How's everyone doing today?
Hey Phil, hey Crunty, thanks for joining us.
Hey, yeah, thanks for having us, happy to be here.
So we can get started or do you want to wait for a few minutes for people to join?
I think we can get started with the intros and people will trickle in.
So thanks everyone for joining today's space for the launch of the Turbo ETHX Vault.
You know what we hope to be a gateway into Stator's ETHX DeFi ecosystem.
We have Crunty and Phil from the Stator team and then Phil from the Seven Seas team.
So Crunty and Phil, do you want to introduce yourselves and then we can get into some of the agenda?
Sure, do you want me to go first or Phil, do you want to take it?
So yeah, as you mentioned, we are from Stator, we are a multi-chain liquid segment protocol
and we've been on six chains prior to this and we built on ETH a little over seven months ago.
And yeah, so far it's been a very interesting ride.
We recently crossed 100k ETH milestone, which has been a thrilling ride for the most part.
And yeah, in terms of the whole protocol and how we want to think about it,
I would say the next logical step is to step into active management, be it vaults and all these sorts of things.
And as far as my journey goes, I've been with Stator a little over a year.
I feel like you guys were one of my first calls at Stator.
So I kind of remember our first call pretty distinctly even now.
And yeah, it's been a very interesting ride.
So I've been in the startup ecosystem for a little over four or five years now.
So I'm used to the ups and downs of e-com, FinTech and different industries, but nothing like crypto, right?
Every day, there's a new project, there's a new trajectory of things that you haven't thought about.
There's someone figuring out a layer on top.
So all in all, it's been a very interesting ride.
Thanks for that. And Phil?
Yeah, I'm one of the members of Seven Seas Capital.
I've been with them pretty much from the start for the past two years.
We're a vault builder and DeFi strategy team that also happens to be one of the largest leverage stakers and LSTLPs in DeFi.
So I guess just kicking it off to Phil, for those who may not be familiar with like sommelier and sommelier vaults.
Phil, do you want to describe what makes a sommelier vault different than other DeFi vaults in the market?
Yeah, that's a great question.
Sommelier vaults are really the only vaults to the best of my knowledge on the market,
able to intake real time information and dynamically rebalance based off of that.
This could range from anything like a black swan event like a hack to something like a temporary market inefficiency like arbitrages.
Most of the vaults by other protocols are pre-programmed in a sense that they don't work optimally for crypto markets,
which are notoriously unpredictable.
You really need that ability to monitor the market and then adjust in real time based off of that.
Got it. And yeah, thanks for that context.
Kranti, I know you mentioned Stator has been around doing LSTs into various chains.
What makes Stator different than some of the other LST providers out there?
It's a popular space to be in.
Yeah, so as I mentioned, we've been in a bunch of chains before Ethereum.
Unlike others, who started on this and then built upon, we had a whole bunch of learnings to pick from.
One of the things we realized was ideally, optionality is something you should focus on,
which is why we wanted people to have the best of both worlds.
We wanted a permissionless set and a centralized set to ensure demand scaling,
especially when there's certain shocks and demands, certain growth spurts, pretty much anything you can capitalize on.
So our entire design from the get-go has been a blend of permissionless and permission set,
where permissionless plays the major role.
And this unique multiple architecture kind of ensures scalability without compromising on the decentralization aspect.
And obviously, the whole censorship resistance and everything that comes with it, you get it.
And of course, if there's any sudden growth, like recently, we witnessed a sizable amount of TVL jumps.
So we were able to absorb these kind of shocks and gradually transition again into permissionless and keep that ratio intact.
And on top of that, even the permissionless set that we strive to be the most capital efficient solution in the market.
We have industry lowest bonding criteria at around 4E.
And on top of it, we try to complement it in terms of annual rewards and everything, making it the most rewarding protocol on top.
So I'd say these are the broad bucket use cases from users and also the node operator side of things.
And just as I'm thinking, since you've been on these other chains, is there anything unique about being an LST provider in the Ethereum ecosystem and for the ETH as opposed to some of the other assets you've supported?
For starters, this is a very measured ecosystem, pretty diverse in terms of the kind of things you can do, the DeFi play you got and all of that.
And also, especially with the other chains, there's still a decent involvement from the foundation.
There's a level of centralization to it where you can effectively plan and drive things rather than react to the market conditions, which I would say has been very interesting so far.
It's not entirely up to a single team trying to test out things.
