The MakerDAO-Aave Debacle: Risks and Rewards of Collateralizing DAI | Analyst Round Table

Summary

The podcast episode discusses various topics in the blockchain and cryptocurrency space, including the high interest rates for staking USDE compared to undercollateralized loans, the challenges faced by private credit protocols like Goldfinch due to defaults, and the success of platforms like Pump Fund, which allows users to launch their own tokens. The conversation also touches on the potential risks and rewards of different DeFi strategies and the importance of risk management in the crypto market.

Takeaways

• 📈 The discussion revolves around various developments in the blockchain and cryptocurrency space, particularly focusing on interest rates, lending, and new projects.
• 💡 The arbitrum stylus proposal enables developers to build on arbitrum using languages like Rust, C, and C++, diversifying smart contract development beyond Solidity.
• 💥 PancakeSwap's deployment on Monad and V Drome's launch on Bitcoin's L2 ecosystem are highlighted as significant events to watch.
• 🔄 The importance of the ltip and staking snapshots in the Arbitrum ecosystem is noted, as they offer insights into protocol funding and potential alpha opportunities.
• 🚀 The growth of the Solidly flywheel and its impact on V Drome's success is discussed, emphasizing the protocol's all-time high fee revenue and volume.
• 📊 The airdrop fund updates, including Tenza Season 4 and Deep Book's native token introduction through a soulbound NFT, are mentioned as notable developments.
• 🔧 The challenges faced by the Solana network due to transaction failures and drop transactions are analyzed, with potential solutions like networking layer fixes and fee market improvements being discussed.
• 💣 The hot seat segment covers the MakerDAO proposal to collateralize with SSD and the controversy surrounding it, highlighting the risks and rewards of such decisions.
• 🔗 The potential of on-chain private credit is debated, with Goldfinch's recent default highlighted as an example of the challenges in this space.
• 🌐 The rise of meme coin launches through platforms like Pump Fund is discussed, with its simple yet lucrative business model garnering attention.

Q & A

What is the significance of the proposal to enable Arbitrum Stylus on Arbitrum 1 and Nova?

The proposal to enable Arbitrum Stylus on Arbitrum 1 and Nova is significant because it allows developers to build on Arbitrum using languages such as Rust, C, and C++, which removes the smart contract development constraints that most EVM-based blockchains have had in the past. This opens up the ecosystem to a broader range of developers and can lead to more innovative applications being built on Arbitrum.

What is the role of ltip in the Arbitrum ecosystem?

Ltip plays a crucial role in the Arbitrum ecosystem by allocating a significant amount of capital to protocols as incentives. This not only helps to attract developers to build on Arbitrum but also encourages the growth and adoption of the network. The incentives provided by ltip can be a key factor for protocols to thrive and for users to find potential alpha opportunities.

What are the implications of PancakeSwap deploying on Moneta?

The deployment of PancakeSwap on Moneta is interesting as it will bring performance and scalability improvements to the platform. It also raises questions about whether any changes will be needed for developers who are already on Moneta, and how this deployment might affect the overall dynamics of the PancakeSwap ecosystem.

How does the launch of V Drome's decks on Bitcoin L2 impact the Ethereum ecosystem?

The launch of V Drome's decks on Bitcoin L2 is significant as it represents a move towards cross-chain compatibility and the potential for Ethereum-based projects to tap into the Bitcoin ecosystem. This could lead to increased innovation and a more interconnected blockchain landscape, with Ethereum dApps potentially benefiting from the security and simplicity of the Bitcoin L2 ecosystem.

What is the current status of the airdrop fund for Tenza Season 4?

Tenza Season 4 has started and the claim for the airdrop fund is open, allowing participants to claim and sell their tokens if they wish. The reactions to the airdrop have been mixed, with some traders who executed a large amount of volume receiving less than expected, while others who traded less got more than they anticipated.

What is the relationship between Axar and Squid?

Axar and Squid have a close relationship as Squid is one of the core primitives built on top of Axar. Squid is a cross-chain decentralized exchange that enables users to swap assets across different chains, such as from Binance Smart Chain to dydx on Ethereum, using Axar's infrastructure.

What is the significance of Axar's upcoming upgrade to support smart contracts on top of its platform?

The upcoming upgrade that will allow smart contracts to be deployed on Axar is significant as it will enable the platform to connect with more non-EVM chains and expand its ecosystem. This will open up new possibilities for real-world asset tokenization and other applications, further enhancing the utility and reach of Axar.

What are the main challenges currently faced by the Solana network?

Solana is currently facing challenges with network congestion and transaction failures due to a combination of factors, including arbitrage bots spamming the network and issues with the network's quick implementation. This has led to a poor user experience, with transactions often needing to be submitted multiple times to be successful.

What is the controversy surrounding the MakerDAO proposal to extend a credit line to collateralize with SSD?

The controversy stems from MakerDAO's proposal to use a $600 million credit line to collateralize with SSD, which some community members view as a significant risk to the protocol. The proposal has sparked debates about risk management, the potential for high rewards, and the impact on the broader DeFi ecosystem's composability and Lego-like structure.

What are the potential risks associated with the Athena protocol?

Athena protocol's risks include potential defaults by exchanges, directional exposure during settlement periods, and the possibility of unauthorized access to funds by those controlling custody. Despite these risks, some believe the rewards outweigh the potential downside, especially given the high funding rates currently offered by the protocol.

Outlines

00:00

🗣️ Podcast Introduction and Disclaimer

The podcast begins with an introduction to the episode, highlighting the discussion topics such as interest rates, lending, and emerging market lending. A disclaimer is presented, stating that the views expressed in the podcast are personal and do not represent any associated organization. The podcast also mentions that the content should not be taken as financial, technical, tax, or legal advice.

05:00

📰 News and Governance Updates

The segment covers recent news and governance updates, including a proposal to enable Arbitrum Stylus on Arbitrum 1 and Nova. It discusses the benefits of Arbitrum Stylus for developers and the potential for increased innovation. Additionally, the segment touches on various deployments, such as PancakeSwap on Monad and V Drome launching on Bitcoin's L2 ecosystem. The discussion also includes thoughts on the impact of these developments and the potential for finding alpha in certain protocols.

10:02

🤔 Deep Dive into Arbitrum Stylus and Ltip

The conversation delves deeper into the significance of Arbitrum Stylus and its potential to be overlooked. It highlights the composability with Solidity smart contracts and the opportunities for developers in the virtual machine realm. The segment also discusses the Ltip process, its impact on protocols, and the potential for finding value in protocols funded through Ltip. The discussion includes reflections on the success of the Ltip process and the benefits it brings to the Arbitrum ecosystem.

15:02

🚀 Launch Updates and Airdrop Insights

This segment focuses on various launches and airdrops, including V Drome's new token on Aerodrome and the potential for new tokens on Build on Bitcoin. It explores the implications of token inflation and the impact of front-loaded incentives. The conversation also covers airdrop fund updates, such as Tenza Season 4 and the distribution of tokens, as well as the performance of different tokens in the market.

20:05

📈 NFT Marketplaces and Airdrop Strategies

The discussion shifts to NFT marketplaces, with a focus on the performance of different platforms and the challenges faced by new entrants. It examines the impact of meme coins and the attention economy on the NFT space. The segment also touches on airdrop strategies and the tradeoffs between incentivizing broad participation and rewarding active users. The conversation includes thoughts on the effectiveness of airdrop campaigns and the potential for new developments in incentive structures.

