Delphi Digital


Head of Consulting @ Delphi Creative

Great read!

We've been talking about the attention economy and the ever-shrinking human attention span in the age of reels and shorts for a couple of years now (at least). It's clear that even stocks are dislocating from "fundamentals" -- most notable instance being TSLA over the last, like, half decade. Gold and silver are the OG "vibe assets" so markets are...somewhat used to this phenomenon.

How do you see global markets waking up to this taking effect in a bigger way for an array of assets? Put differently, do you think it's possible to quantify attention and use it in valuation methods for non-ad biz models?

IMO a lot of this is just the generational divide in perception i.e. boomers and their cause-and-effect philosophy vs zoomer financial nihilism.

I have a couple of questions:

  1. On Coinbase -- Saw some tweets around Coinbase's venture book being on the balance sheet, but measured at cost. Wondering if we have any estimates around what that can do to its book value or revenue projections as those tokens unlock (saw Celestia, Arbitrum on there).

  2. On AI -- the case for decentralizing inference is pretty clear. Is there a tangible benefit to decentralized training (Bittensor approach) and mashing together a bunch of "individually expert" models? How much additional tooling is needed for this approach to succeed and yield accurate results for users?

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"So it does stand to enable cross-rollup asset flows, but not  atomic cross-rollup DeFi."

So when sequencers process txs and send it to validators to build the block, validators will simply discard any invalid txs instead of rejecting the set.

so a user can say "i want to swap ETH on rollup 1, then bridge it to rollup 2, and lend that ETH in a money market". shared sequencers can basically guarantee they will include all transactions, but cannot guarantee that all will be executed. obviously if 1 fails, tx 2 and 3 revert when run in the rollups VM.

but you can also have 1 be successful, and 2 be successful, but 3 fail for some reason. therefore, they cant guarantee atomic txs.

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"and an easy path to liquidity."

There are chains focused on powering omnichain applications, yes. Still very early, but there are teams working on solutions.

I do agree that the fragmentation inside DeFi is insane. Impossible to achieve liquidity efficiency on the scale of centralized platforms -- crypto or tradfi.

One thing I've been thinking about is consumer aggregation apps. We have the likes of 1inch to aggregate DEX liquidity for a specific chain, but not a lot of cross-chain aggregation. A protocol that can split your perp trade between dydx, vertex, and gmx would be pretty cool and enable joined liquidity for the user.

That said, again, Uniswap is basically a different and siloed protocol on each chain. And we need solutions that help DeFi primitives be truly multi-chain and share liquidity across deployments. A money market that can route lender funds from one chain to another based on where demand to borrow for an asset is will undoubtedly be closer to equilibrium (in rates) than any siloed money market. I think the main thing holding us back here is the state of bridges and vulnerabilities stemming from the complexity of the smart contract suite.

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"few major issues hold back DEX UX compared to CEXs"

Agree that DEXs dont really have a sense for who their customer is. Have seen many middleware projects launch trying to remedy this but I don't really see a solution that bridges the Web2<> Web3 gap here.

Tough to know who your user is, let alone their behaviors. Aside from things like swap size, frequency, asset choice, i'm a bit lost on how protocols can actually collect meaningful user behavior data.

Might be missing something here and keen to know if you feel differently!

I think if you're dissecting the methodology to understand it, it makes sense. I can't share charts here but the f&g was fairly high for a chunk of 2021 and then dipped hard mid year. 25% of the index is calculated based on volatility. At-the-money IV for 1 month options on BTC dropped from 120 points to 70-80 over 2 months.

That drop in IV and the f&g was also accompanied by the dip from $64k to $30K before going for the double top post Elon-induced euphoria.

Again, clearly has its flaws so i dont completely disagree. But i dont think its useless either.

Great point, Theo. I've personally spoken to the IPOR team pretty extensively and I'm very excited about what they're building. I think what they are trying to do is very ambitious and they are about a year or two ahead of the market so PMF will come slowly.

I don't think this is a super retail-oriented product. Degens don't care much for speculating on yield -- that's something the big boys would be interested in. Given retail dominance over trading volume has increased in the past 9 months, they probably won't see much growth in the foreseeable future. But that also means they have a great opportunity to use the time until institutional capital starts flowing again to build a solid product.

