we hosted an amazing AMA with Waterfall DeFi on the 12th of October
And here we will put some of the best questions:
Q1. Can you please introduce yourself as well as Waterfall DeFi ?
Tom here, I am the Project Lead of Waterfall DeFi, the risk tranching protocol offering structured risk products to the DeFi space…I started off my crypto journey back in 2017, my buddy was at MIT Lab and was using the lab to mine ETH, so I kinda joined on his bandwagon, and have been on and off since then.
Gradually during last year’s DeFi summer I decided to put more attention into the space, looking into yield farms and applications of derivatives, and finally earlier this year decided to go all in, and take on the Project Lead role for Waterfall DeFi.
Before going full time in crypto I was working in management consulting, operations and strategic planning, having worked at McKinsey & Co, before moving to a food delivery tech unicorn Deliveroo. As the Project Lead in Waterfall DeFi I am basically in charge of handling everything and making sure Waterfall gets to become one of the projects that stands out across the space and offers what the DeFi community needs especially in terms of risk management options in yield farming.
Our team is comprised of professionals with years of experience from both TradFi, consulting, fast-growth tech and Crypto/Defi markets. We strive to deliver the best risk tranching product in this ever-changing industry.
With the spirit of decentralization, our team is formed by nerds all over the world.
Apart from me, here are two other key members of the team
Founder: 0xWaterfall
10+ years of experience in Tier 1 Investment Bank specializing in Cross Asset Structured Products. 4+ years in crypto trading. Will be responsible for all aspects of the project.
Product Lead: 0xNiagara
Master of Finance and an Electronics Engineer. 10+ years experience in structured derivatives and fixed income trading. 5+ years in crypto derivatives trading. Defi OG (YFI farmer). Will be responsible for designing product strategy.
So Waterfall DeFi is a yield aggregator protocol that aims to bring true risk tranching to the DeFi landscape.
We are built on BSC initially, and would develop portfolios that include different farms. Instead of just offering a yield aggregation product, we actually would slice the portfolio into different “tranches” – essentially each tranche represents a risk/reward combo that would allow the users to select
The senior tranche would receive a reduced yield return, in exchange for first lost protection. Junior tranche would receive a much higher, leveraged yield return, but their capital is used to cover any losses suffered from the portfolio.
For example – a portfolio with 10% expected yield, after we slice it into 2 tranches, the senior tranche will receive 5% return, while the rest will flow to the junior tranche. So in a perfect world, the junior tranche will get 15%
The senior tranche is essentially using their future return to buy protection against any capital lost
So in this example – if the farm underperform and the return is only 3% – senior will still get their 5% (as they are being paid out first), while junior might see a 2% lost in their capital
Like I mentioned earlier, we are launching first on BSC, with the first portfolio focusing on 3 BUSD farms. Going forward, once we are more matured and the community is more educated to the product, we will be pushing out not just safe, sustainable return package with major farms and high TVL, but also risky leveraged products and new farms with high APY
Goal is to create different types of investment options and risk factors that users can select based on their preference!
Q2. What are the advantages of Your project ?
Our founder spent over 10 years at a tier 1 investment bank, focusing on fixed income and risk tranching structured products. He realized as DeFi got more and more mature, users would demand for more complex and advanced structured products to compliment their investment strategy, and risk tranching products are something that could fit the community needs. However, there is no true risk tranching products in the space right now, and we believe by bringing the team’s years of experience in TradFi and DeFi, we are able to bring this concept to the community and work with them to figure out what would work for DeFi
In the traditional market, a significant portion of the financial products is fixed rather than variable. On the other hand, DeFi lending protocols are currently 100% under the variable rate regime, which lacks the environment for DeFi to cross over with the traditional market. And bring the money into this open, permissionless financial world on the blockchain.
Under the variable rate regime, the introduction of risk-related products to the DeFi space will bring further development in the already growing sector, and structured products are the next big thing to emerge on the DeFi horizon.
Structured products (options, futures, etc.) allow users to better control their investment portfolio, finesse their risk tolerance, and min./max. their trading strategy to further leverage their positions. Among structured products, the concept of risk tranching is particularly well positioned in the current DeFi market — relatively simple to grasp, it introduces a fixed income product that provides attractive yield options to investors with different risk appetites. In the DeFi space where everyone is seeking a good yield — especially if they’re in a bear market — attractive rates offered by risk tranching products is a strong option for anyone looking to delve deeper into the DeFi community.
