Are There Too Many Liquid Staking Tokens? | Analyst Round Table

Transcript

I think that this uh notion that there should be tens or hundreds or thousands of liquid staking tokens for the same asset is exactly the opposite of what a liquid staking asset is supposed to be the only job of a liquid staking token is to be liquid and the best liquid staking token will be as liquid as the underlying when you create all different types or many many different liquid staking token for the same asset you add slippage and bigger spreads to all those trading Pairs and um for that reason this Market will not scale to it be

anything beyond like airdrop Farmers um my view nothing said on zerox Research is a recommendation to buy or sell Securities or tokens this podcast is for informational purposes only and any views expressed by anyone on the show are solely opinions not Financial advice pachio Ryan and our guests May hold positions in the company's funds or projects discussed what's up guys welcome back to another episode of zerox research today I'm joined by Danny Luke and Ryan to talk about all that's happening in crypto and across the markets um today's a great day bitcoin's up three and a half% Bitcoin related stocks are up double digits uh coin makes up 11% micro strategies up 14% And

mining stocks are also up clean Sparks up 9 and a half% the big catalyst is likely the fact that of what happened over the weekend um with us politics I don't want to dive too deep into it but I think it's probably best to get Ryan's views on what's Happening yeah so you know events over the weekend over the weekend super tragic um but what's on everyone in crypto's mind right now is like you know obviously implications for crypto markets and crypto policy going forward um look D the the Republicans most recently positioned themselves as like

the pro crypto party um you know from the Trump campaigns um you know directly from the the Trump campaign um they've called the um the the Crackdown on crypto markets unamerican um they recently stated that they oppos the creation of a central bank digital currency uh they uh recently stated that they support the right to mine Bitcoin and ensure every American's right to self- custody and um you know given the events again over the weekend we saw what happened in poly market with the polls the probability that Trump takes this uh election Rose above 70% briefly and I think sit around 70% as as of this

recording um so crypto's ripping um and understandably so uh what's on everyone's kind of mind in crypto markets is like what happens next like we have a bullish crypto policy regime um some things that are under obviously staking um subsequent ETFs like potentially a sole ETF um and then you know changing participants in the market right if this is a more crypto friendly regime um institutions are going to feel much more comfortable in the space and how does that change the game that we're playing right in terms of the prevalence of narrative trading or technical analysis like these are things that like everyone's thinking through right now and um you know next 12 months um in regards to crypto policy

are going to be I I think pretty interesting what one thing that I was thinking about is the ETFs thing but Solana is one um what do you think is the next one do you think they'll go like Litecoin xrp the Old Guard or do you think they'll do something like very relevant to real world assets link I guess like big enough to be relevant but also like real world aity or do you think they'll do like actually good crypto stuff I think you're right to say that the obvious next asset is salana I think that the problem with like list like the obvious problem here is just like single asset ETFs are not incredibly popular um

these are pretty illiquid markets to begin with so like you know as as we keep going on down the risk curve on approvals you have to think that these exposures are going to get bundled it's probably and like this is not a sub three Monon thing um but I don't know over the next 12 to 18 as investors get more comfortable with the space there's a very obvious case for um a spy like product you know you're not going to have 500 assets in it but you know bitwise is you know top 10 by market cap product seems you know like an obvious Next Step here um no one wants to own the avac

ETF right like you want to you want to bundle that because it's not an obvious exposure like Bitcoin is an obvious thing it is the industry's beta asset if you want beta exposure to crypto you buy that thing beyond that you're looking for like Diversified exposure and you're going to want to have like a portfolio of these assets and not just exposure to a single one I think it's a great point I think if you look at like grayscale and some of the offerings that they have today than trusts you know they have altcoin um combined offerings they've got defi coin combined offerings so um I think what Ryan's getting at makes a ton of sense you know I wouldn't be surprised I think what these guys will be thinking about next after you know the biggest ones are out of the way are what are those meaningful categories

maybe or groupings or buckets of assets to put together that people would be interested in um in looking at next so it could be you know alternative blockchains you know outside of ethereum or maybe outside Soul if Soul gets its own ETF as well um you know maybe maybe mem coins right doge is still a very large asset and um you know you can look at the chart and see the performance over time so um there's there's different opportunities like that they had a meme coin index launched um I can't remember who launched it but one I I feel like a pretty obvious one is Stak e and Stak soul but I'm wondering if they'll just conver existing ones into staked ones I don't know anything about how the regulation

