ipor_intern 🧙‍♂️🎆

Many people misunderstand DeFi native interest rates Last week everyone was paying attention to JPOW flip dovish. The crypto consensus is that this should spark the golden bull, printer go brrrrr etc. Rates are the government's basic lever to control economic activity, growth, and inflation. Basic stuff. So what about DeFi native rates? It's an entirely different beast, and potentially has an inverse correlation. Let's go back to DeFi summer 2020. TradFi at zero, people stuck at home, crypto pamping. This creates an environment where the credit facility in DeFi has massively expanded as the value and size of the collateral assets have increased as the market pumps. Businesses like @tether and @circle look silly. They're printing billions on chain earning near Zero treasury yield, while DeFi natives are earning 10-20% "risk free" onchain in basic money markets. DeFi rates are a proxy to risk taking. People are willing to pay 20% per annum when they expect 20% per day return on an asset. Then Luna collapsed, FTX collapsed, the entire market structure collapsed. Rates in DeFi went from double digits down to low single with the IPOR Rates down to 1%. All this happens in a macro tightening cycle with treasuries at 5.5%, and Paolo and Jeremy laughing all the way to the bank. BTW hat off to Tether for being the ultimate survivor business to creating the perfect cyclical simple business- high rates print dollars, buy bitcoin for the low rates marco. Back to the current state. We're sitting at the start of the rate hike unwind. Rates aren't going to zero anytime soon hate to break it to you, but the monetary policy is loosening again, and you can see crypto's reaction starting to form. A few weeks ago DeFi native rates like the IPOR USDC/USDT/DAI rates and IPOR stETH reached their 10 month lows, signaling the low point of risk taking and onchain activity. The entire DeFi market is in a state of exhaustion from points farming and airdrops. Yield must be fundamental and interest rates are the fundamental expression of yield. It's nice to see AAVE pumping given its fundamental model- Borrowers pay Lenders. Mind blowing stuff. Pay attention to rates. They're the second largest market in finance. They underpin the global debt system. Lack of proper rates hedging led to the downfall of Silvergate, SVB, almost broke the UK pension system, all in the last three years. Hedge your rates Do we have a reversal? Too early to tell. But if asset prices rise, crypto risk taking returns, and the DeFi money markets are the natural place for this to happen from basic overcollateralized borrowing to leveraged looping. The IPOR Protocol was built for a market just like this. IPOR Derivatives First, it's a marketplace for rates, and with high leverage (up to 1000X). This creates a place where hedgers (fixed rated), arbitragers (basis trade), and speculators converge. Did you borrow and think rates are going up? Take a pay fixed so if the debt cost rises, you can pay off the extra with the derivative payment. Fixed loan. Think rates are going down? Take a receive fixed to protect your future income from downside. Want to create a fixed leverage loop for ETH/stETH? Pay fixed on the ETH borrow, receive fixed on the stETH rate. You can also passively take part and earn by depositing into the IPOR stablecoin or ETH vaults, getting native yield, fees, net PnL, and juicy pwIPOR rewards. IPOR Fusion The first Fusion vault is hooked up to the IPOR USDC LP on Arbirum. Later, some of the best strategies in DeFi will create their own strategies and you can deposit, sit back and let them do the hard work, and get the rewards. Fusion is the basic concept that every ETH or Dollar or whatever asset deposited should always find the best yield. That means if you're a depositor you deposit, kick back, and relax and let the machine do its work. If you're an asset manager or a strategist Fusion gives you a plug and play smart contract infrastructure for building, integrating, and automating strategies. And with the architecture you have transparent onchain automation. If you're a protocol, with a single Fuse integration you can tap the capital inside the vaults and attract strategy builders to deposit, borrow, or trade. DeFi is the core of the crypto ecosystem. Things are about to get interesting again so don't miss out app.ipor.io/deposit/ethereum

