Robert Sams

you can outsource your thinking but you cannot outsource your understanding

Finally, a policy centrist acknowledges what I've been saying for ~20 years: you're going to miss the libertarians once you're finished marginalising their principles from the political discourse. noahpinion.blog/p/i-owe-the-li…

Big week ahead! 🚀 Autonity core contributors are gathering in London for a week of workshops, collaboration, and ideation.💡Stay tuned for updates and some great new content as we get closer to the Mainnet Beta launch! 🌍 #Autonity #Derivatives #Innovation

𝗗𝗼𝗹𝗹𝗮𝗿 𝗮𝗹𝘁𝗲𝗿𝗻𝗮𝘁𝗶𝘃𝗲𝘀, 𝗱𝗶𝘀𝘁𝗿𝗶𝗯𝘂𝘁𝗶𝗼𝗻 𝗮𝗻𝗱 𝗺𝗮𝘀𝘀 𝗮𝗱𝗼𝗽𝘁𝗶𝗼𝗻 For all the western T-bill stablecoin operators and on-off ramp gateway founders I've chat with, they seem unaware that the overlap between USDT and USDC is less than 3%. So it's not surprising that no entity has successfully navigated the challenge of distributing dollar alternatives in Asia/SEA/emerging markets except for Tether. It is crucial to recognize that not all dollar alternatives are created equal. In this long form i will first touch base on the structural difference of USDT and USDC distribution, and other crypto native dollar alternative designs I've seen in the market that might have a chance to play this "rug the fiat" game. USDC and USDT serve distinct demographics and user profiles. @tether has played a pivotal role as a liquidity backbone in regions characterized by stringent capital controls and fluctuating local currencies. Across many parts of these regions, USDT is not only favored for crypto-related transactions but also for cross-border trades and local settlements. The depth of its local, bottom up distribution network is not something can be built in short time, acting effectively as a decentralized dollar based shadow banking system where thousands of local IM groups serving as the Tether OTC desks & lenders. This distributed p2p network of offchain liquidity makes USDT highly accessible to Chinese, Vietnamese, Koreans, Russian, Ukrainian, and many more as dollar alternative. USDC on the other hand, has a more top down approach as a compliant digital dollar, distributed primarily through institutional end pts. according to @jerallaire the ultimate vision for @circle is to evolve into a digital reserve bank. Unknown to many western friends, Alipay, the Alibaba payment arm has its master account with PBOC but NONE of the digital payment co in US or Circle have such setup. After the SVB crisis, Circle is another step closer to this vision as all of its reserve is now parking on the biggest custodian banks and eventually they might get a account with the Fed. Have its own MMF would get Circle another step closer to the Fed's balance sheet without being a bank T-bill stablecoin are not "stablecoin" but bearer bonds, and can only serve users outside of US regime. Circle can’t simply pass the yield to its users for both regulatory and operational cost reasons given their current position: it’s technically not a bank. Custodial stables in western jurisdictions will never be able to pay interest unless the issuers become banks, until then regulators view them as e-money. And the interest earning needs to cover Circle's heavy compliance and ops cost for not being a “bank” yet. This in return establish their legitimacy in front of regulator and the top down distribution over time as a safer version dollar alternative esp for the US and broader US economic alliance. The topline stablecoin mcap didnt grow much after SVB crisis, the outflow of USDC off sets by inflow of USDT. With USDC’s fluid integration into the US banking system & zero redemption cost makes it a cost effective “ATM machine” for fiat <> crypto. vs Tether it’s by design a stronger capital gravitational pull (higher friction to redeem + sticker regional liquidity in emerging markets) h/t to our data chad at Primitive @zk7hao Without piggy back the liquidity and distro advantage with CEX (like what USDT and USDC have with Bifinex and Coinbase), it will take years for new stablecoin operator to establish 1. offchain on the ground liquidity: not through institutions/banks, but through effective highly distributed p2p or regional desks like mentioned above 2. onchain liquidity: play the curve war, the bribery, and LP incentive in all AMMs, and integration into other money legos. I was earliest investor and advisor in @TrustToken and TUSD back in the day, have seen how the team hustled at their best effort but can only exit to Justin Sun eventually for his liquidity backing and distro channel like Poloniex and Huobi he owns. Thank you H.E @justinsuntron for this offer btw The adoption path for new T-bill stablecoins as a Medium of Exchange (MoE) is indeed challenging. However, some may discover a lucrative niche by serving as a Store of Value (SoV) for certain users, effectively functioning as a quasi-checking account for those without a US bank account. For new reserve based Tbill stable operators like @OndoFinance and @USDV_Money, their best bet to boostrap the adoption will be unique distribution channel elsewhere, or have an underserved niche use cases to start with. The head to head competition with existing reserve based stable its hard, liquidity as a very strong network effect, and redemption crisis has been tested over and over for both Tether and Circle. Onchain native yield will soon surpass Tbill yield as we march into onchain summer makes it much less appealing In light of this, I hold a more favorable view towards stablecoin designs based on onchain economy to generate sustained yield to make stabelcoin productive. On one hand, the inherent yield of L1 demonstrates increased sustainability with the flourishing of its ecosystem. On the other hand, these designs mitigate friction with offchain distribution (offchain distribution is bonus pt for more robust liquidity but not necessary) @ethena is designed with the principle as a cross trail arbing instrument between cefi and defi: it's significantly higher intrinsic return compared to T-bills by stacking stETH yields and funding basis. Historical data reveals an exponential surge in funding, propelled by leveraged demand driving prices upward. In early 2021, the spread between funding basis and 3-month US Treasuries maintains an average of +22% throughout the year. Furthermore, the scale of Ethena is poised to expand concomitantly with the growth of the market's open interest, tho limited, but still highly scalable as a native stablecoin issuance mechanism. if we expect OI to grow another 10x in coming bull, conservatively USDe can hold up ~10b mcap easily as table below shows, without relying on reserve or banking. Some other noteworthy stealth mode projects I've come across that showcases a genuinely native on-chain stablecoin design too: Project A is an EVM compatible L1 with dual token design, where one token is for staking/slashing, while another represents the native account balance and will be used for gas payments which is minted by CDPs. and with Bitcoin DA built by @tuxcanfly and other chads like @antiyro in @Starknet such design can be ported to a spot BTC settlement stable coin to be truly censorship resistant. Project B is an @optimismFND L2 with native re-based version lst ETH as the base settlement currency instead of ether itself. this completely change the base interest rate environment of that chain economy, and i expect to see the native MoE is some form of yield bearing natively issued stablecoin. @jinglejamOP @owocki Jinglan and Kevin might be shocked by those radical ochain economic experiments enabled by OPstack, with chad anons 👀 We can never underplay the importance of USDC and USDT on the path to mass adoption, they are the best trojan horses to the eventual fiat-less world (tho there will be a transitional period of hyper dollarization due to the proliferation of these digital dollar alternative). I'm always looking forward to the new generation of stablecoin to solve 1- censorship resistance 2- permissionless issuance 3- no human interference in operations 4- expandable capacity 5- composability 6- abundant liquidity both onchain and offchain Until then, we rug the fiat, we unbank the banked

