deFarm is a Social Layer, that built on top of an onchain asset management platform. The core feature of our products suite allows users to create on-chain DeFi vaults (we called them “Farms”). The creators of those farms will direct the assets inside the vaults, trading them through partners DEXs, giving passive PnL to the farms’ investors.
What is DeFi Vault?
Imagine you have a piggy bank, but this piggy bank is magic. Instead of just holding your money, it can use yours to find more, like looking under the couch cushions or in the pockets of your old jeans. Now, think of a big piggy bank that many people can put their money into. This big piggy bank doesn't just sit there; it goes out to look for more money for contributors. In DeFi, this big piggy bank is called a Vault. People put their money in, and smart computer programs (called smart contracts) help find ways to make more money with it by lending it out or joining yield farming.
In the context of de.Farm, the piggy banks, called "Farms," have a bit of a superpower. Instead of waiting for the smart computer programs to find more money, these farms have a team of money wizards. The money wizards actively look around, find the best places to grow money in farms by making trades on DEXes. Unlike other piggy banks that rely solely on computer programs, farms in de.Farm have these money wizards making active decisions to help contributors’ money grow bigger and faster. This active way of earning profits is what sets deFarm's farms apart from vaults of other platforms.
What actions can Farm Managers carry out with assets inside the Farms?
To clarify, a Farm is a non-custodial DeFi Vault. This means Farm Managers do not have access to the assets within the Farm. Their role is limited to executing investment actions using permitted dApps and smart contracts to manage the Farm effectively. Importantly, they cannot transfer these assets out of the Farm to another address.
During the initial phases of our project, our focus was primarily on on-chain Perpetual and Spot trading. As we progress, we plan to incorporate various other digital assets, including NFTs, early-stage investments, and Real-World Assets (RWAs).
In our first development phase, we have two main products:
Upcoming products, such as NFT Farms, Seed House, and other digital asset vaults, will be introduced in later stages.
Single Farm allows Liquidity Providers to participate in a single trading idea proposed by a Farm Manager. Liquidity Providers can choose to fund any Farm based on the Manager's strategy and past performance. Since each Single Farm only focuses on one trade, it reduces risks for Liquidity Providers as their capital is not spread across multiple trades. Liquidity Providers gain access to unique trading opportunities proposed by expert Farm Managers. They can diversify their investments by funding multiple Single Farm with different strategies.
This process starts when a Farm Manager sets up a new Farm for a specific trading idea and invites Liquidity Providers to fund it. The Liquidity Providers decide if they want to invest based on the Manager's past success and strategy.
Once the funding is complete, an account is automatically created on our DEX partner to carry out the trade. The money that the Liquidity Providers put in is transferred to this account. However, the Farm Manager doesn't handle the trade directly. Instead, specialized agents (smart contracts) from deFarm place and oversee the trade using an off-chain system, which is designed to make the trade more effective.
The trade is closed when it's time to take profits or to stop further loss. The smart contract of the Single Farm ensures that any profits or losses from the trade are fairly divided among the Liquidity Providers. If the trade is profitable, the Farm Manager earns a fee. This means the Manager's earnings are directly linked to the success of the trade, making sure their goals match those of the Liquidity Providers.
After the trade, Liquidity Providers can quickly get back their money along with any additional earnings or less any losses through the smart contract.
A seasonal farm is an perpetuity DeFi vault facilitating the trading of multiple assets within the Farm according to the Manager’s trading strategies. Managed by only verified Managers, Seasonal Farm offers users a decentralized alternative to traditional Hedge Fund. Compared to another traditional hedge fund, where the clients’ or investors’ assets get deposited into the fund accounts, Seasonal Farm remains non-custodial and fully transparent, which means Liquidity Providers can see the fund's performance throughout the process.
The key difference between Single Farm and Seasonal Farm is highlighted in the time as Liquidity Providers are willing to entrust their assets to the Manager. This abides with the level of involvement of the Manager to the Farm. A longer time period means that the Manager is better able to manage risks, plan comprehensive strategies, and maximize the profits of Liquidity Providers.
