fully (㋡, ㋡)
@fullyallocated
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Pinned Tweet
Liquidity Magic: Where is the Missing Money?
A short 🧵 on the recent
@YESMONEY420
whitehat operation
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1 thing I learned from this weekend in Miami:
DeFi is so fucking slept on. I met so many "institutional"/traditional crypto ppl that have heard of DeFi but have no idea how sophisticated some of these protocols are or what they are capable of.
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I saw the Bancor announcement this morning and decided to do some digging. I'm starting to get concerned so sharing my thoughts here. For disclosure, I have some ETH/DAI deposited in the protocol currently pending withdraw.
Post for context:
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Over the past few weeks I've been working with solidity devs on their protocols and had some thoughts about contract architecture. I've summarized these thoughts into this doc:
Here are the main points for a TL;DR:
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Semi unrelated thought: this whole situation has reinforced my skepticism in upgradable Proxies. Bancor upgraded their contracts to disable withdraws right before their announcement so nobody could react. It completely breaks the trust and immutability promise of smart contracts.
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It's been long overdue, but recent events have really shown me how much we need to rethink protocol design, governance, and token economics if we want to truly demonstrate the promise of crypto. I know it's there and I still believe 100% that this is the future.. but holy fuck
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There's so many things we need to improve on before we get to the next cycle. But I'm looking forward to building with you all in the bear. Peace ✌️
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So much of the industry projects just sit to extract value at the periphery: random exchanges, "funds", OTC desks, copycats/forks, etc.
I take a step back and think I can count on one hand the number of people actually working on ideas that truly take advantage of a new paradigm
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Bancor makes it sound like they are doing this out of precaution but I'm starting think they are in serious trouble. Their post is reminiscent of the Celsius situation and their problems are likely similar/related. I'm not sure they're being straightforward about whats happening.
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I wonder why token emission schedules are structured around time instead of growth for a protocol.
What would it look like for a protocol to mint/unlock X tokens per Y% TVL increase or revenue generated?
Much more incentive aligned imo, and dilutive events are offset by
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Also: why the fuck are relationships so blatantly transactional in crypto like some of you straight up aren't even trying to pretend at this point lmao.
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You either die a pegged stablecoin or you live long enough to become a free-floating currency like $OHM
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Holy fuck I’m so fucking bullish goddamn last made some last minute changes to the liquidity structure grinded like a dog for 5 days straight barely slept or ate basically lost 80% of my sanity but it will all be worth it after launch cuz I’m pretty sure this will be one of the
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The biggest illusion of capitalism is that the biggest changes are made by the people that get paid the most, when in reality they are made by the people who care the most.
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Currently, there's about:
~35,176 bnETH outstanding
~7.58M bnLINK outstanding
~15.04M bnDAI outstanding
In the master vault, they have the following assets:
~20,769 ETH (-40.9%)
~4.07 LINK (-46.3%)
~ 13.71M DAI (-8.84%)
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I'm guessing this happened before Bancor paused their ILP, meaning the protocol paid out these entities in full, plus incurred a huge IL debt on their remaining deposits from the BNT they dumped. As a result, Bancor is experiencing liquidity issues on their outstanding deposits.
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By keeping trading active, they are allowing all BNT holders to continue dumping into the liquidity they're now keeping hostage... I'm not sure what their plan is, but the situation sounds critical while trying reassure everyone not to panic.
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Seeing a million DAO tooling around reputation. Projects mainly fall into two categories: activity-based (tracks stats like forum posts, votes, etc.) and social graphs.
Skeptical of the former as it incentivizes spamming/botting as reputation becomes more valuable.
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With that being said, however, I think Bancor's being somewhat disingenuous with their communications. Clearly they've experienced significant externalities from the 3AC contagion and buying time to figure out solvency, but they're framing this issue as a "user safety precaution"
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They also suggest in the post that 3AC and Celsius have been farming massive amounts of volume in Bancor, and they have recently withdrawn their deposits and sold their BNT into the pool for remaining assets.
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Feels like market is not properly pricing
@redactedcartel
rn, having a stablecoin backed by a decentralized basket of LSDs is the exact thing in this environment.
$BTRFLY
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USDC grew up with a silver spoon and daddy fed’s protection if it ever ran out of liquidity
USDT grew up on the streets and would have gotten kneecapped by the cartel if they couldn’t keep the peg
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First, to understand the situation, we first need to understand the mechanisms. Bancor is an AMM with "IL protection", allowing users to deposit a single asset that's used for exchange liquidity. LP's earn fees & rewards on this asset and don't incur IL losses from the swaps.
