Yeah, just waiting for everybody to fill in.

If you haven't attended Volstown Hall, we do this every first Thursday of each month.

We just usually recap what happened in the last few weeks and what we're working on.

And today we're gonna have Simon and Arthur speaking, but we also have Jona and Pontus as part of both teams.

So feel free to just jump in guys if you want to discuss anything.

And we probably go through Rollover, which we had a massive 1, some improvements we did to that process to make it even smoother.

And Also some community feedback we got around P&L and how we calculate those and how we name it.

There were like long discussions in Discord but we always say the same.

Building this together, so if there's any feedback you wanna share, we always try to implement it if we can.

So if for whatever reason you need to jump off, We'll be sharing it tomorrow on all our regular channels and yeah let me share something with you Arthur, 1 sec.

Yeah, so maybe Simon, do you want to start with like general Bulls update?

It's not been long since the last 1 really.

Yeah, I was just looking back on that actually.

Well, we it's not that we tend to it, we do do it every month.

I think from memory, the previous 1 got delayed by a week, I can't actually remember why, but it means that there's only been 3 weeks since we last spoke.

I think it got delayed actually, think about it, so that we could announce version 2 of the protocol and then do the communicable.

Which obviously just means it's been a bit of a shorter period of time.

But despite that there's still obviously been quite a lot going on.

So I think last time in terms of notional traded There was less than 17 billion.

It's been about close to a billion a week over the past 2 weeks, which obviously is cool to see people using the protocol that much.

And then alongside that, there's also been a ton of work going on in the labs team on V2 alongside a bunch of other things.

So we can talk about that a little bit later.

And In terms of trading stuff that's been available, there's been 2 rollovers and there's 1 which was the week of the last call, which obviously didn't go as planned.

There's something which basically went wrong.

And I'm mindful that there's a bunch of people that jumped in the community kind of asking when they're going to be able to settle, that type of stuff.

And it did take a few days, it's obviously not what it, not the way it should work and not kind of what everybody expects when they're trading.

We then obviously had a huge rollover at the end of the month where pretty much every pool except for 1 matured and got rolled over and what's really nice and hopefully people saw this is that kind of issue that happened before it kind of didn't happen again and everything worked as intended.

So meaning people were able to roll over immediately into the new pools, you're able to withdraw if you wanted to, sorry settle if you wanted to, and take your money out, which is obviously exactly how it should be working.

So I appreciate the frustrations around the 1 a few weeks ago that didn't go to plan, but obviously really good to see that that stuff is now fixed and working exactly as intended.

And then alongside that I'm trying to think what else, there's obviously been some, we're going to talk about this as well in more detail, is the P&L stuff.

So adding realized and unrealized P&L into the trader form and the portfolio page for traders and then adding the realized in for LPs.

There's been some community questions around that so we can talk about that in more detail, but that's essentially it.

Obviously in the background there's loads of work going on.

So there's only, what, 8 people in the labs team full time.

So for an 8 person team, I can reassure you everyone's like

Maybe I put you on the spot, but should we kind of like, since there's so many people on the audience, maybe go through what should the trade expect when Rololo happens?

Yeah, so pools on vaults have terms, which basically means that there's a maturity date.

And when you're trading, when you're entering a swap, you are effectively entering that swap till maturity.

And you can essentially unwind by taking the opposite side, which is why you can end up with both realized and essentially unrealized P&L, where the unrealized is what would happen if you were to take the opposite side at any given point in time.

Because they have a maturity, what that then means is at the point the pool term ends, as a trader you've got the option of either rolling over and entering a new trade on the next pool or just settling a position, which if you're in the money involves taking like more margin out than you put in.

If you're out the money it involves taking less margin out than you put in.

And what people should expect on the day that the pool matures is for roll over and settle to be available relatively soon after the pool hits duration.

That could be an hour, it could be 2 hours, just depending on some process stuff.

Obviously what happened with the 1 that didn't go to plan, there's a bunch of things.

Well, there's 1 thing that went kind of wrong, frankly, which has now been fixed.

