Buffalo Bill

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US Treasury Secretary Scott Bessent deserves a new nickname. I previously christened him as the BBC, short for Big Bessent Cock. Yes, his demolition ding-dong is destroying the status quo across the global financial ecosystem, but this moniker doesn’t do him justice. I believe he needs a more apt name to describe the pain he will inflict on two very important constituents in the fugazi financial system: the Eurodollar banking system and foreign central banks.

Similar to the serial killer in the movie Silence of the Lambs, a fucking classic worthy of a “Netflix and Chill” night for any uninitiated youngin, Scott “Buffalo Bill” Bessent is about to exterminate the Eurodollar banking system and take control of foreign non-dollar deposits. Where slaves and highly trained legions upheld Pax Romana, slaves and the hegemony of the US dollar uphold Pax Americana. The slavery aspect of Pax Americana isn’t just about historically shipping over Africans to pick cotton; the modern whip is the “monthly payment” multiple generations of youngsters willingly shouldering life-crushing levels of debt to acquire worthless credentials in the hopes they too can work at Goldman Sachs, Sullivan & Cromwell, or McKinsey. This is a way more widespread, insidious, and ultimately effective means of control. Unfortunately, now that America’s gots dat AI, these debt donkeys are about to be unemployed … put that blue collar on, playa.

I digress.

Pax Americana’s control over the global reserve currency, the US dollar, is what I will discuss in this essay. Various US Treasury Secretaries have wielded this dollar cudgel with varying degrees of success. The most notable failure was allowing the Eurodollar system to emerge.

The Eurodollar system emerged in the 1950s and 1960s to avoid US capital controls (e.g., Regulation Q), sidestep economic sanctions (the USSR needed a place to store its dollars), and bank non-US trade flows as the global economy recovered after WW2. The monetary authorities at the time could have recognized the need to supply foreigners with dollars and allowed domestic US money center banks to own this business, but domestic political and economic concerns required a hardline stance. As a result, the Eurodollar system grew to an unknown size over the ensuing decades and became a force with which to be reckoned. An estimated $10 to $13 trillion Eurodollars are sloshing around in various non-US bank branches. The ebb and flow of this capital caused various financial crises in the post-WW2 era, which always required money printing. “The Offshore Dollar and US Policy” was a paper written in August 2024 by the Atlanta Fed that discussed this phenomenon.

For Buffalo Bill Bessent, the problem with the Eurodollar system is twofold. The first issue is that he is clueless about how many Eurodollars exist and what they finance. The second issue, which is the most important, is that these Eurodollar deposits are not being used to buy his dogshit treasury debt securities. Is there a way for Bessent to solve these two problems? Hold this thought for a second while I touch quickly on foreign currency holdings of non-US retail depositors.

De-dollarization is real. It started in earnest in 2008, when the US monetary masters of the universe decided instead of allowing banks and financial institutions to fail because of their bad bets, to bail them out by embarking on QE Infinity.^[1] A useful proxy to understand the reaction of global central banks that hold trillions of dollars' worth of USD-denominated assets is the percentage of gold in their reserves. The higher the percentage of gold in one's reserves, the less one trusts the US government.

As you can see, post-2008 the percentage of gold in central bank reserves bottomed and began a secular ascent.

This is the TLT US ETF, which tracks US Treasury bonds with a 20-year or longer maturity divided by the price of gold. I have indexed it at 100 starting in 2009. Treasuries have lost almost 80% of their value versus gold since 2009. The monetary policy of the US government was to bail out its banking system and fuck over both foreign and domestic debt holders. No wonder foreign central banks began aping Scrooge McDuck. US President Trump intends to follow a similar strategy, but besides fucking over bondholders, he believes he can tax foreign capital and trade flows to Make America Great Again using tariffs.

Bessent can’t really do much to convince central bank reserve managers to buy more treasuries. However, there is a large under-banked, from a dollar perspective, cohort that exists in the Global South who would love nothing more than to have a positively yielding dollar currency account. As you know, all fiat is trash when compared to Bitcoin and gold. That being said, if you are within the fiat system, the best fiat is the dollar. Domestic regulators that rule most of the world’s population force their plebes to own shitty currencies beset with high inflation and limit access to the dollar financial system. These plebes would buy treasury bills at whatever yield Bessent offers, if only to escape their shitty government bond markets. Is there a way Bessent can bank these folks?

