Steakhouse Financial

Stablecoins? Unlike steaks, they're best served well done. A conversation about stablecoins with our friends at Coinshift: https://lnkd.in/daNY3fwr

Sébastien Derivaux just published "Cryptodollars and the Hierarchy of Money" on SSRN: 🔗 https://lnkd.in/dMScTw_3 At Steakhouse Financial, innovating in the stablecoin space is our DNA You can also read an abridged version in the Steakhouse Kitchen https://lnkd.in/dqps8TuZ What is a stablecoin? What is a cryptodollar? We define cryptodollars as the subset of stablecoins that can be redeemed against higher level money (directly or indirectly in cash). The hierarchy of money is the construction built on top of the actual $ (Fed notes and bank reserves) by the financial system. It provides elasticity to the supply of money. But the farther you are from the top, the more risk there is. The paper also proposes a new taxonomy to get rid of the outdated fiat-backed, crypto-backed and algorithmic nomenclature, similar to the efforts of Nic Carter. Two dimensions: are reserves (assets) on-chain or off-chain? Is the stablecoin fully or fractionally reserves? Also the paper reiterates that serious people don't use the secondary price as evidence of a stablecoin depeg: https://lnkd.in/dKSKuY5P We then look at gross and net ouflows on DAI and USDC showing how those stablecoins react against adverse clearing. This is measured on primary markets (issuer window). Contrary to the SVBs that TradFi blesses us with, serious stablecoins have proven resistant to "bank runs". They expand and contract their balance sheet to meet user demand. The road is still long for cryptodollars and not everything is perfect yet, but we are getting there Disclaimers: https://lnkd.in/dSNPbSbq

Our Chef Sébastien Derivaux Derivaux extended Perry Mehrling's Natural Hierarchy of Money to include stablecoins and cryptodollars in the definition https://lnkd.in/dx27Wk6G The distinction between 'money' (means of final settlement) and 'credit' (means of delaying final settlement) is a scale that varies depending on the instrument and the parties that are settling with one another. Stablecoins are a type of instrument that promise to maintain value relative to a reference asset. Cryptodollars are a subset of stablecoins that offer a path to redeem on-demand to higher-level forms of money, such as bank deposits. In the stablecoin era, the hierarchy of money expands the 'bank deposit' line into cryptodollars. The highest level of money in the absence of a gold standard are central bank balances, which serves as the 'reference asset' in the stablecoin convention. Some cryptodollars, such as M^0 Foundation, stretch the possibilities of crypto-native mechanisms in a creative way. M^0 offers primary redemption directly from underlying treasury bills, bypassing full reserve stablecoins such as USDC or bank deposits altogether. To preserve singleness, regs need to allow issuers to redeem for higher-level money or potentially bypass deposits. Issuers need to be pragmatic with other liabilities and exchange them at par. User behavior will ultimately dictate what role in the hierarchy an instrument assumes Disclaimers: https://lnkd.in/dSNPbSbq

Catch the discussion at Permissionless III in Salt Lake City this week: "Ethereum's Issuance Policy Endgame" and the right way to approach Ethereum's monetary policy. What is it and why does it matter? https://lnkd.in/dTNGGhe8 Ethereum is a universal truth machine. One of the ways the system is kept in balance is the so-called issuance curve. So far, it has worked very well, attracting hundreds of billions of dollars because of the perception that its use guarantees a minimum level of security MVI: prioritizing efficiency and externalities At the heart of MVI is the determination that the proportion of ETH staked is too high. An alternative issuance curve under MVI could effectively reduce issuance and curtail the amount of rewards to validators Simplistically: 1. Excessive security budget creates welfare losses 2. If more ETH is staked than necessary, it is easier to capture large amounts of stake 3. Staked ETH could 'replace' ETH, which would be bad for its value prop as a cryptoasset with no trust assumptions MVS: embracing security maximalism, i.e. maybe no change is necessary _yet_ If MVI frames the optimization as "minimize issuance without compromising security", MVS would be a framing that suggests "maximize security without compromising scarcity" Simplistically: 1. Security is ETH's biggest value prop so no expense should be spared in maximizing it 2. Reducing issuance could knock out smaller or solo stakers 3. Targeting the suppression of specific applications, shouldn't be a primary objective of ETH monetary policy Follow the discussion at Permissionless or contribute your perspective online!

🎙️ DeFi remains a niche sector, yet brimming with innovations ⚡️ Louis Tellier and Sébastien Derivaux (Steakhouse Financial) discussed this trend. "We've seen tokenized securities, Societe Generale - FORGE's entry, and BlackRock's arrival. Now, financial institutions' boards are questioning: 'Why aren't we in DeFi?'" 👇

Mark Phillips | Steakhouse Financial

Announcing Sonya Kim, chef at Steakhouse Financial, as a moderator at the Stablecoin Summit 2024, our side event at #Token2049! Sonya will guide a discussion on tokenising RWAs, enhancing stablecoin resilience, and institutional engagement. 📌 Andaz Singapore 🗓️ 20 Sept Don't miss out on Asia’s pivotal stablecoin event, join us at https://lnkd.in/eiyWyTJH 

Build institutional-grade products with Steakhouse & Morpho Labs, for the next generation of steak enjoyers Steakhouse Morpho vaults are the leader in blue-chip collateral, boring strategies. Angle Labs, Fortunafi, Kiln, Reserve, Summer.fi and more choose to build vaults, strategies and even best-in-class stablecoins with Steakhouse & Morpho. Available in a variety of meaty flavors, including USDC, PYUSD, M, USDT, USDM, USDA, rUSD, EURCV and more...

Join in to hear from Chef S.A KAKAI on the blockchain landscape in Kenya!

🎉 Inviting all of you as we join hands to educate the larger tech community on “Blockchain Use cases in Kenya” at the Innovate Nairobi Tech Week. 📍 Day: 22nd August 2024 ⏰ Time: 2:00-4:00 PM EAT Registration is Free: https://lnkd.in/dhna8ZEs See you there! Lorena Mathendu, Juliana Mwangi, Moses Liech, S.A KAKAI, Roselyne Wanjiru Bitget Safariex Investa Farm Steakhouse Financial Nairobi City County