Ondo Finance, a decentralized investment bank, is building structured products that pool and disaggregate liquidity from various sources, aiming to offer diversified investment opportunities with managed risk for both crypto-native and traditional investors.
Mind Map
انقر للتوسيع
انقر لاستعراض خريطة الذهن التفاعلية الكاملة
hey excellent all right let's kick this
thing off all right so
today uh my name is kyle and i'm the
head of marketing here at notional finance
finance
and today we're here with nathan allman
of uh ondo finance and notional ceo
teddy woodward and
and
yeah so we're just gonna
do another episode of our notable
builders podcast where we just uh like
to talk to other protocols find out
exactly what's going on what they're
building what's up what they're up to
uh talk about a little bit about the
history of the protocol and uh where
you're going
so uh yeah nathan why don't you tell us
just a little bit about yourself and how
you got into crypto
yeah for sure um and thanks for having
me as well it's great to chat with your community
community
um so i started my career in kind of
tradify if you will i was in private
credit investing
um at a
firm that lends to u.s middle market
companies um based in new york and
and
you know worked there for a couple of
years out of college um you know started
really delving into crypto late 2016
early 2017 uh and so you know invested
and traded pretty actively throughout
the last cycle um you know got excited by
by
some really early d5 you know maker dow
probably most prominently at the time um
um
ended up leaving prospect
end of 2017 um kind of around the the
market top to you know trade and invest
full time throughout 2018 2019 um
um and
and
i guess fast forward a bit you know
mid-2019 joined goldman sachs on the
digital assets team helping them
with really everything crypto blockchain related
related um
um
so you know at the time there wasn't a
ton of institutional
crypto market interest and so we worked
on security token issuances
um so you know representing ownership on
chain and you know automating lifecycle
events with smart contracts
uh and then
you know come mid 2020 when crypto
markets heated up uh got to be pretty
focused on
building out a kind of institutional
crypto prime brokerage operation um
um
you know yields were kind of blowing up
in the space and we got a lot of
questions about how to tap into them you
know both directly and indirectly um at
the same time i became a pretty active
participant at d5 and you know was you
know really broadly looking for
some way to
you know hedge out some of the
underlying risks from
uh from defy and you know eventually
landed on
this idea building you know these
structured products that
you know pool liquidity from across the
ecosystem and then you know
disaggregated into
into toronto's with different levels of
risk and
um that's kind of how came to start onto
all right cool yeah that makes sense so
so um
you talk a little bit about
yeah what honda's doing now i guess so
what what do you see that the uh problem
exactly that ondo is solving now
yeah i mean today
you know we really consider ourselves
kind of a decentralized investment bank so
so
um you know what that means is like a
traditional investment bank we are you
know broadly connecting capital supply
and capital demand so you know investors both
both uh
uh
you know retail and institutional um you
know increasingly so the latter over
time with you know various yield and
investment opportunities
um in d5 uh largely that are originated
by dowser that we helped out originate
um you know such as
debt capital raises in order to you know
market make a dow's own token um and i
guess unlike a traditional investment
bank we you know provision those
services in
a you know definitive way um where
you know the contracts execute
autonomously on chain and you know where
the services are
geared towards largely crypto native
market participants um
um
you know we we didn't really
start with this uh broad
broad
mission i would say like we we started
as kind of structured products for d5 um
which is you know a segment of what we
do today and you know in the structured
products space where
where
you know kind of solving for the
volatility and
underlying risks of yield and defy and
you know making those more accessible to
you know more risk-averse
institutional investors through you know
okay okay make sense so so you do a bit
of risk crunching and you offer on the
structured product side a fixed rate so
there's some overlap kind of with what
we do is that
in the sense that it's fixed is is that
right is and what are what do the yields
look like uh there
there
yeah i mean you know broad similarities
in that there are fixed rates i guess
you know pretty different in that we are
at least with our products right now you
know we're aggregating yield from
largely existing liquidity pools or i
guess in the context of liquidity as a
service new liquidity pools but yeah
really focused um right now on yield
from automated market makers
and where the
the fixed rate or the fixed crash is
uh getting protection from impermanent loss
loss
um in terms of what the
the yields are i mean it's very you know
asset and market dependent and um
obviously all of defaults have come down
pretty precipitously lately but
but
generally speaking the