I first travelled to Argentina in 2018 and have been back regularly since. This is a chart of ARSUSD indexed at 100 starting in September 2018. The Argentinian peso lost 97% of its value in dollars in seven years. Currently, when I travel there mostly to ski, I pay all service staff in USDT.

Buffalo Bill Bessent found a new tool that will solve his problems. It is called a stablecoin. Dollar-pegged stablecoins are now promoted by the US Treasury. The empire will support select issuers as they hoover up Eurodollar and Global South retail deposits. To understand why, I will quickly step through the structure of an “acceptable” dollar-pegged stablecoin. Then, I will touch on the implications for the TradFi banking system. Finally, and this is what y’all degens are here for, I will lay out why Pax Americana supported dollar-pegged stablecoin global adoption will power a secular rise in the use of DeFi applications, specifically Ethena, Ether.fi, and Hyperliquid.

As you know, Maelstrom doesn’t fuck for free. We have bags and bags and more fucking bags.

If you haven’t gotten your fill of stablecoins, I will tease a new stablecoin infrastructure project - Codex - that we are advising, which I believe will be the best performing token; from its soon to launch TGE until the end of this cycle.

What is an Acceptable Stablecoin?

A dollar-pegged stablecoin is analogous to a narrow bank. The stablecoin issuer accepts dollars and invests those dollars in a risk-free debt instrument. The only risk-free debt instruments in nominal dollar terms are treasury debt securities. Specifically, because the issuer must be able to provide physical dollars on demand if a holder redeems, stablecoin issuers will only invest in treasury bills (T-bills). A T-bill has a maturity of less than one year. Because it has little to no duration risk, it trades as if it were cash.

Let’s walk through the flow.

Creation of a unit of stablecoin, I will use the example of Tether USD (symbol: USDT):

1. The authorized participant (AP) wires dollars into the Tether’s bank account.

2. Tether creates 1 unit of USDT for every dollar deposited.

3. To earn a yield on its dollars, Tether buys T-bills.

If an AP wires $1,000,000, they receive 1,000,000 USDT.

Tether buys $1,000,000 worth of T-bills.

USDT pays no interest.

But

The T-bills pay essentially the Fed Funds rate, which currently is 4.25% to 4.50%.

Tether has a net interest margin (NIM) of 4.25% to 4.50%.

In order to accumulate deposits, Tether or an affiliated financial institution like a crypto exchange will pay out a portion of the NIM if a depositor stakes their USDT. Staking just means you lock your USDT up for a period of time.

Redemption of a unit of stablecoin:

1. The AP sends USDT to Tether’s crypto wallet.

2. Tether sells T-bills in the USDT dollar amount.

3. Tether sends one dollar for every one USDT to the AP’s bank account.

4. Tether burns USDT, removing it from circulation.

The business model of Tether is very simple. Receive dollars, issue a digital token that rides on a public blockchain, invest the dollars in T-bills, and earn the NIM. Bessent will ensure that issuers the empire will tacitly support by law can only hold dollars in a chartered US bank and or treasury debt securities. No funky stuff.

Eurodollar Implications

Before the emergence of stablecoins, the US Federal Reserve and the US Treasury Department always bailed out Eurodollar banking institutions when they got into trouble. A well-functioning Eurodollar market was essential to the health of the empire. But now, there is a new tool that allows Bessent to soak up those flows. At the macro level, Bessent must provide a reason for Eurodollar deposits to shift on-chain.

For example, during the 2008 Global Financial Crisis, the Fed secretly lent billions of dollars to foreign banks who were short dollars because of the knock-on effects of the collapse of subprime mortgages and their associated derivatives.^[2] As a result, Eurodollar depositors believe that the US government implicitly guarantees their money even though technically they are outside of the US-regulated financial system. Declaring that non-US bank branches will not receive any help from the Fed or Treasury should another financial crisis occur will redirect Eurodollar deposits into the loving hands of stablecoin issuers. If you think this is far-fetched, a strategist at Deutsche Bank wrote a piece openly questioning whether the US would weaponize dollar swap lines to force the Europeans to do what the Trump administration requires of them. You better believe Trump would love nothing more than to castrate the Eurodollar market by effectively debanking it. These same institutions debanked his family after his first term; it’s time for payback. Karma is a bitch.

