Jordan Yeakley, CFA

Jordan Yeakley, CFA

@jordan

Delphi Digital

ABOUT

Jordan is a DeFi research analyst primarily interested in AMMs, derivatives, and self-sovereign identity. Jordan is a CFA charterholder with a bachelors degree in finance. Prior to Delphi, Jordan worked in FP&A in the automotive industry.

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"was still prohibitively opinionated."

just referring to the rigidness of providing liquidity on Univ3. the fee tiers, implementation of oracles, etc. Uniswap themselves referred to v3 as opinionated when discussing the benefits of hooks on v4

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"Pendle"

We covered Pendle in this IRD report https://members.delphidigital.io/reports/voltz-ipor-and-the-next-wave-of-interest-rate-derivatives#introduction 

and in the defi year ahead 2024 https://members.delphidigital.io/reports/the-year-ahead-for-defi-2024#theme-5--new-use-cases-spark-traction-for-interest-rate-derivatives-c226

These were a bit before the points farming and pendle activity really blew up, so maybe we will get something out on Pendle once more info about their v3 is available!

Hey Alex! Sorry didn’t see this at first. By idiosyncratic risk with Banana I’m merely pointing out that the yield is attached to the token and the risks associated with the token, unlike the other yield sources mentioned where you can capture the yield with little to no exposure to crypto assets

haha you think so? its certainly a possibility, but i think might still be viable in the short term. None of gitcoin passport stamps, except for maybe coinbase give insight on jurisdiction. And i don't see why zkSync or others would bend over backwards to alienate part of their user base

Yeah, I've been playing with dither. its pretty cool, and even better now that its integrated with tg bots to let people buy seamlessly. They had the impressive backtest here https://x.com/Dither_Solana/status/1766909239329542416?s=20 but idk, a lot of the tokens it suggests are brand new, its quickly becoming crowded, i think theres potential there for sure but seems like it's still very early

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"positions these protocols advantageously to impose higher borrowing fees."

the excessive demand for lending is/was likely due to the availability of the looping strategy. Theres ways to empiracally prove this, dune queries and some resources like defillama can show lending and borrowing non looped tvl. many expect ETH borrow rate to approach eth staking APY equilibrium. Until it is, theres potential for leverage looping w aave emode to pick up extra yield.

Not sure which borrow rate youre referencing, but there is generally just a lot of different yield opportunities for ETH rn that users may see as more lucrative

Thank you! hadn't heard of goodcryptox until your comment, but it looks interesting and i joined the waitlist. I have tried Dialect, mentioned above in the report, and it is cool, much better than using mobile browser but obviously not as smooth as the tg bot experience.
Def think there's an opening for non custodial solutions, it would make me much more of a power user of them for sure. I do wonder how much the broader market cares, as the non custodial and censorship resistance of DEXs has been a hard sell to most users over CEXs so far. So i think thats the key for these: they cant give back the UX improvements made by the custodied versions.

Yeah i do. I think their fee is extremely prohibitive on larger trades. in my own experience, ive used metamask swaps occasionally when swapping small amounts to a gas token or as part of a bigger task. But no rational user with a medium- large position is going to use MM swaps over a few extra clicks to get to cowswap.

at least w tg bots, you can open a position on desktop and close it on mobile, so theres more of a justification there. could be helpful in some situations

Thanks! ive been seeing some twitter chatter on fluxbot over the past few days and it looks interesting. Not sure how to quantify/predict the impact the direct integrations with fluxdex/raydium/ meteora will have on speed and sniping, but definitely think theres upside in optimizing for solana performance rn. comp landscape there seems very up in the air

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

Really interesting point on the marketing! a lot to unpack there. i think youre 100% right from a market research perspective. the surgical ad targeting in web2 and the resources available is unmatched
I think i talked a little about this in the thales report, but if we look at earnings reports, web2 companies spend a TON of money on marketing, and its a fundamentally different business model to web3. Web2 sportsbooks retain all the house revenue, then spend like 65% of it to acquire more customers. DEX sportsbooks share the revenue with stakeholders, operating in a much more lightweight fashion. We will never be able to compete with that model, but i don't think thats a bad thing.

I might push back a little on marketing strategy though. As far as marketing strategy, I think in many ways DEXs are already better. less money means we have to be more efficient. Blockchain ethos makes the UX for free money better.

  • On web2, i will get a "up to $100 deposit match" offer, and start out w $200.
  • I win a parlay, now i have $275.
  • I spend $100 on losing bets and end up with $175.
  • They only let me withdraw like $50 bc of deposit match is "play-through money" or whatever.

the weird FIFO thing they have going on and all the strings attached mean you basically have to embezzle money to yourself if you use these promos.

