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Main Channel t.me/blockchain_lobsters
Ultimately USDf is a hedgefund … like every other hedgefund (ethena et. al.) who pitch themselves as a “stablecoin” it’s a load of bollocks and most of us know it. USDf are just more brazen about it. It doesn’t make them bad or good: It is what it is.
Right now, many crypto native HFs are going into high yield credit products because crypto perps yield is so low. The funds have vol ~2-4% which is way too low given they get bucketed as “high risk” investments from LPs. Some of them are therefore levered looping more and more risky shit.
USDf capitalising on “risky shit” but perhaps they were too obvious about it unlike some other opps in the market
What I am unclear about is why they mention this as if it’s a good feature of Ethena?
> Unlike Ethena’s sUSDe (an analogous product), sUSDf does not involve an unstaking cooldown period. However, there is a one week delay on USDf redemptions, available to whitelisted users. Due to delays on arbitrage operations, USDf may not always maintain a strong 1:1 USD peg, and may exhibit similar market dynamics as sUSDe.
To me that seems an even worse feature. As a liquidator I would want to redeem and pay off debt positions as fast as possible?
EDIT: It became clearer to me on reading what LlamaRisk are intending to get across but since this is so complex I thought I’d leave up… LlamaRIsk are saying that both sUSDe and USDf have the same intrinsic issues of redemptions. Ethena because of the cooldown and USDf because of the redemption window
Guaranteed yield is my middle name, between Do and Kwon
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In my (limited) experience, many funds are all asking for 30-40% guaranteed yield on stables, guaranteed by tokens (no FDV assumption or backstop), and as instantly liquid as possible, for 3-6 month TVL commitments. Lower time commitment is ofc better for them 😅
All of these liquidity aggregators (think clubs of whales, LPs, etc) are also pushing these deals aggressively - and pushing LPs from one project to the next.
It worked well for some projects last year, I guess, but we’ve (maybe naively) also stayed away from these deals. Seems very dangerous, at the expense of the project and the user.
Yeah, it's gonna be a real shitshow if it implodes. Few people may end up in prison - we'll see.
On the bright side, AFAIK, not anywhere near the scale of LUNA
Mind you, there are some really great funds out there, and I cannot recommend working with them enough, but we're discussing the bad ones and the tragedy of the commons that they cause here. If you're the ethical players, you know who you are, and you're a net value add to the space :)
You're forgetting the part where the illiquid shitcoin promissory notes get marked-to-market by the funds as realized gains, which definitely isn't securities fraud
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and this is sort of circle jerk - people are interested in high yields, then provide it to those funds/tvl providers
so with their cut it becomes even crazier
Eh, that's hyperinflationary. Real fractional reserve doesn't work like that, it's borrow short, lend long - which is what I've built. Nice hard shill tho
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That sort of shit is a literal suicide pact for the token
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40% in this private deals is basically under assumption of $800mln FDV or some other crazy high evaluation, so it's a marketing BS that both sides understands, LP providers and project owners.
But it's always good to have some free token on top of base yield.
Thankfully have limited our exposure to stuff that is just a multisig backed by "trust me bro"🫡
Uncollateralized lending is cool, but not like this. Transparency and risk disclosures are the right way, 40% guarantees...not so much
One is a regular big size basis trade, another one is… whatever it is.
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https://x.com/KeyringNetwork/status/1936436469658525778
If you care here is the analysis based on some earlier posts here.
The bit that is missing is the credit risk or Jump-to-Default risk. The risk that you get an instant zero due to a default. I think the survival probability curves aren’t well mapped in DeFi.
The way I would propose doing this would be decision tree whereby you ranked each asset A,B higher until you get to the real shitters … and then fit a decision tree on the data. I can’t think of a better way to model the prob. distribution otherwise
You would make some estimation of risk probabilities on the top collaterals and use that to fit between like a string pegged at each end
> Running simulations with limited market history suggests that the market can support more aggressive parameterization, but market history does not account for potential depeg events due to the 7 day redemption timeline on USDf.
This is precisely why we published Expected Shortfall calculations for everything with a redemption window in our pools. If you have a 7 day redemption window it’s the SINGLE most risky thing for liquidators and so the LLTV limits must be greater than 1 - 7day 99% Expected Shortfall
i think good thing after luna - no more uncollateralized loans on that scale, so def harder to blow up like that
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lol really? was not aware of this part
enron documentary vibes - https://www.youtube.com/watch?v=hR45ja3VjGE
and then it all goes to shitty projects which are fine to gamble and offer 60% yield may be
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I have had multiple hedge funds ask me to guarantee between 20-40% at any FDV, and I've turned each and every one of them down. Think of the biggest 3 that you've heard of, and it's them
This suicidal greed has become commonplace and idiots agreeing to it are only feeding into an erosion of trust in the space
The last deals that I've seen meant that APR would be in token under some pre-chosen FDV. So, 40% apr in $800mln fdv is realistical 10% under $200mln fdv. But prob something changed and you are right.
I would argue that this additional incentive is a necessary evil for many projects to get traction, and not all deals are bad; it's just how you structure the deals.
Couple of big and respectable projects in last-two year had it and feeling decently well.
The Fedz offer a 30% yield. If you don't print it out of thin air it's not a real fractional reserve system.
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40% is 40%, whether the FDV is $10M or $800M. I know what those agreements look like, they usually don't have fixed FDVs
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Besides, the guy wrote a post on curve finance "indirectly being behind resupply hack" just a week or two ago (which is clearly false)
"cashing on poor retail people while sitting on 50 mln treasury"
"50/50 inside job and retardness"
"They are also responsible for Prisma exploit" - false claim, teams were different.
"it serves me better to keep my mouse shut, but I need to share"
like an ultimate grift with intentional misrepresentation for engagement.
[And yes, resupply team were clearly grossly incompetent in that exploit]
Nobody with half a brain is guaranteeing 40% out of the gate. Only suicidal morons hoping to dump on liquid funds before the funds realize they can't dump on retail would ever agree to those terms
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