Dynamons is honored to invite Zhu Su, the founder of Three Arrows Capital and a major driver of the previous bull market, for an interview. In the interview, besides discussing the impact of the Bitcoin halving market, the development of Layer2 technology, and the trend of repledging, Zhu Su also conducted an in-depth analysis of the decentralized algorithmic stablecoin USDe.
Summary:
USDe market cap surpasses 1.57 billion yuan, becoming the fifth-largest stablecoin! Zhu Su: Exchanges may collude against Ethena.
Background:
Zhu Su’s experience in Singapore prison: Three meals a day plus fruit, the best sleep of his life.
Table of Contents:
Change in mindset after release
Real prison life in Singapore
Comment: He didn’t mean it
Infighting among cryptocurrency players
SBF doesn’t think he’s wrong at all
Bitcoin halving altcoin market
Analysis of the repledging track for Ethereum
Focus on the development of stablecoins with regards to USDe
Strongly promoting the OX.FUN platform
During the Hong Kong Web3 Carnival, Dynamons had the honor of inviting Zhu Su, the founder of Three Arrows Capital and a major driver of the previous bull market, for an interview. Zhu Su shared his life in prison and his insights into the cryptocurrency market after his release, and gave his evaluation of SBF, the founder of FTX, and Do Kwon, the founder of Luna.
In the interview, Zhu Su discussed the impact of the Bitcoin halving market, the development of Layer2 technology, and the trend of repledging. He also conducted an in-depth analysis of the decentralized algorithmic stablecoin USDe and the transformation of the project OPNX, which he had previously assisted. Furthermore, he introduced the latest developments of the decentralized exchange OX.FUN to the readers.
After being arrested at Singapore Changi Airport in late September last year, Zhu Su appeared at the Hong Kong Web3 Carnival after four months of imprisonment. Dynamons first asked Zhu Su about his current state of mind after experiencing numerous controversies.
After Three Arrows Capital declared bankruptcy, Zhu Su became the “big villain” in the eyes of many. Media reports depicted him traveling the world and living a luxurious life after the incident, which was completely different from the image of a criminal. Although Zhu Su has publicly talked about this period of his past, the public’s focus seems to have been blurred by the legal progress of SBF and Do Kwon. He shared his mindset over the past two years with us.
When Zhu Su was arrested at Singapore Changi Airport, according to Bloomberg’s report, the reason for the arrest was that he failed to comply with court orders, cooperate with the liquidation investigation, and attempted to escape. Zhu Su shared the actual situation with us.
Zhu Su once described his experience in Singapore prison as a “pleasant experience” in a podcast recorded with Kyle, which made Dynamons very curious about the real prison experience in Singapore and what daily life was like.
In early May 2022, the algorithmic stablecoin UST issued by Terra’s infrastructure Anchor became severely detached from the US dollar, triggering a death spiral in the cryptocurrency market. A few weeks after the collapse of UST, Three Arrows Capital also collapsed as a result. As one of Luna’s largest investors, Zhu Su shared his views on this event.
In January last year, Zhu Su accused DCG of colluding with FTX to attack LUNA and stETH. We also asked him how he interpreted the whole incident. Does he think it was a joint attack by Alameda and Wall Street against Three Arrows?
After Three Arrows Capital’s bankruptcy, Zhu Su and SBF accused each other on Twitter. SBF believed that 3AC should not cater to users without any precautions, and it seems that he also had opinions about Three Arrows. Zhu Su also accused Alameda of constantly profiting from trading against FTX in the past. Now, SBF has been sentenced to 25 years in prison at the end of last month. What does Zhu Su think about this news?
In the middle of the interview, Dynamons delved into market trends with Zhu Su. We first asked Zhu Su about his views on the current Bitcoin halving market and how he sees the effect of the halving on the rise of altcoins. How should readers expect it?
