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Stable Strategies in volatile markets: Frankencoin's ZCHF Brings Signal to The Noise
Recorded: April 9, 2025 Duration: 1:07:22Space Recording
Short Summary
In a dynamic discussion, industry leaders explore the integration of the Swiss franc into DeFi through strategic partnerships, the growth of stablecoin markets, and innovative yield opportunities. With Falcon Finance's upcoming launch and a shift towards alternative currencies, the conversation highlights emerging trends and the evolving landscape of crypto finance.
Full Transcription
Hello everyone, what's up?
The VATR News here, the advisor in the house.
Nice to see everyone.
Been a while for me actually so kind of excited about uh getting back
on another stream and have quite a few guests been planning this one for a while guys took us a bit
uh time but happy to have everyone on board today we have my actually uh first of all for the first time we have Gabe from alpha
ping what's up Gabe hey what's up thank you for having me thank you for coming sir my
old friend from like they my old days and if I at least came at-Mets. What's up, brother? Hey, man. How's it going? Good to be here.
Great to have you on again, as always.
And my actually recent guest,
back in, I think, beginning of January or something like that,
it was Johannes, no? Maybe the end of December.
With Johannes from Frankencoin,
representing the digital Swiss franc, which actually
became something I'm very fascinated
about, especially when
I was
fortunate to meet Johannes here
two weeks ago in Israel.
He came for the Building Blocks
conference. Shout out to Elon and everyone
for the invitation.
I was there as a Leviathan News
representative.
I hope to write about it
in the next few days. I was kind of doing
some other stuff recently.
So shout out to them.
And it was kind of fascinating to talk
to Johannes there about
some, like to continue our
talk about
how, you know how in such a world
where markets are so volatile and you have all this financial history
that people are talking about over the last, I don't know, century
or a few centuries even or decades or whatever,
whatever the subject on every time.
And you mentioned a very interesting fact
that I'm sure that we mentioned on the show as well, about how the Swiss franc is stronger than the dollar in about 60% or something like that.
Can you correct me exactly on that one?
Well, it's gotten worse.
It's gotten worse.
Just over like the last week or so, the Swiss franc gained.
Actually, the last few last few days were kind of
bullish for the...
You know, I look at the Israeli Shekel.
Okay? So,
relax, Americans.
You're all good.
And I was looking at the dollar,
and I was like, okay, the dollar is going...
Whatever's going on, at least relative
to what's going on here,
the dollar is looking stronger than like a week or two ago.
And then I looked at the Swiss franc and I was like,
okay, the Swiss franc is even stronger than that.
Yeah, you know, I was always telling that story about that
the dollar lost about 66% against the Swiss franc over the last 50 years.
The dollar lost about 66% against the Swiss franc over the last 50 years.
Those 66% have become quite a bit more than 70% by now.
So, you know, we're from a Swiss perspective on a good track.
I was just joking that probably the CCHF is the best performing
or one of the best performing crypto assets in the last days.
forming crypto assets in the last days.
Yeah.
Yeah.
Yeah.
So it's somewhat the perfect storm for us, to be very honest, right?
It's this, like, no one knows what the heck is going on in the US,
and there's, like, so much insecurity.
And, well, you know, that's really where the Swiss franc shines.
That's where we can show our value prop,
hopefully, to the world.
But as part of that,
and that's... But Gabe is Swiss, right?
So Gabe is from Switzerland.
I'm not sure if I just doxed someone here,
but he gets that.
And we have actually...
We've met, or we've been introduced after
DevConnect in Talent last year and regarding something completely different.
And then, you know, started talking about that whole Swiss franc.
And that's this one thing led to the other.
So I'm really, really happy and very grateful for you, Gabe,
to actually take this initiative and, you know,
make that leap of faith and be aligned with me of bringing the Swiss franc to DeFi as well.
Yeah, thank you. Thank you.
I actually think that, you know, first of all, I think that I will try to pull it up for a second. I apologize that this kind of stuff takes a bit.
But one of the charts that I've been looking at recently, I think we probably all have,
is one of the most bullish charts, at least in the industry, I think is the stablecoins market cap,
because it's basically mostly up and to the right.
So we're kind of seeing that, especially in like such volatile markets,
people are kind of wanting their stablecoin assets.
And I think this like, there's so much room for growth that it's kind of insane you know like it's uh
it's unexplored territory uh in a way especially for something as uh like at the level of like
the swiss funk right now yeah i think one of the things that's that's really interesting about the
the stablecoin space is that it's it's dominated by USD-denominated stablecoins.
And that kind of speaks to sort of really sort of the global dominance of American hegemony in the past, oh gosh, since World War II, really.
you know, since World War II, really. And now we're kind of on the precipice of a lot of things,
you know, maybe like kind of like a lot of balls up in the air and kind of seeing where they're
landing. But I think one of the cool things about crypto and about sort of like having these AMMs
and these platforms to build these stable coins, you know, you have cool protocols like what Frankencoin's doing with the Swiss franc.
And you can build that up on chain with like no obstacles for growth, really, other than just, you know, sort of incentivizing liquidity, you know, on platforms like Curve, you know, through bribes or direct incentives.
you know, through bribes or direct incentives. And so it's really cool to see that there's
really nothing stopping those other tokens and protocols from flourishing other than just the
fact that, you know, making them available and allowing folks to utilize them in various strategies
throughout DeFi. It's going to be really cool to see what the space looks like
in the next few years, because I think you're basically going to have one giant Forex market.
And I don't think anyone's going to disagree with me, but I think that chart that you show
there of the total stablecoins market cap of $233 billion, in the future, that might not even be
denominated in dollars, once it's like several trillion dollars.