And that meant that that settle and rollover wasn't actually available for a few days, which clearly shouldn't happen.

But the 1 that just, the rollover that just happened over this past weekend, hopefully everyone saw that the Settle and Rollover was available within a few hours.

Maybe the only other thing that's worth adding, so in the build up to a pool maturing, the LP optimizers become unavailable for new capital

hours away from maturity, just because it kind of arguably doesn't make much economic sense to put liquidity in at that point in time.

And Then from a trader and LP perspective, the majority of pools will now close an hour before maturity.

So previously it used to be 24 hours before maturity.

Now the majority, not all of them, but the majority will close an hour before maturity.

Which yeah, that's worth mentioning, right?

Because maybe some of you as a traders, you've been used to having like pools that we disabled trading 24 hours, especially before maturity.

And they become enabled, like, yeah, we tried to make it as almost instant, but like few hours later.

Cool, sorry, I put you on the spot, but I thought it would be worth like going through this process since, yeah, it's something that, it's part of Bolt's fundamentals, how our pools work, so it's, yeah, continuous work on our side to keep it like as smooth as possible and improving everything that's there.

Cool, So then you also mentioned another improvement to the UI especially and I guess more towards the user and like seeing what is their position at any specific or given time like what is the PNL and how is it performing?

So that's something we implemented, maybe was like 2 weeks ago or 2 and a week and a half.

And we've been listening to your feedback as well.

And we just released the thing yesterday.

But maybe you, Simon, and Arthur want to go a bit deeper on how PNL calculations work.

I'll let Arthur take this 1, actually, then I can jump in.

I guess 1 of the main pieces of feedback that we have been receiving from the community and I guess realizing ourselves as well is that it was quite difficult for traders and LPs to be able to have a real-time view of what their P&L profile looks like.

And What we set out to do with this new release is to effectively build out the infrastructure that enables people to see in real time what their P&L looks like.

So if we just zoom in to the traders and then kind of LPs, that would perhaps be helpful for people to better understand what these numbers mean and how they're derived.

So kind of when thinking about the traders who enter into fixed or variable taker, swaps on votes, there's 2 types of P&L that they can have at any point of time, the realized P&L and the unrealized P&L.

The realized P&L is the P&L that they have already accrued to the trader and the unrealized P&L is the P&L that they would receive if they were to completely close their position, which in context of interest rates of trading, closing this position, your position is equivalent to taking a swap in the opposite direction with the notional amount that's equivalent to your current position.

And within the, If we just go a bit deeper into the realized P&L, given that unrealized is pretty straightforward, the realized P&L is then further split into the fees that traders have to pay in order to initiate swaps and the actual cash flows generated by their swaps.

Those cash flows are basically dependent on how the variable rates evolve over time relative to the fixed rate secured by the swap, as well as any locked-in profit that traders have been able to collect by prematurely closing down their positions.

And this locked in profit tends to be a function of the fixed rate at which the position is created and the fixed rate at which the position is either partially or fully closed relative to the maturity of the pool.

Because 1 thing we need to keep in mind is that all the cash flows in P&L generated from interest rates are proportional to the maturity and amount of time has left until the end of the pool.

And so that's kind of the way I would go about understanding and interpreting trader P&L.

And if we just like take a step back and zoom into the LPs as well.

The P&L of LPs is just effectively, the real P&L of LPs is just the mirror image of the P&L of traders.

And what I mean by that is as traders get into swaps against LPs, they obviously pay fees, which accrue to the liquidity providers who happen to be in the tick range, fixed rate range on which the trader was trading.

And as soon as the traders are locked into a position, whatever positive or negative P&L they generate has to come out from somewhere and that somewhere is, well, the balance of liquidity providers who are on the other side.

And that's why it's very important to keep in mind that whenever you are providing liquidity on the protocol, it is very important to choose the fixed rate ranges carefully because in a scenario where as a liquidity provider, if you end up getting locked into either side of the market, you will end up accruing P&L, which is dependent on this fixed rate that you select in advance.

