What's Wrong With DAOs, Coinbase Earnings, and Arbitrum Staking Prop | Analyst Round Table

Transcript

service providers are desperately needed to scale Dows and officially get stuff done it is an absolute mess like if you're really involved in these Dows on the back end like it is a should show it may not appear it in the discords the telegrams honestly it probably does there but it's even worse behind the scenes we really do think like professional service providers need to step in help get things done there's so many pain points what's up everyone welcome back to another episode of zerox research if you're listening to this podcast there's a good chance that like and I you believe the future of Finance is on the blockchain and we're excited that London is becoming a global hub for blockchain Innovation and institutional adoption of digital assets that's why we're pumped to host the 2024 digital asset Summit in London this March don't miss your chance

to get ahead of the curve later in this episode we'll tell you how you can save 20% off on your ticket what's up everyone welcome back to another episode of zerx research before we dive into today's episode a quick word from our sponsor hexin the most hardcore security team in web 3 pioneering in ZK and novel cryptography hexin is trusted by tier one projects like polygon mantle risk zero Lia 1in new bank and more check them out on the ground at defc connect and be sure to mention ZX research when requesting a quote and you'll get a free web tube pen test with the purchase of your audit what's up everyone welcome back to another episode of zerox research we have an awesome analyst interview lined up for you guys today but before we dive into it I want to shout out blockworks research.com you

can use ZX research 10 to get 10% off uh your your quarterly or annual subscription so be sure to check that out we'll drop a link to the show not or in the show notes so you guys can uh can navigate to it that way today is November 3rd and we are joined by uh pibbles effort and ren I should actually say I because Dan was unable to make it analysts have lives too so uh he decided to take a little vacation much needed um but pibbles do you want to uh take over the the movers and losers of the week yeah I'll jump right into this uh top winners of the week obviously so with the break point conference but then you also saw defi 1.0 kind of ripping and this is mainly due to just how a liquid

the perss are like comp and a and uh Sushi just trade like literal meme coins on pers um probably some DWF Shenanigans going on there uh biggest losers weren't necessarily losers but I would say the two laggards of the week are usually maker and eth and uh you can just see that BTC eth ratio just going or the eth BTC ratio going lower and lower uh rates are actually starting to go down a little bit as of today so I don't know maker was like really great as a play in the bare Market but if things are turning around we're kind of seeing the inverse happen another one I want to flag is ARB had like a really nice

short-lived pump and I guess this will kind of go into the governance section if you want to talk a little about the ARB Stak proposal yeah real quick on the maker front I'm I'm curious if you guys have any opinions do you think it kind of continues to outperform as people go risk on because like fundamentally speaking it's at all-time Highs but feel like people don't really care about fundamentals in a bull market I guess I think part of that depends on sort of like the term duration of all of their reward asset um Investments I don't know how long those are but I know most of their like um US Treasury Investments are pretty shortterm if I'm wrong they have to be shorter than 6 months whereas for the view World asset Investments

perhaps those are like locked in for a longer period of time say two to three years so it's probably like less sensitive to interest rate changes such as like the doish PA that we saw earlier this week um but I think going to a boom Market I don't think rates come down that quickly like fundamentally makers should still be making like a buttload of money um but yeah uh it probably like underperforms like BTC Eve and say maybe salana in the next bow but it won't like underperform too much in my opinion yeah I think the the RO asset narrative obviously kind of created like a a fundamental floor and you saw like what5 $600 kept get defended U and maker

really outperformed for most of q1 and Q2 and I think Maker's pretty much like probably has the lowest correlation to the rest of the crypto Market at large at this point uh because of how grounded it is in in the real world uh like treasury yields but I think it's probably going to underperform until you start seeing spark protocol uh do its air drop and maybe you see other protocols that are building around like this maker end game um if you start seeing other air drops to other protocols that are leveraging maker D liquidity that's when I think you're going to start seeing it outperform again when there's like that narrative is back here and now it's kind of uh like a hypers speculative bold Market um that's where I think it could really start ripping uh I think the chart still looks great like ta is mostly uh what

astrology for men but uh you know take it with a great assault but I still think Char looks pretty decent and and once you see spark protocol I think d air drops when you see maker out perform again I could also see the whole um I guess just maker end game you know run like brought up the idea of forking the salana code base like with how good salana has been performing I could see that being a huge Tailwind in terms of momentum but I'm putting you guys on the spot here but there was a little debacle with uh the PSM and the amount of usdc in there and there was some like stuff that needed to be done has anyone caught up to speed on that and able to explain what happened there yeah so basically the PSM has a minimum balance of usdc

