Announcing our $5.1M Seed Round!
We are excited to announce Affine’s $5.1M seed round, led by Hack VC and Jump Crypto, with participation from Coinbase Ventures, Circle Ventures, Propel VC, Spartan Capital, Global Founders Capital, FJ Labs, Shima Capital, Eniac, AlphaLab, Genesis Block, and Dexterity. This brings our total funding to-date to $6.9M and enables us to empower our users around the world fight inflation by growing their assets, powered by DeFi with real yield. We are currently live on Polygon and Ethereum, with 2M+ USD TVL and helping users earn ~10% real-yield.
Why We are Building Affine
In this post-pandemic, high-inflation world, individuals around the world struggled to preserve the real value of their assets. From stocks to crypto, there are no places to hide from macroeconomic pressures and an impending global recession. In this world, Affine aims to be the trusted protocol for our users to earn yield that is fundamentally different from the opacity — and at times outright fraud — we saw from companies like FTX, BlockFi, 3AC, or Celsius during the last cycle. We believe in that a truly decentralized product can be an antidote to the travails of this last cycle and are building from the original ethos of blockchain — one where a decentralized and trustless system can help shine a light on how things work so that all can benefit.
Paired with the broader macroeconomic downturn, this crypto winter has led to increased scarcity of real yield in the space. Simply put — when the US Treasuries were yielding nearly 0%, the value of DeFi, earning 5–6% on money market products such as AAVE or compound was exciting. However, with Treasury Bills now at ~5%, real DeFi yield began to dry up. In that environment, we had to venture into finding novel DeFi strategies such as providing structured liquidity into decentralized exchanges, where real yield is still being generated. To that end, Affine has created several diversified baskets, that allow our users to participate in this crypto-economy, powered by DeFi, earning yield that is beyond what they can earn in the traditional financial system in a more transparent way.
Making DeFi Management Easier and More Sustainable
In today’s market, most DeFi investors know that there are increasingly few places to earn yield in a sustainable manner. In particular, many opportunities either provide small returns too low to justify the risk or are generating “yield” through the emission of tokens of dubious value. One bright spot, providing liquidity to decentralized exchanges (DEXes), can actually be a productive place to earn, but only if managed well.
To do so, users provide liquidity to a DEX, allowing them to earn trading fees when other users are exchanging assets. However, while liquidity provision has generated over $1B in fees in Uniswap over the last year, studies have shown that over $100M+ was lost due to impermanent loss. This is a fundamental challenge that has made providing liquidity to DEXs too risky for most.
Affine addresses this by using a series of automated trading bots and decentralized smart contracts that help mitigate this risk. By intelligently managing the concentration of liquidity in any given pool, strategies adjust dynamically to either capture more fees. The goal is not astronomical APYs in excess of 1000%, but instead, sustainable yield that also preserves capital.
Diversified, Cross-Chain Baskets
In addition to providing a novel way for any user to generate sustainable yield by providing liquidity to DEXs, Affine also incorporates diversification directly into the protocol. Affine “Baskets” are combinations of one or more “strategies” that can range from simple token holdings (eg. holding wETH), to lending on money-market protocols like Aave and Compound, to more complex and sophisticated strategies like the liquidity providing mentioned above.
What’s more, a single basket can contain strategies from multiple chains. Rather than worrying about swapping tokens to a new chain and orienting to a new project, Affine streamlines this work by offering a way for a user to get exposure to multiple strategies with just a few clicks. This also provides the added benefit of minimizing idiosyncratic risk from a single strategy. For instance, our leading basket, USD earn, gives users exposure to blue-chip lending protocols like Compound and Aave in addition to higher-yielding — but higher volatility — DEX LPing strategies.
Where We Go From Here
The Affine project is just getting started and we know that the project and community will evolve over time. We are deeply committed to listening to you and making it possible to earn yield, without the boundaries created by centralized opaque institutions. We envision a world, where any crypto asset, on any chain, can earn yield through our decentralized protocol, where we increase the utility and velocity of money, while minimizing the counter-party risk that comes with the centralized incumbents and their green and grift. We welcome you to join our DAO and be a part on this journey by joining our Discord.