For today’s episode, I sat down with Su Zhu to learn all about perpetual swaps. There’s probably not a person in crypto who has more authority on this topic than him. The first half of the episode serves as a general introduction to perpetual swaps, while in the second half, we explore how perpetual swaps are coming to DeFi and why they are the single biggest primitive that is still missing from the DeFi puzzle.
While the episode can get pretty technical at times, we tried to follow a logical buildup, so no prior knowledge should be required. Please note that I put some links to definitions and followup reading into the show notes. Enjoy the episode.
In this episode:

 What is a perpetual swap and how does it work
 The history of perp swaps and their usage outside of cryptocurrency
 How the oracle problem is misunderstood
 AMM and central limit order book: mapping the two approaches to perpetual swaps in DeFi
 Tradeoffs between perps in CeFi and DeFi
 Perpetual swaps as money legos
 How DeFi perp swaps will enable a new form of stablecoin
 The role of insurance funds and auto liquidation


Hasu Twitter https://twitter.com/hasufl
Su Zhu Twitter https://twitter.com/zhusu
Episode transcript https://uncommoncore.co/uncommon-core-podcast-episode-8-transcript/
Definitions and further reading:

 TWAP: https://en.wikipedia.org/wiki/Time-weighted_average_price
 LIBOR: https://en.wikipedia.org/wiki/Libor
 CFD: https://en.wikipedia.org/wiki/Contract_for_difference
 Tom next swaps: https://www.investopedia.com/terms/t/tomorrownext.asp
 Rolling a futures contract https://www.investopedia.com/terms/r/rollforward.asp
 yTokens and yVaults: https://anchor.fm/uncommoncore/episodes/6-Andre-Cronje-and-the-Philosophy-of-Yearn-Finance-ei4vds
 Synthetix tokens and inverse tokens: https://docs.synthetix.io/tokens/
 Article on crypto banking https://insights.deribit.com/market-research/the-great-race-to-crypto-banking/
 Design space for auto liquidation mechanisms https://insights.deribit.com/market-research/crypto-derivatives-exchanges-liquidation-pioneers/

Perpetual Swaps 101 - with Su Zhu and Hasu

Uncommon Core 2.0 is a crypto research podcast. This show goes beyond speculation and investing, looking deeper. We explore the fundamental technology and incentives that make public blockchains work under the hood. This show is co-hosted by Hasu and Jon Charbonneau. They’ll be joined by occasional guests, speaking with some of the incredible builders and researchers who are looking to evolve this infrastructure stack to make the mass adoption of crypto possible.

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Hasu and Jon bring on Ansgar and Caspar from the Ethereum Foundation to discuss the ETH staking endgame. 
 
Ansgar and Caspar recently published two controversial research posts which included a proposal to change Ethereum’s issuance curve. They are concerned that the current ETH staking economics could lead to nearly 100% of ETH being staked, with much of that in LSTs. They propose reducing issuance and targeting a lower stake rate.
 
We go deep in this episode on PoS economics, liquid staking, restaking, economic security, centralization concerns, and much more.
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Timestamps:
(00:00) Intro
(00:25) Possible Changes to ETH Staking?  
(00:49) Overview of Current ETH Staking
(16:32) LSTs & Staking Rate Increasing        
(21:36) Nominal vs Real Yield
(23:22) Tax Implications of Staking
(27:57) Staking Demand & External Revenue
(35:33) Stake Ratio Targeting
(36:21) Is 100% Staking Bad?
(40:05) Can ETH LSTs be Money?
(55:24) Would Any Changes Make a Difference?
(01:04:05) Stake Targeting
(01:10:20) Will Targeting Centralize Validators?
(01:22:53) Fiat Money Parallels         
(01:25:16) MEV & Restaking Revenue          
(01:30:52) Electra Proposal to Change Issuance
(01:46:01) Security Budget & Economic Security      
(01:53:40) Validator Set Quality         
(01:55:10) Incentives to Maximize Validator Decentralization
(02:19:00) PoS vs PoW Political Complexity
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Twitter:
Hasu - https://twitter.com/hasufl
Jon Charbonneau - https://twitter.com/jon_charb
Uncommon Core 2.0 - https://twitter.com/UCC2_xyz
Ansgar - https://twitter.com/adietrichs
Caspar - https://twitter.com/casparschwa
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Referenced Materials:
Endgame Staking Economics: A Case for Targeting - https://ethresear.ch/t/endgame-staking-economics-a-case-for-targeting/18751
Electra: Issuance Curve Adjustment Proposal - https://ethereum-magicians.org/t/electra-issuance-curve-adjustment-proposal/18825
Properties of issuance level: consensus incentives and variability across potential reward curves - https://ethresear.ch/t/properties-of-issuance-level-consensus-incentives-and-variability-across-potential-reward-curves/18448
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Disclaimer: The material and information presented in this podcast is for general informational purposes only and should not be considered investment advice. The views, thoughts, and opinions expressed in this podcast are solely those of the speakers and are not the views of any entity or other person with whom the speaker is affiliated, including, without limitation, DBA Crypto, LLC. The “DBA Crypto” name and all forms thereof are the sole property of its owner, and its use does not imply endorsement of or opposition to any specific organization, product, or service.

