​​🧠 3/3

2️⃣ No-RWA (decentralized) stablecoins

This is the other side of the spectrum. My fellow truck-gun-ranch-BBQ-decentralization-VPN-alienhating mongols. Just kidding. Well, here you have varying degrees of fairy tales being spoonfed to you. Choose what you like:

- decentralized collaterals, no governance, centralized third-party oracle
- decentralized collaterals, active governance, anon team members
- decentralized collaterals, centralized governance, ddoxed team members
- centralized collaterals, active decentralized governance, decentralized oracles

Again, these are not bad! It’s just about what you are afraid of most, because there is no universal medicine. Liquity is like the pinnacle of our achievements so far if RAI-HAI weren’t so design-wise unusable. Then you have a bunch of their forks & spoons which came out recently like Lybra & later Prisma (scroll 2 posts above for a cool LSDfi post). And a bunch of other ice cream flavours which are all based on milk anyway.

3️⃣ Algo jungle yield stables

This goes even deeper. These are not even stables per se, they are stable-pegged assets made for leveraging, looping collaterals, and doing crazy shit. They are not intended or ever been used for payments. They are mathematical fun coins basically. There are a ton of cool things here, but they are basically destined to stay relatively small (while still maybe in $1B size) as they can’t tap into real adoption narratives.

- crvUSD: very cool, very new, but centralized liquidity collaterals (or not? see Michael's reply)
- FRAX: very innovative, very agile, but the question is the purpose now (apart from farming?)
- MIM: was very cool and very risky, now more safe, but same questions apply

Plus all the other stables that have not been mentioned above, ikyk. Again, they are not bad, but they are neither super safe nor are they super regulated. They might like their niche and can spin up other products later, as they have. I bet teams ask themselves the same, And it’s fine! Keep pushing for what you believe in, keep iterating, I am just talking from the user perspective as a stable enthusiast myself. Love you ❤️

Don’t forget, this is all subjective stuff! Feel free to discuss and debate in @lobsters_chat & kingdom.

That’s all for today. Stay sane, stay safu, and don’t sell your stables at $0.97. 🫡

Some cool sources on stablecoins:

- https://defillama.com/stablecoins
- https://stablecoins.wtf/
- https://dune.com/steakhouse/stablecoins
- https://dune.com/KARTOD/stablecoins-overview

​​🧠 [Long Research]: EyeScanner 👁

Sooo, ethCC was fun! Was great to see so many of you, incels, surviving. Will do another post with some thoughts on it, but let’s dive into the hotter topic of this week: worldcoin. There is so much weirdness around it, that it’s a big discussion topic.

Vitalik posted his piece in the same hour as the shitcoin trading began, which is unusual of him, but he likely wanted to get more attention when the hype was at peak. He, as a visionary reptile thinker, likes all new things. Naturally, he wanted to research it and give an opinion:

🔴 Privacy concerns: Worldcoin's reliance on iris scanning raises significant privacy issues, as Buterin pointed out. The database linked to the iris scans could potentially reveal sensitive information, posing a risk to individuals' privacy and security.
🔴 Accessibility issues: Vitalik also raised concerns about accessibility, noting that participants need physical access to a Worldcoin Orb, limiting the project's reach. Without widespread availability of these Orbs, there's a risk of favoring urban centers and creating distribution imbalances.
🔴 Centralization risks: Another point raised by Buterin was the potential for centralization. The inability to verify the integrity of Worldcoin's Orb hardware construction leaves room for backdoors, which could compromise the system's decentralization efforts.
🔴 Security challenges: Buterin identified security risks, including phone hacking, coerced iris scanning, and fraudulent use of identities, all of which could jeopardize the Worldcoin system's integrity. Is a good read: https://vitalik.eth.limo/general/2023/07/24/biometric.html.

👀 But from here, it gets worse…

There is the “tech" and there is the optics & token distribution & marketing. While the tech could be interesting to some extent, the rest is done in a scammy way, resembling MLM pyramids and evil shit. And that can be seen by the observers at orbs and the token metrics they made.

