The Optimist Twitter Spaces - Ironclad Finance

In The Optimist Podcast’s Twitter Spaces which took place on April 18, 2024, Charles hosted 0xDeantoshi and Justin Bebis from Ironclad Finance to discuss innovation, interaction, and financial strategies, from Mode to Ironclad, with insights on tokenization, risk management, long-term perspectives, and more! Read our notes below to learn more.

Background

Charlie (Host) – Co-Leader at The Optimist

0xDeantoshi (Guest) – Developer at Ironclad Finance

Justin Bebis (Guest) – Founder of Conclave.io

Ironclad Finance – a decentralized, user-driven borrowing and lending liquidity market inspired by Aave

Ironclad Finance – DevOps, Skepticism, and Progress

Deantoshi describes his role at Ironclad, focusing on DevOps and maintaining Ironclad Finance by researching and listing new assets to ensure their safety. He shares that he handles a variety of tasks beyond just coding, keeping his role engaging and diverse.
Deantoshi recounts his entry into the cryptocurrency space in 2017, initially intrigued by Bitcoin and the promises of various ICOs. He reflects on the impracticality of many tokens he encountered, including one purportedly aiding firefighters, which led him to skepticism about the utility of these tokens.
Deantoshi explains how the decline of the crypto market post-2017 discouraged him until the advent of CryptoKitties and later Defi summer in 2020 rekindled his interest, particularly with platforms like Aave and Curve where one could get paid to borrow.
Justin says that he became interested in crypto in 2020 because it presented solutions to accounting issues with its automated bookkeeping and wallet systems, sparking his excitement for the implications on taxes and compliance.
Justin observes that as he became more familiar with the technology, his optimism grew because the tech proved to be real. He mentions his experience growing Conclave and how FinTech engineers found Web3 significantly better than their previous projects, highlighting the validation and respect for vision in working with Deantoshi.
Charles remarks on Deantoshi’s significant progress from creating Dune dashboards to performing real development work, praising his hard work and adaptability.

DeFi Moments, and Mode’s Ecosystem

Charles shares a personal anecdote about introducing his roommate to DeFi, describing a late-night session where they set up a wallet and explored classic DeFi applications, leading to a moment of realization for his roommate about the potential of DeFi, which Charles found heartwarming.
Justin discusses the potential and appeal of tokenization in finance, explaining to finance professionals the advantages of blockchain for raising valuation and reducing time to liquidity through smart contracts, despite the risks and legal complexities. He reflects on the rapid gains and high stakes in crypto investment compared to traditional venture capital, highlighting the excitement and risks associated with the fast-paced crypto market.
Charles starts the discussion on Ironclad Finance inviting perspectives on Mode from both a user and builder standpoint, emphasizing Mode’s attractiveness.
Justin shares his experience working with the Mode team, describing an urgent project where they needed to develop a secure farming platform within two weeks. He praises Mode for its supportive nature towards teams wanting to build native projects on its network.
Justin details the rapid development and successful deployment of a new platform on Mode, highlighting the impressive market size and borrowing statistics of the platform. He credits the collaborative and organic environment of Mode as key to their success.
Deantoshi adds his technical perspective, mentioning the seamless integration with Mode’s infrastructure and the support for Oracle providers which facilitates building on the platform. He appreciates Mode’s strategic business development and incentives that align with current market trends.
Deantoshi highlights Mode’s balanced approach to rewarding both users and developers and suggests that this strategy will likely enhance Mode’s market presence due to increased activity and development on the platform.
Justin states that the blending of professionalism with a crypto-native understanding is crucial. He highlights the alignment of incentives between Mode and Ironclad, highlighting that their success is interconnected through marketing support, advisement, and investments.

