korpi Profile picture
Oct 21, 2021 18 tweets 9 min read Read on X
Recent amazing $SPELL and $INV rides encouraged me to look into other projects that issue overcollateralized stablecoins. I compared $MKR, $SPELL, $FLX, $INV and $LQTY to find out that $LQTY seems to be extremely undervalued relatively to others. Will it have its moment soon? Image
1)
To compare the projects I collected the following data from @coingecko:
- MC for a governance token (e.g. $SPELL, $INV, $LQTY)
- MC for a stablecoin (e.g. $MIM, $DOLA, $LUSD)
- TVL in the protocol
- Governance token MC / stablecoin MC ratio
- Governance token MC / TVL ratio Image
2)
Taking these ratios into consideration, it seems that $LQTY is the most undervalued relatively to others. Its TVL is $2.2B, MC for stablecoin, $LUSD, is more than $600M and MC for the (non)governance token, $LQTY, is only $63M. I ran a few simulations of $LQTY MC... ImageImageImage
3)
If $LQTY MC / $LUSD MC was at the level of competing projects, $LQTY MC would be:
- At $MKR/DAI: $199M; 3.2x
- At $SPELL/MIM: $4445M; 7.1x
- At $FLX/RAI: $553M; 8.6x
- At $INV/DOLA: $941M; 15.1x

That's a lot of room for growth. Image
4)
If $LQTY mC / TVL was at the level of competing projects, $LQTY MC would be:
- At $MKR/TVL: $317M; 5.1x
- At $SPELL/TVL: $939M; 15,1x
- At $FLX/TVL: $589M; 9,4x
- At $INV/TVL: $1449M; 23,2x

That's even more room for growth. Image
5)
Is @LiquityProtocol a good project? Absolutely. It's like Maker but instead of DAI it issues LUSD and only accepts the most trustless collateral on Ethereum, $ETH. This way it solves the most criticized issues with Maker - accepting centralized collateral like USDC or WBTC. Image
6)
But it's not the only improvement introduced by $LQTY. The efficient liquidations process with the Stability Pool, where users provide LUSD used to quickly liquidate risky positions, makes sure the protocol remains solvent even at unprecedentedly low collateral ratio of 110%. Image
7)
Collateral ratio at 110% means, you can borrow up to 90% of the dollar value of your provided collateral. Of course, it's risky and prone to liqudation in case of $ETH dump but it makes borrowing highly capital efficient for those ready to accept the risk. Image
8)
Borrowing is also interest-free. Unlike other borrowing protocols which charge variable (and unpredictable) interest rates for the whole duration of the loan, users at Liquity pay a one-time fee as low as 0.5% of the borrowed amount. No interest is charged later. Image
9)
What's the most exciting for me is that the protocol is fully decentralized and, therefore, censorship resistant. Noone can change or upgrade the contracts and there are no admins that could alter or halt the operation of the protocol in any way. Image
10)
@LiquityProtocol has even decided to not host a front-end for the protocol. Remember when @Uniswap team removed some assets from their hosted website? This was the fear of the regulator charging them for supporting securities trading. Such a situation cannot happen with here.
11)
@LiquityProtocol doesn't run its own web interface. Their smart contracts on Ethereum are open for everyone to use and can be accessed via third party front-ends. Operators running front-ends are incentivized by a share of $LQTY rewards their users earn in the Stability Pool. Image
12)
Full decentralization at smart contract and front-end level also means there is no governance needed. All the protocol parameters are either preset or algorithmically controlled by the protocol itself. There are no human interventions required. Fully immutable protocol. Image
13)
Because no governance is required, $LQTY is not really a governance token. It's a utility token that captures 100% of the revenue generated by the Liquity protocol. This is why more than 80% of $LQTY circulating supply is currently staked in the protocol. ImageImage
14)
Has a full decentralization proved itself a good approach to build a stablecoin? Thanks to efficient liquidations in the Stability Pool and redemption mechanism, when anyone can exchange 1 $LUSD for 1$ worth of ETH, $LUSD has been extremely stable around 1$ since launch. Image
15)
$LUSD stability has inspired a lot of confidence in other protocols which adopted $LUSD in their products. The best example is @OlympusDAO that introduced LUSD and LUSD-OHM LP bonds which attracted $120M of LUSD into $OHM treasury. Image
16)
Undoubtedly @LiquityProtocol is a great project and its $LUSD is a true decentralized stablecoin. However, $LQTY token hasn't been performing well despite a growing adoption of $LUSD. Maybe it's going to change now when other stablecoin issuers got considerably more traction? Image
Of course, it's not financial advice :) Just my thoughts.

