Angle

My name is Oscar, I'm the host of Degen Responsibly, a podcast and live Twitter space by Exponential DeFi, where we're on a mission to bring more rationality into the industry and also make it more accessible to more types of investors. Today we're featuring Angle and the Angle Eurostablecoin as our featured guests. We'll be discussing all things, e.g. newer stablecoin risks, stablecoins in general, how the protocol works, what makes them unique and why it is worth checking it out. We have today Pablo, one of the founders of Angle. Thank you for taking the time. Thanks Oskar, thanks Oskar, really glad to be here. It's an excellent opportunity to be able to present Angle, Agero and more generally stablecoins to the whole Exponential community, so I'm really super excited. Amazing, amazing. So I always start by asking two personal questions, well, not so personal. The first one is, how did your DeFi slash crypto journey start? And then when did you decide to go all in? So actually, you know, there are different types of people in this space. There are those who wait a few years before, like from starting in DeFi to launching protocol. And there are those who just discover everything and want to launch something and I'm in the second category. So I started playing around with DeFi when I was a student, thanks to some classes I took when I was at Stanford University. And so I took a crypto class, I discovered about some major DeFi protocols. And at this point, I was like, OK, this is where I want to work. I applied to some crypto companies, got rejected by some of them. Actually, I had no reception. And then at the same time, I was getting a yield on USD stablecoins on Compound and Aave. And I realized that I was exposed to exchange risk. And so I thought, let's create a DeFi for everyone that everyone can enjoy without having to care about forex risk. Let's create a US stablecoin. And that's what led me to the DeFi journey. So you went from effectively 3 to 1, from understanding and wanting to learn and work in DeFi to building your own protocols. Yeah, sorry. Yeah, it was a really short and intense journey, you know, like in two months we had written a white paper, signed a term sheet. And maybe it's an advice I can give to all the people out there who are trying and seeking to raise funds, you know, like we didn't know nothing at the time. And we got really super lucky. And the reason why we've been lucky, I should say, is that we've been able to show to investors in the protocol that we were able to iterate quite fast on the mechanisms behind AGL and that we were, you know, like a team that would ship. And this is what, you know, accelerated the funding process for us and eventually get us to move from like a school project you are doing on the side to a project that is your job and that you're doing on a full-time basis. Amazing, amazing. Well, that's indeed an inspiring story. So let's switch gears a little bit to talk about Angle. So what is Angle? If you can explain to us, like we're five, what is it? Well, like you're five, Angle is a decentralized stablecoin protocol. You can think of Angle as an equivalent to Maker, even though protocols do not work exactly the same, but it's like Maker that does DAI, but Angle is mostly focused on the euro at the moment. Okay. So it is a protocol to mint a euro stablecoin. And if you can expand a bit more, what is a problem that you're trying to solve? You talked very briefly about FX risk. So maybe you can expand what is a core problem that you're solving? Sure. So there are two essential problems which led us to start thinking about Angle and what we wanted to do with the protocol. The first problem, I mean, it's not really a problem, but it's something that can be improved. We believe that stablecoins can be made more efficient. You know, like Maker, when you borrow DAI on Maker, you need to over-creditize at 150% your position. It can be capital inefficient, it is capital inefficient. But on the other hand, you have centralized stablecoins, which, you know, you need trust, you need to trust Circle, you need to trust the teaser for always keeping enough money in their reserves. So the problem we're trying to solve, the first problem is trying to account for more efficient stablecoins, stablecoin protocols. You know, try to optimize the stablecoin treatment between decentralization, peg, and what's the third one? And capital efficiency. So we want to keep pushing for protocols that, while maintaining the decentralized aspect, can be capital efficient and allow for the creation of stablecoins with a really tight peg. That's the first issue. And I think that while we didn't reinvent the wheel, you know, with Angle, we've tried to push research further and we could go down the line when discussing about H0. And I could explain to you how we try to do a bit more, a bit better than what Maker is doing. So that's one thing. The other problem we want to solve is we want to build DeFi verticals that will help on board millions, if not billions, of people to DeFi. And so the first vertical we wanted to build is a Eurostablecoin, you know, liquid Eurostablecoin. Because DeFi so far has been very much centered around the dollar. I'm not saying