$15B TVL Battle: Lido & Paradigm vs EigenLayer

$3,600 ETH Call Options | Liquity's New Stablecoin

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Good Morning.

We have Ansem and DonAlt bantering on the timeline. This is usually a sign that the market is so choppy that all of us are turning PvP. Meanwhile, meme stock degens are coming back with GME halted 4 times for volatility.

Maybe we need a cat coin from Roaring Kitty to make it all back.

In Today's Email:

  • What Matters: Lido & Paradigm vs EigenLayer ⚔️ 

  • Case Study: Degen Chain outage 🔦 

  • Governance & Features: Liquity new stablecoin đź’µ 

You read and share. We listen and improve. Send us feedback at [email protected].

Narratives: Honestly you’re better being out of the market in this choppy environment.

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WHAT MATTERS

Lido & Paradigm Back EigenLayer’s Competitor

State of play: The co-founders of Lido, the largest LST on Ethereum, and Paradigm, one of the largest crypto VCs by AUM, have secretly funded a restaking protocol that will be the competitor of EigenLayer called 'Symbiotic'.

  • The Lido co-founders, Konstantin Lomashuk and Vasiliy Shapovalov, back Symbiotic through their venture firm Cyber Fund.

  • Paradigm is one of Lido’s lead investors.

  • Allegedly → Paradigm approached EigenLayer co-founder Sreeram Kannan to invest, but he chose Andreessen Horowitz. In response, Paradigm told Kannan that they would invest in a competitor.

  • Symbiotic is developed by the team behind Stakemind.

  • Several teams in the nascent restaking ecosystem, including AVSs and liquid restaking services on EigenLayer, have discussed integrating with Symbiotic.

What’s next: Symbiotic will be "a permissionless restaking protocol enabling decentralized networks to coordinate node operators and economic security providers."

  • Symbiotic will enable users to restake Lido’s staked Ether (stETH) and other popular assets incompatible with EigenLayer.

  • While EigenLayer only accepts ETH deposits, Symbiotic will not accept ETH deposits but will accept any ERC-20 token, including stETH.

  • Mike Silgadze, co-founder of EtherFi said Symbiotic “seems interesting and innovative”.

Why it matters: The involvement of Lido's co-founders and Paradigm could position Symbiotic to challenge EigenLayer. It also suggests that those close to Lido see EigenLayer's restaking approach as a potential threat.

Our take: Crypto is repeating the web2 tech pattern whereby large investors tend to back the A-player competitor if they can’t get into the round.

  • This is a bad idea → Liquidities will become more fragmented and web3 protocols have less moats and network effect from a technological’s POV because of the open source nature.

For builders and investors: When designing a protocol (or investing in one), asks yourself why is this not just another feature that an incumbent player can just create with <$10M in funding - if you’re building something akin to a feature instead, how do you plan to build a moat?

CASE STUDY

L3 Degen Chain Outage

State of play: Degen Chain, a layer-3 blockchain, stopped producing a block for over 42 hours. Its explorer shows no transactions today, with the last one occurring two days ago.

  • Degen announced that the Degen Chain has started running again at around 7:00 UTC.

  • Third-party infrastructure provider Conduit claims that Degen’s block explorer is still indexing and does not reflect the latest state.

  • According to Conduit, after a custom config change on Friday at 2 pm ET/11 am PT, batches were not posted on the Degen and Proof of Play's Apex chains for over 24 hours.

  • Conduit will share a detailed post-mortem in the coming days.

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INSIGHTS

Trader Eyes $3,600 ETH Call Options

June-expiry ETH options show traders focusing on calls above $3,600, with $6,500 as the most popular strike price with a notional value of $192M.

  • According to Deribit data, ETH options contain 617K+ call contracts expiring at the end of June, with a notional value of over $1.8B.

  • The large volume and notional value of June-expiry ETH call contracts suggest confidence in ETH’s potential price appreciation.

  • This concentration of calls might also bolster ETH’s price if traders exercise their options as prices surpass specific strike prices.

FEATURES & GOVERNANCE UPDATE

Liquity’s New Stablecoin

According to Liquity’s v2 whitepaper, Liquity's new stablecoin, $BOLD, will coexist with LUSD, allowing borrowers to set their own interest rates by using ETH and its staking derivatives as collateral.

  • Most borrowing fee revenue will go into the stability pool and protocol-incentivized secondary markets.

  • Allowing borrowers to set loan rates aligns with incentives, as higher rates increase protocol revenue, which will benefit BOLD holders through stability and liquidity pool payouts.

  • Samrat Lekhak from Liquity noted that while LUSD excels in decentralization, it lacks the flexibility to adjust to changing market conditions, such as fluctuating interest rates.

  • Liquity aims to launch the protocol in late Q3 this year.

  • Liquity is a stablecoin lender that offers 0% loans in overcollateralized LUSD stablecoins to users who deposit ETH, charging a one-time fee.

Other notable feature updates:

QUICK BITES

  • Robinhood launches Solana staking.

  • Coinbase reports a system-wide outage.

  • Wisconsin invested $163M in spot Bitcoin ETFs.

  • Ryan Salame asks for lenient 18 months in prison.

  • Vanguard to name a Bitcoin-friendly Exec as CEO.

  • Deutsche Bank tests asset tokenization with MAS.

  • Paxos adds ex-CFTC Chair Chris Giancarlo to its BoD.

  • BlockTower got partially drained in a security attack.

  • Lens Protocol unveils plan for ZK-powered validium chain.

  • Cypher Protocol contributor admits to taking and gambling funds.

  • Vitalik proposed EIP-7702 and co-wrote the new wallet improvement.

NOTEWORTHY READS & MEME

  • Anagram’s read on bringing ICO back.

  • Midas Capital’s read on understanding the meta-game.

  • Nic Carter’s read on Paul Ryan’s comments on stablecoins.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.