behind that would work or if they would launch new ones because as far as I remember when we said like e is going to launch a ETF everyone was convinced that it would be immediately stable that's obviously not the case um so far like there's nothing that's been said that would imply that so I'm wondering if they'll end up launching Stak Def and Stak Soul ones and this is one thing that I talked with the Lio people um Lio people with hu and V and they were very clearly like um I think they also know that coinbase has the lead there with staking institutional staking and it's not Lio unfortunately like even though I would have preferred it if it was like a

decentralized operator um that would potentially also be good something good for coin if we do go for stake th it's kind of semi of a tangent yeah the the the problem on that is just like the time frame with like they're they're they're in court on that right now right I don't know that's going to take 12 to 24 months to kind of solve probably closer to 12 I'm guessing and gendler's term is up in June of 2026 so staking I don't know it seems like a little far out there right now yeah the the regulatory sort of issue with staking seems like it's it's kind of been a thorn there for the many businesses who have been sued now for

having those types of products or been asked to change you know wordings and disclosures and how those business models work so um like to Ryan's point I wouldn't be surprised if those take longer particularly with the recent allegations naming lios stake eth potentially as a security I think the idea of having a decentralized node operator set um providing the the liquid staking instrument probably too far out in the future um from an immediate sense um I would agree with Ryan that you know salana is the most likely next candidate for the ETF product that being said I think it's almost too far out in the future for it to be particularly

important at this point in time um I almost think that in in rate of change terms uh given that eth is you know we're looking at ethereum ETF begins trading by July 26 up to a 94% probability on PO Market in rate of change terms um ethereum is going to be the next asset that gets the big bid from traditional Finance Pockets I think almost past six months um that narrative has been discounted too heavily and we're almost thinking too far out into the future about the next thing to get approved yeah that's true that's kind of a crypto thing though it's like something happened what's next when is

got to trade the next narrative I guess if you look at the timelines even right like the Bitcoin um you know applications started getting discussed last year probably around this time maybe May or June if I remember correctly and we obviously you know that did not go live until the beginning of this year and you know we're seeing a similar sort of multi-month time frame from applications to potential trading going live for eth as well so even if you are thinking about the next one being salana it's like you need to at least put you know maybe six months on top of you know time following you know new application going in to any trading going live in the future yeah that's fair um couple other big news is dropped over the weekend I

think the biggest one is the maker Dow fund um a no not a fund a billion dollar competition to invest in tokenized treasuries um apparently black rocks biddle biddle build um Ono finance and superstate are applying for it I um this is like Aker Dow is one of those I think assets that everybody like all of the funds are invested in at this point just because it was one of the few defi assets that they could get into so like one thing that David from the blockb research team brought up was that who is the extra buyer over here and I honestly don't really know I feel like who is

buying maker everybody already like all big funds already have maker it's it's a good question but I I think the interesting part about maker itself is it's it's got classic sort of business fundamentals that people can look at and price and bid upon um it it it's kind of carved out its own sort of space within within the industry that um you know you're not just taking a gamble on the future success of something you're take you can take a look at their revenue statement today and decide if you want to own it if you think that you know this sort of decentralized business makes sense going into the future yeah it's one of the few protocols that you can actually run

like legitimate pnls and stuff on like it actually fits it and not you're making stuff up um I don't know we'll see I I really like like they were doing so to be honest with you I'm not sure like how sexy of a asset it is especially given that D5 1.0 isn't particularly popular at this point I think despite the fundamentals like if you just look at the maker eth chart it it hasn't really returned anything beyond what just holding eth would have returned so it's you know I think there's a fundamental question there of can they build a business that is more meaningful to people than just the ethereum um model is or are people still

like sort of closely tying you know the success of something like maker to just the success of something like eth um I think that's sort of a fundamental question I think you know a lot of projects probably struggle from that same question right if salana were to you know fail as a a business per se you know a lot of the things built on top I think you'd have similar worries about their future success too yeah but I yeah like jeto would be dead obviously because it's all like purely a infrastructure play I'm not sure what else I guess like drift and stuff could move after us but like Maker's not that exciting of a business right um I mean what are the products that they have it's mostly