Ethereum’s Staking Endgame

Hasu and Jon catchup on what’s new in the EVM (Ethereum Virtual Machine) and SVM (Solana Virtual Machine) worlds. 


For the EVM, Ethereum has pushed vertical scaling efforts to other chains. This includes Monad, who is building a new EVM L1 with fundamental optimizations to improve scalability. 


For the SVM, the Solana ecosystem continues to gain momentum across the board. Meanwhile, Eclipse is gearing up to launch their SVM Ethereum L2. 


DBA is an investor in Eclipse Laboratories, Inc. and SOL. Jon has material personal investments in SOL, JitoSOL, ETH, stETH, and TIA. Hasu has material personal investments in ETH and Monad.
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Timestamps:
(00:00) Intro
(00:25) Catch up
(00:56) VM Performance Improvements
(02:32) Solana & Eclipse
(04:26) DA vs Execution Bottlenecks
(05:53) Rollups & Parallel Execution
(07:10) Breakpoint
(08:29) Solana & Eclipse – Competitive or Complementary?
(12:48) Ethereum & Solana Funds
(13:33) DBA Research Club
(15:01) What is a VM?
(16:33) Optimistic Parallel Execution vs. Access Lists
(23:45) Solana Resource Pricing
(25:03) Local Fee Markets
(30:48) Liveness Failures
(31:58) A Bottleneck vs. *The* Bottleneck
(35:39) State Growth
(41:29) Weak Statelessness
(45:33) State Expiry & State Rent
(51:10) Solana Un-merklizes State
(51:55) Client Level Optimizations
(53:45) Optimizations for New vs. Old Chains
(57:17) Will Everyone Converge?
(01:00:36) Outro 
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Hasu - https://twitter.com/hasufl
Jon Charbonneau - https://twitter.com/jon_charb
Uncommon Core 2.0 - https://twitter.com/UCC2_xyz


Ethereum - https://twitter.com/ethereum
Solana - https://twitter.com/solana
Eclipse - https://twitter.com/EclipseFND
Monad - https://twitter.com/monad_xyz
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Disclaimer: The material and information presented in this podcast is for general informational purposes only and should not be considered investment advice. The views, thoughts, and opinions expressed in this podcast are solely those of the speakers and are not the views of any entity or other person with whom the speaker is affiliated, including, without limitation, DBA Crypto, LLC. The “DBA Crypto” name and all forms thereof are the sole property of its owner, and its use does not imply endorsement of or opposition to any specific organization, product, or service.