it's a bad thing, but if you are a European user and if you want to get a yield on a stablecoin, it's better if it's a Eurostablecoin. So that if the euro, if the dollar decreases with respect to the euro, you are not losing it with any money. And it's the second issue we're trying to solve. We started with the euro, but there is far more that we have in mind and that we want to do. Amazing. Amazing. And yeah, you're right. I think that DeFi at the moment, as you say, is quite biased towards dollar yields and dollarized products in general. And when you come from another region of the world, maybe you like that type of exposure. If you come from a developing country or a country in general with a weak currency, maybe you actually want to have exposure to dollar yields. But in Europe, the story is different. I myself lived in Europe in the past. And so the concept of holding dollars is so foreign to a lot of people that, yeah, doing DeFi in dollars doesn't make a lot of sense from that perspective. Yeah. And you know, it's often the first, like in the space, it's often first arrive first serve. And when launching a stablecoin, you're like launching a new standard. So, you know, I think we're fighting for two things. We're fighting for the 8 euro standard among all other euro stablecoins. And we are fighting for the euro stablecoin standard against, I mean, not against, but in parallel to USD stablecoins. So since like USD stablecoins arrived before the euro, it's kind of harder to grow the euro stablecoin market. And when you look at it, there is a huge discrepancy. So far, the size of the USD stablecoin market is $140 billion, but the size of the euro stablecoin market is 300 billion euros. And when you look at the respective size in the forex market, there is an imbalance. And correcting this imbalance, it requires network effects, it requires integrations of euro stablecoins, it requires more protocols, more exchanges starting to use the euro. It's not going to happen super easily because protocols and so on have little incentives to move. And what I believe can lead us to create at least more, give more significance to euro stablecoins in the market is by building more products, products that you don't have around the dollar. So for instance, savings products in euro that will enable you to get risk-free euro yield in DeFi. I may be going a bit far, but trying to say that mimicking and replicating what other USD stablecoins are doing will not be sufficient. And we need to think further and try to think about how we can keep innovating in the space so that more people are playing with the euro in the space. Yep. Yep. Totally agree. I think this is one of my personal thesis that stablecoins will be more regional in the future. Right now, there's only one big one. But in the future, if the industry really wants to expand to more countries and to the billions of users that everyone is talking about, we'll need regional, if not one stablecoin per fiat currency so that people start actually getting it and it's how they onboard into DeFi. We saw how successful USD was in onboarding new types of users into DeFi, although that was quite unfortunate of how that was managed. It did prove the point that unless you have a simple product that users can relate to, users will all be coming to DeFi and queuing up to create their own wallets. No, I do agree. And it's like thinking that DeFi is so cool and so people will use it. I don't feel there's been any zero to one so far for big tradFi and DeFi institutions to move to DeFi. Because either you're targeting mass users or you're targeting financial institutions. There has been some interest with all the integrations that have been announced by Polygon with other big corporations playing around with DeFi. But I think we're trying to think of the products that will be zero to one for institutions like investment companies, funds to start using DeFi because it is more efficient than playing around with DeFi. And there are some use cases which are notable and which requires more liquidity, but which could be interesting. For instance, if you look into the Forex market, the Forex market is an inefficient market split between multiple entities, multiple markets that is not open 24-7 that has been often manipulated. And if you put it all on transparent options, then it's more efficient. But again, you need more liquidity. So what I'm thinking, for me, the way is to look at what Maker is doing with DAO, with all the real world asset stuff, helping companies refinance themselves, take advantage of long-term holdings they have to finance their working capital. All this kind of thing can be zero to one, which do not require more liquidity than we have right now. And this is what leads DeFi to take over, I believe. Yep. It's an interesting vision for sure. So let's come back. a little bit to Engel. One of the key questions I always ask is what makes the protocol unique? So in this case, as you talked a bit about how you need to keep thinking further and innovating in the space to fight for that Euro stablecoin DeFi banner standard, what makes Engel unique? So beyond the Euro and yeah, the fact that we're mostly Euro-centered, I think there are some unique