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Understanding The Design Behind Level’s lvlUSD Stablecoin, Yield Talks
Recorded: May 23, 2025 Duration: 0:55:48Space Recording
Short Summary
In a recent discussion, Kedian Sun, co-founder of Level, unveiled the launch of their stablecoin, LVL USD, which offers an impressive 7.87% APY yield, significantly higher than competitors. The conversation explored the competitive landscape of yield-bearing stablecoins, the growth of Level's market cap to over 185 million, and the innovative strategies employed to attract users and institutional capital into the DeFi space.
Full Transcription
Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Hey, everyone.
This is DeFi Dadkin.
Let's try to unmute ourselves.
Kedian, Nomadic, let's see if you can hear me okay.
Yeah, loud and clear. Jinx.
Awesome. And Kedian, am I pronouncing your name correctly?
Yeah, you got it. Perfect.
Awesome. Kedian, and last name Sun, is that correct?
Yep.
Okay, just want to make sure we've got that.
All right.
And guys, do we want to add the level account as a speaker?
I tried adding them, and I haven't been able to.
I'm not sure if they would like to request just to get them into the space as well.
I think it's Gonzalo from our team that's on the account right now.
Gonzalo, are you able to help them to speak or not?
Let's see.
I just – let me double-check here.
I'm going to – you know what?
I will cancel their invite, and then I will re-invite them.
Let's see if this works this time.
Oh, weird.
He said that he's already a speaker.
Can you guys see the level account as a speaker?
Yeah, showing as a listener for me as well.
Yeah, yeah, yeah, me too.
Maybe, Gonzalo, if you can hear us, try just – yeah, there we go.
He dropped out.'s that that'll i
was gonna say if he rejoins i'll probably fix it um x twitter has had a bunch of problems today so
just a reminder um for folks listening uh you know we will oh there we go we've got him in now
perfect um we will edit this and polish this up later and republish it as a regular Edge podcast.
So if you go to the-edge.xyz, that's a great place to subscribe.
Appreciate folks joining us here for the live conversation.
But if you prefer to listen to it on Spotify or Apple, we highly recommend subscribing at the-edge.xyz.
That's my preference personally.
But guys, otherwise, I think we'll go ahead and get started.
So everyone, thanks for joining us.
This is Yield Talks on the Edge podcast.
I'm DeFi Dad here with Nomadic.
Every Friday, we host a live space to review new and interesting DeFi
to spotlight what we believe is an on-chain opportunity
more of you should know about.
Today we're joined by the Level co-founder Kedian Sun.
Level is a stablecoin LVL USD powered by USDC and Tether
in blue chip lending protocols such as Aave and Morpho.
They are just over 185 million now in market cap. Level's stablecoin yield for staked
LVL USD is currently 7.87% APY. That is notably higher than the likes of Athena's SUSDE
or Aave's stablecoin rates for USDC and Tether or Sky's S-U-S-D-S, which is at a fixed 4.5%.
So it's pretty impressive.
It's part of what prompted us to want to have this conversation.
As stablecoin farmers, Nomadic and I have questions about
how are they achieving a higher stablecoin yield?
How can we earn with level USD?
What are the trade-offs to this design? And how can we get
involved with the protocol? So anyways, Kedian, thank you for joining us. Why don't we kick off
with just more about why did you start building Level? What can you tell us more about the mission
at Level? Yeah, first of all, thanks so much for having me and excited to chat with you guys.
And appreciate the introduction.
It's a very, very good and accurate introduction of, you know, what we're doing and, yeah, kind of like some of our attractions so far.
So I guess before I get into like exactly how we started building Level, I think part of what's relevant is kind of like um how it's like i
guess like our team's personal background and like how we got into crypto and stable coins
in the first place and so just a little bit about myself my background's in various forms of finance
um so i studied finance for my undergrad and then i went on to work for uh work in investment banking
um so you know very traditional finance.
And then I moved into like the fintech space where, you know,
we're sort of seeing more of like the innovative side of finance.
