I’ve been going on about how Aave V4 completely changes the economics of the curator business for a while now, so if you’re running a curator business and aren’t seriously considering building your own credit franchise on V4, I genuinely don’t know what to tell you. The business opportunity here is absolutely wild, curators have spent years building relationships with capital allocators and developing their distribution, V4 gives them the opportunity to turn all of that into an actual credit franchise where they can earn fees for managing capital AND capture a share of the economics of the lending markets they operate. Which means curators can now originate borrowing demand, structure the markets that serve that demand and benefit from additional economics as that credit activity scales, which is a much more defensible and lucrative business than endlessly competing for deposits and squeezing out a few extra bps in vault/performance fees. I’ve said this before but I genuinely think some of the largest credit businesses in DeFi will end up being built on V4. Sentora recognised this early and I think a lot of curators are going to look back and wonder why they didn’t. The opportunity is staring them in the face.

Ok I just read through vitalik’s paper and if the vision he outlined is executed the implications are absolutely insane especially for the app layer. The paper is basically Eth’s plan on how they will enable computation off chain with Eth verifying the result (ensuring computation occurred and what it did etc etc). Now what this means is the definition of “onchain” itself changes, because instead of every part of an app having to execute inside a smart contract you can push a huge amount of complexity elsewhere and still inherit ethereum’s guarantees, this really does open up a huge amount of design space especially for DeFi. For example with lending you could have really sophisticated systems analysing collateral, liquidity, borrower behaviour and market conditions offchain, with multiple solvers or execution systems competing to produce the best outcome, like the cheapest liquidation route, best refinancing rate, best collateral swap or best way to match borrowers and lenders all while the protocol only accepts outcomes that satisfy its rules. So basically a lot more of the smart stuff behind a financial product can happen outside the smart contract, while Eth still acts as the final layer that checks the rules were followed and makes sure the money moves exactly as it should. The MEV implications here are quite interesting too because more economic activity happening before settlement means more value moves upstream into who gets the information first, who computes the best outcome and what gets presented to Eth. But the thing I’m most bullish on is what this does to the TAM of Eth just because this vision means ethereum doesn’t have to be fast enough to do everything itself it just has to be able to verify everything that matters. And that’s an enormous difference. It’s literally a world computer.

This is a really strange argument because the argument basically defeats itself. You start by explaining that vaults exist because users can’t realistically track and manage thousands of markets themselves, so the vault abstracts that complexity and someone else allocates the capital for them. I don’t think anybody could have thought of a better definition for delegated portfolio management aka asset management lol. Also a timelock doesn’t magically turn the curator’s decision into the depositor’s decision, it just gives the depositor notice of any changes, your own docs literally say the Curator configures “liquidity allocation rules”, is “abstracting risk curation decisions away from depositors” and makes key decisions about “how capital is allocated.” So even if the code constrains the manager, it doesn’t remove the manager. You also failed to mention what SEC commissioner pierce actually says and thats vaults fall on a spectrum between “programmatic allocations determined solely by immutable smart contracts” and “allocations at the sole discretion of another person or group of persons.” She also explicitly points to selecting yield generating activities and reallocating assets as examples of managing a vault and says managing vaults can raise investment adviser issues. You’re basically trying to make the asset manager disappear by changing the test from “who is making the investment decisions?” to “can they steal the money and can I withdraw?” those are completely different things. Even your “implicit approval” argument is backwards, if I delegate allocation to you then you announce a change and I don’t withdraw during the timelock, my failure to leave hasn’t somehow transformed your investment decision into mine. In fact that requires me to continuously monitor the manager which is the exact complexity vaults supposedly exists to abstract away in the first place. Vaults can absolutely be noncustodial but noncustodial settlement is not non discretionary allocation, no matter how you try to spin this an asset manager is an asset manager even if you give them cute sounding names like “curator” or “allocator”.

Accountable marketed itself into these controversies because they collapsed two completely different things into one, they’ve blurred the lines between “this data is authentic” and “this protocol is solvent”, so I’m not surprised they’re being blamed for a lot of this. They can verify the integrity of what they were shown, but they can’t prove that nothing important was left out or that the reported value can actually be realised, which is what went wrong with Main Street, AlphaPing and now Neutrl. You can’t treat verification as binary because solvency is actually a stack of separate claims, accountable tried to packaged that entire stack into a simple “verified”status. In Neutrl’s case, they verified that offchain records were retrieved without tampering and that Neutrl’s OTC valuation methodology was applied as claimed, but that doesn’t tell you whether every asset and liability was included, whether anyone else had a claim on the assets or whether locked OTC positions could actually be turned into cash at the reported NAV. When you market your verification as “proof of solvency” and say “protocols cannot lie”, you can’t try to hide behind technical scope when your own verification implied something much broader. But even so, it’s always on us as users to make sure we do enough due diligence, there’s a reason DeFi popularised the saying “don’t trust verify” this is just the latest reminder of why that’s so important.

July’s been a pretty good month for DeFi considering we finally broke out of a prolonged contraction, July was the first month of lending growth a 7.2% increase. I think this is a much more important metric than vanilla TVL because a growing loan book is a much clearer sign that onchain balance sheets are being put back to work. Also pretty notable that Aave’s loan book grew faster than the market into the rebound. Obviously one month alone doesn’t confirm a new credit cycle or anything but hopefully it’s a turning point.