And it might be, who knows, it might be denominated in Swiss francs.
You never know.
Or just straight ETH.
It's hard to say.
But yeah, I mean, Johannes can kind of speak to maybe sort of like growth of ZCHF and kind of like how it's been and's been and the plans from here?
Yeah, I mean, ZCHF is making a splash in the sense that with Morpho, we've really made
that first step into DeFi.
The project has been around for about a year, but it's been more on the trial side of things,
I would say, and mainly in Switzerland.
And really now since the beginning of this year,
and the advisor knows that because he's been talking to me
for a long, long time before.
It doesn't mean I know anything.
No, if you watch our latest live video, which is like two hours, right?
There's just so much going on. Actually, since we've spoken, many things hours, right? There's just so much going on.
We had to see, actually, since we've spoken, many things happened, right?
One, you know, Morpheus is one good example.
We'll actually be launching a multi-currency basket very soon on another platform.
Wow.
Where we've started or we've launched on the payment side.
It's a completely different side of stablecoin businesses.
But you can use the Swiss, the Frankencoin,
to pay in one of the largest Swiss supermarket chains, Spar.
I'm not sure if Spar is also in wherever you guys are based.
I'm not sure if they exist in Israel.
I'm not sure if they exist in Thailand.
In Israel, no,
but I think that in other places in Europe,
there is something.
It's pretty big in South Africa,
this I know.
But yeah, and the UK.
And this is going to be also available
outside of Switzerland?
Maybe at some point.
Right now,
it's just being rolled out slowly in Switzerland.
But it's, you know,
having this, just the fact that a big supermarket chain is starting to adopt this is really, really cool.
So for us, we're right now in this stage of building infrastructure because one problem which has not really been solved yet, and this kind of goes out to all of the exchanges who are too much thinking in US dollar is if you build a stable
stable coin you have to have very good fiat rails to be able to go in and out from you know dollar
or or whatever you know currency you're in into the stable coin and not paying you know 10% fees
so that's one of the biggest kind of projects and challenges we're working on right now. I think this is just a question of time to really get this solved because it's obviously as a stable coin, you have that challenge that you are competing with all the meme coins, even though they're dead now.
But meme coins for exchanges are a lot more attractive because you can just hide spreads.
If something is super volatile,
if you pay 7% fee on top,
well, you don't really care.
But if you have a Swiss franc that is ultra stable,
you don't want to pay that kind of money. So that's where the on and off ramp rails
are being built.
Obviously now it's also the second challenge
is that it's Swiss franc-y nominated.
So it's a bit more complicated,
but that's what we're getting.
And that's what we're really focusing on
to bring it on.
Actually, it's a bit of a nugget of hidden knowledge.
Try using your browser wallet to buy a Frankencoin.
Well, if it's the one with the fox, that is.
And yeah, then scaling up from there, really.
We're also not sure if you guys are going to be there.
The whole crypto circus is moving towards LATAM in Q3, Q4.
And that's a massive market for the Swiss franc.
Because if you have, maybe actually Israel as well.
What does it mean, Latin?
What does it mean?
Latin America, Brazil, Argentina.
All those currencies with huge inflations,
stable coins are a massive, massive opportunity
because you suddenly have an efficient way
to go out of your local currency
and are not forced to stay in the local banking system
and in the local currency.
Yeah, and also because many people use it,
there's also the other use case that you've mentioned
that you guys are working on of payments
that people are actually using. So I think if we try to like broaden the view i think that
at least for now and again like correct me if you think otherwise the two main
things that people are able to do with those stable coins and the two main reasons. Like you either want to do payments, salaries, whatever, deals,
or you want to earn yield.
Like anything else?
Yeah, and I believe that for salaries and all that kind of stuff,
the dollar is really good at it.
And, you know, Kmetz and Gabe, you know, if you have a different opinion,
please, please, please ping in here.
So for transactions, having one shared currency is advantages.
However, for a store of value, that is a different ballpark because then you want to have the US, where, you know, the Swiss franc is in lockstep to what the local American politics are doing, basically.
Yeah, I yeah. Just to kind of piggyback off of that, you know, it's interesting at Protocol FX. effects, we launched originally with a stable strategy called FE, fractionalized ETH. And it
still exists and it still has a good bit of adoption in the protocol and in DeFi itself.
So FE is basically a form of ETH that basically, it was originally launched. It was pegged at a dollar, but it moved with 10%
price movements of ETH. So it basically, it was a store of value that reflected the price
movements of ETH. This is fantastic for people that want to save their money that's reflected
based off something that's not completely attached to the US dollar. So if you're bullish on Ethereum
and or even, you know, basically just the yield that you can receive from it as well,
which it received that staked ETH yield, was very attractive as a store of value. However,
one of the obstacles that you have with trying to use FETH as sort of like a unit of currency is that it's difficult for people to kind of like quickly translate into.
And you have to build up liquidity on chain for it through various DEXs and platforms and other L2s and you name it.
other L2s and you name it. And so, so that kind of like hits, it becomes asking yourself, so, okay,
so, so this is going to be quite a massive effort to create for adoption. But as far as like a store
of value, it's incredible. So it's a, it's a great savings account. But the dollar for now is
basically the sort of the universal, you know, unit of payments and kind of unit of
transaction that everybody kind of has to filter things through. Even in our protocol itself,
it relies on oracles, which are, you know, utilize the dollar, you know, very heavily just because
it's so robust and there's tons of liquidity uh behind it but um you know in the future it
there's just lots of opportunities especially like if you look at something like ethereum's
next upgrade pectra um whereby you'll you won't have to use like even eth for gas out of your
wallet you can use other tokens so once you have tokens that can be utilized by others for, for anything,
and, and basically the protocol sort of like figures it out for you, like, you know, what's going to be happening. It's almost sort of inconsequential what you use as your medium
of exchange. You know, if you go and buy coffee with Swiss franc or with a dollar in the end,
it's whatever the merchant, they
get whatever they requested. And so it'll be interesting to see how these sorts of translate.