And what I realized working at a fintech is that in some ways,
fintechs are innovative in terms of UI, but not necessarily like,
but it's not actually like a step up increase in terms of
like improvements on like financial products themselves. And what I mean by this is like,
you know, I'm not sure how aware the listeners are of like how a lot of financial, how a lot of
fintechs operate, but most fintechs that we know of they're actually essentially just built on top of um you
know partner banks or traditional financial infrastructure and so they sort of provide this
uh improvement in the ui uh built on top of on top of this infrastructure that I think you know
with us as being as people in crypto we sort of know that this infrastructure is broken to some
extent right and so I think what really interested us about crypto and
specifically stable coins is that crypto isn't just like a UI improvement on top of financial
products it's actually like a way it's like a structural improvement that not only makes like
it allows us to be more efficient and create better products, it also increases financial inclusion globally.
Because crypto is permissionless, it allows people from anywhere that has internet access to access
these financial products that were previously only reserved for very sophisticated users or
users in developed countries. So that's just a quick background on what really inspires us
about being in crypto in the first place.
And then obviously stable coins are like this very core part of crypto that has like a very specific kind of, you know, real world use case as opposed to the more speculative side.
And just to be clear, I don't have any issues with speculation in crypto.
Well, I have an issue with scans but you
know like at the end of the day speculation is part of like financial markets um but you know
what we are really interested in is kind of like the more like a real world use case side of it
um and so i guess like the broader um theme of like what we're building at level is i i would
describe it as like we're trying to build commissionless on-chain
banking products that increases accessibility of financial products for people that you know
didn't have that access previously and the the products and the initial products that we're
starting with um is like is like level usd and s level usd which are like the stable coin which
is a stable coin and like the yield bearing version like the stable coin which is a stable coin and like the yield
bearing version of stable coin um um respectively and the the mechanism that we've designed if you
think about it's actually very analogous to how a traditional bank operates except you know we've
done this permissionlessly and built it on chain and what do I mean by that is uh you know if you
have a bank account what you do is you're you deposit your US dollars or like your fiat currency with the bank. And the bank mostly uses
those deposits to lend for loans. And specifically, it's mostly mortgages, which are over collateralized
loans. And so what we've built at Level is it has a lot of similarities there. So, you know,
like DeFi Dad explained, take usdc and usdt
as deposits from users and then we lend that out onto uh very like low risk lending protocols like
um arve and morpho which are over collateralized like lending uh products and then we ultimately
pass that yield back to s level usd which is like the yield accruing version of it so that's kind
of like the yeah just like the background of like, you know, how we started
building level.
It's really about like, how can we build banking products, but permissionlessly on chain and
offer this to like more people.
Kedian, I want to just pick your brain quick on just the state of the yield bearing stablecoin
space, because I think if you've just been paying attention to it the last maybe three to six months there's just been a rush of new competitors that
have kind of come into the arena so um yeah competition is heating up just curious just
your general thoughts on all this competition you're seeing in this yield bearing space
yeah so I think the first my first thought is like as an industry I think we
do need to start um being more accurate in our descriptions of various products that are coming
to market I think we're very used to calling everything that is dollar denominated a yield
bearing stable coin um and you know maybe that is just you know what we stick with because that's
what we're used to I think if we really look at like the mechanisms for each of these different um you know quote unquote yield bearing stable coins
they have very different models and personally i would roughly and there's no like clear line but
i would generally i divide them into like more savings types of products and that includes level
as well as like uh took essentially like treasury backed products and then like the other
category is like i would consider them more like investment products um and these um potentially
have more sophisticated strategies kind of under the hood and they have very different risk profiles
and you know just once again just because their dollars are nominated or the principal is supposed
to be pegged to dollar doesn't like necessarily mean that all of them are suitable
as like savings products um so that that's like the first thought um second thing is to your point
there's been like so many of these uh new new yield products that have come to market and i think my
first um thought is just like you know i i just generally believe that more options and more
competition is good for the market.
It's good for users.
It encourages innovation, encourages experimentation.
And so, yeah, sort of like welcome that.
And then the second is I also don't necessarily think of it as like competition per se.