Someone else could come up with a new protocol tomorrow and it could really take it away from that, which wasn't ideally the case from less mature chains.
I guess it's kind of a feature and a bug at the same time.
You mentioned that ETHX is one of the newer launches, like you had other assets in market before that, but it's grown pretty rapidly.
What do you attribute that massive growth to?
Is it a specific DeFi integration or partnership or help us just understand what's been driving the growth?
First of all, the overall market pickup has really helped everyone, especially the LSTs with the transaction volumes and of course the whole ETH price rally that has happened.
And on top of it, the whole Eigenlayer narrative is really preying into it.
We had a couple of campaigns around Eigenboost and that has really helped us bust in the TVL.
And now, of course, there's a lot of protocols built on top, the Ether5 protocol or Kelp or recently one launched by the Magpie team.
There's a whole bunch of protocols that are coming on top which should further boost the TVL.
So these things have really brought in the unexpected TVL, I would say.
Sure, we had a certain estimate built into it, but of course they kind of outperformed all estimates.
And on top of it, you definitely have the proposals that are slowly passing away.
We are in the final stages, component, Libra, we're kind of in the middle stages.
This kind of adds legitimacy to it and which generates institutional interest.
I guess being battle-tested really helps.
The threshold is of course different for different protocols.
Some protocols are okay once you've been around for a quarter, some prefer two quarters.
And effectively, to get through these proposals, you got to pass this rigid criteria of most of the risk teams.
I guess all this kind of came together at the right time.
And of course with the entire break that occurred, I guess that kind of rejuvenated the whole space again.
So there was a slight slowdown in Q4, but now I think we're fully back.
And with the Eigenlayer cap set to go live again next Monday, I guess things are looking pretty positive.
Yeah, I agree that there's a lot of positive tailwinds in the market,
especially on the ETH asset side as far as promising opportunities like the Eigenlayer and the staking ecosystem
and just general higher levels of on-chain activity.
It's been really nice to see.
Shifting to some of the DeFi things going on,
Phil, do you want to touch on the goal for the Turbo ETHX vault and what DeFi strategies it will initially be running?
So the vault intends to be a place for easy onboarding into the ETHX ecosystem.
Yours doesn't come in with their ETH or ETHX and deposit directly into the vault to gain access to the popular ETHX LP opportunities.
In the initial first phase of the vault, that's primarily going to be LPing on Curve, Convex, Balancer, along with Uni-V3, of course.
And one cool thing about small A-vaults is that they make LPing on Uniswap, which can be intimidating to newer users because you have to select your LP ranges.
Actually, super accessible since the vault handles all of those decisions for you.
And like you mentioned, it's going to have the ability to LP on a few different DEXs, right?
Can you talk about the importance of being able to run multiple DeFi strategies in a single vault in a market like crypto, where it's always changing?
As you mentioned, the market is always changing.
So when I think back to like the oldest LST vault on small A, which launched, I think, in like April of last year, the vault went through a series of phases when it came to the strategies it was actually running.
So in the first phase, it played the CBE3 peg, then it ended up shifting mostly to leverage staking because of the differential between staking rates and bar rates.
And then as that compressed, it split between LPing and leverage staking.
And then there were some really good LP farms that were attractive, so focused on that.
And I could keep going on, but you kind of get the idea.
And we know the same strategy won't work forever.
And that's why small A vaults are able to run multiple strategies on different protocols on a single vault.
It makes the vault resilient and then also provides users with an easy experience.
And yeah, I think that's one of the things that really makes our vault stand out.
It feels like when sometimes we're talking to folks, they're like, oh, it is just like this LP vault.
And it's like, well, that's what it's doing now, right?
But it could be doing something else in the future.
One interesting fact just for the audience is not only can the vaults actually adapt over time,
but so can they're like, as far as like, oh, I'm running this strategy versus this strategy,
but they can also enhance their capabilities.
So if a new product, if EthX has like a new integration, like say on some new D5 protocol that pops up in a couple of months,
and that's like really attractive to the seven seas strategy team,
the like a smart contract adapter can be built, it can be audited,
and then that integration can be voted on in small A governance.
And so there's like the governance process and then the vault would then gain that capability, assuming the governance process passed.
So that's just another unique attribute of small A vaults is they can gain capabilities
in addition to shifting between, you know, a variety of strategies.
Kranti, I know you talked about some of the integrations you have in the works like Aave and Compound and Libra also like in the medium term.
