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Stacks DeFi Show #49
Recorded: Jan. 14, 2025 Duration: 1:04:01Space Recording
Full Transcription
Hello, everyone.
Welcome, welcome to the Stacks DeFi show number 49.
Just waiting for everyone to trickle in.
And, but let's do a quick, quick mic check, maybe thumbs up if you can, if you can hear
And let's see if you can hear me, and let's see if I can say something real quick.
Hey, hey, hey, good morning.
All right, all right, all right, all right, fantastic.
That's Dylan.
Hello, hello, hello, that's right, amazing, great to have you.
Great to have you here.
And the one and only Peter.
No Peter.
No Peter yet.
No Peter yet.
No Peter yet.
All right, let's.
Wait a brief second for.
we're also still missing missing philip oh i see peter is moving from listener
probably back to speaker very very soon
so let's give it a few more minutes and then
i'll get going
all right could be checking if you're back peter
i thought it was just dead silence and nothing was happening but actually no there wasn't
everyone was talking but yeah i'm back just checking just checking oh that's great that's
great but we all know the show doesn't start the show doesn't start to a flip gets here so
it's all irrelevant until the man's here that's true that's true that's true he's uh he's joining
as we as we speak so um there is there is philip philip are you uh are you there yeah what's up
how's it going amazing amazing i mean seeing as we haven't officially started yet maybe uh a quick
a quick tune and then we uh we'll get into things that sounds good i've got one ready let's go
You pump it up, it's not so long ago, that's a shout, it's an ancient, every Saturday night, on your favorite radio, the pop is jumping in, and the vibe is so strong, throw your hands in the air, lift your head up, you know you've got to sing along.
Don't you know, pump it up, you've got to pump it up, you don't you know, pump it up, you've got to pump it up, you don't you know, pump it up, you've got to pump it up, you've got to pump it up, it's not so long ago.
Yeah, yeah, we haven't been bumping this much in the market, so why not bump with the song a little bit.
How's it going, Tycho? Are you doing?
Good, good, good, good, good, good, yeah, that's right, I mean, you know, you've got to invoke the pump every now and then, right, so.
Respect the pump, respect the pump.
Exactly, exactly, exactly, now things are, things are going well here, just, you know, honest, honest day's work, you know, behind me, I would say so far, but, but yeah, cooking up a lot of, a lot of, a lot of things, and yeah, also excited to see that the Stacks TVL incentives come, come to fruition, right, that we've been, that we've been talking about for, for a while.
So, yeah, that's, I guess, kind of very much going to be the, you know, the kind of, the, the cork that opens the bottle, so to say, to, to really, really get things going in, in, in, in, in Stacks TV.
But, but yeah, what, what about you, how's, how's everything going this, this week?
It's going well, man, I've been, been pretty, like, productive code-wise, been pushing out some codes that we're going to release soon.
So, yeah, it, it always feels good to write some codes, you know, once you're in it, sometimes hard to get started, if, if you need to do a lot of context switching and stuff, but once you're in it, it feels amazing to just, like, commit codes, get a ready-for-review, you know, it's one of those stats that, when you do them, it's like something visual happens, you know, versus, like, sending an email or doing a meeting, it's like, yeah, great, you've done that.
But, it's hard to look back on your work, then, and say, this is it.
And for codes, at least for me, I, I have this feeling of accomplishment somehow.
So, yeah, good, good feeling, great.
So far, my, my rant or whatever, but, yeah, all good.
Good, good, good, good, good, good, you are.
And we have a very, very exciting, exciting gathering here with all the, all the great, the great people of, of Stacks DeFi, you know, we kind of switch it up every now and then.
Sometimes we have guests from outside the ecosystem, but, you know, today it's all about, all about our, our ecosystem, which is, you know, how it's, how it's supposed to be.
But, but, yeah, maybe we should, should do some intros, of course.
Anything that's said here is not, not financial advice, but, but, yeah, shall we pass it, pass it around the horn to, make, for everyone to make themselves known?
Maybe Dylan and Peter and Blaze want to, want to start?
Yeah.
Hey, everybody.
Yeah.
Hey, GM, GM.
I'm Dylan from Bitflow Finance.
We are building a decentralized exchange for Bitcoiners.
You can show up and trade and earn on, with B2C on Bitflow and get a very powerful DEX aggregator for you so that, you know, you're always getting the best rates, whether it's on Bitflow or Alex or Velar.
And so, yeah, best, best rate on Stacks and expanding to aggregating on layer one as well with some of those swaps and some smart contract automation.
But, you know, and I got to, you know, tip the cap to Philip, you know, for being the pioneer on, on keepers on Stacks.
It's, yeah, pretty, pretty cool to see that expand here as well.
And, but, yeah, I'm not here to show today.
I'm actually just going to hang out and really excited to hear from, from, from Peter and Blaze and what you guys have been cooking.
Yo, I mean, cheers, Dylan.
Appreciate it, love.
I don't know.
I mean, I feel like in a complete, what's the right word to use?
Like we've had such a busy time, right?
So, I mean, anyone who, who knows, we've just rebranded Velar.
So Velar is a, the world's first perfect on Bitcoin.
We've also got a DEX on Stacks and we're building lots of other stuff as well on Bitcoin L2.
So we've gone through such a crazy period of time over the last kind of couple of months really.
And, and everything seems to be coming together.
So really looking forward to talking about what we have lined up and what we've been through, but amazing to be on this show as always.
Anyone who doesn't know, there's, there's always a side group chat and there, it's always the best.
I actually, I actually do these spaces just for the side group chat.
If you're not at least once every month in a space, you're going to get kicked out just so you know, Peter.
But yeah, happy to have you.
I can corroborate the side group chat.
Well, while Dylan might not be here today to shill, I am here today to shill.
Hey everybody, I'm Blaze.
I am shortly launching Granite Protocol, which is an isolated markets lending model for Bitcoin collateralized stablecoin loans.
Been working on this for about the last year and a half out of trust machines.
Incredibly excited to see it coming to market soon.
So hopefully going to be talking all about that and about how we view security and risk management in the Bitcoin collateralized lending space.
