DeFi Dojo Podcast

[00:00:06]All right, I think we're live. I think I think we're live. Look, as is one minute uh goes, I'm going to go check on Twitter to see if we are live.

[00:00:14]>> Okay, I'm going to mute myself in case we are.

[00:00:26]Oh, we are live. Okay.

[00:01:49]This is so exciting. I wonder how it's going to work.

[00:01:55]All right, 5 seconds.

[00:02:02]Look at that. Oh, cool. All right, the future is now. I got to get one of those fancy uh AI generated songs to also play. But that was great.

[00:02:10]>> Yeah, the tech is getting good. Well, cool, man. Um, welcome to today's dojo pod. Thanks for watching all of you who are watching. I think we also have YouTube live for the very first time ever, which is kind of cool. Uh, so if you are on YouTube, I think you can comment there, which is which is nice.

[00:02:27]We'll be able to see that, which is something that we we haven't ever had before. So, uh, we shall see if that works. Anyways, today is uh July 21st and I I feel uh like the stable coin yield landscape has gotten back to a place where 15 to 20% is like fairly typical. Uh point speculation is back on the table, which is surprising. I thought it was almost dead, but now we've had the reairdrop, the the open AI, not open AI, the USDA airdrop. We had the Solstice airdrop. Uh, and then there's a few that people have been speculating on. We could talk about Henry, um, 3J maybe. I don't know if they have a token yet. They do some sort of weird stuff, but like it's a time to be excited about stables again. Um, hopefully everyone didn't lose all their money from like going long or short or leverage trading and still have some stables to farm with. If you do, uh, good news, right? Plenty of nice things to look at. If you >> Are you saying like 15% looped up somewhere or are you saying like% on strategies?

[00:03:30]>> Okay. Yeah. Yeah. I I think that's true.

[00:03:31]I think even higher. I think on there are some, you know, it's all a size thing, right? So like I think at 12 to 15 that you probably can get pretty big size. I think at like smaller kind of like you know, not whale but like dolphin size, I think you can maybe even push up towards 20 or higher, which is which is pretty exciting. pretty excited to see it, you know.

[00:03:51]>> Yeah. Yeah. I mean, so I was looking at some moves here. We'll start with Robin Hood chain because we haven't given them any love uh ever except for yesterday. I did a post about them. Um because I thought, okay, you know, I'll I'll give it a try. I'll I'll go look. But let me let me share my screen. Um this is the first time we're using StreamYard, so if I share my screen and nothing works, uh we can blame Canada. So share screen.

[00:04:15]>> Is Streamyard from Canada? Is that why we're blaming Canada? No, but it's like an old self >> that I just can never get out of my head whenever I'm using my blamethrower.

[00:04:25]>> All right, so this should work.

[00:04:27]>> Yes. Oh, and that's beautiful, too. It's a It's a wonderful way it shows. Okay, so super tiny. Super tiny, but uh uh this is Robin Hood chain, right?

[00:04:35]Revenant Chain has $266 million of TVL, which I'm not going to compare to any other recently launched L2s because I think that would be mean, but that's a lot of TVL for a new chain. Um, which is great. And while I don't know if necessarily you would say like there's some incentives here kind there kind of are, but like not this kind of traditional way you would think of incentives, which is like Monad uses Monad. Uh, Plasma used the Plasma token. E even though you know there are new Monet incentives and we should look at those. I think the Monet incentives are actually pretty interesting. Uh you're not getting that because there's no Robin, as far as I know, there's no Robin Hood token. Will they have one in the future? I don't know. Could be. But for now, we get like this this uh interesting set of protocols, some of which we're super familiar with.

[00:05:22]Morphobl unis swap. Um one, you know, a couple which I don't really understand like Arcus Knox. You know, I've heard about Noxif. I guess it's like one of those pumpish uh token launching things.

[00:05:32]up I think is the same way. Uh and then some other things that make sense like swap, you know, a DEX. So that's what what I'm seeing here. Do you know what Arcus is by chance? Um I'm not familiar with it. No, but I I do think there are incentives. I think it's coming directly from Morpho, right? Because Morpho bid like I mean I could look up the actual number, but I want to say like $200 million of future incentives uh to be like the main partner. It's it's largely for the earn product, right? So it's for like there's Morpho is powering um Robin Hood earn um with like stakehouse and stuff and so that's why you see some interesting different plays there but I think that they are doing incentives through Morpho through stakehouse >> mainly for the earn side but in very large size which should mean you know very cheap borrows I think that's a big part of it right like USG is playing the game steakhouse is playing the game for is playing the game and they're all trying to get part of that Robin Hood pie which I've heard is very sweet since it has you know all of the the offchain dgens. Maybe that's is that the way we put it? Maybe not all of them. A lot of the offchain American >> Dens one of the qu is so we were talking in the dojo about this I think a couple days ago which is you know what made the last cycle so interesting or what made previous cycles so interesting and it was you know one of the many reasons was the the hope in governance assets. So governance assets were this sort of ephemeral thing that makes DeFi more interesting than trady because in Trafy they're not just going to give you stocks. We're just going to say, "Hey, uh, thanks for thanks for coming to Walmart. Here's, you know, here's $10,000 in Walmart stock uh for for using our business, right? That's just not going to happen. You're not you're not going to be able to airdrop farm.

[00:07:10]There's no like additional component of this. Uh, you can't just be given stocks for participating in the company, at least. I mean unless you're an employee which you do get stock up but anyways that you know governance tokens were the reason why DeFi was uh getting outsized returns and outsized money and also governance governance tokens were were you know it was we're in a boom cycle so you could invest in almost any uh Tom Dicker Harry like protocol and it might go up to the the tens of millions hundreds of millions of dollars of FTV.

[00:07:41]Uh and then of course like you know your random meme coins were in the the billions. So that was a large part of it. Uh but most of DeFi now has has kind of stopped believing in a lot of governance tokens. I do think we the bubble popped which to me super healthy. Glad it did.

