Pacman

So a ton of people have been asking (justifiably) who the heck I am, why do I have 16% of ai16z supply, and what I’m going to do with it. It started by @shawmakesmagic tweeting about some agent he built called @degenspartanai, a recreation of a legend on twitter. I put a bunch of my SOL in there because I had been following Shaw and really thought he was building something great. Almost immediately all of that became close to worthless. Degen’s tweets seemed too “human-like” to be real anyway - so I figured I got scammed. So I DM’ed shaw, not because I was angry, but I was genuinely curious why he might have scammed me. I ended up sending him a google meet, which turned into an hour long conversation about what he was actually building, and me realizing twitter is usually a misrepresentation of the people you think you know. Shaw is just inspiring. Someone who is completely dedicated to accelerating the world for the better, and not optimizing for optics or money - just building. I put back the remaining SOL I had sold and kept supporting Shaw in anyway I could. He was really busy so I just stuck around in his discord. (We also did a twitter spaces if you're interested: x.com/shawmakesmagic…). I was in awe, especially in a space filled with Larps and chatgpt copy/pasters. When he launched ai16z.vc I didn’t even flinch. I had 80 SOL in my wallet and just pressed buy. It resulted in me owning 17% of it, which I didn't even want. I immediately sent Shaw and another team member some coins because they didn’t even get a chance themselves to buy any! I also sent some of my friends some coins at a discount so they could hopefully benefit as well. As for the remaining of my 16%, im lowering it to 5% and donating the remaining 11% to a new ai16z initiative. A locked fund that vests over time to support promising developers and creators, and helps solve liquidity issues via potential OTC deals that benefit the DAO and bring in new partners. This story isn't about me, its about the amazing things this community is building. Visit ai16z.vc for details. Accelerate.

Is @LiquityProtocol v2 Solving the Stablecoin Trilemma through Delta Neutrality? This 🧵 will cover the key concepts of v2 which enables a decentralized reserve-backed, delta-neutral hedged stablecoin. TLDR: • Abandon CDP and adopt reserve backing mechanism with 1:1 minting • Launch in 2024 and will be independent product from v1 • Key ideas of V2: Dynamic Leverage Principal-Protected Positions (PPP) Disclaimer: The diagrams and information presented below have been pieced together with limited documentation, Discord convos & @robert_lauko's talk. Will write another thread once official documentation is released! Achieving Delta Neutrality in Reserves As V2 transitions away from the over-collateralized CDP model of V1, the reserves, which composes of volatile assets (ETH/stETH) will be delta-neutral hedged. • Today’s delta-neutral hedging relies on stablecoin protocol transferring all of its collateral positions’ upside/downside to third-party through selling leveraged long positions • Leverage here is essential because the volume of capital committed to longing collateral ETH cannot always equal or be more than protocol’s total collateral • However, leverage also presents very high risk to third-parties because downside is unlimited. There are limited number of investors ready to take on such risk, which limits protocol’s scalability But what if the downside risk could be limited… or null? And what if upside could still be unlimited? Here is where Liquity steps in with their two innovations in Liquity V2: 1️⃣ Dynamic Leverage Refer to diagram #1 in the tweet Imagine an isolated scenario where ETH price backing the stablecoin is relatively stable and is expected to remain around base $. At base $, base V worth of capital is committed to leveraged longing ETH. (Total collateral / base V) provides base x leverage for each leveraged long position. Then imagine that collateral can be redistributed among positions based on the changes in V, so leverage becomes dynamic (and inversely proportional to V capital committed to leveraged longing ETH) In this scenario: • A deviation down from the base price would incentivize more investors to commit more capital (V) to leverage long ETH • As V deviates up from base V, (total collateral / V) decreases which means that leverage goes down • Essentially, people rush into leveraged buy ETH low and dilute the volume of leveraging asset available to each individual And when ETH rises: • Investors begin exercising their positions, reducing V committed to leveraged longing ETH and increasing the leverage for those that still hold Thus, dynamic leverage is achieved. Moreover, this kind of dynamic leverage is appealing from an investor's perspective because their expectable downside would always be lower than upside. 2️⃣ Principal Protection: Refer to diagram #2 in the tweet Principal protection is a tool that lets investors in Liquity v2 ETH leverage long positions to hedge all of the downside risk with a fee called “premium”. Here is how it works: • Firstly, in Liquity v2, a position's upside is unlimited, while the downside is limited to the position's principal. With dynamic leverage, it is only possible to lose roughly the amount one has invested. • With a defined and limited downside, Liquity v2 can now afford to compensate every investor for any loss incurred by their position. To achieve this, investors are required to pay a premium, an additional amount above the principal, when opening a position. • Premiums are pooled and once an investor attempts to liquidate a position with a market cost below its initial principal, an appropriate amount of funds is transferred from the premium pool into the position's principal to increase its market price. Thus, when said position eventually gets liquidated, its seller receives no less than the initial principal they committed. Moreover, there is no value leak from the protocol because instead of ending up in the seller's pocket, premium funds enter a long position’s principal. Looking forward to reading the official documentation for v2 when it comes out. @robert_lauko @rick_liquity @bjnpck please feel free to add more color / clarity.