Because if we think about like, you you know traditional finance and the fixed income market
there's literally like thousands or even like tens of thousands of different products
um and it's like yes I guess in some ways they are competing some of them do compete for like
similar capital and that's where the competition comes in but ultimately there is like a very wide
spectrum of like um investors that have different risk return profiles and so someone that like an investor that
wants to buy treasuries is very different to an investor that wants to invest into like a market
neutral hedge fund for example and so in some ways those products don't actually compete with each
other um and yeah and then like even like if we're looking at non like stable assets you know if we
look at bitcoin versus eth versus altcoins like you know at if we look at Bitcoin versus ETH versus altcoins, like, you know,
at the end of the day, there's different ways for people to, well, people use them ultimately as an
investment. And like, I think in some ways, there is like this rotation of capital, and that's where
the competition comes in. But ultimately, it's just like, you know, you're serving different types of
users with different products. And then other, the last point is probably that competition exists
when there is like a limited amount of demand and so then you're like fighting for the same capital
but i think as an industry um the goal really should be like how do we actually increase the
demand and how do we bring more capital on chain to like um be able to invest or use these different
types of products and when demand increases then the competition actually like for the same amount of like products on the market the competition
actually decreases and then you know each product is kind of serving like a very specific like niche
of users or investors um so yeah that's kind of like my my general view of just like you know all
of the different products on the market and how we think about competition.
I guess the one thing to add is in terms of where we see level
is like another one of the reasons we created Level.
We actually think there's almost a gap in the market
for more low-risk products.
I think since Athena launched, we've seen a lot of these,
like, you know, yield-bearing stable coins
that have started to generate yield from more complex and sophisticated strategies,
or people are bringing like illiquid RWAs on chain.
And all of these I would consider kind of like further along the risk spectrum.
And this was sort of like because people were like chasing higher yields.
But then I think what we realized is that there's actually a way to generate very competitive yields,
which we've been doing while keeping the risk profile very low.
And that's, if anything, we actually think it's a space that's actually relatively less competitive compared to like the high yield, high yield, but also high risk kind of side of things.
This all resonates with me. I am looking for yield that is better than T-bill yield,
This all resonates with me.
but I'm not necessarily looking for a double digit yield that, you know, is eye popping.
I'm looking for, you know, seven, eight, 9%. I think that is extremely competitive
yield to earn on chain. The problem, of course, with a lot of different yield bearing token designs is,
you know, they're newer, it might be untested code, there might be some sort of risk there
that I'm just personally not willing to take. So I completely resonate with this sense of
there's a gap that it seems that Level is looking to address. I especially like the fact
that I was looking at the historical APYs. This is on the Level website. So if you go to app.level.money,
and if you go to transparency, there's a tab there, I believe, that shows the historical APYs.
And so anyways, long story short is the historical APYs over the past, let's say, like three months or so.
For the majority of that three months, the state level USD has been outperforming these others that we noted earlier, like Athena's S-U-S-D-E. And it's impressive.
You know, again, the point here is to sustain a higher yield, but to not have to take some
outsized risk. I can't imagine, you know, if you're managing hundreds of millions of dollars,
let's say in a liquid fund someday, you know, the last thing you want to do is be winding up risky positions.
So, yeah, just absolutely speaks to a gap in the market there.
One thing I'm curious about is, is there like an archetype of a user that you see as the biggest opportunity to increase that demand?
opportunity to increase that demand. You noted that if there's a limited amount of demand,
that's the real problem in terms of growing level or any sort of stablecoin protocol.
We need to grow the demand. We need to attract net new capital on chain. Do you have any other
thoughts to expand on that in terms of how do we actually grow that demand or who do
we tap into to to onboard that much more money on chain yeah I think there's a few potential
categories here so the first which I think as an industry we've been talking a lot about a lot of
this is driven by Athena and other protocols they've done a great job here is like, how do we bring institutional capital on board? And yeah,
the institutional investments is literally like, you know,
multi-trillion dollar industry. There's so much capital out there.
And so I think one, and there's like a,
and each risk return profile itself is like massive. And if anything,
I think the lower risk return is like much the the
the demand from like the lower risk return investors is actually much higher than like
the riskier stuff and that's kind of why you know treasuries are like one of the biggest assets uh
that that exists and so i think um being able to tap into that um you know into that demand
is going to be very important. And we're actually starting to
see, for example, Morpho has also been driving a lot of this, you know, they're starting to bring
a lot of institutional like players on board that are interested in the risk return profile of
on-chain lending. So yeah, I think that's probably like going to drive a lot of, drive a lot in terms
of like demand from a TVL perspective I think the other
side which is what I was sort of describing earlier in terms of you know why we got into
crypto in the first place it's like how can we increase the number of users that demand this
product even if like the total TVL is currently smaller from that group and this is where you
know we can potentially offer these types of products as like commissionless banking and commissionless savings products.