[00:07:59]Uh and and there's a few remainders like who whose stock is still worth holding on to now because now I think we've we've gone from thinking of them as governance tokens and now we're kind of like okay maybe these things will be valued more like stocks. A few names have have arisen. uh unis swap a you know [clears throat] maybe maybe a handful of others ETH and then obviously like big boy bitcoin but for most other protocols unless they're doing something unique or interesting or giving direct value back to the the governance token it's hard to justify holding it now may you know maybe with Robin Hood retail you know uh inexperienced folk coming on chain they may see governance tokens and think oh this is just like brand new stocks or like this is like uh penny stocks we should play with this stuff I don't know. I I hesitant to believe that narrative regardless. Uh getting retail to interact with I think the more useful and interesting and safer side of DeFi.

[00:08:51]So, Morpho, USD, Syrup, Spark, uh, to me is a net positive because this is a this is potentially a group of users who would have no exposure to DeFi and their first exposure is a nice money market, understanding you can leverage stable coin, like leverage dollar returns, which, you know, I think is kind of something you don't typically get to do.

[00:09:14]Uh, I mean, you can in Trafy, but you don't typically get to do it in Trefy.

[00:09:18]And so I think those kind of things those kind of things are interesting. I do kind of worry about the memecoin aspect of the Robin Hood chain. But what you know it's just me being a grumpy old man. I think people love that stuff and so good for them.

[00:09:32]But we should look at these three. So I mean do you have anything to add on that before I jump into these three assets?

[00:09:36]>> I think you're conflating a little bit Bitcoin and ETH to these like governance tokens which that that part of what you said didn't didn't ring true. But I do think yeah I mean you know there's a few that people like Etherfi like um Athena like Maple that are like these kind of like earnings plays a kind of like leader in the in the money market space although like Morpho challenging that like it's the same names I think that we've been hearing for a while you know whether whether they'll catch the bid because of stuff like Robin Hood or you know I I feel like I feel like that narrative is like a little tired but but maybe I hope so. I hope it does because it means better yields for me. So um you know and and and like we are I guess like the most bullish thing I can say is that we are seeing more of this kind of unification of like Trafi and DeFi. I think Morpho is kind of leading the vanguard of this where they're like blurring the lines between um between like you know what Trad and what DeFi is. And we're seeing all these kind of like new earn products like you know Morpho has a ton from Coinbase now they're going to have a a ton from um from Robin Hood. you have like all of the Kraken ones through Veta on a so like you know like they they are kind of in a certain way becoming these infrastructure rails for more broad-based yield products and that was kind of always the dream. So it's like one of those things where like I feel like it always happens in in crypto.

[00:10:59]It's like you know something people have been so bullish on and talking about for so long and it finally gets here and everyone's kind of like so I don't know.

[00:11:06]We'll see. We need a bit more life in the market. We need a bit more positive price action and I think people can get start getting excited again. But these three markets are all >> Oh, go ahead. What were you saying, Stephen?

[00:11:17]>> Just just that price is the best narrative. So, you know, a lot of teams have have tried to build narratives and some of them have done it really successfully, but at the end of the day, if if your token goes up, that's the best narrative for your protocol. I think when when Solstice was like, well, I don't know there there's a mixed bag there. So, Solstice was like heading towards 65 cents. Uh I think there was a little bit of incredility before like this this is too high. This is too high.

[00:11:39]Uh you know this is unreasonably high. I think a fair market value is somewhere around you know one to 300 million. Uh and so maybe maybe price was not the best narrative in that case. But I think typically if you can keep your token at a at a price where the people who are reasonably bullish on it expect it to be uh that's just going to be amazing marketing for your protocol. If and if price goes down, even if your protocol is really good, uh it will lose a lot of steam and a lot of life and a lot of belief because people who believe in your protocol bought your governor's token, they've been burned, now they're less likely to use the protocol, even if the protocol has been remained completely unchanged. Uh maybe with few exceptions. So, and maybe Morpho is one of them, though. I think Morpho has done a great job in like getting their token kind of interesting recently. Anyways, let's look at these three markets because they're the only three markets on on Morpho on Robin Hood. So, it's fairly easy to do. Uh, and I did this yesterday. I did this last night. And you know what? I'm I'm I'm kind of compelled. So, USDE, Athena USDE or Athena's uh, you know, um, synthetic dollar. 4.5% is kind of the yield here.

[00:12:43]So, you don't have SUSD, you have USD that's getting 4.5% APR. Nice APR. Uh, and then you have a 3.33% borrow cost, and you have 91.5% LTV. So, that's like 11 something x leverage. Let's just use 10 x leverage. So, the math there, super easy, right? 4.5* 10 minus 9 * 3.33, right? And that's a 15% net APR with our APY with $15 million to borrow. So, personally, I would love to see vaults that do this on my behalf. I know that the like tow team, Tao Labs team um over with Ipore have built their Athena Maximalist vault. I think that was awesome. something that's a great idea because I want to be able to enter in this loop and exit this loop with with someone else kind of, you know, managing the entrance and exit for me. Uh, and making sure that I don't get hit with slippage or or anything else. Not I mean, with $15 million, maybe there's sufficient liquidity to do that, but leverage can be dangerous for those who don't know how to do it. So, then we have syrup. Syrup I I didn't even know there was a syrup USDG, but I think I can see it on this now. Oh, yeah. Yeah, perfect. So, Syrup USDG exists now, which is kind of cool. Uh, 4.7% APY, so like a percent higher. No, no, sorry. 20 pips higher than the USDE. A percent higher than SPUSDG. SPUSDG is like five 3.5%. But anyways, CRU USDG 4.7% 3.3% borrow rate. More than $4 million to borrow. Uh, we're gonna probably push around 20 here, a little bit higher than 20. So, let's do 4.7 * 10 - 3.3 * 9 17.3. So, less than 20 17% net. I still like it. It's not bad. Uh, and that's with no like lock up. So, finally, Spark. Um, 3.5%.

[00:14:36]Super trusty, you know, like again, all of these are fairly top tier yield bearing stable coins. Uh, 3.5 time 10.

