1/11
A lot of people are expecting the next 'segement' of this cycle will be outflow of ETH profits (which added $200B to its mcap this cycle) into DeFi tokens (which all collectively are worth only $150B)
I think the DeFi tokens are the next play, but outflow isn't the signal
A lot of people are expecting the next 'segement' of this cycle will be outflow of ETH profits (which added $200B to its mcap this cycle) into DeFi tokens (which all collectively are worth only $150B)
I think the DeFi tokens are the next play, but outflow isn't the signal
2/11
The last few cycles you had to wait for ETH profits to sell and catch the rotation into defi bluechips.
But this time we have a lot more options for using ETH as collateral.
The last few cycles you had to wait for ETH profits to sell and catch the rotation into defi bluechips.
But this time we have a lot more options for using ETH as collateral.
3/11
You can take your ETH to exchanges like FTX and use it for longing defi, or you can put it in Maker, Aave or Comp and borrow against that collateral.
You can take your ETH to exchanges like FTX and use it for longing defi, or you can put it in Maker, Aave or Comp and borrow against that collateral.
4/11
You can then take that borrowed DAI and buy defi tokens.
You can then take all those defi tokens and use them collateral in exchanges or other defi protocols.
You can then take that borrowed DAI and buy defi tokens.
You can then take all those defi tokens and use them collateral in exchanges or other defi protocols.
5/11
Depending how savvy and risk tolerant you are, you can do that a fair bit and get pretty decent leverage exposure while still maintaining a good liquidity margin.
Depending how savvy and risk tolerant you are, you can do that a fair bit and get pretty decent leverage exposure while still maintaining a good liquidity margin.
6/11
I think we're going to see defi easily add $100B+ to its collective marketcap over the next year or so, but I don't think we'll see much ETH selling to make it happen.
I think we're going to see defi easily add $100B+ to its collective marketcap over the next year or so, but I don't think we'll see much ETH selling to make it happen.
7/11
Instead we'll see ETH collateral inflows increasing as a signal.
Something we're starting to already see at some of the blue chip protocols.
Instead we'll see ETH collateral inflows increasing as a signal.
Something we're starting to already see at some of the blue chip protocols.
8/11
I think this follow will mostly impact blue chip projects that have pools/lending/borrowing/collateral and debt features, as well as new projects in similar categories. I don't think we'll see flows to infrastructure and farm coins in the same way
I think this follow will mostly impact blue chip projects that have pools/lending/borrowing/collateral and debt features, as well as new projects in similar categories. I don't think we'll see flows to infrastructure and farm coins in the same way
9/11
There will be exceptions to that, but I think most of the buying is going to come from the later stage institutional ETH buyers who have driven up the price of ETH starting to use it in defi land.
There will be exceptions to that, but I think most of the buying is going to come from the later stage institutional ETH buyers who have driven up the price of ETH starting to use it in defi land.
10/11
I think they'll look to buy up established, serious protocols, that mirror classic financial products they are used to and have clear product market fit with cash capture models, and strong TLV already.
I think they'll look to buy up established, serious protocols, that mirror classic financial products they are used to and have clear product market fit with cash capture models, and strong TLV already.
11/11
We had defi summer last year but I think this defi rotation will put it to shame. As ETH continues to increase with EIP-1559, all of that value is going to continue to compound the value of collateralized ETH in defi products.
It will be a wild value capture loop.
We had defi summer last year but I think this defi rotation will put it to shame. As ETH continues to increase with EIP-1559, all of that value is going to continue to compound the value of collateralized ETH in defi products.
It will be a wild value capture loop.
PS - not financial advice. I am bias. I am fairly long ETH and wildly long on most defi things right now. I am also pretty short on most non-EVM and non-Solana stuff as I think this rotation will put a lot of other non-productive assets back where they belong...
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