2020 is no doubt the year of Defi, with Compound, Aave, Maker, and Uniswap taking over the headline news on Twitter and various crypto news sites. The current market value of Compound has reached 470 million US dollars, while Maker has reached 660 million US dollars. The decentralized exchange Uniswap and derivatives platform synthetix has also seen explosive growth in 2020. According to data on Defi Pulse, as of August 2020, the Total Value Locked (TVL) on Defi projects has reached an all-time high of 6.86 billion US dollars.
However, despite the latest market frenzy, the number of users in Defi remains low. Currently, the high barrier of entry has prevented mass adoption. Even though there are hundreds of Defi products on the market, a certain level of technical, blockchain and finance knowledge is required. The Defi boom has been going on for months, but many are still struggling with the nuances and intricacies of Defi. Moreover, both the blockchain and the cryptocurrency industry are still in early stage. The high volatility of digital currencies has made it difficult for users to identify potential risks when interacting with various Defi products, let alone to take protection measures.
In fact, these problems also exist in the traditional financial industry. But in the field of digital currency, the risks and uncertainties are greatly multiplied. However, in the traditional financial world, many platforms have emerged to provide users with product information/evaluation, investment advice, and trading services. In view of the current complex situation of Defi, the time for a new platform launch that can comprehensively provide various products information is ripe. AiFi is excited to seize this opportunity and launching a comprehensive Defi platform to integrate the latest and most complete Defi products for users to monitor yield, return, liquidity, and other key information in real-time, and provide an innovate option-secured trading and Robo-advisor features.
Given the high volatility in digital assets, AiFi is incorporating a new product that combines the assets with options (insurance). Both lending/borrowing and liquidity mining functions of AiFi will attach a corresponding option protection mechanism. Users can choose the proper option product with one-click when they execute defi transactions. This way, if/when the collaterals depreciate, there is no risk of liquidation, and users can ensure their assets is safe. More importantly, in addition to the security of the assets, the users of AiFi lending platform can also adopt a new and better collateralization rates to borrow more assets.
Currently, Defi platforms collateralization ratio is quite high. For example, some stablecoin collateral ratio in Compound is 150%, which means you need to deposit at least $150 worth of digital assets to receive $100 stablecoin. In AiFi, we are creating a framework that takes into account the underlying collateral, the corresponding option, and user’s expected return from the borrowed asset. An optimal ratio can be reached for different collateral/asset pairs so as to maximize income and reduce risk.
Another function of AiFi is the Robo-Advisor. Our system will recommend a customized Defi product portfolio and strategy based on the user’s risk tolerance and product preference, while simultaneously integrating options for risk management. This function is especially suitable for the popular liquidity mining now. Currently, the returns from liquidity mining can be very high due to the value of platform tokens (e.g. YFI, SUSHI). AiFi’s Robo-Advisor platform will recommend the most optimal trading strategy. By integrating the different platforms, functions and products, AiFi aim to help users achieve the highest return. At the same time, AiFi will also actively identify the potential risks in the operation process and recommend corresponding protection measures to eliminate downside risks.
AiFi is a comprehensive Defi platform that is solving the most imminent problems in Defi. Our team is working diligently to lower the entry barrier for average users, and to provide financial products with the best risk-reward. AiFi’s team has worked in some of the world’s most established companies and institutions, with years of experience in investments, asset management, trading and risk management. AiFi is now at the final stage of development, and we look forward to launching our product very soon.