New York, New York–(Newsfile Corp. – October 24, 2021) – Beaver Finance is a single-asset intelligent yield farming platform that is the first to integrate DeFi liquidity mining with the options-based, state-of-the-art hedging solution for Temporary loss. According to Beaver Finance representatives, the highly anticipated platform will launch in mid-November. Now let's explore the mysteries and tensions of the beaver world.
1. Introducing the Beaver Finance Protocol and the team behind it
Beaver Finance offers crypto holders a safe, worry-free and high-yield, high-real-yield strategy. Users can stake single assets to participate in dual-asset yield farming and earn high-yield returns on mainstream DEXs. And what sets Beaver apart from a similar harvesting platform is that Beaver hedges Impermanent Loss (IL) through a series of European options portfolios. Most mining aggregation platforms show the return without taking into account the hidden but mostly large IL, while Beaver Finance addresses the IL problems through options to provide a real profit rate of farming.
There are two sections in the Beaver platform: Liquidity Providers (LP) asset pools for mining and Impermanent Loss Hedger (ILH) asset pools for hedging. Assets in the ILH pool are used as the main component for building an options portfolio to hedge IL of mining positions from the LP space. Assets staked in ILH pools are guaranteed loss-free and those in LP pools are also hedged, allowing LP users to earn actual returns without incurring temporary losses.
Beaver Finance's founding team includes Wall Street veterans as quantitative derivatives traders, scientists from renowned academic institutions, DeFi scientists as designers of multiple token economies, and a team of experienced developers from Silicon Valley. This world-class team is committed to solving the problems of notorious temporary loss and systematic risks in the AMM mechanism and creating the safest and most profitable yield aggregation platform.
The story goes on
2. Motivation of Beaver Finance
First, the Beaver team noted that there is still a huge market for depositing crypto assets. Many crypto holders cannot find a safe and efficient platform for generating single-asset income, while providing dual-asset liquidity for farming in DEXs comes with large uncertainties arising from the high volatility of cryptocurrencies and the risks associated with AMM associated temporary losses. Very often ILs even exceed mining profits and ultimately lead to a negative return.
Diagram 1
As shown above, Uniswap is slipping out of the TVL rankings and the fluctuation reflects the escape of assets during the dramatic trends of the major cryptocurrencies.
APR/APY is the “go-to” indicator for liquidity providers. However, these attractive, high-paying APYs displayed on DEXs or yield aggregators are all based on the assumption of undamaged capital, but not viable for liquidity mining due to the temporary loss. Currently, no yield aggregator counts IL in its APR/APY, which leads to misinterpretation of the final return among investors when collecting farming tokens and capital amounts, especially for newbies who are hardly aware of the destructive power of IL, who surprisingly realize this, without constantly paying attention to it. Depending on the change in exchange rates and the adjustment of positions, the final APY is never as pleasing as displayed on the platforms.
So one of the original motivations of Beaver Finance is to solve the aforementioned “false APY” problem once and for all. Because Beaver uses options strategies to hedge against temporary losses, miners are fully protected. The actual yield corresponds to the APY shown on Beaver, and investors can enjoy the harvest with peace of mind.
3. Similarities and differences between Beaver Finance and other return aggregators
Similar to platforms like Alpha Homora, Alpaca, etc., Beaver Finance allows users to stake single assets to earn a high return comparable to dual-asset farming. There are now also special features innovated by Beaver.
(1) Asset Allocation Engine: Dynamically pairs equivalent tokens from LP pools through algorithms to provide liquidity on major DEXs, allowing users to automatically enjoy the high returns of dual token LP farming in single token stake mode to achieve. In contrast, Alpha Homora and Similarities would add an additional exchange step to the formation of the pair, which would immediately result in a devaluation of the asset and an increase in the exchange rate, resulting in IL.
(2) Impermanent Loss Hedging Engine: Powered by Asteria Finance Lab, protects LP assets from agricultural positions by building European options portfolios to hedge against IL. With ILH, Beaver Finance would be able to protect LP capital and provide users with a real profit and loss rate in asset management operations.
4. Competitive Advantages of Beaver Finance
Beaver has 5 main competitive advantages compared to other yield aggregators:
(1) Simplicity
Beaver integrates multiple liquidity pools of major DEXs and provides dynamic APY updates, providing a fully automated one-stop service for single token staking + token pairing + LP provisioning + yield farming + asset adjustment, enabling users to navigate between different DEXs and liquidity saves pools from carrying out complicated mining operations.