lending uh and real world assets like I I understand that there is a there's a fundamental Tailwind to want to use these Services um but like I don't know how does it stand up next to an a it's trading at I don't know what 10 times sales um given like trafi comps like that's not um that's not cheap yeah and in the course of the bear we've seen a lot of the die Supply backing become increasingly collateralized by both usdc and then also treasury bills and and offchain Loans um which of course has been the largest driver of increase in revenue for the maker

protocol so simultaneously we have this this Outlook where interest rates might fall where that Revenue to the Dow um would fall along with that interest rate exposure but then concurrently there's this narrative where when that happens there should be increased demand for leverage against Crypt native spot assets like like ethereum and Stak ethereum but we really haven't seen that demand for Leverage come back over the course of the past year and the recent bull move where maker tvl and uh the die supply has effectively flatlined and really has underperformed the recent recovery in spot assets

that's how have other leverage um tools been doing like a and stuff because that's their business no same with Moro so a has flippen uh maker in terms of borrows and a is now the largest money market um I believe they have seven to eight billion uh in total borrows outstanding right now oh they're almost back at alltime high that's kind of crazy well not really but yeah I mean the question is still who who wants to own the token I think is still really the question um I don't know we you know despite their kind of flippening of of maker I think just looking at the chart like it really

hasn't done anything appreciable um in the past you know this cycle really I guess the past year and a half um and I don't know if that's because they're not driving enough fundamental value back to the Token itself if it's really just like there's a great kind of operating model going on um but there isn't enough reason to kind of to own the token today um I think you know a lot of projects struggle from that I think regulatory concerns limit a lot of potential you know sort of setups um designs around tokens today so that could be part of it but um I guess I'm I'm not as deep in the weeds I don't know Luke if you think there's anything specific there yeah I think there there's a nonzero probability um that

regulatory headwinds could be some risk to um really any Dow governance token maker a included um where they are allegations of a security or an unregistered Securities offering um that being said it's ultimately for you know the SEC to make that allegation and then for it to be settled in court and we really haven't seen that risk come into play for these multi-billion dollar tokens and that being said Market participants do need to have some disc rate on on that risk so I know we shat on narrative trading last time but I wonder if like tokenization defi like if Larry f is

going on TV TV and saying oh like tokenization and decentralized finance these things actually work and they're like relevant then I mean these are I guess they're not like the best businesses but they are the best that we have to offer to Market participants so I wonder if they could have perform just off the back of that because like yeah I guess they can't ever really or at least not ever but for the foreseeable future Implement some form of value acrel but maker had a burn has a burn um buyback and burn model I don't think a doesn't have anything um so maybe if they Implement I mean I'm sure that like that's the thing if like

Trump and the Republicans win and they can do whatever they want with crypto I think that's like the number one step for I guess all the old guard to implement some form of fee switch like we've seen Unis swap attempt it maybe like seven times over the past year um Lio had a couple of posts but they were fake but there's obviously people thinking about it within the community like all of them are thinking about it so I wonder if that ever like becomes a legitimate thing and we're not just trading government's tokens but we're actually trading I guess tokenized Equity I think the biggest Catalyst at least for a token value approval

perspective for both maker and a are the currently discussed roadmap plans of transitioning these etherum L1 applications to their own blockchains um a has discussed the idea of making a token the staking asset for their own network um can't help but imagine that maker might do something similar um and under that under that context where you both eliminate all of these fees that need to get paid to uh the L1 main net um I think the tokens could see much more of an infrastructure like multiple um compared to the application multiple they might have right now I don't think it makes any sense for

Lending protocols to have their own app chains um I think it makes sense for some products but not for like a at the end of the day if I'm using a on eum I'm using it because it's on ethereum and not on like some random L1 or random L2 like I want the ethereum safety I want the what like you can't just do random stuff I'm not at the whim of a sequencer or some random like node operator it's like it's ethereum um so I'm I'm not sure I get the multiple um and I'm sure that also dies down the way that the L2 multiple died down over like six months but I'm sure they'll try but to me it just doesn't make that much sense perex is sure launch as many l1s as you want launch an