Without the guarantee, Eurodollar depositors would act in their own best interest by moving funds into dollar-pegged stablecoins like USDT. Tether holds all of its assets as US bank deposits and or T-bills. By law, the US government guarantees all deposits held at the eight Too Big to Fail (TBTF) banks; ‌post the 2023 Regional Banking Crisis, the Fed and Treasury effectively guaranteed all deposits at any US bank or branch. The default risk of T-bills is nil as well because the US government will never voluntarily go bankrupt because it can always print dollars to repay T-bill holders. Therefore, stablecoin deposits are risk-free in nominal dollar terms, but now Eurodollar deposits are not.

Quickly, dollar-pegged stablecoin issuers will face an influx of $10 to $13 trillion, and subsequently purchase T-bills. The stablecoin issuer becomes a price-insensitive buyer of Buffalo Bill Bessent’s dogshit paper in FUCKING SIZE!

Even if Fed chairperson beta cuck towel bitch boy Powell continues to obstruct Trump’s monetary agenda by refusing to cut Fed Funds, end quantitative tightening, and restart quantitative easing, Bessent could offer T-bills at a lower rate than Fed Funds. He could do this because the stablecoin issuer must buy whatever he is selling at the yield offered if they are to earn a profit. In a few moves, Bessent gains control of the front end of the yield curve. There is no point in the Fed’s continued existence. Maybe a statue of Bessent in the style of “Perseus with the Head of Medusa” by Cellini will tower over some square in Washington D.C. entitled “Bessent with the Head of The Creature From Jekyll Island”.

Global South Implications

The US social media companies will be the Trojan horse that destroys the ability of foreign central banks to control the money supply of their plebes. In the Global South, the penetration of Western social media platforms (Facebook, Instagram, WhatsApp, and X) is total.

I have spent half of my life in the Asia-Pacific region. Converting depositors' local currency into dollars or dollar equivalents (e.g. HKD) so that capital can access dollar yields and US equities makes up a large part of investment banking activity in the region.

The local monetary authorities play whack-a-mole against TradFi institutions to shut down schemes which allow capital to leave. The government needs the capital of the plebes and to some extent the non-politically connected wealthy sequestered so they can inflation tax them, prop up poor performing national champions, and provide low-interest loans to heavy industry. Even if Bessent wanted to use the large US money center banks as the tip of the spear to bank these desperate folks, local regulators forbade it. But there is another, more potent way to access this capital.

Apart from mainland China. Everyone uses Western social media companies. What if WhatsApp rolled out a crypto wallet to every user? Within the app, users can seamlessly send and receive an approved stablecoin like USDT. With this WhatsApp stablecoin wallet, what if users could also send money to any other wallet on a variety of public blockchains?

Let’s walk through a fictional example to illustrate how WhatsApp could provide a digital dollar bank account to billions of members of the Global South.

Fernando is a Filipino who operates a click farm in the rural Philippines. Basically, he will create fake followers and impressions for social media influencers. Because all of his clients are outside of the Philippines, he finds it difficult and expensive to receive payment. WhatsApp becomes his primary payment method as it provides a wallet with which to send and receive USDT. His clients, who also have WhatsApp, are more than happy to stop using shitty banks. Both sides are delighted with this arrangement, but it dis-intermediates the local Filipino banking system.

After a while, the Philippine Central Bank takes notice that a large and growing portion of banking flows has disappeared. They realize WhatsApp has spread dollar-pegged stablecoins throughout their economy. The central bank has effectively lost control of the money supply. However, there is not much they can do about it. The most effective way to prevent Filipinos from using WhatsApp is to shut off the internet. Short of that, even pressuring the local Facebook executives, if there are any, won’t do anything. Mark Zuckerberg reigns from a Hawaiian bunker. And he has gotten the blessing of the Trump administration to roll out stablecoin functionality globally to Meta users. Any sort of internet laws that disadvantage US tech players will cause the levying of high tariffs by the Trump administration. Trump already threatened the EU with higher tariffs unless they backed down on their “discriminatory” internet legislation.

Even if the Filipino government could remove WhatsApp from the Android and iOS app stores, it's trivial for motivated users to circumvent the blocks by using a VPN. Of course, any sort of friction inhibits usage of an internet platform, but social media is basically an addictive drug for the masses. After experiencing constant dopamine hits for over a decade, the plebes will find any workaround to continue destroying their brains.

