Hey DeFi fam 👋 Just finished diving deep into Yield Basis (the new protocol from Curve's founder Michael Egorov), and I need to share this because it's both brilliant and terrifying at the same time. 😫 The Problem We All Know Too Well If you've ever LP'd on Uniswap or Curve, you know the pain: Impermanent Loss. Your position grows at √P instead of P. Translation? When BTC 4x's, your LP position only 2x's. You're literally selling your winners and buying your losers to maintain the pool ratio. It's a "short gamma" position that makes institutional money stay far away from volatile pairs. 💡 The Yield Basis "Solution" Here's where it gets interesting. Instead of trying to hedge IL with insurance or options, Yield Basis does something radical: They use 2x leverage to cancel out the square root drag. The math is actually beautiful: - Standard AMM gives you 0.5 delta (half-speed gains) - 2x leverage doubles your returns - 0.5 × 2 = 1.0 (full HODL exposure) Your equity literally moves 1:1 with price. No impermanent loss. Period. ✨ ⚠️ But Here's The Catch (And It's A Big One) You're not eliminating risk—you're transforming it. Standard AMM vs Yield Basis: Standard AMM: - Loss Type: Impermanent (path independent) - If price returns to start → Loss disappears ✅ - Worst scenario: Strong trending markets Yield Basis: - Loss Type: Volatility Drag (path dependent) - If price returns to start → You STILL lost money ❌ - Worst scenario: Choppy sideways markets 📉 The "Chop" Nightmare Picture this scenario: BTC at $50k → $55k → $50k → $55k (repeat 10x) 🔄 - Each move up: Protocol borrows more, buys high - Each move down: Protocol sells LP tokens, sells low In a standard AMM, you'd end up back where you started (plus fees). In Yield Basis, you're permanently bleeding principal through rebalancing costs, even though price is unchanged. 🩸 🤔 The Sustainability Question The protocol tries to solve this with a "Rebalancing Budget": - Takes ~50% of trading fees 💰 - Uses it to pay arbitrageurs who maintain leverage - Pays veYB holders in BTC (they distributed 17.55 BTC/$1.62M in Dec 2025)

December 2025 is shaping up to be a month where the intricate wiring of the global financial system will be on full display. A single decision to be made in Washington, D.C. is poised to create powerful ripple effects that will be felt from the trading floors of Wall Street to the boardrooms of Tokyo and across the volatile landscape of digital assets. This narrative will explain how the actions of the US Federal Reserve, Japan's changing economy, and the world of cryptocurrency are not separate stories, but different chapters of a single, interconnected global event about to unfold. 1. The Main Event: The Federal Reserve's High-Stakes Decision 🏛️ 1. The Headline Story: An Expected Interest Rate Cut 📉 At the heart of the month's events is the Federal Reserve's Federal Open Market Committee (FOMC) meeting on December 9-10. This is where the central bank decides on the nation's key interest rate, which influences the cost of borrowing for everything from mortgages and car loans to business investments. Market Expectations: - Rate cut probability: 87-100% - Expected cut size: 0.25% - Key driver: Growing belief in a "soft landing" (controlling inflation without recession) 💡 Key Insight: A rate cut makes borrowing cheaper, often encouraging spending and investment across the economy. 1.2. The Internal Drama: A Divided Committee ⚖️ While markets see a cut as a near certainty, the decision remains a source of intense debate inside the Federal Reserve. The committee is split into two camps with fundamentally different concerns about the economy's future. The Doves 🕊️ - Primary concern: Overly restrictive policy could damage the job market - Key voices: New York Fed President John Williams Governor Christopher Waller Governor Stephen Miran - Desired action: Cut interest rates to support the cooling labor market - Note: Miran has advocated for a larger 50 basis point cut The Hawks 🦅 - Primary concern: Cutting rates too soon could reignite inflation - Key voices: Boston Fed President Susan Collins Atlanta Fed President Raphael Bostic - Desired action: Hold rates steady to ensure inflation is fully under control

Hey DeFi University fam! Just finished analyzing the latest institutional research from Goldman Sachs, Bank of America, and Deutsche Bank. Here's what the smart money is watching heading into November... 📊 The Big Picture October delivered exactly what we expected from seasonality - but with some major warning signals flashing underneath. While Bitcoin held its ground (+14.9% YTD) despite a brutal -10.5% liquidation cascade mid-month, traditional markets are showing serious divergence patterns. Key Stats: - Systematic positioning: 82nd percentile (danger zone) - Bitcoin currently: $112-113k - ETH: $3.9-4.0k - Asia crushing it: Nikkei +17%, KOSPI +20% in October alone ⚠️ Critical Warning Signal: MAG7 Options Skew Inverted For the first time since December 2024, put-call skew in mega-cap tech has inverted. Translation: The options market is pricing calls MORE expensive than puts - historically this marks short-term tops. When everyone's positioned the same way, the market has a tendency to humble the crowd. 💔 Consumer Reality Check The narrative shift is real. Previously, weakness was dismissed as "just low-income" or "weather-related." Now we're seeing: - Middle-income consumers pulling back - 25-35 year-olds (prime spending demographic) cutting discretionary purchases - Earnings misses getting absolutely destroyed (Chipotle -17%, Cava -11%) - Kraft Heinz CEO: "worst consumer sentiment in decades" This matters for crypto because consumer weakness = potential Fed pivot = liquidity implications. 🤖 AI Capex Arms Race Continues Amazon just dropped a bombshell: $125 BILLION capex for 2025, expecting $162-184bn in 2026-2027. All hyperscalers are doubling down despite Oracle's 5-year CDS hitting 2-year highs (debt stress signal). AWS growth re-accelerated to +20% y/y - fastest in 3 years. The AI infrastructure build-out is real, but the ROI timeline remains the $10 trillion question. 🪙 Crypto Market Structure The Good: - October 11th liquidation cleaned out leverage (healthiest OI/Market Cap ratio in months) - ETH risk reversals back positive (options market betting on upside) - Institutional stablecoin adoption accelerating (Western Union launching on Solana 2026)

After the flash crash this afternoon, I know this may be extremely difficult so I want to make myself available to support anyone who feels like they may need it. This is private and will not be recorded or shared with anyone for any reason. My positions held up just fine and I'm thinking about buying more ETH and other assets right now. The hedges worked. No liquidations, just a big scary red candle and a ton of volatility. Creating a plan and sticking to it works. Here's my calendar link: https://calendly.com/hello-defiuniversity/15-minute-check-in

What I’m wondering is if there would have been a way to estimate how far a coin could drop? Using coin glass for liquidation levels, order books, etc. Would there be any way to get an idea of how far an asset can drop during a liquidation cascade like this? I know we can’t predict when it will happen, but could we have known how far something might drop? Or is that 🔮 wizard 🧙 shit right there? lol