L2 I don't care but not like for Lending not for core def5 I think is I'll make a just a quick point it is that even a fair point considering all eth activity is going to l2s today I mean just look at base it's expanding like crazy yeah and E activity has been down only so I will say we see like transactional activity across l2s um flipping ethereum L1 main net that being said we still have probably like 10 applications on ethereum mainnet that all individually have more tvl than the top L1 so while we see like transactional activity

picking up the the migration of deposits really hasn't manifested yeah I feel like most big money will stay on Eve for the foreseeable future and not like even if have like some form of exit hatch um I don't know why risk it why not just stay on eum is this does this maybe partially explain why why ZK Tech could be such a positive Catalyst for growth of those types of chains like if you you don't have to trust anymore you know your money is safe because of math you know um would that be reason enough for this tvl this really sticky eth tvl to to move off to like a a ZK environment

I think it's more about trusting like over a certain period of time um I think it just comes from the fact that it has worked for x amount of like there's still a reason why people are parking their money in a over Moro like I'm sure the moro team has done really well and there smart contracts are all safe and everything's all good but like a hasn't had knock on wood hasn't had an issue for quite some time um and when they do have issues they mitigate them quite quickly so it's like relatively trust worthy it's been battle tested versus so I think that's really like ZK will be great um if it works at the scale that people want it to work at but I feel like there'll always be some form of trust element to eum like at the end of

the day if you can afford the gas and you can't afford the gas because everything's being done on the l2s now why not just use uum if you just want to park your money earn whatever a they offers like 0.7% or something yeah to the extent you need to trust in L2 or an interoperability protocol less and there's less risk associated with those trust assumptions um like like we' assume there would be with ZK Tech as opposed to optimistic um I definitely expect uh that to facilitate more Capital migration in the future that once it hits you know production scale that is yeah the one thing I think people

also discount is that if you try and transfer money off of if you like to your exchange uh it takes 15 minutes with some l2s it takes sub 10 minutes but with ZK for some exchanges it takes like a day which to me doesn't make any sense but it does um with ZK sync for example so it's like that's also a thing even if like these are adopted it's I don't want to wait a day to get my money out of the system like I want it out now sub 10 minutes maybe um so that's also something that's going to be important but we've kind of we'll see how it all develops before we move on to more uh questions let's have a quick word from meina thanks to our

fantastic sponsor layer zero what's up guys for this week's layer zero snippet I'm joined by sarim the head of growth at epina thank you for joining us Sim hey guys good to be here uh just to start us off do you want to give a short introduction of Aina and what you guys have been focused on over the past few months sure um Athena is a synthetic dollar protocol which means we have a product called usde and sde which gives you an apy a reward based on the Futures funding rate long story short it's a dollar denominated protocol and uh what we've been doing lately is uh a bunch of things we have layer zero and I'm really

excited to share with you um perfect and how does layer zero fit into EA exactly yeah so we partner up with L zero quite early on from the moment we launched the protocol and they've allowed us to move USD and sde or for users to be able to move it to multiple chains like arbitrarium blast uh mantle so and a bunch of new ones coming um pretty soon as well so just they've been a core part of our multichain strategy perfect and do you guys have any exciting plans over the next 6 to 12 months yeah I'd like to think so uh we get a launch on a bunch of different chains powered by layer zero some chains

that I'm really excited about um you can think of your fastest growing best distribution chains out there I'm not going to name names but figure it out uh we're going to be listed as collateral as we've announced and buy bit and bit get and a few other um large centralized uh projects soon as well and generally we're building the Athena chain which is also very exciting project which is going to be a Confluence of re daying of yield products of perss enabled through Athena which gives a lot more utility to USD and the ethena governance token so uh I expect ler to be an integral part of that as well perfect that's all sounds very exciting thank you for joining us one I

guess like ecosystem that did particularly well over the past week um was hyper liquid everything on there seems to be doing very well and I it's kind of why I invited luk on because I want to hear his takes on why things have been going up and what's going to happen yeah so I'm no particular hyper liquid expert um but seeing some of the price action on some of these spot Al markets has definitely drawn my attention um so in recent weeks uh the team announced permissionless listing um for for various spot markets that being said the team will still curate a short strict list of various spot tokens uh primarily to name H fund which is the

token related to hyper liquids telegram trading bot Jeff points and per and looking at the price action on those four tickers the patterns very much consistently up and to the right uh almost in a straight line um so I almost think that when you have this this purpose built um blockchain uh for a per deex that's UL Ely going to become more um and you have this strict list of various altcoins or meme coins however you want to classify them um a lot of speculative energy can get channeled and focused into these four siloed markets whereas all that speculative energy on