Here are a few clear ways where even tech supporters can't stop themselves from howling:

🤮 Liquid supply is approx 1% whereas investors and team are at about 25%. From the liquid supply today, 3x of the community airdrop size is in the hands of market makers. It's a silly offer worldcoin got into for the sake of some washtrading. Check two good threads here, objective view on the market maker ponzi taking place: https://twitter.com/AriDavidPaul/status/1683627646633013249. Yet you probably can't short though, because MMs hold the supply and can do whatever. Long-term GCR style, this is a disaster of course.

👁‍🗨 Eye scanning is promoted by vendors engaged in MLM. Even the early affiliated videos promoted “we scan eyes of poor people to give them airdrop" type of vibes. See their founding member older post praising poorer nations scanning their eyes. Upon completing the process, a staff member assured me my tokens would unlock soon and hurried off to help a Mandarin-speaking older couple that had stumbled in. - check the DL News article on how some of the experiences are as well. And just look at the video Altman posted himself, dystopian af: https://twitter.com/ivangbi_/status/1684306782078869505/photo/1.

Anyway, some say that this can really push crypto further to adoption, but at what cost? If you want to have adoption no matter the cost, might start throwing money at RWA, scan your eyes, suck off SBF, and do ponzis… Subjective. Pathetic. But decide for yourself!

As a fun note though, some sers made a buttcoin whitepaper version of this: https://twitter.com/OfficialESC/status/1683019497291038722. Who knows, we might see more of this physical-interaction-crap pop up. We love KYC & AML, and it's totally helpful thing, right?!

If you want to continue discussing this stuff, check conversations in lobsterdao first, to not post the same things again. And if you are choosing a movie - check "Minority Report" or “Black Mirror” 🖖 FIN.

​​👩‍⚖️ [Daily Digest] $0.4️⃣ CRV

Have you slept for more than 6 hours today? Well, good luck catching up… There is a chance you are rekt!

First of all, the “Vyper hack”. On Sunday 30 July, several hack attacks drained funds worth about $70 million on Curve Finance. CRV/ETH pool, alETH/ETH pool, msETH/ETH pool, pETH/ETH pool. Details of the hack are in this tweet. Some of the MEV and whitehat operations saved some funds, see the full list by Tay.

And this leads us to the next point… the CRV situation. Funny fact, which everyone always knew, but still LOL: Michael owns about 50% of all CRV circulating and all of that is collateral on lending protocols... Talk about capital efficiency.

📓 we wrote about CRV and Michael’s positions a few weeks ago on June 14 (scroll up). In fact, the topic itself was discussed in Aave for months! Even during Avi fiasco-manipulation back last year… Yet nothing was done, because key players seem to believe that there is no need to force the hand. Well, it was almost forced last night…

With a chunk of CRV over $30M worth getting into hacker’s hands - one gets the question of “what if… cascading liquidations”. For your reference, CRV would need to drop to $0.40 & below. And with three major players having debt: Aave, Abra, and Frax - the question is, who carries the torch. Because it’s quite likely that one would be made whole, but that could evaporate most of the capital on the buy (bid) side for CRV. So it's less about liquidations even (again, Michael already holds 50% of circulating, and that 50% can't be borrowed by others to short) - but it's more about the quality of the collateral and whether the debt will ever be repaid (?)

Anyway. By design (see Sam’s reply in lobsterdao chat), Frax was the first one to force Michael’s hand, as the debt would increasingly get worse and worse. As such, for the next few hours, Michael kept dumping CRV OTC engaged in highly sophisticated OTC deals trying to secure some funds to repay some of the positions.

💡 the terms seem to have been $0.40 and 3-6 months lockup. But the lockup is not anyhow enforced on-chain, as you see via the links and receipts of tokens, no vesting contracts are deployed. Source: etherscan lol. There doesn't seem to be any other off-chain agreements based on the claims of the buyers themselves.