But for now, you know, there's really a couple of strategies for sort of like getting use
out of a stable coin that's not the dollar. One of those is you can just pay people you can pay folks to
hold your token and that works great uh but you you do have to continually uh keep paying for it
the other one is um you have to have a very unique strategy that that can only be accessed via that
token and uh right now this is sort of like kind of like one of the hidden cheat codes that the Frankencoin guys have kind of stumbled upon.
And so we have ProtocolFX with these Morpho vaults and the ability to borrow against basically leveraged tokens, leveraged positions in both ETH and CVX with our XETH and XCVX products.
CVX with our XETH and XCVX products. And so this enables folks to borrow against these leveraged
positions and take out a loan in ZCHF and then take that and they can do whatever they want with
that. There's liquidity on Curve and Uniswap, a lot more on Curve, and they can swap that for
if they want a dollar stable
coin and one of the cooler strategies is to swap for a dollar stable coin and then go and um uh mint
uh the the corresponding f f asset uh for the uh x token that you you borrowed against so so if you had say um x eth you could borrow zchf you could
swap that to say tether us tether and then take that um and mint uh feth against it and then
deposit that into the stability pool and you so now you have a leverage long ETH position that is now earning stables.
And so you are basically paying yourself to be levered long,
which is like a really cool, almost like a permanent negative. Quick question here.
Why would you switch to USD?
Why would you not stay in the Swiss franc?
Just basically, if you hold Swiss francs uh you can deposit that you can get
an earnings rate on that as well right um that well that's that's certainly one option as well
yeah i mean there's there's uh because you guys have a you can you get deposited into the um
the lp for uh zchf as well um or the pool yeah exactly i mean there's there's definitely different options uh to utilize the
tokens you know throughout throughout d5 but um this is just kind of like one of the the cool
things that we saw with protocol fx of of being able to integrate zchf into into our products as
well what are some of the benefits that you see in it? What was the opportunity?
And then after you, maybe Gabe, maybe you can relate,
like as the Morpho curator, what was your perspective on the opportunity of,
okay, let's try to grab this instrument that not many are using necessarily right now.
Well, the main advantage that I saw with it is um is it basically
gives people that are leveraged long on these these these products the x eth and xcvx as a way
to enhance the leverage that they already are capturing um one of the one of the interesting
things about sort of like x eth and xcVX is you can't really control your leverage.
And so you're sort of at the mercy of stablecoin users holders were also the stable coin holders as well in the protocol?
And so by using your X tokens to mint the corresponding stable, you're enhancing the leverage that you already have while also earning that yield. And so that's where ZCHF really has kind of came into full viewpoint
because it's basically they just supply some liquidity on Morpho. And we've seen like,
I mean, at times when the market's doing great, you're seeing like almost 100% usage of the assets,
the ZCHF. And so it's been really cool to see that and i think
uh there's definitely demand there we just need uh we just need you know some some some more uh
stability from our world leaders but uh but once they do um it's it's pretty exciting to kind of
see what's possible with with those strategies yeah so actually to tie in how it came about is um so as mentioned i i'm a
curator on morpho and it's actually interesting how this all came about because i'm quite a newish
member in the aladdin dao community um because uh i went there and asked also for, for do some gauge voting for curve, for curve pools.
And there is basically where I met KeyMads.
He helped me to get the gauge votes,
pile of Vietnam, shout out to Serial,
shout out to the Convex guys.
They are badass.
And so that's basically,
and there is where I got introduced also to FX protocol
and started using it. And the V2 version, Prime Dominant V.
And there I actually learned that what the guys at Aladdin that were building is like crazy, insanely interesting.
And then I thought about, okay, is there a way we actually could start to build a market for this uh x token assets on morfo
and usually you know with some some assets it's you always have to think a bit okay who who would
be willing or open-minded enough to provide uh the the loan asset for that a stablecoin loan asset
to start it and then um it's because uh thanks that i got introduced to johannes a
while ago i reached out to him and also asked hey would you guys be open-minded to use the swiss
the swiss stablecoin to to actually build this this market with this super super smart people
from aladdin dao and uh k mats cereal and so on and they immediately yes sure let's do it and that's cereal and so on and they immediately yes sure let's do it and that's how i actually
came about and and as k-mates already mentioned so when the market goes up because well it's
it's a long position you do right now right so so usually you don't open a long while we are in a
downturn right so um but when we are in upturn uh it's like as km8 said uh very popular and people like it to do it and
now i just hope more people see it because it's super super uh cool opportunity to loop it and
like km8 explained it to build up a position with it thanks to the frankencoin guys
yeah and and and just just to kind of piggyback on that as well. Uh, one of the cool things about being able to earn yield on a leverage long position is you're almost sort of like, uh, reimbursing yourself if you do have losses, uh, while holding the position.
being liquidated. It's just kind of a really cool way to kind of like give yourself a little
bit of downside protection. And kind of like if you just want to hang on to that position,
you're like, I'm not going to, if I'm super bullish, ETH or CVX, when things rebound,
I want to still have this position and don't want to take any sort of like uh you know tax loss or or what have you uh you can just hang on to it and
and borrow against it and um and and earn that earn that yield like you were talking about d5
advisor yeah i think that's what uh most of us are here to talk about and discuss probably so
by the way guys any chance that one of you is going to pop it on the screen and show how
and what can someone do with it?