[00:14:46]And I mean the bummer about this one is that there's not as much liquidity, only a million dollars. So like if you had 100K in there, you would take up 100% of the liquidity trying to leverage up. Uh - 9* 2, we'll call it 2.5. Yeah. And the net yield's not even that good. It's like 12.5%. So the spark one, it's it's I like that it's there, but it's not really that interesting. The other two are really where I think the markets can be kind of compelling. Uh 15% 17% and you know, who knows? Who knows how long these could last. I I I would imagine that Robin Hood has a pretty sweet deal with uh the issuer of USDG. We've seen USDG. It's Paxos, right? They they've done some deals with Athena in the past which were which are still fairly lucrative both on Camino and on uh Jupiter Land. And so if you get into those things, they I mean if you had gotten into those, they've just lasted for a long time and at a at a nice rate.

[00:15:41]So uh though I think the one on Jupiter is capped.

[00:15:45]>> Yeah. I mean it is Paxos. It is like some conglomerate. It's kind of like trying to compete against that open dollar thing that we saw a couple weeks back. Um you know I think the Athena one's really good. It's like an incentivized rate at 4 and a half%. It like we've seen this. It's not going to last forever. So maybe the one that I would be the most nervous about is that one. But on the other hand, right, like it's the deepest liquidity and that's kind of like you have to play the Athena game. Whereas the other two are much smaller scale. They're more kind of like, you know, natively good yields, but like yeah, it's kind of the issue.

[00:16:19]It's also like lower yielding collateral. The SPU USDG is kind of interesting one because it's like the Spark savings account. They have savings accounts like quoteunquote savings accounts for USDT and U and USDC and um SU or USDS and all these other ones. So yeah, I mean it's a pretty vanilla thing earning three and a half%. I kind of like all three of these to be honest. Um although like I am just always worried about getting like caught in a loop turning negative and then it being a little bit hard to get out. So I would just yeah >> probably like make my decision if I was looking at any of these. Number one, what has the deepest liquidity? Number two, what has the like the biggest door to exit from if I need to exit?

[00:16:59]>> And probably all well yeah and so which has the deepest liquidity also where can you mint and redeem these things natively? I think well I know for SP USDG you can mint it on uh natively on Spark so that kind of makes the looping nicer. I don't know if that's the same for uh syrup. I don't think it's going to work because I don't my Oh, I do have my VPN on. All right. Well, you guys are probably getting a terrible >> Well, and also also for the Spark one, there's no lockups. I think it's pretty much instant. Uh I think if you have like over a like a large size like there's like a liquidity buffer and they need to like free up new capital but I think >> oh >> it's quasi instant for spark and then for syrup you know it's like the normal kind of like syrup uh process of getting out essentially.

[00:17:42]>> Okay. And then and then Athena is Athena which yeah >> usually they don't do native issuance but maybe they did >> probably bridged. Yeah.

[00:17:52]>> Yeah probably bridge. And so you know where is liquidity living? Uh unis swap.

[00:17:55]UniS swap has almost all of the liquidity for Robin Hood chain $76 million. The other the next closest is maybe it's swap hood maybe that's what it is or up I think up is more for memecoins but these are both under million dollars so I wouldn't necessarily check those with unis swap if you want to go check out what they I mean you know you guys know everyone knows what unis swap is uh but if you want to kind of surf around unis swap see what LPs might be interesting you can I would say that all the LPs that I was looking at were were mostly memecoiny uh and terrifying to me none of them you know stuck out as as interesting but if you go to explore which I love to do and Then you go to chains, you can look at Robin Hood chain, kind of see which pools are uh or where where's the volume. So Robin Hood ETH getting a very devilish volume at 666 million. Goodness gracious. But uh global dollar the next one 153 million.

[00:18:46]So you might say okay well is there any yield there for the liquidity providers?

[00:18:52]Probably there isn't. Probably it's like zero fee tier. But let's go check anyway. Also stocks are kind of interesting. like Nvidia $3.5 million of volume on the stock, but when I was looking at last time, I didn't really see anything that popped up, but we can still look. So, global dollar, you can pull it up. This is Robin Hood chain and pools.

[00:19:10]Do we have any nice APR? Well, on ETHUSDG kind of, right? 60%, uh, 40%, 17%.

[00:19:19]What we've said for you know for you know historically is that if you are dealing with ETH you are dealing with a fairly volatile asset not as volatile as memecoins but still fairly volatile you want to be exceeding in my opinion at least 50% APR to to make it worth it.

[00:19:34]Otherwise impermanent loss is going to make you sad. Uh either direction it goes. Either direction that it goes. So if you're beating 50% APR I like it. If you're not, I don't like it. So only one of these is uh and and barely. So I don't know you it could be interesting.

[00:19:51]One of the other interesting ones I'm seeing right now is Nvidia USDG at 341%.

[00:19:55]I don't know how much it that is a function of something else like function of some recent high volume or or this or that or just routing through this LP but 341%. On uh on Nvidia USG that is something interesting because Nvidia is actually less volatile than ETH. Um, so higher APR, less volatility, not as much TVL, but but those are the kind of things that would like intrigue me. And then if we look at uh stable coin LPS, which is kind of like the next thing you'd want to look at or probably the most interesting thing for a lot of people, there are none that I saw that were interesting. So like there's USD, USDG, 1%. Definitely not interesting.

[00:20:34]Wouldn't want to jump into that. Uh, no other one that I'm seeing here. There probably is like a USD a syrup USD G but I'm not saying that.

[00:20:45]So yeah, you can look through this uh silver could be another one, but those are really low TVL. So anything under a million dollars kind of low TVL, you're kind of getting a little bit DGEN, but you could definitely go down to 100K if you're doing less liquidity, but anything under that, you know, who knows? So I don't know. I feel like there might be opportunities here. Uh the whole they've kind of opened up the stock meta a little bit more. Go ahead.

[00:21:08]Do you know who the the issuer is for all those stocks like Nvidia and the silver and stuff? Is it just something >> or or is it like one of the issuers made a deal with Robin Hood >> there? Yeah, I think it's a second one.

[00:21:19]There's like three different stock issuers on uh Robin Hood chain >> which but but this one just says NVDA. It doesn't even say like NVDA or NVDAX.