But then a lot of this is about how do we actually onboard more people, especially in these emerging markets, to crypto in the first place.
So I think those are kind of like the very interesting kind of pockets of capital that we're interested in.
interesting kind of pockets of capital that we're interested in. So let's talk about the two token
design here between level USD, LVL USD versus staked level USD. What can you tell us about
this design and how does Yield accrue to staked level USD?
accrue to staked level USD?
Yeah, so the design, just to explain it, I think it's two ways to explain it.
The first is this is probably the most common form of dual token, yield-bearing stablecoin
models that are on the market.
So it's very similar to, I think it was actually probably Maker that pioneered it with like
DAI and SDI.
And then now they're like obviously revamped to Sky.
And then Athena uses a very similar model.
And I think most kind of yield bearing stable coins have this,
where there is the unstaked version.
In our case, it's a level USD, which is pegged to the dollar.
And then you have the staked version.
That's the one that accrues yield.
And then using like a
more like traditional finance analogy kind of what i was alluding to earlier uh you can think of
level like the unstaked version of the stable coin as like a checking account and then the
state version as like a savings account and you know with your bank it's the savings account that
pays yield not your checking account um and so how it works is the
entire so level USD is backed by like we said USDC and USDT and lending protocols currently
and so the entire like reserve of level USD is being used to earn this yield which accrues to
the protocol initially and then the the yield is only passed on to the state level USD users.
And so this is through like a very standard 4626 volt mechanism.
And so what that means is that the total amount of yield that's earned by the protocol is concentrated among like a relatively smaller,
or it's concentrated among like a subset of level USD users that choose to stake.
And that's kind of why uh the the stake version has
higher yield and this is also true of like you know with dino and other similar protocols
katian uh i think i had a guy i posted this uh twitter spaces yesterday on on twitter x i guess
i should start calling it x i don't know when I'll ever start thinking to do that.
But this user was kind of bringing up the question like, okay, well,
who is actually holding the LVL USD?
And like, I think it's a good question.
Like what is encouraging people to hold that version?
Because clearly you've got some disparity.
You've got a group of people staking it and a group of people holding the LVL USD form. So yeah, I think it's very clear the incentives for the staked version,
of course, you're getting great yield. What is the incentives to hold this non-stake version?
Yeah. So in this stage that we're in, which is still relatively early and also true of other
yield-brain stable coins, we're sort of in this growth phase of trying to get to a certain scale. in which is you know still relatively early and also true of you know other uh yield brain stable
coins is we're we're sort of in this growth phase of trying to get to a certain scale uh first and
so you know it's often described as like the bootstrapping phase and so the incentives for
people to not stake level usd ultimately is driven by like our xp uh incentive program and so um
yeah so so that's kind of like the the then or end of the day, like people who are not staking LevelUSD are using LevelUSD to earn as much XP as they can. And I mean, there's various ways to do this, including, you know, providing liquidity, including, you know, splitting like the XP, splitting like the yield. If you think about XP as like an alternative yield,
like splitting that on Pendle, you know,
using the assets as collateral to borrow on like lending protocols,
like Morpho, et cetera.
So yeah, it's like, you know, we do, there are incentives
and except instead of like real yield as incentives, it's the XP.
Yeah, I'm looking at the farm tab under XP farm on app.level.money. And you can see that
there's all the familiar sorts of DeFi protocols here. Most notably, there's lots of opportunities
on Pendle. I was actually reviewing these this morning, just thinking about some of the PTs, because
I think that there's somewhere around 9% to 10% APY that can be locked in.
So that's fixed for anyone that just wants to earn a simple fixed PT yield with level
USD or staked level USD.
But then there's countless Morpho vaults here. There's also,
there is, gosh, what was it here? Morpho we covered. There's one more I'm missing.
No, actually, nevermind. That's it. We covered all of them here. Those are the key protocols there. But anyways, you can see that the rewards are
stacked highest for those who are going to provide liquidity in Curve. So is Curve the one venue for
providing liquidity for level and staked level USD? Is there any other AMM that is hosting liquidity
for those two coins?
No, we've just chosen to concentrate
all of the secondary liquidity on Curve.
And so there is a level USD USDC pool,
and there's also a level USD S level USD pool.