The buyers haven’t been VC funds or some names. In fact, Evgeny of Wintermute skeptically referred to these deals. Saviors of the day, or rather, Michael’s house (note: no, the house is fine) have been:

- 5M CRV ($2M USD) to Tron founder Justin Sun, who already plans to brr yields for his muh RWA protocol (likely putting his own other assets and re-collateralizing them… smh, let’s see how this goes).
- 4.25M CRV to DCFGod
- 3.75M CRV to scammer machi Jeffrey Huang
- 2.5M CRV to crypto investors DWF Labs
- 2.5M CRV to DeFi project Cream Finance
- etc. $11M+ plus. See his debank profile.

It’s a bottom of the barrel mostly, pretty eh. Justin already planning some schemes, although he bought it fair and square, why not… But back when repayments started happening, prices went from $0.50 back to $0.60 - as UK researchers say “not seen in existence since last week” kek.

😮‍💨 Adam and fudzy have been violently expecting fireworks, but some of their points make sense: ok, no cascade now, but where will demand come from for the other CRV part? It’s semi-liquid shitcoin now? Yes and no. It’s quite astonishing how so far it worked out, and there is still $10M+ demand outstanding from even some founder DMs I got willing to buy being a half of that as is. Fascinating, weird, and… almost wholesome. But weird.

⚖️ Some other news: Multichain funds seized by CCP seem to have indeed been seized by CCP. And worldcoin eyes being sold, wow surprise lol… but still allegedly. Stay safu. DeFi is fine. There is no real Black Thursday here for the whole industry. Yes it would be a big event, but likely the holes would be mostly covered. Cheers.

🕵️‍♀️ [On-chain Sleuth] CRV 🛍

Just wow! Demand from the OGs and some protocols is crazy… So far, Mich bagged (and used it all to repay debt) about ~$44M, getting rid of ~110M CRV.

- Dune board: https://dune.com/spotonchain/crv-founder-sold-crv-via-otc
- Mich debank profile: https://debank.com/profile/0x7a16ff8270133f063aab6c9977183d9e72835428/history

NOTE: SpotOnChain tracks USDT only, hence it shows only $22M. But some sent Frax, some sent USDC… As such, if you look at the total CRV sent though, the amount now is $44M USD. There could be some discrepancies, but anyway it gives a roughly accurate picture.

Look at the post we did in June, overall changes are:
👻 Aave: $63M debt in stables -> $20M repaid now -> $43M debt now
🧙 Abracadabra: $20M debt in stables -> $15M repaid now -> $5M debt now
⚫️ Fraxlend: $16M debt in stables -> $8M repaid now -> $9M debt now
↔️ Inverse: $3M debt in stables -> bigger debt now, $9M 👀

Fraxlend design forced his hand first, so the first OTCs went into repaying it. Then he split between Aave and MIM, favouring MIM despite larger debt in Aave. Inverse is now more indebted in CRV, but that doesn’t seem to be a concern now (?)

1️⃣ Whether it was Black Thursday and systemic or not… A game of musical chairs between the protocols?

First of all… There was nothing systemic here. Liquidity would have shifted elsewhere. There was no risk for DeFi (fk u coindesk, larping snakes). 🖕 Liquidations would have happened, some protocols would have lost, but bad debt wouldn’t be so high. Aave would somehow pay it back with reserves or stkAAVE. Meanwhile, Fraxlend showed the strength of its design without even any external votes. MIM understood the situation and ran to save its users with more proactive counter votes. Good! At the end of the day, protocols have to secure their assets and ensure no bad debt, even if it makes churning one main user as a result. That is, if they are not dishonest…

2️⃣ Governance is fugazi or not. How do we fix it?