Excited to be here.
Cool.
Guess I'll go next.
Yeah, I've been in Stacks for a while, but for years, launched Arcadeco, which was the first DeFi protocol on Stacks.
Stacks is stablecoin backed by crypto assets called USDA.
And then we have StackingDAO, which is the largest LSD on Stacks, liquid staking token LSD for those not aware.
We're actually, our main one is Stacks Stacks, which is, I would say, a liquid representation of Stacks Stacks and it accrues the yield in STX.
So, people know, Proof of Transfer, it has yield in Bitcoin by default, Stacks Stacks accrues yield in STX.
But we're also building a second LSD that's going to be launched pretty soon now called Stacks Stacks BTC.
And as I said, there's a second LSD backed one-to-one to Stacks, but holders, they receive as BTC streamed directly to their wallet or airdropped, whatever you want to call it.
So, yeah, pretty cool. Coming soon. That's me. Over to you, Taiko.
Amazing. Amazing, amazing, amazing.
Yeah, I'm Taiko, the co-founder of Zest Protocol, the lending protocol on Stacks and also contributor to StackingDAO, the staked Stacks.
And, yeah, very excited to bring more TVL to the ecosystem.
Zest Protocol will be a big, big engine of that, as we've seen with the SBTC launch a couple of weeks ago.
And about 40% of all the SBTC in circulation flowing into Zest Protocol.
So, yeah, so very quickly, you know, becoming a hub for SBTC, staked Stacks and then, you know, stable coins and other assets on Stacks.
But, yeah, I guess to maybe to kick things off, like, Peter, you've announced, like, some big stuff.
I mean, obviously, like, the rebrand is one, but, like, there are these new farming rewards.
And, yeah, maybe just, like, for everyone who participates in Stacks DeFi or, say, you know, the staked Stacks to STX pair on VALAR, you know, like, what is going on here?
How does it work?
And what is the thinking behind the new reward structure?
Yeah, so I'll start with the rebrand first and we'll kind of move through.
The rebrand, for me, was something that was crucial.
We had to do it.
You know, anyone who knows kind of VALAR's journey knows that it was literally started pretty much fully funded by Mithil himself.
So there was elements of the brand and the product that we had to get to market in a quick way.
Then, obviously, we got a lot of funding and kind of, obviously, ideologies and systems change.
And then, of course, you build out a team and you bring in better individuals to kind of focus and align ourselves.
And the first thing I did when I joined the team was say, you know, if we want to become one of the biggest products in Bitcoin and we have these grand ambitions to do so, we have to rebrand and brand like we're going to go to the places we talk about.
So it took me probably three months to convince the internal team that we had to rebrand.
And then it probably took another six months of going through the whole, you know, ideology perspective, bringing community and getting community involved and trying things out and then rebuilding the products from the ground up.
So, you know, I'm super happy with how the rebrands come out.
You know, I'm super happy with the product team's attention to detail, really happy with the marketing team about how they've, you know, created these assets that can be used in a multitude of different ways.
So, you know, really, really pumped about what we've done there.
And that just kind of sets us up for the next stage.
And anyone who knows anything about Velar know that, you know, the thing we talk about a lot is the Perpdex.
We have the Perpdex right now on Bob, on Beta.
And obviously, of course, we're on the Stacks DeFi show that the Stacks Perpdex should be live around about March time.
And there's a few key things we're waiting on.
We're obviously waiting on consistent blocks below 20 seconds, which I've been told will be ready by the end of this month, give or take probably a little bit for tech time.
We're waiting for it.
There's going to be an upgradable on some of the different stables in the market.
And then also making sure there's enough liquidity in the Perpdex.
You know, whenever you're launching a new product like a Perpdex, you need to have depth of liquidity to make sure it's success.
We have some really, really well-known traders who want to utilize the Perpdex.
So that'd be amazing for the Stacks ecosystem.
You know, bringing some of these, you know, really, really well-known traders to the Stacks ecosystem will be a huge benefit.
But one of the things that's really crucial before you do any of this stuff is making sure that liquidity on a DEX is there.
And I was actually speaking to some of the team in Stacks today about this, which is, you know, if we want someone to come to a Perpdex and trade, you know, $100,000 of leverage, then they're going to have to go to a DEX and swap that STX to, let's say, SBTC and USDC.
And to do that, we have to have, you know, a decent amount of liquidity in the DEXes.
And that's not just Vela, that's including Bitflow and Alex as well.
So my first focus here is making sure we have enough liquidity across all the different pairs that are within the ecosystem.
So, you know, that's the first reason we decided to optimize these different pools and these different rewards, as well as make sure that the meme coin community are having enough depth of liquidity.
You know, one of the things I noticed from changing the rewards from the last cycle we did was a lot of the liquidity went from the meme coins.
And I truly believe that most new chains and most chains that get significant growth, that growth comes from people discovering a meme coin or being introduced to a meme coin.
And it's almost like the drug that gets them to taste the entire system.
So, you know, I wanted to make sure we had enough liquidity in the meme coins that would then naturally drive the liquidity in the DEX, which would then naturally drive liquidity into the Perpdex.
And it's just kind of like one of those moments where we're just kind of tweaking, you know, we're just tweaking like buttons and changing things on our side and just seeing how the market reacts.
But, you know, super bullish on the ecosystem right now.
I think everything's lining up properly.
And, you know, maybe selfishly or egotistically, you know, I really believe that Perpdex coming to Stacks is going to be the greatest thing that happened to Stacks.
I genuinely believe that.
So, yeah, really excited.
I think all the ducks are kind of lining up now.
And I think we're in a really good position to drive forward.
Awesome.
Awesome, awesome, awesome, awesome.
And, you know, Philip, you know, probably you launched the first Dex on Stacks.
You know, like how tricky some of these things are, right, with incentives and things like that.
Any thoughts on this?
I mean, you've run a lot of incentive campaigns in the days.
Yeah, I mean, it's hard to track liquidity in general, as you already said.
You need to spend a lot of money, especially early on, I think, to make liquidity sticky.
I think also when TVL reaches your Dex or whatever you're building, it can be very sticky.
