Since 2020 — DeFi innovators have created an interoperable web of financial primitives used at scale. A savvy DeFi user can take out leverage on Aave to provide liquidity on decentralized exchanges, re-hypothecate those positions to interact with additional financial instruments, all in an automated, transparent, and trustless fashion.
But DeFi has become complex. Managing those positions is a full-time job, and the learning curve to generate sustainable yield is too high. Competition between ecosystems and unsustainable liquidity mining incentives leave us with a space fragmented across dozens of applications, multiple Layer 1s, and wallets.
The building blocks for a decentralized financial future are here but a simple connective tissue is missing.
- 1.DeFi is a full time job. The number of available blockchains and protocols has 10x’ed over the past year. Strategies are getting more and more complex. What used to be simple yield farming on Sushiswap is now multi-layered strategies, including options and non-linear risks.
- 2.Yields are highly volatile as they are dependent on inflationary tokenomics that are reflexive in nature.
- 3.The yield you see is rarely the yield you get. As strategies become more complex, obscure slippage, entry & exit fees and bridge costs take returns down. A 0.50% fee on a 20% APY yielding position is non-trivial if your position lifecycle is less than 2 weeks.
- 4.Liquidity is fragmented as chains and ecosystems fight to attract capital, creating market dislocations between them.
Fractal is an omni-chain fixed yield protocol. Users deposit stablecoins from any chain (EVM for now) and get diversified yield exposure from all chains.
- Yield is fixed.
- Fractal’s yield-bearing vault token USDF is a high performance & composable yield primitive for DeFi.
- Yield is powered by quantitative strategies deployed on all source chains, allowing liquidity to be dynamically routed where it is most rewarded.
As DeFi becomes multi-chain, liquidity gets fragmented and user experience gets broken. Fractal’s ambition is to make DeFi simple. This requires abstracting functionality from chain specific constraints and making liquidity composable.
The first step is USDF, a high performance yield-bearing asset for greater capital efficiency across chains. Smoothing the DeFi yield generation user experience is the foundation towards the vision of a cross-collateralized DeFi hub. Stay tuned to our social channels for additional blog posts on our broader product vision.