Eric: Welcome to the APY.finance AMA.
Hi @willshahda glad you can make it
Will: Thanks @ERCSU!
Eric: I understand its 1am over there.
Will: Haha, midnight.
Eric: Hardworking showoff this one.
Will: So, time to start my morning.
Eric: So please introduce yourself to the AMA room community.
Will: Hi everyone! I’m Will Shahda and I’m the CEO of APY.Finance. I’ve been involved in the crypto community for awhile now
Eric: Tell us a bit about your background and your journey to being full time in crypto.
Will: I’ve been deeply involved in DeFi since it’s very early stages. So I’ve been a software engineer my whole life, from a very early age, and in recent years got heavily involved on the tech side of Ethereum. My interest in DeFi started with Synthetix, I had been following them since the Havven ICO, and on to the powerhouse they are today.
Some of my first exposure to yield farming before the term was coined over the last year I had been heavily participating in hackathons for Ethereum development. Assembling teams to execute on projects in incredibly short time frames. Back in April, I put together a team to participate in the HackMoney hackathon. At that time, we saw that there was yield opportunities that many were ignoring due to the complexity of pursuing them, since then, this problem has gotten 100x.
Eric: Oh yeah.
Will: This is what lead us to begin developing the platform that has now become APY.Finance.
Eric: So what is APY finance @willshahda?
Will: APY.Finance is basically a yield farming robo-advisor. We like to refer to it as the “Wealthfront of DeFi”. We are trying to solve the three main pain points we see with yield farming time and time again:
1. Barrier to entry
2. Time consuming
To the first point. There are a ton of people flooding to DeFi right now. Everyone is hearing about all this crazy action, all these crazy returns. Even BTC maxis are jumping into the ring with WBTC and renBTC, but what they face is an incredibly complicated landscape with lots of undefined risks.
I’ve talked to many crypto-natives that have suddenly taken an interest in DeFi, but found themselves lost on how to capture the opportunity. There is a big onboarding problem.
Then, to the second point. Once users figure out how to yield farm effectively, they find themselves stuck with a full time job. They spend all day on crypto twitter trying to stay on top of the latest strategies, managing their positions, and assembling complicated spreadsheets to try and understand their actual ROI.
Lastly, it has become far too expensive for most users. Entering into a yield farming strategy can cost over $50 in gas fees. This creates a ton of friction for the average user, and optimizing their positions daily is completely out of the question. The way we solve this with APY.Finance is by providing a completely seamless user experience, with just a simple and cheap deposit transaction, they can send funds to the APY liquidity pool. This transaction is at most a couple of dollars even at extremely high gas prices
Eric: That would be sweet.
Will: From there, the system automatically manages the pooled liquidity, deploying it to a portfolio of yield farming strategies. It can deploy everyone’s capital atomically in a single transaction which creates massive gas savings for users. So we have a simple, one-stop-shop for yield farming that manages your positions for you at a greatly reduced cost. Sit back and enjoy your yields.
Eric: What is the role of the token in all of this?
Will: The APY token is critical to the governance of the platform. The importance of governance for APY starts with risk management. The first area we are involving community governance is with risk assessment. Risk management is very important in DeFi especially with everyone YOLOing into unaudited contracts.
Eric: Guilty as charged!
Eric: How do you envision governance working on APY in the future? Are there rewards for participating?
Will: At first we will have risk scores for each strategy, the community will be able to propose changes to and vote on these scores. The goal is for our portfolio of strategies to match both the community’s perception of risk in the DeFi landscape and the community’s risk tolerance. Successful proposals will be incentivized with rewards. As we continue to decentralize further, the governance token will have greater power and greater incentives. We are developing a generalized strategy architecture that will allow token holders to vote on discrete changes to strategies.
Changing steps or parameters in strategies. Eventually being able to propose whole new strategies. All of this without needing to deploy new contracts
Will: Eventually we see the community completely controlling every aspect of the system through the token.
Eric: Tell us about the team? advisors and investors? Who are the people helping you build this?
