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Ryan Sean Adams
@RyanSAdams
, 10 tweets, 3 min read Read on Twitter
I want to connect some dots for you real quick on Ethereum synthetics and what that means for the value of ETH

Ready?

Thread
1/ Synthetics in traditional finance are really, really, really big

Scroll to the bottom of this visualization

visualcapitalist.com/worlds-money-m…
2/ Synthetics simulate financial positions

DAI is an example of a synthetic in crypto. It simulates USD price but is actually a debt note for ETH
3/ On Ethereum you can create synthetics for all sorts of assets

Each represented by a token

I made a synthetic for TESLA this morning in a UMA testnet. Owning it means owning price exposure to TESLA stock

You could also do: gold, oil, t-bills

All you need is a price oracle
4/ Synthetic issuance as easy as opening a youtube channel

This means a kid in Thailand gets the ability to buy TESLA upside

All she needs to an internet connection

No brokerage
No bank

Just an Ethereum address

Oh, and she can create her own synthetic too. And sell it
5/ If synthetics are massive in legacy finance, might they someday be even bigger in a world where their access is democratized?

Trillions?

Tens of trillions?

🤷‍♂️
6/ Here's the thing

For the synthetics to be trustless and not dependent on a bank they need to be backed by trustless collateral

If my TESLA token is backed by USDC it can be thwarted by Coinbase

But if my TESLA is backed by ETH or DAI? It can't be stopped. It's bankless
7/ ETH is the only trustless value store on Ethereum

Just ETH

What about DAI? That's stabilized ETH

So in order for trustless synthetics to grow the value of ETH must grow. By a lot

And if the demand for trustless synthetics grows then the value of ETH will grow. By a lot
8/ This makes trustless synthetics a massive bull case for ETH

And no one is talking about it

The market is still valuing ETH as a utility, but the people paying attention know...

ETH is money
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More from @RyanSAdams see all

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Ryan Sean Adams
@RyanSAdams
1/ Ethernomics 102

Previously we learned Ether is the reserve currency of an economic network called Ethereum, as USD is to the US

But in many ways, Ether is more like a monetary metal than like a fiat currency

2/ What about Ether supply?

Supply of fiat currencies like USD are subject to the policies of central banks, making them a tool of nation-state politics. Need to reduce unemployment, increase GDP, or stimulate markets? Issue fiat. Can’t pay off the fiscal policy debt? Issue more
3/ Ether on the other hand is a non-sovereign money. Ether supply is impervious to the whims of politics, instead ether scarcity is backed by social consensus implemented by algorithm. Like gold, a unit of ether is a bearer asset, not debt on the balance sheet of a nation-state
Read 10 tweets
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Ryan Sean Adams
@RyanSAdams
1/ Ethernomics 101

Beyond the technical, most people don’t know what Ethereum really is or the fundamental reasons why Ether is valuable

A thread...
2/ What is Ethereum?

Right now, the world's economic networks are mostly nation states. We talk of the US economy or the European economy or the Chinese economy

But crypto allows the separation of economy from nation state

Ethereum is an economy without a nation state
3/ What is Ether?

Like the US, Ethereum is an economic network

And just as USD is the reserve currency of the US, Ether is the reserve currency of the Ethereum economy
Read 11 tweets
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Ryan Sean Adams
@RyanSAdams
1/ What if Dai becomes the main MoE & UoA in the Eth economy?

This resembles an older era of money when dollars could be redeemed for value in gold. Ether as the commodity money backing a general use currency

Let's explore the relationship between Ether & Dai:
2/ In order for Dai supply to grow it must collateralize tokenized value. Today each Dai is backed by $2-3 worth of Ether. In the future, other tokenized value beside Ether will be accepted in Dai, but it's hard to see a world where Ether doesn't remain the primary collateral
3/ Why Ether as Dai's primary collateral?

No better options. WBTC needs custodian trust. Tokenized securities need legal system settlement. Tokenized physical assets need both. Utility tokens are weak now & future-limited by DCF valuations. Ether doesn't have these limits
Read 10 tweets

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