The Problem

What is Reef Finance? Well to start, let’s take a look at the problem their platform solves. With the boom of numerous DeFi projects in the summer of 2020, many of the projects only touch the tip of the iceberg of DeFi. Many of the traditional DeFi platforms have an issue with users having limited capability of learning and usability on different platforms. This problem often leads to fragmentation of liquidity and an unstable user base. With such an issue at hand, many platforms face unsustainable fluctuations of liquidity and yield. There are new DeFi platforms that are introduced each week, however, many of these newer platforms fail to gain usage as many are overly complicated. 

So how do we solve this issue? What platform should users use?

This is where Reef Finance, a permissionless smart liquidity aggregator and yield engine that any financial hub can integrate into. The platform is powered by Polkadot and shares its security model with the ecosystem which enables cross-chain integrations with top DeFi protocols. So there are two primary features of Reef Finance, these are:

  • The trading of assets via Global Liquidity Aggregator with access to liquidity from centralized exchanges and DEX
  • Smart lending, borrowing, staking, mining through AI-driven personalized Reef Smart Yield Farming Aggregator

Most importantly, Reef does not require users to give away private keys. It operates under Polkadot’s shared security model which ensures a high level of resilience and forkless upgradeability. Moreover the Reef platform will also have Reef token holders serving as network governors. This will allow the platform to be more transparent and trustworthy. 

Some characteristics of Reef Finance:

Now what are some other features or characteristics of Reef Finance that I can expect to see? The following are a few features and characteristics that Reef Finance will include:

  1. Global Liquidity Aggregator: Reef will aggregate liquidity from DEX’s, centralized exchanges, liquidity pools, and other sources into a global pool enabling order flow to enter in a single point.
  2. Smart Yield Farming Aggregator: Reef will also act as a DeFi yield engine which creates easy access for retail investors and fund managers around the world to enter into the world of DeFi.
  3. Non-custodial: Assets on Reef will be in control by users and will not store on the platform. Reef empowers users to keep storage of their own assets ensuring optimal security. 

How do I get started on the platform now?

The Reef platform consists of 3 main components: Global Liquidity Aggregator, Smart Yield Farming Aggregator, and Smart Asset Management. So the three components work together to provide users with a one-stop for all DeFi service. Let’s get into a little more detail on these components. 

Global Liquidity Aggregator:

So one question that many of you may ask is, why should I use Reef? There’s so many other platforms out there that I can use! But what if you want to use a service that is able to source through both centralized exchanges and DEXs? Well if you wanted to do that, Reef Finance is the answer. 

Reef’s Liquidity Landscape, Image from Reef LitePaper

The Reef Finance platform also allows users to directly trade their assets on Reef through aggregate liquidity sourced both from centralized exchanges and decentralized sources. More importantly, Reef will be a fully distributed and autonomous protocol compatible with the widest range of DeFi protocols. The platform fully maximizes the ease of integration and compatibility with service providers allowing for a one of a kind of an experience.

Smart Yield Farming Aggregator:

The Smart Yield Farming Aggregator is powered by machine learning and AI. The DeFi Yield Aggregator space has seen a lot of growth recently with major players like Zapper, Rari Capital, and a number of others. 

Image from Reef LitePaper

At the launch of the Reef platform, it will have the following available assets: stablecoins (USDC, USDT, TUSD, DAI, BUSD….), synthetic tokens (c tokens, y tokens….), and hybrid tokens (wBTC…). The aforementioned assets will have autonomous lending and borrowing capabilities and will be supported with the APR set by a DAO-based voting. Lending on the platform will be collateralized via the user’s liquidity asset provided to the platform. Moreover, the Reef Finance platform will completely scrap the DeFi landscape by having the highest yield in liquidity farming and ease for all users. Lastly, the platform integrates Etherisc, Nexus Mutual, Opyn, and other DeFi insurance protocols to provide financial insurance services to users.

Smart Asset Management:

Another aspect of the Reef platform is the Smart Asset Management. The Smart Asset Management is a set of powerful portfolio management features for users. They act as a complement to Reef Global Liquidity and Smart Yield Farming Aggregator. With the fast changing landscape of DeFi markets, asset allocation needs to be constantly rebalanced. So on the Reef platform, the users can seamlessly rebalance by just simply adjusting their allocations of assets between the basket of DeFi products and exposures through UI accessed by any mobile device or computer. The service also has an AI engine that provides users with important information or intelligent recommendations for assets. Moreover, the platform also provides diversification through its basket system. It will pool the assets of the users on the platform and then re-allocate them in a variety of different DeFi classes. 

The $Reef Token

Now that you’ve learned about the structure of Reef Finance, it is time for you to get to know a little more about the native token on Reef Finance’s platform, the Reef Token. The Reef Token’s use will be for governance and general operations on the platform. It serves a fundamental purpose being built on the Polkadot ecosystem as it bridges between blockchains and is its own parachain. On the platform, there are Network Collators that do computations in order to maintain the consistency of the network through PoS. The role of the collator node is to maintain a full node of the parachain ensuring that it retains all the information.

The collators who validate the parachains are then elected by PoS voting and can be rewarded with Reef pool yields. The network will also use Reef Tokens as a mechanism of gas currency for paying all the collator fees for basic operations such as processing transactions, deploying smart contracts, submitting a proposal, and other network activities. Note that collator fees will also incur when interacting with infrastructures on the platform.

Image from Reef Finance Litepaper

Governance

As mentioned briefly before, the Reef Finance platform will be governed by the DAO structure. The Reef Tokens will represent voting power and can be used directly or delegated. A few possible governance proposals include:

  • Changing asset bracket structure
  • Raising/lowering the reserve limit of market; adjusting yield distribution and interest rates
  • Altering pool attributes; voting power time function, pool’s dynamic interest % calculation for staking
  • Modification of structure of a DAO 

All these proposals can be voted by any user that holds Reef Tokens. So this format will allow the platform to run transparently, autonomously, and freely. 

Future Plans

One of the biggest advantages of the platform is the interoperability on the Polkadot platform. Reef is able to leverage this advantage to continue building with different L1 protocols, both private and public chains, opening for countless liquidity sources for Reef. The platform also has plans to develop ETFs and automated tickers. The DeFi asset ETFs will be tradeable and investable just like stocks! They will act as another way for users to manage their assets! Moreover, Reef Finance provides a friendly platform for all users to get their first hand experience into the crypto world! If you are interested in learning more about Reef Finance, check out their socials and Litepaper below!

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Learn about Reef’s recent official news:

Twitter: @ReefDeFi

Telegram: https://t.me/reefdefi

Resources:

https://reef.finance/

https://reef.finance/resources/ReefLitePaper_v100c.pdf

https://medium.com/reef-finance/introducing-reef-finance-the-first-cross-chain-defi-os-483ff03f7016