25:06

🌐 Updates on Permissionless Deployments and Cross-Margin

This segment discusses the importance of permissionless contract support on platforms like dydx and the potential for new opportunities in AMM vaults and asset issuance. It highlights the benefits of cross-margin exchanges and the potential for innovative financial products. The discussion also includes updates on the dydx ecosystem, including the introduction of permissioned smart contract support and the impact on decentralization and network robustness.

30:08

💡 Axel: The Bridging Solution

The podcast features a discussion with the co-founder of Axel, a platform that solves the bridging problem without being a bridge itself. Axel is described as infrastructure that enables bridges and other applications to build on top of it, allowing for the creation of chain-agnostic versions of decentralized exchanges, money markets, and NFT marketplaces. The segment also covers Axel's roadmap, including the integration of non-EVM chains and a focus on real-world asset tokenization.

35:08

🔥 Hot Seat: Solana Network Issues

The hot seat segment addresses the recent performance issues with the Solana network, discussing the reasons behind transaction failures and the impact of arbitrage bots. It explores the challenges faced by the network, including the implementation of the Quick protocol and the potential solutions being worked on by the Solana developers. The conversation also touches on the implications of these issues for users and the broader implications for the Solana ecosystem.

40:09

💸 Goldfinch Default and Private Credit Concerns

The segment discusses the recent default on a Goldfinch loan and the broader challenges faced by private credit protocols. It highlights the risks associated with undercollateralized lending, especially in emerging markets, and the potential for high default rates. The conversation also explores the impact of defaults on the protocol and the need for effective underwriting and loan recourse strategies.

45:12

🚀 Pump.Fund: The Meme Coin Factory

The podcast concludes with a discussion on Pump.Fund, a platform that allows users to launch meme coins on Solana and Binance Smart Chain. It covers the business model and the significant revenue generated by the platform. The conversation also touches on the potential for tokenization and the future of the platform in the context of the growing meme coin trend.

Keywords

💡Interest Rate

The interest rate mentioned in the transcript refers to the cost or return associated with borrowing or lending assets, typically expressed as a percentage. In the context of the video, it is used to highlight the stark contrast between the high returns on staking USDE (a stablecoin) compared to the risky business of undercollateralized lending in emerging markets.

💡Arbitrum

Arbitrum is a layer-2 scaling solution for Ethereum that allows for faster and cheaper transactions. It is mentioned in the transcript as part of a proposal to enable Arbitrum Stylus, which would allow developers to build smart contracts using languages other than Solidity, thus expanding the development possibilities on the Arbitrum network.

💡Staking

Staking in the context of the video refers to the process of participating in the proof-of-stake (PoS) consensus mechanism of a blockchain by locking up a certain amount of a cryptocurrency in order to earn rewards. It is presented as a lucrative opportunity, particularly when compared to other investment strategies such as undercollateralized lending.

💡DeFi

DeFi, or Decentralized Finance, is a financial system built on blockchain technology that aims to provide alternative financial services without the need for traditional intermediaries like banks. In the transcript, DeFi is discussed in relation to the potential of on-chain lending and the challenges faced by private credit protocols.

💡Private Credit

Private credit refers to the practice of lending to individuals or businesses that may not have access to traditional credit sources, often in emerging markets. In the video, private credit protocols like Goldfinch are discussed, highlighting the challenges of underwriting and the risks of high default rates.

💡Emerging Markets

Emerging markets are countries that are in the process of rapid growth and industrialization but are still considered to be in an earlier stage of economic development. In the context of the video, emerging markets are discussed as locations where private credit lending is particularly risky due to factors such as economic instability and lack of robust financial infrastructure.

💡Pump.Fund

Pump.Fund is a platform that allows users to launch their own 'shitcoins' on various blockchain networks like Solana and Binance Smart Chain. It has gained popularity due to the low barrier to entry for creating new tokens and the potential for significant revenue generation, as evidenced by the platform's reported earnings.

💡Tokenization

Tokenization refers to the process of representing real-world assets or concepts as digital tokens on a blockchain. This concept is discussed in the context of real-world asset tokenization on Solana, which is seen as an attractive option for asset issuers due to regulatory clarity and the potential for new opportunities.

💡Decentralization

Decentralization in the context of the video refers to the distribution of power and control away from a central authority. It is a key principle in blockchain technology and is often associated with increased security, transparency, and resistance to censorship. The discussion around platforms like Pump.Fund and private credit protocols touches on the potential benefits and challenges of decentralization.

💡Governance

Governance in blockchain refers to the mechanisms and processes by which decisions are made and changes are implemented within a decentralized network or platform. In the transcript, governance updates are discussed as part of the news segment, highlighting the importance of community decision-making in the development and direction of blockchain projects.

Highlights

The discussion begins with a focus on the interest rates and opportunities in the cryptocurrency lending space, particularly in emerging markets.

Arbitrum Stylus is highlighted as an important development that allows developers to build on Arbitrum using languages like Rust, C, and C++, diversifying smart contract development beyond Solidity.

The panelists discuss the impact of the recent proposal to enable Arbitrum Stylus on the development of new applications and the composability with Solidity smart contracts.

PancakeSwap's deployment on Monet and the performance of deployments on other chains is a key topic of interest.

V Drome's launch on Bitcoin's L2 ecosystem with EVM compatibility is anticipated to be a significant event, potentially attracting Ethereum-based projects to the Bitcoin L2 ecosystem.

The conversation touches on the importance of Ltip allocations and the potential for alpha or edge found in the protocols funded through this process.

The panelists delve into the success of the previous Ltip process, despite some seeing it as a failure, and the influx of builders into the Arbitrum ecosystem.

The discussion highlights the interesting point of V Drome's tokenomics, with inflation front-loaded in the early stages and a gradual decay afterwards.

Airdrop fund updates, including Tenza Season 4 and the claims process, are covered, with mixed reactions from the community.

The panelists discuss the potential of the Deepbook protocol and its native token, introduced through a soulbound NFT, and its expected impact on the NFT and crypto space.

The conversation addresses the challenges and potential solutions for the Solana network's recent performance issues, including the problem of dropped transactions.

The hot seat segment focuses on the MakerDAO and Aave controversy, discussing the proposal to extend a credit line to collateralize with SSD and the subsequent delisting proposal.

The discussion explores the risks and rewards of the Goldfinch protocol, particularly in light of recent defaults and the challenges of private credit lending in emerging markets.

Pump.Fund is highlighted as an innovative platform enabling the launch of meme tokens on Solana and Binance Smart Chain, with a unique revenue model that is capitalizing on the current market trends.

The potential for Pump.Fund to expand across multiple blockchain ecosystems and its possible transition into a token-based model are discussed.

The panelists contemplate the future of on-chain credit markets and the need for solutions that balance efficiency with risk management and default recourse.

