PaperImperium
@ImperiumPaper
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All things DeFi, economics, and Stardew Valley. Views and opinions do not reflect those of @labsGFX .
Joined July 2021
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Pinned Tweet
Having reviewed, approved, and rejected hundreds of grants, here is some FREE ALPHA to help score grants funding*
*My own opinion, but most are common opinions amongst reviewers I think
Let’s start ⬇️
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What are we even doing here if custodians are better than a smart contract
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In ~2 hours,
@MakerDAO
will implement some unprecedented rates moves. There’s been some confusion about the cause, reasoning behind, and likely effect of these changes. Let’s go through them (in that order) 1/n
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If executed as described,
@fraxfinance
about to leapfrog
@MakerDAO
in tbill sophistication. This looks much safer with fewer moving parts and risk, and perhaps better positioned to survive Corporate Transparency Act when it is implemented in 2025
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First liquidation in the 94.5% LTV
@MakerDAO
vault on
@MorphoLabs
. Looks like about 1.7% incentive for liquidator. Not a lot of meat on the bone beyond that. $62.96k position liq’d to $2.46k after inching up to the liq threshold all day.
Very different from a Maker liquidation
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This proposal to allow 1b DAI debt ceiling vs USDe makes me really uncomfortable.
@MakerDAO
would never go from $0 to $1b credit line within a month on anything when it was a DAO. Even stETH didn’t get 1b limit until 6 months later.
This is a breakdown of process & diligence
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I am so, so excited to see this mechanism. I know, I know, multiple tenors fragment secondary market liquidity. But also means oracleless lending pretty safe if you are lending FRAX against FXBs. Also throw into a SC w
@NotionalFinance
tokens/CHAI/sFRAX to make interest rate swap
The initial launch will be 3 FXBs with timestamps of 6/30/2024, 12/31/2024, & 12/31/2026. FXBs can be bought onchain entirely permissionlessly using a gradual Dutch auction (GDA) mechanism in governance approved batches:
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As someone who sits on committees (usually </= 5 individuals) that control >$100,000,000 in grants or procurement, I sometimes wish there was a cheap (<$100) course or guide for applicants. Too often, people with great concepts are just crap at writing grant plans.
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Last update: 11 months ago
GitHub: 404
Website: also gone
Yearly budget: 1.8m DAI + 500 MKR
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This used to be the kind of thing Maker did. Frax is becoming the adult in the room. Bittersweet to see bc the Maker Protocol got me into DeFi, but there’s a Late Roman Empire feel in the air over there, while Frax quietly looks to the future in pragmatic ways.
Frax core dev
@DrakeEvansV1
will be giving a talk at the NY Fed tomorrow 👀 🤫
(For those interested, virtual attendance is free/open👇. In person is invite only).
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Here’s something new that I’ve never seen: law enforcement motion to SEIZE the Tether in an EOA. Not freeze. But burn-and-reissue.
I can’t find evidence blacklisted funds have ever been burnt on Ethereum before.
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Disappointingly, proposals often get passed with little or no discussion in the
@MakerDAO
end game. A great example is the proposal being voted on right now that would establish a DAI direct deposit module with the keys held by an anon rather than governance
In general, it’s good policy to ALWAYS vote against proposals that had zero discussion
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If I ran Maker, I’d be out there harassing every L2 team via email, phone, and unsolicited muffin baskets to be plugging all their DAI into the DSR to power yield bearing stables on their chain. And yet, there’s what? Just Gnosis, Blast, and I think a new RWA L2
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Long thread, because there’s lots of nuance. TLDR, 1) there are easy to identify weaknesses in Ethena’s design, but an informed person can accept them, 2)
@MakerDAO
won’t finance 20:1 leverage in coming days despite tweets to the contrary; there’s not been a risk assessment yet
I guess $USDe contagion will spread faster than I could have thought. Maybe, the bounty should double and
@MakerDAO
contribute half?
$1mm, 50% to
@ProtocolGuild
, 25% to
@zachxbt
, and 25% to
@rstormsf
and
@alex_pertsev
legal defense.
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This is the kind of thing that’s just so irritating at
@MakerDAO
: approving a legal agreement that governance isn’t allowed to read. It’s *probably* ok in this case, but it’s just such a terrible practice to not even offer some basic assurances
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Governance at
@MakerDAO
: Vote on reallocating this half a billion dollars
Voters: Ok, how has each of these two investments performed so far?
Governance: No idea
Voters: Really?