something like salana has ended up getting diluted across uh 300,000 various tickers um so of course hyper liquid has been running this points campaign um there's a m much anticipation of there being a pretty big airdrop and so there's this token Jeff um the founder of hyper liquid is Jeff it's trading at seven and a half million doll market cap and he's about to hand out big stemy checks to all of his loyal users um and fans of the platform uh so looking at it right now it seems like that list of four tokens is outperforming a lot of other names in I

guess the mcoin asset class and um I think performance Chasers will ultimately migrate over to the opportunities that are showing up on on hyper liquid right now um particularly with the Catalyst that we'll see uh probably a big airdrop and more stimulus native to the hyper liquid e ecosystem yeah this is one of those like interesting um SC arios where the team is very much like you make sure to trade these assets because if you trade perss on hyper liquid the points you get are like one tenth of the points you get if you trade the spot markets which is kind of ridiculous um so like they're incentivizing volume it's one of those

apps that people are like oh this one's this airdrop is actually going to save me Jeff didn't take any VC money he's gonna drw 40% to the community probably won't which would make sense but um yeah this this is like where I think like a lot of people's attentions have been over the past few weeks and now it's like really hitting the timeline of everybody's like wow hyper liquid look at all this is happening is there any evidence that um the decline in Blast activity has migrated to hyper liquid are you guys seeing that in any charts I think it's likely what Luke said salana activity went to hyper liquid makes more sense

than blast went di for liquid I mean I'm I'm certainly not seeing a decline in salana activity um they're like tapping 40% of all crypto market deck volume at this point um I think they reached 39% within the last seven days on on a daily basis so I'm really not seeing a decline in um in salana activity for sure I mean the I'm looking at hyper liquid TBL right now and it's like almost a straight line up um I think maybe the more interesting question is about like how did hyper liquid get to this position it's been like like obviously like I think the like constrained validator set is super

important for like a good experience but I feel like the empirically the most important factor in a deck gaining adoption or a high performant one getting adoption is um listings and Hyper liquid seems to fit that mole I'm wondering what you guys think about that this is something I talked about with we link the podcast that I did with Jeff below as well but I talked to him about this and they've like they've actually done a really good job I think it was them and AO that did all the pre-market listing the pre-listing markets um and I mean for a really long time you just couldn't get and you still can't long with size or short with size um on some of the like I guess less popular pairs like apart from

BTC e Solana and maybe a few more you can't really like put on serious size but it is like a breath of fresh air compared to what I think a lot of people got really used to GMX which had like six assets on it over the be so like moving on to I mean there's always dydx um but like they have their own ux issues now because they moved but like I think a lot of people were trading on Dees on arbitrum hyper liquid launched on arbitrum even though it's not on arbitrum it you bridge over for arbitrum so I think they got a lot of those GMX Traders on the platform and they have a lot more assets than GMX ever did so I AG I think you're right like their

listings have been really really good uh permissionless spot listings I'm not sure how relevant it's going to be after the airdrop but until the air drop it it's a closed system where they incentivize traing like let's play there's nothing else to it looking at just looking at some tvl numbers and of some different derivatives protocols like like you mentioned GMX I mean it's down 40% in tvl in the past three months four months um looks like DX as well they haven't really moved um so it doesn't really seem like there would have been much flow back and forth between DX but definitely the GMX drop off might explain this change here yeah

I think people should look keep a lookout on um and there will be a lot of good ones and a lot of bad ones but because hyper liquids its own one there's going to be a lot of applications launching on there as well and there's like some very clear and simple ones like lending protocols and swapping obviously not but like other yield protocols will launch on it there'll be a bunch of Vault systems um and defi apps and I I I'm curious how they're going to deal with that because now they have raid trade launching on there um so I'm not sure how that's going to do they they didn't launched for like three years they were originally built on top of GMX um but we'll see I think like that's a good thing to keep an eye out on as well after these like because at the end of

the day like the spot tokens right now are Jeff points H fun is an actual like thing but and per um like if you are kind of risk averse there's going to be opportunity in other places as well to Ryan's other point as well on it not being a salon migration I mean you can look at the Jupiter perpetuals tvl as well and it's also up only to the right um same goes for drift um they were sort of up only the beginning of this year and it's held steady so it doesn't really seem like people are moving away from salana it might just be rotation out of other less interesting per per apps in the eth space yeah I checked it's blast blast