Transcripts

I just can't believe that interest rate

you said 177% run so you're telling me I

can buy usde and stake it and earn three

times the amount as doing an under

collateralized loan as a lender in an

emerging market like that is you're on

crack like under collateralized lending

on chain is a great business for

borrowers and borrowers only like you're

insane to be lending on those

things before we get into today's

episode just a quick disclaimer the

views on this podcast by either myself

or any guests are the personal views and

do not represent the views of any

Associated organization nothing in this

episode should be construed or relied

upon as Financial technical tax legal or

other advice all right let's jump into

the episode what's up everyone welcome

back to another episode of zerox

research the blockworks research team is

back to bring you another analyst Round

Table this time joined by Brick and Matt

from the blockworks research team today

is Monday April 8th and as always you

can use code0x research 10 at app.

blockworks research.com checkout for 10%

off your annual subscription ren do you

want to kick us off with some news and

governance updates for sure thank you

Sam first of all happy Eclipse day to

those who get the pleasure of doing the

eclipse today um starting off the news

and governance updates first of all we

have a proposal to enable arbitrum

stylus on arbitrum 1 and Nova for those

that need a refresher arbitrum stylus

basically allows developers to build on

arbit using languages such as Russ C C++

and that sort of removes the smart

contract development constraints of

purely using solidity that most evm So

based blockchains have in the past in

addition there's some sort of ltip and

stip snapshots going on right now um on

other news we have a bunch of

deployments pancake swap will be

deploying on monad pancak Swap is

probably live on 11 or so chains today

um it'll be interesting to see what deps

Deploy on Monet given this sort of like

performance and paralyzation and if

there's any sort of like anything else

that they need to change for the devs if

they already playing on there um V Drome

is going to launch his decks on build on

bitcoin which is a Bitcoin L2 with evm

compatibility I think that one will be

interesting to see how many of these

ethereum dabs try to hop on into sort of

like the Bitcoin L2 ecosystem I'll take

a pause there but any thoughts between

arbitrum stylus pancak stop and vum

launching on this Bitcoin

L2 yeah I want to lean into arbitrum

Style

it's super interesting to me that it

largely gets overlooked like no one

really cares about stylish sure you see

a couple tweets about it but no one

really gives it any more thought than

just you know uh a passing a fleeting

thought but arbit from Stylus is a

pretty big deal it pretty much allows

any rust C++ or C developer to go code

smart contracts on arbitrum and then

additionally they're they're composable

with solidity smart contracts so you can

have apps WR in either language so when

you look at monad which is you know also

doing doing innovation in the virtual

machine realm it gets so much buzz and

hype and VCS are all over and it's got a

narrative on Twitter and stylus just

doesn't see it and it doesn't make much

sense to me and also I want to lean into

the ltip stuff a little bit but I guess

I'll give every in a second in case you

guys have thoughts on

stylus keep ripping while you're

cooking yeah so ltip is allocating a

ridiculous amount of capital to

protocols as incentives on arbitrum and

once again I think it's overlooked like

when stip happened the last time there

was arbitrum dowg incentives to

protocols it took weeks for people to

really realize oh shoot there's a you

know half a million or5 million fdv

crypto token that's getting half of its

fdv in incentives uh so I do think that

it's that it's actually a place that

there could be some alpha or some Edge

found found uh for those that are you

know looking through which protocols

were actually funded as a part of this

ltip process generally speaking Matt how

would you say the stip went were any of

the learnings from that implemented in

the L tip and on top of that is there

any protocols that are receiving the

ltip that are particularly interesting

for from your

perspective yeah so scip is a tough one

to to evaluate um if you look at it

purely from a fundamental basis of like

how much money was spent versus you know

the transaction sequencer the the

sequencer fees from transactions you

could probably go ahead and say that it

was a failure but I think that that's

really a misnomer because a lot of

protocols who wouldn't have otherwise

came over to arbitrum are like oh shoot

I want to be a part of this you know

incentives process I want some of the I

want some incentives from the arbitrum

Dow so we're actually seeing quite a few

Builders come into the arbitrum

ecosystem um for example even though

synthetics was not funded as part of the

ltip process they were largely

interested in becoming a arbitrum

focused or at least having some focus on

the arbitrum ecosystem and we see this

over and over again with other protocols

so I think from that perspective stip

could actually be considered a win for

the Dow in the arbitrum Eos system I

don't want to give any like Financial

advice so I would just go say look

through the arbitrum Forum post at which

protocols got funded and and do your own

analysis there on the uh front of vrum

launching a deck on build on bitcoin I

find that super interesting because the

the solidity flywheel like

solidly solidly flywheel not solidity

has like actually kind of started to

take off like we didn't see anything cuz

they launched in the the kind of the

peak of the bull like beginning of the

bear so is like honestly the worst

possible time for a solidly type

protocol to to launch um so it's kind of

cool to see vrum and aerodrum like

trading at all-time highs generating

all-time highs of fee revenue and seeing

the most volume they've ever seen so I

think this is like a really good time

especially with the uh the launch of

runes here around the having for for

vrone to be going over there I'm not

sure if they'll actually be partaking in

the runes protocol or not I'm kind of

confused as to actually what uh what

they're building on build on bitcoin

which is Bob I think is what people

refer to it as but nevertheless I'll be

watching that one I think another

interesting point about V Drome is

obviously they launch a new token arrow

for Aerodrome on base uh will be

interesting to see if they also decide

to launch a new token for their decks on

build on bitcoin I my good feeling says

no at some point like you can't just

keep on launching new tokens for every

chain you launch them but I don't know

seems to have worked out for air Dr

pretty well so that remains to be seen a

few other newsing governance oh sorry

Vick go

ahead no I was just going to ask aren't

um aerod Drome incentives also front

loaded or like there's more dilution in

the beginning which is interesting if

like the token wasn't doing that great

in the beginning and now it has still

like rebounded out of the um like not in

a Perpetual downwards movement but

really like starting to take off so

maybe this could be another curve likee

project where even though incentives

all the time coming in they could still

like manage fairly well yeah I believe

the first 14 weeks you saw inflation

gradually increase or not even gradually

like pretty aggressively and then from

the 14we period onwards it like decays

pretty gradually so I think inflation is

actually at the point to where it's

going down now um but that being said

like there is just inherently a lot of

token inflation that gets that gets

baked into these protocols so like I

definitely would wouldn't want to be

holding V or Arrow like in the beginning

of a bare Market if that makes

sense yeah definitely reflexive both on

the way up and on the way down a few

news updates on the airdrop fund um

tenza season 4 started today ER the

claim is open you can go claim and sell

if you want uh your tokens I think so

far mixed reactions there some to be

like some people that traded like a huge

amount of volume and there were like

Wheels who like didn't get as as much as

they would have thought and a lot of

people who like didn't trade much and

got more than they thought so it does

seem like they utiliz like some form of

T system perhaps like it wasn't as

tiered as like something like jeto where

like there were separate tiers with like

a fixed amount of tenser um for each

tier um but it does seem like there was

some sort of tier currently the tokens

trading at around 1.8 billion FTV and

that's in comparison to blast that 1.5

roughly uh sorry blur at 1.5 roughly

billion FTV um you can form your own

conclusion as to what do you think like

the salana nft marketplace should be

worth more than the ethereum sort of

like gold standard nft Marketplace um

but just one point interesting point of

comparison is unisoft and Jupiter

unisoft currently trades at a 11.6

billion FTV and Jupiter trades at a 14.3

billion FTB so make of the head what you

will um something else on the

air drop side of things deep book which

is a central order book protocol onu

introduced their native token deep

through a soulbound nft the token isn't

live yet but so far it looks pretty good

and I think that protocol actually does

like a lot of like volume in the grand

scheme of things sure like a lot of

protocols on S do have a lot of

incentives just from the S Foundation I

think like just every week like all of

these protocols get like half a million

dollar or something ridiculous but still

um it'll be interesting to see what it

is like the first big air drop on WE

given that I don't think there's been

like a large one so far any thoughts on

those like two air

drops yeah I mean it's always hard to do

air drop but especially following like

the jto thing where a lot of people

suddenly got a lot of money compared to

like how much they have put in so I

guess it always becomes like a tradeoff

between do you want to incentivize kind

of everybody or those who have really

really used the project and if you go

with the lad option you're always going

to run into the problem of like airdrop

