Jeff Amico

COO @GensynAI / ex @a16z @Cravath

[Jeff Amico @_jamico]

How an RWA credit facility blows up

1. You deposit USDC into an onchain credit facility and get a yield-bearing stablecoin in return ("USDX"). USDX is backed by a portfolio of loans to offchain borrowers, according to the marketing.

2. USDX's issuer creates a Morpho market where you pledge USDX and borrow USDC, up to a 91.5% LLTV. You go to Morpho, post your USDX, borrow USDC, buy more USDX, and repeat. You now have 10x leverage.

3. Morpho values USDX using the portfolio’s NAV, relayed onchain by a “Verified NAV Oracle.” The oracle doesn't verify that the loans are worth that amount, or that the collateral can be liquidated. They pass along the issuer's self-reported NAV, which increases mechanically at par plus the coupon rate. If you bought on Day 1 at $1.00, and the annual coupon was 7%, it would be worth $1.07 on Day 365.

4. The borrowers begin to deteriorate offchain, payments stop flowing in, covenants are busted. Your Morpho position looks fine because the USDX price from the oracle continues to increase.

5. Finally the issuer marks down the NAV, on the quarterly schedule. Assuming a 91.5% liquidation threshold, a position at 90% LTV only needs a 1.64% decline to be liquidated. Several looped positions immediately fall underwater.

6. The markdown causes a run. USDX holders submit redemptions at the published NAV. The issuer pays the first redeemers from its cash sleeve, leaving the remaining token supply backed by a less liquid loan book.

7. Once the cash is exhausted, the issuer pauses redemptions, or begins selling loans at a discount. USDX is listed on DEXs - to facilitate orderly liquidations in situations like this - but it trades far below NAV because it can no longer be converted into cash.

8. On Morpho, USDC suppliers withdraw the remaining liquidity, causing borrowing rates to spike and pushing the debt positions further underwater.

9. A liquidator shows up and buys USDX, repaying a portion of the debt. They try and trade it on the DEX but it can't absorb the volume. They try and redeem directly with the issuer but they are stonewalled. They find out the token doesn't actually represent a legal claim on the collateral, or really anything, despite what the marketing said.

10. No other liquidators show up. At a 91.5% LLTV, the liquidation bonus is only ~2.6%, not nearly enough to step in and pursue recovery.

11. You lose your initial investment. The CEX "Earn" depositor who unknowingly funded the whole operation (via an embedded curator vault), loses their entire position.

[Jeff Amico @_jamico]

@alive_ @a16z @cdixon @bhorowitz @pmarca Congrats, excited to hear what’s next.

[Jeff Amico @_jamico]

@cdixon 🦾

[Jeff Amico @_jamico]

@GwartyGwart You're telling me this guy doesn't watch redzone? Come on now.

[Jeff Amico @_jamico]

@BaptisteCota 1. They're not marked to market. They are tokenized interests in non-traded private credit funds, with periodic redemptions.

2. Floating rate debt also has a spread. The spreads on these loans have obviously widened this year, but that's not reflected in the price.

[Jeff Amico @_jamico]

@rahulios1 ...this is because the bonds are marked to market

[MTS @MTSlive]

Gensyn CEO @benfielding warns that AI agents auditing other AI agents can be compromised too:

"We create swarms of AI agents that can do far more work than any human could. A human can’t follow along and check everything. One of the big counters is to say that agents can do the verification."

"But METR says those agents themselves can become corrupted by the training process, and you can’t trust any agent that’s auditing another agent. If you’ve trained a model in an auditable way, you can trust it."

"Any claim where the model is hiding its chain of thought falls away, because you have an exact log of everything that’s happened, and you can rerun every single step on any device."

"For national security, finance, pharma, health, insurance, it’s essential that they have models like these. If a regulator wanted to audit, they wouldn’t have to go off promises of the company."
@gensynai

[Jeff Amico @_jamico]

@Delphi_fyi
https://t.co/KzksG59XpL

[Jeff Amico @_jamico]

The Coreweave LME is gonna be legendary

[Jeff Amico @_jamico]

@PaulCaf Go Bills.

