Thread by @ninos_mansor

DeFi resurrects the saver from a fifty year demise.

It begins with @anchor_protocol, an economic primitive that may become crypto’s risk-free rate & foundation for fixed income.

We just published: “Resurrecting The Saver: Walking Tall with Anchor”

arringtonxrpcapital.com/wp-content/upl…

👇

The report is broken up into three parts:

PART I: THE END OF THE SAVER & UNSTOPPABLE RISE OF CENTRAL BANKING

PART II: SALVATION OF THE SAVER, IS CRYPTO READY FOR FIXED INCOME?

PART III: ANCHOR, DEFI’S RISK-FREE RATE & THE STRIPE FOR SAVINGS

PART I covers:

a) The end of the saver, Nixon’s capitulation and Gold’s final deathblow. The new orthodoxy that lionized the debt-craving consumer. Purchasing power dwindling to oblivion; the decline of savings as a % of GNI and real yields wheezing their way to zero.

b) The unstoppable rise of the central banker, the market’s ultimate watchman and supreme of the speculators. Central banks *are* the capital markets; waging war on de-leveraging events at all costs and spawning the Five Micro Bubbles of dysfunction.

c) The post-Nixon crescendo and central banker’s ultimate double bind: Destroy the currency or destroy the asset bubble. Cracks emerge in the dance between the market and the Fed. The grip loosens with distress in bond (2020) and yield (2021) markets.

d) The double bind, bad news for savers and bad news for society. The masses face currency devaluation or a deep and painful economic deleveraging. A tragic end-game; the end of the saver as class warfare and the road to revolutionary divide.

PART II covers:

a) Bitcoin as salvation of the saver and a narrative converging on the defense of purchasing power. Business cycles free from central banker magic; busts that are quick and nasty and wipe away the boom’s excess. BTC as the Austrian Moment.

b) DeFi as the next era of money markets; the total rejection of centrally planned interest rates and capital controls; a refusal to bail out the “degen” in search of free lunch. No protocol is too big to fail, no matter how “systemically important”.

c) DeFi’s fatal flaw; a farmer land grab, but unsuited to the mainstream saver. Yield that is erratic, volatile and correlated. Building a matrix for DeFi yield and its unsatisfying conclusion: DeFi Yield is Levered Yield.

d) Graduating beyond the boom and bust; the path to fixed Income is paved with smoothed yield curves. Augmenting DeFi away from short term debt by leveraging crypto’s only source of unlevered yield: the dark horse of PoS yield.

PART III covers:

a) Anchor as the first fixed income protocol for stable crypto-native returns. Merging DeFi genius and PoS cash flow to create The Anchor Rate; DeFi’s risk-free rate, the decentralized FFR (DFR) and the benchmark for all yield.

b) Just like other money markets but one special twist: the depositor’s stable benchmark of interest. Mechanism design; Building A Better Savings Account; staking derivatives & the power of the bAsset. Unlock PoS liquidity to subsidise DeFi lending.

c) Defining the Anchor Rate & comparing Anchor Money Markets with DeFi’s. Platform Interest Rates (PIR), Utilization Rates & alpha (α) as the ultimate variable: subsidising lenders and giving borrowers what’s left.

d) The Target Lending Rate: stabilization without central bank bravado. Anchor as a Financial Control System; the self-referential shift toward equilibrium. A decentralized FDIC and the liquidation contract; beware of the undercollateralized & remember to back stop the system.

e) The bootstrapping era: bLuna & the road to Solana, Polkadot & Cosmos. Today’s 20% peg. Anchor as the birth of a bond market. Constructing a Yield Curve & Anchor Rate derivatives: who will be first? Forget “60/40”; Anchor as a portfolio diversifier. The Terra suite.

f) Resurrecting the saver. The Trojan Horse for mainstream adoption, one API away. Abstract away complexity and give the end-user a simple savings account. Anchor as Stripe For Savings & DeFi’s mainstream moment.