fixed front rates are you know a little bit
bit
lower than what the you know market
yield of the underlying assets would be
because they're getting you know some
protection of
you know declining rates or blow up of
the underlying assets and then you know
conversely the
variable charge or the junior charge
rates are you know higher than the
the
market rates of the underlying assets as
they're you know getting leverage on
that pool
hey nathan i um so thanks thanks for
joining us today so um i i've got some
questions for you so
i i think that uh you know what like
what you said
so far you know sounds really
interesting um and i i think that what
can help people understand uh
uh
you know better what you're doing
uh is is through the use of
kind of tangible examples
so you know i think um uh
it might actually be worth just
first of all talking about what you do
today the liquidity as a service i mean
i i'm aware of that um but maybe some
people aren't uh and then also like if
you like you know what what do you what
yeah so i guess i'll talk about
liquidity service first so it's really
an application
of our structured products whereby we
you know help a
typically a stablecoin issuer
provide liquidity into
a decentralized exchange into that kind
of senior tranche without taking on
risk from il um so i guess
you know an example workflow here would
be you know fey or frax or you know
maker could provide their respective
stable coins
into a fixed truck and then a dow that
wants liquidity on decentralized
exchanges so that you know its users can
you know buy and sell its token with
minimal slippage and there's less
volatility around its token
etc will supply its you know native
governance treasury asset into the
variable trudge um you know meaning it
takes on
the the vast majority of risk of il um
and then our contracts will
combine those two assets together and then
then
provide them
you know as liquidity to
you to swap or sushi swap or curve um
and then
you know after some
pre-agreed upon amount of time our
contracts will withdraw that liquidity
you know make sure that stable
acquaintance first paid back their
principle and a small predetermined
yield and then the dow in the variable
tranche gets back um
um
whatever is left and so you know it's
one of now a few ways for a dow to get
dex liquidity without resorting to
you know sort of more historical
practices like pool 2 liquidity mining
which are um
um
you know pretty dilutive
um and you know really that's just a
form of like dex
dex
market making and you know can also be
used in kind of a direct listing
capacity as you know we've talked about
before whereby you know a dow could establish
establish
its initial liquidity pool on adapts
through this means and you know not have to
to
initially deal with you know centralized
market makers or
you know exchange listings with sexes or
you know or again pull to liquidity mining
mining
um you know in terms of how that fits
into the
the bigger picture like i think it's you
know one of many examples of
ways in which we can
you know facilitate the
the
creation of new
investment opportunities
that are kind of unique to our ecosystem
like a lot of what we do is just you
know bundling and aggregating
liquidity pools or other sources of
yield you know could be
you know c5 yields like you know loan to
loans to genesis and so on you know into
vaults and then sort of decomposing them
but um you know where there's a bit more
alpha i guess is
in the realm where we can
in typically like a service-oriented capacity
capacity
create some
new investment opportunity um you know
like investment banks do for
corporates and for government
governments that you know then they
match make to
you know some source of capital supply um
um
and so i think lass is kind of
uh an early example of that
okay um and so you know i guess what i'm
curious there's something i'm curious
about is uh
like what do you consider to be your
your principal value ad or like what
what do you spend the most time on is it like
like writing
writing
the smart contracts that uh that codify
these investment opportunities or is it more
more
on the business development side you
know like building relationships with
with dows and and stable coin issuers
and things like that
lately it's definitely more so
the latter i mean there's a lot of
education that you know goes into
liquidity as a service especially you
know with respect to to dowse and you
know it's a product that we've
for that reason generally not made
um accessible to
the community to go into the fixed
tranche um and i think kind of for the
foreseeable future
we'll keep it that way um you know like
we will
either you know with our sibling
partners or you know ourselves pretty
soon just provide that capital into the
fixed tranche and then you know provide
sort of more abstracted means through which
which
uh retail can
indirectly fund that operation um
um
i mean longer term i think a lot of the
work is really in
in
making products that are both
you know investable on chain and off
chain and that
bundle sources of yield that are
on chain and off chain and you know really
really
do all of that together which you know
hasn't really been done yet in d5 um
like there's
you know kind of maple true fi
centrifuge like the
the kind of off-chain asset tokenizers
and then um you know there's some