Q3 please tell us about the goal you want to achieve in this year
oh wow there’s alot to do for Waterfall on the upcoming year!
We want to become THE decentralized risk tranching protocol on DeFi, which means we will be cross-chain, DAO-driven and work with community to develop different type of portfolios
Of course this would require a lot of work, which is what the team committed to do to take this protocol forward
Here are our rough timeline:
2021 Q3 – initial funding, product development, initial marketing
2021 Q4 – public sales, test and v1 product launch, with BUSD stablecoin farm introduced
2022 Q1 – v2 product launch, introduce DAO, expand selection of DeFi assets in the portfolio, and user originated portfolio
2022 Q2 – v3 product launch, introduce variable and perpetual expiry tranches
Goal is to create different type of investment options and risk factor that users can select based on their preference!
We are now hard at work to get everything ready for test net, which is a few weeks away. We are working with our auditor to review our smart contract, finalizing our DAPP’s interface and likely will launch our testnet soon – stay tuned!
For mainnet, it will depend on our test net process. Once we get the feedback from the community and adjust based on the suggestions, we will be ready!
And finally, and upcoming milestone is that we are working hard to confirm our public sale, which we will have more information in the coming days – please stay tuned to our channel for updates!
Q4. Every project has a story behind their name, Can you tell us more about the story
Oh yeah! The reason behind we calling our project Waterfall DeFi and having the native token coined at $WTF😆😆
Waterfall is a pretty well known terminology in TradFi to describe risk tranching products. Let’s try to visualize this, imagine every risk tranching product as a series of waterfalls. The senior tranches are the beginnings of the stream, starting at the mountain tops and taking their fixed percentage yield while the junior tranches will receive the remaining runoff. When the market is doing well, yield increases; like a rainstorm overflowing the river banks the junior tranches receive a higher cut as senior tranches are only entitled to their fixed percentage yield. Vice versa, when the market is in decline, yield decreases, like a drought where senior tranches remain entitled to their fixed cut as junior tranches are left with only droplets.
https://medium.com/waterfall-defi/risk-tranching-in-defi-fa70c8d6b0ae
The Waterfall of yield payments to the fixed income stable return product to the leveraged return, variable APY junior tranche
Feel free to read this for more details!
And here we will put best questions from our members and Waterfall DeFi fans:
Q1) A few days ago you announced that Waterfall DeFi had successfully raised $2 million in seed funding co-led by GBV Capital, Divergence Ventures and Ascensive Assets. What exactly will this funding be used for? What aspects of your projects will it help you to improve?
Our VC partners have been very helpful to our project — from technical, product and marketing support, that they give actual help and feedback from their experiences in other famous DeFi projects
that goes beyond the funding itself — we have built a long term partnership with them that together we will make the project actually useable and value adding to the DeFi space
The funding itself will be mostly used on project development purposes
From getting our developers paid, to business development activities, and proper marketing that make sure the space heard us and will be trying out our products in the future
We want to make Waterfall DeFi become the hub of risk and reward restructuring, that everyone coming in will get their desired yield farming product of different risk levels
and they will be able to execute their risk management decisions and protect their wealth/earn leveraged yield at their fingertips.
Q2) You already announced your initial product offering – a portfolio that contains 3 BUSD pools: #CREAMFinance, #AlpacaFinance & #Venus. So would you mind if you share some details about the structure of your products and how they operate on your platform?
Tranched products — The core of our protocol. Our tranched products will be multiple vaults (falls) each equipped with three depositable pools: Senior, Mezzanine and Junior.
