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Leverage is the largest unmet demand in the ecosystem and it explains every crypto narrative thus far. ICOs, NFTs and Meme Coins are all instruments that are either going to zero or printing stupid amounts of profits. That's the only use case with proven retail PMF; speculation on leverage. hollowgrahm.substack.com/p/on-leverage
What if there was a protocol that used ETH LSDs as collateral to mint either a) a stablecoin, or b) a leveraged ETH derivative, where the stablecoin is the senior tranche fully backed by reserves while the leverage token is the junior tranche and is backed by the residual value of the reserves minus stablecoin liabilities? The stablecoin could then be deposited into a stability pool that earns concentrated ETH yield (since yield on the entire reserves, not just the portion backing the stable, flows to stability pool) and any slashing on the staked reserves is absorbed by the leverage token holders as the junior tranche. Leverage token holders are essentially trading yield for amplified price volatility, shifting slashing risk away from the stablecoin into a perp like product, while stablecoin holders earn amplified yield from the entire reserves
Leverage is the largest unmet demand in the ecosystem and it explains every crypto narrative thus far. ICOs, NFTs and Meme Coins are all instruments that are either going to zero or printing stupid amounts of profits. That's the only use case with proven retail PMF; speculation on leverage. hollowgrahm.substack.com/p/on-leverage
For simplicity, what if the index is just a 1971USD (gold backed) compared to the current dollar purchasing power?
This is a solved problem because platforms can just choose to settle in yield bearing usdc wrappers like staked frax or dai savings rate. Hope it’s the lawyers holding them back from that decision cause if they haven’t without legal reasons then that’s either incompetence or financial illiteracy.