DeFi

State of DeFi Yields | Issue 6 📈

This week's issue is live! I provide updates on DeFi's base rate, plus stablecoin & ETH yield opportunities

Read about double- & triple-digit $GHO yields, ETH yield strats above the base rate + more 👇
https://mirror.xyz/nexusmutant.eth/VtbiXvlCr2kGlPDOCUcjmwcCFm42r6IPa7E17hz8t18

Traditional banks are run by humans.
Onchain banks are run by code.

FDIC backs the tradfi banks.
@NexusMutual backs the onchain banks.

cryptoinsurance

At what $ amount (or % of net worth) does the fear/anxiety kick in when you send crypto?

Tokenising everything seems great, but a lot of people are turned off by financialising everything.

Starting to think the price should be secondary/hidden for a lot of NFT like items.

Something to be aware of as the bull is kicking in.

DeFi protocols are much more likely to break on the way down, rather than the way up.

Keep it in mind when markets change.

What crypto risks are you worried about right now?

Fixed eUSD yields at ~75% on Pendle right now.

I'm risk averse, but that does seem pretty good.

Smart Contract (Risk) vs Yield (reward) levels are in a pretty good spot right now.

Yields are coming back, especially on ETH. 

Seeing several places to earn 10% - 30% with the main risk being smart contract risk.

Founders

Being a founder is such a dichotomy some days.

Today I've flipped from high level strategy to modelling insurance pricing using Poisson distributions.

Would you be willing to pay a small extra fee on each transaction to be sure it's safe?

It's easy to rank DeFi opportunities by yield, but we haven't managed to rank by risk yet.

Market is nowhere near efficient, so we can't just look to yield as the proxy for risk.

Good risk analysis of Ethena eUSD by the DeFi Education team.

Good risk analysis of Ethena eUSD by the DeFi Education team.

https://defieducation.substack.com/p/ethena-fundamentally-flawed?r=6hda&utm_campaign=post&utm_medium=email

Getting into the weeds of Ethena's eUSD. There are some interesting risks for sure.

Custody, funding rate change and others, but stETH depeg is one that isn't mentioned in many places.

Whatever your views on Ethena's eUSD, pretty cool that there are so many smart people diving in and looking at the risks.

Gives me lots of confidence in crypto/DeFi generally. Crowd sourced peer review is powerful.

What crypto risks are you most worried about?

Protocol controlled value will make a comeback.

Our brains are wired to recognise patterns and trends, they like averages and predictability.

Consequently we underestimate two main things:
1. Exponential growth
2. Risk

I like to keep it simple.

ETH is the collateral of the new financial internet.

Insurance, Ethereum,

Founder of Nexus Mutual

Hugh Karp

@hughkarp