bluhmus

@DefiantNews $200M is less than 0.5% of Deutsche Börse's own market cap (˜USD55B). This is what buying the minimum viable seat at the crypto table looks like, not what conviction looks like.

Kraken is going public. Co-CEO Arjun Sethi confirmed a confidential IPO filing today, just as Deutsche Börse dropped $200M for a 1.5% stake. thedefiant.io/news/cefi/krak…

A long-run fragmentation story is plausible, and this may be an early sign of that showing up in bitcoin’s option value. But there are so many moving parts before and during that window that I would want to see more evidence. For example, could these relative moves largely reflect a reversal of gold’s prior outperformance versus bitcoin, with gold being the more natural asset to sell under stress given the larger profits embedded in the position?

Bitcoin is apolitical money. When nations fight, the incentive to use apolitical money goes up. Since the Iran conflict began in late February: - Bitcoin: +12% - S&P 500: -1% - Gold: -10% Expect bitcoin increasingly to act as a hedge against geopolitical chaos.

@ErikVoorhees Because of the 20% markup on api inference (last time I checked) for frontier models from Anthropic or Openai with pseudo privacy.

If your claw or Hermes agent isn’t pulling inference from Venice, why not?

@LucaProsperi @Morpho @coinbase @krakenfx 0-20 bps over risk-free is where AAA CDO tranches priced in 2006. Same mechanism, spreads collapse to zero when depositors assume someone else eats the tail risk (rating agencies then, stablecoin freeze buttons + protocol treasuries now).

New Dirt Roads out. The Physics of On-Chain Lending. First of three parts. @Morpho's surge into notoriety, driven by flawless execution, is undeniable. The protocol has $11b in deposits, @coinbase and @krakenfx distribution, an Apollo deal for 9% of token supply. Pointing to the lending market as the dominant primitive for the future of finance is compelling but, as usual, the claim requires deeper analysis. Today, most of Morpho's TVL is simply regulatory arbitrage. Under the GENIUS Act, stablecoin issuers cannot share yield directly with holders. Ironically, the regulator, by restricting intermediaries, is enacting a full pass-through risk transfer onto retail depositors, who, in order to get risk-free proxy rates on their stablecoins, are selling cheap puts on crypto collateral through a clean savings UI without recognizing it as such. Survivorship bias from flagship vaults and bull market masking do the rest. The piece breaks Morpho's business into three distinct risk regimes: (a) Liquid crypto collateral lending (b) Leverage looping (c) RWA lending (a) is where, historically, the lending market primitive genuinely shines. Atomic liquidation and continuous oracles make it categorically superior to traditional credit infrastructure, even at mispriced rates. Unfortunately, not many assets fit the category. (b) is also crypto's bread and butter. wstETH/wETH, sUSDe, sUSDS. Leverage looping is not a credit product but a carry trade on mean-reverting basis. Extremely profitable, temporarily, but very hard to manage. (c) is the land of illiquid collateral (private credit, tokenized funds) where assumptions for most quant models fail simultaneously. Unobservable volatility, stale oracle marks, non-atomic liquidation, unenforceable claims across jurisdictions. The dream of building a private credit supermarket on permissionless rails, instantly connected to retail capital across the world, is compelling—and not necessarily for the right reasons. When crypto-native yield compresses, capital on non-custodial rails reaches for off-chain return. We have been here before. I tried to apply quantitative, and mathematically sound, structural credit frameworks to Morpho's isolated markets: Merton, first-passage defaults, jump-diffusion, hazard rate term structures. The results are not too comfortable, but tell the story of WHO is using those markets and WHY. Even under the most generous rebalancing assumptions, rational spreads over risk-free for the safest markets would require fair compensation at 250–400 bps spread. The observed depositor spread on Morpho: 0–20 bps. The mispricing is 5–10x or more. This story is about market inefficiency, regulatory idiocy, and the spotless execution by a building team. This is Part I of III. Part II covers governance, on-chain risk management, and the curator model. Part III talks about addressable markets, unit economics, and implications for MORPHO valuation. Link in comments.

@fintechfrank Best historical parallel is EM FX NDFs: when onshore markets are closed, offshore NDFs do the price discovery. Weekend crypto perps may be starting to play a similar role for macro assets. x.com/bluhmus/status…

Weekend crypto markets are becoming price discovery engines for tradfi Binance Research: $31B in weekly commodity vol trading ~89% accuracy predicting Monday futures direction ~0.80 correlation to tradfi

The graduation of a crypto use case? When the main cash market is closed, price discovery migrates to the venue that is still open, tradeable, and carries real money risk. EM FX NDFs have been a key price-discovery venue when onshore FX is closed: they are tradeable, carry real risk, and often give the best read on reopening. One example is USD/KRW, where offshore NDFs have long been an important signal for where the won may trade when Seoul reopens, especially outside local hours and during stress. bis.org/publ/qtrpdf/r_… Weekend crypto RWA markets may be starting to play a similar role for commodities and other key macro assets. If that 89% Monday directional hit rate holds up, Hyperliquid may emerge as a weekend price-discovery venue for macro traders and a live weekend signal for policymakers when underlying markets are shut. During SVB weekend in March 2023, officials were making system-level decisions with a much thinner live market signal than they could get now. The open question is whether regulators and incumbents let that use case scale.

@0xeles @ethereumintern_ Agree. Loved dYdX V3, even bridged to and staked their token on the Cosmos chain to follow V4. But the liquidity was just so much worse compared to HL except for BTC/ETH. Broke it for me.

