Of all the stablecoins I’ve analyzed, FRAX is the hardest to categorize. Most stablecoins are either overcollateralized, not collateralized at all, or their collateral level is solely dependent on the volatility of crypto.
FRAX is unique; it is the most central bank-like of algorithmic stablecoins I have seen.
If you take a real central bank, most of their assets are other sovereign currencies. Similarly, the assets on FRAX’s balance sheet are other stablecoins. In crypto, this might seem like a strange design choice. But also like a true central bank, FRAX is able to adjust its collateralization level according to…
The biggest story in Ethereum over the last 6 months has been the explosion in transaction demand. Transaction fees have crossed all-time highs, and many everyday users are now priced out of using Ethereum.
But worry not. A savior has emerged.
Of course, I’m talking about rollups. Vitalik has anointed rollups the future of Ethereum scaling. Leading rollups have now received over $100M in venture funding. Every major DeFi protocol has picked a side, committing themselves to one of these soon-to-launch rollups as a future home.
Automated market makers (AMMs) have catalyzed the explosion of DeFi over the past year. Uniswap handles over a billion dollars in transaction volume a day, cementing itself as one of the 10 largest spot exchanges in the world. Sushiswap and Curve are not far behind, each trading hundreds of millions of dollars daily.
But AMMs are far from ideal. We see a constant parade of new AMM designs precisely because these AMMs have so many problems. Uniswap V3 is the latest attempt to shore up the weaknesses behind AMMs (namely, the constant-product slippage and capital inefficiency). But we’re still left…
Stablecoin usage has exploded in the last year. And yet, fewer and fewer people seem to understand how these stablecoins actually work.
For some reason, stablecoin creators are obsessed with making these designs seem impenetrably complex. Almost every white paper is mired in equations and newly invented jargon, as though their authors are trying to convince you: trust me, you’re not smart enough to understand this.
I don’t agree. At bottom, all stablecoin design is pretty simple. I’m going to show you a simple visual language to understand how all stablecoins work.
Think of each stablecoin protocol as a bank…
Today, we’re excited to announce the launch of Dragonfly Fund II, a $225M venture fund, to back the next generation of crypto entrepreneurs and projects.
We started Dragonfly with the vision that unlike traditional companies, decentralized technologies are global from day one. There is no such thing as an American or Chinese protocol — the moment a protocol is launched, its users span the world. Crypto is borderless and global by its nature.
We believe a modern crypto investment firm should reflect that.
This philosophy is realized by the entrepreneurs we back. We’ve been lucky enough to partner with some…
Today, we’re thrilled to announce Dragonfly has made a significant investment in NEAR and is joining the NEAR Validator Advisory Board. We now run the third largest validator on mainnet, and we will work closely with other members of the NEAR Validator Advisory Board to support NEAR in its next phase of mainnet adoption.
Glad you asked.
NEAR is a next-generation smart contract platform. It is the closest thing to Ethereum 2.0’s vision of a sharded scalable blockchain, but launched years before Ethereum 2.0.
Ethereum 1.0 can’t satisfy the increasing demands of decentralized applications. This first became apparent when CryptoKitties…
If adopted, the STABLE Act would force stablecoin reserves to be regulated like bank deposits. This would be a massive setback to stablecoins, which serve as the de facto money of the crypto ecosystem today.
The industry response was swift and furious. All at once, exchanges, entrepreneurs, and investors denounced the bill and its consequences.
For now we can rest easy, as the STABLE Act itself is unlikely to pass. But just recently, the Presidential Working Group made a statement suggesting that all stablecoin holders should be KYC’d.
This statement does not have the force of law. …
AMMs today are the most successful products in DeFi. The massive trading volumes of Uniswap testify to the power of permissionless AMMs.
But AMMs like Uniswap are exceedingly simple. While simplicity is at first a virtue — it’s much easier to bootstrap and secure a simple product — it also eventually becomes a liability. Over time, it will be harder and harder for Uniswap to keep pace with the cutting edge of algorithms.
Uniswap uses only a single variable in determining its pricing: the quantity of assets it holds in inventory. Smart market makers care about their inventory, but they…
Uniswap today is the single largest “exchange” on DeFi. It routinely posts volumes larger than most centralized exchanges. Uniswap has revolutionized DeFi, brought billions of dollars in trading volume, and sparked a Renaissance in AMM (automated market maker) design. In my previous post, I explained how Uniswap works and why AMMs are dominating DeFi trading volume.
But I believe it’s inevitable that Uniswap is going to be unbundled.
I know this is a bold claim. So what comes after Uniswap?
To understand where this market is going, you first have to understand the the four key features that Uniswap bundles…
Imagine a college friend reached out to you and said, “Hey, I have a business idea. I’m going to run a market making bot. I’ll always quote a price no matter who’s asking, and for my pricing algorithm I’ll use
x * y = k. That’s pretty much it. Want to invest?”
You’d run away.
Well, turns out your friend just described Uniswap. Uniswap is the world’s simplest on-chain market making operation. Seemingly from nowhere, it has exploded in volume in the last year, crowning itself the world’s largest “DEX” by volume.
If you haven’t paid close attention to what’s…
Investor at Dragonfly Capital. Formerly Metastable, @Airbnb, @earndotcom. Writer. Effective Altruist. Former poker pro. One always finds one's burden again.