By implement a NAV Price system, Seasonal Farm will provide better asset management and tracking capabilities for both Managers and Liquidity Providers. Whenever users deposit into Seasonal Farm, they purchase a share of that Farm at NAV (Net-Asset-Value). NAV is calculated by dividing the total value of all the equities in a Farm's portfolio, minus any liabilities, by the number of outstanding shares. Find the formula below:
Thereby, the NAV is represented as a token of the farm. So, in short, whenever a user deposit or withdraw, they are purchasing or selling an amount of Farm's token (wrapped in
format) equal to the value of their amount of capital divided by what the price of the Farm's token is at that time of transaction. For a more thorough understanding of the Seasonal Farm's operating mechanism, please visit System Flow or User Guide for details.
Wait, why do Seasonal Farms has their tokens? Why make things complicated like that?
The main reason that Seasonal Farms’ has its own tokens, is to enable more accessible depositing and withdrawing assets into the Farms while they are still running. The Farm’s token is in fact represent a share of the Farms’ total asset. When a user deposits into the farm, they exchange their digital asset for shares of the Farm.
The token prices of a Farm always start at $1. If the total asset value (Asset minus liabilities) of the Farm go up 20% while the circulating shares remain the same, the token price will rose to approximately $1.2. Pretty simple eh?
You can also visit our guide, or try our testnet before investing with real money to understand our mechanism better.
Initially, an Liquidity Provider will deposit funds into the Seasonal Farm, which can be done anytime up to the end of a designated seasonal period. Upon deposit, the Liquidity Provider’s share of the Farm is determined by the proportion of their investment relative to the total funds in the Farm.
Once the funds are in place, the Manager of the Seasonal Farm begins to execute the trading strategy. This involves opening and closing multiple orders over the course of the season, up to a predetermined expiry date. For each order or trade that is executed, the Manager earns a commission, aligning their financial incentive with the performance of the Farm. However, the Manager is limited to managing the trades only—they cannot withdraw funds from the Farm themselves.
As the season progresses, Liquidity Providers can track the performance of their investment, as reflected in the profit and loss (P&L) of the trades made by the manager. When they decide to, Liquidity Providers can claim their funds back. This can be done at any point, although if it's done before the end of the season, an early exit fee may apply. The process is designed to be transparent, allowing Liquidity Providers to see the results of their investments and to have the flexibility to withdraw their capital when they prefer to.
The whole idea of Non-fungible tokens is really attractive, especially that its the gateway to bridge RWAs to Blockchain in the upcoming cycles. 2021-2022 hypes make most people/market participants think of NFTs as PFPs or “shitcoins with picture”.
While indeed, some NFTs are just purely speculative instruments and nothing more than a pump-and-dump scheme of their Creators, treating all of the NFTs space like that is a giant misdirection step. In our thesis, NFTs are here to stay.
However, the entry barrier is huge with NFTs investing. It’s fairly easy to go on Opensea or Binance to purchase an NFT, but its hard to purchase the right one that yield positive ROI in the future. NFTs communities are operating somewhat cult-like and give new users a hard time following, participating, and investing. Ask some newcomers to buy a Milady, and they will think you are out of your mindds.
Then, why not let pros do it? Our NFT Farms give retailers or spectaculators a mean to invest in NFTs without the need to sink too much into NFTs culture. The steps are simple. Manager create a Vault, Users deposit into the Vaults and allow Manager to collects NFTs for them.
NFT Cults can now actually WAGMI together.
Have you ever invested in a pre-market round of a project through an OTC community pool and ended up getting scammed? Or maybe you want to participate in early rounds of your favorite project, but you don't have the necessary connections to do it? If so, Seed House has got you covered.
Seed House is a smart-contract DeFi vault that eliminates the complicated and risky process of investing in pre-sale rounds of a project. With Seed House, early investors can easily invest in pre-sale rounds of a project in an auction-based manner. Seed House is all about reducing risk and increasing transparency for early investors. By providing a secure and transparent platform, Seed House bridges the gap between projects and early investors, making it easier for everyone to benefit from pre-sale rounds in a safe and effective manner.
Seed House is set to launch in Q4/2024, so stay tuned!
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