features in the protocol that make Engel unique as a stablecoin protocol if you compare it to other USD stablecoins. Maybe it's helpful to take a step back to remember what a DeFi protocol is about. A DeFi protocol, a stablecoin protocol is about taking some volatile cryptocurrencies as a collateral and making something which is stable out of it. Engel has pioneered in some ways to create stablecoin in a capital-efficient but over-cryptanalized manner. It's kind of the most optimal thing you can think about in the stablecoin trademark. You can create H0 at Oracle value from USDC and DAI, but the protocol is still over-cryptanalized. So you get the same safety properties, the same security properties you have with Maker, but creating H0 can be done far more cheaply than it would cost to create a Euro DAI, for instance. So this is what the mechanism that allows Engel to do this, we call it the core module of the protocol. So we've been innovative on this aspect. You can also borrow H0, just like you borrow DAI or you can borrow FRAX from FRAXLEND. And the features of Engel Boring Module are also unique. They are based on advanced liquidation mechanism, like this Boring Module is based on advanced liquidation mechanisms, inspired from what Euler is doing for its lending protocol that rely on Dutch Auction. It does guarantee that lenders and like borrowers in the space, if they get liquidated, they do not lose too much. And Engel is the only stablecoin protocol that has incorporated this mechanism in its protocol. So you're better off borrowing H0 from Angle than borrowing potentially any other stablecoin from any other stablecoin protocol. And last, what I want to insist, it's not so peculiar to Engel, but at least we have, this vision is in our DNA. You know, like, I really like what Aave is doing. I mean, they're not doing it yet, but for their ghost stablecoin, GHO. They mentioned that it's going to be possible to create GHO through different facilitators, like different sets of smart contract that enable the creation of GH. Well, it's already here for Engel. You can create H0 through the core modules, through the Boring Module, while working on the real world finance infrastructure that will allow people to meet H0 from like tokenized financial products. And this composability at the protocol level also makes Engel unique. You know, the fact that Engel can incorporate native use cases around H0 directly and potentially in a more efficient way than if you were making a protocol on top of it. Like for instance, leverage yield, you can do leverage yield with Engel, like with a Curve LP token as a collateral, borrow H0 and directly swap this H0 for more of the Curve LP tokens. Then since it's built around H0, like Boring cost of H0 is like 0.5%. And it's really, really cheaper than what you would get if you were doing this on like other really cool protocols, like Gearbox, Notional, since like Engel, we can meet the stablecoin directly. We don't have any cost of capital. It makes it really far more efficient. So it's not particular to Engel, but we are already doing this. And yeah, it's what's cool about Engel as well. Yeah, it's almost like combining the best out of everyone else from the Dutch auctions, from Euler, the real world assets effort that Maker and Dyer are doing, the cheapness and capital efficiency of the best protocols. So you're like combining everything and bringing this idea of DeFi being composable, not only at the protocol layer, but also at the almost ABS layer and bring the best value to your users. Yeah, so, you know, there's always a balance when building DeFi between trying to, like balancing between composability and internalizing. And you need to know where you put the balance because it's easy like to build protocols to add new features, but you also need to know what your protocol is good for. And sometimes you're better off integrating with other people than with other teams, other protocols, than building it all by yourself. So, you know, it's an interesting subject. And I don't feel like that the meta protocol, I don't know, like fat protocol thesis is the right one. I don't have any good idea at this point of protocols which made the right product decisions between internalizing or just taking advantage of composability whenever they wanted to add product. Like it's hard to find a balance when you are protocol like that. Because if you don't build the products, people won't natively integrate to it. So wherever you want to do it for people, you need to build role. But for like, for instance, DIME and Maker, they don't need to build everything. People will do it without requiring any effort from Maker. Yeah, yeah, as you say, it's a tough balance. But I think how we see it at Exponential is it ultimately comes down to who the user is and what is the user benefit. And also what is the opportunity cost? And you could be integrating, you could be building your own infrastructure, but you could also be doing something else that provides more value to users. So it becomes, you know, a conversation about trade-offs and trade-offs between doing something else than necessarily doing it yourself versus integrating with someone else. Yeah, there's a thing as well, when