“Closed sourced is safer” I wonder if hackers found this due to decoding error messages in bytecode, would be an interesting way to scan for contracts that may have certain types of vulnerabilities from poorly set up modifiers

Proud to launch Pantera's Tokenization Portal and Q1 Report with @0xallyzach @FranklinBi! The biggest surprise from our study of the $320B market: Most tokenized assets are still Wrappers — by design, not by accident.

Two new sets of contracts and a new chain? 👀 Have been waiting to build on polymarket, but being on polygon and no real composability opportunities made it a lower prio for us. Excited to see what the team cooks up!

Lots of people are dunking on the Circle proposal to shift Aave rates, and I have, inevitably, been asked my opinion. I’ll share it here publicly. Gordon’s proposal is not incorrect directionally. He correctly diagnoses that the market is not clearing, and provides a pretty standard solution that would fit into half the textbooks on my bookshelf. Where I disagree with him are on his rate (in)sensitivity assumptions. Going straight to 40% seems destined to force liquidations. In the current market, contagion risk is already high, so cascades would need to be mitigated. I don’t know if Aave can throttle the liquidation throughput like the old Maker vaults could, but that would be a way to do that. It’s an open question whether this would be a good idea. I’m open to considering it, but am not convinced at this time. Gordon doesn’t say that the goal is repayment or liquidation, though. He believes this is a way to finance attracting supply, which I agree WOULD be the best way to unstick the market for the moment. However, the rate can’t just be the usual mechanics. For starters, anyone who has been in DeFi knows that juicy rates get diluted quickly in a floating rate lending protocol. Given the high probability of at least some loss, why would a lender put their stables to work even for a temporary (maybe a week?) 40% rate? Imagine you had $100m, and you saw this 40% deposit rate on Aave. Knowing there is more than $1b of impaired collateral in the system, are you going to risk your clients’ money for $109k/day? You’d need a week and a half just to break even on a 1% loss to your deposited funds. Except this is a floating rate. Once danger has passed, the rates drop down. And if they stay elevated it’s likely because the situation hasn’t gotten better. The calculus COULD be different if it was 40% for 6 months or a year. But you’re really just getting outsized rates for a few days in the best case scenario, and it is rising or realized risk that would let you keep earning that rate. This is at its heart a risk that is unmeasured, and so you can’t know what is the correct rate to price it at. You can’t tell if this is picking up nickels in front of a steam roller or the trade of the century. So I think depositors are the most rate insensitive group at the moment, and due to a very wide range of possible outcomes at the intersection of distressed collateral assets, ultimate recovery rates on those assets, timeline to realize that recovery, secondary damage that has created bad debt, and governance risk around things like implementation of Umbrella or the funds seized by Arbitrum. Basically everyone is standing around keeping rsETH marked to some imaginary number because we don’t have enough guidance from Kelp (and possibly L0 and now Arbitrum) for Aave to know how to begin liquidations and realize losses without accidentally taking on someone else’s loss because they were too pessimistic in valuing the impaired collateral. I do think at this point, Aave would be better off making an “ok” plan and acting today than waiting for a “good” plan that requires information from Kelp/L0/Arbitrum/law enforcement that may not be available for some time.

we've been working on an agent system that can explore and monitor the graph of dependencies a token can have, such as the layerzero DVN. a tough problem since this has to be done custom for every token, even from the same issuer/protocols. can't make any assumptions since you don't know what peripheral contracts may exist that introduce risks. lets look at centrifuge JAAA and deSPXA for example: - both use six contracts between the token mint function and the cross-chain mint calls - has a multiadapter contract which checks how many message relayers have to verify before a mint goes out (layerzero, axelar, and chainlink) - configurations are constantly changing. JAAA used to require two adapters but got changed last week to only rely on layerzero (as a 2/2 dvn) we're still iterating and pushing hard to get this tool out to defi teams asap, and are taking early feedback and examples (dm me).

with stablecoin markets beginning to become illiquid, the situation is now entering a more dangerous stage imo to break down the driving factors: the ETH market is ~16.5% backed by rsETH, and rsETH backed loans could see up to 10-15% haircut in emode if losses are socialized equally on mainnet & external chains, leaving 2-3% residual haircut for ETH suppliers after wiping out umbrella ETH suppliers are naturally incentivized to get out ASAP to avoid this, so utilization is pinned at 100%, and borrow rates are not high enough to incentivized repayment of unrelated LST loops (wstETH, weETH) to free up liquidity because it is impossible to withdraw ETH, users borrowing stables like USDT against ETH collateral cant unwind their position even when the rates for stablecoin borrowing start to spike, which severs the typical incentives scheme keeping these markets healthy now we have 2 unhealthy incentives based on the markets becoming locked at 100% utilization 1) ETH holders cannot unwind their positions to maintain healthy LTVs, and liquidators cant withdraw/sell collateral to close positions atomically, meaning that ETHUSD price drop could potentially cause bad debt 2) users supplying USDT have a perverse incentive to max-borrow other stablecoins as a way of exiting, the position has positive carry (for now) so the optionality has low cost, while if conditions worsen they can get at least 75% of their position value out of the market bottom line is, for these pooled/rehypothecated lending markets to function properly, liquidity must be preserved AT ALL COSTS. recent slope2 changes nerfing Aave's max borrow rates are having a negative effect and significantly increasing the risk of cascading market failure

just shipped three new sections on unchain data insights, learn, and tools for the web3 data community 260+ new pages. free. no login the data job board was step one. this is step two. (links in the thread)

Operations and disclosures is the top focus of herd today. A lot of "disclosure" around tokens and vaults is hidden in githubs, dozens of contracts, and scattered forum discussions. This is getting worse as the number of counterparies increase both on and offchain.