Lido allows users stake their ETH to secure Ethereum for yield without sacrificing the ability to do DeFi. $stETH is the liquid derivative token that's usable as collateral in other DeFi protocols such as @AaveAave and @MakerDAO1/ Lido makes money by:
- Taking 10% of staking rewards (revenues)
- Paying half of that out to node operators (COGS)
- Paying staff and contributors (operating expense)
- Incentivising $stETH liquidity in other protocols (operating expense)
May 9, 2023 • 11 tweets • 6 min read
Now that some time has passed since @blur_io's airdrop szn 1, I checked some high-level numbers to gauge whether it was good use of capital.
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1/ Firstly, I was impressed that @PacmanBlur talked about the importance of capital allocation on @bankless ()
It's refreshing to know there are founders in crypto who are well-aware of this concept.
Arbitrum is essentially a spread business🖖. It takes in user gas fees as revenues and incurs L1 (Ethereum) gas fees and L2 compute fees as operating costs.
Protocol Earnings (called sequencer profits) are directed to the DAO Treasury. This has the impact of increasing Arbitrum's “book value” (i.e. Arbitrum has clear economic value accrual).
Apr 30, 2023 • 8 tweets • 2 min read
The issue with *spray-and-pray*
Firstly, law of large numbers is the phenomenon that the sample average converges to the population expected value as the number of trials increases.
The spraying will result in an averaging down of portfolio returns to the market average
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1) In an industry where a winner-takes-all dynamic prevail (crypto is one because money and liquidity have big network effects), investors must go whale hunting rather than casting the net wide. Let’s illustrate with a simple example.