you are integrating with other teams and other protocols is that the risk of protocols becomes the risk of your stablecoin. Yeah. And it's also something to have in mind. You know, if you integrate with a protocol that gets hacked, then some way your protocol gets hacked as well. And you want to avoid that. So integrating other protocols, also, you know, like, well, it's supposed to be cheaper. You need to audit, you need to care for the management practices of the protocol. And, you know, when integrating a protocol and trying to push for 80 or somewhere, I'm like, would I be putting my own money in this protocol? Do I trust these people to handle my protocol? No, but I think it's a good practice. For sure, yes. If you would put your money there, well, if it's cool, if not, then certainly not for the protocol. We at the core team, but also many of the community members at Shield are more worried about the safety and what the ANGLE protocol is doing with its funds, with its strategies, with its design than what they are doing with their own funds. And it's good to have this interest in the community. Yep, yep. I figure this is a great segue to start talking about risk and how ANGLE mitigates some of the common risk factors for an over-collateralized stable coin. So let's talk about the first one that comes to mind, which is peg risk. How does AG EUR keep its peg with the Euro? What are the mechanisms to do that? Okay, so there are different ways with which EUR is maintained. The first way is that, you know, NG0 is like really, has really typically been seen with EURC and the protocol meets H0 in the curve, H0 in EURC whenever there are more EURC than H0. So it's like if there was a price stability module for a protocol with EURC. It's technically not a price stability module, but it has the time effect. The other reason, so it's really a side feature that was added afterwards. The main reason that makes H0 stable with EURC is what we call the core module. It's possible to meet H0 at a relative value from USD stablecoins and to redeem with H0 the corresponding proof value of what is the collateral of the protocol. So let's say you come with one USDC, the protocol will give you $1 worth of H0. Now, how does the protocol always manage to ensure the durability of each EUR against its collateral asset? Like let's say the value of the dollar, the USDC is a suspected EUR, then we need more than one USDC to give you the sales value of your one EUR. The protocol hedge itself against its USD EUR change risk by issuing what we call perpetual futures. So it's leveraging contracts which are sold to people who can long the dollar, short the EUR, make the protocol beta-neutral and guarantee that in all conditions, if regardless of the price variations of the dollar versus the EUR, of the protocol always have enough USD stablecoins in reserves to keep, to ensure H0 redemption and hence to ensure H0 steady. On top of that, the protocol has another layer, the security, better by the deposits of other people called standard liquidity providers who overcollect the protocol and make sure that the protocol hedged, it can still guarantee the redeemability of H0. So this is one mechanism. And then we have our boring module. It will guarantee that each EUR is overcollected that you always have more collateral and H0 in circulation. It's the liquidation features I was telling you about. Like if the value of the collateral decreases with respect to the EUR through this boring module where people get liquidated. And in the liquidation process, it is ensured that H0 and like technically badly collateralized H0 are repaid and that people are incentivized to do so. So, you know, it's like a self-fulfilling loop in the sense that if protocol gets unsafe because it gets badly collateralized, well, people can still make profit and re-collateralize the protocol, a bit like what Maker is doing with the liquidation. Except that Angular's liquidations are more efficient. So basically, and like any protocol, there are different stability mechanism at stage with Angular and H0. And all of them are here to guarantee that H0, well, remains stable, but still is an over-collateralized stablecoin. And one thing... It's impossible to hard-code this in the smart contracts of the protocol, but one thing that's really, really important and that we will never compromise with is the fact that we will never accept any endogenous collateral assets for H0. Like, I call it a centralized stablecoin protocol, but it's not an algorithmic stablecoin protocol. And we will never back H0 with the ANGEL token and do any mechanism that we have for like LUNA, which can create a virtuous loop, like a virtuous feedback loop, but also a crisis scenario and a spiral. And so it will never happen because there will never be any collateral assets, any endogenous collateral assets for H0. Endogenous. Yeah, that makes a lot of sense. So just to recap, there is the Eurocoin pool, which is effectively the sister coin from USDC, but in Euros. That is one of the main liquidity sources for people to trade AG Euro into, let's say, Fiat-backed Euros and then eventually for Fiat. Then, because a lot of your collateral is dollar-based, you're effectively... The