Finally, Bessent could wield his sanctions weapon. The Asian elite all squirrel their money away in USD offshore banking centers. They obviously don’t want their wealth inflated away through their monetary policies. Do as I say, not as I do. Let’s say that Filipino President Bongbong Marcos threatens Meta. Bessent could hit right back and sanction him and his cronies, thus freezing their billions of dollars of offshore wealth unless they bend the knee and allow stablecoins to proliferate inside their country. His mother, Imelda, knows all too well how long the arm of the US law is as she beat RICO charges stemming from allegations that she and her late husband, the former dictator Ferdinand Marcos, of embezzling Philippine government money to purchase New York City real estate. I don’t think Bongbong is itching for round two.^[3]

If my thesis is correct and stablecoins are part and parcel of Pax Americana’s monetary policy to expand the use of the dollar, the empire will protect US tech giants from local regulator reprisals as they provide dollar banking services to the plebes. And there is nothing any of these governments can do about it.

Assuming I got this right, what is the TAM of potential stablecoin deposits from the Global South? The most advanced bloc of countries in the Global South are the BRICS nations.^[4] Let’s exclude China because it banned Western social media companies. The question is what’s the best estimate of local currency bank deposits. I asked Perplexity, and it spat out $4 trillion. I know this might be controversial, but let’s add the Euro-poor-eans to this group that use the euro. I believe the euro is a dead garcon walking as Germany-first then France-first economic policies will splinter the currency union. With the coming capital controls, by the end of the decade the only thing a euro will be useful for is paying the cover charge at Berghain and the table minimum at Shellona. When we add Euro bank deposits of $16.74 trillion, the total comes close to ~$34 trillion up for grabs.

Go Big or Go Home

Buffalo Bill Bessent has a choice: go big, or go Democrat. Does he want Team Red to triumph in the 2026 midterm and, most importantly, the 2028 presidential elections? I believe he does, and if that is the case, the only path to victory is to finance Trump’s ability to provide more free shit to the plebes than the Mamdanis and AOCs of the world.^[5] Therefore, Bessent needs to find a price-insensitive buyer of treasury debt. Obviously, he believes stablecoins are part of the solution given public statements of support for this technology. But he needs to go all the way.

If the Eurodollars and deposits of the Global South and Euro-poor-eans don’t flow into stablecoins, he must Bismark them with his star-studded member. It puts the dollars on its skin, or it gets the sanctions again.

$10 to $13 trillion of T-bill buying power comes from the dismantling of the Eurodollar system.

$21 trillion of T-bill buying power comes from retail deposits of the Global South and Euro-poor-eans.

Total = $34 trillion

Obviously, not all of this capital will find its way into the hands of dollar-pegged stablecoins, but at least we have a large potential TAM.

The real question is how ‌the addition of up to $34 trillion in stablecoin deposits powers DeFi usage to new heights? And if there is a credible argument to be made that DeFi usage will increase, which shitcoins will Pump Up The Jam?

The Stablecoin to DeFi Flow

The first concept readers must understand is staking. Let’s imagine that some portion of that $34 trillion now exists as stablecoins. For simplicity's sake, let’s assume Tether’s USDT received all the inflows. Because of the intense competition from other issuers like Circle and large TBTF banks, Tether has to pass on some of its NIM to holders. It does this by partnering with a few exchanges whereby USDT staked with an affiliated exchange’s wallet accrues some interest in the form of newly minted USDT units.

Let’s walk through a simple example.

Fernando from the Philippines has 1,000 USDT. PDAX, a crypto exchange based in the Philippines, offers a 2% yield on staked USDT. PDAX creates a staking smart contract on Ethereum. Fernando stakes his 1,000 USDT by sending it to the smart contract address, and then a few things happen:

1. His 1,000 USDT becomes 1,000 psUSDT (PDAX Staked USDT; a liability of PDAX). Initially, 1 USDT = 1 psUSDT but every day psUSDT becomes more valuable than USDT by the amount of interest accrued. E.g. using a 2% annual rate and ACT/365 simple interest accounting, psUSDT gains ~0.00005 each day. After one year, 1 psUSDT = 1.02 USDT.

2. Fernando receives 1,000 psUSDT into his exchange wallet.

Something powerful just happened. Fernando locked his USDT up with PDAX and received an interest-bearing asset in return. psUSDT is now acceptable collateral within the DeFi ecosystem. That means he can trade it for another crypto; he can borrow against it; he can use it as leverage to trade derivatives on a DEX, etc.

What happens when Fernando wants to redeem his psUSDT for USDT after one year?

