SaffronFinance AMA Recap：Asset collateralization and customized risk

10 min readNov 25, 2021

On 23rd November 2021, KCC and SaffronFinance had an Ask-Me-Anything session on the KCC main Telegram group with 7000+ members. The main topic was asset collateralization and customized risk. If you missed the AMA, you can check the recap as follow.

Venue: KCC Official English Community

Time: 2 PM, November 23, 2021, (UTC)

Host: Eneko

Guests: Psykeeper, Founder of SaffronFinance

[ Eneko ]

Are you ready KCC??????

We are about to kick off!

As many of you already have seen, kcc has seen some decent growth in all spectrum in October-November, and we are just getting warmed up 😊 Please refer to our monthly report.

KCC wants to thank you for the continuous support.

Now we are on to a new rising star project in our ecosystem. Many of you are excited about it. Today (depends on your country 😉 we invited them to share more about their team, their current state, and future plans with you. And without future delay, let’s welcome our guest speaker — -Psykeeper Founder of Saffron!!!!!

Take it away @psykeeper_SFI and introduce yourself, please

[ Psykeeper ]

Hi everyone!

Thank you for having me, Eneko

I’m Psykeeper. I’m the founder of Saffron, and my background is in both traditional finance and engineering. I’m traditionally trained as an engineer but have worked in finance for much of my life and learned it through osmosis. I began having an interest in DeFi early on because it’s the perfect crossover between finance and technology, and I truly believe it has the power and potential to change the way the world works.

[ Eneko ]

great to know … so, lets start with main questions …

1. Can you tell us what is Saffron Finance ?

[ Psykeeper ]

Saffron is a peer-to-peer risk exchange. Similar to other DeFi protocols where you’ll find users swapping tokens in a peer-to-peer network, or lending/borrowing in a peer-to-peer network, Saffron facilitates trading risk between two people

As a very simple example, if you think that a platform (let’s call it GoxSwap) is going to fail, you’re able to use Saffron to mitigate any risk of failure or loss from it by using Saffron instead of using GoxSwap directly. In this way, Saffron is similar to insurance

In addition, we’re adding other features (impermanent loss protection, fixed interest, etc.) which also mitigate risk for users. On the other side of this equation, users can provide insurance or take higher risks to earn a higher yield. Insurance payments go directly to users who wish to provide that coverage.

I view peer-to-peer risk exchange as the third non-dilutive way to earn yield in DeFi. I think of Saffron as a base layer protocol and DeFi primitive that will be as ubiquitous as Uniswap’s swap algorithm or Compound’s money market.

Saffron uses a tranche system to facilitate the p2p risk exchange. Users choose a high or low risk option, which places their capital into a higher or lower risk rated tranche, therefore adjusting their returns

[ Eneko ]

interesting …

2. How does the tranche work? How do you ensure safety of the 2 tranches and insurance fund?

[ Psykeeper ]

The tranche works by pooling capital into a smart contract that has a tranche exchange rate. The exchange rate increases at a rate either higher or lower than the underlying platform’s APR. Tranches at the top of the payback waterfall earn less APR but are safer against a flaw in the underlying system. Tranches at the bottom of the payback waterfall earn higher APR but get paid back last in the case of a hack or issue with the underlying platform

[ Eneko ]

Great, and talking about your investors …

3. It is really rare to see big investors such as CB/dragonfly or other major institutions to invest in the anonymous team — how do you manage to get that?

[ Psykeeper ]

Those two entities are just 2 out of the 26 strategic partners that took an interest in Saffron early on. I think the reason for their interest was a combination of:

1. DeFi summer bringing huge success to investors

2. Our team executing quickly, before other similar products could launch

3. The team being quite strong and able to explain the concepts and our approach succinctly on a call

As far as an anon team goes, there are a few in DeFi, it isn’t that unusual :) and we took many steps to diversify our multisig to increase the trustworthiness of our smart contract system

[ Eneko ]

Great, you are anon, but can you tell us how many team members are behind scenes ? more or less

[ Psykeeper ]

I haven’t counted the team members in a while but there are approximately 16 team members:

7 developers including myself (5 of which are full time)