but in fact it's PSM and the 2G uni poo and there's been like a lot of withdrawals and over the weekend basically once it goes below that 300 million threshold one individual is meant to reach out to basically the custodian in charge of sort of like the coinbase custody account and say hey um us is running low in PSM I'm going to need you to withdraw from a coinbase custody reward asset account and to top up the PSM but like it's one guy commenting on the Forum and it also relies on the custodian SHRM to also go look at the form and I think he reached out on Sunday and uh I think Sunday and I guess they don't work weekend so you know by the time the custodian like

initiated the transaction to top it up by2 50 million usdc like the total amount of usdc in the PSM and the 2G un pool had dropped I think below 100 million uscc if I'm not wrong which is like pretty dangerously know I don't think there's any like soleny risks to like uh die it's just like a temporary lack of like onetoone liquidity to solve between usdc and die um but the process is like definitely outdated for sure and if I understand correctly the main risk would be the PSM getting drained and then people needing to buy back die on the market similar to what happened in 20120 and then die deegs to

the upside and it doesn't get our back so then paying back the debt is more expensive is that like the primary concern here yeah I think that' be the primary concern okay got it got it okay awesome well I appreciate that R thanks what's up everyone as we explore today's blockchain landscape let's take a moment to recognize hexin the premier cyber security provider in web 3 hexin is trusted by tier one projects like polygon including a Security review of the new polygon DK evm mantle risk zero Lio 1in new bank and more get a deep dive into your technology stack with the most comprehensive analysis in cyber security Consulting with over $55 billion secured they cover everything from Smart contracts to blockchain to web two pent tests there has been nearly $7 billion of total value hacked in

crypto's nent history so it's safe to say that your team has a lot on the line don't skip out take your security seriously and choose hexon don't forget to mention Z X research for a free web Tu pent test with your partnership and you can reach out to hexin at hex.io or find them on the ground at devc connect without further Ado let's get back to today's episode over to some governance updates uh back to talking about arbitrum staking I know we talked about this last week but I did kind of change my view on this just as a little recap there is a proposal live to activate uh staking of ARB and it would be anywhere from 100 to 175 million of incentives over the next 12 months for people who lock their tokens from anywhere from um a couple weeks to a year I believe it is

um I was originally really against this but at the same time I thought about it I don't think it's perfect but at the same time the ARB token needs utility uh it'd be a nice Supply sync for ARB at the same time that there's going to be some stip inflation with the 50 million ARB allocation to the different protocols over the next three months and there's already like a billion uh tokens over a billion tokens of ARB in users hands so it's really just like a 10% inflation rate on the circulating Supply effort I know you and I were kind of originally on the side of I feel like this is dumb but I've kind of changed my view and I'm like all right it's not perfect but I think it's a good interim solution for now what do you guys think yeah I think it makes things a lot more

fair for public market participants in ARB um because like you have different funds who got in private rounds and like obviously they're waiting for their Cliff to end and then they can start vesting but in the meantime the the average public investor or airdrop recipient can sit there and get ahead of that curve a little bit not that it's like super material or anything but like I like the notion I think in conjunction with the steps that are being released like a good Supply sync is always like net bullish I would say Obviously like I know Kobe wrote this whole thread about how like staking is not really staking if you're not really puty collateral at risk for anything we had a whole internal debate about this uh as a group

but I think you know it does create some artificial Supply sync for ARB token for now uh obviously I'm sure there's be an additional like real Supply sync over time when uh it starts distributing some of the sequencer Revenue to ARB stakers so you know it I don't think it's like a material difference uh but you know um it's it's not a bad luck to to again create a supply tank and also distribute additional ARB and give you know inflation is essentially a tax on on non-sters at this point so um it is a good way for retail holders that want to put up that Capital to get additional like owners shipping the protocol yep agreed agreed I think that vote too it's Friday right now so we're recording usually we record on Monday so this will

come out Wednesday so that vote will have concluded but right now the option to fund it with 175 million ARB is winning uh which is the highest allocation possible but be sure to check snapshot to uh stay up to date on that one we can probably link to that in the uh description so you can find it easily but onto the next one we've got uh ribbon to Ava uh token migration Rebrand I guess I'm not really sure exactly the the mechanics but essentially ribbon rebranded to AO and it needs a new governance token and it's supposed to launch no later than January 2024 so I think this is a good one to flag early on and uh to to pay close attention to basically 25% of revenue from the options vaults and the exchange will go to an insurance fund and then the other