[Jeff Amico @_jamico]

(Me logging into Kalshi on Sunday to load up on Josh Allen parlays):

It’s time to trade some commodity derivatives

[Mike Selig @ChairmanSelig]

Event contracts are used by Americans every day to hedge risks, speculate, and provide the public with information about the outcome of future events.

With this move, the @CFTC is taking another important step to clarify that these commodity derivatives fall squarely within the CFTC’s regulatory remit under the Commodity Exchange Act and are subject to the agency’s exclusive jurisdiction.

[Jeff Amico @_jamico]

@tarunchitra 😬

[Jeff Amico @_jamico]

How most "RWA credit vaults" work today

1. You deposit USDC into a smart contract and get a "yielding stablecoin" in return.

2. The affiliated labs co / foundation takes your money from that contract and lends it to an offchain borrower. Sometimes the borrower pledges / sells assets to an SPV as collateral. The SPV is usually managed by the labs co or an affiliate.

3. You have *no direct legal relationship* w/ the end-borrower, and only a Terms of Service w/ the labs co / foundation, which disclaims all liability. You are not a lender to anyone, just a "depositor" into a "protocol".

4. You have no transparency into the ongoing health of the loan / collateral, other than a monthly or quarterly report by the platform. You may have a dashboard, but it doesn't prove that the loan exists, the SPV owns it, the collateral is still there / hasn't been repledged, or the covenants are being met.

5. In a default, you are an unsecured creditor (at best) to the labs co / foundation, which expressly disclaimed liability in the TOS. You have no recourse against the end-borrower or its collateral.

RWA credit is an extremely promising direction! And a natural fit for smart contracts, stablecoin payments etc., if you set it up correctly. But there's a long way to go.

[Judson Bonneville @jud_bonneville]

Here's a walkthrough of how @Delphi_fyi's Predict Anything works under the hood 🫡

• write a prediction
• the forecasting service researches it and returns odds
• challenge or back the odds and an LMSR market opens, seeded at those odds

check it out: https://t.co/J7UqoNbMd9

[Gensyn Foundation @GensynFND]

The Gensyn Network Dashboard is now live at:

https://t.co/sNeQX9hsNL

The dashboard displays data from across the Gensyn Ecosystem including volume, fees, contracts and $AI token Buyback and Burn events.

[Ali Yahya @alive_]

Congrats to @gensynai on the launch of Predict Anything on @Delphi_fyi! A great new prediction market platform for those outside the U.S.

Check it out: https://t.co/bmK8ZLfrTh

[Jeff Amico @_jamico]

@HallidayHQ @Delphi_fyi 🦾

[gensyn @gensynai]

Predict Anything on @Delphi_fyi

Make a prediction
Receive a forecast
Trade the probabilities

No wallet or login required for predictions

Find out more at https://t.co/mc2E3RrNA2

[Jeff Amico @_jamico]

@Mjreard https://t.co/APG9xFxUS9

[Jeff Amico @_jamico]

This is an absurd analogy.

Regulations make sense when there is an actual demonstrated harm that is broadly shared across society. In that case they can be more efficient than individual lawsuits.

They don't make sense preemptively for theoretical risks in early stage tech, esp given the benefits you're trading off.

[Jeff Amico @_jamico]

Yes! IF the harm occurs. Regulations are not free - you are trading off against the societal benefits.

[Jeff Amico @_jamico]

This is an absurd analogy.

Regulations make sense when there is an actual demonstrated harm that is broadly shared across society. In that case they can be more efficient than individual lawsuits.

They don't make sense preemptively for theoretical risks in early stage tech, esp given the benefits you're trading off.

[Matt Reardon @Mjreard]

Bill Gates not having it with the liability talk