Intern the AVSSenger presents "The Restaking Games and The Sins of LRTs"

All you need to know about restaking, AVSs, LRTs... yield, risk, rewards, and how not to get Eigenrekt

🧵 👇 Let's start off from first principles:

- Ethereum provides TRUST as a service to PROTOCOLS/APPs

- @eigenlayer extends this TRUST to OFF-CHAIN SERVICES

This creates an open marketplace for decentralized trust and permissionless innovation

1) Quick thread on @eigenlayer and LRTs

Why they exist, and what are their risks 🧵 👇 2) First, remember that Eigenlayer is not a DeFi protocol, it is a platform to bootstrap new proof of stake (PoS) systems – with associated staking rewards (positive incentive) and slashing (negative incentive).

@0xPolygon might be being overlooked

It is a DeFi and infrastructure powerhouse, not just another PoS L1 with good BD

It is the leader in ZK tech and offers bespoke solutions to on-chain identity, on-chain privacy, gaming, NFTs, and other solutions to drive mass adoption 🧵👇 A while ago it announced the token migration from $MATIC to $POL at a 1:1 ratio. This is required to ensure the transition to the Polygon zkEVM

But besides the zkEVM, there is also Polygon Supernets, the Polygon CDK, and the upcoming Polygon Miden

Don't freak out about interest rates on $crvUSD anon.

Here is how it works: you borrow $crvUSD against a collateral asset supported by @CurveFinance to create a CDP

So far so good, but what happens next? 1) Your position is loaded into the LLAMMA market making algorithm, which will assign the specific price bands at which the collateral will be swapped back and forth

So, what does smart money do when there is $USDT FUD? > Intern goes to bed to forget the pain

Writing a thread on frxETH v2 so you don't have to zoom in the image below🧵 ✊ 1) It will be permissionless: any validator will be able to borrow $ETH to run the validator and earn staking rewards

When you are not Curve and you attempt to imitate their token design as a recently launched protocol it is very easy to shoot yourself in the foot.

The ve @Balancer 80/20 model, however, is a different story 🧵 👇

TLDR: expect more projects joining the 80/20 initiative With @Balancer 's weighted pools, users and protocols can choose their desired levels of exposure to certain assets while still maintaining the ability to provide liquidity.

The higher a token’s weight in a pool, the less impermanent loss in the event of a price surge.

Custom L2 rollups bringing appchains to Ethereum? 🤝

@aevoxyz just launched their OP stack rollup with the help of @conduitxyz and the UX looks pretty neat

Let's look into it 🧐 An order-book Dex for trading options (and perps) is a big value proposition and massive improvement over the current DOV strategies, which are way too inflexible for pro traders (like my intern)

I know it is going to be volatile

You know it is going to be volatile

We all know it is going to be volatile

$ARB is coming, and @dopex_io was one of the first projects to bet on it 🧵 👇

https://twitter.com/tztokchad/status/1637539854480297987

Dopex offers a series of DeFi primitives in the form of Single Staking Options Vaults (SSOVs), Liquidity Pool Options (LPOs), Atlantic Options (ACs & APs), bonds... that can be used for a variety of use cases, such as insured perps, no liquidation borrowing...

Yield stripping is a simple concept to understand, but yield trading might be intimidating when you don't fully understand the AMM you are trading against.

Let's look at the @pendle_fi V2 AMM and maximize those yields

ALL YOU NEED TO KNOW 🧵 👇

https://twitter.com/gabavineb/status/1632756061424988160

Yield trading is all about coming up with strategies that will increase or decrease your exposure to an underlying yield.

That's what @pendle_fi does. It allows users to buy yield-bearing assets at a discount, hedge against yield downturns, fix your rates, long yield...

Most #DeFi users know that @Balancer is an amazing piece of tech.

But beyond its trading capabilities and great UX for LPs, there is one core piece of their architecture that stands out, the Balancer Vault 🧵 👇 The Balancer Vault is the core of the protocol.

It is the smart contract that holds and manages the accounting of all tokens that are present in each Balancer pool.