Why IPOR Fusion is the market efficiency engine A little context to what's going on here An IPOR Fusion optimizer for lending USDC across multiple money markets was hooked up to the IPOR USDC vault on Arbitrum last week, marking Fusion's debut We had a pilot running inside IPOR Labs before that and it was fascinating watching the vault shift capital between @GearboxProtocol and @0xfluid xitter.gq/DarrenCamas/status/182… Once LTIPP rewards ended on Gearbox, Fusion favored Fluid, until Fluid's ARB rewards ended as well. Now the market has picked up again. The vault had been depositing at only one destination or another. xitter.gq/0xfluid/status/1831707… xitter.gq/GearboxProtocol/status… Today as rates are converging the vault made its first multi-pool balance, bringing the market rates to the exact same level. Even a tiny 700K pool has a powerful market impact for bringing efficiency So what's happening and how does it work? Fusion is extremely flexible to create sophisticated strategies on-chain. The particular live strategy optimizes for gas fees and slippage. If you're a small fund on Ethereum mainnet you're very sensitive to gas cost and the rate differential to justify the rebalance. If you're a large fund your position will move the market so slippage, or the impact of your rebalance on the markets it will be exiting or entering, is paramount. Here's what the algo at work looks like xitter.gq/ipor_io/status/1811706… But in this simple case slippage optimization with a small pool brings two different markets into balance. Imagine if Fusion is the place where assets are being managed. Fusion could be a place where all assets converge seeking the best yields amongst a plethora of DeFi markets. IPOR Fusion is literally a market effiency engine How does Fusion relate to the IPOR Derivatives protocol? Derivatives will be an integral part of structured products coordinated through fusion. In the automation of the market efficiency engine yields should converge to the mean, or the IPOR Index. IPOR Fusion is a self-fulfilling prophecy of the IPOR Index and the utility of the derivatives. Maybe DeFi really is an ouroboros 😆

We've been waiting for this day for a long time IPOR Fusion ⚛️ first vault live, and IPOR Derivative LPs are the first to get the yield boost app.ipor.io/zap/arbitrum/usd… Many more integrations and announcements to come Stay tuned ⏳

Hello @bougie0x thanks for tagging and also the concerns expressed, let me update you a bit on some progress From the start we adopted the IPOR Index with the assumption that DeFi markets are rational and efficient. They are not 😅 and that does create some issues around the Index (imperfect hedging, basis risk etc.). However, I will get back to the IPOR Index at the end. The stETH Stake Rate Swap (SRS) was launched last December and has been the most traded IPOR Derivative since launch. It was also the first derivative to cover a single market's rate, and also something different from the interest rate market (While stETH is an index rate in itself, it underwrites a single return amongst multiple holders). @LidoFinance only published the rate once a day on-chain, and to create a day tradeable market, and also offer proper accounting for a derivative the engineering team had to get creative to interpolate Lido's on-chain prints. blog.ipor.io/predicting-the-… So the stETH SRS is the first instrument underwriting a single market's rate and it won't be the last. But we've also been busy building IPOR Fusion ⚛️ which is a DeFi Asset Management protocol focused on integration, execution, intelligence, and automation. One of the low-hanging fruits is interest rate arbitrage for depositors across credit markets xitter.gq/DarrenCamas/status/182… With blue chips like @aave @compoundfinance and @MorphoLabs being challenged by protocols like @GearboxProtocol @0xfluid and @eulerfinance there is going to be a lot of arbitrage opportunities across multiple chains for low-risk stablecoin rate arb. Actually, the IPOR stablecoin pools will be the first pools hooked up to a Fusion vault. Fusion also has independent Atomists (Risk curators and asset managers) who will build various strategies with different risk profiles, many of those focused on Fixed Income. Leveraged looping is one of the main strategies requested, and with the SRS and IRS for ETH, incorporating the IPOR Derivative protocol for saavy allocators. *One note- The Aave v2 markets are in the last stage of being weighted out which was a proposal that passed IPOR DAO governance snapshot.org/#/ipordao.eth/p… and can be seen on the IPOR Index explorer on it's last leg of being weighted out over a month long period Currently at 1.48% of the IPOR USDC Index as an example, while it started the month at over 7% One thing to consider about the stablecoin arbitrage engine is that it has some self-fulfilling long-term role in the IPOR Index as it focuses on optimization of capital across multiple markets, and should bring liquidity where needed, and rates into alignment xitter.gq/ipor_io/status/1811706… Finally, after a long work of bringing fusion to market expect to see single market derivatives focused on bringing more and better hedging mechanisms for users building strategies across the long tail of markets and assets 😎

This is my quant 🤖 Testing in production Am I doing this right?

IPOR Fusion code off to audit Next step is to boost the already juicy 15% yield on IPOR USDC pools on arbitrum