Bitcoin BREAKS $86K — And The Biggest Sell Wall Just Disappeared

Stani Kulechov (0:00)

Star Wars The Mandalorian and Grogu is now streaming on Disney Plus.

Scott Melker (0:05)

What are you waiting for? Hop on.

Stani Kulechov (0:08)

The must-see galactic adventure comes home on Disney Plus. This is the way.

Scott Melker (0:13)

Our only chance is to work together.

Stani Kulechov (0:17)

I'm a life-his-kin. Always wear your seatbelt.

Star Wars The Mandalorian and Grogu now streaming on Disney Plus. Rated PG-13.

Scott Melker (0:30)

Bitcoin is back above $86,000. In fact, pushing towards $87,000 on weak job data, and the biggest sell walls in the order books just disappeared. We'll talk about that very briefly, but more excited today to have a long conversation about tokenization and DeFi with Stani, the founder and CEO of Aave. This is going to be a great show. Let's go.

Good morning, everybody. Happy Friday. As you know, on Fridays, we have a huge show. We always have an amazing guest. I break down a few stories in the news, and of course, we do the weekly Reckoning, which is a review of all of the major stories of the week. Before I bring Stani on momentarily, I just want to highlight what just happened in the news. If you're wondering why markets are pumping, it's because we live in the upside down, where when you get bad news, good things happen, apparently, to your favorite assets. But the US economy added just 29,000 jobs in September, well below expectations of 89,000. The unemployment rate rose to 4.2% above the expected 4.1%, but this is the fun part. At the same time, prior months were revised sharply lower. July down 31,000 jobs, August by 29,000 jobs, et cetera. You may have listened to my rant on The Daily Wolf the other day where I told you that all of the numbers that we get from the government are fake and they're quietly revised when you're not looking. They actually revised how they calculate PCE this time to give it a softer print. Of course, that all means that the Fed is less likely to hike, which means apparently that is good for your assets. I would love to see Fed Chairman Warsh walk down the street of New York City and ask people to lose their jobs so that Bitcoin and the stocks can go up, especially what we see. Okay, so Bitcoin obviously doing particularly well on that news, but it was doing well before we had that news leading to my idea that crypto is traveling in its own beautiful uncorrelated cycle.

Now that we got that out of the way, I'm going to bring on Stani for a much more interesting conversation. Good morning, man. How are you?

Stani Kulechov (2:40)

Good morning, Scott. Really good. How are you?

Scott Melker (2:42)

I'm doing great. It's been too long since we've had a conversation. I'm glad to have you on. I think last time we were recording and not live. So first of all, let's maybe just kind of generally talk about the state of DeFi right now. It seems that things are absolutely booming. We had this sort of moment in the bear market, I think, where once again, there was unnecessary fear, uncertainty, and doubt, and people were saying that it was over, and we had all the hacks and all these things. And then since then, that was very clearly a bottom. And it seems like we're once again rising from the ashes here, and DeFi is really booming.

Stani Kulechov (3:16)

Yeah, I think DeFi, especially the more mature protocols, have been always resilient through all the market cycles and events. It seems that DeFi is the way to build resilient financial infrastructure. And now, in the past months, we've seen that also liquidity is coming back to DeFi. There is additional utilization. And there's been a lot of product developments and milestones on Aave's front as well. So it's been a really great few months.

Scott Melker (3:49)

So let's talk about those milestones. Because I think that probably a lot of people don't even understand how far DeFi has come, right? I think people probably still think of Aave as a liquidity pool where you can go borrow and lend without a third party in between, but you're doing a hell of a lot more than that at this point.

Stani Kulechov (4:07)

Exactly. So I mean, Aave started as essentially a protocol where you can supply stable coins and use assets like Bitcoin, Ethereum as a collateral to borrow against. And this frees up capital that you can use, for example, to other strategies or pay bills, for example, in real life. What's interesting is that we've been able to process over four trillion net deposits and one trillion in borrowing volume. And that's just with a few hundred lines of smart contract code. So there is no settlement teams like in traditional lenders have, or large departments of people actually doing this with agreements. Everything runs on a system inside of a blockchain, which makes it really efficient. And the efficiency shows now on the crypto lending side. For example, you can borrow at roughly 5% on Aave. And if you do the same sort of a transaction in OTC or with qualified custodian collateral, you will be paying between 7% to 12%.