4 on the marketing/business development team

3 graphics designers

and

2 research team members (one head and another part-time)

[ Eneko ]

well, good team，lets continue …

4. what can you say about Expansion and collaboration with other ecosystem and priority? (KCC, Avalanche, solana, BSC, Polygon etc)

[ Psykeeper ]

Expanding Saffron to every area of DeFi is a high priority for us right now. We’re very aware of the value that exists in peer to peer risk exchange, similar to how much value exists in swaps on a DEX, which is proven by the high APRs on non-incentivized pairs. This is why we’ve chosen to audit and ship code for KCC — because we’ve got a product that can come in at the ground level of DeFi on KCC and add value to all existing protocols on the network

[ Eneko ]

great, we want to see you here as soon as possible 😊

5. Who are your biggest competitors and what do you think most differentiates you from them?

[ Psykeeper ]

Our biggest competitors right now are Barnbridge, which is another tranched risk protocol, as well as Ondo finance. One major difference in our protocol is that Saffron V2 has a perpetual staking design that is different from the epoch-based design of our competitors. Another difference is that we don’t have the potential of negative interest rate for the junior tranche aside from a platform failure, which would result in a negative interest rate anyway. This is also an advantage Saffron has over other insurance protocols which are tangentially related but aren’t as closely competitive with us as tranche protocols are

[ Eneko ]

Great, those differences are so important …

6. Will V2 integrate with more protocols/ offering tranching to more protocols more quickly after audit?

[ Psykeeper ]

Yes, audits are an important part of shipping code in DeFi, and they are in progress right now. We’re currently auditing our two-tranche pool for MojitoSwap on KCC, which can be used as a two-tranche pool on other underlying DeFi platforms (like KuSwap, for example) as well. We will likely wait until 3–4 audits are complete like we did last time when we delivered Saffron Staking V2 on ethereum mainnet to ensure safety

[ Eneko ]

Great, better to be Audited before doing nothing …

we are talking about v2, but ..

7. what’s the Vision for V3?

[ Psykeeper ]

I don’t want to give TOO much away about our next version before the current one is even released fully… but… let’s say V3 will be a more agile and versatile version of V2 where anyone can deploy a pool. Simply put: Saffron V2 will be improved incrementally until we eventually reach a final V3 upgrade which will include many flexible features similar to Uniswap V3. In fact, we want to add Uniswap V3 pools to Saffron V2, as part of our fixed interest strategy. They’re a perfect match for Saffron and didn’t exist when we started building V2

[ Eneko ]

o great, i think that it will be Amazing 😊 and for that ..

8. Do you guys have a roadmap lined up for 2022

[ Psykeeper ]

Here are some bullet points for the roadmap:

-Saffron V2 tranches to be released

-Saffron to expand to the KCC blockchain

-Saffron governance to be upgraded to facilitate voting

-Treasury earning to begin

-NFT initiatives

I’ll go into detail about each of these here.

Saffron V2 tranches marks the beginning of our passive/active strategy. In Saffron V1, all users needed to be online at the beginning/end of an “epoch,” which was a two-week period. This is the same for other competitor protocols. In Saffron V2, there’s no such concept as an “epoch,” and users can join and leave their positions perpetually. This is a major improvement because it enables a passive strategy that didn’t exist before.

Saffron will expand its staking and tranche protocols to KCC soon — we’ll be bridging our SFI token, deploying Saffron Staking V2, and debuting the audited Saffron V2 tranche code on KCC first

In Saffron V2, the treasury earns a performance fee, which is set to 12.5%. Performance fees don’t take a premium from principal deposits, and are generally between 10% — 20%. This is exciting for me because we’re going to start earning revenue as a protocol, which should give SFI as a governance token measurable value

Finally, we’re working on NFT initiatives. Anyone in our Saffron V2 beta testing group knows that the LP positions token for Saffron V2 is an NFT and has special properties. The new economy of NFTs will open up new possibilities for finance that haven’t existed before. Luckily for us, mainstream adoption of NFTs through art has already opened the door for people to understand how they work

[ Eneko ]

Any link to check all the roadmap ?

