Sumaa (sumaa)
Exposing your favorite defi protocols
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I dislike front-end work for the most part, but the immediate feedback is very satisfying
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since you mfs love the defi beef, I have my next target: Ethena - one of the worst defi projects to come out of this cycle. Fundamentally a stablecoin backed on yields from a trade that does not scale will never work. Total Stablecoin (173B) USDT: 120B (69.3%) USDC: 36B (20.8%) DAI: 5B (2.3%) USDe: 2.5B (1.4%) Ethena is backed by a carry trade - a delta neutral strategy where you go long spot, and short perps to capture funding payments on the perps side. It's effectively an arbitrage between funding and borrow rates. Like any arbitrage, operating this trade with size slowly begins to diminish it's returns. With only 1.4% market dominance, ethena has around 5% of BTC and ETH OI. Such positions become very hard to unwind without incuring massive slippage. My biggest concerns: - How does ethena handle rates flipping for long period of time? - How quickly can ethena exit their positions in the case of a bank run? - What happens when yields are near zero? who wants to prove my thoughts on ethena wrong?
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multi-collateral on a perps protocol is one of those things that's seemingly very simple, but actually very tricky to implement if you want to keep it both decentralized and efficient. What currently exists: Drift style multi-collateral: Deposit usdc against alternative collateral types PROs: - Simple implementation CONs: - You're capital efficiency is capped by the LTV on the lending market - Rebalancing or swapping collateral becomes trickier - fee's on funding rates + lending rates --------------------- Aevo style multi-collateral: What I like to call just-in-time multi collateral. Users are forced to maintain a usdc balance, whenever this balance goes below a certain threshold aevo swaps a multi-collateral asset into usdc to top up. PROs: - higher capital efficiency CONs: - entirely centralized - not really true multi-collateral - a user could deposit 1 BTC but overtime this continuously gets slowly swapped to usdc
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