Skip to content

Commit

Permalink
updated introduction
Browse files Browse the repository at this point in the history
  • Loading branch information
@chopan123
chopan123 committed Dec 3, 2024
1 parent b783856 commit 43c1703
Show file tree
Hide file tree
Showing 4 changed files with 85 additions and 39 deletions.
35 changes: 35 additions & 0 deletions apps/docs/01-introduction/01-concepts.md
View file
Original file line number Diff line number Diff line change
@@ -0,0 +1,35 @@
## Concepts

These are some concepts to understand the DeFindex protocol:
- **Vault:**
A **DeFindex Vault** is a smart contract that **defines a distribution** of an investment into **one or more strategies**. It works like an index fund or an ETF, where the underlying assets are invested in DeFi protocols. In order to be exposed to DeFi strategies, a user just needs to deposit assets into the Vault. Then, the Vault will take care of automatically investing those assets in the defined strategies.

- **Strategy:** A strategy is a set of **steps** to be followed to execute an investment in one or several protocols. This could be as simple as just holding assets, or as complex as farming and auto-compound rewards automatically, leverage lending or leveraged farming strategies for borrowing and lending markets like Blend.Capital.

Example of Leverage Lending:
```
Investing USDC in Blend, can be as simple as just depositing USDC in Blend harvest the BLND rewards and reinvest them (autocompounding), or it can be more complex with multiple steps: 1) Deposit 100% in Blend, 2) take a 50% loan in XLM, 3) Swap XLM for USDC, 4) Deposit more USDC. Then harvest BLND rewards.
```
- **Rebalancing:** Rebalancing involves changing the allocation of funds between strategies of a DeFindex Vault. For example, a vault with 50% in two strategies could change to 80% and 20%, respectively.
- **Shares** or **dfTokens:** Shares are fungible tokens issued to users upon depositing assets into a specific DeFindex Vault. They represent a proportional share of the total assets managed by the DeFindex Vault. Users can burn shares to withdraw their underlying assets, which might be liquidated based on current protocol strategies.
- **Automated Market Makers (AMM):** AMMs are decentralized exchanges that use algorithms to set prices and facilitate trading. In DeFindex, AMM LP tokens represent liquidity provision in various trading pairs. Users can earn yields from trading fees and token incentives by holding or staking these LP tokens.
Example: [Soroswap.Finance](https://soroswap.finance).
- **Lending Platforms:** Lending platforms allow users to deposit assets in exchange for earning interest. DeFindex incorporates lending strategies to diversify asset allocation and maximize returns. Assets deposited in DeFindex can be lent out to earn additional yield.
Example: [Blend Capital](https://blend.capital).
- **Autocompounding:** Autocompounding is the process of reinvesting rewards automatically into the same strategy. This allows for changing from APR to APY! This allows for continuous growth of the investment without the need for manual intervention. Let's see an example:
If a user deposits 100 USDC in a strategy with 30% APR, after one year the user will have 130 USDC. However, if the user reinvests the rewards every day, she will get more! Let's see how this works:
1. A 30% APR is 0.082191781% per day. Because daily return is APR/365 = 0.082191781%
2. If the user reinvests the rewards every day, after one year the user will have ~135 USDC. Because $$(1 + 0.00082191781)^{365} = 1,349692488$$ Meaning that instead of 30% APR, the user will have 34.96% APY.
This shows how powerful the autocompounding is!
- **Farming:** Farming is the process of earning rewards by staking assets in DeFi protocols.
- **Harvesting:** Harvesting is the process of collecting the rewards earned by the strategy.
38 changes: 38 additions & 0 deletions apps/docs/10-whitepaper/01-introduction/02-core-concepts.md
View file
Original file line number Diff line number Diff line change
@@ -0,0 +1,38 @@
# Core Concepts

These are some concepts to understand the DeFindex protocol:
- **Vault:**
A **DeFindex Vault** is a smart contract that **defines a distribution** of an investment into **one or more strategies**. It works like an index fund or an ETF, where the underlying assets are invested in DeFi protocols. In order to be exposed to DeFi strategies, a user just needs to deposit assets into the Vault. Then, the Vault will take care of automatically investing those assets in the defined strategies.

- **Strategy:** A strategy is a set of **steps** to be followed to execute an investment in one or several protocols. This could be as simple as just holding assets, or as complex as farming and auto-compound rewards automatically, leverage lending or leveraged farming strategies for borrowing and lending markets like Blend.Capital.