[ Psykeeper ]

There is a medium post with a rough outline here: https://medium.com/saffron-finance/saffron-weekly-7-21-21-5c3e1b6966fe

[ Eneko ]

Great, easy way to check it

[ KCC]

Wow, a risk-hedging protocol combined with one of the hottest tend-NFT is gonna be a force to be recon with.

Safe & Sexy

[ Eneko ]

9. Are you going to work into an stablecoin or something?

[ Psykeeper ]

It’s a bit early right now but I think we have the potential to create a very unique type of stablecoin using the Saffron V2/V3 smart contract system. The stablecoin would essentially be produced as a byproduct of the tranche system and would be an insured stablecoin giving protocol participants high yield on the other side. It’s a novel concept we came up with and are working on bringing it to life after we’ve covered most of DeFi with our tranche system already

[ Eneko ]

Well , you have time to think and work on it 😊

10. What are your price point targets for Saffron Finance in 2022?

[ Psykeeper ]

Price targets aren’t part of the plan for the SFI token, but everyone who knows about SFI should be aware of its protocol value capture mechanism, which involves taking a percentage of fees and using those to vote on initiatives within the ecosystem. Initiatives can include burning, buying, and locking up SFI similar to how other DeFi protocols manage and diversify their treasury. For V2 launch we’re looking at a 12.5% performance fee which can be increased or decreased by governance

[ Eneko ]

I think that it can be interesting for investors …

11. Is Saffron Finance looking to collaborate with traditional financial institutions?

[ Psykeeper ]

Our plan is to create a protocol that has an open risk exchange that will attract traditional finance institutions. I think this is something that will happen in DeFi at some point anyway, and we will be perfectly positioned for them to deposit capital and earn on our platform

[ Eneko ]

Great lets see …now we have finished with our questions.

We will unmute the chat and let the community to do some open questions. 5 of them will be selected and answered. Winners will share 100$ :-)

So let’s start with Community Questions

@JayMat12345

What are your marketing plans? Any plans for marketing with for example Big influencers?

[ Psykeeper ]

Marketing comes naturally with Saffron because we enhance existing protocols and bring value to DeFi by adding a new layer on top. We aren’t currently planning on using influencer marketing as part of our strategy

Our strategic partners all help with this and they’re bigger than most crypto “influencers” anyway!

@TwoBit0828

Almost 4/5 of investors are focused purely on the price of token in short term instead of understanding the real value and health of the project. Could you tell us or give us some motivations and benefits for investors to hold your token in long term?

[ Psykeeper ]

I can’t directly comment on price but one of the major benefits of token-holding is voting in the Saffron DAO on vote.saffron.finance and participating in the governance forum on gov.saffron.finance — this is where the protocol direction is decided and the value these protocols carry can be substantial

@Mitchellgilmore1993

Does your tokens have farming and staking usages and if yes what APR do you give to us?Does Your project have farming and staking usages and if yes what APR do you give to us?

[ Psykeeper ]

Currently the SFI token and its pool2 (SFI/ETH) both have an incentive which can be found (along with the current APR) on app.saffron.finance

@DaOldManVV

Many projects have problems with UI / UX and this one turns off new users. How do you plan to improve the interaction with new users and with users outside the crypto space?

[ Psykeeper ]

We’ve got an excellent UI/UX team and they’ve created some really amazing designs in the past — bringing that to Saffron V2 is one of our biggest priorities!

@Tatekei

AUDIT play an IMPORTANT role in enhancing the stability of any PROJECT. Do you have AUDIT CERTIFICATES . Or are you working to AUDIT your project to make it more secure and reliable?

[ Psykeeper ]

Our current contract has 4 completed audits and we’re looking to get 5–8 audits for Saffron V2 tranches :)

[ Eneko]

Great, so those where the selected 5 questions. We will release the winner list later on with the rules for claiming your reward

@psykeeper_SFI can you sharte with us all you social networks ??

[ Psykeeper ]

Absolutely

Web3 app: https://saffron.finance

Governance: https://gov.saffron.finance

Telegram: https://t.me/saffronfinance

Discord: https://discord.gg/pDXpXKY

Twitter: https://twitter.com/saffronfinance_