1. Fernando goes to the PDAX platform and unstakes 1,000 psUSDT by sending it to his exchange wallet and or connecting a third-party DeFi wallet like Metamask to the PDAX dApp.

2. The psUSDT is burnt, and he receives 1,020 USDT.

Where does the interest come from to pay Fernando an extra 20 USDT? That comes from Tether in partnership with PDAX. Tether has a positive NIM, which is just interest income earned from its T-bill portfolio. Tether then creates additional USDT with those dollars and sends a portion to PDAX to satisfy its contractual obligation.

Both USDT (base money) and psUSDT (interest-bearing money) become acceptable collateral throughout the DeFi ecosystem. Therefore, some percentage of total stablecoin flow will interact with DeFi dApps. Total Value Locked (TVL) measures this interaction. Whenever a user interacts with a DeFi dApp, they must lock up their capital for some period, which is represented by TVL. TVL is at the top of the funnel for trading volume or other revenue-generating actions. Therefore, TVL is a leading indicator of future cash flows of a DeFi dApp.

Before we look at how TVL affects the future earnings of a few projects, I want to explain the major assumptions used in the upcoming financial models.

Model Assumptions

I will shortly present three simple yet powerful financial models which estimate a target price by the end of 2028 for Ethena (Token: $ENA), Ether.fi (Token: $ETHFI), and Hyperliquid (Token: $HYPE). I will forecast until the end of 2028 because that is when Trump leaves office. My base case is that it’s slightly more likely for a Team Blue Democrat to win the presidency than a Team Red Republican. That is because there is no way Trump can successfully right the wrongs for his base in under four years that result from a culmination of a half a century of monetary, economic, and foreign policy. The rat poison on the cake is that no politician ever keeps all their campaign promises. Therefore, voter turnout from Team Red Republicans will wane.

The Team Red rank and file will be apathetic to whoever is the Trumpian successor running for president and will not show up in large enough numbers to outvote childless cat ladies suffering from Trump Derangement Syndrome (TDS). TDS will afflict any member of Team Blue Democrat that ascends the throne, which results in them engaging in monetary policies that cut off their nose to spite their face if only to prove they differ from Trump. But in the end, no politician can resist printing money, and dollar-pegged stablecoins are one of the best price-insensitive buyers for short-term treasury debt. Therefore, they might not initially support stablecoins wholeheartedly, but the new Emperor will discover they are quite naked without said capital and ultimately continue the policies I spoke about previously. This policy wobble will burst the crypto bubble and lead to a bear market of epic proportions.

Finally, the numbers bandied about in my models are massive. This is a once in a century change of the global monetary architecture. Most of us, unless we inject stem cells intravenously for the rest of our lives … maybe, will never witness such an event again in our investing careers. The upside potential I forecast will be bigger than SBF’s amphetamine habit. You will never again see such a bull market in the pillars of DeFi that profit from the proliferation of dollar-pegged stablecoins.

Because I like to forecast with base-ten numbers that end in a zero, I estimate that by 2028 the total amount of dollar-pegged stablecoins in circulation will be at least $10 trillion. This number is large because the deficits Bessent must finance are massive and growing exponentially. The more Bessent finances the government using T-bills, the faster the debt pile grows because he must roll over debt yearly.

The next critical assumption is what level of the Fed Funds rate Bessent and the new post-May 2026 Fed chairperson choose. Bessent has gone on record saying the Fed Funds rate is 1.50% too high, and Trump routinely demands a 2.00% cut. Given that on the upside and downside you always overshoot, I think Fed Funds will quickly land around 2.00%. There is no real rigor around this number in the same way none of the establishment economists have a clue either. We are all making shit up on the fly, so my number is as good as theirs. And the political and economic realities of a dead-broke empire require cheaper money that a 2% Fed Funds rate provides.

Finally, where do I think 10-year yields will land? Bessent’s goal is to create 3% real growth. Adding that to Fed Funds at 2%, which in theory represents long-run inflation or thereabouts, gets us to a 10-yr yield of 5%. I will use this to calculate the present value of terminal earnings.

Using these assumptions, we arrive at a terminal value of cumulative cash flows. Because these cash flows are available to token holders as buybacks, we can use this as the fundamental value of a particular project. This is how I value and forecast FDV.^[6] Then I compare my model’s future output to the current value, and presto, the upside potential becomes clear.

All model inputs are in BLUE, and all outputs in BLACK.