[00:21:31]There's another one. So maybe I don't know. It just says Robin Hood symbol twice. So maybe this is like just proper Robin Hood issued uh Nvidia. Let me see. Robin Hood token Nvidia. Um >> interesting.

[00:21:50]>> Uh can I reject all the cookies?

[00:21:54]Oh, I can't reject all. There we go.

[00:21:58]Details.

[00:22:00]Robin Hood.com. Yeah, I mean I don't know is what I'm saying. It looks like Robin Hood is the issuer here. But I I couldn't tell you for certain and like, you know, put put my life on it. But I do think if you go to like NVDA, uh, five tokens. Oh, look at that. Yes.

[00:22:16]So, it is issued by Robin Hood. All right. So, Nvidia by I don't know, Nvidia by XTO, Nvidia by Btocks, Nvidia by Back, and then Nvidia by Robin Hood.

[00:22:22]Uh, and the Nvidia by Robin Hood is the one with all the volume. So, this was not here when I first checked Robin Hood. That's that this is cool. This feels like one of those things where maybe being early to lping stocks on Robin Hood chain could be the thing that gets me to go over there. I'm not really into meme coins. I think they're way too volatile. Impermanent laws, even at a,000% APR often times get totally burnt. But, uh, you know, I can kind of estimate the implied volatility of Nvidia. I can kind of understand the implied volatility of SPY or QQQ or or whatever else. Uh, and so if I can beat the APRs I need to to get over the implied volatility, um, I like them. I like them a lot. And, you know, some of these stocks I just I already hold. I might as well hold them in some yield bearing way as long as I think I'm being a permanent loss. So, let's look at I don't know, Spy. Uh, for tokens, they have the the Robin Hood one. So, we go over here. Um, volume, not a lot of volume, but maybe not a lot of liquidity, which means there might be some yields here. SPY USDG 174K 30%.

[00:23:27]Yeah, I mean even that is good. So if you're getting 40% average on uh SPY USDG, that actually does beat your expected impermanent loss. Um so I would do that. I would do that. I would do this at I would do this at 18%. Right?

[00:23:41]That's kind of what what I've calculated in the past. So very low TVL. Understand that, right? You're not dealing with crazy high TVL. Very low TVL. But if you are someone who like only has I don't know 7K or 5K or something and you want to throw in some liquidity there and play with these things. I think this is great. Um I did develop a tool specifically for this. I think most of you guys have seen it. If you want it just, you know, uh comment and I'll and I'll give it to you gladly. It's not easy for me just to put my tools in in a one place. I make so many of them. I make so many of them. Some of them I like, some of them I don't like and I and I change and edit them all the time.

[00:24:13]So, uh, but I did make a tool specifically for like constant liquidity and and implied volatility and seeing whether or not it's profitable at certain ranges. So, happy to share that out there. This one I like. I like this.

[00:24:24]And then, of course, the other ones are way too low TVL to even really check.

[00:24:27]Um, yeah, but I think like this to me is kind of compelling. I don't know how you feel about that, but I would go faster to Robin Hood chain to kind of play with the stocks than I would for the 15% 20% on stables right now.

[00:24:38]>> Well, yeah. I mean, I think it's it's a great point. I mean, you know, this if if Robin Hood can actually make tokenized stocks useful on their chain, I think that it'll be a big win. I think the closest we've seen really is like Salana trying really hard to make it happen and it's kind of been >> not amazing, but like if if they can actually do this, I think that would be >> uh great for them. Um, in terms of like I think what it really uh matters is like the fees. So, I just did like a quick little bit of research and it seems like for Robin Hood um they are uh EU stocks, whatever that means.

[00:25:14]So, not US stocks, but essentially like the way it works is there is a mint and redeem fee, it's 10 bips getting in, 10 bips getting out. So, you definitely need to like kind of consider that. um for the Onondo one, you know, and Xtocks, it seems like the they're going to have like a hard time competing if like Robin Hood really leans into this and for example has incentives on it, >> really makes builds their ecosystem around it. So, I'm curious to see how all that plays out. It's also interesting to see on like already over there, you know, like they're they're already there uh trying to get their stocks like used. Maybe there'll be some interesting spy versus spy um you know, LPS or something.

[00:25:51]>> Yeah. Um, but yeah, I think this is cool. I mean, I think the loops are fine. Uh, probably worth like going over if you, you know, like any of those particular assets. And I think that like, you know, for someone like yourself who's already holding probably like spy and other assets, >> you know, getting there early, LPing it, especially if they start, you start seeing them doing integrations, which would definitely lead to more volume.

[00:26:12]Um, I think that's good. And then also good for you if you are an LP. having a relatively high fee like 20 bips means that a lot of people probably won't just mint and redeem it and they'll try to like swap for >> go to the pool, right? Pool or limit order or Right.

[00:26:25]>> Yeah. So, I I think overall I think it's cool. Um, you know, hopefully Robin Hood um has a lot of attention and activity.

[00:26:33]I mean, like Mega ETH was like something I was kind of hoping was going to be a big place for incentives and DeFi stuff and that has been quite disappointing.

[00:26:41]So, you know, hopefully this ends up being more like a base than it does a meg.

[00:26:46]>> Yeah. Yeah. I Well, yeah. I mean, I guess you could say that Bass had it had a season of of really nice yields for sure. Compound, >> but there's just like actual useful stuff to do on base, right? Like, and >> they've integrated it. You know, you can get your Coinbase ETH, you can do all your different stuff. Like there's it's not like they just throw money at stuff, but there is things to do.

[00:27:05]>> Bitcoin, Coinbase, ETH, um the drone. Uh yeah.

[00:27:09]>> Yeah, I was. And then there was some good loops over there. There's some decent PTS once once once in a while.

[00:27:13]Yeah. Okay. So, I agree [clears throat] this is, you know, I I've been harsh on Robin Hood chain, I think, just because no one like no one likes to root for the big guy. No one's like, oh, you know, the suit's coming in. Let's all rally behind him. Uh but in this case, hey, this is this is maybe it's a right time for the for the right [clears throat] >> time for the suits.

[00:27:33]>> Yeah, there we go. Right time for the suits. So, that's cool. I like it. Go check it out. uh go LP if you want to.