1 thing to just keep in mind is that in the most ideal scenario where people are constantly trading back and forth along your tick range as a liquidity provider, you will not be really accruing any P&L from actual cash flows generated by those swaps, because in that instance you would be continuously basically offsetting your position against variable takers and fixed takers, which is the ideal scenario you want to be in as an LP.

And again, this is something you like LPs have to consider and think about and try and make sure that their tick ranges are actually in a region where they would expect there to be balanced trading volume.

But I guess like this swaps cash flow is what some people have been asking, like more questions around and trying to understand.

Do you mind, just a theoretical example, again, I'm putting you on the spot now, but if you could come up very quickly with, let's say, for a pool, the rate currently is at 4%.

How will an LP have to behave to decide the tick ranges maybe?

I don't know if it's something that could come up very quickly on stage.

Just to be a bit more specific, maybe it solves some questions there.

Yeah, no, I think, I guess, yeah, the key idea is that the swap cash flows of LPs are kind of, as I said before, just the mirror image of the P&L generated by traders who trade against those LPs.

But if we take a concrete example where, let's say there's a liquidity provider who has deposited liquidity between

and someone comes in and trades in the variable taker direction and takes a position that's worth, let's say, $1 million worth of notional.

So if the trader takes the variable taker direction in their trade, it means that the LP is taking the opposite, so the fixed taker direction.

And the fixed rate at which this interest rate swap contract effectively between the trader and the LP is initiated is determined by the fixed rate that the LP chose.

So if the range is between 1 and 2%, then the realized fixed rate that the LP ends up paying or receiving depending on which side they take is just going to be an average of that.

So let's say this trade has taken place, and let's for simplicity assume there's no fees.

At the maturity of the pool, the trader will be able to collect their settlement cash flow, their PNL, which is going to be the notion which is equal to

times the variable, realized variable rate minus the fixed rate that we're paying, if they took the variable take position, and then the PNL of the LB would just be the opposite of that, so 100 times the fixed rate minus the variable.

And for simplicity, let's assume that the pool duration is 1 year, in which case we don't need to downscale this PNL by time.

And that would be the swap cash flow of the LP and the opposite of that would be the realized P&L from cash flows of the trader.

And then the fees just, in case of LPs, the fees just supplement, increase their P&L and in case of traders, they bring them the P&L down.

But yeah, that would be probably like a simple scenario.

think it's worth adding that that is in a scenario where there is only 1 trader that trades against the liquidity providers liquidity and the way in which LPs, and we put this out in various different places, but The easiest way for the LP to remove any risk associated with swap cash flows, which can clearly also be positive or negative, but the easiest way to do that is to deploy liquidity in a range where there is balanced FT and VT trading activity.

Because if we play through the example that Art just talked through, in that example a variable taker has come in and traded against liquidity providers, liquidity.

If no 1 else comes, then the LP is effectively acting as the FT.

So the cash flows are the opposite of whatever the variable taker is generating.

However if another variable taker, sorry another fixed taker, so you've had a variable taker trade against liquidity of the LP which is 1 side if you then have the other side so a fixed taker coming in and trading against the liquidity providers liquidity What that's effectively doing is that FT that's coming in is then knocking off the LP from that FT position, meaning that the liquidity provider's capital is no longer effectively acting as the FT on the other side of the variable takers swap and therefore they've just collected fees so they're no longer exposed to any potential positive or negative P&L of the swap cash flows but Instead they've collected fees from the first trade and they've collected fees from the second trade.

So when people are looking at LP, P&L, clearly the fees line and the swap cash flows lines are 2 really important pieces of data.

The more fees, the more trading activity that's taking place against your liquidity.

If you are just experiencing, seeing very little fees and just experiencing swap cash flows, then that is most likely driven off the fact that you're deploying liquidity in a range where there is not balanced trading activity and therefore you are effectively acting as the opposite side to have a trade against your liquidity be it FT or VT.

Maybe we can talk through some of the Q&A.

