seeing a bit of confusion about use of fixed pricing in defi, let's see if i can clear this up

the key invariant of defi lending/stablecoin protocols is that the value of debt should always be equal or less than the value of collateral backing it (solvency)

(1/15) if this invariant is threatened, protocols trigger liquidations to pay off the debt to avoid or minimize losses

in many cases, any residual losses after liquidating collateral are then backstopped by the protocol (eg. Maker surplus buffer and MKR minting backstop)

being the bullish propaganda i want to see in the world

$JTO @jito_sol could achieve a $1 billion valuation based on conservative fundamental analysis of just the liquid staking biz (not counting mev infra)

1/ methodology is same as my previous side quest assessing ethereum liquid staking industry valuation

because both LSTs and LST gov tokens provide native coin denominated cashflows, its possible to compare like for like to arrive at a valuation

2/

https://x.com/MonetSupply/status/1654180466302255104?s=20

some dashboards i'm watching rn

1) @BlockAnalitica aave risk dashboard

shows collateral and debt composition, position health, liquidity, buffer vs liquidation, and recent actions

aave.blockanalitica.com/v2/ethereum/wa…
2) @coinalyzetool crv dashboard

can monitor OI, funding, and liquidations across major cex

coinalyze.net/curve-dao-toke…

want to share a fun side quest I've been working on alongside regular @BlockAnalitica risk work

a fundamental valuation framework for the Ethereum liquid staking industry

longform post in the @MakerDAO forum but i'll share overview here

1/17

forum.makerdao.com/t/ethereum-liq… most valuation frameworks use a DCF model, using growth and revenue assumptions along with a discount rate to arrive at a "fair" value for an asset

but this can be highly subjective and difficult to put into proper context

on decentralized stablecoin flywheel effects

🧵/16 the endgame of decentralized stablecoins is to be used as a medium of exchange - trading, transfers, payment for goods and services, etc

achieving moneyness turbocharges protocols' economics, allowing for lower revenue sharing or token incentives to support required demand

there's obviously competitive factor at play, but imo rocketpool homies arent engaging with a key argument here

is there a risk of large centralized operators leveraging rocketpool in a way that is detrimental to reth validator set (and ethereum as a whole)?

https://twitter.com/_vshapovalov/status/1614867092628537344

on the face of it, seems like this risk does exist (although there's no evidence of this happening yet afaik)

joining reth val set is permissionless - generally a good thing as this empowers home stakers, but otoh there's no way to limit stake from large operators like lido can

With idiosyncratic merge risks now in the rearview mirror, @MakerDAO can consider next steps towards re-deploying funds into the @AaveAave D3M

I've just submitted a signal request asking if the community supports changes to MOMC guidance on D3M parameters forum.makerdao.com/t/signal-reque… Existing community approved guidance for MOMC (from November 2021) includes:

- limiting maximum debt ceiling to 30% of real DAI supplied to mitigate liquidity risks
- setting target rate no more than 0.5% below ETH-A vault stability fee to avoid cannibalizing core vault usage

tbt my first foray into threadooring

I think @eulerfinance should not add collateral support for $USDT, as it raises cost of capital for all other assets on the platform with limited benefit

forum.euler.finance/t/eip20-promot…

https://twitter.com/MonetSupply/status/1277005227900559360

if the community insists on adding support, this should include a limited max LTV (much lower than 90% proposed) and strict supply cap (< $100MM) to avoid possibility of full wipe on protocol assets

but imo the risk/return is strongly tilted to the downside

venturing deeper into the future of finance

the comptroller and community multisigs, collectively controlling at least $635MM in funds according to debank, are controlled via 2 of 4 signers

etherscan.io/address/0xB174…
etherscan.io/address/0x6327… for each multisig, one of the signers is the timelock contract corresponding to an on-chain governance mechanism (governor alpha)

etherscan.io/address/0x8412…

just added a 3DAI pool on @CurveFinance's @MoonbeamNetwork deployment

featuring @axelarcore @nomadxyz_ & @MultichainOrg $DAI tokens

hopefully will make it easier to bridge value between eth, dot, and cosmos ecosystems

moonbeam.curve.fi/factory/10 added a pool on @avalancheavax

avax.curve.fi/factory/84/

trying out something new with this month's @MakerDAO open market committee proposal

subject to voter approval, we'll be adopting a flexible forward guidance framework for certain large cap vault types (ETH-A, ETH-C, WBTC-A, WBTC-C, WSTETH-A)

forum.makerdao.com/t/parameter-ch… we're "soft" committing to not raising rates on the above vault types through August 31

this is conditional on:
- PSM balances remaining above 30% of DAI supply (currently 51%)
- rolling 7 day avg risk premium (as determined by risk CU) staying less than 2% above stability fee