protocols that kind of seek to deploy
into them uh like maker but
you can't really get like a diversified
pool of
d5 and c5 yields with wrist watching
today so i mean a lot of the the work that
that
you know is more long-term oriented is
going into building the the
infrastructure to facilitate that
okay that's that's that's interesting um
and i i guess i'm i'm curious like so
the on chain off chain is there is there
any way that you could give me an
example of like what what you're what
you're thinking of because i i i'm just
yeah i'm i'm curious to like
you know like
is yeah i'm curious to see or like to
understand like what you're thinking of
here and and like what kind of like the
you know the the need you think you're
servicing is it like it you know is is
it like there are uh
uh
customers that you want to serve that
are only
willing to do something off-chain and
and you're sort of providing a
connection piece
um between like people that are on chain
and and people that are off chain or
like i i just yeah i don't know if you
could give any example there but like
that would be helpful you know for me
yeah i mean there's a bunch of angles
here but i mean probably the simplest to
dissect is just the
the investment product
product
angle right so you know if you look at
the evolution of our vaults like we
started off um you know with two
tranches on
a single asset so a single liquidity
pool uh and then pretty soon we're about
to launch these vaults that
are on you know diversified
baskets of liquidity pools so like you
know various different curve liquidity
pools let's say so you know if even one
blows up um you know completely goes to
zero then you know the fixed range is
still fine um yeah that sort of starts
to demonstrate why
why
you know in structured products that are
built on baskets of collateral like you want
want
really diversification and ideally
diversification of assets that are not
you know super highly correlated to each other
other
um you know to
you know better manage risk and then you
know once you start
putting in assets from c5 um then you
you really start to get
you know better
benefits to diversification so like you
know probably the simplest example there
would just be a vault you know with two
tranches just like our vaults are today
um but where the the collateral is some
combination of
curve liquidity pools and
you know loans to
genesis alameda
you know block five etc
i see so so so in this particular example
example
like somebody would put in some usdc
and then
and then you'd take that usdc and you
you know
put some of it in the curve pool put
some in a different curve pool you'd
lend some to alameda and then you'd
create this like basket-like exposures
is is that correct is that
am i am i getting that correctly or no
yeah that's definitely one example of
something we're working on in this space
and then you know that's that's sort of
half of what i touched on
before with respect to
you know making
c5 and d5
assets investable
through our products and then you know
the others making the products
themselves investable on chain and off
chain like right now everything's been
very defined native so you've had to
come to our protocol on chain to invest
but um certainly a lot of market
participants especially
more institutional ones are you know
even more
mainstream like less crypto native
retail you know need various
forms of abstraction uh you know that
don't involve them you know self-casting
their assets and a metamask wallet to
invest so you know that'll help sort of
expand the
capital supply um of our products by
making them invest blockchain
but yeah i mean it's you know i think
you know one of the challenges with our
early products has been you know the
the coordination of
um investors of very different risk
preferences into our
vaults like at the same time right like
fixed and variable transfer investors
coming together to you know invest in
some some asset or some pool
together um and so
you know it's it's
pretty important that we plug into
um you know diverse channels in order to
uh you know find participants in
okay cool man um
yeah uh that's that's really interesting uh
uh
i'm excited to see i i i guess i'm
excited to see that launch um i think
that's a cool product and something that
yeah it's something that people haven't really
really
really done before i guess there's like
because there's kind of like uh
you know there's kind of like a yearn
right which is sort of like uh a defy a
pure defy aggregator but there there
isn't something that like is you know
you know
half yearn or half kind of d5 strategies
and uh
um you know half half c5 stuff like
lending to you know alameda or
or genesis or something like that so i
think that's that's like a new
a new sort of basket of exposure um
um
cool and and i guess the idea then would
be that like
well there's this fixed tranche in this
variable tranche and they have different
risk profiles
and so you you like would market them to
different people right is that then
that's sort of like i suppose you're
kind of your whole business right well
not your whole business but like
you know you feel like you have a bunch
of relationships and people want
different things and you know who to fill
fill
what gap is that right or who who to put
in which slot
yeah that's right i'd also emphasize
it's not a binary choice um