I don't have actual numbers on this, but, like, when we launched the Arcadeco Dex, right, we just launched it because there was no Dex.
I didn't really want to operate a Dex, as is a parent.
I mean, we haven't updated our Dex in three years or whatever.
We just have, like, a few Deco pools that people use.
And thanks to Bitflow, actually, that still gets a ton of volume.
I mean, obviously, when you want to trade Deco, you have to use the Arcadeco Dex because it has the deepest liquidity.
But, yeah, it's been, like, pretty tough just in terms of, like, attracting liquidity.
But, again, once it's there, it's pretty nice to see that it usually stays.
And I think StaxUSDA as a pool is still, I mean, I don't know how big exactly, but probably top five in the ecosystem.
And we just don't put that much effort in it.
We do give Deco rewards on it, but DTVL is just so sticky thanks to, like, some early depositors that are still with us, ironically enough.
So, yeah, that's just interesting to see.
I think as Valor launches the Burbs Dex, I think that's also interesting competitive-wise because of the reasons you said, Peter.
Because of, like, well, how should I say it?
I think people are inherently greedy.
And greed powers volume, I would say, generally speaking, because they do want to gamble on memes.
And where can you go long on memes?
Well, you can buy at spots on the Dex.
But if you can buy a PERP, that's a lot better, especially if you can do leverage on that PERP, right?
That's the whole idea of PERP.
I mean, if you'd buy a 1x PERP, there's no point in buying that.
You might as well buy spots then, right?
Because you do have the actual asset then if you buy at spots.
So, I think that's super powerful as soon as you even have a 2x leverage, right?
Because I know it will require a ton of liquidity to power 10x leverage on chain.
I think that will be a while, to be fair.
I mean, that would be my expectations, that it would be a while beyond March still to do a 10x long, say, on chain, on stacks.
I don't expect that to be there the first six months of this year even because of the liquidity requirements.
But once you have the technology, you can scale that liquidity bit by bit.
Find TLPs that will provide you that money or TVL that you need and then, yeah, take it from there.
But I think looking at the hyperliquid launch as well, right?
I was listening to a podcast this morning about that.
Apparently, PERPs are one of the protocols or mechanisms that still make the most money, obviously because of the gambling.
But maybe, Peter, you can comment a little bit more on that and if you have data.
But two, it's generally often a catalyst to get an ecosystem really going.
If you look at hyperliquid, right?
Obviously, there was the airdrop.
People got relatively rich or very rich from it.
One of the biggest airdrops ever.
But hyperliquid is not a chain.
It's just an L3, I would say, because hyperliquid is built on Arbitrum.
Well, it uses the Arbitrum bridge.
So you need to bridge from Ethereum to Arbitrum and from Arbitrum to hyperliquid.
And it was just a perpdex, right?
And now they're building a layer one around that perpdex.
So they have an interesting go-to-market strategy.
We work differently.
Obviously, we start building on stacks as a chain.
But I still think if and when the first perpdex gets launched on stacks, that's a big catalyst.
And it's this flywheel.
Once you have some liquidity, it can attract more liquidity.
You can make more money.
Protocols get rich.
They, in turn, can attract more users.
And your flywheel is going well.
So I'm looking forward to Valor launching it.
I actually, like, I'll be really blunt.
I think the DEX business model is actually awful in terms of actually a business model.
But I think that, you know, we built the DEX simply because there was only, I think there's only one at the time.
And we wanted to kind of make sure there was more options.
And I think it was, I mean, thank God we did.
To be honest with you, when people look at the history of what happened on stacks, I think, thank God we did build it.
But, you know, you're basically just trying to bribe liquidity from one DEX to the next DEX to the next DEX.
And in an ecosystem, when there is small liquidity and a few different DEXs, you're basically just fighting over the same money.
And it can get quite expensive.
So the business model of a DEX actually isn't that good.
You know, I was speaking to some people today about, you know, how the PERP DEX for us and for me is actually bigger than just Vela.
And the PERP DEX is actually, in my opinion, the easiest way to onboard the masses to stacks.
Because if you think about the obvious scenario here, it's like, okay, cool.
User wants to, you know, trade PERPs.
Let's say SBTC to USDC PERPs.
Well, first of all, they buy their stacks on, I don't know, insert random on RAM, let's say Coinbase.
Then they use their leather wallet.
Then they go to Bitflow and swap their stacks to SBTC or something.
And then they come to Vela and they trade their PERPs.
So just by that user then coming into the ecosystem to trade PERPs, you've basically had, you know, four or five different protocols they've touched, as well as they've understood the ecosystem.
So I think, like, I was speaking to, I think a lot of the marketing strategy now has to be around getting the furthest touchpoint protocol to be used.
So then the user kind of gets onboarded through the entirety of the ecosystem.
And I'm really bullish that there's a few different, I don't know if anyone's been seeing my tweets lately.
There's a few different tweets that I've been lining up about, you know, how we can actually all come together and make sure everybody wins.
I mean, this is the key point now.
We're at this decisive point where protocols cannot be focused on themselves.
They have to be focused on how they align together to make sure that we win.
Because time's ticking, right?
Time is ticking.
And we're going to blink and we're going to see 40 new Bitcoin L2s come to market, all with their own KOL budget, all with their own marketing budget, all with their own VCs with unlimited pockets.
And if we believe that we've got the best ecosystem here, we have to make sure we align.
You know, you almost have to lower the blind of, like, competitiveness between protocols kind of getting users and think, actually, the Stacks community as a whole, the Stacks eco as a whole, has to align itself with the idea that we bring users to this ecosystem.
And the ecosystem wins first.
And then the protocol can win second.
But at the moment, we just need to make sure the ecosystem wins.
And that's the most important thing I see.
Cool.
It makes sense.
Just one last question before maybe we give it to Blaise, because he's a first-time guest, I think.
But just one more thing before I shut down your ADHD button, Peter.
Why 20 seconds?
Why do you mention, is that just a random number?
Or why do we need 20-second block times?
Is 30 seconds, like, good as well?
Or, yeah.
Can you elaborate?
Or where does that number come from?
I think maybe 30 seconds will be okay.
