TL:DR; Strips is a derivatives DEX that's bringing a classic TradFi derivative to crypto: Interest Rate Swaps (IRS), and if executed properly Strip could see growth on the level of dYdX or other derivatives EXs
Not Financial Advice
1⃣ Product
IRS are forward contracts where you swap future interest payments based on some notional amount
There are 3 main types
1. Fixed to Floating: fixed to variable
2. Floating to Fixed: variable to fixed
3. Floating to Floating: variable to variable
1⃣ con
Offering IRS is a natural evolution in DeFi that mimics a trend in TradFi
Currently there's no protocol that offers IRS and so Strip is stepping in to meet that demand
Strip hasn't released its IRS DEX yet, but plans to offer the first two types of IRS
2⃣ Prevalence in TradFi
IRS have the most volume of OTC derivatives in TradFi and have consistently maintained 80% market share
As more TradFi goes to DeFi there should be strong demand for IRS from TradFi participants who want to hedge their interest rate exposure in DeFi
3⃣ Need for it in DeFi
IRS are also attractive for crypto-natives in DeFi
With protocols like COMP your exposed to variable interest rates which can be unappealing
If you're lending you don't want the rate to drop and if you're borrowing you don't want it to go up randomly
3⃣ con
Furthermore if you consider yield farming, its possible you don't want to be exposed to LM incentives drying up and your APY dropping significantly
With Strip you can get a fixed APY on your yield farm by providing some notional amount on the DEX
3⃣ con
Finally IRS allow people to speculate on interest rates on the market and given basis trading is a popular trading strategy that's basically an IRS we can observe that there's a lot of potential demand for IRS in DeFi for both crypto natives and TradFi entrants
4⃣ Specific Mechanics
Let's walk through an example of how it would actually work on Strip and some key design architecture within Strip
1. Exchange 2. Liquidation engine 3. Insurance pool 4. Example
4⃣ Exchange
Strips is a cash-settled IRS exchange. You deposit collateral to trade within interest rate markets.
You buy or sell the interest rate against passive liquidity provided by an AMM and pricing is automatically adjusted by the AMM
4⃣ Liquidation engine
If you account falls below maintenance margin then you'll be liquidated and your position will be unwound
The insurance pool keeps the collateral, but if a market move wiped out even the collateral the insurance pool will cover the losses
4⃣ Insurance pool
The insurance pool to protect against large market moves creating liquidation losses.
For providing protection the insurance pool receives:
5% of all realised profits of all market AMMs
5% of all trading fees paid
Liquidation profits
4⃣ Example
You enter a yield farm with a variable APY of 1000%
You have a feeling that people are going to FOMO in and start LPing for LM rewards and that APY will decrease significantly
So you go to Strip and do a floating to fixed IRS for 600% return instead
5⃣ Tokenomics, Team, Community
I think we can see that the product is interesting and should have some demand, but we should always look at other key aspects before building conviction on an investment
Let's consider the
1. Tokenomics 2. Team 3. Community
5⃣ Tokenomics
Value prop:
STRP gives you governance rights, and staking STRP gives you 20% of fees as a method of value accrual.
STRP can also be used as collateral on the platform, so you have three different reasons to buy STRP
5⃣ Tokenomics
The Token distribution doesn't look to bad, but I wouldn't say it really stands out. There's 100M total supply following this distribution
One thing I noted was that in at IDO today only 14 addresses got to buy and so FDV is already at $500M just through whales
5⃣ Tokenomics
There's a ~3 year vesting schedule which seems pretty decent and should stall inflation for some time
There's a lot of tier-1 VCs backing this project which could proxy some credibility but I don't take too much from that as IDK how invested they really are
5⃣ Team / Community
Their discord doesn't seem to active or vibrant, but its possible that its just so early a community hasn't developed
The team looks pretty solid as VCs would definitely look at least look for intelligent people, and they have a good understanding of IRS
5⃣ Community
One thing STRP is doing to build a stronger community is introducing gamification
They'll be holding lotteries for traders based on usage of the platform with rewards like badges or gift boxes
This should incentivize more participation from community members
6⃣ Conclusion
Strip is building a product that should see strong demand in the future, but they haven't released anything yet so they still need to execute
If they can create a seamless product with great UX and build a strong community they'll be very successful
Bullish
NFA
• • •
Missing some Tweet in this thread? You can try to
force a refresh
There's been some great discussion going on in the @templedao discord regarding the unstake queue and whether it's really an appropriate mechanism for controlling liqudity
Just wanted to give my 2 cents on it
I can see why forcefully having shallow liquidity on markets and an unstake queue to prevent capital flight is shady
I think a lot of crypto-natives from 2008 till now have experienced rug pulls and the crushing feeling of getting dumped on by a protocol
However, I think it's different in the case for Temple and here's why
Temple has given a promise of a safe-haven from the volatility of crypto. Volatility doesn't just mean stopping the price from going up, but also down
If the DAO wants to control that what can they do?
I've working on a new method of DAO governance participation in an effort to make it more equitable for all as well as incentivize all community members to participate and make informed decisions
2. Price being a central, sometimes only, concern for governance proposals
3. Over-exposure to the whims of whales and their conflicts of interest
1. Lack of participation
On the margin people who have a very small impact on a governance process, think the US election or small equity holders in the stock market, tend to either not vote at all because it’s unlikely that their vote will be the tipping point
TL:DR; The US Gov has the capability to cripple innovation and usage of crypto across the country, and unless our collective can band together and overwhelm politicians into believing we're the future then dark times are ahead
This essay explores the capabilities of the US Gov to stifle a budding industry, and how the broader crypto community can tackle that threat
Crypto is under threat by the regulatory and institutional powers that be
They may have ignored us up to now, but there's a good chance that as we continue to be disruptive and they become more aware of our potential they intervene to slow our progress
I know a lot of Templars have a variety of viewpoints on how Temple is going to be revolutionary, but wanted to give my own two cents
1⃣ General Narrative
In the early days, of which unfortunately I did not partake, making trades on ETH was relatively inexpensive. $300 ETH meant maybe you were paying at most $30 for at trade, but now that ETH is at $3000 you're paying $300
Well that's a problem
1⃣ con
For one in creates a barrier to entry into the ecosystem for new participants.
How can I possibly justify an investment where 10-20% of my trade evaporates into gas cost?
Even if I'm already in the ecosystem there's a significant disincentive for me to participate
TL:DR; Nation-states are built upon the manipulation of individuals by nationalism into sacrifice for nothing in return, however, the advent of DAOs represent a new social model of belonging built on symbiosis rather than predation
This is a thought provoking piece considering the archaic nation-state and how its deterioration is a result of social models evolving bringing people together for a common cause rather than a shared sense of identity (nation, ethnicity, etc.)
🧵on the lay of the modular blockchain land for @scribeDAO
TL:DR; Blockchains have now become composable removing the need for a singular chain to tackle the Blockchain trilemma, rather a variety of chains can specialize and work together as modules to provide the best solution
This article discusses the three main components of blockchains, and how now a variety of chains can specialize and come together to more efficiently tackle the trilemma