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Ryan Watkins

22 Oct, 8 tweets, 2 min read

yUSD is an incredible product, but it’s also one of the riskiest stablecoins available on Ethereum.

In addition to compounded smart contract risk, yUSD’s risk of peg loss is the sum risk of all its underlying stablecoins losing their peg, combined.

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If even a single one of the underlying stablecoins in the yPool (USDT, TUSD, USDC, DAI) underlying yUSD loses its peg, yUSD will also lose its “peg”.

There is nothing insuring against this risk and Curve is clear about this on the risk section of their website.

This peg risk may be addressed in the future by allocating the underlying stablecoins elsewhere to protocols that backstop against this risk, or don’t introduce it altogether, but for now it’s there.

Other ideas for how to insure against this would also be welcomed.

Further challenging yUSD from a risk perspective is liquidity.

Currently, there’s no great way to get in or out of yUSD besides interacting with Yearn’s yCRV vault.

To ultimately get to or from the underlying stablecoins it takes multiple steps and transactions.

As we’ve seen with Black Thursday this would be a nightmare in a high fee, high congestion environment.

Luckily however this risk is slowly being mitigated by the development of yield aware stablecoin optimized AMM protocols like SnowSwap, CreamY, and Curve (new pool).

Sufficient liquidity for these yield aware tokens like yUSD would make them significantly more accessible and useful.

Not only would increased liquidity allow users to avoid the complexities and fees involved in moving in and out of smart stablecoins today, but they would also allow larger users to move in and out of them with less slippage.

Smart stablecoins like yUSD are an exciting addition to DeFi and if they can overcome their challenges today, they could have a bright future.

This and much more in our latest Q3 report on stablecoins.

messari.io/article/ethere…

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More from @RyanWatkins_

Ryan Watkins

@RyanWatkins_

21 Oct

🤯 Ethereum now transacts two times more value than Bitcoin daily.

This is what a cryptoeconomy looks like when it starts to find product-market fit.

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There are two key developments over the past year that made this all possible: stablecoins and DeFi.

The two provided a strong foundation for real financial activity to take place on Ethereum.

messari.io/article/ethere…

Ethereum’s progress has been so incredible that it will likely becomes the first public blockchain ever to settle $1 trillion in a year.

Read 6 tweets

Ryan Watkins

@RyanWatkins_

22 Sep

The last couple weeks in DeFi have been an absolute bloodbath.

But keep in mind bull markets never go up in a straight line.

In the 2017 ICO boom ETH pulled back 20%+ seven times before it peaked in January 2018.

So far in this bull market we’ve only experienced one.

1/

What's clear right now is that there are more sellers than buyers and DeFi’s summer casino could be coming to an end (it’s the start of Fall anyways?).

But let’s zoom out and look at DeFi’s summer in numbers.

messari.io/article/a-data…

The median DeFi asset is down more than 40% in the past 30 days.

Take some time to digest this table.

Below are a couple takeaways from the data.

Read 7 tweets

Ryan Watkins

@RyanWatkins_

17 Sep

DeFi moves fast. Yearn moves faster.

As if launching a $1bn asset management platform in 8 weeks wasn’t enough, Yearn is now entering new markets rapidly.

The latest being AMMs, lending, and stablecoins through a potentially disruptive new protocol called StableCredit.

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In a nutshell StableCredit is MakerDAO + Aave + Bancor combined, but with minimal governance and no token ($YFI is not involved).

The latter two points hint at StableCredit’s ambition to be truly decentralized infrastructure that requires minimal human interaction to run.

StableCredit allows users to deposit an asset and then receive a credit line that allows them to borrow up to 75% of the collateral they provided.

Read 11 tweets

Ryan Watkins

@RyanWatkins_

16 Sep

There's now more than $1 billion in #Bitcoin on Ethereum (0.5% of total supply).

$500 million in the past 30 days 📈

This is the gravity of triple digit yields.

1/

While I personally think the biggest cross-chain opportunity is exchange rather than pegged assets, pegged assets will definitely be huge as yield farming opportunities continue to pop up.

messari.io/article/bridgi…

Also interesting here is how the trend demonstrates how powerful yield farming incentives are.

There's a lot of assets that have been left out the DeFi mania because they're unproductive and sit idly in wallets.

Read 4 tweets

Ryan Watkins

@RyanWatkins_

10 Sep

Since Compound launched liquidity mining in June, billions of dollars in tokens have been distributed to liquidity providers across various DeFi protocols.

Simply put, yield farming offers investors a novel method for acquiring tokens.

A how to + best practices below.

1/

Unlike ICOs, where investors exchange capital in return for new tokens, yield farming allows investors to acquire tokens by supplying a protocol with capital.

That capital is then put towards a productive use such as lending or liquidity provisioning.

messari.io/article/how-to…

Yield farmers are free to withdraw their capital whenever they choose.

They only pay an opportunity cost for having their capital locked into the protocol.

In this regard, investors are able to acquire new tokens effectively for free. (more on the risks later).

Read 7 tweets

Ryan Watkins

@RyanWatkins_

1 Sep

Bitcoiners have ported more than half a billion dollars worth of #BTC onto Ethereum in 2020.

As yield bearing opportunities within Ethereum’s DeFi universe expands, demand to port value from the outside will only increase.

and are building the trustless bridges.

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Many interoperability protocols are not yet fully built out.

But what is clear is there’s real demand for interoperability and a big opportunity.

Bitcoin provides more than $200bn in capital that could potentially enter Ethereum’s DeFi ecosystem.

messari.io/article/bridgi…

There has been a massive uptick in #BTC on Ethereum since the DeFi boom kicked off.

The amount of BTC on Ethereum has nearly doubled since the launch of CRV on August 13.

Read 7 tweets

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