While navigating the DeFi landscape can seem straightforward for someone who spends hours in “cryptoland” per day, this can be a daunting and frustrating task for new users. Between the various difficulties of pools requiring token splits, managing Liquidity Provider tokens, and interacting with confusing interfaces, yield farming can be extremely frustrating to a user who may be new to the crypto space. We see stable coin yield farming as the perfect introduction for the unbanked and underbanked to onboard into the world of crypto. Not only does this serve as an introduction to crypto, but the real world utility of earning 100 times the apr found at their local bank is wildly impactful. However, unlike a bank, the user retains unrestricted access to their funds and remains independent and safe from economic instability.
What it does
Our solution targets anybody with a mobile phone number including feature phones (flip phones) and smartphones. Users deposit the Celo Dollar stablecoin into our protocol, and algorithmically determines and deposits the funds into the most profitable stablecoin pool integrating with MobiusAMM and Ubeswap DEX and ambitious to integrate more exchanges across different EVM chains. Our solution auto compounds the rewards to take the active management out of the users hands for ease of use. This yield earned from these pools is withdrawn in a variety of ways, ranging from social impact to phone call credits.
How we built it
Our tech stack includes a frontend web application built with ReactJS, atop tailwind css for styling and theme. For our contracts we were able to reference Revo Market’s pre-existing auto-compounder smart contracts deployed to the Celo Blockchain. We started building this dApp using a boilerplate user interface with wallet connections and web3 programming libraries pre-installed, and further built on top of that by interfacing with Celo DeFi protocols such as Ubeswap, Moola Market, Valora, Kotani Pay, etc. Further development of Synth involves an entire redesign of the Revo auto-compounder smart contracts such that we can support automated rebalancing of liquidity provider positions across different decentralized exchanges.
Challenges we ran into
One of the things we struggled with once we decided we wanted to create a yield aggregator was how to provide value to users and differentiate our project from other stable yield protocols. While evaluating different mechanisms to Move capital we were torn between the allocation being determined by governance, or allocating all to the top performing pool regardless. Since the goal of this is to ‘set and forget’ we found it counterintuitive, that users would participate in voting on a platform designed for autonomous management of a users deposits. However, if no governance mechanism is set in place, the protocol’s algorithm to determine where to allocate capital next would need to be robust across a variety of scenarios.
When LP’ing into a yield farm, generally the advertised APR will go down due to more capital being spread out across more individual LP’s. If our protocol cannot accurately simulate the highest profitable yield farm before depositing, then potentially what could happen is an inefficient amount of position rebalances (aka: moving capital from one farm to another). This would incur unnecessary losses for Liquidity Providers and actually end up with a sub-optimal yield farming strategy.
The current plan for deciding which pools to allocate capital is as follows: Currently our protocol leaves delegation up to the community. However, we are discussing shifting to a model which algorithmically determines the highest pool and that the funds will be allocated to unless specified and voted against (51%) by the community.
We are proud of the team we created around this project. All our members are from Blockchain at Cal Poly, a university blockchain club dedicated to learning about web3 dApp development. Regardless of the hackathon incentives, we are proud of pushing a fully thought out product design as well as an MVP. We are also proud of ideating and working through an innovative product allowing the unbanked and underbanked to generate a new income source from any device.
Another thing that we also took pride in while working on this project is that the use of USSD can not only dramatically expand the potential user base, but also eliminates the need of a computer, and instead simply requires a flip phone. With the complications of typical yield farming we were very satisfied that we were able to simplify and deintensifying.
What we learned
Our team learned a ton about various competitor protocols and some of the limitations they face. We became aware of new projects such as Kotani Pay and aim to leverage their technology to onboard more users. Our team also increased our fluency within the Celo ecosystem, became more comfortable interacting with numerous protocols, and gained experience learning about the web3 tech stack. Most importantly we learned how to work in a new environment with limited time and lack of skills/resources.
What's next for Synth
The grand roadmap for Synth lies with configuring the connection to Synth via USSD and expanding into more DeFi protocols. On the USSD side, we have researched the steps and configured the design but still need to implement the contract to allow users directly deposit into the pools from their feature phone. For expanding capabilities, the team wants to add more yield farms into the app to provide more opportunity to swap and chase stablecoin yield across protocols. Multi-tier risk tranches for investors is also something we are planning on implementing; for example, a high risk tranche is a leveraged stablecoin yield farm that earns up to 10x returns. Eventually we see this working multichain, but that is another layer of complexity that requires community governance.
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