Introducing the Basepool: a proposed partnership between @MakerDAO and @CurveFinance that offers unrivaled capital efficiency for stablecoin liquidity pools

Read the draft proposal here (split into two options, A & B): docs.google.com/document/d/1Yy…

TL;DRs in the tread below

1/19 The core of the proposal is a new Curve stableswap pool, consisting of $DAI, @circlepay $USDC, @PaxosGlobal $USDP, and @Gemini $GUSD

This provides a variety of fiat on<>off ramp options for users, along with linkage to the DAI credit system and vaults

bull case for terra and anchor protocol

(i'm skeptical they will be so lucky, but we'll see) lfg continues to purchase btc around current price range

lets say they get to $12B in reserves against $24B in circulating ust (50% backing)

they work out a decentralized custody mechanism, reducing regulatory and rug pull risks on btc reserves

fundamental problems with anchor protocol, a thread overview:

anchor is a lending protocol, allowing users to borrow UST against staked asset collateral (currently LUNA and ETH, more coming)

while borrow rates are set based on market utilization levels (similar to compound and aave), deposit rates are kept relatively fixed

terra vcs are really between a rock and a hard place. when ponzis collapse, receivers typically claw back investment gains from earlier participants. so their own funds’ solvency depends on them boosting and defending broken mechanisms and nasty ppl like unstablekwon

big ooof now imagine the cluelessness or just utter nihilism required to be a late joiner like those in the recent lfg round

crypto will enable limitless derivative trading

i see a lot of uncritical excitement for this, but basically no serious discussion of how this impacts markets

reuters.com/article/us-cft… two strategies for manipulation i can think of off the top of my head

(1) spot fixing but for any underlying - seeking direct profits

place derivs bet, coordinate with influential party (pro sports player, govt official, etc) to ensure win, split profits

Anchor's handling of bAsset rewards creates perverse incentives which increase risk to depositors

1/206 bAssets are tokens corresponding to liquid staking positions (currently LUNA and ETH are supported)

rewards earned on bAssets are handled at the application layer, so apps supporting bLUNA and bETH can capture these rewards as an incentive for integration

2/

Here are my @MakerDAO poll votes for the week

tl;dr: Voting to approve all measures ✅

Vote here: vote.makerdao.com/polling?networ… As ETH price rises, Maker needs to raise gas to compensate for increasing transaction costs (denominated in DAI)

This would still leave ETH-C vault type at 5,000 DAI minimum to allow for smaller scale users

Details on the dust parameter: forum.makerdao.com/t/signal-reque…

Sharing a roundup thread on recent activity within @AaveAave governance 🧵

Just voted for proposal 47 (extending liquidity mining with reduced budget) and 48 (adding @FireblocksHQ as "whitelister" for Aave ARC permissioned market) ✅

app.aave.com/#/governance Proposal 47 weights incentives for stablecoin assets towards borrowing (2/3 of incentives versus 1/2 previously)

I'm interested to see how this works out - hopefully it increases market efficiency and protocol revenue, but only time will tell

Proud $RGT and $TRIBE holder here

imo the merger proposal makes a lot of sense, but i don't think it will be easy to find mutually agreeable terms

See forum threads for reference:
tribe.fei.money/t/fei-rari-tok…
forums.rari.capital/d/177-feirari-… Synergies (why @feiprotocol and @RariCapital are worth more together):

- Fei can help bootstrap Fuse pools with FEI and PCV assets
- Rari shares Fuse admin fees from borrower usage back to Fei PCV
- Mintable stablecoins bring huge utility for cross chain liquidity

experienced my first hack last week as part of the @xtokenmarket $SNX LP pool

not a great feeling, but I appreciate the care the team is putting into the recovery process

wanted to share an alternate perspective on user compensation, loosely based on $GRAIN and $CORN the grain and cornichon tokens were made in response to yield aggregator hacks from last year

users received 1 CLAIM token per 1 USD of losses, as calculated at the time of the hack

the underlying protocol directs funds towards repayment over time