Governance: Yeah. If anyone knows, they’re not saying 🤷♂️
I feel like a lot of stuff is falling through the cracks lately at Maker. Needs to restaff after all the turnover I guess
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Since yesterday many people have asked me to elaborate on WHY this is safer. It basically boils down to fraud risk. The
@fraxfinance
ecosystem is already exposed to the core team, and my understanding is they are the ones behind FinresPBC. Contrast with
@MakerDAO
Arranger model
If executed as described,
@fraxfinance
about to leapfrog
@MakerDAO
in tbill sophistication. This looks much safer with fewer moving parts and risk, and perhaps better positioned to survive Corporate Transparency Act when it is implemented in 2025
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This is also backed 100% by defaulted loans and I’m very upset that the people paid to monitor this let it sit at the bottom of a regular monthly report and not draw attention to it. Thankfully it’s a tiny vault.
The Harbor Trade transaction has 1.5 million DAI outstanding from the vault.
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Two things I would be crippled without but are totally free to use:
@etherscan
and
@DefiLlama
. Really outstanding value that could easily be a $5-10/month subscription.
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Was also a relief to see really great folks from
@hiFramework
,
@centrifuge
,
@solana
Foundation, and
@FlowTraders
there in the halls of
@USOCC
. It’s so important that DeFi-friendly people are at these things so TradFi and regulators can hear about protocols & permissionlessness!
This was definitely my favorite part of the
@USOCC
RWA symposium. Didn’t expect the academic papers panel to be so fun. Legal panel was also 🌶️ w talking about how degen it was for 3AC guys to do that bankruptcy claims exchange & “unserious” people fractionalizing real estate
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@kaiynne
@arbitrum
@synthetix_io
@GMX_IO
As a reviewer, your request was very large - $9m. Only one grant above $2m was approved and it was still < half what Synthetix requested. I would encourage you to revise and resubmit with a lower request 👍
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Things
@arbitrum
governance does well: Bottom-up initiatives. People decide they want a thing, then attempt to manifest that in reality.
Thing
@OptimismGov
does well: Law & order. There is due process for disputes, proposals, and allocations. The process is pretty de-politicized
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I’ve always wondered why
@aaveaave
and
@compoundfinance
tokens weren’t more widely accepted as collateral. Yield bearing, high quality. The bank deposits of DeFi
I wrote a SIP to add
@aave
aUSDc as a collateral asset for
@synthetix_io
v3 on
@base
Why it's exciting:
- Earn from lending (4-5%) + perps fees + USDC/SNX incentives (if TC approves)
- Boosts liquidity for scaling Perps while utilizing idle assets
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@tomhschmidt
@ethena_labs
I don’t think it’s fair to say it’s not marketed as a stablecoin when it has USD in the name and is called a “synthetic dollar” and it’s primary feature is to be pegged 1:1 to the dollar.
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While I don’t agree this is a smart move by Aave, if Maker doesn’t blink and take a “stop, look, listen” period I think that will just confirm assumptions about not soliciting sufficient input before making big decisions
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@androolloyd
That someone controlling one of the biggest protocols would say that? Yes. I want to believe he just phrased it poorly. It would be like a Boeing executive saying trains are safer.
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For those following,
@MakerDAO
did not blink. Guessing
@aave
will not as well. Very sad to see two great protocols that just need a little time to sit down and talk. A week’s delay would probably set everything straight.
While I don’t agree this is a smart move by Aave, if Maker doesn’t blink and take a “stop, look, listen” period I think that will just confirm assumptions about not soliciting sufficient input before making big decisions
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Every stablecoin issuer is faced with an under acknowledged choice: be akin to a central bank or be a commercial bank.
These involve different trade offs, and a stablecoin ultimately cannot serve both ends. One needs to maximize network effects & stability, the other profits
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@aleksandertom11
@CSMFHT
@hellaclitean
Yeah, there is evidence wheat was also domesticated in this time period. But barley is pretty ubiquitous in early texts. It’s used as a form of payment and also a bit less fragile. It’s 100% believable both would have been farmed then. Was just trying to be part of the convo 😔
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Guy is CFO of Fabric. Starts his own secret company, gives it $35m treasury from his employer. Promises to pay 6% and then yeets it all into UST and Anchor.