right i mean you could go some in one
tranche and some of the other and just
kind of dial up or down your risk
you know proportionately but
um yeah i mean i think the
the thesis behind you know multi-trade
structure products broadly you know even
in in trad fish that you can you know
lower the cost of capital for you know
whoever wants the
equity exposure like whoever wants to
actually own the asset by um
um
you know by getting financing you know
at different levels of seniority from
you know market participants with
cool sounds good man
do you have just like that kind of goes
into my next question was do you have
like a user profile of who is using the
more the fixed you know lower risk
trenches versus the higher risk variable ones
yeah so early on i mean the fixed
raunches would
sell out
pretty quickly to a few um
um
pretty like on top of it whales if you
will and the variable charges would uh
kind of trickle in a little more
slowly with retail um i think that's
because our early products were on
you know non-correlated lps where
there's only one lp in the underlying
and the variable transfer asset would be
like the longer tail asset like the you
know lcx or ygg you know or something
like that that's just like not as widely
held and
um so you know there wasn't quite as
much appetite there you know looking
forward i think
most of our products are going to be
like dollar denominated
you know hence kind of the focus on on
curve pools and c5 loans um you know or
or bitcoin or yeast denominated where
you know in in both the fixed and
variable charges and so i think that'll change
change
um the the user profile a little bit um
i guess more lately you know we've been
pretty focused on liquidity as a service
where the variable transfer participants
are exclusively daos and you know the
fixed range participants are really
i mean they're like underwriters they're
these stablecoin issuers um so it
okay yeah that makes sense that makes
sense so i did see uh the news you guys
did a 20 million series a if i'm not
mistaken so congrats on that uh pretty recently
recently
what do you i guess going along with
that like what do you see as kind of
your challenges moving forward with you
know moving into
the areas of defy investment banking and
launching these new products like what
do you see as
as some of the main hurdles you've got
yeah i mean our biggest struggle so far
has really been the
like the user education and then the
frankly like pretty poor
user experience around
um you know having these really narrow
subscription windows and having to
reject you know a bunch of capital that
comes in on the side that's
oversubscribed um you know i mean really
these are just forms of the
the
the problem of you know coordinating
these investors in in different charges
at the same time um
and you know so far we've really been
an agent like we've you know put these
products together and you know haven't like
like uh
uh
you know take in any like
um the like principles in this
marketplace so we're working on a
product where um you know we'll kind of uh
uh
indirectly raise some capital and then
you know with the the balance sheet that
we raise like we will
uh invest kind of flexibly in
into the tranche that is like relatively
under-filled you know certainly up to
certain risk limits and you know help
provide like a better user experience
that way and you know higher probability
of acceptance of subscription requests
and should make the products you know a
little bit stickier and the user
experience a bit better and you know
ultimately that's how we'll monetize by
nice okay
and um
i guess
like what are your what are your success
kpis for for on ferrando like in the
medium to long term is it i mean i
assume it's not tbl it's like usage and and
and
and you know
your vault subscriptions being
full or whatever so what what do you see
as the uh
that you'll know that hondo's has been a success
success
yeah i mean tvl is not a bad one in the
medium term especially if it's like
caveated to be you know tbl that's sort
of invested
in vaults like at risk you know
unincentivized and so on but you know
certainly other
usage metrics like you know number of
down partners and you know size of those
faults and
um you know i guess the
the more telling kpis
longer term are
more like performance oriented metrics
so like churn of those dow partners um
you know default rates of you know our
underwriting efforts you know return on
equity of the balance sheet
um i think these things will really
paint a more clear picture on how
you know sticky or not the the product is
is um
um
you know obviously there's a lot of
sort of
metrics of input that we
pay attention to to get there like you
know number of kind of off-chain
integrations with retail aggregators or
you know institutional investors um
um
you know who were kind of working on
onboarding into the products um
um
and you know just kind of
checking these functional requirements of
of
you know making
endovaults investable engine and
offchain and bundling these on-chain and
off-chain assets which you know we don't
um
okay i i have uh some another question
for you nathan so
um i guess what goes into your selection
process so you know like i guess you
know question comes to mind why curve
why not ave
uh and and uh and then you know on the
other side uh