[00:27:38]Some of the things that that have popped up that have been interesting. You know, a lot of them I've been talking about um frequently. There were couple markets on Pendle that I thought, hey, these are kind of interesting. You probably don't know about these. Let me at least like give them a give them a look. And so those ones are Yes. So by fixed APY, let's just do stables. I'm not huge into uh non-stable PTS. [clears throat] So I don't I don't typically even look at them at all because if you're a non-stable asset, you know, holding you is where all the value is. Uh the additional yield on that is almost almost irrelevant um to some extent. But so definitely wouldn't touch uh a junior STRC product, but the one that did kind of pop out as potentially interesting was 3G. So 3J, we've mentioned this uh in the past few calls. 3G has pivoted kind of from like giving unsecured credit to everyone based off of their credit score and like their bank connecting and this and that to mostly being a private credit issuer uh to a very very very small select hand group of or hand selected group of people.

[00:28:42]That seems to have gone well narratively. I don't know. Um they so they have uh okay amount of TVL now. Now the TVL has grown I think up to 65 70ish million TVL from like a it was stuck at 15 for the longest time and and only like one of that was actually lent out to people. Uh so the the narrative as interesting as it was didn't really didn't really take off. This seems to have done much better right it seems to be doing much better. SUSD3 uh everyone should know this is a junior trunch right so if there are losses on that private credit defaults or whatever you know losses can occur this would take the hit and not USD3 which is way down here um at a much more like modest 13% fixed the 13% fixed still really good particularly good for a senior tunch um but just good in general for for a stable coin so 20% on this juniorish tunch for private credit uh underwriting private credit very hard to do. I wouldn't jump into this if you couldn't write if you if you don't understand private credit at all.

[00:29:46]Definitely don't go into it. Uh if you haven't at least been aware of the the private credit instruments in DeFi that have already taken losses. So I think there's one in Midas. Uh there may have been one on another protocol. I can't remember. But uh private credit is not up only. It it's mostly up. That's that's why it exists. But it's not up only. uh you I don't I don't think most issuers of of like loans to private credit borrowers expect every single loan to be paid off in full. Uh and if they do, they're probably not underwriting properly. So these things can go down if you're in a junior tri.

[00:30:24]Just be aware of that. That's what I would say. I'm not saying it will happen. I'm just saying like that's an expectation. It's kind of similar for reinsurance, but the reinsurance meta is totally different because there's two different major reinsurance things. I've talked to every I've talked about this every single call. I'll briefly mention it here. Reed XYZ and Henry, two different animals, both in the reinsurance arena. I love them both. I think they're both fantastic. Henry's on their season one. We actually had some people in the dojo do some season one points calculating. Uh and then Re is on their season two. Actually, we had DK Nugo from the D5 dojo. He's he did a really cool like claw assisted uh sensitivity thing to see if the season 2 points are worth it. We ended up with the same numbers from my own spreadsheet, but I was very impressed by what Claude could do there. Anyways, Ry does not directly expose users to reinsurance. Ry uh only allows retail users to access their mezzanine and senior trunch, which means there's always a more junior trunch that is directly exposed to the reinsurance, whereas Honory directly exposes everyone to reinsurance and has a arguably a better base yield. Right? So, their base yield is around 12 to 13%. Whereas for rexyz only their mezzanine tranch is at 12%.

[00:31:37]But in terms of who's exposed to more direct loss I would say henry is exposed to loss directly USD's issue is that it takes at least a quarter to redeem which is very painful. So uh I don't know how Henry we we still need to figure out how is doing this how Henry handles the redemption issue but are we know that REUSD has one like redemption limits which kind of throttle redemptions in the first place and then two has this uh up to or or not even up to but the opposite of that uh at least a quarter redemption period. So pros and cons of both totally different they're not the same. don't think of them the same. ONR is not a stable coin. RUSD is much more closer to a stable coin. RUSD senior trunch I would say is effectively a stable coin and I like it a lot. Uh 18% 141 days. I like this one though. I know people have different opinions on Mar you have different opinion. I mean not that you like it too but you are I think a little bit more hesitant over the duration risk if I'm getting that correctly.

[00:32:44]>> Yeah, I am. I mean I I I like RUSD quite a bit. I think it's one of the products that's launched over the last say year plus that has actually brought something new and kind of a different primitive on chain. So I think that's cool. I also like Solomon team quite a bit. The thing that makes me nervous is just like you know you don't have a guaranteed withdrawal. So you know that it's quarterly. Um but at least last time you know I think it was about a million and a half that could exit on something like a $50 million asset. I believe the asset's now grown to more like $20 million now or 22 million or something like that. you I don't think we know exactly or maybe we do that it's that same million and a half that can get out per quarter. Uh and then it's essentially prrated. So if you had you know like $4 [snorts] half million dollars I wanted to get out you would only get a third of your money out and like that's that makes me nervous right like the fact that you have to wait for such a long duration and then you just get a prrated share depending on like what everyone else wants to do. So, under like stressed circumstance and like let's say, you know, $9 million or $18 million wants to get out, you're going to get a very low proportion of your deposit. And so, that's tough.

[00:33:46]They've also not been great at having liquidity to exit or like swap out of it for quite a period of time. So, like that's another challenging piece of it.

[00:33:55]But, you know, it's it's kind of like what you in the current market have to do if you want to get 18%, you know, fixed rate. The only like caveat I would say is that like you kind of have to discount that against um you know the exit cost, right? So it's like 13% onchain yield roughly 18% fixed rate because like the points and like the tokens done very well. Um and so it's like 141 days plus a quarter to get out if you really wanted to fully exit the position. Or if you're just going to stay in it forever and get that 13% then great. But if you're not and expecting to kind of like open and close a trade, you definitely need a price in the quarter of of like waiting for redemptions essentially.

[00:34:38]>> You're uh you're muted, Stephen.