But it all comes down to Oracle updating times and prices and stuff.
And, you know, the internal meetings I've been speaking to, and I'm obviously not a tech guy, is, like, if you know the price before the Oracle knows the price, you can front run and stuff.
I was speaking to some people about Redstone Oracle being a good option for the Stacks ecosystem, about bringing that Oracle in.
And, yeah, that's kind of my understanding on it, is that, obviously, the faster the blocks, the quicker it updates, the quicker it updates, the more accurate the pricing.
That makes sense.
I believe, Blaise, you guys have been working on Pith Oracle integration.
Is that right?
We have, yeah.
We actually, I believe, just launched it on Mainnet.
It might have been on Friday last week or Monday of this week.
But we're pretty excited about that.
Pith is a different model of Oracle than Dia or Redstone.
Those are push oracles, similar to Chainlink, where, like, the price will get pushed on chain every couple of blocks.
With Pith, you actually pull the price and then you write it on chain as part of the transaction.
So it's better in some respects in that, like, the price is always fresh, but it's worse in some respects in that, like, it costs a little bit more gas.
So tradeoffs.
But we're excited to have it launched and hoping that we can get some other protocols to dive in and use it because Pith is a great Oracle provider.
So when you, actually, let's take a step back because people might not be aware of Granite.
Maybe you can just give us a rundown of that in a few minutes and then I'll go further into the Oracle a bit because the question I was going to ask is related to that.
So, yeah, go ahead.
Yeah, yeah.
Happy to give just a TLDR of the protocol.
So we've been building Granite for about the last year and a half.
We're coming out of trust machines similar to the Zest team.
So super close with Tyco and Emil and the work that they're doing there.
What we're building with Granite is an isolated markets lending model for Bitcoin collateral is stablecoin loans.
So at a super high level with lending in DeFi, you generally see two types of models in the space.
You have more long tail money markets where you have many types of collateral and you're borrowing many types of assets, similar to what we've seen the Zest team roll out.
And then you have more concentrated or isolated market models, which is what we're orienting around.
So if you think about the Ethereum space, that might be like an Aave versus a compound brief.
So each of those have their place and their utility in the lending ecosystem.
What we've been hyper-focused on with Granite is security and risk management, just minimizing risk as much as possible for Bitcoin collateralized lending.
So there are kind of three core buckets that we went after with that.
One is rehypothecation collateral, where we never rehypothecate.
The collateral stays in Granite at all times.
The second is multi-asset borrowing, which can lead to some kind of, we'll say like long tail risks where collateral assets end up being exposed to the weakest borrowed asset in the ecosystem.
So we have an isolated single asset market model.
You can only borrow stablecoins and that's it in the entire protocol.
And then the third bucket of risk that we identified was, we'll say like aggressive liquidation practices.
So the classic model for DeFi lending is on a liquidation, the liquidator can take 50 to 100% of the position.
And Granite has soft liquidations where they only liquidate the account back to health.
So if you're half a percent under your liquidation zone, they liquidate half a percent of the collateral back.
And for us, for us, what this means is like it actually becomes probably the most risk minimized place that one can borrow against their Bitcoin.
You know, it has tradeoffs.
You don't earn yield on your collateral, for example.
So like you're not outside of the SBTC rewards, you won't be earning any additional yield on the Bitcoin that stays in the protocol.
But people who end up using Granite are going to be those that are more conservative with the lending approach they want to take.
Cool.
Interesting.
That's a mouthful.
I wrote a few things down because I do have some questions more out of my interest, really.
But maybe also of interest to the listeners, you mentioned the whatever liquidation model, soft liquidation.
I can't recall what you called it.
You used an example of half a percent.
It only liquidates you for that half a percent.
I'm just trying to think, practically speaking for a user, why does that matter?
How does it change things?
Because, say, Arcadeco loans, yes, if you go under a liquidation threshold, which is usually 140% collateralization, we just liquidate your position and we sell off as much as we need to cover the debt that you have.
But you do get penalized of 10%, so you kind of always lose the 10%.
Are you saying, in practical terms, that you just liquidate half a percent, the user doesn't get a penalty, and the loan lives on?
Oh, no.
Yeah, a little more detail on that.
I've very much built this feature for myself.
This is a very personal one for me.
So we do still have the penalty or the liquidation reward to reward a liquidator for coming in and actually liquidating the position.
But where this would be useful is, so the reason I built this is that in the last cycle, I had playing around with, we'll say playing is the wrong term, I was pretty heavily into barring against my Bitcoin and other cryptos.
And when the correction happened and the prices went down 85%, it put me in an awkward position, which was I was within a couple percentage of my liquidation zone.
And because I was borrowing on Aave, if the market had whipped down another $25 on the Bitcoin price, it would have liquidated my entire stack.
Even though I would have only been maybe like half a percent in the liquidation zone, the liquidators on Aave would have had the right to take everything and sell all of my collateral to repay that half a percent.
So if I had borrowed on granite instead, they would have only been able to liquidate half a percent of my position to bring me back into account health.
And so what it gives borrowers is just this extra bit of wiggle room where if you fall into the liquidation zone, you're not going to be catastrophically wiped out.
All that will be done is enough of your collateral will be taken to bring the position back to health and nothing more.
In addition to the 10% reward.
Does that, I mean, I'm not sure, really have to look at data, I guess, in an Excel or just on paper.
But does that really make sense, though?
Because, say, a market that is dropping a lot over the course of, I don't know, a day, maybe two days, maybe it could be a few hours.
You drop half a percent under that liquidation, fine, a liquidator steps in, he takes that half a percent.
But, like, if the market keeps on dropping, that process has to be repeated, like, a lot of times.
How, like, does that make sense for you?
But it's just kind of strange, like, practically speaking, you would repeat the same liquidation, like, 10, 20, 100 times a day for half a percent?
Is that, I mean, it's just a bot running, of course, a liquidator, but...
Yeah, well, it's a really good question.
And, like, we've invested pretty heavily in, like, the back-end liquidation capacity in order to support this kind of model.
But you don't have to liquidate at half a percent.
So, like, if the position fell 10% below, you could liquidate that entire 10% position back.
