pysel

Got to present on Bitcoin Covenants at @ucsantabarbara's Foundations for Blockchains and Cryptocurrencies course, taught by Prof. @dahlia_malkhi. Below: what they are, what they unlock, and the full presentation. 🧵

Stablecoin yield debate is probably one of the most interesting aspects of the CLARITY act. In short, there are two camps: 1. Banks. Their whole business model is spread between deposit yields and lending rates on loans they give out. 2. Issuers/exchanges. While issuers cannot directly pay treasury yield to stablecoin holders, exchanges found a way to do it in a form of rewards. These obviously pay higher than typical bank deposits. Banks argue that stablecoin yield can lead to outflow of capital from traditional deposits, which can disrupt credit markets. Issuers/exchanges argue that banks just don’t want to compete. Which side are you on?

Can’t wait to: 1) Buy tokenized s&p 500 fund 2) Open leveraged long perp position and use the tokenized fund as margin 3) Tokenize the perp position 4) Open the leveraged long perp position and collateralize it by another perp position 5) goto (4) ⚙️⚙️⚙️

There is no coming back after this

@adlonymous yeah, decentralization is the means, composability is the ends

@pysellll a lot of composability stems from decentralization

Composability > Decentralization

@adlonymous @BlockchainUCSB Yeah, it adds protection for open source developers. On a high level, everything that you do that is non-custodial is good (writing smart contracts, for example) As far as I understand though, hosting UI is different, since you control the frontend

@pysellll @BlockchainUCSB what do the developer protections look like in the language?

This week at @BlockchainUCSB, we talked about the recent moves of CLARITY Act in the Senate Banking Committee. I've been postponing my understanding of this upcoming bill, but I found it to be an extremely interesting piece of legislation. More on it below 🧵

There are more interesting aspects to this bill, for example, the stablecoin yield debate. If you wish to learn more, definitely stop by our Crypto Weekly meeting next week!

On May 14th, The Senate Banking Committee approved the CLARITY Act in a 15-9 markup vote, which sent the bill to the full Senate. Right now, there is a 55% chance that CLARITY gets signed into law by EOY. Track it here: polymarket.com/event/clarity-….

Because AMMs have either: (i) poor capital efficiency, slippage, and impermanent loss (Uniswap V2 curves) (ii) rebalancing requirement (Uniswap V3, which fxswap is solving) (iii) pre-determined pricing rules (stableswap-style curves) (i) and (ii) can kind of be solved but afaiu because of (iii) serious markets cannot be created there. I was a big supporter for AMMs before recently, when I gave a presentation about AMM vs CLOB (specifically for stables) and got absolutely grilled because of these 3 points by economists, lawyers and tech folks

@pysellll what's the main concern with AMMs for FX? especially something like FXSwap from Curve

in a future where cross-usd stablecoin liquidity is solved, issuers in other jurisdictions will have a model of issuing a usd and a local stable, ensuring liquidity in their usd-stable/local amm pool so their stables can always have routes

Seems like clearinghouses are starting to pick up some pace. This is (to my knowledge) the second such raise in the last couple of months, with the first one being @bettermoney_co. Even in cross-chain flows, it is easy to see how much volume can be netted. My favorite visualization is: l2beat.com/interop/summary.

When I first started doing crypto in the Cosmos ecosystem, I thought the phrase “bridges are the weakest link of blockchains” is overstated. Well, it has clearly not been the case. Light clients was the way to go from the beginning.

PS: quorum certificates

Fundamentally, this is why your crypto money is safe

[7/7] Covenants are still a proposal, but the design space they open up is huge. If you find this interesting, feel free to dive deeper into the topic by watching the entire lecture here: ▶️ youtube.com/watch?v=FOhBeO…

[6/7] One interesting use case that covenants enable is Congestion Control Trees. Suppose you're an exchange that owes 10,000 people. Broadcasting 10,000 separate transactions would be expensive — especially during periods of high fees. Instead, with covenants, you can construct a tree of UTXOs rooted at a single funded output. The structure of the tree is enforced on-chain: it can only be unwound such that each leaf corresponds to an individual payment. Only the root needs to be broadcast on-chain. Off-chain, you can prove to each recipient that they're able to unroll their branch independently, claiming their payment whenever they want. The diagram below shows a tree encoding 8 such payments.

Got to present on Bitcoin Covenants at @ucsantabarbara's Foundations for Blockchains and Cryptocurrencies course, taught by Prof. @dahlia_malkhi. Below: what they are, what they unlock, and the full presentation. 🧵