75% will go to covering operating expenses for the developers until $5 million AC crude each year and then after that it kind of has the same exact mechanism as maker with the the smart engine burn so that it'll build up protocol and liquidity by buying uh Avo from the usdc pool and then you know therefore reduce the circulating Supply I really like this proposal I think it's great I just don't know how much revenue uh AO actually makes like it could be a very very long time before $5 million AC cruise maybe one of you has a a better idea on this but nevertheless I I think the uh the smart burn engine is a a great mechanism and a good way to return value back to token

holders I don't have a good idea of how much money AO is making right now but they I feel like they they they've they've definitely been shipping I think they've recently launched like cross margin capability for AO um they've obviously been sort of keeping track of like pre-launch futures for any large air drops for example um so that's just air drop you can trade that on the exchange and in the previous month they've integrated ribon option vaults into AO itself um so whenever like the option vs are selling the calls or the puts like that flow is being passed through AO instead of like what used to be sort of like this like offchain RFQ type of mechanism that was manipulated slightly but then eventually they did

manage to address that uh by integrating a paradigm I think one key thing I think about in terms of able is will people still value it as like an options faults so of toen or just the wider exchange because I have a feeling that option BS don't do as well um as they did as the previous B I think that was a very like just retail had no clue what they were doing they were just aing into it for some like fancy apis um whereas this CYO like chances are like you're a bit more sophisticated um chances are we learn a bit more from the past cycle and V just don't see the same amount of like TBL growth that they saw last cycle yeah I just pulled up aa's stats and it's looking like it's right under 10 mil TV

but like 24hour 24hour volume was like 11 mil um and then their biggest day they had was I think last month it was like 40 mil but it looks like it's averaging like probably 8 n mil 24hour volume and USD inflows are on the up and up I mean it's still an expensive ass token in my opinion for what it is but like good for them for being ahead of the old apps specific rollup narrative so just this is the first time really hearing this PO I really do a deep dive so kind of off the cuff but this is options Vault revenue and their purpose exchange Revenue right just to clarify yeah that's right so right now I just pulled

up token terminal uh sh token terminal uh they have pretty good data so their annualized revenue right now is $330,000 so $5 million at current pace you're not seeing $5 million for over a decade uh token holders will not wait that long or way too impatient of a of a population but uh you'd have to imagine I I've seen a lot of good uh people talk highly of their per exchange um obviously we're still in like the depths of the bare Market regardless of be Bitcoin and soul ripping like most crypto protocols aren't really seeing like alltime highs in terms of users and volume and what have you I'd have to assume that Revenue goes up staggeringly over over the next cycle um maybe you see $5 million in in Revenue in year one

uh and then that flips on that fee switch to token holders into uh buying back Ribbon or or AO token uh and doing you know leveraging P to create like a deeper moat of liquidity for uh like a univ V3 univ V2 pool so I like this proposal um pretty bullish on the ribbon team overall the token is probably a little over value to your point sets uh pibs but um I like this idea I like like taking the smart bur engine protocol like pces that makers dealing with their own token yeah I I'm with you I'm for this proposal unfortunately that value cruel doesn't sound like it's coming anytime soon but we can keep a close eye on it nonetheless um on to another one we got a Unis swap proposal from du Juan Nam

crazy name but to delegate up to 12 and a half million uni from the treasury to under representative delegates who have shown like to be very active in value ad not a whole lot to say on this honestly uh I think this is a fantastic idea and I'm surprised more protocols don't do this like I feel like this is a great way of balancing uh delegation power amongst different people it's cool but like when fee switch for delegates when do delegates start to get paid for their contribution to the protocol and it's not like it matters let's be honest right like Jesse Walden from variat and a couple other whales will still decide ultimately what H swap governance does it's mostly a farce today not to be pessimist like I think it's a great idea but will it actually change anything with unit swap governance probably not

you'll be a public good and you'll be happy with that for Life I'll take the opposite of that I think the uh the program to get active but underrepresented delegates to get more voting power like could be the start of like the Turning Stone of fixing uni governance and do with stable Labs is like he's really great active in governance and a lot of things so uh I'm excited to see this program kick off and see how we as a team can step in there and help out yeah I agree with that and also we are uni delegates so consider us uh if you're looking to delegate and speaking of that actually we have a new vote live on uh the arbitrum snapshot which is the

arbitrum Coalition vote um I guess like the tldr is it's three groups there is blockworks research us and then so us blockworks research and then trail of bits and Gauntlet we just kind of think that service providers are desperately needed to scale Dows and officially get stuff done it is an absolute mess like if you're really involved in these Dows on the back end like it is a show it may not appear it in the discords the telegrams honestly it probably does there but it's even worse behind the scenes we really do think like professional service providers need to step in help get things done there's so many pain points just for an example we just reviewed over a 100 stiffs proposals made a spreadsheet so the community could track it and there's no expectation of getting paid or anything

