Launching Mainnet Beta
We’re thrilled to announce the launch of Affine Protocol — Mainnet Beta! The protocol has been deployed to the Polygon and Ethereum Mainnets, enabling investors to access diversified, and sustainable yield, without the usual complexities of DeFi. The Protocol enables users to combat the consistent problems around impermanent loss, which has plagued DEXs from the beginning. The flagship basket, USD Earn, provides automated diversification and liquidity management tools that were typically only available to the most sophisticated investors.
This launch takes place in the context of the dramatic failure of centralized crypto institutions like FTX and the broader macroeconomic downturn. As we transition to a deeper winter, where higher real yields are harder to find, investor expectations have lagged as they continue to chase comparable returns, often in more opaque, higher risk places. “The market downturn and fraud in centralized crypto has motivated us to redouble our efforts to build in this space, but we know that even in DeFi, earning sustainable yield is still difficult.” Tarik Moon, CEO of Multiplyr Labs, the core contributor to the Affine DAO.
At face value, providing liquidity is straightforward. Investors post two different assets — say Ethereum and USDC — so that traders on a DEX can exchange those assets. For every trade, liquidity providers earn a small fee, and assuming the prices between the assets don’t change, this can be low risk. However, prices do move. Liquidity providers still earn fees in this market but usually end up losing money due to impermanent loss. While users have earned over $1B in fees in the Uniswap Ethereum-USDC pool, studies have shown that over $100 million was lost via impermanent loss. This is a fundamental challenge that has made providing liquidity to DEXs too risky for most. Affine aims to fix this.
Automated concentration bots intelligently adjust liquidity positions to help users’ funds stay productive. Today, these are strategies applied by leading hedge funds manually but they are too difficult for most investors — from retail to institutions — to execute. What’s more, these single-sided liquidity strategies are grouped with other DeFi strategies, such as lending on Compound or Aave, into baskets, making diversified portfolios as easy as buying a single vault token.
In addition, we’ve put trust and security at the forefront, having been audited by leading Web3 security firm, Halborn Securities. The team ran an intensive, three-week exploration and found no major vulnerabilities in the Affine Protocol. You can read more about that here.
Finally, the Affine DAO was also established to help put community management and ownership at the core. Making DeFi accessible and beneficial for all means drawing from as many capable and interested members as possible. We welcome you to join this active and growing community here.