@MonetSupply
knows what came next
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I guess I’ll be that guy and say I think
@ethena_labs
USDe is an interesting, clever piece of engineering but it is not a stablecoin. Its structure will work until it doesn’t, & eventually markets will misbehave and the stable can incur losses. Not to be seen as “safe” asset
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I have repeatedly tried to contact
@USOCC
. They host a RWA symposium in Feb, but have not included a single speaker w experience
Help! Email innovation
@occ
.treas.gov to tell them to include speakers from
@centrifuge
@maplefinance
@TrueFiDAO
@Credix_finance
@ClearpoolFin
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Dismayed at the deterioration of good governance practice. The current executive vote includes authorizing $50m to purchase USDe directly. This $50m was not disclosed on the original proposal, the assessment, or the voting portal. Only documented bc I pointed out a typo in forum
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Excited to see
@arbitrum
’s proposal to acquire stable, yield bearing assets for its treasury. It’s structured to get a good deal for governance + produce documented diligence by the committee that smaller projects can refer to in their own diversification
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Former chief economist at the IMF sent me an autographed copy of one of his books as a thanks for answering some questions about DeFi.
Not all outreach has to be directed at politicians, and I’m glad there are organizations like
@fund_defi
that support educational outreach
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People out here criticizing a rinky dink rando project for accidentally hiring a DPRK dev. Imagine a large, mature, systemically important project *requiring* key roles be filled by anons
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Bitcoin suffers from what 99% of DeFi also suffers from - rich people’s preachy solution to what they imagine problems to be. Stablecoins, UIs not in English, low fee chains all solve real problems. Tokenomics, volatile assets, and gamified Anglophone websites do not
During my time in Africa, while advocating for the Lightning Network, I faced a cold, hard realization.
Despite my efforts, I found that more people were interested in dealing with USDT rather than Bitcoin.
They desired USD, even if they were synthetic versions.
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With less than a month until the 1-year anniversary of
@makerdao
End Game, let’s see how it has gone. Let’s start with the stated goals of End Game:
Clear Rules
Governance Incentives
Move Complexity to SubDAOs
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People occasionally ask if I still have my MKR. I’ve never sold (unless liqs count). It’s deep value - fantastic protocol burdened w a kafkaesque governance. But that also means its drawbacks are almost 100% self inflicted - easy to fix w new management. Private equity wet dream
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It’s not well known, but
@MakerDAO
finances business and residential loans in the US. I wish more policymakers were aware of that.
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@taylor_ryker
Stop with this Maker chain and AI nonsense. Get DAI on cheaper chains and reconnect w price sensitive users in LATAM et al. Offer incentives to merchants in the real world to take DAI or partner w fiat stable to abstract away the conversion from DAI > stable > cash > buy things
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Know what
@makerdao
needs? Someone paid to provide oversight for the RWAs. Idle cash balances that should be earning tbill yield, 99.6% LTV loans, junior debt getting out ahead of senior.
It’s just a growing list, and nearly all of is being weak with asset originators.
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Cantor Fitzgerald guy was just on CNBC saying he loves Tether bc he has 90b of their treasuries. That would be a remarkable shift to
@Tether_to
holding almost only tbills/repo. I can only assume he misspoke
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@Omirrainha11
@rStardewValley
I think a lot of male players realize they’re Clint in real life, and it’s very painful for them
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Cannot wait for the RFP to be posted. All the tokenized tbill crowd should be excited to see
@MakerDAO
about to open up a competitive process to onboard tokenized tbills. Huge shoutout to
@SteakhouseFi
for spearheading this process. Long-standing need
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Demand for a currency where supply is insufficient seems like a good use case to launch a stablecoin. In this case, you might even be considered more reliable than the sovereign
1. Does anyone have a good explanation as to why the Afghani has strengthened 20% against the dollar in the last 6 months? How is the Taliban achieving this?
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Looks like Richard Heart has finally decided to try out the
@MakerDAO
DSR. 42m DAI ultimately sourced from the PulseX: Sacrifice address just got swapped for sDAI. This is notable bc Heart appears to control ~12% of all DAI in existence.
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Ah, I see the
@MakerDAO
proposal to directly buy $50m USDe and pay 2.5% AUM to have someone stake it and hold it at CB passed.
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Do you issue an asset that is stable, liquid, and yield bearing? This is your chance to submit an application for the
@arbitrum
stable treasury endowment program (link in next tweet).
I expect most applicants to be tbills or tbill adjacent, but other structures encouraged!
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2023
@makerdao
recap. It was a very active year for Maker, so this will be a long thread.
Let’s start with the good 😌, then the bad 😖, then the meh 😑
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Yes. Just past 37m mark,
@cantorfitzgerld
CEO says they have $90b in treasuries for
@Tether_to
. Seems newsworthy to a stablecoin nerd like me
Cantor Fitzgerald guy was just on CNBC saying he loves Tether bc he has 90b of their treasuries. That would be a remarkable shift to
@Tether_to
holding almost only tbills/repo. I can only assume he misspoke
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I realize I’m older than many people in crypto. But history is littered with fixed-exchange-rate currencies getting rekt by not meekly following market interest rates.