Spend It

The most important behavior that new stablecoin users engage in is spending on goods and services. By now, everyone is used to tapping their phone or debit / credit card on some sort of point-of-sale system to pay for things. Using stablecoins has to be just as easy. Is there a project that allows users to deposit their stablecoins to a dApp, and spend them as if it were a Visa debit / credit card? Absolutely, it’s called Ether.fi Cash.

Users from around the world can sign up in minutes, and after completing the onboarding process, now have their very own Visa-powered stablecoin spending card. You can use it on your mobile phone, and or via a physical card. After depositing stablecoins to your Ether.fi wallet, you can spend anywhere that accepts Visa. Ether.fi can even extend credit against your stablecoin balance to turbo charge your spending.

I am an advisor and investor in the Ether.fi project, so I’m obviously biased, but I have been waiting for a low-fee solution to spending my crypto offline for over a decade. The customer experience whether I use my Amex or Ether.fi cash card is the same. This is important because, for the first time, many in the Global South will pay for goods and services anywhere in the world powered by stablecoins and Ether.fi.

The real juice is becoming a financial supermarket, offering many traditional products a bank offers. Then, Ether.fi can offer additional products to depositors. The key ratio I forecasted in order to calculate future cash flows is the Fee / Vault Ratio. For every dollar of stablecoin deposited, how much revenue does Ether.fi earn? To arrive at a defensible number, I perused the latest annual filing from the best-run commercial bank in the world, JP Morgan. On a deposit base of $1,060.4 bn, they earned $18.8 bn in revenue, or a Fee / Value Ratio of 1.78%.

Ether.fi Cash Vault %: This represents the percentage of stablecoin supply that is deposited into a cash vault. Currently, after only four months in existence, the percentage is 0.07%. Given that this product just launched, I believe there is room to grow that percentage to 1.00% by 2028.

I believe that $ETHFI can 34x from the current levels.

Now that the plebes can spend their dollars, is there a way to earn a higher yield than Fed Funds?

Lend It

After millions more folks can go out and spend stables to purchase a coffee, they will want to earn interest. I already spoke about how I believe issuers like Tether will pay a portion of their NIM to holders. But that won’t be a massive number; many savers will be in search of higher yields without taking too much extra risk. Is there an endogenous yield within the crypto capital markets that new stablecoin users can capture? Absolutely, Ethena offers higher-yielding opportunities.

There are only two ways to lend money within the crypto capital markets safely. Lend to speculators via derivatives, or lend to crypto miners. Ethena focuses on lending to speculators via shorting crypto/USD futures and perpetual swap (perp) contracts against long crypto capital. This is a strategy that I called “cash and carry” back in the days when I was promoting it at BitMEX. I subsequently wrote an essay entitled “Dust on Crust” where I implored an intrepid entrepreneur to package this trade up and offer it as a synthetic-dollar, high-yielding stablecoin. Guy Young, the founder of Ethena, read that essay, and subsequently assembled a rockstar team to do the hard work and bring it to reality. When we heard about what Guy was building, Maelstrom signed on as a founding advisor. Ethena’s USDe stablecoin became the fastest-growing stablecoin ever, racking up ~$13.5 billion in deposits in under 18 months. USDe is now third largest behind Circle’s USDC and Tether’s USDT in terms of circulating supply. Ethena’s growth is so strong that by St. Patty’s Day next year, Circle CEO Jeremy Allaire will drown his sorrows with a pint of Guinness as Ethena because the second largest stablecoin issuer behind Tether.

Because of exchange counterparty risk, the rate that speculators pay to borrow dollars to go long crypto is usually above that of T-bills. I set the neutral rate at 10% when I created the perp along with the team at BitMEX in 2016. That means if the perp price is equal to that of spot, longs will pay shorts a 10% APY. Given that every single perp exchange copied BitMEX’s design verbatim, they all feature a 10% neutral rate. The reason this is important is that 10% is much higher than the current upper bound of Fed Funds at 4.50%. Therefore, staked USDe yields should almost always be higher than Fed Funds. This gives the opportunity for new stablecoin savers who wish to take a little extra risk the ability to earn double on average the yield offered by the Buffalo Bill Bessent.^[7]

Some, but definitely not all, of the new stablecoin deposits will save using Ethena, earning higher yields. Ethena takes a 20% cut of interest income. Below is a simple model:

USDe Market Share: Currently, Circle’s USDC has a 25% market share of total stablecoins in circulation. I believe Ethena will surpass Circle, and we have seen over time that at the margin USDC loses deposits as USDe gains them. Therefore, my long-term assumption is that USDe captures a 25% market share behind Tether’s USDT.

