Crypto is great because it’s decentralized. Here’s the catch-22: To grow, you need TradFi liquidity. But opening the door to TradFi sacrifices decentralization. What to do? Whether it's Ethena, Pendle or Uniswap, crypto businesses are hungry to expand their target addressable markets beyond the small world of DeFi.

Backtesting a stETH looping token:

Index Coop’s latest wstETH15x token product aims to leverage ETH staking yields. By looping Lido’s wstETH up to 15x, this capital-efficient strategy has historically amplified returns from base staking yields (~3%) to as high as 40% APY, according to backtests.

The chart above compares rolling 30-day and 90-day APYs. Although the tests show wide variance in the yield on short timeframes, the longer-term average remains elevated near 27%. This kind of performance demonstrates the power of automated leverage loops when done right.

Deployed on Base, wstETH15x is already available ahead of its official launch via Index Earn. It’s being positioned as an upgrade for Index’s Interest Compounding ETH (icETH).

The project has seen a fair bit of attrition in its prior offerings, e.g., in regards to its decision to retire the once-popular DeFi Pulse Index (DPI) token.

— Macauley Peterson

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Permissionless IV is calling founders, devs, and innovators to take the stage and push the space forward. No fluff — just the people writing the next chapter of crypto.

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The classic crypto dilemma

“What if the internet had a decentralized payments system from day one?”

This is one of the crypto industry’s favorite thought experiments.

It may surprise you to know it was almost a reality.

Legendary cryptographer and computer scientist David Chaum founded the company DigiCash in 1990, which produced the digital payment system “ecash.”

Ecash was revolutionary in its time. The payments system relied on “blind signatures,” a kind of cryptography that allowed anonymous payments between users (though it would’ve been on traditional banking rails).

There are various reasons ecash failed to take off, but legend has it primarily due to Chaum’s reluctance to sacrifice on principles of decentralization and privacy. 

Based on the history recounted in the seminal book Cryptoassets, Chaum turned down $50-100 million deals from not one, but three, major institutions — Microsoft, Netscape and Visa — to integrate ecash into the early internet.

DigiCash eventually declared bankruptcy in 1998 and Web2’s walled gardens went up, presaging crypto’s perennial tension between its libertarian principles and growth.

As a growth industry, we want to build for the mainstream to attract more users. But that brings concessions or tradeoffs that can be tough to justify.

Take, for example, Ethena’s announcement of its “Converge” chain” with Securitize last week.

Not only is Converge a whole new L1 chain in itself (and not an Ethereum L2), but DeFi applications building on Converge will be “vetted by Ethena and Securitize via a whitelist,” Ethena’s official blog reads. Its validators will be a permissioned set “composed of traditional finance entities and centralized exchanges” staking ENA.

Decentralization maximalists will find a lot to pound the table about. Bankless’ David Hoffman called out Converge for being another permissioned chain and what he perceives as a regression from traditional banking.

Most of the $19 billion onchain tokenized real-world assets today are walled off from the rest of DeFi for compliance reasons, and not composable with the innovation machine that is DeFi.

Converge needs its own settlement layer so that it can fence itself off for its TradFi clients to integrate with permissioned DeFi liquidity. That’s difficult on Ethereum today.

So herein lies the dilemma — the same one Chaum faced:

• Do we want to grow the pie of onchain wealth quickly by making it accessible to TradFi? or

• Do we want to pursue the far arduous task of courting marginal organic growth to permissionless DeFi? (Spoiler alert, the latter option is running its limits.)

The dilemma points to the harsh reality Vitalik once pointed out: DeFi is a circular ouroboros of capital chasing yields and airdrops.

Ethena founder Guy Young basically conceded the point when he said Ethena “no longer has any interest in shuffling around the same chips between each other. We need to think bigger.”

If the goal was reaching the mainstream masses, onboarding TradFi at the incremental expense of crypto’s libertarian ethos is inevitable.

And Ethena, of course, is not the only crypto business making that tradeoff. Pendle, too, announced its desire last month to roll out a KYC’d yield-trading product for regulated entities.

Coinbase also announced last week “Verified Pools” as a way for KYC’d institutions to trade on segregated Uniswap liquidity pools, made possible by its v4 “hooks.”

Trading off decentralization sucks, but one can also appreciate the ambition for growth.

The silver lining is that some of these centralized initiatives may spur positive externalities that would eventually spill over into DeFi innovation.

Markets work in unpredictable ways. I like decentralization. But I also don’t want DeFi to go the way of David Chaum’s ecash.

— Donovan Choy

Mantra’s GenDrop delay sparks trust crisis

Mantra’s GenDrop has become a textbook case for how not to handle a community distribution. Originally approved via Proposal 4 last December, the airdrop of the first 10% allocated was set for March 18, 2025. That date came and went with no launch and a confusing announcement offering little clarity — prompting backlash from early supporters who felt ignored.

The team justified the delay through Proposal 11, which authorized a stealth release at an unspecified future date to “prevent short-sellers from negatively impacting the market.” But the logic doesn’t hold: Shorting absorbs sell pressure and facilitates price discovery. Meanwhile, secrecy around timing creates information asymmetry and invites insider abuse.

Mantra Discord’s #general channel discussion is now all airdrop all the time, despite the addition of a six minute “SlowMode” chat delay. Community members have rightly called out the erosion of trust. Some cite the team’s failure to deliver on their  promise as a further disappointment following the move to a longer vesting schedule — now stretching to 2027 — which was regarded as a bait-and-switch.

The broader concern is that governance-approved timelines were quietly discarded in favor of discretionary decision-making.

Mantra’s OM token initially sold off about -13% last week, but has since recovered most of that. And to the extent that future GenDrop recipients are trying to hedge their exposure using perpetual futures, they’re paying through the nose for it — funding rates for shorts are running in the 50-100% APY range over the past week and have spiked even higher at times.

— Macauley Peterson