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Seamless integration for optimal yield across blockchain ecosystems

Onchain vs. Offchain Data Handling Protocols Management Improvement UVPs

We have developed DeFi passive income algorithmic strategies that provide aggregated liquidity provisioning, staking, and yield farming across different protocols and blockchain ecosystems. Our goal is to create a platform where we can offer sustainable high yields by adding and integrating new DeFi protocols/blockchains, thereby seamlessly combining these other functionalities.

Our strategies are divided into 2 groups: math-intensive offchain strategies and simpler onchain strategies.

Optimal weights of capital in liquidity pools according to their historical performance.

Optimal conversion between initial and final set of tokens on balance.

Risk-free maintenance of leveraged positions.

Growing collection of techniques to achieve the best performance across them.

On-chain strategies are often straightforward and are created using simple DeFi protocol mechanics, characterized by a short life cycle. At the core of on-chain strategies, there is a sequence of operations of just a few types: flashloans, staking, lending, borrowing, and LP minting/burning. These operations can be sequenced for one or multiple DeFi protocols on different blockchains.

Our goal is to combine on and off-chain strategies into our portfolios with a given risk/reward ratio, while consistently updating and improving upon them by adding strategies based on new application additions.

By doing all of this, we intend to achieve a stable competitive advantage in regards to our yield generation, where our minimum yield is the same or greater than the maximum yield of any protocol we’re connected to.

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Onchain vs. Offchain

In DeFi, computational/communication logic can be developed either on-chain (as a set of smart contracts) or off-chain (as proprietary services).

CCF strategies are MOSTLY off-chain services managing assets centrally, and this is why:

Smart Contracts are passive, and we need many active components that initiate actions.

Our models are computation intensive and require external datasources which are often not available on determinist smart contracts or that require expensive oracles to connect to off-chain data sources.

Smart Contracts are visible to everyone on blockchain and have higher risk of hacks/attacks/front running bots.

Proxy Smart Contracts

For our strategies, we DO develop smart contracts that are called proxy smart contracts.
They COMBINE execution logic into a single complex transaction so that:

We achieve transaction atomicity.

We decrease transaction costs.

We achieve flexibility in using additional mechanisms to commit transactions smoother (for instance, by using gas tokens).

Data Handling & Preparation

We separate the data into two domains:
Real-time data & Historical data

We use historical data to automatically identify optimal historical metrics (performance of the pools, hedging health ratio) as a basis for automatic decision-making and “catch-up” the insights up to real-time. On the other hand, we use real-time data to update metrics and make real-time decisions.

Real-time data

We use real-time data from the blockchain and directly from other services/protocols for optimal decision-making. We collect real-time data from blocks and different APIs specific to protocols (REST APIs from 1inch for example).

Historical data

For LP, the primary source of historical (and real-time) data is the blockchain. We parse the blocks and get raw info on the protocols/pools of interest. We then process the data to get datasets that are ready to be used by our models.

Any raw data from blockchain can’t be used by models directly. Thus, we clean, aggregate, and provide feature extraction to get datasets that can then be used by models.

We’ve developed proprietary features for this process.At any point in time, we might add another API or data feeds from third-party sources to provide better datasets to our models, even though they’re not limited to DeFi exclusively (for instance, options market data feed from the Deribit exchange).

Protocols

Currently, we support 4 blockchains:

Ethereum

Avalanche

Polygon

Terra

Binance Smart Chain

We have numerous DeFi protocols supported on those blockchains – including, but not limited to:

Aave

Uniswap V3

Curve

Compound

Mirror

Convex

Frax

We don’t stick to a concrete protocol(s) and build our strategies on top of it. So the list is and will constantly be changing. We have a separate process of evaluating every new potential or existing protocol that we may connect to when it comes to the following categories:

Counterparty Risk

New Functionality

Activity of participants (traders, liquidity providers etc)

As a result, we might make a decision to either disable some pools or protocols and strategies on top of it (Sushiswap, for instance)
or add a new protocol.

Risk Management

Top Priorities

Our top priority is risk management. We started with stablecoins to offer our clients the best earnings with minimal possible risks.

We separate risks into the market (volatility) and counterparty (protocols) risks. We build complex models to eliminate market risks and have built manual processes to analyze counterparty risks.

While we can’t measure or predict counterparty risks, we can grade them by comparing them to each other. By doing so, we can estimate whether integrating new protocols will bring additional counterparty risk.

Continuous Improvement

When we deploy a strategy into production, we continuously improve it to mitigate risks and accrue more yield. We do this on different levels:

On the subprotocol level

We monitor protocol pools and dynamically update the set of the pools we work with. For instance, we periodically check the performance of stablecoin pools on Pancakeswap and add new pools like the TUSD-BUSD pool (this process is manual).

On the protocol level

We add unique mechanisms like governance token management for the protocols we connect to on the protocol level. For instance, we utilize CAKE tokens mining for Pancakeswap and then, on top of it, add Syrup pools management. Once – these mechanisms allow for higher yield with the same market risk.

On the inter-protocol level

We add new protocols and boost strategy earnings by providing functionality fit for the protocols. We can get a higher yield on Uniswap when hedging market risks on tokens supported by Compound in addition to Aave. Adding Compound integration allows us to choose from pools with higher fees.

On the strategy level

We improve strategy models/solvers to get better results. For instance, decreasing transactional costs by including rebalancing costs when tuning weights for assets portfolios.

Our Unique Value Proposition

Our strategies use a combination of AI-driven automation techniques to generate returns that:

Can be withdrawn with one click to multiple fiat or cryptocurrencies.

Require vast amounts of data to be collected, modelled and analyzed.

Are difficult or impossible to achieve manually.

Are diversified across a growing set of yield opportunities in Defi and CeFi.

Involve interaction with multiple protocols.

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