(2) High yields
Compared to the low returns of single token staking on DEXs or other yield farming protocols, based on a solid theoretical foundation and extensive DeFi practical experience, Beaver's strategies optimize the efficiency of asset allocation and achieve high returns that come with Dual token farming is comparable.
(3) Loss-free protection
Based on the Option Portfolio Hedging Module developed by Asteria Finance Lab, IL hedgers can benefit from the returns of options market makers without incurring any capital loss; At the same time, it helps minimize IL in LP asset pools. Through extensive backtesting under multiple simulations, Beaver's hedging model not only eliminates capital losses for ILH pools but also generates stable returns.
(4) Professional
Beaver's finance team includes experienced Wall Street derivatives quants and traders, researchers from renowned academic institutions, and a technical team that previously led the development of several top DeFi projects. Hedging algorithms are based on the solid theories of the Carr-Madan formula and the classic Black-Scholes-Merton model and are back-tested in multiple scenarios to optimize functionality and minimize user costs.
(5) Security
System and asset security is the top priority at Beaver Finance: the financial models and investment strategies are repeatedly backtested by the professional team; Smart contracts are coded and audited by security experts and audits are conducted by leading blockchain security labs. Preventive techniques are used for a number of security issues such as reentry, arithmetic overflow/underflow, default visibilities, and floating point numbers and precisions, etc.
5. How do users participate in Beaver Finance?
Beaver Finance aims to provide a hassle-free, zero-based user experience. Generally, users can choose one or both roles: Farmer and Hedger.
Farmer => LP Mining (LP) section:
Beaver Finance would support cryptocurrency pairs with high yields and a certain level of security on major DEXs. Users can select any token pairs and deposit any asset into Beaver LP pools and leave the rest of the work such as token pairing, LP deployment and staking to mining for the platform to do the automatic execution.
Hedger => Impermanent Loss Hedger (ILH) section.
The capital of ILH pools is used to hedge against possible temporary losses of LP mining positions. Options portfolios are created using rigorous mathematical models and at the same time automatic delta neutral hedging is also performed, which not only protects LP assets from IL but also ensures the stability of ILH pools.
6. Beaver's Impermanent Loss Hedging (ILH) Engine
Beaver hedges temporary losses from liquidity mining through a series of European options portfolios powered by Asteria Finance Lab.
Mathematical principle: Carr-Madan formula
The basic concept is that for any return structure f(ξT) with respect to ξT that expires at time T, this can be realized by constructing a European options portfolio with ξT as the target and expiration date T subject to the condition of f(ξT) can be derived secondarily, which essentially represents a static investment strategy.
Don't be intimidated by the mathematical description above, in short: it has been mathematically proven that the IL caused by the X*Y=K model can be hedged in the opposite direction by a number of options.
On this basis, the classic Black-Scholes-Merton option pricing model is applied to calculate the costs and the hedging result:
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Diagram 2
When backtesting the three-year data (2019, 2020, 2021), the average cost is 0.7% and the hedging completeness is 99.8% (blue line). Compared to the uninsured asset loss (yellow line), the LP capital is almost loss-free.
The Beaver team also conducted detailed backtesting on the principles used in the ILH pool. According to the backtesting data, Beaver guarantees that staking individual tokens in the ILH pool is loss-free.
7. Current status, vision and future plans
Beaver Finance is thoroughly tested by a number of reputable security labs and will be officially launched at BSC in mid-November! First believers and early contributors to multiple Kickstart events will receive surprising rewards! By the way, the previous TVL contributors can not only earn risk-free single-asset staking profits, but also higher points, similar to the mechanism of DYDX, and would eventually be rewarded in the Beaver ecosystem.
Beaver Finance is committed to integrating the best-in-class profit and hedging models of traditional finance with decentralized technologies, building a secure and trustworthy yield aggregation platform for individual assets. Through extensive research and understanding of the options, Beaver Finance has eliminated the risks of liquidity mining and offers all cryptocurrency holders a worry-free passive income channel.
The Beaver Finance team will continuously work with Asteria Finance Lab to build DeFi infrastructures such as stable coin swap and multi-asset management based on derivatives. At the same time, the Beaver team will continue to integrate more advanced blockchain developments such as NFTs and financial strategies, providing users with comprehensive one-stop financial services. For more information, visit the website https://beaver.fi/ and Telegram https://t.me/beaver_finance for the latest updates.
Contact:
Beaver Finance / beaver.fi
Michael Li
+1 773 895 4530
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/100675
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