36. TracerDAO | V2 teaser and the future of Derivatives markets

Koji Conversations

Mar 9 2022 • 28 mins

On this episode of Koji Conversations, Jack and Soph chat to Co-Founder of TracerDAO Patrick McNab and head of the Tracer team Billy. Tracer DAO is a smart contract protocol for derivatives, focussed on providing a suite of tools for users to manager their risk or supercharge their holdings via their new derivative primitive, perpetual pools. They offer effective risk management tools to hedge out risk that exists on balance sheets, as well as allowing users to effectively take out further risk on underlying positions. Following the V1 launch on Arbitrum, they have seen about $375m volume, with $50m TVL. V2 will supercharge that growth. How? Permissionless deployment. Removal of minimum commit sizes. Distributing minting fees to pool token holders. Cambrian explosion of markets. Pat and Billy also detail how the problem of volatility decay is being solved in V2, as well as teasing their perpetual swap product due to launch later this year. JOIN Tracer DAO's COMMUNITY Project twitter: @TracerDAO Person twitter: @pat_mcnab & @bwelch13 Site: https://tracer.finance/ (https://tracer.finance/) TIME STAMP OF QUESTIONS 0:08 We always start off the episode with an elevator pitch, so welcome to the podcast and bring us up to date of Tracer DAO V2 2:11 It sounds like a pretty incredible missing piece of the DeFi puzzle for many users, lets dive further into volatility decay, and how you guys plan to tackle that to make sure you’re incentivising those long term positions 3:34 What is volatility decay and what's the trade off with volatility decay? 4:19 So the longer I am in a position, the more exposed I am to volatility, the more my collateral will naturally depreciate over time, that's the trade off for no liquidations? 5:16 And you get that same sort of utility but now with V2 it with 75% or about there, less volatility decay than V1 5:40 So you’re looking to have a fee mechanism then distribute the rewards back to people holding those pool positions? 5:54 So that's counteracting any negative effects that someone might have? 6:01 What were the biggest takeaways from your V1 launch, aside from aside from volatility decay? 7:23 You guys launched in September last year, so compared to maybe where the market is at now would have been viewed as a bull market, have you seen the users change their position holdings reflecting that? 8:15 So you basically built out a structure product on top of the Tracer pools, one to allow people to gain access to this opportunity that stirred from the fact of inefficient allocation of resources by people participating in the pools 9:15 Lets chat about Arbitrum for a bit, you guys have been one of the first projects there. What are your thoughts on Arbitrum, what do you do think about L two 22? 12:12 Is Arbitrum going to be the final home for tracer finance, or is there looking across to different chains as well, maybe Avalanche, Phantom, is a multi chain future in the pipeline? 14:19 As for the scalability of Tracer DAOs specifically, I know a big feature of V2 will be permissionless deployment, so essentially your smart contracts are designed so any user can plug and play a market they wish to gain exposure to. Why for your team is permissionless deployment so important? 17:27 When I’m deploying a market, what are the key features? There is the price feed, and there is this collateral type as well. Do you get to pick and choose the collateral type and the price feed that you’re using or is it the collateral type is permissioned and you can only select from a few and then the price feed is permissionless? 18:26 Is there any risk in having a highly volatile collateral type? 19:01 Are you expecting to see some really novel collateral types maybe ?__? positions for example? 22:31 The removal of commit sizes is going to open you up to a whole new raft of smaller market participants. Why was that really essential to the V2 launch? 23:25 Lets go a bit more drastic,...