farmers who are going to get a big chunk

of the like incentive structure so my

like kind of small thesis I've been

thinking about this that this is

something that we will probably or like

incentive structures or airdrop

structures overall are probably

something that we're going to be seeing

a lot of developments in or at least

like

um projects trying out some new stuff

here and there going

forward yeah the tzer one's tough for me

to digest just obviously it came like a

couple hours ago so I haven't had a ton

of time to think about it but nfts have

kind of been down only and from what I'm

hearing like people were farming you

know season one it was like the end of

2022 I believe so like if you were

farming this thing at the end of 2022

you probably got absolutely slaughtered

on the nfts that you purchased for

starters and then they didn't even

heavily wait the season one and season 2

activity versus season 3 so the people

who came in post goto airdrop and then

you compare that to the fdv of blur

which is obviously the defao nft

marketplace on ethereum and it's trading

at a premium to it it's just makes it a

tough sell for me um and on top of that

like the prolif proliferation of meme

coins like it feels like it's just

totally replace the the attention

economy on its salana from jpegs to meme

coins um and I don't know if I see that

changing to be honest and you even look

at Magic Eden's market share on salana I

haven't looked at it recently but you

would think that tenzer would have

commanded like a 95% plus market share

over salana volume considering it was

pre-t toen and granted magic Eden is

pre-t toen as well but you still see

them with like 30 to 40% market share a

lot of the time last time I had checked

so I don't know uh I don't know if I

would be buying tzer is I guess what I'm

saying but obviously not Financial

advice yeah but I mean I think that's a

good example of or showcase as well how

strong Originals have been recently like

a lot of people want to trade those and

then I'm guessing that okay I traded

ordinals on this platform let me as well

just like trade my salana NFD here's

like there's a lot of stickiness there

and uh as I think I mentioned earlier on

or on an earlier podcast that it was a

brilliant like business move from Magic

Eden to like push into this narrative

and grow through

that yeah that that statistic that you

mentioned s is little shocking to me to

be honest I would have thought like tza

would be like com be like above 80%

market share on salana all the time but

yeah as viick mentioned I do think that

could be strongly attributed to sort of

like magic Eden's command over like the

ordinal Marketplace and in that set of

nftd trailers flowing onto like other

ecosystems yeah you also just to mention

real quick before we move on to the next

note here like you you can download

their wallet and that get you like extra

points for magic Eden so like I think

that it like break you nailed it on the

head like people download the wallet

they use it and like they're like well I

might as well trade Salon nfts here

because I'm getting you know magic Eden

points as well on top of my ordinals

wallet it also feels that the like 10er

Hive kind of died down or I remember it

had to be beginning of the year when

Twitter was full of people like coming

up with different strategies and just

like trying trying to get as many points

as possible and then lately it has more

been like nobody really talks about that

platform

anymore all right a few last news

updates Ellipsis Labs founder of Phoenix

trade which is a crankers decentralized

limit order Book Exchange on salana Race

20 million last week um and the last

news update is that Antonio from dydx

say that dydx before will introduce

permission to Smart contract support

which will enable more powerful

opportunities for amm vaults structure

products asset issuance and a lot more

to be built on top of

dydx any thoughts

there yeah I think the permissionless

contract support on dydx is particularly

interesting um the way I see it likely

they want to enable you know a

traditional Dex for swapping and a

lending market and then you could see a

world where someone could build

something very similar to Athena fully

on chain on dydx chain uh meaning you

know a delta neutral stable coin or

something of that nature so basically

give uh Traders all the infrastructure

necessary to do delta neutral basis

trading on dydx chain so I think that

that's really really cool and I'll

definitely be keeping an eye there to

see if any projects actually go and

build uh kind of what I have envisioned

then there was also that interesting dyx

proposal that just passed to I believe

it was stake a portion of the treasury I

forget the exact amount to dydx

validators who were uh underrepresented

so to like smaller dydx validators to

help insury centralization of the

network and uh its robustness so I

thought that was a really cool proposal

as well so not only you know increasing

decentralization to dydx but also uh you

know getting some yield in usdc to the

dydx

treasury it's actually in uh that was a

proposal by stride so it's 20 million

from the community Treasury and they

autoc compound the usdc rewards back

into dydx so it's actually like a a che

little value acrel opportunity that they

capitalized on for for the dydx token

which I thought was pretty

cool but yeah going back to the

permissionless deployments it that's a

pretty interesting business move because

if you look at something like osmosis

they also allow uploading smart

contracts on their chain but it's

permission so like the community has to

vote on it uh which I kind of think

makes sense because then that doesn't

allow for any body to like spam the

chain with some like basically trash

smart contracts or whatever um but I do

say the like value in being

permissionless or um like the crypto

ethers and it's also like hard business

model to get right because for the

underlying chain itself it's like quite

tempting I guess uh to start scaling

vertically into the same like business

as the smart contracts or the new

projects deployed on top of the chain

are so like for

example um on osmosis there are already

like per platforms but I think there

would be a big incentive for osis to

like

uh integrate perp trading into the chain

itself because it's uh or like the

protocol uh or the project would allow

per per trading itself because it's a

like Great Value acral um like

possibility but then again like you're

basically disincentivizing anybody else

to start building on the Chain I feel

like dydx has always had this Vision

though of just pers trading like dydx is

one of those teams that I have to

commend on they've had this Vision their

entire time like we want to be a uh

order book centralized exchange user

experience on chain so we want to

compete with binance on chain just for

perss so I actually think that you know

even if they see some decks or lending

platform or something do a ton of volume

and have a great value crew model

they'll actually just stick with their

Vision like they've never strayed from

it thus far and I don't think they'll

start doing that

today I think there's some really

interesting things you could do too with

like cross margin um like obviously you

know dydx is a cross margin exchange so

like exchange so like it'd be kind of

cool if you could use your purpose

position as collateral on an amm or or a

structured product or vault or some sort

of thing like that I I don't know if

that would get a little bit too messy

and potentially introduce new risk into

the system but it'd be cool to see some

of that come to

fruition big Infinity po throwback

RP all right um now for a quick word

from Axel thanks to our fantastic

sponsor

dydx all right guys for today's dydx

segment we have your host axar

co-founder and director of the axar

foundation thank you so much for coming

on thanks so much for having me just for

quick starters do you mind just giving

us like a quick 30 to 60c overview of

what Axel is absolutely so um Axel the

way we like people to think about it is

that it solves the bridging problem but

is not actually a bridge right all of

you are familiar with you know Bridges

and all of the hacks over the past few

years Axel operates one layer below it

is infrastructure it is a platform that

allows Bridges and other applications uh

to build on top right so to make an

analogy the same way that on layer one

you can build decentralized exchanges

money markets nft marketplaces all those

great Primitives with Axel you can build

chain agnostic versions of those

applications right the cross chain Dex

cross chain Money Market Cross chain

nftd marketplace right so it's a

platform that powers Bridges but all

kinds of other applications as well so

we had squid rer on actually a week or

two ago how are you guys related to them

and the The Wider dydx

ecosystem great question so squid uh is

one of these core Primitives building on

top of Axel right and is the most

popular cross-chain decentralized

exchange that's built on Axel what it

enables users to do is take an asset say

uh BNB on this binance smart chain and

swap into usdc on dydx as simple as that

right a simple interface looks very

similar to Unis swap but takes an asset

as input on one chain and gives you an

asset on another chain now for the

particular use case of dydx all of the

collateral is in usdc so that's the

asset it delivers to the user and uh the

other cool feature that it has is that

it can do the whole flow in uh 20

seconds we have what we call this

Express features with Axel which allows

applications to express their

transactions and uh we have these uh

relayer services that take the whole

risk on behalf of the user so the user

can actually

uh get very seamless user experience get

their assets very fast on the

destination chain while assuming zero

risk you have this kind of uh Market

making entities that's one way to think

of them that support the user and take a

very small fee in exchange for the

service gotcha I appreciate that

explanation and I know axar has a lot of

exciting plans over the coming year so

would love to hear what's on the Axel

road map for the next six to 12 months

um sounds great sounds great so we're on

