It’s getting funnier😂 they admit the post was real but their explanation is that an AI marketing tool somehow came up with 11 distributor integrations, 0%, 7%, 25% and the 80/15/5 split? Cool. Where did the AI get the numbers from?

Yoo uhm… @Morpho are you saying your business model doesn’t work?

The craziest thing about this whole Kelp/LZ lawfare situation is that it’s going to be the new normal. I don’t want to get into the legal fugazi of who’s right or wrong between Kelp and Layerzero here, but we need to understand that legal enforcement is completely normal in TradFi and as DeFi professionalises I think we’re going to see a lot more of it. DeFi tries to replace financial intermediaries with code, but code replacing execution and settlement doesn’t mean disputes around negligence, disclosure, responsibility or who eats the loss when something goes horribly wrong suddenly disappear. In TradFi if you rely on critical infrastructure and it fails there are contracts, warranties, indemnities, insurance and the legal system as an avenue of recourse. And I think as more institutions come onchain a lot of that will start making its way into DeFi too, which probably changes how we think about due diligence on critical infrastructure and “we have 5 audits bro” isn’t going to cut it anymore. We’re going to have to start asking questions like who is actually standing behind this, what have they represented, what happens if their infrastructure fails, what insurance do they carry and who is liable for the loss. Which is also going to significantly change the competitive landscape because being able to actually stand behind your infrastructure financially and legally starts becoming part of the security model itself. Smart contracts aren’t going anywhere, but neither are actual contracts.

This is a really strange argument because the argument basically defeats itself. You start by explaining that vaults exist because users can’t realistically track and manage thousands of markets themselves, so the vault abstracts that complexity and someone else allocates the capital for them. I don’t think anybody could have thought of a better definition for delegated portfolio management aka asset management lol. Also a timelock doesn’t magically turn the curator’s decision into the depositor’s decision, it just gives the depositor notice of any changes, your own docs literally say the Curator configures “liquidity allocation rules”, is “abstracting risk curation decisions away from depositors” and makes key decisions about “how capital is allocated.” So even if the code constrains the manager, it doesn’t remove the manager. You also failed to mention what SEC commissioner pierce actually says and thats vaults fall on a spectrum between “programmatic allocations determined solely by immutable smart contracts” and “allocations at the sole discretion of another person or group of persons.” She also explicitly points to selecting yield generating activities and reallocating assets as examples of managing a vault and says managing vaults can raise investment adviser issues. You’re basically trying to make the asset manager disappear by changing the test from “who is making the investment decisions?” to “can they steal the money and can I withdraw?” those are completely different things. Even your “implicit approval” argument is backwards, if I delegate allocation to you then you announce a change and I don’t withdraw during the timelock, my failure to leave hasn’t somehow transformed your investment decision into mine. In fact that requires me to continuously monitor the manager which is the exact complexity vaults supposedly exists to abstract away in the first place. Vaults can absolutely be noncustodial but noncustodial settlement is not non discretionary allocation, no matter how you try to spin this an asset manager is an asset manager even if you give them cute sounding names like “curator” or “allocator”.

Gearbox is a great example of why you shouldn’t confuse lack of attention with lack of progress, the market hasn’t exactly treated them kindly, but while everyone moved onto the next narrative they just kept grafting on the same core architecture. This RWA leverage solution they’ve just released is where that strategy is really going to pay off imo. I’ve spent a bunch of time looking into the different approaches being built here but what @GearboxProtocol has done is by far the most elegant design I’ve seen. It’s not just better looping ux, looping naturally assumes the underlying asset is liquid and everything settles atomically so you borrow, buy the asset, deposit it again and repeat, which is great for crypto native assets but doesn’t really work for RWAs where you have different redemption timelines, transfer restrictions, KYC requirements and in a lot of cases barely any secondary liquidity. So gearbox gets around all these issues by using the credit account to borrow the full amount upfront and subscribe directly with the issuer. Instead of needing 5 or 10 or however many separate loops and waiting through the settlement process each time, you can create the entire leveraged position in one go and redeem the entire thing in one go on the way out. What I really like about this is that leverage no longer needs to depend on secondary market liquidity to the same extent, because it was always pretty silly to expect an issuer to bootstrap $50m or $100m of dex liquidity before people can take levered positions on the asset. With this model the position can scale against available credit instead because the credit account is interacting directly with the issuer, which means the lending side can support assets that would have been impossible or just really inefficient to support through the normal loop model. Even the asset specific stuff like KYC, transfer restrictions, redemption and specialised liquidation logic can sit inside gearbox’s infra rather than the lending protocol having to figure all of that out. And because gearbox is separating the asset specific execution and risk machinery from the funding layer, I think the bottleneck for lending protocols changes quite a bit too. Because the problem is no longer whether an asset has enough secondary liquidity to be listed and what really starts to matter is whether somebody can actually originate good borrow demand against the liquidity sitting there. If an issuer can bring the asset, gearbox can handle the market specific plumbing and a lending protocol can provide the funding, which is just a more efficient way of creating leverage around assets that never really fit the normal money market model in the first place. These guys have done a great job of addressing the actual market specific pain points and creating a structure where everybody wins, RWA issuers get leveraged distribution without needing deep secondary markets first, stablecoins get a new structural source of borrow demand and lending protocols get access to a much wider set of credit opportunities. What I’m really excited to see now is how much leverage this can support in practice, because if you can get a decent amount of leverage on assets that were basically unleveragable before then you open up a pretty massive new market. Really excited to see how this plays out and wishing the chads at gearbox all the best with this launch.