In web3, you can earn a reward voucher NFT, send it to a friend or use it yourself, no strings attached. We had a really cool on-chain march madness NFT bracket thing, too. I think the potency of DEX sportsbooks marketing strategy is solid, and as UX gets better, we can rely on pricing arbitrage to onboard sharp bettors.

your point about marketing is def valid though. theres not much outreach from dex sportsbooks, we dont see them on TV or anything. hopefully that will change when the experience is a little bit better

As far as the odds go, its mostly a wash there. Azuro and Thales import odds from DraftKings, Pinnacle, etc. And they make the same margins. https://dune.com/leifu/parlay-market-dashboard
if you divide total parlays profitability ($424K) by [Parlay market stats total volume ($1.74M) - Parlay Safebox Balance ($42K)] we get 25%. When ive checked in the past it has been 28%, which is spot on w draftkings and fanduel

Slots def are their cash cow, but sportsbooks bring in about 10% of the handle (5% on straight bets, 29% on parlay) whch is better than a lot of table games like blackjack and roullete. They also dont let users source other platforms offers in house. they spend all that money on customer acquisition to keep you there. We have stuff like purebet than tries to find best price across anywhere.

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"Projects like Backed, and Superstate are well positioned to push RWAs forward and demonstrate DeFi’s value add to a massive audience."

this would certainly be useful, ill check w our data team on this!

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"Long-term bets"

Some CEXs do offer this, but the feature is generally not as widely available as short term bets, and it's less popular.

Some CEXs will also allow you to early close within a certain amount of time, say 10 minutes, after placing the bet, or will let you close a parlay early if you've won the first X legs.

Here, we're trying to highlight how DEXs could transform these features into something entirely new, that CEXs wouldn't be able to replicate.

Many people may not want to place a long term bet bc it is so illiquid. Unlocking its composability by using it as collateral, levering up on other trades and getting liquidated after a key player gets injured, or placing a season long wager with the yield from your stETH or tokenized treasuries are just a few ways long term bets would transcend anything possible on CEXs.

For early closure, the degree to which CEXs work with the user here varies greatly. Some don't offer it at all, others give an early closure offer that is far lower than it should be, others have arbitrary time windows for closure. Being able to purchase a bet entirely for the speculation on the line itself, and knowing you can sell it at the fair price, not a proprietary, opaque algorithm is a feature that would play nicely with long term bets and make CEXs look very poor in comparison.

https://twitter.com/joshgi97/status/1736413902106222612?t=Voe3t4ddj3F8sdhXGZegKw

if you look at this tweet, the payout offered for this parlay is very low. Can't blame the sportsbook for lowballing him, that last leg probably isn't hitting. But defi could make it far easier to hedge out pending legs or make the cash out algorithm more transparent

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"dYdX v4 is transitioning to Cosmos appchain, Aevo is pioneering the OP rollup stack with a unique offering of pre launch markets, Vertex"

I think DYDX specifically is being punished for its high FDV and the major unlocks. UNI struggles due to its lack of utility, and the new front end fee probably casts doubts on the idea of fee switch being activated any time soon. Personally id chalk up the DEX performance to case by case circumstances, but usage is definitely influenced by incentives/airdrop farming

Agreed! The timeliness and quality of the MetaMorpho vault ecosystem is probably my biggest worry around Morpho's success.

Maybe I'm being a little naive, but Liquity has done well in its immutable/ decentralized/no gov niche, and Rari Capital Fuse was a degen zoo, so assuming MetaMorpho gets some traction and mindshare, I think the demand will be there.

Some of the specifics around LTV improvement over the status quo are still unclear though. I wonder if after the multi asset lending pools UX is recreated on top, if LTV will be lowered closer to the where we are now, undermining some of the value prop.

Interesting take on InstaDapp. I need to take a deeper dive into Fluid, but my initial takeaway was that it would be able to play nice with these other projects as a liquidity middle layer.

Self-Sovereign Identity. SSI refers to identity users have complete control over. They can issue, store and permit/revoke access to credentials rather than trusting centralized entities. SSI has a lot of overlap with blockchain, but they exist outside of one another.

There is some debate on the degree to which SSI 'needs' blockchain and vice versa (there are plenty of web2 SSI products emerging from Okta, Microsoft, and startups)

The main aspect blockchain brings to SSI is a trustless, censorship resistant way to store decentralized identifiers (DIDs). The tradeoffs associated w non-blockchain DID warehousing are the meat of the debate on how intertwined blockchain and SSI are/should be.

SSI and blockchain are both young, unestablished, and have struggled with the use case problem, so im hoping both lean into the relationship as much as possible

i'll touch on this more soon!

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"If a filler is too greedy, they risk losing the order to another filler willing to take a smaller profit."

great question! not too sure right now, will look into this and get back to you

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"Capital efficiency lags far behind Uniswap and Maverick"

Capital efficiency here is referring to how Maverick and Uniswap service a large amount of volume relative to their TVL, while Curve has around $2B TVL and may do $100M in daily volume - 5% volume/TVL ratio.

Uniswap and Maverick can often be 50% or even higher. Maverick has $40M TVL and did $120M in volume past 24 hrs across all chains, pretty wild.

Doesn't necessarily mean Curve is incapable of being capital efficient, but its PMF and brand direction with the bribes and stuff has certainly shifted it more towards liquidity moat than swapping venue.

Jordan Yeakley, CFA has not authored any research reports yet.