Isolated Lending Markets are a natural way to tranche the risk of a tokenized strategy. Lenders : protected against drawdowns (via liquidations) and provided a limited pool of free liquidity (via unutilized lending supply) in exchange for lower yields. Vanilla holders : moderate risk, moderate yield Loopers : take on considerable drawdown and liquidity risk in exchange for the highest returns. I suspect the popularity of the looper-lender market is partly responsible for why explicit risk tranching hasn't taken off onchain (relative to its popularity in TradFi). Basically the demand for splitting a tokenized strategy into different R&Rs is already met in a personalizable fashion w/o additional fragmentation i.e., loopers can choose their own LTVs to Liquidation Threshold buffers while drawing from the same liquidity pools. As preferences expand (which they will), this could change, but for now it gets the job done.

The quietest but most exciting category expansion going on crypto right now isn't stablecoins or tokenized stocks, but the reemergence of tokenized strategies. After DeFi summer, the only thing left standing here were LSTs. Yearn TVL died down, most "farms" disappeared, long tail credit facilities were hacked or died off, yield sources were few and far between, and fixed rates were no longer interesting as yield sources (mostly staking or lending) had no little-to-no volatility. This is all changing. An entire supply chain is being built to bring new tokenized strategies to market : - Critical Vault & CeDeFi infrastructure - Reputable Risk curators, Strategists & Asset Managers - Isolated Lend-Borrow markets for rapid credit listings - Reemergence of fixed rates Everything the industry wasn't ready to sustainably offer in 2020-2021 is finally reaching product-market-fit now. And it's driving more growth to actual DeFi applications than stablecoins despite there not yet being a comparatively large or cohesive narrative tracking it. The design and use space to explore for tokenized strategies is massive. Infinitely programmable and composable funds of all types. Have a feeling the narrative will catch up.

Trying to build useful agent-based sims is such a pain Every time I get close I uncover another layer of complexity I'm not currently capturing

If anyone is interested in diving deeper, I wrote about this and the design space for them a few months ago :

The comparisons of stablecoins to Narrow Banks typically gloss over the most important details. Namely : yield pass through and the intended customer base. The attractiveness of the Narrow Bank's business model stemmed from it's pass through of the IORB Rate (currently at 4.4%) to previously unqualified institutions (e.g., MMFs who can only have access to the ON RRP Rate which currently sits at 4.25%). It's goal was also to never be a consumer bank, but split the 15bps spread with these institutions. The Fed's rejection of The Narrow Bank was ultimately their issue with the yield pass through and the effect it would have on the potency of monetary policy (e.g., the EFFR would cease to be as useful, funds would flow out of the Banking system, etc.) A Narrow-Bank-Stablecoin-Equivalent, wouldn't just park funds in safe assets, it'd pass through rates to consumers, which is prohibited under the GENIUS act. And it's unlikely that the Fed's stance on this should change as the impact of passing the IORB Rate through to consumers would practically render monetary policy obsolete as there would be no more opportunity cost to holding cash for anyone. Instead of the MMFs gaining ~15bps, it'd be consumers gaining 440bps. Agree with everything else in @nic__carter 's post though, just felt this was a good detail to clarify.

Historically speaking, the U.S. uses its influence over peer countries to adopt reserve assets that are in its financial interests. Notable examples include Britain’s return to the gold standard after WWI, the dollarization of the global financial system after WWII via Bretton Woods, and the Saudi-U.S. Petrodollar pact following the 1973 oil crisis. While U.S. gold reserves have stayed constant over recent decades, China has been slowly amassing its own National gold reserve. The inflows of gold are being driven by China’s significantly larger gold mining industry. U.S.’s tonnes of gold mined annually : 158.0 China’s tonnes of gold mined annually : 380.2 In contrast, BTC mining (and crypto as a whole) is a U.S. dominated industry. U.S.’s share of BTC hashrate : 37.84% China’s share of BTC hashrate : 21.11% Given the room for growth (i.e., BTC’s market cap is significantly lower than gold’s), the U.S. once again has a strategic imperative to wield its influence over peer countries in adopting a new reserve asset. A window exists for the U.S. to start beating the drum and front-run a BTC arms race.

$5.65 Trillion is held by banks in Fed Master Accounts earning a risk and duration free 4.4% Thats ~$250b a year going to subsidizing liquidity in the banking system with virtually no pass through to consumers

Just finished my first set of notes on a series of posts about stablecoins, yield bearing dollars, and what post-stablecoin macro looks like. I find it tremendously interesting and believe the next few years could have massive implications on how we think about monetary policy, banking and a whole host of other things Have been mostly writing and researching on my own so far and would love to start getting some outside perspectives and directions If you're knowledgable on the topic and interested in exchanging ideas, let me know

Duality processed it's all time high for aggregator volume today greater aggregation volume = better prices

BTC up 105% over the last year [REDACTED] up 119%