boarding uh many of the non evm chains

right now AEL has just evm and Cosmos

chains about 60 chains integrated to the

network but we have a big upgrade that's

going to launch Smart contracts on top

of Axel and make connections

permissionless so we're going to be

adding Solana suie stellar reple and a

couple of other non EVMS in the coming

months uh now usually when uh we decide

that we want to add a chain the

decisions is informed by the customers

right the applications uh building on

top of Axel and a big segment that we're

focusing on is real world asset

tokenization a lot of the real world

assets ISU want to be launching on

Solana uh because Solana has clearance

from some regulatory bodies in New York

there's only Solana and and ethereum

they also want to be launching onui

because that's a new ecosystem there's a

lot of excitement there a lot of

opportunity for new stable coin issuers

um so I guess given how close we are

with a lot of this real world asset

companies we are prior prioritizing some

of the nonm chains that they want and we

have a lot of very interesting

initiatives we're going to be announcing

in the coming weeks and months on the

real world doet side and also the work

we're doing with financial institutions

that's going to be a big part of what's

to come with

Axel nice well that is super exciting

and we'll actually have to get you on

for a full episode at some point to get

to get a bigger rundown of axar because

I know there's a lot of nuances but

thank you so much for coming on uh I

don't know if you want to share with

people where they can learn more about

axar or uh where they can find you

personally yeah for me I mean just

follow me on Twitter feel free to

message me I always respond to people uh

just type my name on uh on Twitter and

uh yeah happy to send you more

information about Axel but I think just

follow us on Twitter WE Post regular

update so you'll be able to find all of

the information there awesome thank you

so much we'll catch you sometime in the

future absolutely thank you so much for

having me now moving on to our hot seat

Kone segment I'm going to throw it over

to you Sam this week for probably one of

the more talked about topics in the past

week yeah I got a lar as a salana expert

here for a second but uh basically

anyone who has used Solano over the past

week or two has definitely realized it

is incredibly broken it's hard to land

any transaction without submitting a

request like three four five times and

nil on Twitter we can be sure to link to

this thread in the show notes but put

together a great explainer of of really

what's going on here so I'm going to do

my best uh to summarize it for you so

basically there's three passs for uh a

given transaction on Sal either one it's

successfully included and there's zero

errors so the transaction went through

and it was executed successfully that's

like the Happy case but then there's two

where the execution actually failed so

the gas is paid but the execution failed

because of some certain unmet uh

conditions so like for example if you

have too low of slippage set on an

illiquid Dex pair there's a chance that

that transaction actually reverts

because the slippage tolerance was set

too low and that's actually the the

chart that's been floating around on

Twitter that shows like 75% of salana

transactions have failed that's like

that's the reason it's mostly Arbitrage

Bots who are spamming the network to

some degree in order to uh get their ARB

through because transaction fees are so

cheap that you stand to make more on the

actual Arbitrage assuming it's

successful and you can you can afford

those failed transactions so that's not

really the problem here the problem is

actually the third case which is drop

transactions and this is the case in

which the block leader actually never

even saw the transaction request by the

user

so the N the networking layer is

basically the communication layer of the

internet and it's used to send packets

from one data connection to another so

for example TCP um and then there's

quick which was actually designed by

Google which I found interesting in this

thread but basically salana uses quick

and it gives the abil the builders the

ability to drop transactions based on

certain criteria in order to combat

chain halts during periods of high

demand and if you'll recall salana

doesn't have a mem pool so losing

connection here means that the

transaction never actually makes it to

the leader so the problem is that even

though block leaders can now like

throttle certain uh connections the

logic on which the connections are

throttled like the criteria that need to

be met are really like poorly

implemented and buggy so the it's just

not well defined and it's a poor

implementation of quick so that's

essentially what all the salon

developers are kind of all Hands-On deck

trying to solve right now but for the

immediate term it's not clear if any

sort of patch or fix will actually solve

the problem in totality um fired dancers

of course being worked on which is

supposed to address some of these quick

implementation problems but that's still

six plus months out so it's really

unclear as to when these uh issues

actually get resolved so I'll stop there

I don't know if you guys have any good

takes on the the porcelana performance

but I guess it's a good problem to have

is kind of my take it means you're

you're doing something

right yeah uh I studied distributed

distributed systems engineering over the

weekend and so I'm now like a PhD in

network engineering uh what I I'm

kidding I I'm not going to pretend to

know that much about like the networking

layer of salana but I think there's like

two two ways you can like sort of fix

this right one is like fixing the

networking layer and there's like a

bunch of like optimizations that a bunch

of teams including like Anza which is

kind of like a spun out like team from

the salana foundation or labs are

working on like the client um they're

working on like fixes to like the

networking component but the other side

of this equation is also like the fee

market right traditionally niss salana

has struggled with fee Market design

their base fee is still like a fixed fee

per signature and it doesn't take into

account the number of compute units that

a transaction utilizes and so there is

like a quite a large incentive for these

Arbitrage Bots to spam the network at a

relatively low cost and so I think the

eventual fix for this is both a

combination of fixes to the networking

layer and also fixes to the sort of fee

mechanism and I know like a lot of

people are hyped about 1.18 and sort of

like the new scheduler that's coming out

but I don't think that's going to help

this or like help what salana is

experiencing that much because that's at

the point where the transactions like

actually reach the block leader um but

right now like the transactions aren't

even reaching the block because of these

like Network and like propagation issues

so yeah I don't know when it will get

fixed but not going to lie salana like

does feel pretty unusable I think most

people have to like do transactions like

three to four times and that's just like

a pretty bad user experience so between

that or like a $100 like transaction

fees on the three just pick your poison

I guess the only thing that I think is

worth noting is that just three years

ago pre EIP 1559 ethereum had similar

issues or at least a similar user

experience similar negative user

experience and instead of it taking like

whatever a few seconds for your

transaction to drop and not go through

it was like tens of minutes or 10

minutes so you know while it's not good

it's it's a bad user experience it's

we've all anyone who's been on chain for

you know five plus years this is

something that will likely be solved in

the future and get better uh and it's

definitely not the worst we've dealt

with so I guess what I'm trying to say

is that having these problems now feels

so much better than the problems we had

you know just in 2020 which wasn't even

that long

ago what still isn't clear to me and I

hope one of you guys has some

clarification here is how the ore mining

actually plays into these problems cuz

like from my understanding is it's not

the Arbitrage Bots that are causing the

problem it's it's other stuff and it's

like is or mining really what ignited

this or or was it is that not really

that big of a part of the

problem should we be uh maybe give some

background on or mining Yeah Yeah so

basically there's like a proof of work

ripoff that's like an application on or

a smart contract on salana and you can

run this program to mine these ores and

there's like very little liquidity

there's only like 100k of liquidity

actually that was like a week ago when I

looked it's probably like half that now

but regardless you can mine these ores

that have no real function um and

apparently that's been contributing to

salon's problems but I I truly don't

understand

why I mean

this is all coming from Daniel our great

teammate who tried to explain this to me

one morning so I'm probably paraphrasing

and paraphrasing in a wrong way but like

he said that there's like a big

incentive to just like spin out nodes or

trying to get as much compute through to

the chain as possible or through the

smart contract uh which like emits these

ores when you solve the equation

basically so what people are doing are

they are for example hiring some like

professional RPC providers I think um

and then basically have them spam the

smart contract on chain which then I

don't know how big the effect really is

on the like bad experience but

apparently that could like bring about

some

problems I would have to imagine that

these problems existed before or and I

think like even before or right like

there were periods where Solana was like

slightly unusable I don't think or like

contributed that much to what's you're

seeing right now but it definitely like

didn't help and as far as like the RPC

font brick I just thinking like on one

hand M must be like crying at how

unusable salana is but on the other hand

this guy must be printing off his like

RPC

business I think it's just congestion in

general so like I'm sure or mining has

some contributes a bit but so does pump.