From Senior to Junior the pool risk goes from low to high and the returns goes from fixed to leveraged, under normal yield market situations your return in Junior pools are higher than what you can gain than yield farming by yourself,
as the yield are transferred by the Senior pool deposits since they only receive a fixed yield, however they face a lower risk as their capital pooled in are insured by the Junior tranche pool. Essentially in Waterfall you can leverage and earn extra yield that it is possible just by yourself, or you could receive a stable and predictable cash flow that DeFi farms usually difficult to offer. You either protec or attac! First tranched product will be the BUSD Falls where we will have the above three tranches deployed to the BUSD pools in Alpaca Finance, C.R.E.A.M Finance and Venus Protocol at Binance Smart Chain
so we chose these three farms since they are relatively mature and as an aggregator our users’ funds’ safety is our first priority
Going forward, once we are more matured and the community is more educated to the product, we will be pushing out not just safe, sustainable return package with major farms and high TVL, but also risky leveraged products and new farms with high APY
Goal is to create different types of investment options and risk factors that users can select based on their preference!
Q3) I read on your website that your Porfolio is divided into different “Tranches” and users can choose in which tranche to deposit funds based on their expected return and risk appetite. So how many types are there? What are their differences and what adadvantage do they offer?
As mentioned there are three tranches: Senior, Mezzanine and Junior.
The Senior tranche provides you a stable, fixed rate of return over time, your capital is insured and protected
the Mezzanine also is deemed to get a fixed return, however the risk level is higher
The Junior tranche is the most risky, yet you get leveraged return for the extra risk you take on
More than many other farms can offer or if you just deploy capital on your own actually!
Essentially the tranches are categories of risk and reward that helps people to get the stuff they want, we want to enable no matter conservatives or degens to be able to get the yield they desire
providing stability and efficiency to the yield market
And in the future, it could go way beyond stablecoin farms tranching
but also AMM LP’s impermanent loss tranching, Layer-1 staking protocols’ tranching possibly? the limit is our imagination only
Q4) Waterfall DeFi charges any commission for withdrawing and depositing funds on its platform, if so, where do the funds collected from said commissions collected go, that is, what use do they give to said funds raised, are they destined in their entirety for the continuous ?
Actually when users stake their $WTF to the protocol, they will get our governance token, which is veWTF, and those are minted by locking up our $WTF in the staking part of the protocol.
The governance token mainly has 3 use cases
- Vote on future DAO related issues, such as what product to be launched live
- Create their own tranched products for the community to vote on
- Be eligible for a portion of the transaction fee
The first 2 are governance rights that we want our strongest supports to be able to have a say or participate.
The last one is economic benefit that we want to share with them – the protocol will charge a small % of redemption fee for the users during their deployment – and this would scale up with the TVL we have. Part of the fee collected would be used to support the daily operation of the protocol and to invest in further development. The other part, as a true decentralized platform, will be shared to the veWTF holders on a weekly basis. The share will be based on the share of veWTF the user hold in the pool
I hold this further signal the project’s goal to put community first
Q5) I can see you held many AMAs everywhere and I read that you’re just a few weeks away from your launch. So can you share with us what you’ve been up to? Could you tell us some of #Waterfall’s development updates?
Lets focus on a few milestones that we had achieved so far.
The first milestone for us is to decide which blockchain to focus on, and we decided to go with BSC, due to its negligible gas fee and presence of high TVL farms with sustainable return.
Then the second milestone would be launching our first product – which would include 3 BUSD farms. Going forward, once we are more matured and the community is more educated to the product, we will be pushing out not just safe, sustainable return package with major farms and high TVL, but also risky leveraged products and new farms with high APY
Goal is to create different type of investment options and risk factor that users can select based on their preference!
We are now hard at work to get everything ready for testing, which is a few weeks away. We are working with our auditor to review our smart contract, finalizing our DAPP’s interface and likely will launch soon – stay tuned!
For mainnet official launch, it will depend on our test net process. Once we get the feedback from the community and adjust based on the suggestions, we will be ready!
And finally, and upcoming milestone is that we are working hard to confirm our public sale, which we will have more information in the coming days – please stay tuned to our channel for updates!
Q6) Where can I buy your tokens right now what is your current contract and how can I buy them?Will you have any other DeFI feature like staking, yiekd farm or NFT in the future? Can share a little about your roadmap?
This actually give me a chance to say that, we are working with a platform to launch our public sale – we are still finalizing some details, so cannot say anything in details yet except
- We will have a public sale!
- It will happen really really, REALLY soon!
- The announcement will come out within days 🙂
so please follow our social media and get the latest information about the details!
