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SydneyJason
@sydneyjason
In traditional finance, the debt markets show the health of various aspects of the economy. I'm convinced that the high rates to supply stablecoins in liquidity markets like Aave indicate that *capital is a constraint* in DeFi today. Anyone know of any Dune dashboards that aggregate this across chain/market? Supply rates for stables on Aave Polygon and Ethereum mainnet on Nov 30👇
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SydneyJason
@sydneyjason
Hypothetically, what is the "neutral rate" for stablecoins onchain? Crypto currently is more risky than the TradFi industry (due to the risk of hacks, rugs, lack of FDIC insurance, etc). So I would argue the neutral rate is something like <US10Y treasury yield plus 2-3%>. That implies that FRAX, LUSD, PYUSD, DAI, and USDT are undercapitalized with this current snapshot.
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SydneyJason
@sydneyjason
An interesting analysis would be to look at the performance of assets over time from which the marginal borrowings are reinvested. I.e. 1) Anon borrows $10k in Aave and pushes the utilization rate from 80% to 81.6% (thus accelerating the borrow rate beyond the gentle slope) 2) Anon deploys $10k to buy asset X, assuming it's value goes up over the short to medium term How does X historically perform over various time frames? (1 day, 7 day, 30 day, etc)? Is this a consistently predictive pattern? And how does the price of collateralized borrowing compare to perp contracts?
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