[00:34:42]I was muted. Okay. I was going to say yes, I agree uh entirely. And so we we've actually been doing that. Um redemption price is somewhere around 1.385. It might be a little bit higher now because you know yield. Uh but that's roughly uh maybe I'm wrong here. Maybe it's because it last I checked it was like two and 2.83% discount which is where you'd want it to be, right? It's roughly a quarter of yield. Uh and so if a quarter of yield is discounted, you're you're I think in my opinion at like a fair uh market value for RUSD, assuming you don't get the yield during redemption, which I don't think you do. So if that is the case, let me just jump into REI. I really do like Arya's website, too. I don't know if you guys like are UI guys.

[00:35:23]Um, but re's the way they've structured it. It looks very similar to Reservoir, actually. Now, maybe Reservoir kind of copied their their style, but if you look at it, you can go to uh is it Capital Strategy? Yeah, I like that they have a different page for Capital Strategy than they do for their onchain metrics. So, Capital Strategy, you see what they're underwriting with the reinsurance stuff. Um, if if that's like something that you want to add to your underwriting process, you definitely should. But then they have metrics, which is kind of what I'm looking for.

[00:35:51]And the cool thing about metrics is they show There we go. They show me the NAV, which is what I really wanted. So 1.3914.

[00:35:59]We can go back over here. Uh, 94.

[00:36:03]This is not the proper way to do the math, by the way. I should be using a calculator, but just funny math right here. Uh, yeah, but let's say 2%. So about a 2% discount. Maybe a bit small.

[00:36:13]And so the real risk which um Mario you mentioned is that if you enter into this 18% yield the discount may widen from 2% which is what it's at now to three four 5%. Uh and if it goes to 5% now you've lost 3% of your yield. Now we're in there for a little bit less than half a year. You're probably going to get 7 to 8% ROI in REUSD terms. Uh so if you lose 3% of that, you know, it's still positive. You're still you're still uh uh you know, you still made a profit, but um it's not nearly as much as you thought and your your effective real APR is lower. So I would say are there risks? Yes. Major risks uh are that the discount widens, that you know the the withdrawal is throttled, it's difficult to exit. I I have heard people in the dojo say that one of the other major risks is that you're exposed to reinsurance. And so if you're in a catastrophic year, hurricanes, tornadoes, earthquakes, uh you know, whatever it might be, then um being an RUSD is is dangerous. I don't think that's the case. Uh and this is probably a spicy statement, but because of that junior capital, and so we've actually looked at this. Apparently, the junior capital is this number here, this 318 million. I I don't want to be quoted on that. That's just what uh someone in the dojo said because the onchain capital offchain capital is basically the retail deposits and so the remaining capital is theoretically the non retail deposits which would be the re capital's own holdings. That's I don't think that's correct though. I think it's a mixture of uh that as well as premium receivables which is just what re is owed from their reinsurance. But again, I'm not entirely uh I'm not entirely sure. But there is a junior level of capital there. I would like to get full clarity on that. So Saul, if you see this, please let me know. Uh and that capital is protecting you. So and also like those catastrophic catastrophic events only happen roughly once every 10 years at least statistically speaking.

[00:38:21]That's how they underwrite. Uh and so even if there was a loss, the loss should be small. I mean large draw downs on typical REU usd on reinsurance funds are like maximum uh 10 to 15%. If that happened that would really be covered by the RU USDE or the RE's junior trunch and so the mezzine should still be unaffected.

[00:38:40]That's a lot of nonsense to say that I still like RUSD's risk profile. Okay. Uh few other things real quick. Oh man, what do I what do I want to look at? Um, I'm gonna look at some Exponent stuff just because I want to remind you guys that if you go to Exponent, they have tons now. So, I know we're kind of like feeling in the in the reinsurance mood.

[00:39:02]Uh, if you go over to dashboard, no strategies, strategies, no markets. Uh, one thing Mara that you said is that the exponent front end can be a bit hard to navigate.

[00:39:16]>> It's brutal. Um, I I had to have you walk me through how closing a position uh recently. I had like opened a limit order and I like for the life of me couldn't do it and I had to like go to a different part of the website that would not have been obvious at all for me. Um, and then I had to like turn on a VPN and do all this different stuff. Anyway, it was a bit frustrating for me.

[00:39:36]>> Know it's been around.

[00:39:38]>> Yeah, I appreciate you walking me through that. It was weird that you made me do all that stuff, but I guess that's the the way you have to do it every time. Um, >> that's what you got to do. But yeah, I think it's I mean it is a good platform and I think some of the assets in here are interesting. It's mainly this and Commamino and Jupin but like the three actual D5 protocols I use on Salana. So uh you know improve the UI but tech seems to be working pretty well.

[00:40:00]>> Yeah, that's right. That's right. Uh and yeah, we've talked about NYC um as it's not a stable coin. That's the biggest thing. But this 42% APY 42.5ish% uh like how you should think of this and so you know while your head is still in the trunching atmosphere in my opinion the way you should think of the junior trunch is leverage exposure to loss right so you have leverage exposure to loss which is just one divided by coverage ratio so one divided by 44 is roughly 2.2 so you have 2.2x 2x exposure to loss, right?

[00:40:38]So, ONYC goes down 1%, your your position goes down 2.2%.

[00:40:42]But you have in this case 42% yield.

[00:40:47]Now, if the base yield is 11.69, then you you're almost getting a 4x exposure to yield. So, that's really really good.

[00:40:55]I don't know if you ever do that math for like leverage loops. So, we could look at that the the morpho loops, right? So you're going from 4.5% on USD to 15%. So let's just call it a three.

[00:41:08]We're getting a 3x exposure to yield, but a 10x exposure to loss. So 3x the yield, 10x the loss exposure. That's way different from this, which is almost 4x exposure to yield, only 2x exposure to loss. So I like that ratio. I'm not saying jump into the junior. You really can't. It's it's a uh it is capped. And so because it's cap, no one can enter.

[00:41:31]At least it was cap last we checked. If it wasn't cap, I think, you know, maybe maybe maybe I don't want to tell you guys anyways because I might go jump in there. But [clears throat] a couple things to remember here. One, NYC is not a stable coin. It could take losses. Uh you're directly exposed to reinsurance.