So, that's going to be a question of, like, how governance actually sets the parameters.
Like, where is liquidation LTV?
And at what point do the liquidators step in in order to execute the liquidation?
But liquidators could wait a little bit longer for the position to be a larger position to liquidate if that was more, let's say, gas-efficient or a more efficient transaction on the DEX.
Right.
Okay, that makes sense.
I mean, it's a little bit comparable to MEV, almost.
You know, a liquidator will try to capture the most math, but he competes with others in the market.
And so, you get pushed on your margins in the same sense.
If there's multiple liquidators, one will not wait if they think the margin, whatever they can capture, is the greatest versus just waiting.
We've got a feature that we're rolling out hopefully soon that I'm pretty excited about where we are planning on surfacing the liquidation calls via the front end so that anybody can actually come in and, like, click a liquidate button and close down accounts.
Not close down, but bring back to health accounts that are currently in their liquidation zone so the community can participate without having to run their own bots.
Because that can be a pretty big lift for people to code and run a liquidation bot in order to be a liquidator.
Yeah.
No, that makes sense.
It's kind of funny, though, because we had the same feature request for Redemptions.
So, Redemptions is a mechanism on Architeka Vaults that keeps you as the ad-pack.
That was smart contract level only before, and now we added that to the UI just because people kept on asking for it.
My two cents was that I thought it was the dumbest feature request ever because a bot is always going to front-run a user clicking that button.
However, people wanted that for the stupid reason I think that the optics are there and they think they can redeem a vault manually.
I don't think it has ever happened, but that's anecdotally.
I just think it's not great because a bot is just quicker, and I think, for granted, that will be the same.
But I understand you would do it for users because they just want to feel that they have the ability or the power to also, like, liquidate.
Yeah.
Like an equality thing, socialism on the chain or something, whatever.
I think where you'd see it come in, we're in this kind of awkward position as an ecosystem, and we were talking about a little bit earlier, where there isn't really deep liquidity on the DEXs.
And so that actually can potentially impact liquidations for these lending protocols.
And, you know, we have to be really careful at Granite, and I would imagine that the folks at Zest are the same way, where we're limiting the markets based on whether or not we actually can process the necessary number of liquidations or the size of liquidations on the DEXs that are available to us.
So while we're in this kind of fledgling phase as an ecosystem with low DEX liquidity, we might, you know, if there's a large correction in the Bitcoin price, we might enter, like, a situation where, like, there are a significant number of liquidations that have to be processed, and people have to do that with centralized exchanges as well.
And I think that's where the bots will kind of fall flat.
The bots are really good at executing the atomic transactions with DEXs, but as soon as you have to start pulling liquidity off-chain to liquidate on centralized exchanges, then that entire process breaks.
And we're hoping that's where the community will really have an opportunity to participate, if that ever happens.
Fingers crossed.
Yeah, that makes sense.
No, I didn't mean any offense to any of the users, of course.
I just think...
Oh, no, it's a great point.
Great point.
Yeah, some things are just...
It's hard to be online 24-7, you know, and as fast as the bots.
Yeah.
Anyway, Dylan, what's up with runes, man?
You told me to buy some runes in December?
Yeah, well, we dumped on you.
We pulled the...
Yeah, we got you, Philip.
Sorry we had to trick you.
No, runes are dead, right?
So, yeah, no coming back there.
No chance that fungible tokens on Bitcoin succeed.
Everyone should stop any work they're doing on that kind of stuff.
Unironically, I agree, but can you also, unironically, give us a quick and serious rundown of, you know, the runes decks, what happens with runes in general, where you see the market?
It's obviously not financial advice, but just out of my interest, because I don't follow it at all.
Yeah, I think people are, like, if there's, like, some of the blue chip runes tokens, that even those are, we don't see super deep liquidity yet.
It's growing, but it's growing a lot more recently over the past month on, like, runes decks and dot swap and Bitflow.
So, but, yeah, I mean, these are, you're actually starting to see better rates than you would see through a listing process, like, on Magic Eden.
And Xverse is doing a great job of, like, aggregating that on the L1 side, so you can go and compare, like, who has the best rate on L1.
Sort of like you can compare who has the best rate on stacks with Bitflow.
But at, like, a super basic level, not even, like, splitting up the transaction across different pools, just saying, like, you'll get this much from here, here, and here.
Go trade.
And, yeah, I think, I mean, BTC, it's a precious asset.
People, you know, I think are a little bit scared to deploy it into protocols that are, you know, unproven, or maybe some of them claim that they're trustless.
And, you know, like, we know that that's not true.
So, we've tried to be very transparent about, like, our security model.
But, yeah, just to be, you know, just to share, like, why I think we haven't seen TVL grow as much is that on the Rune side, I think it's too many steps.
You know, people would prefer to, if you want to have the biggest funnel possible, you want to just make it so that people can send a Bitcoin transaction and, you know, do a trade.
Or they can send, you know, a Bitcoin transaction for, you know, depositing BTC and depositing DogGo to the Moon.
And then, you know, they've got their LP position and they're farming, right?
Like, maybe they don't need to know anything that's even happening on the stack side.
So, that's some of the stuff that, you know, that's kind of what has nudged us towards building more of the Keeper infrastructure.
We can kind of remove a bunch of steps.
We can remove the clunky parts of DeFi.
And, yeah, you can do things like limit orders or auto-restaking and auto-claiming your rewards or potentially even reinvesting them.
Basically, any on-chain action can be automated there.
And, yeah, I think, you know, we're working on improving the UX.
You know, you had BRC20s first and that was, like, a very organic grassroots type of excitement around that token standard.
And then you had Ruins, which were maybe more efficient in terms of, like, not bloating the UTXO set.
And people were expecting it would just, you know, rip the same way that BRC20s did.
But, you know, they didn't.
There wasn't, like, for most people, there wasn't, like, a very tangible difference in the trading experience.
And the earning experience is, like, non-existent for months and months and months.
But I think, you know, we need a few more champions in the space to basically say,
hey, if you want, you know, these assets on Bitcoin to succeed, like, you've got to consider putting, like,
1% of your, like, Ruins holdings into a liquidity pool and pairing that with some amount of BTC
so that we can grow deep liquidity on-chain.