So those are the two places that you can provide liquidity
as well as the two places that you can provide liquidity as well as the two places that
you can, well, it's the one place, Curve is the one, you know, venue that you can provide liquidity,
but there's two pool options. And then it's also where you can buy and sell or like swap for level
USD and next level USD on the secondary market. There is like also liquidity on Pendle, but
that's obviously different.'s like the liquidity to buy
and sell PTs yeah I want to get into that Pendle yield eventually here but I kind of want to just
start at this kind of first foundational level we've been we've been kind of talking about where
where the yield comes from in this arrangement with Aave and then I believe Morpho came fairly
recently correct me if I'm wrong there, but
I want to kind of get into how you discern which Morpho vaults to go with. I think for starters,
I think I've seen that you're with like Steakhouse Vault and what I know about Steakhouse, I mean,
that immediately resonates as like probably one of the more trusted, methodical, thoughtful vault operators and curators in the Morpho ecosystem. So I think
I can understand why you made that choice. But yeah, just in general, kind of touch on
your thought process here and like, where you would go eventually, like how far out on,
on the risk curve, you're willing to go in these like
Morpho vaults I guess if that makes sense yeah good question um and first of all yes we actually
only just started allocating to Morpho I think uh two weeks ago so it is like a recent um it's
like a recent product uh upgrade that we're very excited about I think the general principle here
kind of going back to I think what i've almost being a bit
repetitive about is like we sort of think of ourselves as like an on-chain banking or on-chain
savings product and so i mean there's no clear definition but like the the principle is like you
know we're gonna stay with low risk stuff um and yeah and it's kind of like is this something that
is uh if it's something that's significantly more risky than what, you know, like a bank or like what a savings product should offer, then we wouldn't like do that.
And so we obviously started with Aave because they're like the largest, you know, lending protocol.
They have, ultimately like Aave's advantages, their liquidity.
And then with Morpho, there's a lot of different bolts on Morpho, but we are sticking to the ones that are,
once again, lower risk.
And so there's a couple of prime vaults
that are curated by Steakhouse.
And then I think the other major one is Cauntlet.
And so prime vaults are low risk because of the collateral
that's accepted in the vaults.
And so typically, this is just like versions of Bitcoin and EAP you know like
the the safest most liquid assets on the market um and then the other side of risk is is related
to liquidity so if you look at the collateral Aave is that Aave's collateral is actually more risky
than some of these more for prime balls that I mentioned because they do accept like a basically
like a larger variety of collateral um but then
Aave is like a one advantage where like they're less risky is because they're very liquid like you
know if there's an extreme scenario where we need to withdraw all of our reserves from the lending
protocols Aave can support that currently uh even at like you know nearly 200 million um whereas
like with Morpho Vaults they're still uh in the process of
i guess getting to that stage and so um if there is a morpher vault that is extremely liquid but
may accept like slightly slightly riskier collateral that's also something that we would
consider um but yeah that's like the general idea is like you know is is the source of yield like
very low risk and that's kind of exclusively what we're focused on. So I think, yeah, I think the other, you know, I guess this is a little bit of alpha, like
in terms of other yield sources that we're looking at, we are looking at, for example,
like Spark, which is the sub-dial of Sky. And yeah, that's kind of like the category of
yield that we're looking at, which there's honestly not very many of them on chain. Yeah, that makes sense. Fluid was also top of mind for me, but Fluid is newer.
And so I absolutely would rank Spark without any sort of comprehensive risk framework in front of me. Yeah, Spark was very top of mind. So I'd love to
see them included in that. And, you know, again, speaking firsthand to looking at level USD,
thinking about the different yield bearing assets out there, I was just running through
like my own checklist and thinking through like, all right, what's here? What are the risks to consider? I think like the most notable risk for me personally is just how
new level still is. Like, you know, it's something that can over be overcome by continuing to,
you know, thrive each and every day. Every day that you're, you know, that you're live without
an exploit, without any sort of issues with the underlying assets, you know, that you're live without an exploit, without any sort of issues with the underlying
assets, you know, is a win. But the fact that the majority of the yield is sourced from Aave,
Aave for me is like risk-free yield at this point for stable coins. So the fact that you're able to
enhance what I can get on Aave, which would always be my home base, always is my on-chain benchmark for yield that I can earn. I can, again, speak firsthand to
the benefits I see there as a farmer thinking, all right, this is low risk. I'm not doing anything
with leverage. I'm not doing any sort, doing any sort of like looping position.
