DeFi
DeFi Dynamics. Exploring the Future of Finance.
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Chatted with @niftytime.eth yesterday and he brought up a point I don't think I really noticed: A lot of people, especially NFT artists, got super burned on fake DeFi last cycle that they avoid this cycle's DeFi. Luna/Terra and other centralized lending providers all blew up, and many people lost their generational wealth as well as watched their friends lose it as well. I actually think this fear is what's causing these huge DeFi chain (hyperliquid, linea, berachain, etc) returns, because most of the last cohort is either blown up, or too scared to take part. I would have expected these returns to start normalizing to comparable with the risk-free rate, but it almost seems like these yields are going up, if not down. At the moment the average crypto user is just buying and selling memecoin tokens, but the information is pretty clear that most of these are outright scams. Anything more sophisticated is seen avoided, but this sort of makes me more bullish because eventually those yields *have* to compress. This new class cannot just trade memecoins and lose money forever, right?
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The other funny thing about the Paradigm/Stripe/Paypal chain is we totally forgot 4 weeks ago Circle announced a USDC gas token EVM L1. I see Paypal in that list of partner organizations and wonder if they are *actually* going to do anything. If it really was just Paradigm and Stripe, I'd be way more excited. To me, Paypal has been larping in the crypto space for over 5 years and hasn't really delivered anything useful nor driven real net new users. I don't think any business should trust them to use the technology to disrupt their business, so the idea that this partnership precedes them using the chain and help onboard Paypal's user base is questionable at best. You come at the king you best not miss. https://www.circle.com/blog/introducing-arc-an-open-layer-1-blockchain-purpose-built-for-stablecoin-finance
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I should probably talk about current defi plays more. My bigger current one has been Arbera replaying the Curve-Wars strategy on Beradrome by locking in it's own protocol-owned-liquidity. - Beradrome is an Aerodrome-like marketplace to source liquidity. It's slightly more abstract since Berachain has it's own ERC for Defi vaults, so technically it doesn't only work for AMMs. It's token is generally a call option on future yield, much like Aerodrome. - Arbera is a sort of call option on short term volatility where users can purchase and sell arTokens and harvest yield. Reading the documentation its pretty good for people interested in things like 0DTE options who just want to manage a portfolio with a small percentage in volatility farming. Arbera is currently doing a major campaign to incentivize it's own liquidity by being the top voter on Beradrome, and also incentivizing locking up BERO in it's own coffers. What's interesting is many protocols and defi systems simply don't realize liquidity is a major pillar in protocol success. Their only idea is to give away equity for short term liquidity, rather than doing a swap. I saw this a ton at Aerodrome where teams simply did not understand weekly rewards for capital locked up is terrible, since when it ends the team is left with nothing. The smarter play of course is to flat out swap your equity tokens for liquidity tokens. Arbera has realized this as it currently owns about 5% of all Beradrome votes and is actively incentivizing votes to drive emissions to it's own pools. Once Arbera starts owning more than 10% I predict some very wild stuff will happen, as it's not even subsidizing that much! nfa dyor https://x.com/ArbitrageBera/status/1963673325495861400
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Crypto's values are actually in financial freedom and making people wealthy who have access to the internet. Usually when they shill some remittance nonsense, you read the fine print and it's really about them taking a cut in fees from low quality payment transactions between poor people. It's just digital colonialism. What we should do is teach people that existing Ethereum products and chains can and will improve your daily lives by allowing you to take advantage of the world of high finance. If these companies wanted to really get into blockchains, they'd throw a few hundred million into Uniswap or Aerodrome, or start lending on a Morpho or Aave. The L2's are right there, and people who are onchain should see right through this hot load of crap. These companies are not real crypto organizations and never will be, and no I'll not be partaking in uplifting this corpochain grift.
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