And, you know, we don't have to just keep begging, you know, Binance to list Doggo to the Moon,
which we should probably apply some pressure there, too.
They list a lot of things and Doggo to the Moon should definitely be on there,
along with some others, like, you know, Billy.
But, yeah, I think we don't want to rely on that.
I mean, we want to build these services on-chain and around Bitcoin.
And, yeah, so that's what we're working towards.
Yeah, awesome.
I think you laid that out really well.
And I'm just currently on the Bitflow page, the Explore one.
And it's just very clean.
It's really nice, too, to explore runes.
Yeah, I see Billion Dollar Gat, whatever that is.
I see Doggo to the Moon.
So, yeah, it's really cool to see that on Bitflow.
Knowing all of that is traded on Stacks, but you can take that back to Bitcoin Layer 1.
For all the hate that I give runes, I do think it's technically pretty cool.
I'm just, like, in that cultural boat where I'm, like, having a very hard time just spending any BTC.
I know I'm trading my BTC for some dumb shit meme coin that likely goes to zero.
And it's, like, I want to do that with Solana or whatever, but I don't want to do that with Bitcoin.
It's kind of this weird, like, psychological thing, which is still one of my teases that runes will have a hard time taking off.
Might I recommend you borrow against that on Granite or Zest?
That's true.
That's an option.
It is true.
I do use lending protocols quite often, so that could happen.
And I do, however, this is, again, speaking personally, I do use lending borrowing when I, not when I want to buy tokens.
Actually, I want to, I use it for real-life expenses more than for doing stuff on chain.
I don't know if that's for everyone.
Probably not, but, yeah.
Honestly, probably a smarter approach.
You know, borrowing and then YOLOing into meme coins might not be the best investment advice.
Yeah.
Don't listen to Blaze.
That's the only move.
Exactly.
Take very responsible, low borrow amounts.
And then YOLO into meme coins.
But you take the interest rate risk on long-term personal purchases?
I mean, just curious for your experience.
So, it could be DAI, right, on Ethereum.
They have, well, nothing is fixed-fixed.
DAI could, through governance, always change their, like, interests.
But the way I actually look at lending borrowing is kind of like, I'm not an options trader, so what I'm going to say is probably dumb.
But probably, like, a put, you know, where I'm like, okay, I don't mind if I get liquidated at this level.
But that's for coins that you've held maybe a decade.
You know, you're up, I don't know how many X, and you're like, I'm going to borrow against it, but maybe you don't want to pay the taxes.
Or maybe you just want to still speculate you borrow something against it.
And if they liquidate me or I never pay off that loan because it's on chain and I can do what I want, who's going to stop me, right, because it's a permissionless loan.
So, the dynamics are very different there versus if I would go to a bank and say, I want to buy a car and I want this interest, whatever fixed interest loan.
So, these are kind of different dynamics.
So, if I do that, it's probably when I'm like, okay, this coin is sold in my head.
Maybe I'll pay it off.
Maybe not.
The protocol can go after me.
They'll have to chase me if they want to force me to pay off the loan.
But, yeah, I don't know if that makes sense, saying that.
Was that tax advice by Philip there?
Basically, don't pay the tax by selling it.
Just liquidate yourself and pay nothing.
I mean, I don't know.
Direct quote.
Direct quote.
If you're in the U.S. and you get liquidated, you do have to pay taxes on that liquidation.
So, it's like a double whammy of negativity.
So, Philip basically has been committed tax fraud for the last decade.
I'm going to send the boys around.
It's an interesting strategy, too, though.
Theoretically, with Bitcoin's four-year appreciation and how it's never down over a four-year cycle,
if you borrowed at a low enough LTV, you wouldn't have to pay it back, theoretically.
You could just keep rolling that forward.
So, I know a lot of folks are interested in that strategy.
And a small amount of Bitcoin now is going to be a much larger amount of Bitcoin a couple of years from now.
Hopefully.
So, let's see if that plays out.
Yeah, actually, my main strategy has been just borrowing, or rather lending, not borrowing myself,
but mostly lending my liquidity to the DGents.
Because I know there's tons of people who borrow against their, like, holdings, whether that's Solana or Bitcoin or something else,
and then just go buy stupid shit.
I just know there's tons of people like that, and I've been providing their liquidity.
You know, it's like the drug dealer in the local whatever.
I'm not going to come further anyway.
So, I think that makes a lot more sense.
If you have free liquidity, lend it out.
And, yeah, let the others DGents on chain.
That's just how I look.
And maybe I'll use, I don't think, for Granite, how does that work?
Is the, are you matched peer-to-peer, or it's also a pool model?
I don't know if you mentioned that.
Yeah, Granite's also a pool model.
Only difference being that we don't lend out the collateral that you deposit.
So, if Bitcoin stays in the protocol, it's always there.
That makes sense.
Wouldn't you say, though, like you mentioned Compound versus Aave, don't you think Aave won?
Or how do you see it?
I think we're still pretty early in the game.
Probably a better model than Compound, because Compound has, I'll say, like, it seems like
they've stopped developing their core protocols, and the team kind of moved on.
I compare it more to Morpho versus Aave.
Morpho built around this isolated markets model, and they've just seen explosive growth
after they layered on top of that risk curators that allow you to construct more complex vault
strategies.
We don't directly have plans for that, but I think that the core of Morpho's success
there was that isolated markets model, where it really just isolates the risk down, as
opposed to Aave, where they're managing dozens of borrowable assets.
So, I think that the jury's still out, though, on which one's going to be the ultimate winner,
or even if there will be.
Because I think there really are two different use cases for lend-borrow that have two separate
user bases.
Cool.
Yeah, that makes sense.
Yeah.
Cool.
Awesome.
Yeah.
Look, we have 10 minutes left.
I don't know if anyone wants to share something else.
No, Daiko, if you had any ideas or comments about what was said.
Yeah, I mean, one thing to, I just pinned the tweet here real quick, but, like, there's
been a lot of USDA activity, you know, in Arcadeco's stablecoin on Zest Protocol actually
this week.