This is, let's call this, this is a more like vanilla approach. And I think to the point you
made earlier, like, that's what so many of us want. Like, we want to sleep well at night,
we want to have reliable, predictable yield, and we want yield that sustains. The longer that level USD continues to
prove that it can outperform whatever other benchmarks are out there that we've called out,
the better. It's just going to attract that much more capital. And thankfully, because of the depth
of liquidity on an Aave, I see so much room here for this
to grow.
But Kedian, are there any other risks that are top of mind for you?
Anything else that you might call out for us as users?
Yeah.
I mean, we're very happy to be very transparent about all of the risks.
And I think, if anything, every product on the market should that's how users you know have the most information to make a decision
I mean I think the framework here is like with any product you can actually just like break it down
into the various components and then you can analyze each of those risks and then like um yeah
essentially sum up those risks and so I can happy to go through that exercise with level and so um i mean it's actually
relatively simple for us like users come to us with usdc and usdt and so because we're ultimately
backed by these two assets that's the first risk which i think at this point used that you know
most people in the space are very comfortable with the fact that you were holding usdc and usdt in
the first place means that you trust those assets.
And so we can like, I think the risks associated with those are like pretty negligible at this
point. But obviously, you know, we also did see Circle DPEG back in 2023. So it's not like there
is zero risk there. And then the second is, you know, you are coming to us level as the protocol
to deposit your USDC and USDT. And so there's various, essentially,
we're like this layer of smart contract risk that is like, you know, that does exist. And our
contracts are, you know, audited by multiple of the top security audit firms out there. But, you
know, to your point, like we are still relatively new. And, you know, as we like stay in the market
for longer, there's more lindy effect, and then there's more trust built up in our smart contracts I also want to note note that our smart
contracts are built in a way where um you know only there's only certain very few certain actions
that can be taken so like the reserves can only be allocated previously to our Bay we actually had
to upgrade our contracts to be able to allocate to
Morpho. And so now we can allocate to Morpho. And then, you know, if we were to add Spark,
we're actually working on another Spark contract update to do that. And so it's like, you know,
there is, yeah, so basically, I think that's what I'm trying to say is that, you know, with some
protocols, it's actually just like a multi-sig that the team controls. And it's like, in theory,
I think, you know, those funds can actually be moved anywhere whereas like we actually have predetermined parts
like that are smart contract based for where the funds can go um but regardless you know that is
my contract risk um and you know there is a chance that could get hacked and then finally like the
last component of what we do is like where we generate the yield from which is from ave and
morfo currently and so then um you know there's a chance that Aave gets hacked,
there's a chance that Morpho gets hacked,
or there's, you know, something else that happens there.
But, you know, to your point, at least Aave,
I think it's considered kind of like the crypto risk-free rate.
They've been around for a long time.
They're very battle-tested.
And then Morpho, I think, is kind of like getting to that stage as well.
And so, yeah, just to quickly summarize, like the three key risks involved with using Level are the risks with USDC and USDT or like, you know, Circle and Tether.
There's Levels, smart contract risk.
And then there is like the yield source risk, which is currently Aave and Morpho.
source risk which is currently Aave and Morpho. And then I think one thing to also note which is
like very nice about what we do is because we are fully built on chain there's actually no need like
you can just look on chain like you know you can look on either scan to see exactly where the
reserves are there's sort of no need for like third-party attestation providers which is
actually another layer of trust that needs to be involved with a lot of other stablecoins.
And so, yeah, like a key benefit of what we're doing is like this just full on-chain transparency.
Yeah, when you start talking about risks to USDC and USDT, those become like just major DeFi-wide black hole contagion, terrible scenario. So knock on wood that nothing happens
there. Katie, I want to get into more about yield. So I started noticing you guys on Pendle
pretty early. I think you've done a great job of kind of executing on Pendle. Maybe you can
highlight your strategy there, what kind of yield offerings people can get on Pendle, maybe you can highlight your strategy there, what kind of yield offerings people
can get on Pendle, and maybe the differences between your staked versus non-staked version
and just maybe wrap in how XP kind of works on Pendle as well as the kind of real yield.
Yeah, so with Pendle, yeah, basically we have, you know,
we have pools for unstake level USD.