I mean, that would be Gabe's mark, right?
You're a curator.
Show us in real life.
You basically brought together protocol effects
and a frankincoin.
Now show us what you can do with it.
I'm putting him on the spot here, I know.
But he can handle himself.
We can also like...
Oh, you are on mute.
Yeah, I don't know.
Do you see the message I posted, the links to the vaults in the chat?
Oh, that's in the Twitter chat.
Nope, nope.
But you might wanna share your screen.
Just a second.
I don't see the chat.
Like maybe Restream is not exactly the same as it was
because, ah, okay, wait a minute.
No, that's not like,
no, I only see in the comments what did you write uh
great or maybe you can write it on telegram so that's it
oh wait maybe some something made a sound of connection right now okay yeah should be good
okay here we go where are you you want the morpho app or well yeah that's on the morpho app so so basically how you get here um i hope you still see it so this is just some test accounts
so what do you do here and when you want to get uh benefit of it you can basically um filter by
filter by Alpha Pink, for example, and then you see, we have here Falcon.
And so we have here the Alpha ZCHF Vault, which we did together with the Swiss Fran guys and KMets help.
So you can see when we go down here, we have like these two markets, the XEF and the XConvex one.
And so what you can do now if you want
to benefit from it let's go on the xe if you just click on that one and then you can supply xe here
you just click here and borrow the swiss franc and then do the magic that kmets explained so what you
can see what is very interesting is right now the borrow rate is extremely cheap so the swiss bank guys
they give you swiss stable coins at a very very cheap rate that you can get um to then do the
define magic nice and that all happens on the morfo on the morfo. You can do it directly there. So I posted the links in the chat.
So I'm not sure where to display it
because it's for me the first time
I use the streaming tools.
But we can also after the stream,
I will put it in the comments.
By the way, any usage for this up so far?
How long has it been oh so it's been running
now for about one and a half months i would say roughly is that about correct about one and a half
months and so we see uh who use it a lot are the convex uh is for x convex convex pretty popular
are the convex uh is for x convex convex pretty popular x eve also popular but there is more like
i think one there's some guys with bigger position who just play with bigger positions
but where we have more users in user terms is on the x convex one they really played well
nice and shout out to you, Gabe, by the way,
for thinking about an integration
and putting it together.
I'm sure you've found the right people
for sure.
And I think that just like Sirius
that you've mentioned earlier,
a big shout out to him as well.
I actually think like people who can really
like think of stuff and like
connect the dots. i actually think like people who can really like think of stuff and like uh
like connect the dots it's exactly it's astounding what can happen in uh defy and it's a very very uh important uh role like uh exactly especially the aladdin
that was like such a group of giga brains and uh i just thought it was an amazing idea to bring um
the the aladdin dow assets together with frankencoin because frank as a swiss as uh johannes
mentioned before i'm a swiss also so to kind of bring the swiss frank come more into the d5 world
one one step at a time that would be really I'm looking forward to it and hope more people
will use it.
Go ahead, Raymond.
I was just going to say one additional strategy that is with the AlphaPing Morpho vaults is
the ability to place BTC in the vault and borrow the Swiss stable coin against it.
And in fact, Gabe, I don't know if you have that up again,
but you might want to show on your screen that the borrow rate for ZCHF against Bitcoin is,
it's extremely low right now.
right now. And so it's an incredible opportunity if folks want to take advantage of that right now as
And so it's an incredible opportunity if folks want to take advantage of that right now as well.
well. So that's like, you know, one of the things I'm wondering where, where, um, how are, and that
it's not, it's not just, it's not just this one. Like in general, if you look at the borrowvolts,
um, on Morfo, right. Uh, those rates, they, they are substantially lower than what you would get,
they are substantially lower than what you would get,
let's say, even on treasuries, on USD treasuries.
So that's obviously, of course,
like this world has only limited liquidity at the moment.
So I think it's like 400,000, if I'm not mistaken, a bit less.
And but yeah, so this is a macroeconomical question.
I don't understand, like how did those, and this is not, this is like something we observe
if you go up, up to borrow, um, general and then, then select like, you know, against
Bitcoin, for example, those rates, they have come down tremendously like crazy and and i'm wondering you
know kmetz and and gabe and and the advisor like what do you think how can this there be such a
huge misallocation between even you know rates which you will see in in the trat fi and and and
how can crypto rates be so much lower i don't know know. I'm a bit at a loss of words, to be very honest.
You know, I think about that quite often
in terms of like the ability to get
basically those rates like you're talking about,
the discrepancies.
And I think a lot of it just comes down to
A, appetite for risk.
But B, and I think this is actually like the larger one,
is just asymmetry of information.
I think it's very difficult to find sort of like
that central repository of information in crypto
other than say something like DeFi Llama,
which does a fantastic job.
But you first have to know to go to DeFi Llama.
And I think if you're in the TradFi space
or coming from that or not a DeFi native,
that's not your first place to look
and you don't know where to go.
And so I think as the space grows,
as it gets larger,
those discrepancies will likely sort of,
obviously kind of like the arbitrage will
shrink but for now uh those of us that are here that are aware of it that that understand sort of
like what what's possible uh can can really sort of like take advantage of those those rates but um
you know uh even even even on the discrepancy within defy itself as you're talking about uh
you know ave versus morfo it's it's, you know, Aave versus Morpho.
