1. Should we pursue alt-L2 liquidity more aggressively?
I think the highest priority should be on L1. It seems like a new L2 launches every other week, and the number of L2’s on Ethereum seems to be quickly approaching triple digits. L2BEAT just announced today they are launching L3BEAT https://x.com/l2beat/status/1795758335448281572
If we are limited on funds due to RPL/ETH ratio falling, then I think we should mostly prioritize L1 and if we feel confident we have “enough” there then just pick a few of the most popular L2’s (Base/OP/Arbitrum), and maybe a couple value-aligned L2’s (I’m excited about Taiko).
Hopefully some of the liquidity fragmentation between chains in Ethereum ecosystem can be improved or solved down the road with things like based sequencing. I think the most popular L1 assets will be what users ultimately want to hold/bridge around to various L2’s so we should mostly focus on L1 for now and revisit the topic if funding grows.
2. Should we spend more or less on POL (protocol owned liquidity)?
I’ll be interested to further explore the LP deposits RPL value capture option since that could improve liquidity directly with protocol ETH revenue. I’m hopeful rETH TVL will be able to grow quickly after Saturn 1 changes and maybe some further ideas could be explored on this front once more protocol revenue is available. I like the idea of eventually directing some protocol ETH revenue to IMC as well instead of only relying on RPL, but I think that should be revisited later as there is already a ton of changes the DAO will have to consider with the tokenomics vote.
3. Currently ETH and stables are the most common LP pairs in DeFI. Why haven’t LSTs taken ETH place yet? Should we strive to?
ETH is the native asset and is neutral. I agree with the “Protocol Sink Thesis” put forward by Bankless: https://bankless.ghost.io/12-the-protocol-sink-thesis-639070caed39286b12323271/. I think base layer money also follows the same trends. Network effects are difficult to disrupt, and the primary network effect for establishing the base layer money will be the asset with the highest settlement assurances and least risk attached to it. That will probably always be ETH in Ethereum ecosystems, and USD in fiat systems (and I think USD dominance will only grow with stablecoins, even as other fiat currencies are tokenized - since USD has the highest settlement assurances and lowest risk in fiat systems today). I don’t think LST’s should strive to “replace” ETH in that sense. LST’s might make a good store of value (similar to t-bills in fiat systems), but for a medium of exchange I think native ETH should always have priority (similar to vanilla USD being the primary medium of exchange in fiat systems today). Especially if market forces continue to keep LST’s no higher than 33% market share each, there will always be benefits for native ETH to be the neutral “world reserve currency” of crypto.
4. How much Lindy should be enough Lindy for the IMC?
Rocket Pool should hold other protocols to a similar standard it held itself to. I don’t remember the details exactly but I think RP intentionally limited it’s TVL for some time after the full product was running live on mainnet (maybe on the time frame of 6months to a year)? Contrast that with EigenLayer locking up absurd amounts of value capitalizing on the “points” farmers, and there is still no full products (AVS’s) that are running live on mainnet producing any meaningful amounts of yield. Also important to consider how well audited the projects are, if they are open-source, etc.
5. What’s your view on LRTs? Should the IMC work with restaking protocols?
I think LRT’s will struggle to gain significant traction. Every AVS will have it’s own risk profile, and so every LRT could be managed differently and this introduces a high amount of complexity and risk (for what seems like very little additional yield). Maybe this will change and one or two AVS’s will become extremely popular and profitable, but by that point I think it still probably makes more sense to just treat it more like a “DeFi” product where you are leveraging up on risk by looping or stacking yields from different assets, or it will be something popular enough that Node Operators will opt into it separate from EigenLayer (like MEV-boost). I don’t see LRT’s ever being able to meaningfully compete with LST’s once the points farming / narrative cools off.