Did we lose Kedian or is that me?
Can you guys hear me?
I can hear, I can hear everyone.
Okay. So yeah, I was saying that on Pendle,
we essentially have pools for
our unstake level usd as well as pools for stake level usd uh first thing to note is that there is
um we currently have two different expiry um expiries for both assets and so the first one
is actually expiring very soon it's in like uh i think it's expiring on monday in like three
in like around three days and then then the second is September expiries.
And so we have that for both level USD and S-level USD.
And so with S-level USD, I mean, the premise of Pendo is ultimately like yield trading.
And so with S-level USD, there's obviously yield that's associated with it.
And so you have your S-level USD PTs and YTs,
and that essentially splits the principal from the,
from like the yield.
With the unstake level USD, you know, by itself,
there is no yield, but we do give 40X points for,
like for the, for the PTs and basically give 40X points
to level USD.
And then that's essentially like the points or like XP are treated as like the yield.
And that's kind of what's getting split between the PTs and the YTs.
So essentially, you know, you would use Pendle to speculate on XP for unstake level USD.
And then you would use S level USD on Pendo to speculate on the
real yield guys can you hear me okay yep I can hear you okay sweet I think my audio dropped
off there at one point but I'm back um so Kenny and any other yields throughout defi that we should know about here with uh with level
yeah i think the other main one is we have a morpho vault that is curated by m11 and so that's
actually a way where you can deposit your level usd and earn real yield on it that's not coming from S level USD itself.
And so basically you can deposit level USD into the vault as a lender and you can earn yield from
that as people borrow the level USD on the other side. So I think that's kind of like the other
main category of like yield that users can earn.
like yield that users can earn.
Awesome.
I think we might have lost DeFi data potentially.
So he's actually dealing with a storm in his area
and his power's out right now.
And I think he's running on generator power.
Hey, Nomadic.
Hey, my sound's working again there.
No, I could hear everything there.
So apologies.
Enjoying the conversation. Just couldn't unmute myself there.
Might even be an X problem.
Guys, we're probably close to wrapping up.
I just wanted to double check.
Is there anything else top of mind for you, Ketian?
Anything else that you think our audience should know about in terms of level?
Yeah, I think one question that a lot of people ask is, like we said before,
right now, unstake level USD is essentially subsidized by our points program.
And so I think people ask what happens when these XP incentives end.
And then they, I think, probably correctly assume that, you know, all else equal, then,
you know, people are going to start staking.
And then the S-level USD yield starts to converge with lending protocol yield.
And so the question is, like, you know, why use level USD at that point instead of using
like the lending protocols directly?
And there is like this, you know we believe like this is
very clear value proposition even even in that scenario um and and specifically it's related to
capital efficiency um so if you use the lending protocol directly uh what happens is you know on
other you're you're holding either a usdc or a usdt um and as far as i know there's not really much
you can do with these A tokens. You're
basically, even though like these assets are like, you know, permissionless and you can,
there are things that has potential for things to be done with it. There isn't really any use case.
And the difference with like, if you were to use level USD or S level USD is we've integrated S
level USD into like Pendo, into Morpho and other
lending protocols. And basically you can reuse like this asset to unlock more capital efficiency.
So for example, you can take level USD and S level USD and use it as collateral on Morpho to
borrow more USDC that you can either use to like, you know, emit more level USD or for other use
cases. That's not something you can do with like other USDdc other usdt or like the morpho vault tokens and that's kind of like this
very um yeah that's kind of like the the very uh clear like sort of value proposition even in a
world when like our s level usd yield might converge closer to the lending protocol yields
um and then the other thing to add is like, you know, we are still in this growth phase.
And so, you know, being realistic, there aren't as many use cases for level USD currently,
other than earning XP. But like, as a team, we are very focused on like, you know,
how can we create long term value for unstaked level USD in the long term?
unstake level USD in the long term. And that includes how do we create more use cases?
And that includes like, you know, how do we create more use cases?
And how can we actually have double USD used as a stable coin in the real world?
And that's kind of ultimately what Tether does a great job at. Because USDT is used
essentially as a form of real money, they're able to basically... I mean, Tether doesn't really share that much of the yield,
but it's kind of like, that's how they are able to essentially accumulate more yield as like the
company. And if they wanted to, they can use that to share yield. And so that is something that we
are very aware of. And I think, you know, we do have like, we are working on like a specific
strategy around creating use cases for unstake level USD beyond just XP.