It's still, you know, I think we have a lot of tribalism and people kind of like focus on their
one thing and they have their one strategy and it might venture outside of it, but might not. But
I just think that, you know, that until we have, you know, millions more eyeballs looking at all of these strategies and vaults and um you
know stable coins uh that that it's gonna kind of like just be popping around like that so so
i recommend folks take advantage of it while they can yeah so so actually right now there
there are actually two alphas that i could share so one is um morfo just uh rolled out i think
today actually um a new function which is called migrate
where you can migrate your positions on ave or compound directly to morfo and the second one
that we went uh through the screen on morfo is like well the auto alpha is if you recognize the
swiss stable coin which has a market has liquidity and everything and you can now right now borrow
against uh borrow um bitcoin uh uh well no use Bitcoin to borrow Swiss stable coin at like nine basis point, which is like
it's nothing.
It's free money.
It's literally free money.
Right.
And you even get on the other side, 3%, by the way.
Yeah.
So you not only like, you know, one discussion we always have,
and it's a bit unfortunate and maybe, you know, very much connected to that we're very early
and people don't understand our markets work often,
is that, you know, people just plainly compare yields, right?
So you have, you know, 5% yield on us dollar is worth more than three percent on
on the swiss franc what they forget is forward rates if you know and exactly what we've seen
last last last week right if you hold the swiss franc and you hold the us dollar and and the
swiss franc goes up or like the dollar goes down 6%, that's like having a 6%, that's actually way more than a 6% annual yield
on the Swiss franc, right?
So oftentimes, that's why those yields are in ratified markets
so much lower in the Swiss franc as well,
is that just basically because the currency is expected
to be substantially more stable than the dollar.
Holding it even without a yield, because inflation is lower,
is worth more than basically holding the dollar with yield.
And it's not shiny numbers, but yeah,
that's one thing we're hoping to really change a bit,
that people realize, oh shit, actually this makes a lot of sense to hold this asset, even though it doesn't give me this boosted, whatever, super high yield.
But the awareness and education, no?
Yeah, it's awareness and education.
I mean, probably any traditional investor who is coming to DeFi
will already know that because that is, you know, the Swiss franc.
There's a reason why the Swiss franc is so large in traditional finance.
It's huge.
It's completely outsized to the Swiss economy and the size of the country.
On the other hand, like, you know, just because, like,
I think to relate to that point, I think it's going to be probably easier to convince TradFi to lean into a Swiss franc stablecoin rather than retail.
Because they're like already familiar with the advantages of holding Swiss francs.
I mean, on the institutional side, yes.
However, I mentioned this term perfect storm at the beginning,
and that might actually change, right?
That now with what is happening in the US,
there's many people that are now suddenly looking for alternatives
looking for alternatives to the dollar as well, very actively.
to the dollar as well, very actively.
And that's where we believe that this might be a very good point in time to convince people
that, hey, actually, some diversity in your star of value positions is not a bad idea.
And that's why we're also, you know, we're so glad to have people like you mentioned and Gabe
to say, okay, well, yeah, let's make it a part of DeFi. Let's allow people to access
different strategies and products also denominated not only in a dollar, but in a Swiss franc.
Yeah. Yeah, I think just to say like I see the points, you know, with the forward rates and all
that, you know. Well, you know, the other cases with the USD dominated stablecoins, what many
people do, you know, they also do a looping and also a pretty low risk looping which brings your
yield pretty high so i personally hope i look forward that that we can also create more markets
and uh and tooling you know to to also do this low risk looping for for a swiss franc stablecoin
you know to also in this looping market stay competitive when it comes to rates.
Question, guys.
Where does the yield in looping come from if it's not subsidized?
In the borrow and borrow?
That spread basically would make it cost more, not making more money. So you would have to have a negative spread, right? Oh, no, sorry, I talked from yield bearing
stablecoins. Yes, but if you can basically then borrow them cheaper than the yield you get, or the deposit, then you have a negative spread.
If the borrowing is cheaper than the lending,
what you will take out,
otherwise you wouldn't be able to loop, right?
Or am I understanding something wrong here?
Maybe Kmetz, you can, or both of you,
who are a lot deeper in that side of DeFi than me can enlighten me here a bit.
Yeah, you're absolutely correct.
But I think what Gabe was saying is that your collateral has to be generating that yield,
like a yield-bearing stablecoin like a staked CR uh you know fx save or something like that uh and so uh with
the with the current strategies that we have you know they're they don't generate any yield and so
um at least the x tokens don't but uh but but by by borrowing zchf um as you're talking about it
does like slowly appreciate in price.
So folks just have to be, you know, kind of aware of that as they, you know, collateralize as you would any loan.
But the spread comes from, despite the fact that's going up, if you deposit into sort
of the vaults that FX protocol has for the stability pools, basically you're earning like 30%, 40% interest
just without any looping.
And that comes from,
it's probably closer to like maybe 15% at this point,
but that comes from basically just those vaults
are collecting yield from the entire strategy
from like the staked ETH or the staked CVX.
So yes, to your point, if one day folks do want to collect that spread,
like if you're saying that sort of the ZCHF is actually going up at say 3%
and stablecoins and Dey are just wildly popular and, uh, say, uh,
you know, state CRV USD is, uh, earning something like, you know, um, uh, 4% or 5%,
you could loop it up. And, uh, of course just collect that spread and just, you know,
live happy the rest of your days. So, uh, it, it, it's interesting. Um, there, there's just
going to be like a lot of like sort of
like those things, as you were saying, like the forward rates that people are going to have to
like kind of take into account. And that just comes back to sort of like that information
asymmetry and education and everyone just trying to really just get the best understanding of sort
of like, how do I borrow at this rate? How do I lend at this rate?