This is what makes joints, exits, and swaps possible.

You thought win-win situations are impossible in #Crypto?

Well, let me tell you that there is a perpetual futures instrument where traders have much higher expected returns, and where the house does not have to worry about liquidation risk

Enter @InfPools 🧵 👇 Step 1: solve liquidations

Why?

Because liquidations are risky, can lead to accumulating bad debt, and they are very inefficient for illiquid and volatile assets

If the liquidation fails, some traders may not get paid out on their profitable position

What would we do in #DeFi if it wasn't because of the volatility of these crazy markets?

Started suffering IL badly and now we here 🤙

Enter DVPs - Decentralized Volatility Products

Introducing @SmileeFinance First off, this is not a solution for impermanent loss

But who would have thought that IL would end up being a blessing in disguise and inspire a new wave of innovative derivative instruments based on volatility?

You enter a peer-to-peer deal and spend weeks assessing your counterparty. Then why don't you manage your risk when entering a liquidity pool?

Don't turn a blind eye on Impermanent loss

A thread on @GammaSwapLabs and why it is a much needed protocol 🧵 👇 In the past we had no choice but to suffer from impermanent loss.

With Univ3 we gained access to an options market

But as an LP, are you being fairly compensated for the risk you are taking?

Let's move on, it is gonna pay off

If you are bullish on #DeFi and you are not bullish on interest rates swaps, I don't know what you are doing.

You in it for the memes or what?

Let's dig into @element_fi and their new AMM, Hyperdrive 🧵 👇 Epic music by the way...

Musing on valuation frameworks and why the duration of cash flow matters 🧵 As the industry matures, the supply of stablecoins is kind of a big deal for crypto.

The market turns against you and interest rates drop as a result of the increased float of stablecoins in the market

Wish there was a protocol that let you borrow against any asset, used no oracle, and had no governance?

Permissionless, decentralized, and oracle free. Simple as that

Enter @ajnafi 🧵 👇 If Satoshi Nakamoto had designed a decentralized money market, it would likely resemble @ajnafi: a peer-to-peer borrow-lending platform where users do not have to trust external oracles or even care about protocol governance.

More people are starting to catch up with the narrative that interest rates swaps and risk management will play a huge role in the upcoming years

But even with this uptick, I have a feeling that not many understand the potential of @ipor_io power tokens

Let me explain 🧵 👇 First, we can observe a quick uptick in TVL, but also a fairly balanced distribution of liquidity across pools ($DAI, $USDT, $USDC)

Whale 🐳, bull 🐂, or bear 🐻, we are in a position of incomplete information at this point.

Game theory enjoyooors and the @tapioca_dao community will surely enjoy this one.

An omnichain money market built with @LayerZero_Labs tech is definitely exciting, but what is twAML mechanism and why is it a key component for the protocol? 🧵 👇

https://twitter.com/tapioca_dao/status/1615971544274014211

First, twAML stands for Time Weighted Average Magnitude Lock

It is a mechanism design that seeks to promote economic growth while avoiding the well-known pitfalls of liquidity mining programs

https://twitter.com/jediblocmates/status/1601248129835114496

“The root problem with conventional currencies is all the trust that’s required to make it work” - Satoshi

But you know what is inherent to all currencies and we can't avoid trusting?

Oracles, the single point of failure that can make or break a DeFi protocol 🧵 Most DeFi users understand that there is no such thing as "perfect" when it comes to protection against oracle attacks

However, there is the commonly accepted notion that @chainlink is the closest thing to a reliable and cheap solution

Too busy looking for gems with untested mechanism designs?

How about looking into blue chips and resilient protocols?

Here is all you need to know about @AaveAave V3 🧵

https://twitter.com/StaniKulechov/status/1606357768339800064

OG, IPFS and open source frontend, peak liquidity at $30B, credit delegation, flash loans... Aave has set an industry standard and a foundational layer for what a decentralized money market looks like, and there is a reason for that

https://twitter.com/kamikaz_ETH/status/1610575532177121280