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This doesn't mean that the pool doesn't incur IL, however. The protocol mints new BNT to the pool to cover the nominal costs of IL incurred by the swap. The problem, however, is that the amount of actual tokens remaining in the protocol is still lower because IL still exists.
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My guess as to what happened is, and this is purely speculation, but BNT's pools have incurred a lot of IL over the past few weeks due to market volatility. Particularly in their most liquid pools like ETH.
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Why hasn't crypto "happened" yet:
Most people in web3 have the right ideology, but lack the hard skills to build great products.
Those with the hard skills to build products in web2 can't grasp the underlying ideas around decentralization.
Those can do both probably rugged you
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Super stoked to work with
@_ndigo
to implement the Default Framework into
@OlympusDAO
's upcoming V3. What started as a simple on-chain governance demo is now a full fledged protocol architecture design pattern that could not have happened without his contributions.
LFG ✊
Olympus V3, aka codename Bophades, is finally going into Code Arena audit this week. The framework we are building is meant to make a very strong foundation for Olympus moving forward.
Here's a brief overview of the contracts 👇
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There's still 9 people left in w/100 of DAI owed by the protocol, but only 800 DAI left in the pool. Bancor wouldn't have the liquidity to pay them if they all withdraw. Bancor relies on the fact that there's a 30 day period before ILP activates to prevent this from happening.
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Deposits are not accepted likely because they will immediately get pooled with outstanding IL losses and lose 40% of their value instantly. My issue is: why is trading still active? Just let us get our deposits back.
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I decided to check out some contracts and did some preliminary digging. I'm not confident this is all entirely accurate, so use your judgement as I share what I'm seeing. Given that I had some deposits, I wanted to check how much IL I would experience if I were to withdraw now.
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For example let's say 10 people deposit 100 DAI into Bancor for a total of $1000 liquidity. Someone swaps from the pool removing 100 DAI from deposits, so 900 DAI is left. Now one person leaves, and bc of ILP, the protocol pays out all 100 DAI of their deposit (+fees and rewards)
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I pulled up the master vault contract to look at their balances. According to the Bancor documentation, this is where they keep all their token assets.
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Classic a16z VC aping into things they don't understand 😂
Read more, apologize (?) less
We'll see you at the top, when it finally clicks. Feel free to ask questions and don't be afraid to look stupid, you already got the hard part out of the way 👍🏾
everyone who shilled you "up only technology" needs to be deleted from your life
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I know that this was never a risk free play, and I don't have an issue with booking IL losses. I'm comfortable with the risks I took doing single sided LP into the protocol and I've always respected what Bancor's done in the space and didn't mind supporting new experiments.
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@CatchKristen
@oscargodson
What makes async mostly inefficient? Async means written communication and preserves context that others can tap into without having to be on calls. Plus it forces people to plan and articulate clearly what they say
Inefficiency is a function of process/culture, not style...
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YESv2 programmatically deploys liquidity depth based on market price <-> floor price, factoring in total supply (mcap) of the system.
This makes it easy to pump regardless of if it's the first, second, third, or hundreth time.
Add in the built in leverage and...
I try not to buy charts like this until I see a recovery
The first pump is always easy cause most tokens are locked up and the LPs are thin
After that first dump, those early cheap tokens go from insider(dev/sniper/kol-allo) wallets to the LPs, making them thick
With thick LPs
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Hear me out
Matchmaker DAO, a social club where members get tokens for successfully matching single friends together
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$YES is the craziest game of leverage chicken I've ever played
feels crazy when the eth comes back into your wallet and you get to ape it again into the pool lmao
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If value was determined on a peer-to-peer relative basis (rather than one guy saying this is how much you get from the pie), how many CEOs could look their employees in the face and say “I’m worth 200x of you”?
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Why are ppl still beefing in crypto
There’s like 15 ppl left
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I then looked at the outstanding supplies for their protocol-paired tokens (denoted by "bn") to see how many deposits they have for that asset, e.g. 1 bnETH = 1ETH deposited. Then I divide the difference to get my assumed IL loss for that asset (since they don't disclose this).
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Efficient, tight range liquidity is not good. Agree
Full range liquidity also not good.
How about dynamically adjusted liquidity depth based on price premium against on BLV?
Boutta find out
𝗢𝗻 𝗣𝗿𝗼𝘁𝗼𝗰𝗼𝗹 𝗢𝘄𝗻𝗲𝗱 𝗟𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆
While I argued against buybacks, including Maker’s buyback-and-LP strategy, protocol owned liquidity is a useful common good
It allows for more stable liquidity than “renting” from yield farmers, and can be made capital
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Leverage isn’t the issue. It’s market driven liquidations that are.