fund so does memec coin trading so does

everything else going on salana I think

it's just back to like Ren's point that

you know basically there's this

incentive to spam the network to get

your transaction in like if you have an

opportunity to make you know 10 bucks I

don't even know how many Salon

transactions you can spam to make that

still worthwhile but it's a [ __ ] ton um

but yeah I'm definitely not the most

well read on the situation

either actually that's an interesting

point um You' think it's like a

snowballing effect where suddenly it

gets a bit worse and then more people

start spamming the chain and then more

people start spamming the chain so the

like experience gets worse and worse

kind of a self- fitting

problem yeah the or problem would be

more interesting if the price was going

up because obviously that would

contribute to that flywheel that you

just that you just mentioned but I think

Dan and mert honestly would do this

conversation 10x more justice so we'll

be sure to link to the uh the most

recent light speed podcast which I know

they talked about this in depth so we'll

do that but outside of that Matt why

don't I kick it over to you for your hot

seeder cool Throne yeah so I don't even

know who exactly to hold in the hot seat

so I'm just going to hold this entire

situation in the hot seat uh it's the

makered out a debacle you might have

seen some of it on Twitter so for some

contacts so for some context maker Dow

put up a proposal to extend a credit

line of 600 million to basically

collateralize to collateralize die with

SSD so this is taking $600 million that

doesn't exist and die uh purchasing SSD

and you know receiving the yield that

Athena USD receives

uh so yeah this is a big risk the

protocol but at the end of the day uh

it's a risk that pays off and that they

think is a worthwhile risk directly

after this maker out proposal a or Mark

Zeller from a who leads a Chan put up a

proposal to

delist d as a collateral asset on a so

set the LTV to zero you can't use a you

can't use uh D to take out loans on a

anymore is the proposal that he put up

and it started a huge controversy there

are you know

his Mark Zeller and backed by Stan kind

of say that the reason for this was risk

optimization they think that D's risk

went extremely uh the you know the risk

matrices on die changed completely in

one day so they want to get rid of it

completely others are saying that you

know setting a 0% LTV is a drastic

measure and that it's basically just

severing the relationship between maker

maker Dow and a which kind of makes

sense given that they're starting to

compete a little more and more these

days but overall the whole situation is

just a giant [ __ ] show it's kind of

setting a new equilibrium for governance

across the board and uh yeah it's just

probably not a good look for the space

overall as it decreases kind of the defi

Lego composability value proposition

that we love and

enjoy I think historically like meral

has been I mean like it's always been

like relatively back but they've dabbled

in rwa a lot more and you know they've

extended what call like private credit

lines to various like credit managers so

to say I don't think like Sude increases

the risk of die being unbacked by that

much to be honest and if anything like

Sude quote unquote going wrong would be

like a slow unwind rather than just one

day like a borrower from a credit fund

saying like hey I can't beay like this

$50 million loan um so in that sense

like I I still think it's fine and from

A's perspective obviously there are some

sort of incentives that they have to a

has has its own stable coin go which I

don't think I've seen as much adoption

as they would like so it would make

sense for them to you know D this like a

die Market or like try to quotequote

like fud another like stable coin but

yeah would agree that like it is a [ __ ]