Immediately, people started blaming governance. Flexibility=control... Should MIM be able to force the hand that fast? They acted in the interest of their users though. What about Aave V2? There are many questions here, because while many say bad debt would have been limited, don’t rush to make bad decisions (Marc) - you can’t argue that it WAS WEIRD how Gauntlet proposals and everyone else have been ignored. Maybe no malice, maybe no conflict of interest per se - sure, but definitely overlooking the situation. And now they want to buy CRV, at least kudos for making it via a treasury vote and not just deciding to buy (on-chain governance benefits). No diss on Aave here, V3 looks great, but one can’t overlook the debt of $60M+ on a medium-tail asset with worsening liquidity and think it’s ok. Blz don't beat me up ❤️

- Also, made a thread on governance: https://threadreaderapp.com/thread/1687087857859719168.html
- A thread on different models tradeoffs: https://twitter.com/apeir99n/status/1687095911024136192

3️⃣ Founders are evil and rich? Is Mich an evil abuser lol?

Mich didn’t want to sell (majority in any case) and had put them as collateral instead. Now he is forced to sell lower, which one could say was a sifu move - but Mich built much more for the space than the trading shady fker. It might have been an oversight from our in-house-physicist, but it is what it is. Currently, he is taking an L compared to if he sold it before - and that is a fact.

But again: There was nothing systemic here. DeFi is not dead 🤕 Liquidity would have shifted elsewhere. Balancer has bribes. Uniswap has liquidity. Everything was ok from the start if you accept the fall of some and the rise of others. It’s cool to see some OGs come to the rescue, but again - that is NOT an industry rescue, it’s a rescue of their favorite. A choice, not a necessity.

PS: love both Curve and Aave, no diss on either. Simply presenting different sides to the debate. Cheers 🖖

👩‍⚖️ [Quick Digest] Are you doing it all wrong? For founders & teams.

GM! As bear continues and all user metrics fall, it's hard to keep yourself both motivated and convinced. User metrics down, governance activity down, volumes down, your bonuses down, your industry prospectives down - it's all falling… Is it fine?!

We often hear: Devs, do something! - but if we get asked “what would you do in our place?” - we immediately understand that we are wrong. Sometimes a dev can’t do anything, or rather, a dev is already doing everything. You are just asking for oranges from an apple tree.

💡 And the decision-making cycle here is different from the one of an investor.

For investors, you are supposed to max bid at the bottom. Basically to spend more in bear than in bull. That’s your max opportunity period when you consider ventures investing vs value investing. For teams, it’s often the opposite. Teams are more like value investing cycles, even if their VCs force them to gamble with their lives. Teams’ max opportunity window is staying alive to hit the critical point, whereas timing the bear isn’t actually that important. Or is it?

Anyway, check out https://threadreaderapp.com/thread/1693165661361692778.html 🦞 And GLHF PnD-ing your friends on a weekend, let’s see how long it survives.

Did a looong SEND IT podcast with amplice on all things DeFi and mostly about @GearboxProtocol journey: from 0xmikko coding weird shit, to forcing me into wagecucking, to V1 DAO... and now V3. Thanks for having us 💕 @leviathan_news, DAdvisor, Wajahat, and Samuel 🤖

PS: I never said I am a genius, Sam did me dirty in this clip, lawsuit inc mfka.

🎞 https://youtu.be/BwdHKnFTScU

DId a looooong one with Alp and Jack from Defiant back in Istanbul. We went through a lot of things on lobsterdao ethics and alignmeeeent - to different things like wallets and adoption mental gymnastics - to Gearbox vision and DeFi. Check it out! It has timestamps, so you can click around.

📹 https://youtu.be/5m2lzTj-PVk?si=OqU97i-wL7RZN2qa
CT: https://x.com/DefiantNews/status/1730588429006627056

PS: my face looks like a hamster, was already getting sick and swollen, I swear I don’t eat that much.