Soon this will be a problem of the past, though.
Study
@BaselineMarkets
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@ohmzeus
too ahead of the curve
Balance Sheet Management Protocols coming soon to a DAO near you 👀
@DefaultDAO
@JasperGooijer
you interested?
@rafdo
@StaniKulechov
As a member of the community I would rather have the Aave governance building a massive warchest of stablecoins (that are automatically lent out to earn interest) and other protocols gov tokens (mkr, uni, sushi, CRV, bal, yfi).
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everyone has some fancy theory on the "memecoin meta" and its underlying cultural implications, trying to justify its narrative
to me it's much more straightforward. memes became a thing because people got sick and tired of trading tokens designed to make them lose. absurd
Think memecoins can be explained through the lens of Jean Baudillards work on post-modernism.
Meme tokens are symbolism of important cultural moments.
Thanks to liquidity pools, we can attribute value to this symbolism.
What does this value represent?
Not costs of production
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I.e. to truly make an improvement in crypto you need
1) excellent product/engineering skills
2) ability to reimagine your entire sense of reality
3) undilutable ethics
Without all three you're just a scam
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Normalize 👏 sending 👏 all 👏 tokens 👏 to 👏 the 👏 liquidity 👏 pool
Say no to rugs 🚫
Say $YES to
@BaselineMarkets
⬆️
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I feel like this should be the bible for building protocols. So incredibly based.
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Finally FINALLY balanced top of book depth while still retaining fast floor bumps minimized spot liquidity required to support existing market structures and so capital efficient what else am I missing
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wait wtf lmao. The madman burned over 60% of the initial supply distributed to presalers
30 percent of total supply burned
Higher
$BobaOppa
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Or use
@BaselineMarkets
and have liquidity raised = liquidity in pool, in immutable contracts, away from the hands of money grubbing teams, guaranteeing a floor price for all tokens in perpetuity.
Believe it or not, it’s not as hard as you think.
Fomo team raises $15m in presale, adds $1m to liquidity and keeps the rest. Incredible technology.
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@JustinTylerYu
@RariCapital
Trust me, as a college dropout—this is a blessing in disguise. There’s a lot of status around educational institutions but all they do is teach you how to play other people’s games. You probably learned more from your time at Rari than you will in all of college lmao
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@domm
name: Default Identity
url:
funding round: seed
location: SF Bay Area
1-line pitch: universal customer accounts for the internet
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Someone help me understand. Why the fuck does every Ohm fork discord have a hentai channel lmao 🤨
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Rumor has it that a bunch of degens booked a big karaoke room in Tokyo to chill and sing and have endless drinks
There’s also a DJ set and live instruments (keyboard, drums)
Idk, probably nothing though
Fr roll thru. Open to all, FCFS
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Thank you to our community and partners for the support they've shown. You have been incredibly patient and understanding throughout all our "incidents". It's been a rough ride trying to make up-only actually happen, but we're never going to stop trying.
It was an honor.
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The word DAO has lost all its meaning…
Most projects with DAO in the name are not decentralized, definitely not autonomous, and some can barely be considered an organization…
DAOs feel like crypto frats/social clubs. Being in one feels like an online networking event 😔
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$EIGEN doing everything it can to prevent inevitable blood in its pools by reducing the sellable supply via rugging depositors 😂
No one can find out it’s the same old vaporware definomics in a shiny new box!!
In the end a token’s liquidity speaks the truth.
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I don’t see how Olympus is gonna end in anything other than a big steaming pile of POO
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Barely through the pilot and people think they know how the series is gonna end
@BaselineMarkets
just getting started
Haters gonna hate
Ainters gonna ain’t
Jeets gonna jeet
Loopers gonna loop
Shifters gonna shift
Yessers gonna yes
Dreamers gonna dream
@BaselineMarkets
just getting started
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I can't express the gratitude I have for our security advisors—
@poolpitako
,
@bantg
,
@plotchy
, and
@trust__90
for their efforts and guidance during the process.
+h/t
@1zaqk1
finding multiple optimizations in the arbitrage that returned countless extra ETH from the strategy.
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sell me your ohm at 10$ and fuck off sell me your ohm at 10$ and fuck off sell me your ohm at 10$ and fuck off sell me your ohm at 10$ and fuck off sell me your ohm at 10$ and fuck off
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Coming soon:
1) balance sheet mining
2) on chain referral bonuses
3) decentralized contributor rewards w/ peer review
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Im sorry, excuse me, what??????