like how do you pick the centralized
people that you're sort of willing to
lend to yeah
yeah
yeah i mean we have a
credit team that we're building out for the
the
c5 lending aspect um
so they're kind of responsible for that
i mean in terms of ave
ave
curve convex i mean the
yields historically have just been
a lot higher and um
you know still reasonably scalable on
curved convex and you know we've been
working with all these stablecoin
issuers who
are willing to provide
incentives to
you know increase the reach of their
staple coins so um
you know and then there's also i think
more material risks that weren't
traunching on on curve context um
yeah i think there's been a lot of like
risk raunching protocols that have built
on air compound but
haven't really seen a lot of
they've kind of had the opposite problem
that we've had they've had like no
demand for the the senior tranches
because you know people viewable and
compound is already
very low risk i mean ave already has a
you know basically a junior tranche like
uh you know the the ave
um you know protection module so
uh i just don't think that there would
be a ton of
senior charge demand there but you know
certainly could
you know if the yields improve i mean if
they just turned off their incentives
but the yields improved could look to
aggregate some of those yields into the
okay so so i like because uh you know
i'm just asking because like a lot of
the you know the curve convex fields
have really come
like quite far down and i guess
uh you know at least when you're looking
at the uh
you know the the biggest three state you
know like usdc die usdt
usdt
and so i you know are you sort of like
getting into the kind of the more uh
uh
you know are you anticipating this like
launching these products
where uh people are getting exposure to
uh you know stable coins like fey and
frax is that kind of your as as to is
that your idea of like where you're
going to get this yield from yeah that's
the intent um but you know that extract
would have
blow up protection from
these stable coins which is really why
you know this is our first use case of
like multi-lp
vaults um you know because risk with
these stable coins is
i don't know it's a little more binary
than like
price risk yeah you know lcx on
you know sushi swap and so you know if
one of the stable coins were to blow up
and we only had a single lp in the vault
then uh you know even the fixed tranche would
would
take principal loss
so you know our i guess the
what what you'd have to believe
to invest in the fixed ranch is that
you know all of these people coins are
not going to blow up at the exact same time
time
um you know they could all blow up
eventually um but if they were to do so
you know sequentially
uh then then the fixed range would
generally be okay
okay okay okay so so you know so maybe
it's like you're investing you got some
in uh
so i so if it's like so if you do like
50 50 on the fixed and variable and
let's say you invest
invest
and you put the capital in three
three
sort of uh
uh
three you know faye fracks and and some
other one that's like
on the riskier side
then the idea is that if one of the
three blows up
then that then the fixed tranche is
still safe because
because
uh it's like one one-third of the
capital is gone and that gets pushed
onto the junior tranche
is is that like is that the base you
know is that kind of the basic idea the
way that you feel that you know you can
offer the senior tranche something
suitably safe
is that yeah yeah that's correct in the
example you gave we're also going to
start playing around with different um
um
you know different ratios of the sizes
of the tranches which we can you know
finally do in this case because
both tranches are all of the tranches
you know are dollar denominated unlike
the they've also put up on uni or sushi
where you know each tranche is providing
one of the two assets behind the 5050
liquidity pool so you know to use your
example um you know if the the fixed
frauds were providing you know 33
percent of the capital you know it were
effectively a 33 ltv loan against the
underlying liquidity pools then you know
two of the underlying liquidity pools
could completely blow up
right right right right
oh cool okay and then so what do you i
mean i
no sorry i was just gonna add on to that like
like
you know
in terms of demand on the variable front
side i mean there's already you know
billions of dollars of
lps in these pools who are already
taking on
you know this
pretty binary
blow up risk so um
um
you know for them to go to the variable
tranche like they're going to get
you know
leverage on that so they'll get you know
higher yields than they're already
getting in these contracts lps
right right right okay okay
and so i like you know i i know it's
obviously like things are the market
conditions change and and all this stuff
um but i'm curious like what what kind
of returns do you think you can offer
you know like just like on a ballpark
you know to the senior or the or the
variable tranche
we're trying to target
i mean in these market conditions
something like
you know
six seven percent maybe we'll provide a
little bit of incentives if you know
yield stay so low um you know bundling
in some c5 yields will actually help
here as
you know things are almost right
um yeah yeah yeah but yeah i mean you
