within the Ave protocol and also are exactly what you need to facilitate a decentralized stable coin. So I think that's something that's really nice even on the development side is that GO fits into the existing Ave market. So a lot of the processes and ways that you will interact with it should be very familiar to interacting with GO. It's really a new custom asset that's getting added to the market. So while there are differences in the implementation and we'll go through those in some detail at a high level when you go to interact with Ave and borrow GO it's pretty much the same as borrowing another asset. You deposit your collateral you borrow GO you hold it for some amount of time at a cruise interest and eventually you pay it back. So that's pretty much the same process as any other asset. That being said when it gets added the way that this asset is configured has differences and the differences are what help it maintain its stability. So let's walk through those. The first is that this asset isn't supplied to the market. So if you think about borrowing some other asset you know if you deposit with and borrow wrapped bitcoin somebody else has to have deposited that wrapped bitcoin in order for you to later borrow it. In terms of GO that's not required. When you deposit your wrapped ETH and borrow GO nobody has to have deposited it. Instead the protocol reaches out to the GO contract and mints that GO on demand. Same goes for when you repay that GO is actually burned rather than going back to the suppliers. The oracle price is fixed to one dollar. So of course other assets the oracle reports the actual market price so that the protocol knows how much value is this asset. How much can you borrow against it maintaining that over collateralization. In this case GO is pegged to one USD despite what the market price is. So this helps maintain stability. It creates arbitrage opportunities say the price is above one dollar in the market. When the protocol thinks it's just one dollar you can mint a bunch of GO you know that is debt at the cost of a dollar. You can sell it at the market say for a dollar and five cents. That increases supply which should reduce the price. And then eventually you can buy back that GO at one dollar pay back your dollar debt and you know five cents on the dollar is arbitrage. Stability mechanism and difference in how this asset works is in its interest rates. Normal assets the interest rates are based on the utilization of a pool. So you know if you have 100 token supplied and 10 of them borrowed the interest rate will be relatively low. If you have 100 token supplied and 90 assets borrowed the interest rate will be quite high. In this case there are no suppliers so interest rates work differently. To start interest rates will be set by governance. And again this serves as a stability mechanism. You can increase supply by reducing interest rates and the inverse holds true as well. Another difference to highlight is that interest that accrues on positions will be repaid to the AVE governance. So rather than having to pay suppliers because there are no suppliers that interest can be redirected. Some other differentiating factors for this token is that discounts are available to users who stake AVE in the safety module. So you know if governance has set the interest rate to 3% by staking AVE you can get some discount on that interest. There's also multi-collateral positions so you have the flexibility to use different assets as collateral within the same position. This is different than DAI where you have a single vault. You have one collateral type so this introduces a little bit more flexibility for some use cases that might make sense where if you need to re-up your collateral you don't necessarily need to swap between assets to fund that position. And then thirdly you can earn interest on these positions so by supplying your collateral to the AVE protocol other users will be borrowing it and you'll earn interest on that which effectively reduces the interest that you're paying on your borrowed positions. We highlighted and a lot of the earlier part of this talk was around risks right so let's talk through what are the risks here and how are they mitigated in the AVE market. So collateral asset risk, the AVE protocol has a pretty strong history of being relatively conservative and effective in managing the assets that are used for collateral and you know setting the configurations around those so making sure you have safe over collateralization ratios etc. Similar goes to the flash crash risk. This risk exists but we've seen that the AVE protocol is a relatively resilient market that has gone through pretty turbulent times already. And protocol configuration is pretty similar to collateral asset risk where we work with the DAO, the DAO works with Gauntlet and was relatively conservative. There's the smart contract risks and stability mechanisms, I think we've covered those enough. So when go, soon TM, there's a few dependencies and governance right now including deploying the V3 market whether we'll be upgrading the V2 market in place or deploying a new market for V3. So there's some dependencies around that which will as soon as those are done we'll look to move forward with go and goes future. We're hopeful that we can move go to L2s. We think there's a really large opportunity there with lower fees to have this as a token that's used widely both by crypto native users and more of the general population. Another interesting functionality is that we have facilitators. So go, AVE is the first facilitator of go which means that they have permission to mint more go and in the future AVE governance, I'm getting the time's up, let's talk fast. AVE governance can add additional facilitators which will have the ability to mint go if they are approved. So obviously there's a lot that goes into that, a lot of reviewing, I think that will probably be more long-term but something cool to look forward to. That's it, thank you guys.