Avg USDe Yield: Given that in this long-run scenario I forecast $2.5tn of USDe supply, this will put downward pressure on the basis spread between derivatives and spot. As Hyperliquid takes over as the largest derivatives exchange of any type, they will decrease the neutral rate to increase the demand for leverage. This also implies that the open interest (OI) of the crypto derivatives market will grow substantially. It makes sense that if there are millions more DeFi users who have trillions of dollars in stablecoin deposits at their disposal, they can pump OI into the trillions of dollars.

I believe that $ENA can 51x from the current levels.

Now that the plebes can earn a bit more interest income, how can they trade their way out of inflation-induced poverty?

Trade It

The most pernicious effect of global monetary debasement is that it forces everyone to become a speculator to maintain their standard of living if they don't already own a phat stack of financial assets. With a much larger portion of the world, who has suffered the most under wanton fiat debasement, now saving on-chain via stablecoins, they will trade the only asset class, crypto, which offers them the ability to speculate their way out of assured poverty. The on-chain trading venue of choice currently is Hyperliquid (Token: $HYPE) which has a 67% DEX market share. Hyperliquid is so transformational that it is quickly growing against CEXs like Binance. By the end of this cycle, Hyperliquid will be the largest crypto exchange of any type, and Jeff Yan might become richer than CZ, the founder and former CEO of Binance. The King is dead. Long live the King!

DEX market share - Source

CEX market share - Source

The theory that DEXs will consume all other types of exchanges is not new. What is new in Hyperliquid’s case is the execution ability of the team. Jeff Yan has built a team of roughly ten folks that ships better product at a faster pace than any other centralized or decentralized team in the space.

The best way to think about Hyperliquid is as a decentralized version of Binance. Because Tether and other stablecoins predominantly powered Binance’s banking rails, we can think of Binance as the precursor to Hyperliquid. Hyperliquid also depends solely on stablecoin infrastructure for deposits, but it is an on-chain trading experience. With the rollout of HIP-3, Hyperliquid is quickly transitioning into a permissionless derivatives and spot juggernaut. Any application that wants a liquid central limit order book with real-time margining can integrate any derivatives market they desire with the HIP-3 infrastructure.

My prediction is that by the end of this cycle, Hyperliquid is the largest crypto exchange of any type, and the growth in stablecoin circulation to $10tn will supercharge this growth. Using Binance as an example, we can forecast Hyperliquid’s ADV for a given level of stablecoin supply.

Currently, Binance’s perp ADV is $73 billion at a $277 billion total stablecoin supply; the ratio is 26.4%. You will see this represented in the model as Hyperliquid ADV Share.

I believe that $HYPE can 126x from the current levels.

Finally, I want to talk about the shitcoin stablecoin project I’m the most excited about because it has an upcoming token launch.

Collateralize It

Now that millions and possibly billions more folks use stablecoins, how will non-crypto businesses take advantage of this new form of payment? Most businesses around the world have issues with payments. They get charged egregious fees by payment processors, and many times banks will just not deal with them. But with stablecoins in the hands of many more users, businesses can liberate themselves from the clutches of rapacious TradFi financial institutions. While this is a great aspiration, businesses will need an easy to implement tech stack that enables them to accept stablecoin payments, pay suppliers and taxes in local currency, and account for cash flows properly.

Codex is a project that has launched a purpose-built blockchain for stablecoins. They are not an issuer today, but provide the ability for businesses to deal with stable-to-stable, stable-to-fiat, and fiat-to-stable payments. Remember Fernando and his click farm. He needs to pay some of his staff in pesos into their local bank accounts. Using Codex, Fernando can receive stablecoins from his clients and convert a portion of those stablecoins into Pesos which are deposited directly into a local bank account. Codex has already launched this functionality and in its first month did $100m of trading volume.

Why I’m so excited about Codex has nothing to do with disintermediating the global transaction banking business of TradFi. Yes, that is a massive TAM to go after, but the more game-changing business that no one is attacking is extending credit to SMEs who otherwise have no access to working capital financing. Today, Codex only extends sub one-day credit to the safest PSPs and fintechs, but tomorrow, Codex could extend longer-term loans to SMEs. If an SME is fully on-chain and runs its payments with stables using Codex, it can achieve triple-entry bookkeeping.