@MakerDAO
is correcting that on borrow side. I wonder if they’re not repeating the same mistake w DSR rate 11/n
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As a skeptic of Ethena’s suitability for most investors, I think it got a big upgrade in safety today bc Maker acts like a junior tranche here. The more Maker holds or lends via hardcoded $1 value, safer it is for everyone who can move faster than Maker. USDC was same last year
There’ll be so much MEV when Ethena blows up. I wonder if it’ll be more or less than when Luna imploded. The contagion potential seems higher but DeFi is more MEV-aware now.
But I do think Ethena’s implosion will be what eventually drives most lending protocols to implement OEV.
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Ethena has been such a hard thing to dig into. Almost everyone has either given them money or taken their money or stands to profit from their failure. It makes you always look sideways bc very few of these folks disclose their position when speaking
(I have no exposure at all)
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I sometimes get asked about junior governance participants. Last year I said to watch
@jack_anorak
’s rise on
@OptimismGov
. This year I would say notice
@TheDevanshMehta
on
@arbitrum
. Both would honestly be wasted if they stay on their home power bases and hope to see them grow
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Given
@MakerDAO
supplies nearly 2/3 of Morpho’s lending pool, could
@PaulFrambot
please let DAI deposits accrue $MORPHO? It seems quite an oversight that the largest lender is excluded. Only other assets excluded besides DAI are WBTC and EURe
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From a talk I give to regulators. Notice that nowhere in this stack is “asset manager” or “financial institution.” DAOs are great for working on software - and usually pretty horrendous at pretending to be hedge funds. The former has the added benefit of low compliance burden
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I want to like this concept, but Richard Heart has ~2/3 billion DAI and you don’t want him with veto power.
Ok, forget about Maker L1 for a second and hear me out: What if DAI holders would have the ability to veto a Maker governance proposal. Basically, following
@LidoFinance
design.
From a technical POV, this could use storage proofs to gather votes across multiple chains.
CC:
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@MakerDAO
If you found this thread helpful, feel free to share or use the info (but do cite me). Also have open DMs for researchers or reporters with further questions
13/13
In ~2 hours,
@MakerDAO
will implement some unprecedented rates moves. There’s been some confusion about the cause, reasoning behind, and likely effect of these changes. Let’s go through them (in that order) 1/n
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I wish some community member would independently revive the
@MakerDAO
community calls. It was the one time everyone involved in the protocol (inside and outside) could talk to each other and get up to speed on the latest work to be done
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I share this confusion that people didn’t know about USDT on Tron. Every time I’ve ever paid someone outside the US/Western Europe onchain it’s always been USDT on Tron or a Binance deposit address. One was willing to take DAI, but grumbled so I did USDT.
It is funny how the crypto world wakes up to the news of USDT on Tron.
Those who live in Emerging Markets like me know this because we have been using it for at least 3 years, and it all started with the huge success of Binance P2P.
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L2s, stablecoins, and RWAs are the most interesting places in crypto. First two are best positioned to grow the user base for the industry, while the latter fills a vital role to meet risk-adjusted return and diversification needs of capital already in crypto.
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Very responsible, professional tweet. Complex products require complex thinking
Glad to see a successful launch for
@MakerDAO
@sparkdotfi
and
@MorphoLabs
with $100m caps being filled in a few hours
Composability like this is what makes DeFi so powerful
But I do want to caution users here on the use of leverage:
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I would probably try to build and grow a stablecoin for developing world retail and business use. LATAM, SE Asia, Africa, etc. Wouldn’t even try to make N American or Europeans aware it existed; the whole point it to provide financial services to those who lack them
If money were no object, what would you do with the rest of your life
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Had someone introduce me yesterday as the “crypto Littlefinger”. Also the “GFX spymaster” last weem. Let’s have a candid moment about business intelligence
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Makerburn(dot)com really is the best dashboard in the business
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Everybody is trashing this Lummis-Gillibrand stablecoin bill. But how cool would it be if Circle & Paxos had to pay for rush delivery to get you legal tender. Imagine a dump truck of rolled nickels being dumped at the office of some trading firm. Bank deposits aren’t legal tender
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It’s been entirely predictable as the number of paid delegate slots has shrunk throughout end game to ensure only Rune’s personal delegates get paid
How it started: 14 paid delegates
How it’s going: yet another reduction down to 6
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@OptimismGrants
@arbitrum
So if you have a cool idea - especially if it’s actually a public good (non-rivalrous, non-exclusive) - look into applying to the many grants programs available! Also don’t be shy of polishing the application and attaching supplementary information 👍
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Of course, the best-laid schemes of mice and men can go awry. But I think we may soon refer to
@fraxfinance
rather than
@MakerDAO
as “the adult in the room.” Not there yet, but their trajectories both suggest it is just around the corner
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Top Maker delegates: be paid $80k/month
Also top Maker delegates: claim you can’t have any opinions, make proposals, or do any actual work because it’s “micromanaging”
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A DAO developing and improving a software protocol like Maker should be focused on finding new markets for $DAI rather than centralizing into an ossified patchwork of committees and “responsible facilitators” with significant personal discretion
3/
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I am very excited for the efflorescence of stablecoins coming. The US and BVI will be joined by Hong Kong, Bermuda, Singapore, new decentralized stables, existing decentralized stables using US/BVI/Caymans.