I’ve been saying for a long time that v4 is a huge opportunity for curators because it can turn them from vault managers into actual lending franchises, so it’s great to see Stani validate the thesis and clear up some myths around v4. I really think the operating leverage v4 gives curators and integrators is pretty insane. Curator growth is tied to AUM but with v4 they can build from the demand side instead, find the borrowers, originate the credit, create the spoke and draw liquidity from the hub. If you’re good at that, the same funding base can support an expanding book of completely different credit markets. Which changes the economics of the curator business because your growth is no longer capped by how much capital you can attract into the next vault and is now driven by how much good credit demand you can originate. So at scale I really think we could have curators running multi billion dollar specialist lenders on top of Aave without ever needing to build the underlying liquidity network themselves. That’s a massive upgrade to the model and a much bigger business than charging 10-20bps to decide where someone’s USDC goes.

I too would write a love letter about partnering with competitors if I’d paid Robinhood $100m + for the privilege lol. The funniest part is coinbase then turning around and bringing aave in as a credit layer for tokenised stocks. The issue here is the conflating of distribution with a network effect that somehow accrues to morpho. Coinbase using morpho doesn’t make robinhood more dependent on morpho and vice versa, If anything, every big distributor you add has more incentive to make sure the credit layer stays competitive and replaceable. And I don’t think “we power your biggest competitor too” after paying them an insane amount of money is quite the flex to coinbase that you think it is. The base + Aave stuff on tokenised stocks is basically showing you the model in real time. Coinbase and RH own the users and distribution, they can shop the credit layer around product by product and make the protocols compete underneath them which is exactly what RH did and why you ended up massively overpaying. It’s basically the supermarket model they own the shelf space while you’re fighting to be stocked which means: You’re not the network. You’re a vendor to the network.

It’s pretty obvious that fixed rate is going to be the next DeFi battlefield. Morpho already has midnight, Kamino just announced their solution and I’d imagine every other major lending protocol is working on it too. I know by looking at the numbers today you could argue that nobody really cares. But here’s the thing with fixed rate, if a protocol manages to build deep markets across 30d, 90d, 1y and further out, they’ve built an onchain yeild curve that gives a proper view of what onchain capital costs across time. Defi hasn’t ever had that before and I think the ability to actually see where the onchain funding curve sits against Treasuries, SOFR and the rest of the dollar market is a big deal. So if 1y funding offchain is 4% and 1y funding onchain is 6%, that 200bps spread is telling us something. And whatever the reason for the spread the important thing is you can finally see it properly rather than having it buried inside a bunch of different utilisation curves. So if a business wants to borrow $50m for two years a bank can look at its own funding cost, add a spread for that borrower and quote a rate, private credit can do the same thing. But DeFi hasn’t really been able too as the underlying funding cost can move around underneath the loan for the entire term but If you have a real 2y onchain rate, you can actually start separating the price of capital from the risk of the borrower. Maybe 2y onchain money clears at 6% and you’re willing to lend to that business at 8.5%. Now you can put that next to whatever a bank or private credit fund is offering and see who is actually cheaper. That gives DeFi a way to start competing for credit that currently sits almost entirely offchain. Corporate borrowing, private credit, asset backed lending, RWAs, all of it gets much easier to price once you know what your own capital costs for the same period of time. And the more that market develops, the more interesting the spread between onchain and offchain funding becomes too. If onchain capital is expensive, money comes in to capture it, If it gets cheaper than alternatives borrowers have a reason to come the other way. A lot of people are sleeping on this and it’s why I wouldn’t read too much into fixed rate TVL today. So imo whoever ends up owning the deepest onchain funding curve, is going to have a serious advantage when DeFi starts competing for offchain borrowers and I reckon winning fixed term will mean becoming the undisputed category leader in DeFi lending. Protocols aren’t competing to offer fixed rates or even fixed terms they’re really competing to be the place the rest of finance compares itself against, some just don’t realise it yet.

