UNI (UNI)

According to Wu, based on data from @marcov_91, since last December, Uniswap has burned close to 6 million UNI across multiple chains, valued at approximately $21 million; this translates to an annualized cost of $46 million in burn value. Notably, Ethereum, Base, and BNB Chain are currently the top chains for daily UNI burns. https://t.co/aqezFSVgUv https://t.co/UUrpTILWqy

I agree with this take but here are my few cents:

In the last 6 years, protocols like Uniswap, Hyperliquid, Stablecpin issuers were not among the top revenue hitters.

Then, revenue was heavier around L1s and it seems like it will remain as such forever.

6 years down the line, a lot has changed and this won't stop.

so, here are a few narratives I'm looking at for the future:

- privacy chains and protocols as more people move to harness confidentiality, more txns accrue to these chains and protocols as value.

- Neobanks if they totally bridge the gap for the unbanked (not CT)

- Next shiny thing humanity is hitting limitations on but don't know how to solve.

But then, the only real moat to look out for is for protocols that volume moves through.

This Vitalik's 2016 Reddit post gave core idea for Uniswap:

'Let's run on-chain decentralized exchanges the way we run prediction markets'.

Hayden then built it and DEXs became core infra of DeFi where price discovery happens, LPs farm, and ppl can trade without KYC.

What if the new idea by Vitalik becomes a new Uniswap? Or in this case Aave?

He proposes DeFi without liquidations, built on options instead of debt.

How it works in practice:

Today on Aave you deposit 1 ETH at $1.5k and borrow $1k USDC.

If ETH dumps too much (likely lol), a bot sells your ETH with a penalty.

The whole system depends on real-time oracles being correct every second. Late liquidations incur bad debt.

In Vitalik's design your 1 ETH splits into two tokens: a 'stable dollars' token and an 'ETH upside' token.

- Borrowing: sell the stable token for cash, keep the upside token.

If ETH dumps you just lose the upside. No liquidation bot and no penalty

- Stablecoin: hold the stable token.

Worst case it slowly turns back into ETH rather than depegging overnight

- Leverage: buy the upside token. Max loss is what you paid and you can't get liquidated

It works like buying a call option: you pay once upfront, that payment is the most you can ever lose, and a temporary price wick can't liquidate you since only the price at expiry counts.

The two tokens always add up to 1 ETH, so the protocol can't end up with bad debt.

And the price oracle is only checked once at expiry so slow prediction-market style oracles are enough, no real time price feeds.

Since positions expire you have to roll them. But this creates new DeFi products like Pendle-ish vaults that automate the rolling for a fee.

This design removes cascading liquidations from DeFi lending.

Gotta keep an eye on it.