SVM vs EVM

Hasu and Jon bring on Mike Neuder (Ethereum Foundation) and Chris Hager (Flashbots) to discuss the design philosophy of proposer-builder separation (PBS). They first dive into the past and present implementations of PBS, including MEV-Geth and MEV-Boost on Ethereum. Then they discuss the future of PBS - whether PBS should be enshrined, protocol-enforced proposer commitments (PEPC), PBS on L2s, how to prevent censorship, and more. 
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Timestamps:
(00:00) Intro 
(01:12) What is PBS?
(05:37) The History of PBS
(08:43) MEV-Boost
(10:18) Block Production in Proof-of-Work 
(11:31) Benefits of PBS
(14:17) PBS Makes Based Rollups Viable
(16:21) PEPC & Proposer Complexity
(17:46) Other Builder Services
(19:49) PBS & Regulation
(22:48) Regulation & Encrypted Mempools
(24:38) Division of Labor is Inevitable
(26:15) Risks of PBS
(29:03) Development of COre Protocol Software
(33:31) PEPC, POB, & Alternatives to PBS
(41:53) Decentralization vs. Usefulness Tradeoff
(46:30) State of PBS in MEV-Boost
(50:51) Optimistic Relays
(52:09) Enshrined PBS (ePBS) 
(55:55) PBS on L2
(58:47) PEPC
(01:05:25) Proposer Commitments & User Intents 
(01:09:03) Concluding Remarks
(01:11:05) Recap
(01:12:06) PEPC, PEPC-Boost, & MEV-Boost+
(01:18:44) PBS From First Principles
(01:21:41) PBS is a Philosophy, Not an Implementation
(01:25:44) To Enshrine, Or Not to Enshrine?
(01:35:12) In-protocol vs. Out-of-protocol Development & Funding
(01:50:16) Censorship & Proposer Agency
(01:58:15) Outro & Disclaimer
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Hasu - https://twitter.com/hasufl
Jon Charbonneau - https://twitter.com/jon_charb
Uncommon Core 2.0 - https://twitter.com/UCC2_xyz
Mike Neuder - https://twitter.com/mikeneuder
Chris Hager - https://twitter.com/metachris
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Relays in a post-ePBS world - https://ethresear.ch/t/relays-in-a-post-epbs-world/16278
No free lunch – a new inclusion list design - https://ethresear.ch/t/no-free-lunch-a-new-inclusion-list-design/16389
Payload-timeliness committee (PTC) – an ePBS design - https://ethresear.ch/t/payload-timeliness-committee-ptc-an-epbs-design/16054
Notes on Proposer-Builder Separation (PBS) - https://barnabe.substack.com/p/pbs
PEPC FAQ - https://efdn.notion.site/PEPC-FAQ-0787ba2f77e14efba771ff2d903d67e4#41230925420345af84f31b50d806b8ed
PEPC Open Problems - https://docs.google.com/presentation/d/12kpwAXbZqUA0fu2HnZKSesVwO31ICbgIiacHd0EQ_fk/edit#slide=id.g2401d3821ec_1_0
PBS Guild Proposal [v3 WIP] - https://collective.flashbots.net/t/pbs-guild-proposal-v3-wip/2223
MEV-Boost+/++ - https://www.blog.eigenlayer.xyz/censorship-resistance-with-restaking/
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Disclaimer: The material and information presented in this podcast is for general informational purposes only and should not be considered investment advice. The views, thoughts, and opinions expressed in this podcast are solely those of the speakers and are not the views of any entity or other person with whom the speaker is affiliated, including, without limitation, DBA Crypto, LLC. The “DBA Crypto” name and all forms thereof are the sole property of its owner, and its use does not imply endorsement of or opposition to any specific organization, product, or service. 

An Incomplete Guide to PBS - with Mike Neuder and Chris Hager

In this episode, we explore Jon’s journey into crypto and our mutual passion for research and the writing process. We then give an overview over the key areas of crypto infrastructure today. Finally, we zoom into rollup decentralization roadmaps, and Jon shares a controversial new thesis about sequencer decentralization.
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Timestamps:
(00:00) Intro
(02:42) Interview start
(03:44) Jon's work week
(08:04) ChatGPT & writing
(10:57) Jon's start in crypto
(14:45) How to pick things to work on
(17:08) Outsider's perspective on crypto
(19:05) Jon's research process
(22:00) Jon's proudest moment in crypto
(23:06) Crypto Infrastructure overview
(29:58) Why crypto infrastructure is interesting
(35:57) Rollup decentralization overview
(42:44) Challenges decentralizing the sequencer
(47:46) Ethereum vs Cosmos approach to governance & decentralization
(53:35) User ability to opt out
(56:37) Staking vs. governance deciding sequencers
(01:08:31) L3s
(01:13:34) Superchain
(01:16:38) Summary of rollup decentralization
(01:21:08) Outro
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Hasu - https://twitter.com/hasufl
Jon Charbonneau - https://twitter.com/jon_charb
UCC2 - https://twitter.com/UCC2_xyz
Website - https://ucc2.xyz
__
Disclaimer: The material and information presented in this podcast is for general informational purposes only and should not be considered investment advice. The views, thoughts, and opinions expressed in this podcast are solely those of the speakers and are not the views of any entity or other person with whom the speaker is affiliated, including, without limitation, DBA Crypto, LLC. The “DBA Crypto” name and all forms thereof are the sole property of its owner, and its use does not imply endorsement of or opposition to any specific organization, product, or service.

How will Rollups Decentralize? Proof-of-Governance and more

Listen to conversations between two veterans of the crypto industry: Su Zhu, CEO and CIO of Three Arrows Capital, and Hasu, Strategy lead at Flashbots. Exploring the big ideas in crypto from first principles.
In this episode, Hasu continues the conversation with Danny Ryan and Tim Beiko, two researchers from the Ethereum Foundation. The three are joined by Stephane Gosselin, co-founder of Flashbots, who makes his podcast debut and stands in as Hasu's co-host. 
Together, they discuss:

 MEV before and after the Merge
 mev-boost and proposer-builder-separation (PBS)
 The rise of liquid staking pools
 Whether Lido should cap its own growth
  How the Ethereum Foundation sees its role in interacting with very "protocol-adjacent" projects like Flashbots + Lido

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Perpetual Swaps 101 - with Su Zhu and Hasu

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