know to your point you know these these
convex hills have come down a lot
right right okay um
um
yeah that is really uh making
making
making c5 yields investable to divine investors
investors
i don't think that'll hold for for too
too long but i
i i view it as
a very needed solution to you know be
able to toggle
you know one way or the other based on
all right i was just gonna say we can um
open it up and just as quickly see if
there's anybody in the audience that uh
wants to ask a question feel free to
um if not then um you know as i
mentioned earlier there's a tiny bit of
overlap in the sense you guys do some
fixed-rate uh
products in a sense um and we obviously
at notional are the
fixed-rate uh
money market um
so i don't know if you guys want to talk
briefly about maybe maybe nathan where
you see you know uh
uh
fix rates and defy going in the near
term if you have any
predictions or you guys want to
comment on that just to give people a
little idea of
maybe what you guys predict the near
term holds with all this market to turmoil
yeah i mean
i think in d5 today like we don't have
the traditional market participants that
really want
fixed rates i think that's gonna undoubtedly
undoubtedly
change but um
you know we don't have like
corporates like hedging underlying
exposures or
anything like that um so it's
it's gonna take a bit but
i think i think we'll get there i don't
yeah i i think i think that's i think
that's fair i i think that like you know
people do
you know i think the
dows are sort of like the emerging
uh like sort of natural users
here for fixed rates in the sense that
like they're kind of like they're kind
of like corporates
uh they're like they're like d5's
version of corporates right um in that
you know
at least from our conversations
uh you know some of them are sort of
like you know more structured like hedge
funds and and then a lot of them are you
know there's uh
uh
there's there's a core mission of the
dow and and the treasury is is more set
up to support
support
that core mission and uh we've seen like
you know
like taos that are set up more like that
are generally just more interested in
stability and and don't and want to take
and don't want to take risk
really with their funds you know they
want to earn sort of a safe and stable
return because like they're kind of
their core mission isn't isn't
optimizing that
right um
so i think like you know it i think that
dows are kind of an emerging
consumer of these sort of fixed-rate products
products
uh at least from the lending side and
then i you know i guess what i would
like on the borrowing side i think
i think you know we've seen at least at
least a notional like
uh i think the
primary sort of demand for for fixed
rate borrowing so far has been from uh
more centralized companies so people
that are active in the you know the c5
lending space at least from what we've
seen notional so far
um now i think that that'll change over
time but i would agree that you know
it's sort of like there's there's a
level of
there's a level of sort of market
maturity that that isn't really there
yet in d5 um so i think it'll it'll just
yeah i think um there's there's much
more obvious demand for
downside protection of you know which
sort of comes with a lot of these
fixed rate or kind of fixed french
products including ours but um
um
you know for now can probably
flex a lot of the
sort of hard assumptions around the rate
being completely fixed and
and
like a less volatile but downside
protected return exposure
it's just very expensive in a lot of
cases where the underlying assets are
super volatile to offer
right yeah right right right um so you
know maybe uh uh
to kind of close it out here nathan i
guess uh just what what do you
you know
what do you what do you think about the
market generally like do you think we're
in for a long period of low returns in
d5 or uh where do you think
you know what's your view if you have one
one
on where d5 interest rates are going to go
yeah i mean d5 interest rates are you
know 95
liquidity mining so they're they're
really not yeah i guess i'll i'll say defy
defy
quote-unquote yield
you know a little more more broad than
interest rates assuming that's uh that's
what you're asking about so yeah you
know it's more so you know what what are
the prices of these underlying tokens than
than
uh than any like
true yield um you know i'm pretty
bearish liquidity mining really long
term um
and so i
i do think that you know d5 yields i
mean especially as you know
institutional investors increasingly
build the plumbing to connect to
this ecosystem will you know converge
with c5 yields and you know we're
certainly seeing that on the you know
more blue chip like you know d5 repo
platforms if you will like a compound
kind of looking like you know treasury
yields right now um but you know where
where d5 yields don't have
you know whatever the intermediaries cut
is so you know and often compound you
know would be well where retail can
actually get you know the
the stock borrows on you know their
their assets that they're getting
leverage on right
right
so yeah i mean i don't think that and
and i guess this is part of why we're
focused on aggregating both d5 and c5
yields but i don't think there's like
you know
enormous like
structural differences
you know behind like
you know what the the rates