like we're just trying we've been there since day one like you can go back dig up some of the block Works research threads when the Dow had been established made some fun movement before we believed that you know the Dow could actually vote on those things they did it kind of I guess before they should have and we kind of rectified that situation and uh yeah I'm kind of rambling at this point but basically what I'm saying is I think that we definitely need service providers to provide really high value services like auditing research delegate education um and things of that sort so definitely consider voting for that proposal yes no comment on the Forum if you'd like uh but we would love your support and happy to answer any questions if you have any

um does anyone else on the team have something to add there yeah I would just uh comment to add and say I think Aram Dow is one of the most engaged and involved Dows out there to be honest in the entirety of crypto to be very honest there's a lot of high quality proposals out there there's a lot of involved delegates and the lot of active discussion on the forums but sort of execution around the proposals is always a problem especially given how many different stakeholders there are involved right um there there's a very long process from going to proposal to actually voting on it and into actually implementing it and just having someone there to facilitate all of that whether that's risk assessment research

coordination and creating like objective voting Frameworks you know for example in the AUM s proposal I'm sure every delegate tried to create their own framework um for like the 100 plus St proposals or maybe you didn't um and I wouldn't be too surprised if like over all of the delegates and stakeholders more than say 2,000 3,000 man hours was lost right and so our job is to basically come in here and make that a lot more efficient for everyone but I wanted to just emphasize that what we're doing is just providing objective Frameworks and research um the algorithm Coalition won't be like the be all and SE all we're not suddenly going to become the voice of the Dow we're just helping provide tools to basically speed up all of the governance process but

every delegate and every token Holder will still be able to maintain their independent voting power and basically come to their own decisions independently of us we are just providing Frameworks so that you make a more informed decision that probably benefits the Dow more as a whole and results in a more effective allocation of resources in the long term and just to add to that because other d are also going through this exact same like similar idea or where you have subject matter experts that are ormes in their certain vertical um how do you onboard them how do you actually make sure that they're working on behalf of the Dow and people that are some some people that are against this this concept because they believe like Dows supposed to be like inherently decentralized you shouldn't have professional centralized

entities that are like I don't want to say running the show but kind of making decisions on behalf of the larger Community I I think what's important is like this idea of optimistic governance let these smmes do what they have to do if you don't feel like as a dow that your voice is being heard you always have the option to remove and replace that service provider as long as that as long as we don't cross that threshold that like we're we're stopping the ability for the Dow as a whole to veto remove replace pull funds what have you from a service provider um I I think like this is what the future of Dow governance looks like at least for the foreseeable future until we get to a point where we have the tools AI capabilities to actually like do true decentralized coordination and make

effective decisions like Capital allocation what have you we're just fact of matter is we're not there yet and D just like l2z trading rules with centralized sequencers I would argue Dow need uh training wheels which is like this this decentralized group of like service providers uh that really work on behalf of the doubt yeah you guys killed that I uh I definitely botched it in comparison to you guys but I think that's very well said and this is like a very fluid body you know it's supposed to you know Aid the Dow and we're going to learn so much through this experience that hope hopefully we can bring to other Dows and maybe other people can take this framework as well and apply it to their own Dow so very excited to see what comes out of it and hoping it gets past so definitely be sure to vote for

that one but uh don't want to take up too much time on that let's head over to the hot seat cool Throne uh ren do you want to kick it off yeah sure um I got coinbase in the hot seat this week I wouldn't say it's like too much of a hot seat it's probably like in in between hot seed and Kone um so coinbase announcer Q uh earnings afterm market yesterday it was uh pretty much average like as expected I don't think anything surprised anyone that much transaction Revenue was down 12% quarter on quarter on the back of trading volume being down 177% quaron quarter so transaction Revenue came in at 289 million um institutional transaction Revenue was down 18% quarter on quarter basically

all everything like trading and volume related was down um a decently significant amount however subscription and services Revenue was down a lot less right um there were a lot of things that were like relatively down for example interest income blockchain rewards custodial fee Revenue but one sort of outlier there was other subscription and service Revenue was up 10% quarter on quarter and that was driven by Higher coinbase One Revenue coinbase one sort of coin bases like sort of VIP Subscription Service you get like lower trading fees you get a bunch of like subscriptions I think there's like a lifestyle product subscription in there somewhere and also growth in their financing product and this is actually the first time in coin bases history

that non-commission revenues have exceeded commission based revenues right um so obviously coinbase is sort of meling its retail user base for whatever spread they're willing to pay if I'm not wrong it's something pretty ridiculous it's like 1.5 percentage points not basis points of today so they're making a lot of transaction revenue of retail users but that's not going to be the case forever right um stock ER just had their moment where commissions went from say like $4.99 to a trade uh on a trade to Z doar and all it took was Vin Hood to make that first move and every single other stock brokage followed suit I think something similar happens in to coinbase sooner or later or crypto as a