Example of Leverage Lending:
```
Investing USDC in Blend, can be as simple as just depositing USDC in Blend harvest the BLND rewards and reinvest them (autocompounding), or it can be more complex with multiple steps: 1) Deposit 100% in Blend, 2) take a 50% loan in XLM, 3) Swap XLM for USDC, 4) Deposit more USDC. Then harvest BLND rewards.
```
- **Rebalancing:** Rebalancing involves changing the allocation of funds between strategies of a DeFindex Vault. For example, a vault with 50% in two strategies could change to 80% and 20%, respectively.
- **Shares** or **dfTokens:** Shares are fungible tokens issued to users upon depositing assets into a specific DeFindex Vault. They represent a proportional share of the total assets managed by the DeFindex Vault. Users can burn shares to withdraw their underlying assets, which might be liquidated based on current protocol strategies.
- **Automated Market Makers (AMM):** AMMs are decentralized exchanges that use algorithms to set prices and facilitate trading. In DeFindex, AMM LP tokens represent liquidity provision in various trading pairs. Users can earn yields from trading fees and token incentives by holding or staking these LP tokens.
Example: [Soroswap.Finance](https://soroswap.finance).
- **Lending Platforms:** Lending platforms allow users to deposit assets in exchange for earning interest. DeFindex incorporates lending strategies to diversify asset allocation and maximize returns. Assets deposited in DeFindex can be lent out to earn additional yield.
Example: [Blend Capital](https://blend.capital).
- **IDLE Assets:** DeFindex maintains its balance between invested and idle assets. Idle assets are kept liquid to ensure users can easily withdraw funds without disrupting ongoing investments. Also, if a strategy is unhealthy, Emergency Managers can liquidate risky positions and move all funds into idle assets in order to protect investors from unhealthy or risky strategies.
- **Rescue funds:** Emergency Managers can liquidate risky positions and move all funds into idle assets in order to protect investors from unhealthy or risky strategies.
- **Price Per Share (PPS):** Price Per Share (PPS) is a key metric that determines the value of one share (dfTokens) relative to the total assets managed by a DeFindex Vault.
- **Autocompounding:** Autocompounding is the process of reinvesting rewards automatically into the same strategy. This allows for changing from APR to APY! This allows for continuous growth of the investment without the need for manual intervention. Let's see an example:
If a user deposits 100 USDC in a strategy with 30% APR, after one year the user will have 130 USDC. However, if the user reinvests the rewards every day, she will get more! Let's see how this works:
1. A 30% APR is 0.082191781% per day. Because daily return is APR/365 = 0.082191781%
2. If the user reinvests the rewards every day, after one year the user will have ~135 USDC. Because $(1 + 0.00082191781)^{365} = 1,349692488$ Meaning that instead of 30% APR, the user will have 34.96% APY.
This shows how powerful the autocompounding is!
42 changes: 7 additions & 35 deletions apps/docs/10-whitepaper/01-introduction/README.md
View file
Original file line number Diff line number Diff line change
@@ -1,43 +1,15 @@
# Introduction

With the new Protocol 20 of Stellar, new Smart Contract based Descentralized Protocols have arised in the Stellar Blockchain. Automated Market Makers like **Soroswap.Finance**, or Lending and Borrowing protocols like **Blend Capital** are just the beggining of a new set of DeFi Protocols.
With the introduction of Protocol 20 of Stellar, new Smart Contract based Descentralized Protocols have arised in the Stellar Blockchain. Automated Market Makers like **Soroswap.Finance**, or Lending and Borrowing protocols like **Blend Capital** are just the beggining of a new set of DeFi Protocols.

These protocols allow from simple to complex investment stragtegies. Very simple strategies can be just to invest in a Soroswap.Finance AMM Constant Product Liquidity Pool, or just to lend USDC in a Blend Market and harvest the BLND reward to later swap those BLND harvested to USDC and reinvest them in the lending pool. Other very simple strategy can be to diversify investment in two assets and just hold those assets.
These protocols allow from simple to complex investment stragtegies. The most simple strategy can be holding assets, other simple strategies can be investing in a Soroswap.Finance AMM Constant Product Liquidity Pool. Also, a more complex strategy can be lending USDC in a Blend Market, harvest the BLND reward to later swap those BLND harvested to USDC and reinvest them in the lending pool.

A bit more complex strategy can be to diversify the investment in both protocols, or even, lend USDC, borrow XLM and then participate in a Liquidity Pool USDC/XLM with some reward program that can be harvested.
However, this is very time consuming and requires a lot of knowledge about the protocols and strategies. From one side, a crypto investor would need to spend a lot of time learning about the protocols and strategies, and then, would need to manually manage their investments. From another side, it's just too complex for non-expert users, or even for wallets users that prefer a very simple interface.

However, for this to be easyly done by non-experienced users, or even by wallets users that prefer to have a very simple interface, an interface Smart Contract protocol is needed.
That's why DeFindex was created. DeFindex is a protocol where users can define how their **investments are distributed** among **multiple DeFi protocols and strategies**. The definition of this distribution and its rules involves the creation of a vault, which works like an index fund or an ETF, where the underlying assets are invested in DeFi protocols.

DeFindex is a protocol where users can define how their **investments are distributed** among **multiple DeFi protocols and strategies**. The definition of this distribution and its rules involves the creation of an index. The distribution refers to the specification of percentage allocations to protocols and strategies.
This is particularly useful for wallets users (even web2 users) that prefer a very simple interface, where wallet builders can integrate DeFindex in their wallets, to offer a DeFi investing service to their users. Also, for expert users that prefer to have a very easy way to diversify their investments among multiple protocols and strategies.

