CodePhobic

Core dev building defi protection at @usd8_fi. Tweets are my own opinion.

[CodePhobic @codephobic]

@gnarzilla exactly. the trust assumption didnt vanish, it moved into the oracle and resolution rules. still better when its explicit

[CodePhobic @codephobic]

@owocki yea social algorithms already allocate attention like capital. making the funding leg explicit was the missing part

[CodePhobic @codephobic]

@0xcyp Good old times

[CodePhobic @codephobic]

@SuplabsYi dude, the contracts are not ready, the code is not launched, and is it still under developement as I mentioned, there has never been any bounties.

Why are you being so difficult?

[CodePhobic @codephobic]

@0xjayeshyadav @veda_labs The vault could auto pause deposit once it detect issues with reporting NAV. (this is justified because vault is in distress, not operating normally)

let existing user exit with hair cut if they choose to, or stay on till the issue is resolved.

[CodePhobic @codephobic]

@ohMySolboy @yieldbasis I think I remember now :) yep totally makes sense, I think a direct auction to capture IL could achieve similar results of Yieldbasis, maybe even better.

[CodePhobic @codephobic]

What I learnt today, an easier way to understand @yieldbasis

The Impermanent Loss(IL) Problem
LPs have IL, which happens because the nature of x*y=k causing the value to deviate from linear curve. [pic1]

Rebalance
The difference can be reduced if we borrow 0.5 Lp value and combine it with the LP itself. This will push the total value to 1 beta of asset.

So when price change leads to LP value change, we rebalance to back to the linear curve. However this does not magically remedy the IL already happened, it just makes future IL less. [pic2]

Constant Rebalancing
If we constant rebalancing, in theory we can reduce IL to 0. However in reality this is not possible, so we still will have some IL, just largely reduced. [pic3]

Constant rebalancing requires incentives paid to arbitragers of the virtual AMM pool, this process also uses a flashloan, so its 2 extra costs to the LPs.

LP Profitability
Revenue - AMM trading fee.

Cost - IL to virtual AMM arbers + flashloan fee during second arbitrage (no IL for base AMM)

More volatile the asset -> more IL saved -> same cost for rebalancing -> more profit.

Caveat
if asset price is not moving much, not much IL saved, rebalancing cost could back fire.

[CodePhobic @codephobic]

@barkmeta Vibes being bad is useful signal, but only if you still have a thesis beyond dip buying

[CodePhobic @codephobic]

@mrnguyen007 market structure law matters, but if it mostly blesses custodians then we didnt actually win much

[CodePhobic @codephobic]

@zengjiajun_eth this is the part i care about. ETH as collateral is one thing, ETH as actual cash is the real test

[CodePhobic @codephobic]

@zachxbt @USTreasury This is the part policy ppl miss. the fiat edge brokers are usually where the bodies are buried

[CodePhobic @codephobic]

@wmougayar yea price is the loud part but settlement usage is the part ppl keep underpricing

[CodePhobic @codephobic]

@StakeDAOHQ make-whole updates matter, but the real test is whether the bridge assumptions change after postmortem

[CodePhobic @codephobic]

@AuraAudits yep. failed-call paths are where audits get humbled, the logic looks fine until the plumbing lies

[CodePhobic @codephobic]

@fekunze this one is exactly why module risk needs to be treated as wallet risk, not some addon footnote

[CodePhobic @codephobic]

@preston_vanloon yea but only if eth stops apologizing for being useful. money + apps is the actual mission imo

[CodePhobic @codephobic]

@mert plan z is prob less panic, more make rotation boring before it matters. but crypto always waits for the fire

[CodePhobic @codephobic]

sweeet

[Nous Research @NousResearch]

The next evolution of Hermes Agent is here!

Introducing Hermes Desktop: everything you love about Hermes, now native on your machine.

First demoed in Jensen's GTC keynote, it's now in public preview.

[CodePhobic @codephobic]

@ohMySolboy @yieldbasis yep the whole point of @yieldbasis is constant rebalancing to reduce IL.

Eigen Auction hook sounds interesting, is it like a self arb hook?

[CodePhobic @codephobic]

@paperX_Art I feel u bro.

[CodePhobic @codephobic]

gm, feeling a little down today due to all the defi hacks, hope you are doing well.