1/22

I love DyDx as a product, it shows the huge value that onchain perps are going to have. But, I think its overvalued compare to the upside potential of others in the space.

China's push on CEXs was a huge gift to the space, that while up large, I think is just starting.
2/22

Unlike a lot of projects DyDx's token is strictly governance. There will be no fee capture, no use case, no buy backs.

All the trade fees actually go to equity holders, and unlike some other systems these aren't variables in the contract that the DAO can vote to change
3/22

The $20B FDV puts it on par with FTX, which if it can continue to grow its volume and maintain this level of liquidity depth, may actually be only minimally over priced.
4/22

And since that dilution has a long way to go we still may see really strong growth from the token in the mean (I'm certainly holding some expecting that to be the case)
5/22

But, people have tried to compare it to $FTT and $UNI in different ways and I don't think comparing those valuation models makes sense.
6/22

$FTT gets a 1/3rd of FTX revenues, and a portion of Blockfolio revenues through buy and burn, and it has a staking model for perks, and can be used as collateral on FTX.
7/22

$UNI on the other hand seems like it is a prime example of a governance only token capturing huge value.

But, I don't think that's the case.
8/22

$UNI is really more driven by the fact that the products tremendous volume exists and that holders expect one day to be able to turn on the fee pools through voting.
9/22

DyDx doesn't have that future.

The type of changes that can be implemented by DAO voters are minimal actually from what I can see.

They are essentially doing free governance work to maintain a system.
10/22

That governance-only model works in a few strict cases, where the maintenance of the system is a vested interest to everyone using it.

These protocols are ones that build over time and have high interoperability.
11/22

For example, if $MKR didn't have a fee capture model it would likely still be worth people securing it as they would have vaults staked their, want their $DAI to retain value, and other protocols that use $DAI as a collateral would want to protect that value as well.
12/22

But a marketplace like DyDx isn't like that. There is no built up circulation you are protecting.

If DyDx is worth less as a token tomorrow that doesn't impact a whales ability to trade on the exchange.

If it's worth more it doesn't impact them either.
13/22

The only thing it changes is the incentives because DyDx is smartly used as a rebate reward.

And don't get me wrong here, I think their rewards set up is probably the best I've ever seen.

But it is ephemeral.
14/22

Overall I think that DyDx is hands down the best DEX perps in the space. It's got an amazing UX, a well thought out set of liquidity mining programs, an impressive @StarkWareLtd integration and has captured huge volume.
15/22

It isn't going anywhere and will likely keep growing and continue to be a multi-billion dollar ecosystem.

But, I think it gives us really good insights on how the onchain derivates space will develop.
16/22

I'm heavily keeping my eye on this space, as I think there is probably room for multiple sets of 100x growth, especially for tokens that can build the right incentive capture models that share in long term success.
17/22

I think competitors like $PERP, $INJ, $MCB, $DDX and $FST all have huge potential here to bring leveraged products/perps that have revenue benefit the protocol rather a private company, and in turn build a long term sustainable system.
18/22

Right now I think $PERP is the obvious leader there, having a battle tested product and readying their v2 Curie to launch on Arbitrum and have built in fee capture.
19/22

Like imagine a scenario where one of those contenders releases a product that is even only 70% as good as DyDx and it ends up capturing a $14B FDV at the early stage.

That's a 14x - 38x for most of these protocols.
20/22

Then wait a few years, not only odes this space grow, but because DyDx emission epochs distribute a flat amount of DyDx per epoch their incentives decline over time, and likely so does buying interest in a governance only system.
21/22

Once again, that doesn't mean DyDx as a product has any issues, or that their token won't continue its trajectory, or even that any other exchange would beat them in volume.

But, it does point to the large undervaluing and huge upside potential in the space.
22/22

As usual none of this is financial advice. But, my personal opinion, is that China has just provided a *HUGE* gift to defi by cracking down on perps and CEXs after years of on-ramps and at a time when L2s are finally ready to perform at scale.
PS - I own a bunch of all of the tokens mentioned here, including DyDx and want to see this entire space successful because I think it would be huge for defi as a whole.

Wanted to get that out of the way as I know plenty of people will misconstrued this thread.

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More from @adamscochran

25 Sep
1/21

Feels like MKR, once a defi darling, has kind of had its days behind it.

We're seeing a pretty big shift that I think highlights really interesting lessons for defi projects.
2/21

$DAI won out by being novel, innovative and most importantly defining for the ecosystem. The $MKR team created the foundation tooling and standards for many of the practices we have in defi today.
3/21

But, as they've grown and further decentralized they've built great procedures for managing the existing DAO operations within a framework, but not for fostering innovation.

Which is a classic startup problem only amplified by unstructured systems.
Read 21 tweets
22 Sep
1/4

Just save your money like its 1965, just don't buy coffee away from home and you'll totally be able to buy a house and live the American dream.

"Save $5 a week and get 8% interest"

....
2/4

...crazy high interest for equities in normal years, and would result in $130k at retirement.

Given the 380% inflation in the last 40 years, that'd be worth around $34k in same year buying power.
3/4

So lets assume you live 20 years past retirement, basically you get the equivalent of an extra $1700.

Thank god you gave up that coffee and pulled up your bootstraps...
Read 4 tweets
17 Sep
1/7

So we don't know the exact details yet, but apparently the Treasury Department is expected to put up specific sanctions targeting crypto related to ransom payments...

BUT, it seems like its good news 👇

engadget.com/us-treasury-de…
2/7

Based on the snippets below the sanctions are expected to be focused, aimed at specific malpractice rather than something that is against the entire industry/asset class.
3/7

We don't know what those specific restrictions are, or who/what/why they are targeting, but the fact that they are specific and targeted, specifically to not cast a wide net is a HUGE improvement from the last kind of action we saw alluded to from the treasury.
Read 8 tweets
16 Sep
1/2

This is why employees need more upside. Nate was super early in OpenSea, but probably had sub 0.75% equity.

A key player that helped them level up, was left out of upside so took to poor taste actions.

Now he resigns leaving them even less competitor to coming challenges
2/2

OpenSea is a talented early engineering team, that I don’t think has scaled well on the BD, community and product side, in part because their growth was simply too fast for them to scale.

Losing anyone who engaged with community and had them heard is a big blow.
3/

Since some people don't seem to grasp the message here or read comments, lets make this express.

His actions were dumb.

They were immoral.

He should not have done them.
Read 10 tweets
16 Sep
1/21

At this point I'm convinced that the SEC's current regulatory stance on crypto is more someone's personal political agenda.

Highly technical, educated people, informed on this space cannot reach the conclusion that defi platforms can simply 'come in and register'
2/21

First take @brian_armstrong's post about the SEC blocking Coinbase aggressively, something the entirely doesn't align with a department that should be acting in good faith to support innovation while protecting consumers.
3/21

Then we factor in Gensler's history at MIT where he spent so much time looking into crypto and decentralized systems.

Yet the statements he makes in hearings don't align with his knowledge.

Read 21 tweets
14 Sep
1/

Tuning in late to the banking committee hearing but will dump anything interesting here.
2/

Sen Warner specifically notes that he has *never* seen a community so well organized and in strong communication as the crypto community.
3/

Gensler suggested that crypto is a problem for subverting AML laws and references some matter of intelligence debriefings that aren't public.

Seems a stretch.
Read 14 tweets

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