So, you know, loans are up almost 50%, and deposits also up 30%.
APY right now is 28%.
Maybe it's come down already a little bit, but there's slowly but surely a very healthy
market developing for USDA loans on Zest.
I'm curious if you have any thoughts on that for that, like, how that kind of ties into
the, you know, broader picture of USDA and stablecoins and stacks.
Yeah, I mean, people do want to borrow USDA, right?
There, there's a lot of field strategies that you can use USDA for that yield.
It's quite a nice APY, paid out in Deco always, our governance token, and people have been
doing that.
I tweeted about a week ago, I think it was also like 29% APY, and actually with the
treasury, we've been a big lender.
As I just mentioned, what we usually do is just lend out the tokens to the people that
do want to degen.
So, I'm happy to provide that activity, and I'm really happy.
No shark fillet, I see.
Busted, busted.
Yeah.
No, but it's true.
You need, you need this activity on chain, you know, to build a healthy economy.
You need to track the velocity of money, and before, honestly, before Zest was there, there
was just no velocity, and the velocity you see now is picking up, and people do actually
want to get access to, to USDA, and not only to USDA, you see USEH by, by their Medica team
also having like a healthy velocity and borrowing rates and then things like that.
So, I, I am pretty happy just generally seeing that on stacks.
The reason it has come to USDA in the last few weeks, I think, has also got to do with
that we launched SBTC vaults, and so those vaults are not vulnerable, vulnerable or exposed,
I should say, to, to redemptions.
I believe, I don't have the data on this.
I just, this, just my gut feel that some people, because we do offer more or less fixed,
fixed interest, right?
Again, they can change through governance, but they don't change like continuously throughout
the day or even on a weekly basis.
When we set them on governance, usually they're set for at least a few weeks to a few months,
and people know that they can mint USDA at 9% today.
That's yearly 9%.
They owe interest on whatever they borrow, and so, yeah, there's, there's a huge threat
right now, right, to, to capture that.
And then, since we launched SBTC vaults, no redemptions at 9% fixed, that's a pretty
interesting proposition to just go and put some SBTC in Arcadeco, mint some USDA, and
like I said, lend it on, on Zest, or maybe do something else with it, right?
But that, that also has got to do with it, that people feel confident using Arcadeco and,
yeah, executing that strategy.
Bullish.
Very bullish.
Very bullish.
Yeah, that's great.
And I also saw like in the, in the chat, I mean, we have a sort of side chat going on
here that Blaise was making some comments about the structure of state's tax BTC and
the rewards.
Maybe you want to very quickly touch on that because it's, it's going live very soon.
Giving me the opportunity to not give tax advice in public.
Excellent.
So, yeah, not tax advice.
No, my request.
Go for it, sir.
Go for it.
My request on that was just from all of us in the, in the U S where, uh, if we get streamed
rewards, when we receive those rewards, they are considered to be taxable.
Um, but if the rewards accrue inside of the contract and then we claim them at a later
date, the tax event is only I'm not claiming.
So if you could kind of bottle up all those BTC rewards for us and let us claim them later,
that would be excellent.
Um, but I'm, I'm super excited for this, uh, new Bitcoin version of steak stacks.
I think steak stacks is a phenomenal product and I'm definitely going to use this new one
myself.
And the bottling up just means that you can kind of, I don't know, plan.
Yeah.
It's the, it's the difference between like Steve and wrap Steve, right?
With, with Steve, you're getting streamed the rewards constantly with wrap Steve.
It's wrapped into a wrapper.
And only when you unwrap that, do you get all the rewards?
Um, and so the difference would be like, you know, if I staked a couple thousand dollars
and stacks through, uh, or stacked it through STSTX, um, and I was getting streamed the rewards
every year, I'd have to pay taxes on that.
Even if I kept the position for like 10 years, but if instead it only, like I only get a position
at the end of 10 years and I claim it, then I don't have to pay taxes for those first nine
years.
And I just pay it at the end, um, which gives it a little bit more, makes it more plannable
for me, um, or predictable as a, as a stacker.
I see.
I see.
Interesting.
I think that's like a good area where keepers could help support as well.
Like they could, you know, basically be streamed and people have different preferences, right?
Like I want all my rewards right now, or I want them, you know, uh, piling up at a smart
contract and I'll claim them when I'm ready.
Like that's, those are the type of actions that like, uh, the keepers can help manage for
you just online all the time.
Um, yeah.
And I think it could happen across protocols as well, but yeah.
Yeah.
And it could just be a wrapped version too, like Steve and wrap Steve.
Um, although we're starting to add a lot of letters now.
W S T S T X BTC.
Um, yeah, and that, that's the real, like, that's the reason why there isn't any, any
sort of, it's not wrapped, right?
So like the, the, the rewards are streamed is because, you know, um, otherwise it becomes
very hard to track prices, the, the, the token, right?
So it would never be the case that the S T S T X BTC kind of accrues the S BTC rewards
like inside the token, right?
Which is what happens with regular state stacks.
Um, but yeah, I guess, so the claim, it could be a claim, but then yeah, the claim would
probably have to work in such a way where it's just your address that can claim it.
Even if you, you know, sell your state stacks BTC, you can always come back and, and claim
any accrued rewards right on that, on that address specifically.
Yeah.
It's also an opportunity for any builders in the space who want to build vaults, like building
a vault like this, that just collected all the rewards, like would, I believe based
on some interpretations still be taxed advantage.
And so people can do that and probably get a bit of liquidity in there.
That's probably very like thin, tiny, whatever nuance where do you own that vault?
Is it, is the same as a wallet from a tax perspective, right?
What does the tax code say?
Because yeah, we can put like a proxy smart contract in between instead of streaming to,
to the principal, you know, to the stacks address, stream it to, to a smart contract that both
the protocol and that specific address that should have received the SBTC has access to.
So it has like two owners, a smart contract, well, the protocol and, and the, the, the wallet.
But I mean, it's kind of stupid that that would not be taxable.
But the other thing, I mean, it's beyond retard, it's in my head, at least, but I'm not disagreeing
with your, with your analysis there.