[00:41:45]You're expected to take losses, you know, a couple times a decade. And so please keep that in mind. Uh but then also the senior you know has this 44% coverage which means that 44% of NYC's like NAV underlying uh would have to get wiped out slash to pay out these reinsurance claims before the senior trunch ever got affected. So at 8.31% you know uh not not terrible for for a fairly riskadjusted play. So um I kind of like it. I wish I could get into the junior trunch. I can't but it'd be kind of cool if I could. And oh, actually I wanted to look at Royo uh while we had the the opportunity because did I Oh, they got dark mode now. All right. Uh because I think they made No, they didn't. They didn't make the uh um the Makina thing public yet. So, we can't look at the Makina thing, but maybe they're doing some private vaults that could be interesting for people is all I'll say. Uh okay. So, observation period still in progress for for that.

[00:42:47]Um, Avant at 98. Yeah. So, we mentioned this in a call before. The Avant one is kind of interesting for one reason. This is the senior trunch. So, what they've done is they've tunched the senior trunch. So, there's still a junior trunch beneath this. This kind of feels like RA Capital at this point, but uh, Ovant has SAVUSD, which is a senior tunch. They have a AVUSDX, which is the junior trunch. That junior trunch still exists and still takes on first losses before SAVUSD.

[00:43:16]So in this case, the junior trunch is getting almost 10%. Even though this junior trunch is more senior than Avant's own junior trunch. So I know it's kind of complicated, but you know the the the too long don't understand don't watch is uh the junior trunch here is really a mezzanine tunch for avant. So at 10% I kind of like it.

[00:43:36]Really my main concern would be uh the additional smart contract exposure because I'm using royo rather than any uh real loss. So, if I'm willing to go into the senior trunch anyways, I think I would also be willing to go into the junior trunch of the senior trunch, even though really it's a mezzanine tunch.

[00:43:51]Complicated, confusing, uh convoluted.

[00:43:53]Yes, I fully agree, but decent yield for a junior senior. Uh maybe, maybe could be. And then PTO. So, uh Mar, I feel like this is this is one maybe you know a little bit more than me about that coverage ratio is insane. I don't know how you feel about Falcon X. Um or their place >> is like their biggest asset. It's it's kind of just like, you know, lending more more lending stuff maybe similar kin to like >> um No, it's more like a Maple kind of deal.

[00:44:23]>> Oh.

[00:44:24]>> Um yeah. So, I mean, you know, I I think it's decent. I I guess the main thing I'd be worried about on the Royo stuff, and you know more about this than I do, which is like the fees, right? Like, >> does it make sense to get that 9.55%. I know in Strata like the fees especially because um like the Athena ones were like getting into a loops always looked attractive and you like look at the fees on Strata and you're like oof I don't know if I want to take those kind of fees >> fees. Yeah.

[00:44:51]>> Yeah. I'm not sure about the Roy ones.

[00:44:53]Um does that like hurt the potential of like sitting in a product like that? You know I guess the one interesting thing is like they're not durationed right. So it's like you with a PT, especially with like the STRDA ones, um you know, it's kind of like a fixedterm thing and you kind of know when you're having to get ex you know exit out of it. So you have to like cut that out of the yield on this. I guess if it stays at 9 and a half% theoretically you could sit in it for quite a long time and like recoup those fees whatever they are. Do do you know how the fees on work?

[00:45:22]>> I don't I don't I think maybe if we looked if we clicked on one of them we could see it. Um so we'll do that.

[00:45:29]interesting to see like happen um a lot of things change like like one of the more interesting markets on Morpho right now is lending to STCUSD not because STCUSD has any additional new risk associated with it but mostly because of the drama associated with cap uh and so like underlying mechanics totally fine people liquidity though and so lending rate kind of good right you can go lend to SECUSD I think that may also be the case for uh the junior tr here at 17% but uh to put to put context is coverage. I think we really got to put that in context. Um coverage ratio as I mentioned before your your leveraged exposure to loss is just one divided by coverage ratio. So here you're about 4x exposed to loss. So 1% loss on the senior trunch would be a 4% loss on the on the junior senior trunch uh for Pareto in super high right. So uh 4% crazy uh basically you are 25x exposed to loss 25x so one divided by 100 divided by uh four 25 so 25x exposed to loss so 1% loss on this uh this instrument means a 25% loss on the junatron here um and so cap 3% that's a 33x exposure to loss for you know what I what is probably something like a 3x X uh yield 33x loss exposure. I don't love that. I don't love that, right? Unless I was 100% certain that this was only lending to a nothing else, like that's all I was doing. And even then, I think still think that it's super super risky. Uh the benefit is you're not like you might think, oh, you're 33x leveraged to loss.

[00:47:12]That means entering and exit is probably super expensive because, you know, typically we deal with leverage and we think that way. Well, the benefit of tons is the answer is no. Uh you don't actually have to do any real leverage.

[00:47:22]You're not swapping. you're not going through those leverage processes. So, the benefit of a junior trunch is that you're skipping all of the pains of actually leveraging and all of the costs and the fees associated typically with leveraging. Uh, but the problem with with trunching leverage is that once you lose it, you lose it. Uh, so with leveraging a stable coin on Morpho, if it goes down, it's an impermanent loss.

[00:47:47]If it goes back up, you've regained all of that. So if it goes if if a stable coin goes from like $1 to 95 cents and then back to $1, you've lost no money unless you're liquidated. For a junior trunch, if it goes from a hundred from from a dollar to 95 and that junior trunch loss is actualized, right? And you have 33% exposure. Well, one you're done. You're liquidated. You zeroed out.

[00:48:08]Uh let's just say it was like 10x, right? So 5% loss, 10x, a 50% loss, and then it goes back. Well, you may be 10x exposed to loss but only 5x exposed to yield. So, you took all that loss but only got half of that yield back. Uh, so those are things to consider. Um, and then I think USDA is kind of interesting. Let's just click on this one to see if we see fees. So, uh, market overview, risks, liquidity, coverage, utilization, TVL, addresses, activity, facts, maybe. Uh, okay. Well, I'm not >> I just did a little quick research. It seems like it's a 0% management, 0% performance. It is like a 10% fee uh taken on the uh senior trunch yield. Uh junior tranch yield is not taken, but then there's a yield 45% yield share. It's a premium that's taken from the difference in the yield that goes between the senior and the junior.