whole to be honest um so it's quite encouraging seeing that coinbase is sort of solidifying or strengthening their subscription and services revenue and I think they know that that's probably the path that they're going to have to take and then there's a bunch of like other growth drivers to for coinbase over the next few years usdc where they had their announcement that they sort of had like a new joint partnership with circle earlier in August I want to say um obviously they have just staking business and now with base they're out to I'll stop there um and I'll let other people sort of comment on how the earnings went the main thing that stuck out to me was interest in come being down I know usdc market cap has been down only but that was just surprising to me after

after the partnership with circle so I'd like to know more about that not saying you you do off the top of your head Ren but I would be intrigued um and I also saw some people talking about on Twitter how they raised uh retail fees to from like one and a half percent to two and a half% effective for the next quarter and and for the foreseeable future so I think I have that right but correct me if I'm wrong but that was also surprising but I think you should see an uptick in trading fee Revenue assuming flat volume if that is the case I mean I think retail goes to coinbase really caring about what fee they pay to be quite honest so I think it's a good move for now a nice little Band-Aid um but yeah I I don't know it's just funny

everyone's talking about coinbase now on on crypto Twitter you honestly think based on the amount of open interest on call options that all of crypto Twitter has the ability to pretty much buy all the shares of coinbase if if they were exercised um but yeah nevertheless uh effort I'm sure you've got some thoughts here yeah I think I I could be wrong um about the the swap fee or their their effective fee on retail so there's two different ways you can trade on coinbase there's coinbase advance and then's like the normal swap fee uh I'm sorry the normal like swap interface uh like the the retail trade option so I think what happens is like if more users use advaned trade which has like a lower fee uh take rate that's where you see like that effective rate change I don't think

they actually increase their rates on customers I could be wrong though uh but I think it's just based on the the mix of user um based on how they they're swapping um the the next thing I was going to say is you know obviously I know a lot of people make fun of like ajusted evida they overall like their net loss was the lowest it's been over the past year plus their dtin eida was still positive for for the uh the quarter um and and the fact of the matter is like we saw the lowest volatility in Q2 and Q3 uh that we've seen you know throughout throughout the I don't know past four or fiveish years in in crypto um they barely had to really touch their their C on hand um they're in a really good spot like if you believe that the next cycle is is

coming if you you know if you think 2024 2025 is going to be better than 2022 and 2023 I'd have to imagine that they uh turn like an actual profit uh in the upcoming cycle and not just like adjusted evid up um one thing I thought was also interesting to note is that they plan on increasing their marketing spend in Q4 compared to Q3 and Q2 and I believe q1 as well and I wonder if that's because they're trying to time the upcoming full cycle by marketing more in Q4 and then potentially like the the major run up of the next cycle starting in sometime q1 Q2 2024 so um I think they're in a good spot unless crypto unless the bottom falls out and we actually reach like a lower low which I don't think's gonna happen not on

would who knows but uh unless you see like complete lack of volatility over the foreseeable future um coinbase is kind of operating neutral territory right now um and there's only bullish I think on the horizon you can argue that the custody fees could drop in the events of a Bitcoin spot ETF that is very true but I think custodial fees are like less than 10% of their overall Revenue um and obviously like regulatory Clarity I think is G be bullish uh I would love for them to potentially become a bank of source because they kind of are like a Neo bank so there's like idea there's ways that they can generate additional Revenue through reification eventually if we have the proper regulatory framework to do that um you know I think overall coinbase is like the first real fintech company

we've ever seen um they're building their entire backend based on these new Financial rails other fintech companies like PayPal Square what have you like they aren't really fintech they're really just nice gooes on top slapped on top of like the old Financial rails if you're bullish crypto and bullish like this decentralized public like networks like I don't know how you are bullish coinbase my personal take um we'll see if it it ends up playing well out well so far it it has played out well for me personally this year I actually checked in on uh the pers volume as well uh the other day just looking at past 24-hour volume because that just launched like two weeks ago and they had two bill in a 24-hour volume so I mean Global that day was probably around 150 billion so

that's not that much but I do think people are underestimating the pricing power of coinbase on their pers offering I think they're going to be able to charge higher fees and still capture market share because of the fact that it's so well capitalized and transparent and people like know really who the counterparty is I would expect that market share to climb up to 10% by the end of next year but we'll see yeah also Chim in here to add that I I think there's like three main growth drivers for coinbase over the next few years the first is international expansion I think binance has been completely getting pummeled over the past year just getting shut down in um sort of territory after territory so the international growth is

really important there the second thing is the derivatives and the US futures expansion like for example we saw right in the last week CME became the largest Bitcoin Futures exchange and I think the demand from institions is definitely there to trade on a relatively safe venue um I think at one point CME had 3.5 billion in open interest versus bance which had 3.8 billion in open interest so like the Gap isn't that far and coinbase just allowed or just opened up US futures in several key markets even in New York which has like really really strict regulations when it comes to like digital asset changes and the last one is usdc um usdc supply has gone down even more in the past few weeks I think just in the past month it's gone

