Supernova | Rate Exchange

“A lot of the looping (trades) blew up,” says @nicoypei. “They want to get out or unwind their position, because right now their position is losing money. But the problem is that they can’t right now.” theinformation.com/articles/crypt… 2/

man, i really should have maxx longed defi rates on @SupernovaLabs_ when i had the chance huh

ya at this point im only seeing demand for cedefi solutions with legal recourse and fixed rates ideally as well hence i been shilling @kamino_liq upcoming cedefi product and @SupernovaLabs_ fixed rates i lowkey doubled down on ethena a few years back post euler hack because custodians are optimal in many ways

There's only a few centers for distributions in crypto that can get your product in front of 11-12 digits of capital or centi-million users: Qualified custodians Prime brokerages Top hardware wallets Top hot wallets Centralized exchanges Top multi-sigs or you are in the arena competing for private deals with roughly 50 whale LPs worldwide Congrats to @aave on this epic integration!

Luca and @adcv_ 's posts brought the lending as put option framework into the discussion. Last week I spoke with some large Defi LPs who borrow sizable positions against BTC/ETH. They are very interested in a new instrument we are developing called Collar Options I believe this is the first option product with clear PMF, so whoever wonder how on-chain options or lending protocols will play out shall continue reading > Institutional Borrowers hate lending protocol's instant liquidation bc (1) it shrinks their BTC exposure (2) the 5-10% liquidation bonus is a direct loss for borrowers (1) is somewhat manageable but (2) is a real pain Collar options protect borrowers against (2), and theoretically it should be free or close to free. I will explain Example: > BTC @ 100K, LLTV 75%, Borrowing 60K USDC (60% LTV) > then BTC drops to 80K, LTV rises to 75% and triggers liquidation Collar Option: Borrowers Buy Put Option (strike: 85K) + Sell Call Option (strike: 120K) on Collateral to Financially Protect against Liquidation The put option guarantee that if the BTC value is below 85K, get close to 80K, and be liquidated, the account will be covered to 85K and not be affected by the 5-10% liquidation penalty. The selling of the call option is optional, and it capped the borrowers BTC up-side to 120K. its proceed is used to finance the buying of the put option to make this hedge free or close to free An easy way to think about collar option is that it boxes your BTC returns in the box of 85K and 120K. If it go out of this box and to 60K or 140K, you will still receive 85K or 120K Borrowers can skip the selling of 120K call and only buy the 85K put if they don't want to cap the upside, but the removal of the cap will come at a cost On-chain Options start here > Perps for retail trading > Options for money market hedging If you run an option desk / exchange that can absorb sizes, my DM is open.

Off-chain lenders are charging 7-9% APR for crypto-backed loans. Why they don't tap in to Aave/Morpho/Kamino's low 3% borrow rate? More borrowers will push Defi interest higher for lenders too which is great for growing TVL. Requests to @SupernovaLabs_ from a large LP: 1. Margin call instead of instant liquidation 2. Fixed borrowing rate Lending protocols are only serving the lenders well. Most borrowers aren't in Defi yet, but they will be if we do a good job on solving these two requests.

defi market is heading to off-chain borrowers on-chain yield era. these are the top 15 borrowers on @aave here's some observations: > top 6 borrowers accounts for 25% of total borrow demand and all of them are running looping strategies, and all of them use e-mode to push the LTV ratio to close to absolute max > @EtherFi @LidoFinance @ethena and @coinbase's cbBTC lead the chart in yield-bearing collaterals. There isn't much other assets > borrowing against majors is weak as institutional borrowers can't get predictable cost of capital opportunities: There's so much lending capital on-chain and currently institutions can borrow at comparable rate to what the US government is borrowing at. Two billion-dollar opportunities: > bridge fixed / float rate dynamics which blocks off-chain, institutional borrowers from borrowing on-chain (@SupernovaLabs_ ) > bring off-chain yield source to on-chain capital (@capapp, @3f_xyz) There can easily be another ethena-level success in this tweet