Tranches in finance are when a financial product/vehicle is split up into separate baskets to divvy up risk and yields to appeal to different investors.
There are junior tranches, which carry the most risk. If there is a default/crash, junior tranche holders take most losses.
To acquire Saffron Finance's governance token, SFI, users must deposit ETH-SFI Uniswap LP tokens or deposit into the two supported tranches, the "S" (senior) tranche and the "A" (junior) tranche.
- S tranche gets 71.25% of emissions
- A tranche gets 3.75%
- Uniswap LPs get 25%
To deposit in the S tranche, all you need is DAI. You deposit DAI and get paid in interest from Compound and SFI.
To deposit in the A tranche, you need DAI *AND* SFI at a 1,000:1 ratio. The A tranche is yielding over 10x what the S tranche is yielding in Compound interest alone.
As the A tranche has a higher barrier to entry, the amount of capital in the pool is minimal, far below that of the S tranche.
It's at a point where someone depositing DAI into the A tranche will get 4x the SFI rewards they would depositing that same DAI in the S tranche.
The A tranche is becoming increasingly attractive as the price of SFI rises, meaning that those that want in must buy SFI on Uniswap.
Couple that with limited liquidity and the SFI pump is becoming recursive upward.
@MrGavinLow did a great job running the exact numbers for SFI farming in this thread.
But in my opinion, I think SFI is temporarily overvalued. The market doesn't know how to react to this unique tokenomics decision.
Per his numbers, a $10,000 DAI deposit will yield approximately 17.5 SFI at the end of the epoch in 10 days. That SFI currently has a value of $12,250.
It's unwise to assume SFI will hold these levels, but assuming a 50% drop, that's still $6k in SFI + interest in two weeks.
Disclosure: I don't hold SFI.
Also, since they're an anon team and the contracts are unaudited, please keep your head up with Saffron.
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Back by popular demand. Again, with everything on DeFi being on-chain, we can see connect firms & addresses.
A breakdown of some of the known Ethereum addresses of a16z, Celsius, Nexo. Also, a look at addresses *likely* operated by firms like Alameda, Struck Capital, & more.
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a16z's (1/2) interesting because it became the first "mainstream" VC to go big on DeFi tokens.
They have $26m in MKR, $2m in SNX, and $1.5m in REP.
Of note, they're up $11m in their MKR.
a16z (2/2)
What I really remember about this address is others in the space eyeing it last year:
Someone deposited $250k of SNX into the address.
We still don't know if it was a16z.
Not much else to say though - I guess Pool 2 yield farming isn't in their mandate.
Hands down one of the coolest DeFi products I've seen in recent months is Alpha Homora by @AlphaFinanceLab.
The product has seen a lot of attention over recent days as investors seek higher yields on Ethereum yield farming and liquidity mining.
Let's take a closer look.
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To put it simply, Alpha Homora allows users to obtain leverage on Ethereum yield farming.
It also automates the yield farming process, even if the user does not want to take leverage.
This is similar to what the @zapper_fi team did in its early days with Zaps.
When you want to LP one ETH into ETH/WBTC on Uniswap, you swap 0.5 ETH into WBTC, then supply both to the pool. Cool.
But let's say you want to collect more in trading fees or in UNI (if rewards are voted back in), you can take leverage of up to 2.5x (used to be like 3x).