We did a deeeeeep interview about EigenLayer on Defiant News with Alp, and chads Tina & Teddy 🔥 Basically a one hour panel on restaking security implications, AVS use cases, product viability, and some DA stuff... Watch it! youtu.be/xev-eZEWCnA

PS: ivangbi and alp started doing these bi-weekly deep dives on different hot topics on Defiant. The idea is to not just suck up to founders and let them shill, but to try grilling them and asking genuine questions which a token holder / researcher would have. For example, in this episode we tried to distill the fancy AVS narrative to early-infra-shitcoins launch platform. That doesn’t anyhow diminish the research and the technology, but helps view things in a more friendly way. Hopefully it’s interesting, enjoy!

Did a deep dive on Epicenter about DeFi resurgence and how Gearbox reimagines composable leverage / onchain credit. No trust scores, only math! Honored and proud to have been on Epicenter with Meher Roy, thanks to the Epicenter and Chorus One teams 🫂

- YouTube link https://youtu.be/webnsH2pS0k?si=68IN_FtrrHW4VeuW
- Twitter post https://twitter.com/epicenterbtc/status/1771457019200827593

PS: the modularity and other concepts you see these days with lending-like protocols are not exactly new. Every second protocol was like that already a year ago. It’s just that, unlike infra, DeFi is (sadly) tangible, hence you can’t just get away with narratives. So where narratives stop and UX begins, the former quickly falls as there is need to somewhat handhold users or offload the problem onto another team. At the end of the day, modularity is there and will be there, but UX is an obstacle. See Aave, leading by example.

Also did a recording with Joel and Saurabh a few months back that they only released now. That one was on communities, narratives… and us being skeptical on Solana just before it did a 20x lmao. Midwit fucks.

- https://www.decentralised.co/p/podcast-episode-ivangbi-from-lobsterdao

Modular Lending / Modular Leverage

Some thoughts about the lending space and modularity:

1. Never work on a lending protocol, perps, or anything involving risk underwriting. It's the most terrible and difficult segment to go into. It's not rewarding, and you can't ever sleep or go on vacation. Wouldn't wish this to anyone.

2. Read point (1) again, don't do it.

🫶🫂

Jokes aside, wrote an extensive research piece and outlined the differences among Gearbox, Aave, Morpho, Ajna, and other protocols - in the context of modular leverage / lending. Fluid, Silo, Frax, Curve, and many others have good takes.

PS: this is not a diss at Aave or anyone else; please, no bag fights. There are many chad teams. But if you work on a protocol and believe it has advantages, you need to preach and push it. And the more, the better.

- TLDR is here: https://twitter.com/GearboxProtocol/status/1784987887551046086
- Full piece is here: https://blog.gearbox.fi/gearbox-modular-leverage/

Ethereum Twitter fights of the past week(s) got me to write on a broader topic... Did anyone ask for it? Absolutely not! But as an online couch warrior myself, I couldn't pass by. Hope you like it!

✨ 𝘾𝙊𝙈𝙈𝙐𝙉𝙄𝘾𝘼𝙏𝙄𝙊𝙉𝙎 & 𝘽𝙍𝘼𝙉𝘿: 1-9-90 ✨

https://lobsters.substack.com/p/1-9-90-community-and-brand-building

In 2019, almost every VC said "F*ck tokens, we want equity. Tokens were a mistake!" A year later, they were buying every series A. Is this time different, truly? We can’t keep going as a self-policing communist alignment circle.

💡 Play a different game. Embrace the split ⤵️

Everybody sees the problems in crypto capital markets, but blaming the game or the players doesn’t help anymore. We need solutions...

I believe the crypto industry has already split into two: tokens vs products.

It used to be that token *was* the product. You’d focus on both equally. If your product did even remotely okay and you paired it with incentives or token games, you could boost attention and valuation.

Token <> product reinforced each other! That worked during the Chainlink growth phase, with aggressive oracle tweeting and “community” (paid armies) rallying. It worked for L1s. But I don’t think it works anymore.

Shenanigans have been very short-lived.

Don't agree? Think it's a temporary fling again?

🔗 https://lobsters.substack.com/p/token-is-no-longer-the-product-an