And really sort of take advantage of that
to maximize capital efficiency.
Exactly, exactly.
So yeah, that's what we're building, really.
And hoping to make DeFi bigger.
Oh, Johan, I have a question, if I may.
Do you see any upcoming potentials
or to use the Frankencoin as a collateral
to mint certain US-dominated stablecoins and so on?
Yeah, actually, why not?
You mean ZCHF?
Yeah, so you use it as collateral.
Yeah, yeah.
It's a great idea.
It's a great idea.
Because, you know, it's so much easier for people to think about dollars, you know?
Like the captivated audience, or however you call it, You know, like we're all rushing to the dollar.
Like, that's the game we play.
That's like you have to pay to whomever.
It's much more likely that they will accept dollars than anything else.
I mean, it's actually a very interesting one because you, in fact, what you do by that is you would go short dollar, right?
So if you provide a franc coin as a collateral and then you mint dollar and you sell those,
you do something with them and that's actually where you want to be.
So, well, we should create a market.
I mean, you're the...
Because I have a real situation here where I would like to get your guys' thought.
And so there's a new project that some of you heard about, I guess, or everyone is like
called Falcon Finance by DWF Labs, incubated by TWF Labs. So there's a new
yield-bearing stablecoin. Works similar like Iffina, but my guess is, or I'm betting on that,
it will be actually bigger than Iffina because it's already huge, huge commitments already.
And they have a yield-bearing stablecoin which is called the SUSDF. And
so, what I was thinking, because I do the Morpho Vault creation of the Falcon Vault,
and I really was thinking when I heard you talk about all the Swiss franc stuff is...
This one, Gabe?
Yes, yes, correct, this one.
Exactly.
So, quickly to Falcon Finance.
So, it's now, they will launch publicly, I think,
around end of this month.
So, in beta, they already have over $130 million,
multiple hundred millions in commitments. So, that why I was thinking like, as a case,
if we can use the Swiss franc or the Frankencoin as collateral to mint USDF, which then, of course,
which is the, which is packed with US dollar. And this you convert into the SUSDF, which is
a yield bearing token and currently they generate
about 15% yield on this token on the SUSDF which is the yield bearing one stablecoin.
And yeah, so that would be my question for Johannes. If he can see there a possible
interesting, I don't know, partnership,
or I don't know how to call it, like as collateral.
Yeah, I mean, there's loads of interesting ideas here,
and there's also conversations going on.
The question is like, how do you sign it?
How are the risks? Because, so, you know, USDF, what it is,
it's yield-bearing so there by holding it you're
taking some kind of risk and it's some kind of partially kind of like centralized risk because
you're taking risk against the entity which is behind it and the strategies they're running on
it so I see those type of products they They're somewhat on-chain hedge funds.
You deposit money and you get a yield in return,
but that money is used for something
and that creates some risks.
It's not like Tether or Circle,
which are very, very conservative
to what they do with the money.
So it might not actually be that stable.
And you have to differentiate
let's say if you
say okay you make a pool
let's say USTC
and Swiss franc
you make a pool USDF
Swiss franc it's two very very
different things which
also have to be looked at differently
you can't just say stablecoin, like US dollar stablecoin,
Swiss franc, that's not what this is.
This is a yield bearing product.
It's a lending product in some form.
The Swiss franc, like the franc coin as well, right?
It's also, it's a CDP, so it's not a fully backed stablecoin.
It's just, it's a very conservative, over-collateralized one
that is fully on-chain,
fully transparent.
So a bit like MakerDAO,
which UCF is not.
So there's definitely,
there's loads of ideas
and really good strategies
and things you can do with that.
It just takes a bit of time
to figure out what is the best way
to implement it it that it makes
most value and especially that you are taking on a risk which you actually can control and which
you know where the risk is because often the issue with those type of things is that it looks really
good on the outside right you get a 35 yield it, but you don't actually know where the actual risk is
until that risk becomes a reality and the thing blows up.
Well, so you mean the USDF coin?
Which is, by the way, also an over-collateralized token.
But where do the 35% come from then?
If it's an old-class token. You mean SUSDF, which is the yield bearing one, it's the USDF.
That comes to institutional trading, different trading stuff.
Exactly. But in the, you know, if you look at TratFi, a hedge fund that makes a 35% yield is an ultra high risk hedge fund.
Right.
You don't like 35% return on a hedge fund and on a liquid strategy is a very high return.
So that's,
that's what I'm saying,
right?
So you have always,
you have to look at,
okay,
where does it come from?
How is it structured?
What is it really behind?
Where do I,
where are you taking counterparty risk?
Where are you taking a market risk? Why are you taking market risk?
Why are you taking cost of risk?
Why are you taking smart contractors and so on?
And make sure that your own protocol doesn't blow up
because you're taking on risks which you can't really
quantify in the end.
That's what I'm saying.
But yes, so to sum this up, yes, there's really cool ideas and
really cool things you can do and which we're doing. But then once again, right, this is an
open system. Anyone can come. And this is what I love about DeFi, anyone can come and create that pool and also make money with it by taking out a performance fee, taking out a management fee.
And using all those different things, such as the USDF or the SUSDF or the CCHF or the XETH or whatever asset as a building block to build your own strategies.
And that's what fascinates me.
It's just, you know, you can also do that in the real world.
It's just a lot more higher barriers.
And here you can just go in and you say, okay, hey, this is, I believe there might be market
potential for that.
Bam, you build it, deploy it.
Yeah, interesting.
Well, yeah, who knows?
Like, I'm sure there are all kinds of possibilities.
