Hello! BlockTalkers & Blockchain Enthusiastic!
We recently hosted an AMA with Reef Finance, on November 17th at 11.00 AM UTC. Many of you might have participated or many of not. But we make sure no one missed out from the knowledge shared by Denko Mancheski, CEO at Reef Finance so here we are up with the AMA transcript, for those who missed the live session, this blog post will be a saver & feeder of knowledge for them.
Denko Mancheski — My name is Denko, I am the CEO of Reef. I have a tech background myself. Started development in early high school with C++ (did algorithmic competitions for few years), then moved into the enterprise world where I worked for 2 ERP providers (built some modules and some mobile apps which are still used to this day). Few years later I moved to one of the biggest healthcare platform providers in Europe. Worked there for over 2.5 years and the last 6 months I was leading a team (we were building a complex app for healthcare data modelling around the OpenEHR standard). 6 years ago I got into crypto and started blockchain development myself. My first experience was with NXT (then turned into Ardor), and I have also been doing a lot of Solidity (Ethereum), Steem and some EOS. Since I am based on Slovenia, the development community is not so big, so I’ve been working with familiar people. 2 years ago we teamed up and worked on multiple blockchain as well analytics projects together. In January this year we decided to focus on DeFi and started building Reef.
Introduction Questions Asked By Team BlockTalks
Q1. Could you please introduce Reef Finance to our community in layman’s term?
Ans — Yeah, great that you mentioned the word layman since so far our intro had a lot of tech narrative and was not very user-friendly. Ill still post it here
Reef is a DeFi operating system — a permission-less smart liquidity aggregator and yield engine where any financial hub can integrate into. Powered by Polkadot, it shares its security model with the ecosystem, and enables cross-chain integrations across top DeFi protocols. Reef gives the retail investor access to the DeFi landscape with a very low technical barrier of entry while at the same time it augments the decision making process based on user’s risk levels.
The improved narrative would be:
A one-stop place where anyone can quickly invest into DeFi taking into account their risk tolerance
Or even shorter: The easiest way to get into DeFi
Shaping the slogan to be as precise and user-friendly as possible is also an iteration on its own.
Q2. What are the advantages of Reef Finance to other alternatives in the Blockchain field?
Ans — The fact that we are powered by analytics engine (complex statistics and machine learning) + being cross-chain (access to multiple ecosystems from a single place). The other one is the team being both blockchain and data science. Its a huge edge over competitors.
Q3. What are the major milestones Reef Finance achieved so far & what are in the future pipeline?
Ans — Its best to take a look at the live roadmap: https://reef.finance/roadmap
We are currently preparing for TGE and product launch after. Have successfully closed ~4m$ fundraising and focused on scaling the team.
Questions Asked on Twitter For Reef Finance Team!
Q1. The “Reef Yield Engine” which is mentioned on your website is claimed to be cross-chain over blockchains. What kind of features does it include to maximize the expected yield?
Ans — Reef yield engine allows you access to all the currently available yield farming protocols. Since it’s powered by an analytics engine, it can maximize your yield by routing your funds to the highest yielding pools. The problem is that farming protocols and instances have different risk levels. We derive risk levels based on multiple metrics, from social media traction, to on-chain traffic. This way, the users have a better understanding of how they allocate their funds, and can adjust based on their risk tolerance. We will publish our methodology on how the model is grading different DeFi activities on our blog.
Additionally, in order for a certain instrument to show up in a certain basket, it needs to fulfil certain minimum requirements (eg: 2m$ TVL received from X number of addresses, etc.)
Q2. Currently, Reef has 3 income streams which are Basket engine; protocol fees; and interest paid by power users who borrow tokens from the Reef pool in order to increase their voting power. It’s quite surprising that all these 3 income streams only flow in the Reef pool. Do you have plan of giving DAO the power to make decisions on how these funds would be further allocated?
Ans — Great question. We plan to introduce Reef Treasury which will be the recipient of the income streams, and the DAO can further decide how to allocate the funds (eg: grants, buybacks, etc.).
But, there is one more very important thing. Its something that no other project has. It is called “projected price”. This means that if the spot price of $REEF is 1$, the projected price might be 1.1$. This is derived from the amount of paper profits generated by the users who will get at least 10% of their profits in REEF. The 10% (might be up to 100%) that the engine keeps plow through the order book. So projected price is an estimate of what Reef’s price would be after the user’s baskets get liquidated. Its calculated in real-time.
Q3. You mention that Reef is an “intelligent liquidity aggregator”, but in simple terms (for users with little knowledge of the subject) what does this mean? Is it just access to various CEX tokens like DEXes for trading or something else?
Ans — Correct. We plug into DEXs on-chain as well as CEXs (through integrations such as Binance Brokerage/Access). Then based on the items in the basket and the allocation size, we route the funds to the appropriate places so there the least possible slippage/fees/price effect.
Q4. Reef DeFi claimed to be fully Decentralized and non-custodial. Why the plan of introducing some certain KYC procedures regarding CEX liquidity? Hasn’t this contradicted what fully decentralized and non-custodial stands for?
Ans — You will always be able to use Reef just with just a metamask wallet. The moment we integrate CEX liquidity, if the user wants to have access to it, certain KYC procedures will have to happen. We will not be storing user’s data at any point in time. The KYC procedure regarding CEX liquidity will flow from the user’s machine directly to the prime broker.