Yeah.
I think despite all that we talked about in terms of the risk profile being
so appealing with level USD, you know,
I'm seeing with these Morpho vaults that you are making possible all sorts of
different looping positions.
So, you know, for folks that like to loop, you know, this is another great opportunity,
I think, to check out a stable coin pair where, you know, you're ultimately able to borrow close to,
I think it's like 91.5%, at least on a few different Morpho vaults.
The one I'm looking at is one of the larger ones.
Actually, the liquidation threshold on this is 91.5%.
But anyways, regardless, I'm thinking that unlocks somewhere around like 10 to 12x looping capability,
looping capability, depending on how much leverage you want. I won't go into that anymore,
depending on like how much leverage you want.
because personally, I'm not a big fan of using high leverage in looping positions. But
the thing about DeFi that I love is that we give people the permissionless ability to do whatever
they want with their money. So love to see the options here available. And none of that
is possible if you don't have a reliable yield bearing asset like state level USD. So really
cool to see that made possible. Guys, I think this is a good place for us to start to wrap up. So I
want to remind our audience that they can learn more about Level by going to level.money.
They should follow Level USD.
That's L-E-V-E-L-U-S-D on X.
Follow Kedian Sun on X.
And then Kedian, just thank you so much for joining us.
It was great to be able to dig in with some of the questions we had doing some research on level
and trying to figure out ourselves like,
okay, when does it make sense to deploy capital into this?
Do I just go with the stake level USD?
Do I farm with vanilla level USD and earn XP?
It's been really, really helpful for me personally.
I'd love though to close out with any bit of final alpha
you might share with our listeners.
Yeah, I think I'm happy to like highlight
a few different opportunities that are available right now.
So I think the first is this week,
you might've seen that we announced
our level ecosystem vault that is curated by Steakhouse.
And so what this vault allows is it allows two things.
If you're a lender, it's like you can basically lend USDC into the vault and
like a very competitive yield and the vault is secured by collateral that's
relatively low risk and all of the collateral is related to level assets.
So like, you know, level USDd stake level usd level pts
etc and then yeah as a borrower you can use these assets to basically borrow usdc and loop if that's
kind of by the strategy that you're looking for so that's the first vault you know it's a new vault
i wanted to highlight the second is what i briefly mentioned before, which is the M11 curated vault on Morpho that allows you to earn organic yield on level USD outside of like the level USD ecosystem.
And then the other, and the thing to highlight here is that this is a way to earn real yield as well as XP at the same time.
Because if you just stake level USD, we don't give XP for that.
we don't give XP for that.
And then finally, just like a reminder that, you know,
like I mentioned, our Pendle pools are actually,
the May expiry Pendle pools are expiring very soon.
And so it's a good time to start rolling that over
into the September expiry Pendle pools.
So yeah, I think those are probably like the three things
that I would highlight.
Really appreciate that.
And congrats on growing, you know,
to this stage, like being at, you know, 185 million, it's no small feat. But I absolutely
share in that view that there's just so much more room for us to grow. I get really frustrated when
I see protocols clearly competing with one another another because there's like a musical chairs in DeFi.
You know, there's only so much liquidity. And like really, the winners are going to be focusing on product design that is going to attract that net new capital.
And I think that for someone who is managing hundreds of millions, hundreds of billions, maybe even trillions someday, they're going to be looking for this sort of profile on chain. So I think the vision makes total sense.
And I'm excited for this.
I think this is another proof point
of how DeFi is maturing.
So anyways, Kedian, thank you for your time.
Everyone, thanks for joining us.
Happy Friday.
If you enjoyed this,
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listening to the podcast
we will clean up the audio
some of the issues there with
some wifi dropping
at least on my end we'll clean that up so
that it's a little bit easier for anyone else to listen to in the future. We appreciate those of
you joining us live. It's fun to do these live and just have these conversations on X. But yeah,
if you want to share this later on, subscribe at the-edge.xyz and we'll have a newsletter article out plus links
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joining us, Kedian. Everyone, have a wonderful weekend and we will see you next time.
Thanks, everybody. Thanks so much for hosting. This was great. See you guys.
Thanks, Kedian. Take care. See you, Nomadic.