Website: https://waterfalldefi.org/
Twitter: https://twitter.com/waterfalldefi
Telegram: https://t.me/waterfalldefi
Discord: https://discord.com/invite/gS9Gda4sez
Medium: https://medium.com/waterfall-defi/
Q7) Are you also working to AUDIT your project, to make it more secure, trustworthy and reliable
Yes, security is a key issue and we take it seriously. For our protocol we can classify risk in two different segment
- The risk thats with our protocol’s code
- The risk thats associated with the underlying pools that in our product portfolio (3rd party)
For the first one, we take measures and work with a renowned auditor (Slowmist) to review our code base right now, they gave us some feedback (thank god its relatively minor) and we are now working hard to revise the code based on their suggestions. We will soon have the auditor report done and can’t wait to share with the community to boost their confidence in us. Meanwhile, going forward we soon launch our bug bounty program and continue to work with different auditors and other developer friends we have to peer review the code, making sure that we are always vilgant about checking and reviewing the security
For the second one, We usually would evaluate the risk involved in different crypto assets based on a couple of factors, including: the reputation of the team/protocol, amount of TVL committed by the community, the sustainability of the yield return, etc.
That’s why we introduce 3 BUSD stablecoin farms that all have high TVL and sustainable yield, which is the most secure / safe approach to engage with our first ever product launch. We will also limit the TVL for our first product to ensure we can plan for a smooth launch
Q8) On researching about $WTF Token Metrics i noticed that a large proportion of your tokenomics(45%) is allocated community members. So can you explain how can the community earn this token allocation? Do you have any ongoing events?
Our project is fully committed into making the protocol as decentralized as possible. Even our team members are formed across the world of yield farming strategists and DeFi OGs.
As in our tokenomics, we have committed 60% of the tokens allocated to our community, via user incentives like staking, liquidity provisioning, public sale and our treasury — the usage will be decided in our future DAO.
For more information about our tokenomics, can refer to this article: https://medium.com/waterfall-defi/waterfall-defi-token-metrics-aead80c89627
There are three major use cases for our tokens:
- You can stake our token to earn the governance token, which in terms would allow you to vote on upcoming protocol decisions such as approving new portfolio strategy
- Holders of our governance token would have the right to earn a portion of the transaction fee we charged from users
- Going forward, users with our governance token can propose their own risk tranching products and earn structuring fees
Q9) Can you give list 1-3 killer features of this project that makes it ahead of its competitors?
What is the competitive advantage your project has that you feel most confident about ?
There are a few similar concepted protocols in the space now, and Waterfall is a bit different from them due to the following features:
1.Diversification
Our portfolio strategies package multiple DeFi assets and yield farms to ensure risk and return diversification
In the future, we aim to include more diversified assets to ensure an abundance of options for the community.
- Clear tranche differentiation
A TVL limit is set initially for each tranches in the initial launch to ensure clear tranche differentiation
Going forward will lift the limit but will introduce dynamic reward to incentive optimal user behavior - Three tranche approach
We will launch with a three-tranche product, expanding the optionalities for the community. - Fixed income product
Will introduce a fixed income product by locking up the user deposit for a fixed period of time (seven days) during the deployment period
Q10) Currently, Binance smart Chain blockchain trending topic and It’s./having high transaction speed and cheap gas fees. Are you planning To Moved other blockchain or launch your mainet in The future????/
We shared the same opinion that BSC is the second most mature defi space, with a lot of mature, high TVL farms right now, and the gas fees are negligible.
That being said, this is just the first step, and we are actively looking at expanding into other blockchains in the near future.
Expanding to Solana and other EVM-compatible chains is on the roadmap, EVM side is easier since most of the codebase can be reused, Solana we will expand our team with rust developers to do the work
And this was the end of our AMA with Waterfall DeFi.
If you have any other questions you can ask here:
ℹ️ℹ️ Useful links ℹ️ℹ️
Website :- https://waterfalldefi.org/
Twitter :- https://twitter.com/waterfalldefi
Discord :- https://discord.com/invite/gS9Gda4sez
Medium :- https://medium.com/waterfall-defi/
Telegram official community : https://t.me/waterfalldefi