And I like the creative thinking.
And I do think that it's actually a genre probably quite worth exploring.
And by the way, guys, I want to touch on another topic that I think often is not really discussed,
but I do think that especially in this kind of case,
it is relevant.
How do you go about and market it?
How do you actually spread the world?
How do you actually spread the world how do you actually gain like
how do you get users to use the product you know not just the technical aspect
of okay yeah it's a great product use it like how do you actually get to the
people like rich new audience who's the target audience in a way and how do you go about it and I will just
say that one way to do it is by getting the QR code slot for squid and if you
can guys check the screen right now we have an amazing new auction system based
on our token squid that everyone's earning right now on the
stream by the way because you also want to put any kind of Leviathan news participation whether
it's the headline side of the thing submitting headlines and I really think that like we also
have this kind of well the same juncture on that front and I'm sure by the way that FX and
Morpho and Frank are all at the same front. How do we actually grow the industry and not just talk
about growing the industry inside our own little pool? You know what I mean?
I mean, I can only talk for myself,
but I have the coolest job in the world because I'm Swiss and,
you know,
I am out there selling the Swiss way of life a bit.
So that's really what I'm doing,
you know,
talking about,
good.
And,
I believe that,
you know,
once,
once you have, once you believe you're on chain
and you say, okay, I believe in this Swiss style
or Swiss whatever,
then the franc corn is a very, very close, obvious choice.
And how do we do that?
I mean, actually, it's just a bit of a funny debate going on.
We did in Denver, we did a cheese tasting because as I said, you know, Switzerland has cheese, chocolate and a very stable currency.
So we did a cheese tasting in Denver and now we're doing a chocolate tasting in Dubai.
This has actually been picked up by a gentleman called Cryptophile or a lady called Cryptophile,
wondering who the heck would do something like this, like a chocolate tasting event.
And yeah, it's earning quite a bit of views, right?
Because then you might know Kevin.
I don't actually know.
I don't even know those people.
Mr. Shift, you know, huge follower base on Twitter.
Now talking about chocolate tasting in Dubai.
And that's exactly where we want to be.
And that's exactly where we want to be.
So you're saying that, okay, the marketing strategy for now, cheese and chocolate.
Relevant.
No, cheese and chocolate and, you know, having like a stable team, a stable turn of stable tech, we're boring.
You know what I mean?
We're the Swiss guys.
We don't do shiny things.
We do honest work.
So I think one key factor that the Frankencoin guys have latched onto is partnership integrations.
That's huge, right?
And so having jumped out to kind of like with AlphaPing and doing these vaults is very important
because the more partners you have, the more integrated the products get, the more people
use them, the more other people are talking about your products as well so there's that um obviously coming on the viathan news uh chit-chatting
with our buddy defi advisor uh is a huge uh marketing push as well and so uh yeah yeah man
you know like obviously tvl is right now growing uh as we speak like mean, how could it not? Masses are flocking
into the Swiss,
Frank,
changing,
changing world economies.
but you're right.
Right.
for that,
you know,
people need to know about it,
but people need to be,
exactly.
And of course,
I mean,
like that's,
I mean,
that's the whole point of us doing the show, but that's exactly why I'm curious about other ways that you guys are expanding. And I think it's coming from a place of me thinking about how to expand Leviathan News in a way.
effects, it's the same issue.
And with AlphaPing or Morpho,
it's always the same
issue. Because still,
guys, we're in such
a tiny pool.
You know what I mean?
It really
does seem like we're
talking to a few
tens of thousands
of people at most.
I mean... As, as like over 90 or 90 something percent
of the capital in the industry.
You know what I mean?
Like, I don't actually have the data.
It's an estimation that I'm having.
And if someone can contradict me with other facts,
I would be happy to learn about it.
But it feels so small.
No, you're right.
Also, when I actually look at the stats,
even the top DeFi stablecoins,
like, for example, BlackRock is putting money into Biddle,
and it's so easy for them.
But even them, it's like they've put 2 billion or something like that,
almost 2 billion, and they're already at like the seventh place.
You know what I mean?
So how do we actually spread the word?
Because I'm actually very curious about how to do it for Leviathan News.
UX still is really bad.
Yeah, that's true.
I had a talk about it with a friend the other day.
He was trying to move some funds around
with multi-chain or whatever.
Man, we can't expect any normal human being
to do this kind of stuff.
They have to not know that there are even this kind of...
We have to dumb it down to levels that I don't know if people are willing to...
Not dumb it down, make it usable.
It's a very...
Yeah, I'm sorry.
But Kmetz is really right.
I mean, the way to do that is by integrations.
So how we believe, and that's...
I mentioned at the beginning, right?
Like one of the biggest challenges we are having right now is the frictions to get good integrations with,
you know, on-run providers, with, you know, players with one leg or in the TratFi world.
They're huge, but those frictions, they're not even technical because, I mean, technically
speaking, it's an ERC-20 token. It's like, come on, just, you know, it's another token.
It's the processes, it's the compliance, it's the changing regulatory landscape and so on.
So what you need to have is you need to be able to work with,
I mean, there's large neobanks, for example,
that are playing around with stable coins.
However, this is just a question of time in the end.
It's a question of time and becoming so big that it can't be ignored anymore.
Right?
The thing with the stable coins is they're...
Let me give you a very concrete example.
Credit card fees.
So credit card fees are merchant fees more than anything.
And that's the first big problem.
On the user side, you don't really pay fees, right?
Now with crypto cards, I do.
That's one big downside.
And just a little question.
I'll address that in a second, Romer.
But on the merchant side, you pay in Switzerland about 2%, 1.5%, 2%.