I’ve met 4 new stablecoins in the last month & excited for all of them!
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If
@MakerDAO
is dead set on directly buying + staking USDe, I don’t understand why do it offchain? Current plans allow up to 3% slippage and cost 2.5% fees on AUM and tokens held by CB. Just open a small PSM or TWAP from
@CurveFinance
. Cheaper + can verify the amount Maker holds
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It just feels a little like Thai/Indonesia/Philippines policy in 97 or Mexico in 94.
@MakerDAO
DSR increase feels expansionary bc unlike Fed deposits, they can be rehypothecated easily & so makes borrowing cheaper! 12/n
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Interesting to see both
@CurveFinance
and
@MakerDAO
landing on approx 20x leverage to lend vs sUSDe. Curve plans to use an oracle instead of fixed $1/USDe, tho. Initial take: Curve senior tranche, USDe holders mezzanine, Maker junior? Seniority by speed
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Which makes sense in some ways. Their job is to do The Thing. Not write proposals. I wish DeFi was more accepting of grants consultants. These are things in the real world. Much harder to get a $30k NSF grant than $1m grant for “liquidity mining” (a waste 90% of the time)
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Supply change over 3 months for largest 10 stables suggest
@MakerDAO
needs to take action:
USDT +11%
USDC +19%
DAI -18%
FDUSD +195%
TUSD -51%
USDD +2%
FRAX ~flat
PYUSD +33%
USDP -53%*
*mostly from Maker redeeming 166m USDP
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And 7 Siblings immediately borrowed 50m DAI and put it right into the DSR. Wealth transfer from MKR holders to negative-rate borrowers has begun 🫡
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Was just showing someone else, so will post publicly as well. My employer now lets the public access its plugin to query EVM chain data directly into spreadsheets so you don’t have to copy/paste stuff from Dune/Etherscan all the time
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Takeaway: the (more serious) campaign finance illegalities swept under the rug to protect politicians, other C-suite folks all given deals, parents not charged. What a f*cking joke.
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Maker should refocus on its core competencies rather than bleed cash to create new competitors to
@AaveAave
@compoundfinance
where the profit potential looks weak and incumbents well entrenched
2/
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I do have to wonder who is borrowing stables at these rates. Like, do they not have credit cards? Because the rates would be lower, more stable, and not require collateral.
Or is this mostly $1m+ borrows for which that isn’t an option?
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September 4th, and
@MakerDAO
still waiting on the July rewards from CB Custody to show up in the protocol. Presumably CB already credited these to the account? No update from the trustee/Arranger on the matter of July rewards. August rewards will be due in a few days 🤷♂️
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That weird moment when you realize DAI now relies on monthly attestations just like USDC and GUSD and USDP and BUSD.
Still better than the quarterly ones from USDT 🤷♂️
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Excited to work together with the newly elected members of the council!
Congratulations to all newly elected LTIPP Council members as well as the Application Advisors!
The 5 elected council members include Treasure ARC's very own
@karelvuong
for making it alongside GFX Labs, 404 DAO, Wintermute, and the GMX Grants Committee.
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Best part of the proposal is it doesn’t disclose how much USDe Maker will purchase. Only reference was a typo buried in the resolution hosted on IPFS. High fees, strange choice to be offchain, no disclosure of the $50m purchase size. This will be bundled into tomorrow’s vote, btw
If
@MakerDAO
is dead set on directly buying + staking USDe, I don’t understand why do it offchain? Current plans allow up to 3% slippage and cost 2.5% fees on AUM and tokens held by CB. Just open a small PSM or TWAP from
@CurveFinance
. Cheaper + can verify the amount Maker holds
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Hate to see it, but understand the reaction. Just thinking aloud, Maker willing to act as bagholder probably increases the safety of USDe bc USDe held by Maker and its vaults would be slower, and therefore last in line to sell into the market or redeem.
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