It doesn't make much sense, but I think this is a big part of the reason why, you know,
we see things like, like the, the yield compounders, like beefy, they have a lot, like the yield
compounding is advantageous, but there also is a tax advantage to using it as well.
So it's just crazy that the tax code works like this.
Of course, you know, do IOR, talk to a tax professional.
I am not one.
Always pay your tax.
Yeah, no, makes sense.
No, cool.
That was really interesting, by the way, that comment, Blaise.
I think it would require a small change in our contracts, which have already been audited,
but definitely up for discussion.
But we'll, we'll take it offline, Tycho, but yeah.
Perfect.
I also think the more you can interact with native Bitcoin, the better, not, I'm not sure
if, I mean, I'm not, I'm definitely not a tax expert, but if you have your SBTC minted
to a smart contract instead of, you know, being minted to your own personal wallet, then maybe
you don't have to, you don't have the implications of, you know, swapping one asset for another.
And if you have these services that are online, they can then, you know, notice when, you know,
SBTC has been minted to maybe like your personal smart contract and then take an action on your
behalf, then, you know, you're not, but you could just be maybe staking, you know, BTC or like borrowing
against your BTC without like at your own personal wallet level, not seeing like a conversion to a
different flavor of Bitcoin.
You're all missing the big point here, which is in what, six days, no, five days, I don't
know when it is, big boy Trump walks in and he first announced what's going to be no tax
on Bitcoin and we're just going to absolutely run to Valhalla.
No, all tax advisors globally for Bitcoin are zeroed and we all just get stupidly rich and
that's it. That's the story. That's where it ends.
I thought you were going to say we're missing the point. We've got to move to Dubai.
Well, I mean, maybe I come to, I was thinking this the other day, maybe I come to America,
you know, if Trump turns it around, you might get me walking in the stomping ground in New York
City, who knows?
Peter, you're going to have your own Boston tea party.
You just want me there. You, you, you'd love to have me on your doorstep.
Let's be honest. I'm not in the U.S. I don't care where you are, Philip, but where, if I
went to New York, I guarantee you'd fly in. We'd have like English tea together and we'd
listen to some, some of your DJ mixes for sure.
Uh, my wife, she'll have tea definitely. Um, she loves tea, but, um, whenever I fly anywhere
from Dubai, they see that I'm British and they bring me scone, they bring me scones and
they bring me English tea every single time. Like it's like a, it's like a thing. They
just see I'm British and just bring me scones.
You bring your crampets?
Nah, it's scones or scones, whatever you want to say it. Yeah.
We should meet in the UK though.
It'll be emotional. We can do it.
Why should, why go to the U.S.? You know, if you can meet in the UK.
Yeah. The colonial capital of the world. Very true.
Anyway, man, it's, we're at time. Fuck, we're, um, take over to you, man.
Wait, I got, I got one question real quick or, or a comment too. I just want to say, like,
go for it. So we're working on updating our pool and earn page, but yeah, I just want
like, uh, Peter, man, like the stuff that you guys launched the, the rebrand, the, the pool
and the farm page are just absolutely beautiful. I want to give you a kudos there. And I got
to know, like if you, if you prefer light mode or dark mode. Yeah. Honestly, the product,
the product team absolutely killed it. And the thing is they're still updating different parts.
So, um, there's some, there's some stuff that I've like, you know, I don't know products
particularly well or devs. So I suggest things and they go away and just figure it out for me
every single time. They're a really, really good team, but I'm, I'm team light mode, but we did a
poll and that was like outranked. I think, I think light mode is 10% and then dark mode is 90%
or something on the metric. So yeah, I really am like the minority. So I think I've enforced
the dark mode for it for now. Uh, but maybe I'll, maybe I'll come back. Yeah. Light mode
is crazy. Dark mode is the only way. To, to enter spaces, by the way, I've got a banger for you.
Um, last cycle when Solana was at $190 and Ethereum was at $3,200. Bitcoin was at 46K.
Definitely. Definitely super cycle. You know, anyway, that's it for me.
That was inspirational. Cheers for that.
Yeah. The irony came through there, Peter. Anyway. Um, yeah. Last, any last thoughts guys?
Cycle or Dylan, Blaze, Peter?
Yeah. I'll jump in here and say, um, I need to plug Granite because we are launching our closed
beta very soon. Um, so please join the wait list. Come on in, help us, get this off the ground,
test it. Um, open beta will be in a little bit, but closed beta is, I will say imminent. So come
join and, uh, look forward to working with everybody.
I have one request and one request only. Oh, first of all, there's some, there's a trading
competition on Velar right now. Uh, you can make like $500 just by doing one swap, uh, also
far rewards, et cetera, et cetera. So go to app.villa.com. Anyway, what I want to say
is if, and when our boy Trump signs an SBR, you know, he just like pens to paper, the,
you know, we're buying a million Bitcoin. I think we should have a special show, right?
With Philip DJing the opener, uh, pump it up, obviously is the song. I mean, just chill
for like 30 minutes, just talking about how great, how great America is. Cause we, we,
we owe my life at that point.
America. All right. Dylan, what's up? Anything else? Or that was it?
No, we can talk some more, uh, next week. Excited about this keeper infrastructure,
like smart contract automation. Um, yeah, it's, uh, it's, it's pretty great stuff that we're
cooking more native Bitcoin swaps. And, uh, yeah, we can dive into it more, uh, next week
in the Stacks DeFi show number 50. Almost been a year, almost.
Yeah, it's been over a year, but we missed a few, but, um, yeah.
I'm anticlimactic as always. But, uh, yeah, almost a year, Philip. Almost a year. Um, yeah.
It was great. It was great. Really great to hang out, hang out together. Make it a,
make it a full, a full Stacks one where we can just, you know, let our minds run and talk
about all the, all the great things that Stacks DeFi has to, has to offer. And yeah,
next week, hopefully more, more liquidity, you know, more, more loan debt, more, more,
more opportunities to get liquidated. So it's going to be great. It's going to be amazing.
All right, guys. Have a good one.
Cheers.
Cheerio.
Adios.
Adios.
