Proposal: Whitelist Saffron Finance (SFI) + 250k Co-Invest
This proposal is expected to appear on Snapshot for voting on August 16th, 2021.
TL;DR
- Whitelist SFI
- Liquidity-Volume ratio is impressive, especially at times of high volatility, average of 2.96 L/V. (See below for analytics)
- 250,000 BNT Co-investment from the DAO to incentivize liquidity from SFI holders/stakers and work to beat the Sushi Swap & Uniswap V2 pool on trade volume (14,478 SFI holders)
- Saffron Finance has uniquely positioned itself as the premier asset collateralization & risk tranching protocol in DeFi, has built a powerful, intuitive community, and has attracted the attention of some of DeFi & TradFi’s greatest minds (mentioned by Wharton Business School & World Economic Forum) - and is well poised to capture significant market share of the risk-tranching niche of DeFi.
- V2 is currently Saffron’s highest priority, and is currently being audited, will be rolled out with many new features such as perpetual staking, additional stablecoin offerings, expansion of the protocol into Solana, and more… Prior to V2, Saffron has just deployed to Polygon, an extremely exciting time for the project, and a massive opportunity to become the deepest source of liquidity for the SFI token.
Project Site: New UI → https://beta.saffron.finance/
Contract address: 0xb753428af26e81097e7fd17f40c88aaa3e04902c
Token Security
The SFI token is capped at 100,000 and is generated every 2 weeks during the wind down of an epoch. Tokens are earned by LPs proportional to how many dollars per second (dsec) they provided to the system for the duration of an epoch. SFI token subsidy is halved every epoch until epoch 8. From that point on, the system steadily releases 200 SFI tokens per epoch, until reaching the 100,000 cap. Currently, there are 91,640 SFI in circulation. SFI tokens that are staked and assets that are deposited into the protocol cannot withdraw until the end of an Epoch, which is 2 weeks in length, as it allows interest earned to be allocated more accurately between tranches and also ensures that senior tranches are insured. Upon V2 release, while there will still be a lock up time, SFI stakers and liquidity providers will not have to stake and unstake again at the end of every Epoch. Instead it will be done automatically by the protocol.
The token has never been exploited, even though Saffron’s contracts are currently unaudited, this is being worked on aggressively. The Saffron contracts do not grant permission to any one team member to execute a mint/burn function.
Project
Saffron is an asset collateralization platform where liquidity providers have access to dynamic exposure by selecting customized risk and return profiles via the use of SFI pool tranches. Existing decentralized earning platforms expose liquidity providers to complex code driven outcomes (bugs, smart contract failures, exploits, etc) - Network participants must evaluate an array of catastrophic scenarios where the resulting state could wipe out their holdings or lead to significant impermanent loss. It is hard to anticipate the net effect of extreme market volatility or focused economic attacks. Saffron narrows the set of possible outcomes by giving liquidity providers dynamic exposure.
Launched in October 2020 by pseudonymous founder “Psykeeper”, the protocol’s main use case is to act as an intermediary between liquidity providers and lending protocols, where liquidity providers can provide liquidity to lending protocols through various SFI tranches.
The protocol currently offers 3 tranches for liquidity providers:
Liquidity Balancing S tranche,
Yield Enhanced A tranche,
Risk Mitigated AA tranche,
While returns of the A tranche can be meaningfully higher than the AA tranche, in exchange for enhanced return, participants of the A tranche must stake Saffron’s native tokens (SFI) to mitigate against failures on the underlying lending platforms (i.e. Compound or Aave).
In the event of a failure of an underlying lending platform, liquidity providers in the riskier tranches will be in a position of first loss, while liquidity providers in more senior tranches are effectively insured. In exchange for this “insurance” liquidity providers in the senior tranches receive a lower yield.
To read more about how Saffron works, and explore platform data, read here:
https://beta.saffron.finance/docs
https://beta.saffron.finance/dashboard
Co-Investment Reasoning
Currently, the deepest source of liquidity for the SFI token is on Uniswap V2, which currently has ~$4m in liquidity, followed by Sushiswap that has ~$2.2m in liquidity. Between Uniswap V2 and Sushiswap, SFI LP’s have earned a combined $6k in fees today, while maintaining quite handsome Liquidity-Volume ratios. Here’s the catch, while SFI token holders have enjoyed a nice return as the token has recently rallied, there is >18% suffered in impermanent loss, which might or might not be/have been realized. This alone is enough to incentivize at least 30-50% of the liquidity sitting in Sushiswap & Uniswap V2 to move to Bancor over the next 90 days. With a co-investment of 250,000 BNT (~$965,000) we will already have close to 50% of the liquidity Sushiswap has, and will be able to firmly make our way to becoming the default platform for SFI holders/LP’s to safely store & grow their assets. (Uniswap = Vertical, Sushiswap = Horizontal)
Saffron Finance Market Data
** SFI Price: $1,115*
** Price Change 24hr: +18.1%*
** 24hr low / high: $932 / $1,117*
** Trading Volume 24hr: $3.3m*
** TVL: $28m*
** Market Cap: $89.1m*
** All Time High: $3,496*
** All Time Low: $41*
Community & Communication
Twitter: https://twitter.com/saffronfinance_
Discord: https://discord.gg/xmbjjpd9
Github: https://github.com/saffron-finance/saffron
Forum: https://gov.saffron.finance/
Official Docs: https://beta.saffron.finance/docs
Medium: https://medium.com/saffron-finance
Security Audit
- Pending V2 Launch for Smart Contract Audits (currently underway)
Benefits for Bancor & Saffron Finance
- Bringing SFI holders & LP’s deeper liquidity via the Bancor Network will allow Bancor to tap into a protocol that is poised to take advantage of retail/TradFi mania as far as DeFi is concerned, the goal is, that by the time this happens, for Bancor to be the deepest source of SFI liquidity across all of DeFi. SFI stakers will be pleased to know that instead of providing (dual-sided) liquidity with their token(s), they can now come to Bancor, deposit strictly SFI if they’d like (can also deposit BNT too, if they choose!) Saffron has certainly begun picking up massive traction/attention. Bancor can tap into this by essentially becoming an octopus, pulling in another highly liquid project like Saffron, and providing a superior liquidity provisioning experience to its holders/traders. It is a wholesome game for all parties.
- The whitelisting of SFI would allow Bancor to tap into Saffron’s passionate, strong, fast-growing community. Saffron will (if not already) attract the largest minds in DeFi, and vice versa, Saffron to tap into Bancor’s extremely developed community and grow in many ways that benefits their own community outside of the fact that SFI holders/LP’s would now have the ability to not suffer IL while acting the way they’d like in the DeFi world. (Providing liquidity)
- Saffron has made the transition to moving to formal governance recently, now having an active forum and utilizing Snapshot for voting, which Bancor DAO participants are very familiar with. Saffron has already greatly matured since its release in October of 2020, and “fits the bill” as far as being a very unique project worth whitelisting to Bancor, and making great effort to shift liquidity away from Uniswap V2 and Sushiswap. I believe that with the incentives we can offer SFI holders and LP’s, they will come, and stay, in order to protect their yield, as well as grow, and trade their assets.
Proposal created by @_krris.
Thank you for your consideration and time.