down from like 26 billion to 24.5 billion I don't know where the bottom is I think the only saving grace for usdc is sort of institutional adoption in the sense of for example very web to or Trad by companies using usdc for example sap using usdc for sort of like crossborder payments I think that's probably going to be one of the larger growth drivers for usdc supply and sort of interest income there but yeah I think the narrative is the same and it does feel like coing base is becoming a very consensus trade on CT yeah we'll see how it pans out um I know our our livelihoods depend on it all right zerox research listeners we're calling on you to join us for the

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register today by hitting the link in the description and using promo code 0x20 to save 20% on your tickets see you in London the land of tasty pastries and be sure to hit up Dan and I for a beer pbl who you got in the hot seeder cool Throne yeah so I've got Prisma Finance all my homies hate Prisma um so a lot of people were farming this for like the past two months it's the convex Founders they came out and just forked like Equity but they claim its Innovation because you can vote lock prisman tokens to allocate rewards to gauges and different liquid staked eth collateral um so they launched the token uh two days ago and all the people who

were farming points still haven't received their tokens instead they instantly turned on Prisma rewards for anyone who wanted to come deposit it into the farm um as a result Justin's Sun hopped in and threw like0 mil in there minted like 60 mil of MK USD stable coin and he's just been like instad dumping his Prisma rewards and like early supporters haven't gotten their airdrop yet and the the Prisma rewards like the ABY are really high across the board but the rewards are locked for I think like 24 months or something but you can take a 50% haircut

if you want to instest those and dump those so I've seen like obviously Justin sun is nuking the token and then like DCFS in there as well also nuking the token and like all the people who supported it and like really helped pump up the numbers in the early days they are just kind of really getting screwed here so this is the second time a points program has treated me really wrong uh first one being ethery when uh the points ended up being useless like you can get like a t-shirt or something with those so I I'm pretty much like team I hate points I hate them so much it's the worst thing to ever happen to defi um another thing I want to flag

about Prisma is if people can just keep nuking their Prisma rewards then the yields are going to go down a lot which might like incentivize people to just get the hell out of Prisma and then MK USD can start dep pegging and it can end up just like go did and I think we might see that like speedrun because like I mean first of all there's no demand for something like this we don't need 10 liquidy Forks all doing the same thing um so it's gonna be really fun to watch how this goes on I mean they have 300 mil tvl right now and it's mainly just like the defi cartel and the token is just down tremendously ly you got

duped that that is absolute I didn't realize the extent of the situation that is crazy I agree with you screw Point systems I love the salana like all the builders over there but all of them are embracing this point system and there's no there's no surprise as to why they are they have to promise you nothing they're just giving you imaginary points on the screen not telling you what it's worth so I am very much in Camp screw points yeah just um one last point I think when I checked fbook on coin gecko like the market cap was like five million while the fdv was like three billion I think that's just so so disgusting and another thing that I think a lot of people are figuring out for these like sort of EA stable coins or sort of like protocol specific stable

coins are that you need some reason for there to be intrinsic demand for the stable coin if there's no intrinsic demand for the stable coin then it's just not very sustainable you know you have like deegs to the downside or you have like people Mass redeeming at once or you sort of have these like death spirals without that intrinsic demand that's why I think overall like all of these like liquidy for like EA stable coins are hard to sustain to be honest just because there's no like intrinsic like quote unquote real yield that asn't just generated from printing like native governance tokens or at least for example like Athena I think that's one sort of e effect a coin that will perform relatively well in terms of

market cap growth just because there sort of like inherent yield being generated from both like the underlying staking of e but also from like the short position that they use to Delta hedge um because that's like quote unquote real yield that's being generated from somewhere maybe it's not sustainable maybe it's not scalable but at least like Reve is quote unquote real if that makes sense all good points I agree I mean you need to have a reason to hold a stable coin you're not just GNA buy it just to hold it for fun uh e who you got the hot seater gold yeah we'll start off another hot seat so I have osmosis and like the overall Cosmos like stack on the hot seat today a surprising com me I guess uh so

osmosis went down down is probably not the right term but pretty much got dsed twice this this week so uh Celestia's air drop happened on Tuesday probably the largest air drop that's been anticipated for probably this entire cycle I'd argue like Celestia supposed to be like the next king maker and potentially could be with ethereum in terms of like the data as a data availability solution so it was like this big planned airdrop uh they leveraging the cosmos stack to build Celestia so it's supposed to be like a big win for the cosmos ecosystem people got air dropped from L2 ecosystems obviously main net uh obviously Cosmos users also got air drops so it was supposed to be like this really Grand event that I thought was going to BR