@bluhmus @ethereumintern_ the UX on the starkex (eth) -> cosmos migration was abysmal. metamask wasnt even working, they gave you some weird address derived from your evm one, overall was very weird and inconvenient. hl is straight send usdc to bridge and you get credited on HL

>be dYdX >Ethereum rollup, huge DEX >become an alt L1 for some reason >die What were they thinking

@DCinvestor What does Trump offer that outbids passive de-dollarization of the world's biggest oil corridor? Must be an extremely expensive phone call

i don't like the current situation at all but there is only one man outside of Iran with the power to force the reopen the Strait of Hormuz without a toll his name is Xi Jinping and if Trump can't figure something out soon, he will call him and give up something big for it

@DCinvestor The yuan + crypto dual acceptance is not just sanctions evasion but a hedged treasury strategy. Iran is building optionality against both Washington and Beijing at the same time.

i am obviously categorically against any party levying a “toll” on ships passing through the Strait of Hormuz however, it is extremely notable that they are willing to accept payment in crypto as a censorship-resistant asset and transaction layer (alongside Chinese yuan which they presume they shall have free access to) the world has changed, and the future is open commerce, one way or another and reserve currencies will have to increasingly work and prove themselves continually in order to earn and keep the title

@pythianism Sponsor NAV marking sounds like the same Level 3 mess FASB 157 tried to fix. On-chain helps, but can decentralized governance actually force mark-to-market on originations? Banks couldn’t, even with regulators watching.

Private Credit is an unmitigated disaster and it is only going to get worse Sky has been evaluating many "structured" products for the $12Bn USDS supply, they are universally non-starters Basic lack of transparency, checks on governance, principle agent problems Sky is going to have to own origination end to end to get the transparency, safety, and liquidity needed for this type of deployment We will create our own and re-invent this industry in the process

@laurashin If Circle reliably waits for court orders, which are slow, USDC becomes the preferred stablecoin for hacks. Weird market structure outcome.

What struck me most: the attackers built fully constructed LinkedIn identities, showed technical fluency, deposited real capital, met Drift people in person at multiple conferences. This wasn't a day job. It was patient, resource-intensive, nation-state-level work. @LewellenMichael and @Amanda_S_Wick explain what happened and why it matters. 🕵️ Timestamps: 🔍 00:00 Introduction 🕵️ 00:59 How Drift got infiltrated through a six-month intelligence operation 🛡️ 05:22 Why crypto companies underestimate nation-state-level threats ⚠️ 09:14 Whether DPRK is confirmed behind the Drift hack 💼 18:00 How North Korea recruits non-Korean operatives for crypto attacks 💰 33:52 Why Circle refused to freeze $232M in stolen USDC ⚖️ 51:13 How Tether's freeze response compares to Circle's inaction 🔐 59:31 What laws Amanda Wick would craft for blockchain-speed freezing

@SteakhouseFi @LineaBuild Thinking about the bridge as a balance sheet rather than just a liquidity pool makes a ton of sense. Feels applicable to other assets too, eg bridged stablecoins where the bridge invests the backing in short-duration govvies. Nice work!

We provide an asset-liability management framework for @Lineabuild Native Yield Bridge When a bridge stakes deposited ETH, it introduces duration into what was a fully liquid balance sheet. Users still expect instant withdrawals, but staked ETH can take days or weeks to unlock depending on Ethereum's exit queue conditions. We analyze how much liquidity the bridge needs to hold and how that number should adapt as conditions change. It's an extremely complex system with many variables all moving dynamically (exit queue conditions, slashing exposure, staking spreads, etc.)

@ImperiumPaper @megaeth Congrats!

Today is my first day as Economics Lead at MegaETH. @megaeth’s approach to its onchain economy is a good match for my own, and I’ll be focused on helping MegaETH grow a thriving onchain economy that solves real problems for real people, companies, and organizations.

@DefiLlama Great work! Looking forward to seeing this for pendle!

What does the token actually do? This has been one of the most fundamental unanswered questions in DeFi since the beginning. Does the token control governance? Does it have any claim on the treasury? Does it receive protocol revenue via buybacks or dividends? Today, we launched Token Rights on DefiLlama. Token Rights gives you a clear, standardized view of what a token entitles holders to: revenue, treasury, governance, or none of the above. We’ve rolled this out across two dozen protocols, including additional context like historical governance discussions around token rights and whether teams raised equity separately from the token.

@RhoRider Data come in with a lag, it is hard/impossible to identify a recession in real time. There are only indicators. Eg if a recession is defined as 2 consecutive quarters of declining gdp, how can one call a recession if reliable gdp data are only available after one quarter?

Takeaway here is the neither the Government or the Fed will warn you, or even admit, if SHTF

Also worth noting during both the Fed never actually admitted “recession” until they were basically over It took Bernanke until 2009…and he used the term “severe contraction” Greenspan denied it all through 2001, only using the ‘R’ word in the context of rebound in 2002

@RhoRider Appreciate the post, keeps one on the toes. Sure, there will be corrections, and volatility will explode at times, but bubbly development seems different from 25 years ago, no? m.youtube.com/watch?v=5ze3ZN…

One day, sometime soon, there’s going to be an announcement about a major company abandoning further AI investments due to lack of real returns… and that will trigger the biggest market meltdown in modern history. Bookmark it.

@ImperiumPaper True, but so far every time I got auto-delevered on my short positions I ended up making more money because those are firesale prices

Remember: No one can close your position when you’re selling short rather than sitting in perps where circuit breakers close you out.

@jazgulati For a reason…best bridging experience in DeFi - fast, reliable and dirt cheap.

$50k more fees, 500+ new users, more solvers onboarded, more integrations, more quality time with some of the best in the space safe to say a successful week

@jazgulati Great work, Jaz, used it for the first time today. Flawless, fast, cheap, love it! From now on my go-to bridge.

ppl are really still paying debridge/stargate/across hundreds of $ to bridge stables just use garden