Are those like the things you're most excited about when it comes to EthX use cases or are there other things?
Oh yeah, so definitely interested on the lending and CDP side of things because that we believe unlocks like a whole set of utility,
which, you know, people can then further build on like, say, you guys can effectively create looping strategies and like,
there's a whole different lack of utility, right? Like initially, when we launched, I guess like that's the norm with any chain first,
you got to focus heavily on LPs because to call yourself an LST, I guess you got to be liquid enough.
So that's been our focus so far. And I think we've fit like a decent amount of like, you know, liquidity depth.
And overall, we are in a fairly confident spot for most of these protocols to, you know, feel okay with onboarding us.
I think one of the big unlocks would be something like Aave and Compound definitely.
But even the upcoming protocols who had like a strong presence before, right?
Like Mofo Blue, which you guys recently had an announcement on.
So even those guys were making strides in the whole decentralized lending market that they're trying to create.
So that is something we're definitely excited about.
I think we'd be up somewhere around mid-fib if everything goes smoothly and similarly radiant silo,
like there's a whole bunch of other lending markets we're looking at.
And in terms of CDPs, I think the big ones we're looking at is, of course, Libra.
Then Prisma, which, you know, really hit the stride lately.
And of course, any other niche opportunities that keep presenting, we'd be on the lookout for.
But in terms of pure scale, I would say mostly lending protocols and CDPs are the big unlocks we're looking at from a DeFi space.
And on the node operator side, we have a whole utility pool solution going live,
which kind of eliminates the exposure to SD, which has been like a requirement for most of the institutional players that we're dealing with.
Because they had serious constraints about tokens that are effectively not ETH or Stables, where they have to limit their exposure.
I think that, I mean, it's a little complicated to give details straight out, I guess.
But that is something we're definitely excited about.
And we hope that brings a lot of unique validators to the ecosystem more than we have right now.
And how does the Eigenlayer ecosystem fit into how you're thinking about where you want ETHX to migrate to?
Is it like, yeah, I want everything in Eigenlayer.
No, I want some of it to maintain on these money markets in the ETHX form on like Aave and Compound.
Can you just give some context into how you're thinking about that?
Sure, sure. So it depends on how the whole Eigenlayer pans out and how the scale up is, right?
On paper, the strategies definitely sound like we're trying to give more yield without taking on massive risks in that sense.
So overall, if it pans out in such a way where you can even differentiate yourself on Eigenlayer and it becomes almost like a parallel layer on top of ETH,
I guess it's OK, even if you want to build something around it majorly, even if 80% of the TVL kind of sits there.
But I think still, for the most part, at the end of the day, it has an underlying layer for it.
And with all the additional LSTs, LRTs that are kind of building on top, be it KELT, be it EtherFi, anyone,
I guess it again comes back to the same DeFi use cases.
So if at all we have to take that route and then build the DeFi use cases, be it Aave, be it any other lending market or CDPs, we are open to that.
But it all depends on the scale up.
Like if it scales up rapidly and all of a sudden you can unlock the entire ecosystem with it, we are happy to explore that route.
But if that doesn't seem to be the case and only half the TVL can flow through Eigenlayer and the other half has a decent amount of market play, we are more than happy to explore that route.
As of now, there's no like a fixed route as such from our perspective. It depends on how the market shapes up.
Got it. Yeah, preserving that optionality makes a ton of sense and I guess being flexible to this potential new paradigm.
Yeah, that all makes sense to me.
I don't know if we've talked about this before, but Somalia is like inching closer to having multi-chain capabilities and having bolts on like the L2s.
Obviously, you've been multi-chain for a while now, but I don't believe EtherX has made its way to the L2s.
Can you talk about how you're thinking about EtherX and the L2s?
Yeah, sure. So one of the main reasons why we've been a little cautious is, as I've mentioned, we've already built on multiple chains before.
So once we kind of hit the stride with ETH, we realized how big the market was on Ethers before you have to get into other chains and then explore that.
So that's why there's been a slight gap, I would say, in terms of the new chains we step into.
Also with the whole L2 game plan coming in, I think it kind of changed the way we look at things.
As in previously, if I have to launch a whole bunch of new features or there's something you want to fix with Ethereum itself,
for the most part, you have to go through a very ardent process or for the most part, you have to just launch your own chain.
And it has worked to an extent, but with all the kind of L2s that we're trying to do,
recently there's a whole bunch of L2s trying to bring Solana efficiency into the ETH system using L2s.