bring in a lot of trade volume for osmosis a lot of liquidity what have you a lot of like ethereum users to come on and trade on osmosis that's where Tia was initially going going to be uh launching um and what ended up happening was because so much volume happened on osmosis uh it ended up like becoming unusable uh so I got air dropa I tried to IBC it over to osmosis to start trading or selling it or even providing liquidity within the first hour that was my game plan I wasn't able to it took me over two hours to actually IBC my Tia over by that time it really wasn't worth the TP in my opinion um and I think just the the amount of usage and it wasn't even that much usage like to call SP Spate right like if you look at defom I

think the day that TIA Air dropped um Osmos has got more volume than Ora on salana but like wasn't a top 10 decks by 24-hour volume and osmosis still went down um and to add insult to injury uh in addition like there was a random pump on osmo Osmos token on binance and and uh coinbase so osmosis pumped like 100% on coinbase and binance uh yesterday I believe on on Thursday November 2nd and there's about a five minute lag between the pump on the centralized exchanges and uh on osmosis the it its own decks and within that five minute period I guess Arbitrage Bots tried to dods the the network to try to close that

Arbitrage it made osmosis completely unusable um Arbitrage Bots were uh bidding up osmo to try to close the AR and nobody could sell and I think because of correlation Bots that are looking at the correlation between other Cosmos chains because osmosis was getting bit up uh to to close the ARB um other assets like Mars token Axel soier were up like 20 to 25% chasing osmosis which went up like 35% on on uh Osmos decks even though it was up like 100% on binance in coinbase um and because of all these Arbitrage Bots again nobody could sell nobody could transfer anything the E chain the ecosystem or

I'm sorry the Dex itself became completely unusable um and also what this comes down to is like there's a fundamental issue with the PTP and the men pool layer with like how it pretty much becomes like a priority gas auction uh every single bot just throws uh you know tries to DS Network to be first in line to close the ARP um and my understanding is that just last night after six hours after all this went down osmosis created like a patch uh for validators to create like a mol filter to filter out certain Arbitrage bot and certain addresses that I think we're causing a lot of this uh these issues but um there's supposed to be like a network upgrade to include something called block SDK which kind of creates like swim Lanes within the men pool uh so you can actually start to like

partition out like top of block auctions or bottom of block auctions Etc um but long story short like this was supposed to be a really big weak for osmosis in the water Cosmos ecosystem we kind of fell flat on our face uh The Wider ecosystem has been talking about for a while how like ibc's gotten better and and overall abstraction of this multi-chain network how osmosis and The Wider Cosmos SDK was like ready for for big time uh and osmosis couldn't even get above like 10 TPS and it was just completely like unusable um so unfortunately this kind of fell on our face here uh wasn't a good look um Debs are working to build to fix this I'm even hearing of a rumor that there's an upcoming new client for Comet bft which is the consensus mechanism that's built

on top of Cosmos SDK or the cosmos SDK is built on top of that's going to kind of mimic fire dancer from salana so it's going to leverage turbine it's going to leverage Gulfstream uh and kind of fix a lot of the PDP and meable issues that the comet that Comet bft currently has so that's supposedly like been in stealth mode this entire year I think it's going live in the next few weeks at least on testnet or or uh yeah I'm sure on testnet um but yeah I mean overall playing the cosmos and the entire Cosmos has to get on the hot seat for this week damn that was a very good recap AP of everything that happened I did not realize the extent of the issues and honestly I just feel really bad for the cosmos folks because I completely agree with you like I was excited for you guys

to kind of have your time in the Limelight and it seems you know nothing nothing can go right ever since that USD Peg like that's just how it feels funny story there's actually a rumor going on right now like internally in the cosmos like chats that this exact mle issue is what led to the USD that somebody purposely pulled the liquidity from curve uh I think correct me if I'm wrong right somebody pulled liquidity from curve and like the four pool and then uh or yeah I guess one of the US main pools on curve and then that's really when you start seeing us dpeg and typically you're supposed to try to um the I guess the the way that Luna worked right now is like escaping me uh

sadly but um I guess somebody also spamed the meol and Luna at the same time and that this issue might have actually caused the dpeg of us to the point where it couldn't be recoverable that's like a rumor going on internally don't know how like factual that is but really interesting nonetheless that is interesting and also just to lay it out for the audience effort Capital did not actually claim AA airdrop he's just using a hypothetical example because he is a us-based investor yes uh bibbles you got for the uh I think you got a couple cool throws why don't you just rattle them both off yeah so it's mainly just the all out one salana Avalanche and near all did Super well the past two weeks well eth was in