I agree their approach is scalable and IPOR is an all-weather product. Would be really cool to establish a crypto native LIBOR/SOFR that acts as a benchmark for yield markets.

I think treasuries as collateral will exist in on-chain environments. When that happens is really up to market demand i.e. the demand to borrow against treasuries in stablecoins to deploy into on-chain strategies

Sure, the way FIs use leverage against their treasuries is not possible via crypto today. I think as the opportunity set expands and markets like Aave allow owners of tokenized treasuries to lever up against it, this just naturally happens. Having low vol collateral that is earning yield in the back is pretty helpful inside crypto -- where collateral tends to be subjected to 20-40% drawdowns fairly often.

I also agree the current approach to RWAs is not exciting -- as you can tell from the post!

Maple, imo, is positioned very well to take advantage of private credit opportunities by allowing credit managers to access crypto capital.

Not particularly, it's tough to deviate from the set playbook of having asset owners tokenize their portfolio to access crypto-centric liquidity against it

Maybe one day, we'll be able to migrate AAPL shares to Ethereum to borrow DAI against. But i doubt that happens anytime soon :D

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"However, it’s meaningfully slower than most protocol bridges."

Can the use of CCTP override the 7 day waiting period of bridging from ORUs to ETH using the native bridge?

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"which means that the basic Uniswap routing algorithm will not take advantage of all of the v4 pools."

Seems to be the biggest uncertain puzzle piece of v4 (the routing logic)

I don't quite understand why they would want liquidity for a single pair to be get fragmented across so many pools without the means to integrate them all.

Seems like v4 improves flexibility for LPs but UniswapX + routing uncertainty degrades the experience more than v4 benefits them, leading to a net negative effect on LPs.

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"The shift to an RFQ model will basically turn LPs of liquid AMMs into “toxic exhaust” for the fillers."

If users eventually flock to platforms like UniswapX (reasonable assumption) and LPs all get stuck with massive amounts of toxic flow, do you think we eventually see on-chain native markets crumble in terms of liquidity?

In the scenario that UniswapX results in a large reduction of Uniswap Protocol liquidity, do these RFQ systems then just became a means of accessing CEX liquidity from on-chain environments?

I think the default thesis here is "new is always better", so I agree that fresh NFTs are likely to be the center of capital flows in this sector.

I think the leverage-effect on NFTs like Punks is specifically why ppl are ignoring them now. Cuz when ETH goes down, they go down more.

I tend to agree they exhibit similar price movement to the last cycle this time around too, given how deeply entrenched they are in Ethereum culture

Talking Punks specifically here

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"4x to 1000x+ market opportunity."

From a selection perspective, are there specific criteria a collection needs to have to give it a higher chance of being a top performer?

No, i think the move to a more decentralized architecture means they no longer have to try and be "compliant" since dYdX Trading, Inc is no longer centrally running/maintaining the tech

It's a very subjective viewpoint tbh. Like Gutz said, many believe the nature of PoW networks offers stronger security guarantees.

My personal viewpoint is different. Ethereum, as the largest network by organic security budget, would be my pick at the moment for the most secure DA layer

Cool post sir

Beyond the obvious "it helps build liquidity", trying to think through why this is better than vanilla "one-token-one-vote"

I think it introduces some weird mechanics. Balancer 80-20 pools auto adjust your tokens if you deposit a single asset. Meaning if you deposit 100% in one token, 20% of that is sold for the second token to keep the pool ratio balanced (reducing your exposure to the core asset)

To me, it seems like an unnecessary point of friction for governance (which is already very poor in turnout)

Any thoughts on why this is an attractive model? Happy to change my mind ofc!

Will try to answer as best as I can given i have a smol brain

Leaving inscriptions aside, the surface-level logical conclusions you come to when thinking about Bitcoin as a DA layer for validity proofs (ZK rollups) is that the costs are pretty high

But I remember coming across a snippet from a Twitter space a while back where John Light, who has spent a ton of time exploring rollups on Bitcoin, said he actually thinks Bitcoin could serve as a strong DA layer for validity proofs

( )

I think the ultimate thesis of this is that Bitcoin stops being a consumer-facing layer and becomes the ultimate DA layer, but i am unsure of how viable this is

Ashwath has not authored any research reports yet.