show and it brings up an interesting

point right like there are these like

new crypto D5 Primitives that people

have thought of they've quickly found

like product Market fit and ground to

like billions and billions of dollars of

like TVO or like AUM or liquidity at the

end of the day the whole thing about

crypto is sort of like defi Legos right

you get this vision of composability but

then now you have the centralized or

quote unquote centralized like Risk

Managers coming in and kind of like

cutting out the composability component

of crypto and whether that should be

allowed is a very good question and the

follow-up question to that is like who

should that sort of risk management lion

you know should it be on atina and they

should be the ones actively going like

okay like make it out [ __ ] out like

let's only do like $200 million dos of

like die credit for like SD or USD or

should that just be like purely on maker

Dow and then obviously there's like a

whole bunch of second order effects to

that with all of these protocols that

are integrating like all of these

different tokens in my opinion it should

definitely be a maker though I think why

this has gotten so much attention within

the maker Community is because like

historically maker hasn't really made

this or

a similar sized bet before especially on

a mechanism that hasn't yet been proven

in a like a Black Swan event and that's

tough to model out because yeah you're

basically just assuming like certain

probabilities for the blacks one event

and then based on that you get some EV

calculation and then decide to do it or

not um so I I know some community

members weren't too happy about like

yeah this is a great opportunity for

maker to print a lot of cash because uh

basically the last time I checked uh I

think maker was earning 80% AP wise

for uh like the die borrowed out which

is amazing if you have like 500 or a

bill in there um so I do see the

temptation to you know expand quickly

and kind of take advantage of these high

funding rates we have right now but then

again on the other side like if

something will or if something happens

to go wrong uh connected to Athena I

feel that it's going to be like a super

quick um unwinding or like an event that

you basically you either lose everything

or almost everything or then you survive

so it's tough situation to um be in then

yeah interesting decision to go ahead

with such a large like I don't know

decision yeah I mean I'm all for it I

think while funding rates are positive

like go for it and then you can change

parameters down the line if you need to

but I'm also like a usde bull I think

democratizing that trade is is a really

cool idea and a new primitive that we

haven't seen and I'm all for it but

maybe that's just because Ren and I

spoke with guy just this morning for an

interview episode so recency bias no I

mean I do see the vision I think it's a

great projects it's just that as always

with stable coins like the worst thing

is when the market loses confidence in

the protocol or the you know whatever

stable coin you have because usually

it's also quite irrational like what

happened with usdc where the peg was

trading

below um like the confirmed collateral

value that the bank still had uh

beginning of last year I think um and a

similar situation could go down with d

and you also have this game

theoretical uh situation where like

you're incentivized to front run all of

your Capital out of the project to be

the first one to like not take a haircut

and then the people who are slower are

gonna be the ones that are basically

left holding the

bags and maybe to clarify after having

said all of the I'm I'm not saying

anything of this is going to happen I'm

just like like trying to paint a picture

of what the maybe the worst situation

that could happen would be

here Athena's definitely got lots of

risks like there's the risk that Ste

deegs there's the risk that uh you know

copper clear Loop has 4our settlement so

even if one of the exchange if one of

the exchanges goes down like they'll

have directional exposure for a 4H hour

period of time binance doesn't actually

use copper clear Loop so if binance goes

down but at that point there's you know

a lot more to worry about than just

Athena um there's the risk that you know

the whoever controls the ability to

access the custody with copper clear

Loop actually just takes the money out

um you know there's no contractual

obligations like that could happen a

quote unquote rug I don't think that

it's at all likely but it's a

possibility so like there's all these

risks to consider but you know I do

actually think that at least from my

perspective and in my opinion like those

risks are outweighed by the current

reward that uh Athena is paying out at

least for me and only for me not

speaking for other people so maybe maker

down made a similar decision and you

know decided that $600 million was an

appropriate risk to take on given that

the expected value of their payoff from

this position um so overall like I'm for

it too I think it's a risk but it's a

it's a well thought through

risk yeah I thought it was interesting

that guy told us today like he wouldn't

be opposed to moving some of the short

legs on the eth trade into Stables given

the opportunity and like the risk

management deems that at a certain time

like I I just think that there's a lot

more things they can do to protect

against these risks than people are

giving them credit for and I also think

like they're diversifying their you know

their exchanges their custody providers

like all of that different stuff so like

worst case scenario in my view isn't

like really the risk of negative funding

it's it's actually like the risk of yeah

centralized exchange going insolvent and

not getting paid out on the short leg

but even then like if you've only got

20% of your open interest on one

Exchange then you're taking like what

20% of the you know 50% of the Hedge and

then that's only that it just ends up

being a very small amount so I don't

think this is a scenario like us where

all of a sudden you wake up one morning

and your life savings is gone I think

it's going to be at worst like 10 to 20%

haircut but I'll probably eat those

words in a bare market so tread

carefully no but as I said earlier like

there's still the possibility that

everybody starts panicking and then the

situation becomes worse than it

otherwise would um one question I had

and I don't know if you want to save

this for the other podcast episode but

like did you talk at all about the

insurance fund like what's the situation

with that has it been growing and like

through which ways Yeah it's gotten

really big actually so they're adding

about $6 million a week as of April 2nd

it's up to 33 million from the starting

point of two million I believe 10

million of that was added through the

recent raise that they had but I think

20 to 25 million is organic just growth

and I believe that that Revenue I

actually didn't ask this directly

because it was one of my questions I

wasn't sure where the acral actually

came from but it sounded like ssde

stakers get their Pro share dependent

upon you know how much of the USD Supply

is Stak and the remainder so the USD

that's just sitting in EAS that isn't uh

Stak in us sde that excess goes to the

Insurance Fund so yes at you know 30 40

50 60% funding rates they are absolutely

printing on that Insurance Fund I will

note that the original studies done by I

believe it was Gauntlet or chaos I can't

recall which entity but they recommended

$30 million of capital in the Insurance

Fund for every1 billion dollar of usde

supply and obviously usde has about two

billion of supply and only 33 million in

the Insurance Fund so right now that

actually is below the targeted threshold

that was done by a third party but the

internal testing that was done by the

Athena team suggested more like 15

million for every 1 billion of USD

supplies so it depends on which source

you want to go on uh I think probably

taking the more conservative of the two

is the better approach but nonetheless

like at this run rate like they're going

to be at 60 million for their two

billion USD in just a couple weeks and I

mean at that point though it's a game of

catch up because I'm sure the USD

supplies on a fast track to five billion

given that their sth campaign is kpi

based and time duration based so it's

either first to five billion USD Supply

or in six months whichever comes first

and if it's anything like the first

campaign then it will be a lot sooner

than six

months all right I think that's a good

point to sort over to my hot seat K

drone similar on sort of like the

private credit side of things I have

goldfinch in the hot seat so there was

another default on gold finch last week

this time from a company called Len East

that they just reviewed that they can

only repay 4.25 million out of their

10.15 million loan from the gold finch

Pro so that represents roughly a 58%

loss on that specific loan and it

represents 7.7% of active loans on gold

finch according to sort of community

members within the Discord

750,000 B from ginch was used by lendes

to repay other borrowers obviously in

Bach of the loan agreement you can't

really do that that's a big no no um and

yeah like a 10.15 million loan with a 25

month term paying out a

177% uh rate and yeah I think like this

is probably the third default that goldf

has experienced previously they had a

default from tund day one from Stratos

and a few like Alma vest po added

together is probably around like 20

million or so so gold V is in pretty

rough shape and all of these private

credit protocols have just been

continued to be battered like ever since

sort of like the Luna 3ac FTX Fallout

and if you would remember there were

like a huge amount of crypto market

makers that blew up and weren't able to

repay their private credit loans from

protocols such as like Maple finance and

it just seems like that Fallout

continues though even outside of crypto

borrowers um yeah I'm not sure what the

solution here is obviously like

underwriting jungle bonds especially in

Emerging Markets is pretty hard and

defaults are unavoidable like it'll be

hard to run a private credit fund with

like a 0% default rate but obviously

you're hoping that the the return from

your uh lending overcomes like whatever

default that occurs and so I don't

think like maybe there's a bit of an

adverse selection problem given that a

lot of their loans were like an emerging

countries in these sort of like sort of

like growth mode companies that were

doing like bike shirt

or whatever so that definitely like

doesn't help but it's also not like

whoever was like underwriting these

loans were not professionals you know

they had like professional like credit

fund managers like managing these loans

during the underwriting but yeah at the

end of the day there's always going to

be like a lack of accountability like I

underwrote those loans but like you know

if something defaults like it's not

really my problem and similar thing from

like a you know like if I'm like a

random like bike sharing company in

Ethiopia and I default like yeah like

gold was probably like my last lifeline

and like if I default then so it you

know um so yeah that's just another

thing on the gold V and like private

credit side of things but would love to

hear if anyone has any thoughts on how

we fix this to be honest or like if

private credit onchain should like even

exist I think it makes a lot of sense to

have private credit on chain uh just

because of all of the efficiencies you

can uh reach and all of that good stuff