Will: The team is from the network of developers I have built up from my experience in hackathons which gives us the advantage of having worked together before. We are still scaling up the team, and will continue to onboard more talent as well. Our focus with advisors and investors was to bring people on that had hustle and were very product focused
Investors from other projects and angels that were willing to go to bat for us especially, and they’ve been tremendously helpful thus far, our advisors as well.
Sunil is the co-founder of Urza DAO and is very immersed in the DeFi world, helping us stay up-to-date with the latest and drilling deep into new strategies.
Pascal is the founder of Jarvis, he’s been through all of this before and it is great to have him backing us up. Jarvis has a very passionate community, and we hope to develop the same for APY.
There are a number of others helping to advise as well and they have all been exceptional.
A lot of people have come out of the woodwork to offer their help. People see the need for this platform and are excited by the potential.
Eric: I’ll open up the floor for the community questions.
Q: Many DeFi smart contracts have bugs and prone to security breaches. How secured is yours in APY Finance? Did you ever audit your smart contracts code?
A: We are approaching security in a few ways. First, there is the security of the protocols we connect with to implement our strategies. To this end, by allocating liquidity to a portfolio of strategies, we can vary the amounts based on the risk score of a strategy. A strategy with a high risk but high APY will get a small amount of capital, captures the upside, but limits the downside.
Also, by having a portfolio of strategies, we are able to diversify smart contract risk. A vulnerability in one protocol will not put all the funds at risk. We are also exploring options for insuring our positions.
Finally, there is the auditing of our own contracts. The architecture we are building out allows us to iterate on strategies while greatly limiting the scope of future audits. As we move forward, we will be able to release more information about the technical details of this architecture
I was just on a call with a couple of my developers about 15 minutes before this AMA discussing some of our latest updates, we’re very excited about it!
Q: What is your business model? Compared with similar projects like YFV.Finance, what difference does APY.Finance have to attract investors and users?
A: Great question. With all the exciting things happening around YFI and yearn it’s important to address what is different here. Yearn products, such as yVaults, lay somewhere between a financial primitive and an aggregator. There are many disparate pools that wrap certain DeFi protocols, automating some of their actions. They are very cool products to be honest, similar to xToken, which is another platform I love.
APY.Finance is much more consumer facing, yearn is DeFi products for DeFi people. APY.Finance looks to be much simpler and easier to understand for the new user. They just deposit once, and their liquidity is deployed to many strategies.
Users can be assured that they are always getting the best APY, without having to understand all the different protocols and DeFi tokens. The APY.Finance smart routing is critical here.
Q: DeFi Yield farming is driving adoption because it brings crypto back to the promise of democratizing finance. What are your thoughts on this? What are Apy.finance liquidity mining plans?
A: I absolutely agree with this, this was a huge reason I went deep into DeFi. Becoming jaded by a lot of the insanity from 2017, projects that really went off the rails, then finally seeing actual products, creating actual value for users, and getting back to the roots of cryptocurrency, programmable money.
This is a big part of the larger vision we have for APY. The system we are developing has the potential to go beyond yield farming. While our system brings incredible value to yield farmers today, we are moving in a direction where we can enable a community to govern the automation of capital in arbitrary ways.
We see the potential for a whole new paradigm of DAOs. The architecture we are developing for APY is so generalized that it could be used by a DAO to automate virtually any action on the Ethereum blockchain. Also, we do plan on having a liquidity mining program. Users providing liquidity to our platform will be able to earn the APY token. A significant portion of APY tokens have been allocated for this purpose.
Q: How do you think APY Finance is positioned to take advantage of increasing interest in Defi protocols? Can you share with us why you chose DeFi? What are your views on the financial sector?
A: I believe we are very well positioned as the attention on DeFi heats up because our platform is consumer facing and our strategies are aggregating the supply side financial primitives in DeFi. We have the potential to capture a big part of the market share of new users attracted to DeFi for the yield farming. We are focusing on a seamless and intuitive user experience. Most DeFi platforms cater to the DeFi PhD. There is a real lack of platforms that can help users cross the chasm to DeFi. We think this gives us a unique opportunity and a chance to fill a big gap in the market.