DeFi Money Markets: Prioritizing Safety, Stability, and Differentiation

Charles mentions the importance of prioritizing builders and aligning with them to ensure the success of a network. He asks about the role of Ironclad as a lending and borrowing protocol on Mode, inquiring about its significance in securing a place for liquidity providers.
Deantoshi explains that DeFi currently revolves around three core applications: decentralized exchanges, perpetual exchanges, and money markets like Ironclad. He highlights the versatility of money markets, which allow users to maintain full exposure to their assets while taking various directional bets without selling.
Deantoshi further elaborates on the strategic uses of money markets, such as leveraging stablecoins to hedge or amplify investments, thereby enhancing financial strategies without the need to liquidate primary assets. He talks about the importance of safety and reliability in money markets, highlighting their team’s experience and dedication to deploying secure financial solutions on Mode.
Charles says that for him, money markets are an optimal way to make directional bets with leveraged exposure. He prefers them because he is not a short-term trader and because money markets offer more stable borrowing costs and less attention to funding rates than perpetual exchanges. He notes that money markets do not have open interest caps, which can fill up quickly on exchanges during active market conditions.
Justin states that their primary job is to create the safest possible environment for financial maneuvers, employing risk management strategies akin to those used by hedge funds to minimize risks and reduce dependencies. He mentions their platform’s resilience during major market downturns like the FTX and Luna crashes, highlighting their commitment to providing top-notch service without pushing for maximum utilization or excessive profit-making.
Justin also discusses their plans for synthetic debt instruments and stablecoins, aiming to position their platform as a major facility for such products once the $MODE token launches. He highlights their ongoing efforts to ensure safety in market configurations, working closely with providers like Etherfi to manage and improve liquidity conditions to support stable market operations.
Justin explains that “mid-market” refers to companies targeting a specific market category rather than aiming for a massive scale. He emphasizes the importance of focusing on user onboarding and creating accessible opportunities, contrasting this approach with the pursuit of headline-grabbing valuations. He also describes their role as the application layer, which helps attract users to larger platforms.
Justin further discusses the differentiation of their platform in the crowded lending market. He suggests focusing on stablecoin offerings and mentions Aave as a comparison, highlighting that their approach involves more user-focused innovations rather than just replicating existing models.
Deantoshi elaborates on their differentiation strategies, emphasizing their experience in the space and their move to incorporate PID controllers into their interest rate strategies. He explains that PID controllers allow for more dynamic adjustments to borrowing rates based on actual usage, making their platform more capital-efficient and responsive to user behavior.

Enhancing Financial Efficiency and Innovation in Cryptocurrency Markets

Charles says that the implementation of automated flexibility in interest rates results in higher capital efficiency, greater utilization of the protocol, and increased fees for suppliers. This dynamic approach is a significant improvement in responding to market needs.
Justin notes the long-term perspective of their team and how it influences their risk management strategies. He draws a comparison between the impact of PID controllers in their protocol and the significant cost savings applied mathematicians can achieve in large-scale operations.
Justin explains that their platform optimizes risk and reward management more effectively than traditional systems like Aave or Compound, particularly due to their focus on building for L2 solutions where operations are cheaper.
Justin highlights the inefficiencies in crypto markets due to their nascent nature and the complexities involved in arbitrage and risk assessment. He advocates for the use of PID controllers to manage these risks intelligently.
Deantoshi mentions that the upcoming Ironclad token will offer benefits for long-term staking through their reli query technology, enhancing yields for long-term investors.
Charles teases future discussions about the Ironclad token and introduces the concept of an $IUSD token, hinting at further developments post-airdrop.
Charles states that higher capital efficiency, increased utilization of the protocol, and more fees generated create automated flexibility in the interest rate, reacting dynamically to market needs, which he describes as impressive.
Justin acknowledges the importance of their long-term operational perspective, which helps them manage risk and reward effectively. He likens PID controllers to cost-saving measures in large-scale operations, emphasizing their potential to enhance financial outcomes.
Charles discusses the balance between innovation and complacency in financial standards, suggesting that developers need to question long-established practices to foster innovation.
Justin continues, explaining how PID controllers can modulate risk and reward, enhancing both revenue and stability for lenders. He highlights the inefficiencies in crypto markets due to their nascent nature and the lack of underwriting knowledge.
Deantoshi introduces the potential of rail query staking with the upcoming ironclad token, suggesting that longer-term staking could yield greater rewards.
Charles hints at upcoming discussions about the Ironclad token and $IUSD token, suggesting that these will play a significant role in their strategy.
Deantoshi elaborates on the benefits of staking the Ironclad token for longer periods, indicating that this could incentivize longer-term investment in the protocol. He also mentions the possibility of integrating an NFT market to trade mature staking positions.
Justin explains that their time-weighted staking strategy prioritizes liquidity and safety, allowing for the creation of a bicameral system for governance votes. This system takes into account the duration of the stake and the number of tokens each staker holds to assign voting power proportionally.
Justin mentions that they are introducing the $IUSD token, which will integrate with their PID controller to support major network assets. Special governance and liquidity incentives are planned for holders using the Mode token with $IUSD.
Justin discusses the concept of farming using Mode and $IUSD to build liquidity and generate yield. He highlights the innovative farming tools they are developing to enhance liquidity management and reduce risks associated with price volatility.

Mode Airdrop, Embers Program, and Ironclad Token Launch Updates

Charles expresses enthusiasm for the upcoming Mode airdrop and queries about the duration of the Embers program, which rewards users with ironclad tokens for engaging with the platform.
Deantoshi describes the Embers program as a points system where using the platform earns users a share of the initial airdrop of ironclad tokens. He mentions that the program’s details are available in their documentation and FAQs within their Discord.
Justin targets an April 30th, 2024 launch for the Ironclad token, aligning with the end of the Embers program. He describes their efforts to coordinate with various stakeholders, including exchanges and promoters, to ensure a successful launch.
Deantoshi warns that their airdrop has not been released and stresses the importance of following only official updates to avoid scams.

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Show Information

Medium: Twitter (Audio)
Show: The Optimist Twitter Space
Show Title: The Optimist – Mode Network
Show Date: April 18, 2024