Crypto Structured Fund

Inspiration

Lending has become a big thing in DeFi field. Most people either borrow stablecoins to margin long ETH or deposit DAI to earn a risk-free interest. To differentiate, we want to introduce a new product that has a moderate risk and higher return to let risk-averse investors can also get involved in the growth of ETH.

What it does

Crypto Structured Fund(CSF) allows people to invest in two different terms: Preferred Share or Excess Return. A contract time and target interest rate are predetermined. Take "1 year, 20%" for example, we invest funds from both sides to ETH and lock it in a smart contract. One year later, we sell ETH for 120% of the initial DAI amount from preferred share's investors, then give the rest to excess return investors. By doing so, preferred share investors will not get a loss unless the price of ETH collapses.

Interestingly, we can see market force works in a different way. For lending platform, a collateral/leverage ratio is given, and the APR is determined by supply and demand. On the contrary, CSF has a "target" interest rate first, then market determines the leverage ratio.

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How I built it

A smart contract that accepts investments and implements the logic of conversion and settlement. It automatically swaps assets by using Kyber Network's swapTokenToEther and swapEtherToToken function.

Challenges I ran into

It's embarrassing that Kyber Network and DAI are on different testnet. So we decide to deploy our own token to simulate.

Accomplishments that I'm proud of

Different from prediction market and lending platforms, CSF does not rely on a price oracle. Thanks to the deep pool of liquidity from Kyber Network, we simply convert assets from one to another, and that's already a considerably fair settlement.