Solana eclipse, another fee switch, and PTSD

Story One

Solana Eclipse

Millions gathered across the US, Mexico, and Canada to watch the Solar eclipse. Meanwhile, all the manlets transacting on Solana experienced their own eclipse in the form of dramatic transaction failure. On April 4th, 75% of all non-vote transactions on Solana failed, and the chain continues to be heavily congested. Of course, it didn’t go unnoticed on CT. 

But let’s not jump the gun and assume that the handful of vocal people on Twitter would mean there is actual user impact. According to Mert, CEO of Helius Labs, a Solana dev shop, the failed transaction chart is a bad way to measure users’ experience. Fair enough, 50% of the transactions appear to be created by bots trying to exploit arbitrage opportunities. The launch of a protocol called Ore, where users could earn one coin/minute, likely didn’t help matters. 

As they say, when it rains, it pours. ⛈️

Still, on the bright side, it is not a liveness failure as is Solana’s usual problem, but one of congestion. In a sense, it’s once again a victim of its success. 

Takeaway: If this incident highlights anything, it’s that people will spam the hell out of any low-cost blockchain when there’s something to be gained from it. At least, people’s failed transactions on Solana don’t cost them hundreds of dollars. ????

Story Two

Another Fee Switch

Didn’t think we’d talk about DAOs this year, but here we are. Maybe tired of receiving stepmotherly treatment, governance discussions of DeFi protocols have pivoted to the one thing that has a visceral pull on degens: money. 

And not just any money, money made from fees. The latest DeFi project to explore this topic is Aave, a lending and borrowing platform. 

On Aave, lenders deposit their crypto as collateral and borrow against it. It’s popular enough that Aave’s profits sit around $60 million. And who wouldn’t want a piece of that? 

Marc Zeller, leader of the Aave Chan initiative, a driving force in Aave governance, has shared his proposal to activate the fee switch, hinting at an eventual re-distribution of fees to stakers. 

Letting people vote on if they can get money? Sounds like the outcome is obvious. 

Takeaway: At this stage, I’d like to reference Rune Christensen, founder of Maker DAO, one of the oldest DAOs, who recently said that “having Rando’s making decisions” is no bueno. Unfortunately, he didn’t deliver any recommendations for recruiting non-Randos

Story Three

PTSD

Ever since humans discovered gold, alchemists have dedicated their lives to finding the philosophers’ stone that would turn any material into gold and solve all our problems. 

Of course, to anyone who has read “Can’t we just print more money,” it’s obvious this wouldn’t solve much. A must-read for people in crypto, and one cohort in particular: those chasing algorithmic stablecoins. I vividly recall finding out that my UST holdings had evaporated, just like the Negroni I spilled on the beach in surprise. 

Sure, it sounded too good to be true, but when would that ever deter people from f*cking around and finding out? 

Now, we have a new coin competing in that category: Ethena, the synthetic dollar using delta hedging (backing the coin with Ether derivatives), which at some point offered 70% yields. 

Yields have dropped, but what hasn’t is their ambition to dominate the stablecoin market. To grow, Ethena Labs is expanding its balance sheet to Bitcoin. Probably because they realized holding more than 20% of Ether Open Interest isn’t a good look (yes their size is size). 

Takeaway: First of all, the yield is just 7% now—that’s a yield for ants. Second, I’m not the only one who got some PTSD, seeing they’re adding Bitcoin. But this time, my Negroni is safe. I’m simply not checking the crypto news while on holiday.

Fact of the week: Speaking of the philosopher’s stone and turning mud into gold, in the anime Fullmetal Alchemist (sorry, spoiler ????), the stone is made of humans. This is in line with the whole series’ motto of “equivalent exchange.” Maybe there’s a lesson in that for synthetic stablecoins. After all, many cryptocurrencies are backed by people’s hopes and dreams.

Naomi for CoinJar

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