The improvement of triple over double-entry bookkeeping is that because revenue and expense transactions are all on-chain, Codex can in real-time compute a net income and cash flow statement for an SME using unfalsifiable data. Based on this unfalsifiable data, Codex can lend money to an SME with confidence that the fundamentals of the business will allow said business to repay the loan with interest on time. Currently, in most developing countries and to some extent in developed countries, SMEs find it difficult or impossible to get bank loans. Banks understandably don’t want to take the risk because they fear the backwards looking accounting data they receive is fugazi. Therefore, banks lend only to large companies or politically connected elites.

Codex, in my vision, will become the largest and most impactful financial institution for the Global South first, and then the developed world ex-US by using stablecoin infrastructure to underwrite loans to SMEs. Codex will truly become the first real crypto bank.

Codex is in its infancy, but the founders will make their users and token holders uber wealthy if they are successful. Before Maelstrom took on this advisory role, I ensured the founders were ready to pursue a tokenomics playbook similar to Hyperliquid. From day one, revenue earned will flow back to token holders. They may conduct a capital raise. Sign up to learn more here. But I want to make sure the world is aware that there is already an actual piece of stablecoin infrastructure, doing real volume today, that will TGE soon. It’s time to get on board an FTL spaceship.

The Rein of Buffalo Bill Bessent

The degree to which Buffalo Bill Bessent will terrorize the Eurodollar and non-dollar bank depositors around the world depends on the spending trajectory of the US government. I have the utmost confidence that Bessent’s boss, US President Trump, has no intention of balancing the budget, cutting taxes, or curtailing spending. I know this because Trump admonished his fellow Team Red Republicans for being too obsessed with cutting spending. He quipped in not so many words that they had an election to win in 2026. Trump has no ideology other than winning. And political winners in a late-stage capitalist democratic republic give out goodies for votes. Therefore, Buffalo Bill Bessent will run rampant, and there ain’t no Officer Starling around to stop him.

As the government deficit continues to widen, and Pax Americana’s hegemony declines, growth at least in the magnitude needed to increase tax revenues will be scarce. Therefore, Bessent will stuff more and more debt down the throat of the market. However, the market doesn’t want to own debt in a currency when the express policy of the folks in charge is to weaken it. And therefore, using stablecoins as T-bill sink, it’s time to put the dollars on its skin, or get the sanctions again.

Bessent will wield his sanctions cudgel widely and violently in order to make sure that dollar-pegged stablecoins bring home capital sequestered in Eurodollars and non-US retail banking deposits. He will deputize the Tech Bros like Zuckerberg and Musk to bring forth the good word to the uncivilized barbarian horde over yonder. And these Broligarchs will gladly wrap themselves in the flag and push dollar-pegged stablecoins to their non-US users whether local regulators like it because they are PATRIOTS!

If I am right, we will see news headlines that hit on these themes:

1. The need for oversight of the offshore USD market, aka Eurodollars

2. Tying the use of central bank dollar swap lines with the Fed and or Treasury to opening up certain aspects of digital markets to US tech firms

3. Regulations put forward to require stablecoin issuers to hold dollars in a US bank branch and or T-bills.

4. Encouragement of stablecoin issuers to list on US stock markets

5. US big tech firms adding crypto wallets to their social media apps

6. General positive statements by members of the Trump administration about the use of stablecoins

Maelstrom will continue to be very long the stablecoin vertical because of positions in $ENA, $ETHFI, and $HYPE. We always look to the future; therefore, you will hear a lot more about Codex as I believe it will become the stablecoin infrastructure main character.

Pass dat dollar lotion, I’m a bit ashy.

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^[1] QE stands for quantitative easing, the process by which a central bank creates banking reserves by purchasing government bonds. US Federal Reserve chairman Ben Bernanke started QE infinity in 2008.

^[2] We only know about this stealth intervention due to Freedom of Information Act lawsuits in the US.

^[3] If you want to watch a fascinating documentary about the whole saga I highly recommend “The Kingmaker”.

^[4] BRICS stands for Brazil, Russia, India, China, and South Africa.

^[5] Zohran Mamdani (running for mayor of New York City) and Alexandria Ocasio-Cortez “AOC” (Congresswoman from New York City) are two leading Democrat politicians whose platforms are very socialist but popular.

^[6] FDV stands for Fully Diluted Valuation.

^[7] The extra risk they are taking is the counterparty risk of the exchanges where Ethena sells derivatives contracts.