In a recent episode of the AGI Podcast, Bill Sun (@BillSun_AI), co-founder of Pin AI and GenAlpha, sat down with Haseeb Qureshi (@hosseeb), managing partner at Dragonfly Capital (@dragonfly_xyz). They dove deep into how crypto is reshaping liquidity, trust, and intelligence. If you're into meme tokens or broader blockchain trends, this chat offers plenty of nuggets on tokenization, real-world assets (RWA), and yield-bearing stablecoins—concepts that could supercharge the next wave of DeFi innovation.

Unpacking the October 25 Liquidation Cascade

The conversation kicked off with a breakdown of the chaotic events on October 25, 2025, triggered by a tweet from former President Trump slamming China trade talks. This sparked a massive sell-off in stocks and crypto, leading to a liquidation cascade—a chain reaction where leveraged positions get forcibly closed as prices drop.

Haseeb explained how crypto markets became the outlet for global risk sentiment since traditional markets were closed. Exchanges like Binance buckled under the volume, with APIs failing for over an hour. Stablecoins like USDe depegged dramatically on Binance (down to 68 cents), but held steady elsewhere, highlighting venue-specific issues rather than systemic failures.

Key takeaway: In crypto, weekends don't pause the action, but they can amplify volatility when liquidity thins out.

Lessons from the Crash and Systemic Risks

Reflecting on the fallout, the duo discussed how overleveraged positions and poor exchange infrastructure exacerbated the damage. Bill shared how his team's risk management flattened positions early, avoiding major losses. Haseeb noted that auto-deleveraging (ADL)—where profitable positions are forcibly closed to balance markets—created naked exposures for hedged traders.

Was it a systemic failure? Not quite, they argued. It exposed flaws in centralized exchanges (CEXs) like faulty oracles marking prices based on their own chaotic order books. Better integration, like Bybit's direct mint/redeem with Ethena, helped mitigate depegs elsewhere.

For meme token enthusiasts, this underscores why understanding leverage in DeFi is crucial—looping strategies can amplify yields but also risks during crashes.

The Evolving Role of Stablecoins and Trust in CEXs

Yield-bearing stablecoins like USDe from Ethena (Ethena) took center stage. These aren't your standard pegged dollars; they're backed by strategies like basis trades on perpetual futures, earning yields from funding rates.

Haseeb highlighted the shift: post-FTX, off-exchange custody (e.g., via Fireblocks or Anchorage) minimizes counterparty risk. Bill added that his project, AIUSD, aims for high APY without DeFi looping pitfalls, focusing on AI-driven execution for users.

On trust in CEXs? It's waning. Models like Binance's Safu fund separate custody from trading, but the crash showed APIs and oracles need upgrades. Decentralized alternatives could gain if CEXs don't adapt.

Leverage Looping in DeFi: Innovation or Risk?

DeFi's leverage looping—borrowing against yield-bearing assets to amplify returns—came under scrutiny. Haseeb viewed it as financing more basis trades, which saturates yields but doesn't inherently risk the underlying protocol. Loopers bear the liquidation pain during depegs.

Ethena's approach stands out: using off-exchange custody and legging into T-bills when basis yields dip below risk-free rates. This makes it robust, as seen in the crash where it actually profited.

For blockchain practitioners, this means yield-bearing stablecoins could democratize hedge fund strategies, but watch for over-saturation leading to lower yields.

Tokenized Stocks and Regulation: The Path Forward

Shifting to RWAs, they debated tokenized stocks. Haseeb is skeptical short-term due to low liquidity and regulatory hurdles. Why bother with tokenized Tesla when perps offer leverage without dividends or custody hassles? Demand might grow internationally, but derivatives will dominate.

Regulation is key: readiness for tokenized assets lags, especially in the US. Options in crypto never took off because perps provide simpler leverage without the complexity of strikes and expiries.

Predictions on Yield-Bearing Stablecoins and Perps

Wrapping up, Haseeb predicted yield-bearing stablecoins will split: CEX earn programs for simplicity and DeFi for permissionless innovation. Perp DEXs like Hyperliquid could thrive with AI automation, but human traders will stick to point-and-click for the thrill.

Bill envisioned AI as personal execution traders, turning natural language into strategies. In 10 years, AI might drain alpha, leaving trading as a human-vs-human game like poker.

This episode is a goldmine for anyone tracking meme tokens' intersection with advanced DeFi. Check out the full podcast on X for more details—it's packed with insights to level up your blockchain knowledge.