last 32% volumes over the past week so I think it might be them Ryan was right bachio was wrong so I guess like so drift is super interesting because seems like activity is still picking up there post air drop um I don't know if they have an incentive thing going on right now but the first one's like always the biggest one that everyone wants if this is mercenary Capital that has migrated to hyper liquid for um in hopes of an outsized air drop opportunity what does the opportunity look like longterm for this platform or maybe how does the team go about making sure that this capital is sticky I um I think the hyper liquid platform is

actually really really good um and I think like obviously a lot of it is mercenary but I I I still think that like it's probably less mercenary than other applications were because there are like GMX was actually being used for some reason and it was it was a good experience but you could only create six assets and it had like hor horrific fees um hyper liquid like Smooth um it's quite good and there's always going to be a market albe a niche for per Dees um I think like especially with regulation a lot of people can't trade on Sexes um so I think like hyper liquid's definitely one of the best two out there

dydx is also quite good I think vertex is also doing relatively well um but it might be good to check out how their volumes have done post air drop I don't think vertex was ever like as complemented um as h liquid was as hyper liquid is like no what nobody was like oh vertex is the best trading experience ever but people are actually like saying hyper liquid is the best um perpetuals decks experience we've had ever uh it's really good to be honest with you I like it's the only one that I use um but I'll I mean these are all mercenary it will leave they'll have

like a 30% drop off but as opposed to the 80% they would have traditionally had yeah I think Bach makes some good points there I mean if they're actually building a great product which it seems like they may be I'm not a I'm not a perex expert myself so I couldn't really tell you but um you know I've heard things good things about the listings and and other features there um so certainly you know if they can kind of out compete the category but obviously there's always a big big big question when something is Pre-K um when it shifts to post token um and we see activity fall off so uh we can make guesses as to how much of that might stay um but ultimately there's probably just some percent that is you know straightforward mercenary Capital that

will not be enticed to stay because there will be something else to go farm in the space there's always something else that's pre-t toen or has rewards yeah so the points programs and air drop farming will always like attract a lot of users to try out the product and if the users like it I'd expect them to stay uh post tge and certainly hearing people's feedback on the product it seems like it's one of the best per dexes in the industry um so I think a lot of per de Traders will will stay on that platform I also think it's interesting that the success of hyper liquid is also a testament to the success um and the power of a cosmos based Tech um hyper liquid originally

built off of uh tender consensus and uh forked their consensus algorithm to implement proprietary hyper bft consensus um which Jeff advertises can boast um throughput of up to 200,000 orders per second per second which is incredibly powerful uh bandwidth so I think um it goes to show that if you get some gigabrain developers to Pork aspects of the cosmo stack you can actually Implement some incredibly powerful products um of course that ends up looking like success for the end application as opposed to success or

tbll for Cosmos and the cosmos Hub um so it's a very different outcome than what people might have thought success would look like for Cosmos um but from my perspective success for hyper liquid is is success for Cosmos Tech yeah I think that's one thing that it's hyper liquid and they also have bar chain coming out um I don't know how like with bar chain I'm not sure how it's going at this point but I mean those are like two of the biggest names um that are launching and they're both launching on Cosmos and you can make the same point about dydx right yeah that's true DX apparently apparently monad is using a

fork of um tendermint as well H if only there was a way to make Adam go up Unfortunately they didn't put a you know a fee switch for you know use of tendermint and IBC uh to feed back to the to the Token so oh well it's one of the saddest things I think is the cosmo the fact that Cosmos is actually utilized more than like anything else probably for good projects and then nothing happens to the cosmos out bits um one more thing that we've had over the weekend is sanctum uh launch not the weekend I think they launched it today they launched profiles V2 a new

friend Tech type system that um I want Danny to introduce to us yeah uh I'm not fully positive if if the profiles V2 is fully at this kind of friend Tech style application launch yet but um I think kind of the the details and information they're adding in there um and building out with profiles can become interesting um there was a tweet from one of the team members discussing just some interesting things that they'd like to do with sanctum going into the future um one of those being some sort of social fi application similar to frch where kind of the the the core idea would be