New Article: The Sweep and Force of Section Three, by Michael Stokes Paulsen and me, forthcoming @PennLRev papers.ssrn.com/sol3/papers.cf…

"Designers of CBDCs have foreclosed on this option, opting to continue levying a large, stealthy, regressive tax on their citizens. They have done so to protect banks and their own finance, both of whom have long benefited from this privilege." ft.com/content/7ad330…

@izakaminska Root cause isn't deposit frictionlessness, it's the appreciation by uninsured depositors of a bank's solvency on a mark-to-market basis. Whether they run today or run in 2weeks, the CB will have to lend against insufficient collateral.

7/ But it does mean that the only way to increase financial stability in a rising interest rate environment is to bring back bank frictions and make customer deposits sticky again.

🧵Bloomberg's Matt Levine writes today about the bank deposit franchise, and how the traditional bank model assumes deposits can be treated as long duration liabilities because customers are loyal and deposits sticky...

"To the extent the Doomsters have impact, their net effect will be to place the national security types in charge, or at least to raise their influence.  And how do they think that is going to work out (on their own terms)?"marginalrevolution.com/marginalrevolu…

Some AI doomers would risk nuclear war to stop large AI training runs. Can't figure out which is greater: (1) over-confidence in AI xrisk priors or (2) conservatism bias wrt nuke xrisk if u airstrike a nuclear power. time.com/6266923/ai-eli…

"Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to insured depositors, with potentially $300 billion of insured deposits at risk." papers.ssrn.com/sol3/papers.cf…

Bagehot's Rule: "Lend freely against good collateral at a penalty rate" Powell's Rule: "Lend freely against overvalued collateral at the risk-free rate". Same rationale, very different long-term effects.

@GarrickHileman @dandolfa @jp_koning @Suitpossum @mikejcasey "I’ve heard regulators say: 'Well, why would we want to teach people about money? They might start asking questions'". I hear this too and I think the sentiment and practice is scandalous.

Much has changed this past decade since @codedlogic @dandolfa @jp_koning @Suitpossum @mikejcasey et al launched the idea of central bank digital currency My thoughts on where we stand with the great #cbdc design debate, and what needs to happen next: dazeddigital.com/life-culture/a…

The Forecasting Research Institute now exists (I'm a co-founder). forecastingresearch.org Its mandate is to advance the science of forecasting for the public good--& is now hiring research and data analysts, content editors, and RAs. forecastingresearch.org/apply Please spread the word

“Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works.” ~ John Stuart Mill

If Europe stopped importing Russian energy, what would happen? Energy exports (blue) pay for imports of goods (red) & services (orange). Without FX reserves to cushion the blow, imports would stop, recession would deepen massively & war in Ukraine would be far harder to sustain.

@least_nathan My dad personally helped over a dozen families migrate from Russia to Canada. In the last few days, many of them participated in pro-Ukraine rallies. The west should be taking every opportunity to help *more* Russians break ranks with Putin in any way, not less.

In Melitopol.

@MerliAless If there were deposits at the Bundesbank they are frozen now. That’s what has been decided. And the decision has been decisively supported by the President of the Bundesbank.