protocol has liabilities based in dollars because it wants AG Euro to be reasonable for dollars. And from that perspective, you need to manage those liabilities by selling perpetuals. So you're taking the others out of the perpetual trade. There are also hedging agents who are looking to hedge their Euro exchange rate risk. And there's also the liquidations in the borrowing module. So those are the four things that keep the ANGEL Euro, the AG Euro stablecoin, pegged one-to-one. Exactly. And on top of that, I'm sorry if it's a bit complex for the audience because not everyone may be familiar with ANGEL. But on top of that, the protocol is engaged in what we call direct-requisite modules, where AG Euro are natively minted on EUR and on AVE. So it's Fiat-backed AG Euro, but Fiat-backed AG Euro are not really in the market. They only come in the market when they are borrowed through EUR's borrowing mechanism or through AVE's borrowing mechanism. And in this sense, the stability mechanism behind AG Euro becomes really that of what you would expect of the GO stablecoin on AVE. Interesting, interesting. And to explain why this might be needed, if I get the idea right, is if you see that the borrowing cost of AG Euro is too high, let's say on AVE or EUR, what the protocol could do is mint new stablecoins into AVE or EUR, increase the supply of stablecoins in the protocol, and then help reduce the borrowing cost. If the borrowing cost of the stablecoin, you know, it's negatively impacting the protocol. And is that the main idea? Yes, exactly. So AG Euro are minted whenever the borrowing cost becomes too high because we want AG Euro to be an asset that can be easily borrowed and without much cost of capital for it. Yeah, that would especially happen if it's trading above EUR 1, right? So you want more liquidity, you want the peg to reduce from over EUR 1 to exactly EUR 1, so you mint more. But in any case, it is over collateralized through the other borrowing protocols that are enabling that operation. You got it. Yeah, you got it. Because essentially, borrowing is like shorting. And so if AG Euro drops above peg, and I believe the price is going to go down, well, I'm incentivized to borrow. But if my cost of borrowing becomes too high, then I'm just losing money. So yes, it's a perfect summary. Yeah, it's effectively the same as what FRAX does with their AMOs, their Autonomous Market Operations, I think they're called. There are different terms, you know, directly produced AMOs, it's the same. We prefer not to use, well, I mean, we use it, but we prefer not to use it so much because it's called AMOs or like Algorithmic Market Operations. And the term algorithmic is kind of connotated in the space. Yeah, it's bad stuff. So it gets comfortable, and we feel that we need to get more than we need to confuse. Yeah, exactly. One of the other things that really caught my attention that is really cool for users is the SAN tokens. But I think it also relates to how the protocol mitigates risk. So can you explain a bit more about what are the SAN tokens and what is their purpose in the protocol? Yeah, great that you looked into it as well. So SAN tokens, and sorry for the naming, it's a terrible naming, which was like two years ago, almost two years ago now, and we need to find a more appealing name for it. Basically, in the core module, people can mint at Oracle value, then we have the hedging agents who can, along the dollar, short the euro and make the protocol delta neutral. But it's possible that the protocol is not fully neutral at all times against its USD euro change risk. You know, when someone comes to mint a million dollars worth of HD euro, then the protocol may be unhedged until someone opens a longer USD, short euro position. And so to cover for the moments where the protocol is not sufficiently hedged, we need a third security mechanism. And this third security mechanism is met through our standard liquidity providers, who just lend money to Oracle and their collateral should be used if the protocol is not well hedged and if the protocol gets badly collateralized because it was not sufficiently hedged. But to incentivize people to give these funds, you need to be able to reward them. And how are these people rewarded? Well, Engel invests a portion of its funds, of its VL, in contracts, like in strategies, like on Aave, on Compound, it gets a yield. The cool thing is that this protocol it's making is distributed to standard liquidity providers. So if there is 150 in the protocol, 50 coming from standard liquidity providers, well, the protocol will get a yield on 150. But this yield made on 150 will go to standard liquidity providers who just brought 50. So as a standard liquidity provider, you are essentially earning a multiplier on the yields you would be making if you were implementing the same strategies, the same Engel strategies as Engel. That's one thing. And on top of that, you are getting transaction fees from people minting and burning stablecoins. And you can also see being a standard liquidity provider as being a liquidity provider in an event like Uniswap, but without any risk of impermanent loss. And so it's a really cool product. We've tried to educate people about it. We still