the toilet not really in the toilet it was just like floating on toilet water um salana obviously had break point this past week there was a lot of really exciting things that got announced like first my most exciting piece is just uh Jupiter the leading deck aggregator is there dropping like 40% of its jup token to users uh they also launched a pers product and they're going to do something it's like jlp it's kind of like a GMX is model and then like drift is going to integrate that as well we saw a couple of consumer facing apps that were um really showcasing at breakpoint and we also saw a fire dancer

on testnet and then like of course you saw Souls price just like absolutely ripping the POS two weeks it's like people just genuinely didn't know the stuff was going on and was probably because they don't subscribe to block Works research because we talked about this last December and in February like people just don't read I guess um so yeah salono major cool Throne like lots of great things happening there um one thing that will be interesting is whether it can sustain this pump or if like so that was it getting repriced for all the fundamentals that have been there the whole time but now we have like the FTX estate which is constantly

unstaking soul and then sending little Clips to centralized exchanges so we have some pretty constant cell pressure over the coming months so that'll be interesting and I think there is a cap of like how much they can liquidate per week I'd have to like go find the Dos for that um also piggybacking off of Salon I Al about near near I also just wrote a report about uh like two or three weeks ago they have this Kai Kai app and it just it's up only mode like there are so many users of Kai like it's probably like the most adopted app in crypto and the best part is like no one knows it's crypto so they have ncon coming up this

next week by the time this podcast is live ncon well have been going on expecting to see some more like web 2 Partnerships and some more stuff about like AI Integrations so yeah those are my two cool Thrones yeah um just a few points there I think the jupitor air drop is fantastic is probably one of the leading like liquidity and S aggregators on salana and the fact that they air dropping 40% of the community is pretty good um that's in comparison to for example Celestia Who air drop 6% and piff who also air job 6% but however I do want to like emphasize that I don't think there is anything wrong with piff and um Celestia air dropping 6% to the

community or specifically like just the Deens um there target audience that will basically help them win in the long term isn't the Deens it's probably more so like infrastructure developers modular blockchain devs devs themselves blockchain ecosystem so they really shouldn't be trying to Target Deens with like a job anyway as that's not their core user base um I just wanted to put that out there and another thing that you put is doing is they launching SD which is this leverage so staking back stable coin um off the top of my head my new yor reaction was I'm not sure whether that's such a great idea especially considering onch liquidity for s or Soul stake derivatives isn't exactly that high at the moment and you

know margin fire has a lot of like keto so deposits and they all be sharing that liquidity in the case of a mass liquidation and we've seen how Mass liquidation is going onchain not not so good to be honest um so yeah I'm kind of against that idea but we'll see for now they're also integrating usd's um cctp directly into Jupiter so hopefully that'll do pretty well um another thing on yeah I I do think Kai Kai is like a pretty good app especially in Asia like Asian people love their shopping rewards like apps like they go absolutely crazy over them and I wouldn't be surprised to see that growth continue to sustain in

the coming months or years one other thing I would add on the the sole front is the uh back pack exchange I gotta shout out my lasses um The Mad Lads they're definitely like doing some interesting stuff in terms of like an nft project they have you know the backpack and the X nfts and stuff like that so I think that's going to be interesting to watch play out and I'm very biased based on my bags but that's like one of the few nfts that I didn't sell for pennies on the dollar so I'm holding that one into into the bull run and hoping for the best yeah just one more thing on the fire dancer um I think the full fire dancer client is coming out in H2 2024 and there's sort of like a earlier smer

probably not as performing version of that coming out in H1 2024 um but numbers that have been leaked or that were announced at breako were 1 million TPS uh I would think a lot of people saw that number and went like holy but I think Anna totally clarified that that isn't like what it would look like in performance that was like in an isolated environment and didn't take into account like the whole like end to end Network stack but it does feel like fire D will be like a significant transaction through put um a significant increase in transaction throughput for salana and could potentially enable like a new variety of use cases yeah I'm interested to see how the fired answer stuff

actually influences projects that are alive today like goto Soul like with their client that tries to extract some Meb it's like are they going to have to switch like I don't know how that's actually going to look but might cause some problems for some protocols that might be worth paying attention to but I think that's a good place to end it if you guys can't tell we're a little bit low energy it's a Friday Monday is usually when we're full on energy and Friday is the the low energy day so uh everyone have a great weekend on this call I guess because people will be listening to this on a Wednesday but nonetheless thanks for coming on guys hey everyone thanks so much for tuning in to today's episode we hope you really enjoyed it wanted to take one more moment to remind you guys about our

upcoming 2024 digital asset Summit in London this March seats are limited so be sure to hit the link in the description and use promo code 0x20 to save 20% off on your ticket we'll see you in London be sure to hit us up if you plan on [Music] attending