Let's take a step back. If you look at any financial activity within DeFi, whether it is yield farming, lending or liquidity providing, there are risks involved.
My Chads, institutions and retail are entering the DeFi space at unprecedented volume. One of the key primitives in DeFi will be the securitization and tranching of DeFi and is still massively undervalued. Enter https://t.co/Gx4H3hIzNg ( $SFI ).
Don't worry, let me ELI5.
Let's take a step back. If you look at any financial activity within DeFi, whether it is yield farming, lending or liquidity providing, there are risks involved.
As an honest lender, the rewards are interest, and risk is default of the borrower.
Securitization means taking several assets and pooling these together to create a new fancy asset.
Tranching means cutting a security into two or more several pieces, where each piece carries a different level of risk.
Imagine a risky activity such as being a LP to SUSHI/ETH on Sushiswap.
Uncertainty about rewards:
1. What's the price of SUSHI?
2. How much are the fees I receive?
Uncertainty about risk:
1. Loss of funds (e.g. SC risk)
2. IL
SUSHI/ETH retail tranche:
- x5 multiplier rewards.
- IL
- If smart contract exploit, funds first go to INSTITUTIONS tranche.
SUSHI/ETH institution tranche:
- Low (potentially fixed) rewards
- Funds SAFU
- No (or reduced) IL
1. Its focus on the tech (no over-hype), which is needed for a complex product such as securitization and tranching. Also rumors about core dev being ex-CMC founder.
2. Strong community.
* Chainlink reached out (props to the amazing $LINK team).
* Talks with $ALPHA and rumored upon V2 releases there will be a collaboration.
*Cream integrations in v2
* $COMP tranches
- Lower gas costs
- Roll-over system (deposit once and forget, no more epoch system)
- Include more asset tranches
- Customizable risk params
A. Customizable risk yield farming / liquidity providing. Already partly in V1 of Saffron, but V2 will allow for much more customization in risk level.
B. Fixed-interest delta-neutral yield farming / lp / loans.
Based on the risk customization, V2 will have fixed-interest/APY yield farming. The impact of this cannot be understated. Besides institutions, many crypto projects have huge unused treasuries (some 100M USD+).
1) Staking in the SFI staking pool to earn SFI.
2) Accrue fees regenerated from the protocol
3) Requirement for joining some tranches for enhanced yield
4) Governance
This SFI has been used to secure a funding round by leading VC’s. These VC’s will be locked up. More announced soon.
Great interview by Psykeeper for Delphi:
https://t.co/77ZH9le7Lb
AMA + how to join liquidity pool video:
https://t.co/aHqd84VLvi
https://t.co/VEi6b8SuDc
Great article from Messari about the scope of fixed income protocols: https://t.co/jLc8gNBssg
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