This summer, cryptocurrency repossession protocols reached new heights. Almost without exception, these levers play on the native product of proof blockchains like Ethereum and Solana attracted unprecedented capital inflows.
On June 5, the total value locked (TVL) – a convenient but incomplete measure for judging the size of crypto protocols – had reached $21 billion.
Protos created a graph showing the distribution of this TVL – Click here to view.
However, at the time of publication, the assets of these protocols had decreased by a third, to $14 billion.
As investors return from summer vacation, college classes resume, and capital allocators reevaluate their portfolios with sophisticated professionalism, the world has decided to out of some danger at the beginning of the third quarter.
The decline in these values in USD is influenced by a general decline inETHSOL and other repossession funds. From June 5, the cryptocurrency market it lost 26% of its total market capitalization.
Repos: more leverage, dilution, complexity and risk
Repo protocols allow crypto asset holders stock assets like ETH or SOL to generate additional output. Anil Lulla of Delphi called it “re-earthingETH on more dangerous networks,” and it certainly has both features.
Re-stamping re-murderor “dual distribution,” assets across two or more protocols. A common recovery strategy includes Ethereum + Lido + EigenLayer, among many other examples. Including those additional protocols outside of the core layer – in this case, Lido and EigenLayer – includes additional risk of two networks in the same investment.
To compensate for these additional risks, repossession systems advertise returns with annual percentages in the double or even triple digits.
“Lapping,” or taking out additional loans after a reforeclosure to reforeclosure again, can turn those numbers into the four digits and beyond.
2024-09-07 02:01:19
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