In the US, I think it's more like 3.5%.
I'm not sure how it is in Israel, probably also up there.
And is this a pain large enough to warrant a switch to a completely different technical system?
That's a big challenge you have, right?
So stablecoins in many forms they
are more efficient they are better they're a shared system they solve a pain but is the pain
already large enough or do you have like how can you make that um lazy or that that it that that
lazy you can overcome that laziness to change or that resistance to change.
And I believe it's basically time
and the strategy of many needle pinches,
needle, how you call it in English?
Like little stabs,
millions of little stabs.
And that's how we will change.
But that is just taking time.
It's the old, how do you eat an elephant one bite at a time sort of trick.
Exactly.
I think ultimately, if we think about how probably each of us got into crypto and DeFi,
the main attraction, I think, is, if we're honest with ourselves, number go up technology.
And I think that that certainly is going to play a very large role.
It's just the as we talked about earlier, the spreads that you can get from and the yields that you can earn, the permissionless opportunities.
As these expand, it will attract people. If the opportunity for
gain is greater than sort of like whatever the perceived risk or technical difficulties, people
will learn to use wallets. They will learn to use the systems that we have in place if the opportunity
is great enough. And I think that's sort of like what our industry really needs to focus on is in addition
to sort of like user experience so that those people that do want to embrace that opportunity
can do so with as little friction as possible.
But ultimately, it's about not rug pulling people.
It's about really making sure that
the good actors that are really trying to create something new, impressive, different, and
exceptional for folks to use and make their lives better is ultimately what it comes down to. And
that's sort of going to be the ultimate key is just like, are we really improving the financial
system? Are we making a difference?
And if so, and doing so in a way that people can legitimately change their lives and their
outlooks as to how they approach their finances, then I think the growth is inevitable. And so
I think you've got a lot of smart, talented people working on these things. And, you know, like Johannes and Gabe and DeFi Advisor yourself,
you know, is you just kind of keep plugging along through the points
where it's not number go up.
One day the number will go up and it will be quite rewarding for everyone.
But I think we just need to keep the big target in sight, and one day the adoption will come.
I agree.
So let me quickly address that question, because that's been standing in here for a while.
So the question is, if you want to, exactly.
So hey, just trying to stream, was looking at CHF stables the other day and could only find CCHF Earnvolts on Morpho.
Any other on-chain venue where you can use it as a collateral and borrow USD stablecoins?
So, you've joined just a tad too late because Gabe and myself, we actually had a discussion about exactly this case about 10 minutes ago.
Not yet.
I think that is the proper answer, but the longer I think about it, the more it makes sense.
Because what you basically can do with that,
you can short USD against the Swiss franc.
And that's probably something which might be in quite high demand
at this point in time.
It's basically the number one selling point of the Swiss franc.
Correct.
And then you can leverage short the dollar.
Yeah.
Actually, I just think that because, like,
for the actual liquid capital or the thought of it,
it's so much easier for everyone to think in dollars
because whatever price you ask for,
you're given that price in dollars because whatever price you ask for you're given that price in dollars and to touch on your points there came it's actually think that you
know I don't think the actual big audience is gonna come until some of the
stuff that we see as front and like stuff becomes back and stuff like people are not
really in my opinion that into knowing what's a network and uh wallet wallet maybe network like
once you have to go to bridges and networks that's too much you have to at least allow like just a
just a swap or whatever i think that uh we have a long way to go on that front.
And I really think that UX is...
It is a bottleneck for crypto, I think.
We're not getting to the level that we should be at.
But by the way, I think to touch on another point
that you've made that I definitely do agree on,
it's about integration.
It's about getting to the right depths and the right partnerships and having a lot of, like, we have to eat TradFi and especially FinTech from within, you know?
We shouldn't, like, be blocking them out.
We should, like, be integrating with them, at least in my opinion, at least in some cases.
And just
having the revolution come from
within.
Because they have the reach.
And by the way, I think that we're all under using
Telegram, by the way. I'm sure that with
Telegram,
such a huge market.
There's also things coming. By the way,
I have to jump off in two minutes.
Latest.
But so actually, the Telegram comment, yes,
it's technically, unfortunately, not that simple
because like bridges and so on, they're not that advanced
there in Telegram.
But we're exploring ways on how we can actually
get the front corner to telegram as well as ap
i think it's a good direction for every project in the long run i think they have such a huge
consumer network them and some others who knows anyway guys really appreciate your time. I apologize if it took a bit too long than I planned,
but really enjoyed having you guys on
and it was really fun for me going back on the stream.
And I don't want to keep you guys waiting too long.
So thank you, everyone.
Good luck with the partnership.
Go check out Frankencoin and the Swiss Frank protocol effects.
Of course, of course, both version and more for an alpha ping.
Thank you all for joining and come in there.
Like join us at the bathroom news everyone.
And try the auctions.
Definitely try the auctions. Definitely try the auctions.
Gonna try and pop up the QR code again for everyone.
Bid some squid, get some advertising
for the best audience in the DeFi industry.
Honestly, in my opinion, guys,
this is a slot that you should consider.
I don't think it costs more than like 20 or $30 at the moment.
And it's the QR code for a week on the corner over there
like the previous ones.
I don't have this one at this size,
but it's kind of like this one or this one that we had.
We also had one for effects of course,
like a quick snap at it.
Maybe it's this one.
I don't know.
Anyway, guys, thank you for your time so much.
And I appreciate you.
And bye, everyone.
Bye, folks.
Adios, everybody.
Adios.
Take care.
Cheers.
Ciao, ciao.
Bye bye.