need to educate more, but it does. However, standard liquidity providers have made a lot of money in the protocol, thanks to the yield strategies. And we're constantly iterating to improve the yield strategies of the protocol while keeping the protocol safe. So yeah, it's an interesting use case in the protocol as standard liquidity providers. Yeah, amazing. Like I'm looking at our, you know, our data on exponential.fi. I see, you know, we listed two of the SAND tokens a couple of weeks back. One is the DAI pool and the other one is the USDC pool. So the DAI pool has roughly 2 million in GVL. It has been earning over 5% the last 30 days. The USDC won like 3.4%, which are significantly better rates than what you can get at Aave or Euler or even Morpho, which has this cool peer-to-peer technology. So you have like leading market rates for DAI and USDC because you get the benefit of accruing the yield that everyone else is not getting. Sort of like a leveraged yield without risk of liquidation or risk of impermanent loss. Now, you're right. And, you know, long-term for us is to position Arsemanger as like a wire through these yield strategies for standard liquidity providers. And by the way, you know, we are going to release this week, it has been voted by governance, a new yield strategy that should help increase the revenues of the protocol by like 30%. Nice. How does it work? So the main strategy the protocol does is that it invests on Kanpan, Aave and Euler and goes all in on the protocol that gives the best yield. The thing is that when you have funds to invest, the best allocation between different lending protocols is probably not all in the same lending protocol. It's to split between different lending protocols because whenever you are lending, you have a market impact. But the computation of how to do this allocation between protocols, it's an NP-hard problem that cannot be solved on-chain, that is hard to solve off-chain as well. So we also want to keep a permissionless aspect in the strategies, you know, so that harvesting and putting the strategies back at equilibrium, everyone should be able to do it. So what we are going to do from now on, we're going to adopt an optimistic approach where everyone can suggest an unpleasant portfolio of the protocol, but only those who propose allocations which are better than what the protocol currently has will get implemented. And so it enables us to keep a fully permissionless strategy while having something that can improve and that lets everyone the power to improve on what is currently done. And it's kind of powerful, you know, it's a changing paradigm where if you run all the computation off-chain and just run a verification layer on-chain, you can get far more efficient results while keeping a super cheap experience gas-wise. And I believe we could generalize this to many other aspects in DeFi, and right now we are doing it to improve the revenues of our standard LAPD providers. Yeah, and it also allows the community to be more participative in the strategies, which even I'll get with, for instance, a year that is a bit more centralized from the strategies perspective, that there's like some more active management in who chooses which strategies for which folds, and then in this case, we're allowing anyone to propose any allocation across DeFi. Yeah, but here it's just a case among others, and I'd be super curious. I don't think we're the first ones to do this, but I'd be super curious to see how it evolves, like the fact that off-chain computation and just on-chain verification, there is a trend, I believe, in the AMM design. like with CoSwap, with OneIntrusion, where I believe in the future the way people will trade on-chain is that there will be, it will be an order book model, but where orders are posted on an API not on the blockchain, and where people can just fetch signatures on-chain when they want to to take orders and settle them. So, like, it's it's not there yet, we are really in the first iterations of this but I believe that DeFi will go that way, because it's what will make them what will make it more efficient while keeping it permissioned. Yep, yep, exactly. I think there might be a trend in the future I think the guys from Summoner Finance, which we will talk with in about a month, also here on Legion Responsibly they also have a design in which they have off-chain computations but on-chain verification of their data and then eventually on-chain implementation but yeah, that's probably a whole other topic for another time. Let's come back to ANGLE so one of the things that is also cool about AG EUR is that it is cross-chain you do not need to be living on Ethereum, you could be living on Polygon, Optimism how many other chains is ANGLE EUR, AG EUR, live on? I need to count but you know, launching a stablecoin, you need to make it available in as many chains as you can so I think it's around 12 chains but the protocol only exists relatively on 5 chains Ok, that was going to be my next question if it's over-collateralized, can people in these other 12 chains borrow or is it only the asset that is available on that network do you have a global debt pool, or is it per chain, how do you manage that? it's per chain, so