Vendor Finance

1/ The DAO model breaks when one token must represent everything. It creates unclear value, slow decisions, and idle treasuries. Bonsai’s answer: a MetaDAO that incubates standalone Leaves and channels their growth back to one asset, $BONSAI. 🧵

"Don't use leverage" This is often the advice we see on CT following large events like what we've seen on Friday. It all seems obvious (because it is!) But what if I told you that >80% of everything you're doing in DeFi is hidden leverage. And since people don't really know about it, it's even more dangerous than willingly going 100x on a perp exchange, because that leverage is most certainly underpriced at the moment. Oracles are hidden leverage. This is what this article is referencing: a 60M spot manipulation resulted in a multi-billion liquidation cascade. Amount spent < amount loss, the very definition of leverage. Using oracles to price an underlying instrument makes it a derivative -> loans whose value is defined by an oracle are derivatives loans. These derivatives loans, like any derivatives, are associated with more risks than their physical counterpart. Oracles are also extremely fragile. Whether it's a Chainlink/Binance price feed, they are all tied to the liquidity of the underlying market. And who provides that liquidity? Market makers. Market makers have to widen the spread and ultimately stop quoting price is what market makers need to do survive. That's the cycle of life. But think about this: if the oracle price is ultimately tied to market makers maintaining a healthy orderbook, these oracles will fail to return accurate data at any sign of volatility. The system is designed to fail when it's the most stressed. Oracle prices aren't physical prices. Oracles are a representation of risk-averse liquidity depth that is guaranteed to disappear during extreme volatility. Oracles are paper tigers, folding at the earliest sign of trouble. So while the advice is "don't use leverage," DeFi's blind overreliance on oracles has baked a systemic form of it into the very foundation of the system. The events of Friday was the result of that hidden risk bubbling up to the surface and breaking everything. That makes me extremely uncomfortable. And it should make you cautious too. The biggest risks in DeFi are hiding behind oracles.

What changed? Until now, only whitelisted tokens could use Vendor. Now ANYONE can create a pool with ANY token they want. Instantly. 🫰