Non-custodial prime broker that enables hedge funds to amplify yields by up to 3× through overcollateralized loans funded by Diffuse Prime LP
Joined June 2024
- Tweets3.1K
- Following4
- Followers517
- Likes7.8K
DeFi's $billions in yield are locked behind one broken number. Here's how we fix it. 🧵
Diffuse Protocol retweeted
Update on rsETH incident:
According to our analysis, rsETH on Ethereum mainnet is fully backed.
Out of an abundance of caution, rsETH remains frozen across Aave V3 and V4 and exposure to the incident is capped.
WETH reserves also remain frozen across affected markets including Ethereum, Arbitrum, Base, Mantle, and Linea.
Aave is actively validating information and assessing potential resolutions.
Diffuse is looking for
a general partner to build essential institutional infrastructure today.
DM us. Let's talk. prime.diffuse.fi | #DeFi #Institutions
Why This Matters
The Kelp situation wasn't a black swan - it's a signal about infrastructure maturity.
Hedge funds and institutions need lending protocols built on cryptographic transparency, not trust in data aggregators.
The market is ready. The technology exists.
Risk Isolation Model
We structure each deal in isolated vaults - no contagion.
Off-chain monitoring feeds.
Real-time health factor updates.
Liquidations require a valid zk-proof and curator confirmation.
Verification at every step.
Concrete Example: rsETH Risk Framework
For a position like rsETH, our verification tracks:
- Mint backing ratios and asset composition
- rsETH/ETH prices across multiple DEX sources
- Liquidity pool sizes and concentration metrics
- Critical mint contract parameters
- Cross-chain messaging layer health
All verified. All on-chain!
How We're Approaching It
At @DiffuseFi Prime, we build risk assessment into the protocol layer.
Before any loan, curators verify deep protocol metrics on-chain using ZK/TEE infrastructure.
We use EVM storage proofs for DEX prices + zkTLS for yield protocol data - all verifiable before capital deployment.
What Institutional Lending Requires
Large leveraged positions need visibility into:
- Asset composition & mint logic
- Pricing data across multiple venues
- Liquidity depth and concentrations
- Smart contract critical parameters
- Cross-chain integrity
This is table stakes for $280M+ positions.
The Core Challenge
Here's what we're seeing:
1 price feed + 1 bridge configuration = incomplete risk picture.
Nobody was intentionally negligent, but the infrastructure wasn't designed to verify protocol health on-chain before making major capital commitments.
Problem 2 - Bridge Infrastructure Simplicity
@LayerZero_Core 's messaging layer, which secured cross-chain rsETH movement, used a streamlined validator setup, one DVN.
For bridging $280M in assets, this creates concentration risk that's difficult to monitor.
Bridge security matters as much as asset security.
Problem 1 - Chainlink Single Price Feed
rsETH was used as collateral on @aave , tracked by a @chainlink price oracle reporting rsETH/USD.
For $280M in leverage, a single price feed is incomplete.
It can't answer:
- How rsETH is backing?
- How liquid is rsETH?
- Mint contract risk?
The Kelp DAO situation highlights a critical design challenge in institutional DeFi:
complex cross-protocol assets back $280M in loans, how much data visibility is enough?
It's a question all of us building in this space need to answer.
We've got 30k in prizes during @Cointelegraph pitch session!
Today at the @Cointelegraph event, a pitching activity took place.
One of the participants was @DiffuseFi, which we invested in. They won several $ prizes, and I'm glad to see their success.
🥂 Congrats to the team and special thanks to Cointelegraph.
Final/ Why this fits Diffuse Prime framework:
Multiple underlying yield sources
- Single interface (PT)
- Fixed yield via discount
- Structured redemption agreements
- Continuous monitoring of peg + liquidity
9/ Why Pendle PT?
Because PT-$sYUSD trades below par.
At maturity:
PT-sYUSD → 1 $sYUSD
Discount convergence equals fixed yield.
Time does the work.