rather than to purchase like with frch you purchase someone's keys or their token basically to get access to their you know their chat or their content essentially um with sanctum with you know the LST um kind of making LST that you want um on their protocol the point I think in that case would be you know creators would have their own kind of person specific LST you have a Creator specific LS that could be minted and um people that want access to their content could then Mint or you know swap into that LSD hold it in their wallet um get access to the content and then the Creator um in exchange could get you know a portion of the fees from the stake um the stake revenue from those tokens so it's an interesting switch up it's not quite a a um full-on trading

application you might say where you know frch keys and other kind of implementations of a similar protocol have been you know wanting to kind of trade up up and around the price of a particular person or idea or Creator in this case it would probably be a bit you know more fixed to whatever asset is used in this case if it's Stak Soul you know you'd be um just dealing with the cost of of stake soul in that case um but probably more fixed kind of price approach to things um and then the the revenue back to creators rather and kind of um you know maybe fleecing your your um fleecing your audience I guess if you want to call it that um instead you just be looking at some sort of maybe flat percentage from the staking rewards um it's quite a shift I think in that model

which I think is interesting that is interesting I think sanctum is one one that we should question about do you think it's all mercenary and people will leave or do you think we have a lot of Believers in individualized 100,000 LSD different types of lsds on Solana I'll say as a user and you know stick soul of various type person myself I do find their product quite valuable um the really interesting aspect is for businesses protocols projects um anyone to be able to kind of create their own Stak Soul variant through the platform um it's like this interesting method of you know rather than asking people to

direct pay for services um they've found this nice way to have people kind of you know you can pick something that you're interested in and a team that you want to support and you can instead just stake your soul using their variant um you're still making all the you know if you're a soul believer and you you know you're still earning most of that stake reward but you can kind of decide to sort of elect to delegate that you know whatever fee if it's a few percentage points off the stake rewards um to that project um I think it's a really interesting model and it's not you know not quite so mercenary because you can you know if I just want to hold some other Stak token I would go ahead and do that you know they're they're earning the similar staking rate as

other available you know liquid Stak Salon tokens within the ecosystem so um you know there might be people chasing an airdrop but um if you're already a stake Soul holder there's not really much reason for you to like jump in and then jump back out I think that this uh notion that there should be you know 10 t or hundreds or thousands of liquid staking tokens for the same asset is exactly the opposite of what a liquid staking asset is supposed to be I think it adds fragmentation to um look you're the only job of a liquid staking token is to be liquid and the best liquid staking token will be as liquid as the

underlying when you create all different types or many many different liquid staking tokens for the same asset you add slippage and um bigger spreads to all those trading Pairs and um for that reason this Market will not scale to be anything beyond like airdrop Farmers um in my view to be fair to the sanum theme the way that they like I agree with you in the sense that in general there should be as few lsds as possible but to be fair to the sanctum team um they do have like quite an elegant design they use stake accounts that are like inbuilt Solana and then

you only trade through Infinity I think or it's because it just matches directly um and I think it's like uniquely enabled by Solana because unstaking is relatively easy on Solana so it's like I think in that sense it's I I still agree with you in that you want as few as possible but to be fair to Solana and the way that they've done it is likely the only way that it could work if it did work um like this multi LSD environment where you can give 5% of your um emission rewards to somebody so that they can post meme calls in their telegram group that you follow but that's the only one

that like sanctum is the only way that it would work probably yeah the the problem is that there's there's still no point to it if you the reason Reon to take and to the reason to add incremental IL liquidity or to um to diversify into a different stake sole asset is to get a different yield profile right that's like that's literally the only reason and the yield difference on these lsts like rounds to zero there's no differentiation you're just getting whatever you're getting issuance and fees and meth or some combination of those um the only difference is going to be on the um the take rate of the validator and that's

not going to vary much at all so like you're adding product differentiation to a market where there is no differentiation and then causing like potential like liquidity problems in the future like no one at scale is going to be participating in that model I think a cool way for them to implement this will be in the future that they do some form of like liquidity mining through it so like you you like Danny said the whole point was that you can hold your own salana and still like give some percentage of it away and I think that's what they will do like you'll still own your own Solana let's say like some new lending product launches in three months on Solana and they need Solana liquidity um you can

