DeFi market overview:
Decentralized finance (DeFi) has shifted the way that cryptocurrency users interact with the protocol, introduced variety of new features and, most importantly, gave back the asset ownership to users rather than intermediaries. However, as the DeFi ecosystem develops, it faces a number of issues, one of which is complexity. An average user is now required to have a specific and up-to-date knowledge of how to interact with pools, deposit liquidity and mitigate impermanent loss.
In addition, many may find it hard to differentiate between various DeFi projects and evaluate their potential risks and rewards. Portfolios are in constant need of attention if you are looking to maximize profits, which may be difficult to keep track of. Finally, Ethereum transaction fees have grown significantly, making it more expensive for regular users to interact with yield farming opportunities and other dApps.
APYSwap offers a unique solution to these problems. APYSwap is a protocol for decentralized cross-chain exchange of shares of Tokenized Vaults. It implements a delegation function for user assets and provides a marketplace for financial assets trading. APYSwap allows users on multiple blockchains (initially Ethereum, Polkadot and Binance Smart Chain) to create and control their native blockchain vaults and transfer the ownership to third parties. Users may also benefit from passive income without actively managing their portfolio. Alpha version is already available with beta and Polkadot’s parachain version still in development.
Product and features:
APYSwap consists of three layers: the protocol and smart contracts, the layer 2 aggregation marketplace as well as the user wallet on the top layer. APYSwap Vault is the underlying layer. It is a smart contract managing access to its funds and functionality to other blockchain agents depending on their share ownership of the vault. It can interact with any trustless service on the Ethereum, Polkadot and Binance Smart Chain networks.
Ownership of the vault is split between multiple agents by tokenization. This allows portfolio managers to create specific combinations of Liquidity Providers, Yield Farming and other tokens and enables the transfer of divisible shares of these portfolios to third parties. Therefore, instead of unlocking the assets for trading, users can instead trade APYSwap Vault shares. This provides liquidity to the previously illiquid assets without losing the rewards tied to assets remaining locked.
Polkadot, Binance Smart Chain or Chromia blockchain can be used as Layer 2 networks to transfer or trade shares in APYSwap vaults, while the assets remain anchored to the Ethereum network. This also allows for the Uniswap-style exchange, where the users can exchange tokens on Chromia layer 2 without the high gas fees and Ethereum transaction times.
Portfolios and APYSwap Vault shares are available at APYSwap Marketplace. Marketplace transaction will be signed via APY Mask, a Metamask-style web wallet. This wallet may also be used to manage the APYSwap Vaults, transfer their ownership, etc. Users can login via APY Mask and vote with their APY token balance for the addition of new services or whitelist/blacklist certain DeFi projects.
Current share prices of the APYSwap Vault as well as the asset’s pool is determined by oracles. Fees in APY tokens are used to reward oracles’ honest reporting and tokens can be staked to vote for honest oracle selection. Share prices will be settled naturally by the market, since it is up to a buyer to decline or accept the price, offered by the seller. An oracle price assessment will also be implemented, where buyer/seller would be able to pay delegated oracles with APYSwap tokens in exchange for their services.
Users may choose to delegate control of their shares to the rebalancing contract via the on-chain or hybrid solution, select the rebalancing strategy and their portfolio will be automatically managed on their behalf.
Token utility:
APYSwap tokens are used to safeguard and govern the APYSwap’s ecosystem. They ensure that only the reputable DeFi projects are available on the marketplace. Their role is to provide an insurance utility. Projects, interested in listing at the APYSwap’s marketplace, will have to purchase APY tokens and lock them.
If the project has proven to be untrustworthy, tokens will be unlocked and distributed as a compensation. A time limited yield farming opportunity will be launched in exchange for locking funds in the vault.
Token owners will be able to vote for new portfolio projects. At first, APY team and early adopters will provide portfolios and tokenized vaults. In the long term, the platform will shift towards the complete decentralization with community acting as decision makers.
Portfolio managers will be incentivized to purchase the APY tokens, since they can attract more users by offering unique projects in their portfolio. However, they will need tokens to vote for the addition of said projects into the APY’s whitelist. Therefore, portfolio managers will contribute to APY token’s market value.
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