In terms of the Ethereum ecosystem, Zhu Su pointed out that Layer2 solutions have become relatively common, especially with the rise of services like “Roll up as a service”. Such technologies are easy to generalize, resulting in relatively low differentiation.
He believes that the main challenge for L2 platforms lies in managing the liquidity of funds, specifically how to effectively move funds from one place to another, especially through liquidity bridges. In addition, he observed that this kind of fund movement has already started to be implemented in perpetual contracts (Perp) and decentralized exchanges (Dex) applications.
In the past, Three Arrows Capital was very optimistic about the repledging track and carried out a large number of arbitrage operations through Lido. Dynamons discussed this with Zhu Su to understand what significant differences there are in terms of risks and reward structures compared to native staking, and to learn about his views and evaluations on these changes.
After the Bitcoin halving, Zhu Su believes that the “stablecoin market” will be the next big narrative in the cryptocurrency field. Currently, it is difficult for investors to earn interest by holding USDT. If the Ethena model is adopted, the income can be transferred to the blockchain through the combination of real-world assets (RWA) and diversified investment methods, thereby increasing the returns.
Zhu Su pointed out that Ethena’s strategy involves using funds to purchase Ether and short contracts, and then returning the interest to users. Although this approach is complex, it can attract more investors to enter the stablecoin market. In addition to Ethena, other projects such as MakerDAO are also innovating in this field to expand the functionality and influence of stablecoins.
It is worth mentioning that in the past, Three Arrows Capital suffered losses due to a large amount of UST collateral. However, Zhu Su mentioned in the podcast that USDe will be used as collateral for OX.FUN, and he believes that the market has learned its lesson from Luna. However, the cycle of Ethena is still very early, and these words have profound implications…
Why does Zhu Su have a positive view of Ethena while recognizing its cyclical nature? What are the differences between UST and USDe?
Zhu Su recalled the significant fluctuations in the market in 2018, especially during the BCH fork, which led to a severe Auto Deleveraging (ADL) event, causing huge losses for Alameda and Amber.
He said that at that time, the price of BCHABC plummeted from $400 to $200 within a day. Many investors bought spot and hedged through contracts. However, suddenly, exchanges like OKX canceled all related contract trading pairs, causing traders to be unable to realize the profits even if they were profitable in short positions. Later, the price dropped further to $100.
Therefore, if Ethena repeats this scenario and happens on a more mainstream Ethereum, its impact will be more profound and may trigger a larger market turmoil. In addition, if there are technical vulnerabilities (such as the Restaking bug) and a large number of trades are concentrated on centralized exchanges, the market may quickly and significantly decline. Zhu Su’s view on how to counter exchanges is:
In the closing of the interview, Dynamons discussed the future plans of the OPNX exchange and OX.FUN with Zhu Su. He stated that the main reason for the temporary suspension of OPNX was not due to regulatory restrictions by the Dubai government, as these regulations only limited marketing activities in the Dubai market, and he was only involved in the project as an advisor.
In fact, OPNX mainly wanted to develop a debt claims business similar to FTX, but the products and markets related to FTX were no longer attractive. Zhu Su further explained that since his release this year, he has discussed with investors how to adjust strategies because he believes that the market environment has changed and requires more creative and diversified approaches to attract users. Therefore, he is currently dedicated to the OX.FUN project.
Furthermore, Dynamons asked Zhu Su why he chose to build a decentralized exchange in an era where centralized exchanges are already saturated. He stated that after the collapse of FTX, there is a lack of perpetual decentralized exchanges (Perp Dex) that can accept multiple cryptocurrencies as collateral in the market, mainly due to the risk of selling certain cryptocurrencies into dollars.
“While a day in the cryptocurrency world is equivalent to ten years in the real world,” this saying may have become clichéd, but in this interview, Dynamons not only gained insights into the ever-changing cryptocurrency market from Zhu Su but also witnessed the passion for crypto and the direction he insists on as a cryptocurrency OG. It is hoped that this interview will inspire readers to find their own place in this field full of variables!
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