right now the protocol exists natively on Ethereum, Polygon, Optimism, Arbitrary and Average it's like different debt pools with different parameters all the time, different debt CDs it's a different risk analysis whenever you launch the protocol on a different chain but it's the same stablecoin and so if there are not enough AG EUR to liquidate the position of Arbitrary well there are some cross-chain arbitrageurs who just bridge from Ethereum to Arbitrary and liquidate on Arbitrary the complex thing in setting up all this infra it's not deploying the protocol on a new chain because once you've got the smart contracts, it's super easy to deploy on an EVM-compatible blockchain the complex thing is maintaining a single standard for AG EUR and maintaining a neat bridging UX while keeping super high security requirements and we've tried to pioneer a design with ANGEL in a space so that any bridge solution can be whitelisted to meet AG EUR on a chain so each bridge tends to have bridges and to have their bridge representation of a token so for instance we have the AnySwap AG EUR, we have the Layer0 AG EUR but if we want to keep it on each chain, we also have a canonical representation of AG EUR so there is the canonical AG EUR and ANGEL governance can decide which bridge token can be used to meet 1-1 the canonical representation of AG EUR so so far Layer0 is used but the thing is, if you make a bridge token fungible with the canonical representation of the token if the bridge gets hacked well you are just putting yourself at a high risk of having your stablecoin defect exactly, yeah so this fungibility is what allows people to have a nice UX because they don't have to face bridge liquidity issues they don't have to pay fees when it comes to getting the canonical representation of a token on the chain and we don't want any AG EUR holder to pay fees in percentage of what they are bridging because it's not a good model for us so we have this UX but how do you keep high security standards in this regard? and what we're doing is that we have limits in the amounts that can be bridged we have global limits and hourly limits so if Layer0 gets hacked the relative exposure of the protocol to the hack would be really small because it would be equal to what the protocol can lose in an hour or two yeah, I think it's a very interesting balance there because otherwise you have this issue for instance, if you have ever bridged to Avalanche you have the USDC canonical version and you have the USDC bridged version and it's always so confusing between what is the right coin that I need to use for this exact liquidity pool and maybe you have the exact same pool that uses different versions of the token and different contract addresses and different everything so as a user it's quite confusing and then what you're innovating on is okay, I will allow bridges to also mint AG EUR but I will limit that risk so in case those other protocols get hacked the protocol is covered up to a limit up to a specified and agreed upon budget that this is our, let's say, budget for hacks and losses yeah, you summed it up perfectly and so right now we've only onboarded Layer0 except on Polygon where we have Polygon POS bridge now we need to work on onboarding more bridges so that we are diversifying the risk because if Layer0 gets hacked losses may be small but we need to find another solution to bridge AG EUR from one chain to another and I'd really like us to get a system where AG EUR is supported by all the bridges and the experience is seamless because people are not paying any fee and they are not seeing that it's going from one bridge or another and going on the one which has the cheapest fees this is what I want to do okay, so we're nearing towards the end of this conversation I want to open up the microphone to anyone in the audience who wants to ask questions either to Pablo or myself from the exponential side seems we're good with questions everything was so clear you've made a great explanation Pablo it's really technical and I know I can use people from time to time but yeah, on my end if there are no questions I want to thank you Oscar for inviting me and I want to thank the whole exponential team for developing what you guys are developing I feel it's really important to give people the tools to deal with DeFi transparently as what you're doing so I'm glad that you're pioneers in this space and that you are making DeFi more intelligible but also more transparent and readable for many people so thank you for what you're building and really looking forward to working with you as we iterate in our DeFi development yeah, for sure, happy to also thank you a lot for the time Pablo, this has been in the works for quite a while at least a month so thanks for taking the time I also want to thank everyone who joined if you go to the replies to this space you will see the link to combine your attendance NFT in the Link3 platform so feel free to do so it's on the Polygon chain so you will have your nice attendance badge for these spaces again, thanks a lot Pablo thanks everyone for the audience we'll see you in a couple of weeks when we talk with our next featured guest thanks everyone thank you Oscar thank you, bye bye guys