## Core Concepts
We want to make DeFi investing easy, simple and accessible for everyone!

- **Index:**
An index ("DeFindex") or **DeFindex Vault** is a smart contract that **defines a distribution** of an investment into **one or more strategies**. A DeFindex has a fixed list of strategies where investments can be made and the percentage distribution can be fixed?? or variable. Changing the distribution percentage is called rebalancing.

- **Strategy:** A strategy is a set of **steps** to be followed to execute an investment in one or several protocols. This can include farming and auto-compound rewards automatically, leverage lending or leveraged farming strategies for borrowing and lending markets like Blend.Capital.

Example of Leverage Lending:
```
Investing USDC in Blend, can be as simple as just depositing USDC in Blend harvest the BLND rewards and reinvest them (autocompounding), or it can be more complex with multiple steps: 1) Deposit 100% in Blend, 2) take a 50% loan in XLM, 3) Swap XLM for USDC, 4) Deposit more USDC. Then harvest BLND rewards.
```
- **Rebalancing:** Rebalancing involves changing the strategy distributions ratio of a DeFindex. For example, an index with 50% in two protocols could change to 80% and 20%, respectively. This process moves all the investment in the protocols to achieve the desired percentages.
Rebalancing can be made in order to allways achieve a desired strategy distribution ratio, or in order to change the desired distribution ratio to a new one.
- **dfTokens:** dfTokens are fungible tokens issued to users upon depositing assets into a specific DeFindex Vault. They represent a proportional share of the total assets managed by the DeFindex Valut. Users can burn dfTokens to withdraw their underlying assets, which might be liquidated based on current protocol strategies.
- **Automated Market Makers (AMM):** AMMs are decentralized exchanges that use algorithms to set prices and facilitate trading. In DeFindex, AMM LP tokens represent liquidity provision in various trading pairs. Users can earn yields from trading fees and token incentives by holding or staking these LP tokens.
Example: [Soroswap.Finance](https://soroswap.finance).
- **Lending Platforms:** Lending platforms allow users to deposit assets in exchange for earning interest. DeFindex incorporates lending strategies to diversify asset allocation and maximize returns. Assets deposited in DeFindex can be lent out to earn additional yield.
Example: [Blend Capital](https://blend.capital).
- **IDLE Assets:** DeFindex maintains a balance between invested and idle assets. Idle assets are kept liquid to ensure users can easily withdraw funds without disrupting ongoing investments. The Minimum Idle Amount is the threshold of liquid assets required to support smooth operations and withdrawals.
- **Emergengy Withdraw:** Emergency Managers can liquidate risky positions and move all funds into idle assets in order to protect investors from unhealthy or risky strategies.,
- **Price Per Share (PPS):** Price Per Share (PPS) is a key metric that determines the value of one dfTokens relative to the total assets managed by a DeFindex Vault.
In this whitepaper we will explain core concepts to understand DeFindex. Then, design decisions, how it works, which contracts are involved, the current state of the art.
9 changes: 5 additions & 4 deletions apps/docs/SUMMARY.md
View file
Original file line number Diff line number Diff line change
Expand Up @@ -2,21 +2,22 @@

## DeFindex Protocol
* [Introduction](README.md)
* [Concepts](01-introduction/README.md)
* [Concepts](01-introduction/01-concepts.md)

## Whitepaper
* [Whitepaper](10-whitepaper/README.md)
* [Introduction](10-whitepaper/01-introduction/README.md)
* [State of the Art](10-whitepaper/02-state-of-the-art/README.md)
* [Yearn Finance](10-whitepaper/02-state-of-the-art/01-yearn-finance.md)
* [TokenSets](10-whitepaper/02-state-of-the-art/02-tokensets.md)
* [Core Concepts](10-whitepaper/01-introduction/02-core-concepts.md)
* [The DeFindex Approach](10-whitepaper/03-the-defindex-approach/README.md)
* [Design Decisions](10-whitepaper/03-the-defindex-approach/01-design-decisions.md)
* [Smart Contracts](10-whitepaper/03-the-defindex-approach/02-contracts/README.MD)
* [DeFindex Vault](./10-whitepaper/03-the-defindex-approach/02-contracts/01-vault-contract.md)
* [DeFindex Strategy](./10-whitepaper/03-the-defindex-approach/02-contracts/02-strategy-contract.md)
* [DeFindex Zapper](./10-whitepaper/03-the-defindex-approach/02-contracts/02-zapper-contract.md)
* [Strategy Examples](./10-whitepaper/04-strategies-examples.md)
* [State of the Art](10-whitepaper/02-state-of-the-art/README.md)
* [Yearn Finance](10-whitepaper/02-state-of-the-art/01-yearn-finance.md)
* [TokenSets](10-whitepaper/02-state-of-the-art/02-tokensets.md)
* [Appendix](./10-whitepaper/10-appendix/README.md)
* [Why Not Swap in Deposit](./10-whitepaper/10-appendix/01-why-we-cant-swap-on-deposit-or-withdraw.md)

Expand Down

0 comments on commit 43c1703

Please sign in to comment.