just liquid stake it through them um through their sanctum LSD and I think that and then there's some form of yield differentiation because they'll be emitting rewards to you still not good enough um differentiation probably and still you could just do the same thing through the just giving the token in The Lending pools but I mean it could at least be experimental I guess there's not really a point to it I agree with you I there I can't spin it I think you make a good point Ryan I wouldn't argue that any large players would should would or should probably try to enter in the way that you're describing but I do think it sets up an interesting potential for just a a consumer application for you know retail

enjoyers of the space um if that means they never get you know massive size buying you know sanctum uh steak Soul tokens that's totally fine if they make a cool app and it's like meaningful and people are willing to you know use those like Stak Soul variants to interact with the platform um then I'd call it a win do you so when when a retail user has one of these individually spaked things across a very in a very narrow valy validator set or stake to a Creator or whatever um the holding times on these things are super low um crypto is very shortterm shortterm oriented when the person goes to sell

that are they going to incur like and they and they incur that slippage like they just go to Jupiter and they punch an order because they're realizing volatility or there's an opportunity elsewhere and they want to move quickly out of this asset and they see that large slippage amount like my I mean I would assume that that's like a pretty bad ux right like they're going to like that that's not going to be that's not going to be something that people gloss over um or or am I wrong uh I suppose it depends I think if people approach it that way right if they you know kind of Market order into one of these tokens maybe not through the the sanctum application itself um from what Bach was mentioning I I do think they have a

fairly interesting kind of mechanism set up behind it where they're sort of all there's like this kind of unified steak pool where they're kind of they're grabbing the Stak out of each of these tokens and kind of they house it all together and when you then go and redeem your variant it's kind of like hitting against that um that kind of unified pool um so I I think if if people are interacting with it in sort of the Native way like making use of sanctum itself I don't know that that is that much of a concern though I think it would be a good question um for that team or to dig deeper um with those guys um I haven't looked too far into the you know how those that math really plays out um but yeah I I think to your point I think from my understanding if someone

then went and you know tried to sell a 100 thousand of their or a million of their token on Jupiter instead um You probably would just eat Market slippage there um and it wouldn't feel great but I think the kind of the app and what they've built itself like interacting directly with the pool that they've kind of defined for it um alleviates that concern to to a great extent from what I know yeah and I agree with Danny I don't think everything needs to be the ultimate app some things can just be relevant for 10 to 20,000 people like a small thing it's just cool you can just semi use it yeah I mean I think if if you think they're trying to make a friend Tech um you don't need funds buying it it's you want users who will use it so if it's if the ux for like an

app or you know is good and it makes sense and people are willing to sort of use the Stak Soul token as a means to interact um then it could be good if people don't want you know want to use steak soul for that type of purpose then maybe it won't do so well but I think for retail it's probably not as big of a concern right if you need to lock up one stake Soul or you know get you know Creator A's you know one or two stakes so from them to to see their private content um probably not so bad yeah and I don't see any institution ever going for these types of products anyway it's we had a similar thing on Wii like I'm the developer of ethereum

um on ethereum they had a similar product called unhee um not the same but semi similar and it got hacked I think like the more complexity you add to staking derivatives um it's just it's never really worth it it's the same as like adding too much complexity to lending stuff you you want like very basic very simple um so I don't really see like anybody really at scale using sanctum which is fine yeah and I think for larger operators like I don't think they'd be interested in these stake Soul variants if if anything you know if this business model works out and it's a great platform they probably want to buy the cloud token or whatever their their their platform token is going to be that

might you know return revenues from the business model right if it turns out to be a great so like the best social F you know platform and you can see the you know the user metrics going up and the activity going up and the revenues are great then um why would you hold the Stak Soul you'd hold the you'd want the token in that case I mean at least they're trying something new which I like I feel yeah it's interesting nonetheless whether it works or not I mean that's that's a big TBD we'll see TBD this week I think is when they're launching the token right yeah soon I don't know if I've seen a date but it might be out there thought was this week we'll see do we have anything else that we want to mention that is very important for our listeners to

hear about oh you're right it's the 18th by the way wow stimy checks on the 18th all right Danny Luke Ryan thank you so much for joining thanks for having me very pleasure hopping on guys to our listeners Ryan was very quiet because it's 130 degrees in whatever room he's in right now so he's very upset uh thank you for listening have a Fant fantastic evening [Music]