0/🧵 @Tether_to announced $1.48b profits for Q1 2023 - omfg, and a bit of colour on their reserves

“IS $USDT BACKED?” is the oldest question in crypto

IMO, the appropriate question should be -> “IS $USDT FAIRLY COLLATERALISED?”

Here’s how I personally look at $USDT reserving… twitter.com/i/web/status/1… 1/🧵By Q1’23 @Tether_to had issued $79.4b of digital tokens, and held $81.8b of assets -> in other words had net assets for $2.4b

Is this over-collateralisation enough? It depends through which lens you look at Tether:
1) Money transmitter (i.e. just a servicer)
2) Bank/ fund

0/🧵 In January 2023 @g_dip, @Oliver_Schimek, and myself founded M^ZERO LABS_ (@m0labs) - this is why we did it

What will M^ZERO be? A neutral value transmission framework able to permissionlessly mint currencies under decentralized governance

This is *MY VERY PERSONAL* view 👇 1/🧵 MONEY IS OUR MOST COMPLEX MASS-ADOPTED PRODUCT

> Money intermediates value exchange across very complex networks, minimizing friction

> In well-functioning money systems, this ease of use translates to extremely beneficial cost of funding for (sovereign) money minters

🧵/ You can choose whether to look at the moon or at the pointing finger instead

With #CreditSuisse #SVBank at al. getting pumped back to life by the State, we should start asking whether the state-bank alliance makes much sense anymore

BANKING IS BROKEN, HALLELUJAH 👇 1/ The fact that #SVBank failure was a shock for markets tells a lot about the quality of markets (and regulators)

Below, an extract from SVB's regulatory disclosures. What was the regulator doing instead of observing the most classic of bank’s maturity mismatches?

0/ I’m on a personal fight to remove the word Real-World Assets (or RWA) from the DeFi jargon

It is truly a logical insult and a counterintuitive definition that can do way more harm than good

*PLEASE* help - here is why 👇🏻 1/ EVERYTHING IS AN ASSET

Whether you can ascribe value to that, and with confidence, it’s a different story. But everything is an asset, from housing to $BTC to watches to reputation to time

0/ I’m a broken record but *I DON’T CARE*

It is easy to write post mortem on how bad was @FTX_Official fuck up, but useless

I’ll do something else, I will show you what parallelisms there are between FTX and a so-called OG I know well, @MakerDAO

Might be useful 🧵 1/ Sin 1 - CENTRALISED DECISION-MAKING

@FTX_Official power was controlled by a small group of insiders tight around the founder @SBF_FTX, with investors staying silent

@MakerDAO is de facto controlled by @RuneKek the founder and a tight group of insiders - proved in LOVE vote

0/🧵

DeFi liquidity went down from 200b ATH to current 60-ish, bettered by interest rates, frauds, bad execution

I couldn’t be happier to invest and build today. These are my:
# 3 most relevant protocols
# 3 protocols I’d stay away from
# 3 things we are missing IMO

🧵 👇🏻 1/10 Most relevant protocol # 1: @LidoFinance

With the merge coming, there’s no protocol that has higher potential to transform DeFi:
- Develop new primitive with $stETH
- Spin out native stable
- Expand across other PoS chains
- Express pressure on $ETH governance

0/7 > I had the intuition that flat & naive 1-token-1-vote crypto governance systems are *AWFUL* in uncertain environments, so I tried to prove it. This week Dirt Roads is for *NERDS* and modelled gonzo-mathematical games of governance 🧵👇

dirtroads.substack.com/p/-43-first-pr… 1/7 > 1st game: Optimistic Governance Game - OGG:
* Voters are good people
* Voters are not proponents
* Proposals can be benevolent or malevolent, and cannot be distinguished
* Malevolent proposals have huge private benefit at the expense of a probability of blow-up

0/🧵Last week saw the most participated / contentious vote in the history of DAO governance happening at @MakerDAO

I have now had the time to absorb a lot of what happened in the past days, and being at the centre of it with my proposal for a Lending Oversight unit, my take 👇 1/🧵As a researcher, I have analysed for a while thru dirtroads.substack.com DAO governance and its virtuous and vicious results. I have written a ton about @feiprotocol and @RariCapital merger, @arca and @SushiSwap, @anchor_protocol, etc.

I believe in good governance

1/4 🧵And so my days as CU facilitator @MakerDAO are over - before starting 😂

The ratification vote of Lending Oversight ❤️ attracted 294k voting $MKR - huge record. Most of institutional crypto backed the idea of financial oversight, but that wasn't enough, @RuneKek didn't 2/4 🧵 Worth noting:

Insane active VC participation

Founder re-centralising vote in Shadow Delegate

Previously ostracised co-founder resurrected -> his comeback message is a bliss

Tons of proxy voting

Concerted parties (borrowers too)

Last-minute re-delegation

$MKR borrows

🧵/ Shared a week ago my thoughts on the need for a new stablecoin taxonomy - given the importance I’m doing it again

Using *ALGO* (@terra_money) vs *OVER-COLLATERALISED* (@MakerDAO) is improper and redundant. We must do better

So here’s my take 👇🏻 1/ Every pegged currency has an algorithmic component - @MakerDAO itself is 50% backed by other stables thru algorithmic incentivisation

The key difference, instead, resides in the nature of collateral used for backing

To me it’s about *ENDOGENOUS* vs *EXOGENOUS* collateral

0/ At @MakerDAO we are exploring the possibility of kicking-off one of the largest fund raising efforts in DeFi in order to boost the System Surplus and turbocharge Maker's growth plans. This would be much more than a plain vanilla raise of cash through VC funding 🧵👇 1/ @MakerDAO's System Surplus (SS) is the closest comp to a bank's Core Equity Tier 1 capital, a buffer to protect the protocol against the unknown unknowns that might hit us if the over-collateralisation proves not to be enough. That SS currently sits at 69m

0/ When your kids swipe 2.5b per year on your protocol card, you got a problem. @terra_money hijack of the liquidity sitting in @CurveFinance’s 4pool is the move of a bold but reasonable father. But why-how-what it means. Thread for the uninitiated🧵

dirtroads.substack.com/p/-36-terra-v-… 1/ @stablekwon and @terra_money have declared war to @MakerDAO with the intention to partner with @fraxfinance, @redactedcartel (and @OlympusDAO) and create a 4pool including $USDC, $USDT, $FRAX, $UST as the future key liquidity pillar of @CurveFinance - exactly, no $DAI

https://twitter.com/stablekwon/status/1506494471873081352

0/ The math connecting lenders <> borrowers on protocols such as @compoundfinance and @AaveAave comes right after @Uniswap's constant product function when it comes to influencing the whole DeFi industry. Strangely, it hasn't been challenged the same way. This might change 👇 1/ The size of the bid<>ask spread on those protocols is a measure of the space still available for optimisation. And the guys at @MorphoLabs listened. What is Morpho? Morpho is a front-running peer-to-peer lending overlay to @compoundfinance and @AaveAave, with huge ambitions

0/ @terra_money has established @anchor_protocol has a simple and powerful entry gate to the ecosystem. Fast-forward 10b later, questions arise about the sustainability of the famous 20% deposit yield on $UST. We must pay attention 👇 1/ As a reminder @anchor_protocol is a borrowing protocol, although different from @MakerDAO, in the sense that it is not the ultimate minter of its own currency, and also from the @AaveAave / @compoundfinance, in the sense that it lends out only one asset - $UST