One group that is confused: the estate. Since FTX evidently had key control of the Sollet bridges, the liquidators seized ALL of the tokens in the bridges and sent them to storage
The bridge address was used as a burn address- these tokens shouldn't really "exist"
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That's a topic I'll address soon. But I'll say this:
Loopers aren't as fucked as they think.
An important concept to understand is that a looped position's value doesn't come from price—it comes from the liquidity structure backing it.
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musings for our community
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4 gwei gas today!! perfect opportunity to clean up some farming positions.
Jk everything went to 0 there’s nothing to clean up
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Can someone smarter than me help me understand:
What stops banks from throwing their whole treasury stack into the fed to borrow $ then buy back higher % bonds = refinancing treasuries?
Wouldn’t that be risk free trade, basically releveraging for free w the cheaper fed credit?
arthur is wrong. new dollars are not being created with this banking program.
pretend those deposits right now are "trapped" at the banks in purgatory. because of how bank assets have lost value as rates rise, the dollars that were given to them are in purgatory until the bonds
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the value of passion > the value of money, yet the fact that our richest people aren't the most passionate is a blaring sign of system failure.
that's all
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@Darrenlautf
@0xfanfaron
Compensation is an exchange of value for your work, salary is an exchange of value for your soul
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Aave & Fraxlend
In a liquidity squeeze, one of them is getting paid back first, while the other is taking on more risk. I think there's a lesson in incentive design somewhere in their repayment mechanisms...
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I actually think there is a big difference between crypto and web3. Based on my conversations, "crypto" people care about building systems/infrastructure and "web3" people care about creating applications/experiences. One isn't necessarily better than the other, just commentary.
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The best token mechanisms aren’t the ones that make you feel smart for understanding them, but the ones that make you feel stupid for not thinking of it earlier
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Sentiment, gearbox, FIAT II and to an extent Olympus—seems like a new model around on chain credit accounts is popping up
Low key bullish in the context of FTX and the failure of centralized custody… imma let this play out
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I swear to God if I see another Canto tweet on the TL I will bid so hard everyone will immediately dump their bags and stop shilling
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Software is eating the world.
Crypto is eating software.
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2 billy BLAST points holy fuck
Our partners at
@ThrusterFi
just notified us that we are currently earning 21M Blast points a day.
Without growing any further, if the system maintains the current size, we're on track to earn 1.89B points at TGE.
Reminder: the team will not be keeping any points for ourselves.
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@jungyoonlim
Read smart contracts relentlessly. Read the same contracts over and over until you could rewrite them from the ground up. Solidity is generally super simple to understand and write, just has zero margin of error in regards to execution.
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Ironically, our arbitrage strategy was partially inspired by the exploit used in the JIMBO V2 attack.
So in many ways, this whitehat is a testament to how much we've grown since starting to build programmatic liquidity systems—but also how much more we have to go.
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Based af intro to Solana. I love the writing style and how compact the information is.
H/t
@_ndigo
for always having these resources somehow
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oooooh boy have I got something COOKING for u folks
dis gonna come out of nowhere
Tminus 🔜tm
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@Fiskantes
No.. Jeff Bezos is notoriously famous for being obsessed with customer experience and Steve Jobs with product. Clearly most crypto founders care about neither lol
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Social graphs have their own problems like sybil attacks and maybe politicizing reputation. Without careful mechanisms/costs social graphs trend towards popularity contests which also suck.
But ultimately I think rep is probably some function of a social graph
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Yeah cuz everyone has the same amount, so how people allocate it is the truest indicator of who they are…
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Talking with
@_ndigo
about Default framework at
@MessariCrypto
’s
#Mainnet2022
at Pier 36 in New York City this September 21-23.
Come hang w/ us and listen to us blab about probably nothing.
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@tbr90
Distribution... ETH has much larger inflation than BTC, so the ownership of stock is more concentrated. this means 1) it takes more buying to get back to ATH (tracking mcap vs. price) and 2) there's more sell pressure bc miners own more stock & sell off larger pieces in a run.
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Skill issue
Market circuit breakers are outdated, we have price floors and native leverage now.
Imagine stopping your market cuz there's too many jeets lol
JUST IN: New York Community Bank $NYCB stock trading halted after crashing 42% today.
1K
3K
13K
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Congrats to
@antonttc
,
@c1ncel
, & others for putting on a very successful and well organized
@EthTaipei
. Great vibes, great ppl.
Looking forward to next year!
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@typesfast
@typesfast
is it better to have bigger stockpiles or create a more responsive/adaptive production capacities altogether? E.g. ventilator masks with 3d printing. What if PPE is not the scarce resource of the next health crisis?
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