If you want to learn more about @LiquityProtocol:
- liquity.org/features/inter… - a short overview of the most important features of the protocol
- docs.liquity.org - deep-dive into the protocol's mechanics

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with korpi

korpi Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @korpi87

Mar 20, 2024
The future of web3 engagment is round the corner.

@bonus_block is transforming user acquisition with AI-driven targeting and on-chain activity rewards.

It's a new undiscovered territory which may be worth billions of dollars.

Short thread on BonusBlock and $BONUS 👇 Image
End of Spray and Pray Era

Current methods of attracting users to web3 protocols often rely on imprecise strategies like broadly targeted airdrops or testnets.

They often attract value-extractors rather than real users and don't guarantee long-term value or engagement.
End of Costly User Acquisition

Current methods may not be viable for lower valuation applications due to the prohibitive costs or the inefficacy of broad targeting techniques.
Read 15 tweets
Mar 18, 2023
Arbitrum is on fire!

With $ARB airdrop worth >$1B, a lot of liquidity will trickle into its ecosystem projects.

"A rising tide lifts all boats"

If you still look for INVESTMENT OPPORTUNITIES, this is a mega thread with 30 innovative projects building on Arbitrum: Image
$GMX

@GMX_IO is a decentralized perpetual exchange that allows users to trade BTC, ETH and others with up to 50x leverage and no price impact.

GMX has seen an incredible adoption with total volume >$110B and total fees ~$170M.

MC: $696M
$GNS

@GainsNetwork_io is a decentralized perpetual exchange offering leveraged trading on crypto, forex, stocks, commodities and indices.

With $32B total volume and $23M total fees it has definitely proven to have product market fit.

MC: $284M
Read 5 tweets
Mar 16, 2023
Possibilities GPT-4 offers may have not been discovered yet.

✅ Coding a game
✅ Building a website from a sketch
✅ Passing an exam
✅ Writing a lawsuit

All done.

But people are still hungry and come up with new ideas.

See what they are up to and what GPT-4 can deliver: Image
GPT-4 is the latest release of the smart chatbot from OpenAI.

In the first 24 hours it has already managed to impress people around the world.

And it hasn't stopped impressing...
GPT-4 gave clear instructions what business to set up in order to turn $100 into as much money as possible:
Read 15 tweets
Mar 15, 2023
It's not been even 24 hours since GPT-4 went live and users have already created amazing things with it.

See a few examples and tell me we are not going to be replaced by AI very soon.
GPT-4 is the latest realease of the smart chatbot from OpenAI.
GPT-4 is not only "smarter" than its predecessor.

It can also accept VISUAL inputs!

Let it sink in: it basically understands images!
Read 20 tweets
Feb 26, 2023
Is Blur OpenSea killer?

I'm not sure but I can see why this narrative can have legs:

➡️ 5x higher volume
➡️ 5x lower valuation (OpenSea raised at $13B)

People buy a token because they believe the price will go up.

Above "fundamentals" justify that $BLUR is undervalued. Image
Answering your questions:

➡️ I know there is a lot of wash trading to farm $BLUR
➡️ I know OpenSea valuation would be much lower today
➡️ I don't think it matters in the short term to propagate this narrative

$BLUR is a short term trade for me, not a long term hold (so far).
I don't consider myself as a good trader and I'm often wrong in the short term.

But I like narrative plays.

Check out the $BLUR investment thesis presented by better traders, like @Crypto_McKenna:
Read 4 tweets
Feb 20, 2023
Big players like @a16z are depositing into @SolidlyDEX and @solidlizardfi.

Protocols are legitimized, TVL goes up...

Bullish for $SOLID and $SLIZ, right?

Well... Not really.

A short lesson what makes Solidly forks successful long term as people seem to have forgotten. Image
➡️TVL is a vanity metric

TVL doesn't mean anything if it's not sustainable.

@a16z is depositing into many protocols because they offer high APRs on the tokens they hold.

When new forks show up and their APRs will be higher, farmers will move there. Image
➡️Depositing into a protocol is not bullish

If your bull case for a protocol is "a16z deposited", think again.

If a big player deposits into a protocol to farm and dump its token, it's not bullish.

On the contrary, it's bearish because of a constant selling pressure. ImageImage
Read 8 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us!

:(