So CME is launching compute futures next month with a forward curve going out 36 months which is a pretty cool opportunity for DeFi. For once we don’t have to turn up 20 years late and tokenise a market TradFi already built because the compute credit market is being built right now. @USDai_Official is already financing GPU operators onchain and CME is now creating the derivatives market around the underlying so DeFi actually has a chance to be part of building this market early instead of wrapping it afterwards. And the fact that we’ll soon have futures makes this a lot easier because they give lenders something they haven’t really had before. If I lend you $50m against GPUs, I don’t care that much what an H100 rents for today. I care what those machines are going to earn over the next 2-3 years because that’s what services the debt and ultimately determines how much I’m willing to lend against them, up till now most of this has just been underwriting but now there’s going to be a market price for it and eventually a way to hedge it. Which can make lenders more comfortable and pull in more capital which probably means the first effect of compute futures is actually more leverage lol. But the futures curve also tells us when the economics are getting worse. If the 24 month curve gets smoked, the borrower might still be making every payment and nothing has defaulted, but every lender looking at that asset now has a completely different view of what those GPUs are going to earn over the next few years. So the credit can start repricing before anything actually breaks and imo this is where DeFi can go way beyond just making loans against GPUs. You can split the credit into senior and junior tranches, trade it, build fixed rate markets around it and even use the senior claims themselves as collateral so we basically have an oppertunity to build a proper funding market around compute. The crazy thing is that the physical compute market, the derivatives market and the credit market are all being financialised at the same time which is pretty rare and basically a first for DeFi. We’re used to integrating with markets where all of this has already been built, but with compute we actually get a chance to be there while the market itself is still taking shape. Which means we don’t just get to compete for an existing market we actually have a shot at building it from the ground up. The age of abundance needs a credit market Defi is the answer.

Neutrl is an incredible case study in why “delta neutral” doesn’t mean risk free …49% of all value disappeared. These guys were buying locked altcoins/SAFTs otc at a discount, shorting the token on perps and pocketing the spread. This sounds like such a great trade until people want their money back. Just because the short hedges price risk that doesn’t mean it hedges counterparty risk or the fact that your long leg is locked and can’t be sold. And here’s where users got absolutely smoked NUSD was still a $1 liability sitting on top of a book that contained assets you can’t necessarily turn back into dollars when everyone heads for the exit now the redemption maths is showing roughly 51c on the dollar. 49% haircut. You can hedge the token price but you can’t hedge the fact you funded illiquid otc postions with money you promised people could redeem at $1. etherscan.io/address/0xB3f07…

I think the biggest BD/growth opportunities for DeFi are the temporary liquidity gaps that exist all over tradfi markets. Eg. Pension funds use interest rate derivatives to hedge what happens to their liabilities when rates move, If rates rip higher, the value of those future liabilities can actually fall, which is good for the fund. The problem is the hedge can move against them at the same time and start demanding cash collateral immediately, so you can have a pension fund sitting on billions in good assets potentially even in a better position overall and still scrambling around trying to find a huge amount of cash that day. You see the same kind of thing in commodities where producers shorts futures to hedge the stuff they own, prices rip and even though the actual inventory is now worth more the hedge is losing money and wants cash margin today. Point is timing is the problem and once you start looking for it, this stuff is all over tradfi. Banks make a huge business out of plugging these gaps through repo, credit lines and whatever else is needed to get cash where it needs to be quickly which is ironic considering that nothing beats onchain finance for that and so it feels like a really obvious place for DeFi to start hunting for growth. Especially now that we’re getting to the stage where traditional assets can stay with a custodian and still be used to secure onchain liquidity. The institutions don’t even need to care about DeFi, we just need to get plugged into the custodian, clearing broker or whoever already sits in the middle of the flow and provide the liquidity underneath it. This is a way more interesting origination opportunity with higher potential to convert imo simply because you’re starting with an existing liquidity problem and building the lending flow around demand that already exists.