will be
um i just think that
you know the
the infrastructure is going to be a bit
cheaper to operate so yeah
yeah um
um
so yeah i guess you know to answer your
question more directly i mean it really
depends on you know what what prices do
and you know that's just going to be
uh you know driven by what global macro
does if we have uh you know your v-shape
recovery um and
and
yeah tpt on that
yeah yeah yeah for sure
um yeah you know i think it's i mean
it's you know i think it's an
interesting thing like uh so something
that we've looked at is uh uh
uh
uh the the rates of return on um just
like on you know lping on uniswap or a
sushi swap or or sort of one of these
dexes uh
it like it's kind to me the
the
like rates of return to like lping you
know let's call it usdc eth or something
like that are just so
like like
not even anywhere near
like compensating you for the il risk
that you're taking
which like it's like we've been looking
into it like you know as a team
and uh it's like i i don't know it's
just something that's it's kind of crazy
it feels like there's like two to three
x too much capital in these uh in these
dexes given the amount of trading volume
and like it's it's funny because i like
it's hard for me to understand like
like
like why there is so much capital in
there um because like they're just
taking so much il risk
you know what i mean like it's just uh
i don't know it's just kind of like an interesting
interesting
just an it's interesting observation and
that and i guess like
it you know it's interesting because
like what i guess what you would expect
normally would be that
you know eventually the
sort of like the supply of of capital
and d5 would just decrease
right if if there just isn't
if there if there aren't returns
necessary to like justify capital like
well there should just be less capital
right but like i i don't know i mean
it's it's it's it'll be interesting to
see i think whether or not you see
you know a large scale like transfer of funds
funds um
um
you know out of d5 and and into c5 you
know if rates continue to stay where
they are now
um so it's something that i think we'll
be you know keeping an eye on because i
think that that that's like a possible
way that this actually balances out
is you just get money leaving the system
now we'll see
yeah i mean i think definitely in the
case of
amms i mean it's a little easier to
explain for
longer tail assets where the the teams
are typically providing
a good chunk of that liquidity right
because they're not just optimizing for
yeah you know net yield like they uh
uh
you know want people to buy and sell
their token at reasonable slippage um
but you know that really doesn't explain
why there's more liquidity than there
should be for like a
usdc east
lp i i do think a lot of it is just like
it used to be a lot more profitable to
lp in those pools and a lot of people
just haven't moved their assets out when
you see that you know v1 to v2 like d5
protocol migrations i mean there's just
like you know absurdly shocking amount
of capital that stays in the v1s of
these protocols
yeah yeah eventually like earns nothing
and it just like takes forever so um
yeah i think uh i don't know people
people been busy managing their
more risky higher productive farms in
the the bull market and now they'll go
back to their usdce thelpies
right right i think i think you're right
i think you're right uh you know it is
it is always
uh kind of remarkable how long uh
uh
yeah how long it takes for people to
like you know move their asses it's not
definitely definitely not like
uh a super professional user base uh
that's like on top of it and doing
everything on you know
uh same day definitely not
there's both though right i mean it is a
little it's harder to measure the
profitability for like you know more
sophisticated market maker that's
hedging their liquidity pole with like
perps off chain which like definitely
happens quite a lot
yes yes i think i think that is that's
that's true that's true um but i think
that there's still like just like a i
don't know
a ton of assets that's uh uh
uh
at least from what i can tell like just
like taking like a really bad risk reward
reward
uh proposition sitting and sitting in
these amms um yeah but that's i don't
know just something that that we've been
we've been looking at in the last couple days
yeah i mean
very much offers the the opportunity for
retail to make very very granular
investment decisions like you know what
pool are they gonna market make on but i
think we'll we'll see more abstraction
about her you know define native
intermediation of uh you know folks who
kind of help point uh
you know investors in in the right
direction and you know maybe we'll we'll
provide a means to you know get
lower friction switching costs into c5
yields if in when those are higher
all right well let's wrap it up uh
anything you want to show at the anime
phone job openings or where to follow
you or your products or anything quick
yeah i mean always hiring so
jobs.finance for uh
yeah that that's it for uh for that and
then uh yeah i guess just stay tuned for
you know our curve vault launches pretty soon
soon
and thanks for thanks for having me
all right yeah thanks so much for coming
on we appreciate it
well all right have a great one
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