The world is a huge Ponzi

1 - Ponzi under the banking system / Currency creation

Core mechanism:

M0 (Base currency): Issued by the central bank, such as cash and bank reserves.

Fractional reserve system: Commercial banks only need to keep a small portion of user deposits (e.g., 10%) as required reserves, while the rest can be used for loans.

Currency inflation: Through the "loan-deposit" cycle, M0 is amplified into M1.

In simple terms: The central bank is responsible for "printing money" (M0), and commercial banks leverage loans to "increase" this money (M1). The whole process is like an ever-expanding currency game.

2 - Ponzi in the crypto world / Currency creation

On-chain M0: Fully backed stablecoins like USDC and USDT.

On-chain M1: Similar to demand deposits, users expand the on-chain money supply through lending protocols (like Aave, Morpho).

Currently, this on-chain M1 mechanism faces severe challenges:

Fragmentation: Each protocol issues unique tokens, lacking interoperability. Can you imagine that the dollars in a JPMorgan account cannot be exchanged for dollars in a Citibank account?

Complexity: Users must choose protocols, assess risks, and manage tokens themselves, which is less convenient than traditional banks.

Leverage risk: Excessive leverage or protocol failures (like the 2022 Terra-Luna collapse).

How to solve it?

Risks and opportunities coexist. Level aims to reshape the on-chain M1 system while balancing currency expansion and stability.

Core process:

① Users deposit USDC/USDT and receive a unified interchangeable stablecoin, lvlUSD.

② Level allocates deposits to low-risk lending strategies, obtaining various collateral tokens.

③ The underlying assets lent out continue to circulate, expanding the on-chain M1 supply.

All along, Level has no rivals, only friends. USDC/USDT, as on-chain M0, is the target for Level's deposits; DeFi protocols are the source of Level's underlying returns.

If you still see Level as just another "yield-generating stablecoin," I can only say, it's too small, the vision is too small.

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