Crypto Leverage and the DSR

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Right now, the DSR is tracking the traditional finance rate. But we did have a positive DSR in the past when there was an oversupply of crypto leverage. So I could see a scenario where we returned to this potentially. It's hard to say though, because Crypto collateral as the sole provider is the sole collateral is hard to scale up to these numbers. For the foreseeable future, it will probably be falling around this trade fight rate.

Sam MacPherson joins us to discuss how Spark leverages MakerDAO's wholesale credit line to build a lending marketplace built around DAI. We talk about Spark's design, the pervading influence of MakerDAO's DSR, why spot stablecoin demand reigns supreme, Spark's L2 strategy, MakerDAO's shift to AMOs and more!

And as usual, we start the episode with our analyst bullpen to discuss Gary Gensler's failure, Arbitrum's bug and social consensus, Solana's (not gonna happen) fork debate and if this is the worst bull market.

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Timestamps:

(00:00) Introduction

(01:14) Hot Seat/Cool Throne

(32:25) Interview Start: Spark

(38:23) How the DSR Enables the Lowest Rates in DeFi

(41:08) Organic Spot Demand for Stablecoins

(45:44) The DSRs Equilibrium Rate

(49:15) Undercollateralized Lending

(50:33) MakerDAO's Replacing the PSM with AMOs

(53:54) Spark’s L2 Strategy

(56:52) Fixed Rate Lending and DeFi’s Yield Curve

(1:01:12) Every Protocol Will Vertically Integrate

(1:03:12) Why Spark Forked Aave v3

(1:05:41) How the SubDAO Bidding Process Works

(1:08:40) Revenue in High vs Low Rate Environments

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Resources:

Proof-of-Steak (Gary Gensler)

https://twitter.com/GaryGensler/status/1623777842000539648?

MakerDAO

https://makerdao.com

Phoenix Labs

https://twitter.com/phoenixlabsdev

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