Why don't we go on then and talk about some other stuff that's been happening in the background.

Some other stuff that's been happening in the background because they're kind of the things which have been released and like I guess most visible to everybody in the community, which is Rollover and then obviously these improvements to P&L.

But alongside that, there's obviously been a ton of work that's been taking place in the labs team around version 2 of the protocol alongside some other stuff around potential kind of improvements and both to the app but also to the kind of markets that are available.

Nothing necessarily new to announce right now.

Clearly, version 2 is something which we wanted to get the light paper out there as soon as we could.

So other teams could start reading through it and thinking about the ways in which they could integrate with version 2 and this kind of like non-custodial clearinghouse that's being created.

What's really cool to see actually is there were a ton of different teams that did reach out off the back of that, just thinking about how they could build on top of it.

If people in the community are listening to this community call, either other DEX teams or thinking about building their own stuff or kind of friendly with other teams that might benefit from all of the benefits that come off the back of creating these low-level rails and a single margin account for traders.

Obviously, we encourage people to reach out.

We're always happy to talk to people through our thinking and help them understand potential ways that they could integrate with version 2.

There are going to be, in the not too distant future, some announcements around version

Like I said, nothing to announce at the moment, but we are excited between now and potentially the next community call or maybe a little bit after that to start making some more announcements and more noise around version 2 and all the things that that unlocks.

But in the meantime, I think it's predominantly just all the trading and opportunities that are available on the markets that are currently live on the protocol.

And obviously we're going to keep shipping stuff to improve the app and to try and improve trader experience.

We're always here in the community of course to answer questions.

There's tons of people that come through with tickets.

And just here to help people understand the protocol and understand how to trade.

I don't think we're going to get Broccoli back.

The problem is some of these questions which you have are then marked against my own name.

So I'm just going to be answering my own question.

Why don't we do some of the ones which don't have my name?

So, Arta, how is the fixed interest rate determined immediately after the term begins?

Yeah, so I guess purely from a technical perspective, whenever a pool is launched on the protocol, the first ever fixed rate is dictated by the first ever LP that deposits their liquidity within their range.

And it just ends up being the average of the upper and lower fixed rate.

And historically, we've been making sure that trading on the protocol starts to open up as soon as there is sufficient liquidity for people to actually roll over their trading positions.

So for most people who just trade whenever they see new pools, the fixed rate would already be initialized by whoever was the first LP in that pool.

But 1 thing to keep in mind though is that the fixed rates in those pools cannot just be naively rolled over, if that makes sense.

So you can't just take whatever the final fixed rate is in the previous pool and just use it to initialize the new 1.

I mean, you can, of course you can do that, but 1 thing that you would need to keep in mind is that the fixed rate at the end of the pool that matures is relative to the maturity date that's effectively a few blocks or days away, let's say.

But as soon as the rollover happens, the maturity is going to be potentially 1 month away, which means that as an LP, the fixed rate that you set in an ideal scenario would be your view of what the expected variable rate would be at the maturity of this pool.

But of course, that's something that we can't really know for sure in advance and that's why we have interest rate swap markets.

But that's how I would at least think and reason about how setting fixed rates in the beginning would have to work.

So I sometimes like to see other people's LP positions like the Uniswap v3 LP screen.

Do you have plans to implement that screen?

Arte, I'm going to come back to you for this 1.

Yeah, so I think the Uniswap v3 LP screen is pretty interesting because there's the LP flow before an LP position is initialized where you can there's a nice little widget that you can use to move the price ranges in context of Uniswap.

That is definitely something that we could also introduce in our UI and Broccoli has been doing a lot of magic behind the scenes incorporating some of these ideas into our product roadmap and over time will be releasing more and more of these quality of life improvements for LPs as well, but not just for LPs, for traders as well.

And that's of course just the beginning of the journey and then there's going to be a bunch of work on the portfolio side to also help LPs better monitor and manage positions that they've already created, which is going to require more thinking in context of vaults rather than Uniswap, I guess, just given that the complexity of maintaining a position on vault is arguably higher given things like liquidation risk and position locking and so on and so forth.