like I think we've talked about it quite

a few times but to me it's just

interesting like if you look at private

credit funds just like in the Trad five

world I'm I'm not sure but my if I

recall correctly I think they produce

around like 15 20% yields default rates

are probably below like 5% of the AUM uh

which even at that point like somehow

sounds super hard to me or high to me um

and like compared to this Goldfinch

situation which what did you say like

20% of the AUM is now under default

that's brutal because like you kind of

assume yeah you know that private credit

and especially Emerging Markets are a

tough business and like riskier than you

know buying AAA bonds but still like you

basically take on more volatility than

um investing into equities and your

returns aren't like even close on par

with that um so I'm guessing like if

these news spread out more it's going to

be hard for um like this some of these

Deb protocols to you know attract

Capital especially in a bull market like

this when yeah we just talked about Thea

but that feels like pretty close to a

zero risk or I guess not zero risk but

much closer to like a zero risk

situation than um like investing into

this super super risky or I guess not

super super risky but still risky um

like the instruments in Emerging Markets

credit markets has always been the same

thing which is a assessing credit

worthiness and B default recourse so

when we like Maple Finance when it was

going through its uh its whole thing

back in the 3ac blowup days it had a ton

of defaults I forget the exact

percentage but it was even more than 20%

of AUM um maybe closer to 50 their only

loan recourse was reputational hit and

in a world where you know three was

blowing up uh reputational hit was not

good recourse if I remember correctly

and forgive me if I'm wrong I haven't

looked into gold finch in over a year

but uh they actually have contractual

obligation and Loan recourse so I'm

curious to see how that actually plays

out um and who would go and Sue the

defaulting borrower and additionally

like yeah it's a you know this is a

ridiculously hard space to solve uh if

we manage to get onchain credit to truly

work whether it be through digital

identities um you know I've always had

this idea that it's some sort of like

like ZK so basically your ident your

identity and your maybe it's like

connected to Plaid so your net worth and

all your different assets are tied up

into a ZK proof and then if you default

it's you know kind of unraveled to the

lender so that they can actually come

after you and there's contractural

obligations there so do you think one

day we get these onchain credit markets

to work and it will be what makes you

know in my opinion the next step for

defi like brings defi back into the

narrative but the solutions we have

today just are not there um and from a

team like Goldfinch who seems to have

transitioned a lot of their bandwidth

and brain kind of into other initiatives

of late so they launch this like AI

advisor or something um it it'll be

interesting to see how the situation

plays out but overall I'm I'm hopeful

it's a good team I I wish them the

best I just can't believe that interest

rate you said 177% run so you're telling

me I can buy usde and stake it and earn

three times the amount as doing an under

collateralized loan as a lender in an

emerging market like that is you're on

crack like under collateralized lending

on chain is a great business for

borrowers and borrowers only like you're

insane to be lending on those things I'm

I'm I'm sorry I think it's a terrible

idea until like that's on a private

blockchain and like actual like people

who have spent entire careers and under

collateralized lending and credit

assessment like that's when it makes

sense and you can kyc and there's actual

default recourse but otherwise like

that's a no for me dog yeah not that you

put it that way and make that comparison

to it is pretty crazy I mean technically

Goldfinch tells that all of its loans

are like over collateralized and they

say like they B do a bunch of due

diligence like it's collateralized by

like balance sheets like cash flows and

whatever but yeah I mean like it's still

kind of under collateralized at the end

of the day and if you're gonna make

three times that on Athena which is like

quote unquote like real yield then that

seems like a lot better R would yeah

I'll add that I don't know anything

about Goldfinch for the most part and I

do commend them for like trying it

because it is needed like defi is

fundamentally constrained until we have

under collateralized lending but like

today like yeah no you just put that so

simply and eloquently like yeah H hard

agree yeah I think uh one more thing

that I just like to put on the C own

this weekend has been making waves on

CTS pump. fund so pump. fund is a

website that allows you to launch a

shitcoin on both salana and blast and

basically how it works is that you

deploy a coin you add like a ticker your

image whatever and people can like buy

it on pump. fun and once it reaches

69,000 in market cap on salana it

deploys $112,000 of liquidity into a

radium pool up and basically as you can

imagine like thousands and thousands of

tokens are getting launched there every

single day and every time a token hits

the radium pool pump. fund takes a two

so fixed m migration fee so at current

prices that's probably like around $400

and pum fund is making

$350,000 a day and if you sort of

annualize that that's 100 million in

annualized Revenue which is like pretty

pretty crazy to be honest and like on

the other side of the equation like de

screener they charge like

$299 for an ad on like sort of like the

right side where you see like the price

the market cap and like that ad space is

always filled up so I think obviously

the main takeaway at least for me is

that picks and shovels are absolutely

eating especially like mcoin picks and

shovels which makes me think that like

telegram Bots will probably have to day

again um this cycle given that they've

been like pretty battered to be honest

over the past few months but it's just

crazy seeing like such a simple business

make so much money uh and like it's

something that's like super unique about

kryp and these guys are like a three-

person

team yeah I mean that so wait you're

saying for deck screener when somebody

links the socials to the coin they

charge 300 bucks yeah so that's one

component like when someone wants to

link socials they charge 300 bucks and

then there's also like ad space which

they sell on the sidebar and that's

probably like another like completely

guessing you but probably like another

few hundred

bucks that has to be such a good

business model because yeah yeah

basically every coin you look at always

has those socials there um and that's so

scalable or like you basically don't

have to do anything anymore you just

like you've completed your uh platform

and now you chill and enjoy the bull

market yeah I think it's it maybe it

doesn't make it uh sense for these

platforms to launch a token themselves

but like shout out to the team for

creating this stuff pump out fun has a

real opportunity like in its current

state it could definitely be like a you

know temporary time in the spotlight but

overall it's a simple idea right I'm not

sure if I mentioned it but the lp gets

locked so you know all you basically are

buying into this um you're buying into

this Cur liquidity curve with soul

you're buying this mem coin uh and then

eventually a large portion of the soul

that gets put into the into the

liquidity curve gets put into radium and

then those that LP token is burned so

it's no longer accessible uh so it helps

with like these Fair launches it removes

your risk of a in the traditional sense

getting rugged where you take out all

the liquidity from the pool you can

still get rugged other ways but the

traditional uh rugging liquidity sense

so it's like a great idea from my

perspective the actual platform is um

you know has a lot of room for

improvement but that said like if it

goes and launches across all these

different chains right now it's only

live on salant and blast but you could

easily go see it live on Bas and

arbitrum and everywhere else in the near

future there's no reason it shouldn't be

live there besides obviously instead of

using radium it be using Unis swap or

whatever um so I think that pump. fun

actually has like the legs to be a a

real like you said pick and shovel or

infrastructure product in crypto and I

definitely kind of hope to see it

continue iterating and and growing and

being better here's a question for you

all if you were one of the three

co-founders of Pumped off fun you're

making 100 million doll in annualized

Revenue today so that's probably like

$33 million each and chances are like

this meme coin like craziness continues

for at least like a few more months if

not like until the end of the year or it

gets even crazier from her would you

launch a token or no you launch a token

and I don't know like 80% of your

Revenue has to like go back to like

token holders just like some Fe switch

you have to manage a dial like just push

back uh now you have like Community only

like part of the protocol where it's

like if you don't launch a token sure

you don't get like whatever money you

can cash off the token but you're making

like $33 million each and like just cold

hard

cash if I were them I would be doing

absolutely everything I can to further

decentralize the actual product because

you are literally enabling the launching

of of you know shitcoins like yeah I

would want to distance myself from that

personally and I wouldn't want to just

be pocketing Revenue into perpetuity but

that's just my take Sam wanted to say a

two-word phrase that can't be said on

this show so bad oh my gosh uh yeah

there's a lot of liability with

launching tokens but I think more so you

know if I go launch a pump. fun

competitor to day and I shove a points

like just a point system on the top

right corner so that if you launch a

coin you get 10 points or you launch a

coin that successfully hits radium you

get 10 points you buy into a coin with

more than one Soul you get one point

like they will get vampire attacked and

eight so I do think that actually to

stay competitive they probably need to

have some sort of token or incentive

mechanism for users at some point okay

another uh interesting question would be

does anybody know if there's really like

being a token that's been launched on

buum that fun and then it's become like

huge

I think anam's cat H or whatever was

like a PP fun launch and then there is

like treat I saw I don't know if it's

true or not but like some guy launched

like 183 different tokens and he's made

like 650k so far so yeah I do think

there's like been a few like big ones

like not like whff level big but like

relatively big tokens that have been

launched on pump off fun I'm taking a

look right now it looks like shark cat

is the uh most popular

at um um hm not sure the exact not sure

the exact market cap but maybe 140

million or so followed by anom cat Hobs

at 50 million followed by what in

tarnation wit at 22 million so short

answer no but like those are substantial

numbers all right well I think that's a

good place to stop it I know we all have

an eclipse to go watch other than brick

who is fading the the coolness of the

the Eclipse which is insanity to me but

you guys can get after him on that in

the comments if you disagree as well but

thank you guys so much for coming on we

will see you here next week and uh yeah

thank

you

[Music]

byebye