Of course, arbitrary L2s, we have the big ones which are already there and protocols have already built on it.
And especially, who doesn't like cheap gas and vast execution?
It's just the question of what are the big bets that we'd want to take?
Effectively, if we launch, we'd want to launch on multiple sets of chains in one shot to leverage the L2 ecosystem for the most part.
And especially with use cases like Manta and Mantle, where they've managed to unlock the ETH that's currently in the bridge.
Because that's something that's kind of debated for a while.
And of course, it has its proponents and operants who are equally strong in their arguments and are equally valid too.
So with those kinds of things opening up, I guess, at least from an analysis standpoint, it gives a new form incentive to come into.
So I would say arbiterment optimism would definitely be on the cards considering the scale they've achieved.
And since they already hit that critical mass and the other chains will have to see what are the use cases that they build on and how they scale up.
And based on that, we can take the ball.
Got it. Yeah, it's super cool.
And there are a lot of decisions to be made when it comes to launching on those those L2s, like you mentioned, because, you know, you only have you have finite resources and then each ecosystem has their own dynamics and, you know, various narratives forming.
So but it's exciting, right? It's always exciting to happen to new users.
Yeah, but definitely like walls like this make the whole play a lot easier, right?
Like if the whole level of abstraction is such that for the end user, it all looks the same no matter which chain they're in.
I guess like that that makes the whole ecosystem very seamless.
And that is something that we've also been thinking as to how do you make it as close to a native speaking experience as possible on other L2s?
How do you make it seamless?
So users feel the same way they feel on ETH, even if they're doing it on an orbit room or even on some upcoming chains.
I guess like walls and automated strategies definitely play a big role in that.
And we have some exciting things on the horizon as far as, you know, potentially, I guess you may call them omni-chain vaults where a vault is not just confined to a specific L2, but actually doing activities
across a number of L2s for a given asset or asset category like ETH or LSTs or stablecoins.
But we'll release more info on that in the near term.
One other thing I wanted to touch on was just some like incentive components of this vault.
So you can come to app.smile.finance and like click on the Turbo ETHX vault.
It accepts multiple deposit assets.
So at this time, it's ETH and ETHX.
So that's a new innovation we've made for those that have been following for a while.
Like typically, SMLE vault has only accepted one deposit asset, but we've done some enhancements to our smart contract architecture that allows now multiple deposit assets.
We can add to this list over time, but we're originally starting just with ETH and ETHX because that seems like a natural starting point, especially with a vault focused on the state or ecosystem.
And so there will be an incentive program that will run for 30 days.
It's getting queued up now, so it should go live in a few minutes.
But there will be some incentives that folks can earn for locking their LP tokens.
And then there's also some ETHX rewards as well for participants in the vault.
So that program will run for 30 days, and then we'll evaluate progress and see what we want to do for the future.
So that's just one details component.
We also, another interesting thing on the SMLEA side for DeFi composability, and I think it applies to this vault, is we've started to get some integrations for the vault shares.
So when you deposit into a SMLEA vault, you'll get tokens back representing your position in that vault.
So for the Turbo ETHX vault, it's like Turbo ETHX is the token.
And historically, the only thing you could do with that is stake it in this incentive contract.
But now, this week, we integrated with Sturdy, which is like a lending protocol, and they allow those vault share tokens to be enabled as collateral.
So we have, since the program's just started, we only have three different vault shares enabled as collateral right now.
So that's like Turbo SWEATH, Turbo STEATH, and RealYield ETH.
But we have the capability to add new collaterals, which allows folks to borrow against those.
So that's something we're evaluating with these recent vault launches, like the Turbo ETHX vault.
We can add it as collateral to our setup on Sturdy and some of these other emerging lending markets that don't have the same requirements as Avair compound.
So that's just something to keep an eye on if Turbo ETHX gets additional DeFi integrations where users can enhance their utility.
We'll obviously announce those on Twitter.
But that's just something to keep an eye on.
And hopefully, you'll see more announcements in that vein from the Somalia account in the near future.
Krath, do you feel anything I'm missing here before we wrap up?
No, I think that's a pretty succinct summary of everything we've discussed.
And yeah, definitely excited to see the world go live and how things evolve over the next couple of weeks.
Yes, I'm here. Super exciting.
Awesome. Thanks, everyone, for joining, and have a great Friday and weekend.
Thanks, guys. Thanks for having us.