APY.Finance AMA summary recap with Shin Chan community

We held a live AMA with Will Shahda the CEO & Solidity Engineer of APY.Finance on 12th Oct evening. Here’s the recap for those who missed it.

Intro

I’m Will Shahda, the founder of APY.Finance.

I got involved in DeFi back in 2018 because of my interest in stablecoins. While Tether may have been the most popular stablecoin, I found myself drawn to the mechanics behind systems like MakerDAO and Havven (now Synthetix).

In 2019 it became clear to me that DeFi would be the next big thing in crypto. Everyone in the space was product-focused and the projects were delivering real value to users. It was a return to crypto’s roots, the promise of programmable money.

To hone my expertise in DeFi, I started attending as many Ethereum hackathons as possible. I put teams together and executed on projects under tight deadlines in the heat of competition. Frequently, we found ourselves winning.

The most recent hackathon I participated in was HackMoney. It was here that the idea for a yield farming robo-advisor, now known as APY. Finance was born.

APY.Finance is a yield farming robo-advisor that focuses on user experience and risk management.

There are three major pain points with the yield farming user experience: barrier-to-entry, time commitment, and cost.

APY solves these pain points by giving users a single place to deposit their liquidity. All it takes is a low-cost transaction to deposit. The platform handles all the heavy lifting of yield farming by pooling everyone’s liquidity and distributing the gas cost.

We also use a risk assessment framework to assign every strategy a risk score. APY then distributes user liquidity across a portfolio of yield farming strategies to optimize risk-adjusted yields.

AMA begin

Q1: How much tokens supply the platform plans to sell, to distribute them as an incentive among the APYFinance platform’s liquidity providers?

31.2% of our tokens are reserved for liquidity mining rewards. The rate at which we distribute them and how we will distribute them is something we want to continue to revisit based on community sentiment and what we believe will improve the health of the platform the most. Eventually, we want this to be controlled by governance as well.

You can read more about our token economics here: https://medium.com/apy-finance/introducing-the-apy-token-edac64d0cf6b

Q2: How does Apy Finance protect user funds from liquidation?

Whenever a strategy in the yield farming portfolio uses leverage, we track the collateralization to ensure that there is enough buffer to last until the next rebalance. This way we can unwind portions of the strategy if the position gets too close to being undercollateralized.

Q3: Why did APY Finance choose an IDO over other forms of offerings for its initial launch despite some of the negative stories attached with it? Have you cross your T’s and dot the I’s to ensure it's going to be a success?

We are listing on both a DEX and a centralized exchange. We wanted to pursue multiple channels of token distribution as each one has different pros and cons.

Q4: APY Finance helps to the new crypto user to not misspend their capitals you have that Risk management model?

By depositing into APY, you can ensure that your funds are not being exposed to unnecessary risk. As we’ve seen recently, platforms made by anonymous developers very frequently rug pull. Even after they’ve built up a reputation for months. This is a risk factor that will be weighted heavily in the risk score.

Q5: How does APY Finance optimize gas bills while rebalancing every time? How beneficial is it for small liquidity providers?

Because the entire liquidity in APY is balanced at once, gas fees can be reduced dramatically. This means that users who would ordinarily be stuck in a single yield farming strategy due to the friction of withdrawing at a high cost can now capture more frequent yield farming opportunities to increase their risk-adjusted yield.

Q6: Why is the occasional UI problem with using Chainlink oracles caused?

You have experienced a UI issue as a result of a fluctuation in the conceptual value of the launch-related accounts due to the stablecoin variance. Has this problem affected the funds?

This did not affect funds at all. The value of stablecoins tends to mean-revert around $1 instead of staying exactly 1:1. This will cause the precise USD value of your account to vary a small amount.

Q7: What is the competitive advantage of APY.Finance over similar projects? Can you name 2–3 APY.Finance functions ahead of the opponent? What will that function look like in the future?

The APY platform gives users a single pool to deposit their liquidity. The pool’s liquidity is automatically managed, continuously optimizing for the best risk-adjusted yields in a portfolio of yield farming strategies.

APY operates at a higher level of abstraction than other yield farming aggregators. Our focus is on smart routing between yield farming strategies in a balanced portfolio. Other aggregators focus exclusively at low-level automation of specific yield farming strategies.

We think it is important to account for risk and not just seek the highest possible yield. DeFi is a rapidly evolving space and we need to limit our downsides otherwise we are picking up pennies in front of a steamroller. This is why we diversify smart contract risk with a portfolio of strategies and why we rebalance liquidity according to risk-adjusted APY.

Q8: What are the difference between Yield Farming and Mining?

Mining is typically just to earn a governance token. Our liquidity mining program, for example, is a way for early supporters to earn APY before the strategy portfolio goes live.

Yield farming is when one provides liquidity to a financial primitive or set of financial primitives to earn yield.

Q9: How do you evaluate the risk within the APY Finance’s frameworks? What kind of risk factors do you calculate on top of the offered percentages for yield farming? How can users ensure that the offered liquidity pools & the projects are safe to invest in?

We use a risk assessment framework to look at smart contract risk, financial risk, and centralization risk. We are also engaging security firms to assist in our risk assessments.

Some risk factors relevant to some of the biggest issues we’ve seen recently in DeFi has been anonymous developers, opaque team incentives such as premines, and the length of time it has been in operation.

Q10: The APY Finance liquidity mining rewards program locked $67M in the first hour and peaked at around $80M on the third hour. Did you expect those numbers in such a short time?

These numbers quite honestly far exceeded our expectations. It was very exciting. We unlocked the contracts in block #10973309 and by block #10973310 several million USD was already deposited.

-End-