[00:49:07]So like for that yield that is like re I don't know what you would want to call it like a fee on the risk premium.

[00:49:15]>> Yes, there's a fee on the risk premium of 45%.

[00:49:18]>> That's crazy high.

[00:49:21]>> Now, I I'm not looking at their docs, so you know, if you're Royo and I'm getting those numbers wrong, yell at us and tell us what they actually are. But if that's true, it seems very high. I mean, it's >> it is different where Strata is like more on the side of lower performance.

[00:49:35]>> Yeah. Like they're putting fees on your on your deposits on like retail money coming in, retail money coming out, you're getting hit. Whereas this is kind of like performance almost uh where it's a fee on the yeah I mean we really got to get esoteric to explain how trunching works with risk premium but basically there is a base a base portion of the yield uh like typically between 60 and 80%. And that yield goes is distributed evenly by by TVL. So I guess proportionally to the tanches. Then the remaining yield. So the 80% goes to uh just evenly distributed between all tanches. And so there's like a base APR. They all get a same base APR. Then there's the the rest of the yield which is the risk premium.

[00:50:24]And so that risk premium is distributed to the tanches based off of how much risk they hold. So more risk, you get more of the more of that remaining pie uh to your tunch. Now what as far as I'm understanding what you're saying is uh they're saying 45% of that additional yield is taken as a fee. If that's true, it's pretty pretty high. Pretty high.

[00:50:45]But that is just the risk premium. And it really depends on what the base is.

[00:50:48]So if the base is like 90% for Royo and they're only taking, you know, 45% of that little 10% left, it's it's, you know, no like brass tax numbers. It's not that much. Uh, but a 45% fee on anything looks super crazy high even if it's like really not. So, I think it it warrants more research is what we're saying.

[00:51:07]>> Yeah. And also like it it it does hurt the overall mechanism because you have to like then distribute more yield to the genotron to make it attractive and it I don't know it it feels like it messes with the math, >> right? You're not really being rewarded for the additional risk. If so, the more risk premium the protocol is taking, which means less risk premium the user is getting, which means they're not being rewarded >> uh additionally for the additional risk they're taking, which is what you want to see. You want them to be additionally rewarded for the risk. Okay. Well, that was great. Thank you. Uh there was a bunch of Merkel stuff. Do you want to like flash explain all the Merkel stuff that you're seeing?

[00:51:44]>> Yeah, I mean there's just like there's there's there's a bunch of incentives like just running through it. I mean, there was a base uh a uh base morpho has USD loops. Um they're being incentivized. It's the same basically as Robin Hood. So, another place to go check that out. Um the steakhouse vault on for USDG, you know, getting 4%. It's kind of interesting because you can like loop it up. Um there are some just vanilla places you can put stuff. So like Athena's USDTB on Morpho for some reason are being incentivized aggressively at like 11%. Um also I've been seeing more and more like the Metamas dollar. I'm not saying I've never touched it. So like you know uh not a big MetaMask guy in general, but like it has been there's like on a on was it Monad Chain or something like that it's getting like 12 or something like that percent. If you just like hold it on ETH mainet or Lana you're getting like 8%. I think it's probably, you know, it's just like a white labelled stable coin done by Bridge, which is owned by Stripe, which is like, you know, big big companies here involved. So, you know, probably pretty decent risk profile if you don't mind metamass exposure. Um, and then there's, you know, other stuff just like supplying to any market on on Morpho, you can just like get incentives like that as well. So, I guess what I would say is like there's a bunch of vanilla places to go get yield if you feel like any of those are are good riskrewards.

[00:53:09]And then also you know like some of these loops are good. OBV4 loops for very small depositors are you know can be up to I think like 40 or 50%. But like the the liquidity is very low. So it's not a place where if you have you know even half a million dollars you could go get those kind of yields. But if you're in the like you know 20 50 100k I do think av4 is like a pretty interesting place if you're willing to brave the again quite poor UI. Um it's kind of sad sometimes going to av4 and just seeing how confusing it is for such a large protocol. Um but yeah, those are just like lightning fire stuff. Um there is just like a lot more yields popping up and and it's always great to see.

[00:53:52]>> I agree. Yes. Um okay, the last thing I want to say was thanks for that by the way. Uh yeah, I mean Morpho you can do some fairly conservative lending out 13% right now which I which I love. I think it's phenomenal. uh really if you know there's there's an argument that DeFi is dead and the argument that well if yields are up then maybe it's maybe it's like hidden alive it's like uh secretly alive the RA season 2 right we know when it ends we know kind of how many points we're seeing per day we can kind of make some uh uh assessments and then we have the point multipliers that are typical for the REUD and REUSD markets kind of interesting to see RUSD having more with these FDVS we can see how much additional APR we can expect My understanding is that basically at 18% uh it's assuming 100 million 250 million FDV, right? So right now I think RE's FDV is like 500 million. So they're assuming like a 75% drop by the end of season 2, right? The end of season 2, which is in December, and then however long it takes you to actually get your air drops, maybe by January. Uh so it's pretty conservative. Hard to buy YTS at at like 18% because 18% number just looks so high. But um that's [snorts] basically what you're betting on, right?

[00:55:05]That the FDV at the end of season 2 will be higher than 100 1550 million. If you think that's correct, YTS might be interesting. If you don't think that's right, if you do think that there's going to be 75% or more draw down, the PT in my opinion looks quite nice. So this was this was some fun math we did.

[00:55:21]Uh and if you ever want to participate in the understanding of that math, join the DeFi dojo discord.

[00:55:29]Uh actually, right now we do have a really nice promo going on. So, if you watch this and you want like I think it's free month or free two months or free three months or something uh in the dojo, you just use the the the code I read, you know, like because you made it to the end of the tweet, but we'll use it for I watch, but really I read is the is the code and you can get like a crazy discount on the on the package. Anyways, that's it. Thank you guys so much for watching and have a wonderful rest of your day.

[00:56:00]Oh, there's an