There's a lot of thinking and work happening there.

And I'm excited to gradually release those and see how the community reacts and also keen to make sure we incorporate feedback as we go along.

I'm tempted to respond to the classic answer soon, but yeah, like, we've said in the past, can you swap down to down vote?

There's gonna be something at some point, but when token, like honestly, is not something that we can answer, of course.

Will there be something for old fans with OG roles?

That's for Broccoli to answer as and when he can get his microphone back.

How many seasons will there be and on which chains?

Each of the seasons basically runs quarterly.

Season 4 is not going to start until next quarter.

At the moment, obviously, those seasons are available on all the chains that Vault is live on.

I think it's kind of likely that that's obviously going to continue, but who knows how many seasons they're going to be.

It really is a feature for the community, so it depends what the community wants around that.

So do you plan to add some kind of onboarding for newcomers to make vaults available for mass adoption or is it only going to be crypto DGNs and traders only?

There is a bunch of work that's happened around this.

There's I guess various different ways in which vaults can become more accessible to more people.

That exists both on creating new content which helps explain the way that the protocol works and helps explain not just the way the protocol works but also how interest rate swaps work and what the potential benefits associated with that are for people either looking to trade, looking to hedge, maybe looking to construct structured products off the back of it.

So there's definitely more content and educational kind of material that will be put out to help explain that to people, which is not just people who are new to interest rate swaps, but also people who are already active on Vaults and looking to understand the mechanism a little bit better.

Then alongside that, there's continued work, which hopefully everybody that's been using Vaults for a while will see this.

There's been a lot of work gone into improving the app to make the protocol more accessible and more intuitive, just in terms of taking positions, understanding the P&L that you're generating whilst you're in a position, understanding how to unwind, all these types of things.

And there's obviously going to continue to be a lot more work which goes into that.

Given Vaults is a new primitive, it's not like there's other places you can go and learn how interest rate swaps.

You can only really come to Vaults and trade it as an instrument.

So we're mindful that the interface has to be a way that helps explain that to people.

But hopefully you've seen a lot of the progress there and there's obviously a lot more to come.

Another question, so plans to add more L2, for example, Optimism Polygon?

This is another thing which is kind of happening in the background at the moment, just exploring these potential new chains.

For anybody kind of paying really close attention, there's a Twitter space that happened last week with the Avalanche team because they've announced this new institutional subnet, which is something which we find kind of interesting.

That's not necessarily something which is going to open more things up for the community right now.

But there's certainly more work which is going on there and we are continuing to explore new chains and new markets that open up trading opportunities for people in the community.

And then final 1 before we go to any other questions which are coming up.

So do you plan on adding additional investment strategies except leverage put call options?

So I think version 2 of the protocol is it provides opportunity to add new instruments and new exchanges, which therefore opens up the potential for people to build new trading strategies that combine various different instruments that might exist through vault-led exchanges or through other exchanges that exist across the ecosystem.

In terms of us releasing content explaining the strategies that you can build using an interest rate swap specifically.

So there were a bunch of different quant articles that were put out through the course of last year, kind of exploring things like statistical arbitrage that you could deploy that got to like various levels of depth and there kind of will be some content around that which will be created in the future.

At the moment if we go back to kind of 1 of the earlier questions there's a lot more time and energy being put into helping make vaults more accessible, so helping to explain kind of what an interest rate swap is, what it means for you, kind of how you can trade that, kind of how you can use it to hedge rates and then also putting time into improving the interface versus building out more sophisticated quant strategies.

But there are people in the community that come through at times and talk about that stuff and if people have strategies they want to share then obviously encourage people to do that.

Cool I've got to do 4 this is broccoli this is a hard job I you can't say anything but I feel for you.

OG got to see all the early action like Univote.

So we're going to have another community call obviously next month.

Make sure you look out for the announcements that are coming up pretty soon.

Promise Broccoli won't get rugged for that 1.

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Voltz Town Hall 04/05/2023