So now both the SEC and CFTC have confirmed they’re moving ahead with crypto rulemaking regardless of clarity failings This is extremely bullish especially when you read Atkins statements on crypto and how the SEC plans to regulate, linked the two most important ones in the post. Even though congress fumbled i think we’re in a very good position as an industry. Future is bright sec.gov/newsroom/speeches-st… sec.gov/newsroom/speeches-st…

This is pretty big because it means that Aave doesn’t need to custody collateral to become the institutional liquidity layer. An institution can keep assets exactly where its mandate says they have to be which is with a qualified custodian and still borrow directly from DeFi liquidity. That massively expands the addressable collateral base, DeFi is starting to plug into traditional balance sheets rather than asking them to migrate first. Onwards

Not much has changed for DeFi in the latest version of the clarity act. The big thing is still how they define a decentralised protocol because that basically decides who gets treated like infrastructure and who will be considered a financial intermediary. Their definition says transactions need to happen according to an “automated rule or algorithm that is predetermined and non-discretionary”, without relying on someone else to custody or control the assets. They’re also pretty clear on what takes you outside that. They won’t consider a protocol decentralised if and I quote “a person or group of persons under common control … has the authority … to control or materially alter the functionality, operation” of it. And they’ve also clarified that governance on its own doesn’t count as common control which is great for protocols like Aave, Uniswap and Compound. Because it means that aave for example can still have governance changing risk parameters, adding assets and evolving the protocol without that automatically classifying it as a financial intermediary. So as long as governance of a protocol is purely setting the rules and isn’t sitting there deciding what happens to users assets you’re good and this bill is extremely bullish for you. If you’re the person being paid to decide where somebody else’s asset goes though, I think this gets a lot less bullish. That’s basically what curators on Morpho and Euler are doing and even though Morpho and Euler would almost certainly be considered decentralised based on the bills definition, the curator layer would sit outside of that as somebody is still choosing the markets and deciding where pooled capital gets allocated directly introducing discretionary judgement. Even thought a smart contract might execute that decision the decision itself is still discretionary. I’m not saying every single curator suddenly needs a licence but if the thing people are paying you for is your judgement on where their money should go, it gets pretty difficult to argue that you’re just neutral infrastructure. And even if the bill doesn’t pass, it doesn’t really change much as the SEC is heading in the same direction anyway, disintermediated software gets one treatment, businesses that exercise custody, control or discretion get another. For curators, that probably means some become proper onchain asset managers and just accept that regulation comes with the business others will probably try to automate more of the job away. Either way, clarity and the SEC notes from a couple weeks ago make it pretty clear that putting an intermediary behind a smart contract doesn’t make the intermediary disappear.

Had to make the crypto version of this meme, tell me it ain’t true 😂

This is bad news for curators. lenders can go direct and agents will eventually handle underwriting/rebalancing so “curation as a business” is going to get commoditised fast! If I was a curator I would seriously be considering @aave v4. don’t curate a venue operate it.

Tokenisation should be about plugging credit markets that already exist straight into onchain liquidity, I’ve been doing a bunch of research into offchain markets with existing borrow demand and insurance premium finance is ridiculously low hanging fruit. Basically when a business has a big annual insurance bill it doesn’t always pay the whole thing upfront, it might put 15-20% down and a premium finance company pays the insurer the rest, then the business pays that loan back monthly over the year. If they stop paying the lender can cancel the policy and the insurer returns the unused part of the premium, which goes towards paying the loan back. So if you financed $800k of a $1m premium you’re not just sitting there with an $800k unsecured loan, you have the remaining premium sitting behind it which can be turned into a claim on the insurer. The main risk is that collateral is constantly reducing as the policy gets used, so servicing matters a lot if someone misses a payment you need to move quickly because every day you wait there is less premium left to recover. I think @aave V4 is perfect for these usecases (onchain warehouse facilities) because you can design a specialist spoke with its own underwriting rules and a hard credit line into a Hub. The originator puts the receivables into a bankruptcy remote SPV with the originator maintaining first loss. The spoke only recognises receivables that meet whatever criteria Aave or the spoke operator sets with the hub capping how much that spoke can draw. So you could start small and watch how the book actually behaves and only increase the line if the data looks good. The industry is huge too, IPFS, premium credit and others do tens of billions and these guys already fund themselves through bank lines and warehouse facilities which in many cases include overcollateralisation and junior protection. So it’s not an exotic structure and it fits in pretty well to Defi as is, the loss data is also pretty reassuring, S&P shows historical annual net losses on the IPFS book averaged around 0.28% over 20 years. Obviously it’s not risk free, fraud can happen, servicing can be shit, insurers can fail and legal rights can get pretty muddled up but these are all risks you can structure around. I think the way DeFi eats the world is by finding existing credit markets that can become net new borrow demand onchain instead of offchain. And I think premium finance is an easy place to start because the loans are short duration, principal comes back every month and the institutional funding structure already exists. The funny thing is aave has done something like this before with an old @centrifuge RWA market lending against senior tranches of trade receivables and freight invoices, so this isn’t some alien idea for them either, they where just early lol. Anyway none of this needs us to invent a new market, the borrowers already exist, the underwriting already exists and the funding structures already exist, you’re basically just swapping part of the traditional wholesale funding stack for onchain liquidity. If that works in premium finance there’s probably a pretty long list of other credit markets it would work in too.

