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~2 months ago I pitched to @SpartanBlack_1 that $LEND market cap will overtake $MKR.
A walk through my reasoning: https://twitter.com/StaniKulechov/status/1284723736571252741
A walk through my reasoning: https://twitter.com/StaniKulechov/status/1284723736571252741
1/ While most consider @MakerDAO to be a stablecoin, it is at its core a credit facility.
Today, I'd venture to say 90%+ of demand for DeFi borrowing is for leverage, which means stablecoins are naturally the most borrowed assets.
Today, I'd venture to say 90%+ of demand for DeFi borrowing is for leverage, which means stablecoins are naturally the most borrowed assets.
2/ While $DAI is a critical pillar for DeFi, traders today prefer liquidity over trust minimization. It's *much* harder to trade against DAI than USDT.
As a venue that provides USDT/C, + other stablecoins, @AaveAave was the natural place to absorb the demand for leverage.
As a venue that provides USDT/C, + other stablecoins, @AaveAave was the natural place to absorb the demand for leverage.
3/ For the first half of May, $LEND's market cap:TVL ratio was converging with that of $MKR.
If collateral is a lending protocol's unforkable moat (for now), it meant the market was starting to price the value locked in Maker and Aave as the same.
If collateral is a lending protocol's unforkable moat (for now), it meant the market was starting to price the value locked in Maker and Aave as the same.
4/ As a newer platform with a more aggressive shipping schedule, more features (flash loans, more asset pairs) and a higher growth rate, $LEND's collateral should be priced higher per $.
This was the signal to start paying attention.
This was the signal to start paying attention.
5/ At first @SpartanBlack_1 and I disagreed - compared to Compound's last equity value (~$100m) and on a fee multiples basis, $LEND at $75m looked fairly priced to moderately expensive.
Maker's native stablecoin also warranted a premium in val.
This changed when $COMP launched.
Maker's native stablecoin also warranted a premium in val.
This changed when $COMP launched.
6/ Even after an initial correction, $COMP's value *far* exceeded our estimates (~$30).
Introduction of liquidity mining clearly reignited risk in DeFi markets, and hints at a token model revamp likely meant better value capture for $LEND token as well.
Introduction of liquidity mining clearly reignited risk in DeFi markets, and hints at a token model revamp likely meant better value capture for $LEND token as well.
7/ Side note: In a bear cycle, I used fee multiples to identify undervalued assets like $KNC back in Dec 2019.
In a bull cycle, using LTM/ NTM fee multiples or DCFs to justify fair valuation means I will miss out on every move.
Relevant... https://twitter.com/chamath/status/1280531290635157505?lang=en
In a bull cycle, using LTM/ NTM fee multiples or DCFs to justify fair valuation means I will miss out on every move.
Relevant... https://twitter.com/chamath/status/1280531290635157505?lang=en
8/ I've received messages when $LEND traded at $90m, $150m, $200m - typically along the lines of "seems overbought, should wait for correction".
At $80m, I had my reservations against val as well, before diving more into Aave's plans.
$LEND is currently valued at $400M.
At $80m, I had my reservations against val as well, before diving more into Aave's plans.
$LEND is currently valued at $400M.
9/ For those less sensitive to short term vol, here's a longer term outlook.
Lending Club mcap: 1B, most activity in US
Transferwise last private val: 3B
With more DeFi tokens resembling pseudo equity, I won't be surprised to see a few of the lending protocols valued at $1B+
Lending Club mcap: 1B, most activity in US
Transferwise last private val: 3B
With more DeFi tokens resembling pseudo equity, I won't be surprised to see a few of the lending protocols valued at $1B+
fin/ cc My fellow DeFi heads @Arthur_0x @Rewkang @QWQiao and kudos to the relentless team at @AaveAave @StaniKulechov !