We chose DeFi because it is something we are passionate about. I’ve been a true believer for a long time, with so much instability in the world right now, I feel like we are seeing unprecedented levels of distrust in traditional finance. No one knows where traditional markets are going, we only know that the moves are going to be extreme. It’s this same instability that lead the creation of Bitcoin all those years ago. I really do believe we are making the tools that will build a new era of finance.
Q: Can APY Finance Assets experience fluctuations in interest rates? Can it be affected by market risks? How is APY Finance protected against fluctuating risks and liquidity risk? How does your risk policy work?
A: Risk management is critical in so many ways. While I’ve touched on how we handle smart contract risk, financial risk is equally important. Leveraged positions are often taken in yield farming strategies, and this always introduces liquidation risk. There are a number of triggers that initiate a rebalance of our yield farming strategies. Whenever a rebalance is necessary, a portion of yield is reserved to incentivize a third party to initiate the rebalance.
One of these triggers is liquidation risk, an example would be the liquidation risk on a leveraged Compound position. Even if you collateralize and borrow the same asset, you are gradually paying out interest rates that can eventually bring your collateral low enough to make your position vulnerable to liquidation.
The system can calculate the amount of collateral buffer that is required based on the interest rate and collateral factor to determine the safe margin.Once the system approaches the edge of that safe margin, a rebalance becomes available to unwind a portion of the position to keep the collateral secure. This is done when farming COMP with the DAI³ strategy. Not only does the user not need to worry about liquidation risk, they don’t need to pay the insane gas fees to manage that risk.The economy of scale provided by pooled liquidity on APY disperses those gas costs.
Q: YAM, another yield farming project running with unaudited code, faced with critical many errors leading to the falling of YAMv1, frozen 750k$ so how will APY prevent that mistake from YAM?
A: Very topical question.
~$700mm went into unaudited contracts practically overnight. No questions about it, it’s getting degen out there. I’ve personally done smart contract audits myself. I know just how involved they are. Even very simple contracts cannot be assumed to be safe. Striking the right balance between innovation and security is important.
For us, we plan to have a limited alpha launch, we want to gradually allow capital onto the platform instead of letting everyone pile in as fast as possible. As the contracts continue to be proven out over time, we can have more trust in them, they can be audited more, battle tested in more real-world situations.
Prior to this DeFi frenzy, teams were being considerably more careful with their contract deployments. A good example of this was the Uniswap v2 contracts, Uniswap’s contracts are not upgrade-able. Once they were deployed, that was it, totally immutable. So they had to be 100% sure their contracts were solid from every angle, and it shows in their code. It’s very concise, very optimized, least surface attack possible.
Because of the deterministic nature of smart contracts, they can be very robustly tested compared to other types of software. It is possible to develop extremely secure contracts, but we must put the time in.
Q: What are the most difficult challenges you encountered during the development of APY Finance and at which development stage is it in right now? And finally, what do you hope the APY Finance can achieve this year?
A: Right now we are executing on our MVP for the alpha launch. An exciting thing for us right now has been the generalized architecture for strategies that we are developing. This year we hope to get a lot of DeFi newbies yield farming with yields on par with their DeFi PhD idols.
As far as difficult challenges, the DeFi space has gained incredible momentum in a very short time. Every day seems like a week. It would probably be exhausting for anyone not accustomed to the insane 24/7 nature of crypto. Every hour counts and we are not taking any time for granted. That’s one of the reasons it’s been great to work with teammates of mine from hackathons. They know how hard I push, and they are willing to match it. Truly honored to have them with APY.
Eric: I think its 2am over at Will’s part of the world. Thanks for taking the time. Very in depth stuff! Please invite the group to your official channels.
Will: Thanks Eric! Appreciate you having me on this AMA.
You can stay up-to-date with everyone going on at https://t.me/apyfinancechat
You can also follow us on Twitter https://twitter.com/apyfinance
Eric: Awesome AMA for an awesome project. I am SO gonna use this.
Will: Thank you everyone for the questions! Can’t wait to have you on Eric!