I know Visa announcements are a bit of a meme at this point but this latest one deserves some attention because there are some pretty substantial implications here for undercollateralised lending and DeFi as a whole. I’ve seen so many protocols try to build some form of onchain credit score to work out whether someone is trustworthy enough to lend to without everything being overcollateralised. Visa is doing it a little differently, they’ve given credit coop access to settlement data, so the lender can see the actual cash flow they’re lending against and size the facility around what is really being settled, then when the receivables come in repayment gets taken from that flow before the borrower gets the rest. So instead of trying to get really good at predicting whether someone will repay, you structure the loan around cash flow you can actually see and get paid from. Visa says this has already financed $2.5 b+ with zero defaults while reducing borrowing costs by up to 30%, which is pretty insane. I think everyone will start doing this and that’s when things get really interesting. Visa, Mastercard, Stripe, Shopify, Amazon, all of these companies and many more sit somewhere between businesses and the money they’re making, and all of them have data that could make those cash flows financeable. They don’t even need to provide the financing themselves, lending protocols can provide the capital while whoever has the relationship with the business originates and structures the deal. The financing itself is happening on stablecoin rails and we’ve always had an abundance of capital supply in DeFi, this starts creating the other side of that market. Because as stablecoin linked payments grow, you get a much larger pool of settlement obligations and receivables that can be financed this way. So stablecoin adoption doesn’t just create more capital looking for yield, it can create more demand to borrow that capital as well. And my favourite thing about all this is that the yield comes from actual businesses paying to finance real economic activity instead of the circular/cyclical crypto demand we’re used to. If this model spreads it could become a massive new source of undercollateralised demand for DeFi, bringing a completely new class of borrowers onchain which is exactly what we need. The funny part is the more this scales, the more important the data becomes because you can have all the capital in the world, but if you can’t see what a business is actually earning or where the repayment is coming from, you still can’t underwrite it properly. So inadvertently we’re going to end up making the offchain players into data monopolies. Going to be really interesting to see how this all plays out from a market structure perspective.

Our prayers have been answered lol EF Protocol unanimously declined tapered issuance from Hegota and said it needs a much broader ecosystem process. Turns out “too much ETH is staked” isn’t enough justification to rewrite Ethereum’s monetary policy, bulldoze the benchmark rate and force an entire onchain economy to reprice. I can’t believe this even needed saying. blog.ethereum.org/2026/09/07…

This is nuts. Blue Owl had one of Loparex’s most senior loans marked around par at the end of last year and a few months later it was marked at 22 cents another part of the debt went from 88 cents to 5 cents and if that wasn’t bad enough, in Q2 alone investors tried to pull $4.7 b from two Blue Owl private credit funds, with redemptions hitting 19% and 38% respectively against a 5% quarterly limit. This is a good wake up call and reminder of something I think we need to take way more seriously as private credit comes into DeFi. With BTC or ETH there’s a live market constantly telling you what the collateral is worth, but with private credit there might not be a market at all. A loan can still be marked at 90 while the people closest to the borrower already know nobody is paying 90 for it, you can imagine what happens if you let someone borrow liquid dollars against that number. They don’t need to manipulate an oracle, they just need to know the credit is deteriorating before the mark catches up and that’s just one risk vector that I haven’t really seen anyone talking about. So next time someone tells you private credit is the future of DeFi, I’d ask why we’re so desperate to bring an asset class onchain that is currently getting absolutely smoked by stale marks, redemptions and dogshit tier assets that barely have a live market price in the first place. Putting the loan onchain is easy finding out what it’s actually worth is the hard part.