So its fully non-custodial even if we plug your account to CEX liquidity (the client is like a middleware between your account and CEX liquidity). We literally have no database which stores any kind of identity.
Q5. Where does the APY come from for betting on Reef pools? Reef Treasury, the receiving protocol for revenue streams, what share will you have in all this and how will it help in the distribution of funds and the constant increase of APY?
Ans — The Reef Baskets (not pools) route your funds to other defi activities (such as YFI, uniswap pool staking, etc..)
As I mentioned above, all the revenue streams flow into the reef pool first (we either buyback or provide liquidity). It all happens on-chain .. its literally hardcoded in the smart contracts. Eventually, we can deploy an update where the funds flow in the Reef Treasury (again fully visible onchain), and then the DAO can decide how the funds are spent (by voting -> everyone who has the token will vote).
Questions Asked by our BlockTalks Community Members during live Session to Reef Finance Team!!
Q1. Currently attracting real users and mass Adoption is a problem for Blockchain projects. So how will $REEF solve this problem?
Ans — Yes, this is one of our bigger goals. And not just crypto users but non-crypto users as well. We will be integrating FIAT gateways immediately, so we will be able to start onboarding non-crypto users. Besides the easy onboarding, we will provide proper education so they get to understand how this landscape works and what are the risks around it.
Q2. Tell us a little bit about security? Have you done an audit of the platform? Are the smart contracts error-free? What are the test results?
Ans — We are currently in the process of being audited by multiple companies.
Q3. From where you get the idea for you project? And from where you get the project name? Does the name “Reef” matches with our products?
Ans — It would be best if you read the origin story:
Reef Origin Story
Reef happened naturally after observing certain problems repeating in different industries over and over again…
Q4. What are the utilities of Reef token in your ecosystem?
Ans — The reef token is a governance token, so the users will be able to vote on different proposals (releasing new features, readjusting certain parameters in the system, etc.). Besides governance, the token is powering our infrastructure, so you can pay the protocols fees with it. It can also be used to stake into the Reef pool and get RPTs (Reef Pool Tokens), but it’s also going to be used in the yield distribution mechanism (customizable payout ratio for the yield that the basket generated), which will allow the user to farm the Reef token and directly stake it into the pool.
Q5. What differentiates Reef from other DeFi offerings?
Ans — Reef is on top of the DeFi ecosystem. Composing and integrating on top of all the financial primitives into a user-friendly product which augments the decision making process based on user’s risk levels.
Q6. For a project development first of all main priority is having enough fund. Does your team financially capable to run this project? Do you have enough fund for it’s developement Can you tell us that how your project generate the profit?
Ans — Yeah. We have done a 4m$ fundraising. Also, the ecosystem has revenue streams which eventually can be used to service the burnrate.
Q7. Do you have any new partneship recently? And what advantage of this partnership to the project?
Ans — Yes. We are partnering both with Ethereum and Polkadot ecosystem projects. We are all about composability and integrating on top of the ecosystem, so the way we are positioned we will be partnering with many projects.
Q8. The projected price is still confusing to me as I still couldn’t get the explanation you gave earlier. Assuming $REEF price is 2.3$ does this mean that the projected price will be 2.4$ or how exactly will it be calculated?
Ans — Thanks for the great question. Here is the scenario
1. When users choose to liquidate their baskets (get out of the assets inside the basket), IF they generated profit, they will be able to choose how this profit is paid out to them -> the ratio between REEF and ETH for example.
So lets assume you have 10 ETH in profits and choose the minimum ratio which is 10% in REEF, 90% in ETH (this is not a fee, its just the ratio in which currency you recieve the profits). Out of this 10 ETH, you get 9 ETH + 1 ETH in REEF tokens (lets say 10000).
Now, it means we gave you tokens and kept your 1 ETH. This 1 ETH directly goes and buys from the pool
Now if you imagine that there are 500 open baskets, and they have 5000 ETH in profits generated, at least 500 ETH will eventually (when the users liquidate their baskets) flow into the the pool -> affecting the price. This is what the projected price means.
Q9. What are the ways that I generates profits/revenue to maintain your project and what is its revenue model ? How can it make benefit win-win to both invester and your project ?
Ans — As mentioned, Reef currently has 3 income streams: Basket engine, protocol fees and interest paid by power users who borrow tokens from the Reef pool in order to increase their voting power. All the 3 income streams are currently flowing in the Reef pool. In the future, through voting, we plan to introduce Reef Treasury which will be the recipient of the income streams, and the DAO can further decide how to allocate the funds (eg: grants, buybacks, etc.)
Q10. You said that “We need oracles both on Ethereum as well as on polkadot side” but for this why you choose “chainlink”? There are other platforms too which provide the same service? Why are you excited to work with them (Chainlink)?
Ans — They are one of the most established oracles in the landscape. We are also working together with them on other initiatives which we will soon announce!
Q11. What strategy will you implement to bring non-crypto-natives into your ecosystem? How do you keep a balance between developing the technology and also improving the value of your token?
Ans — As mentioned above, FIAT gateways + proper education/onboarding for non-crypto users.
Yeah, regarding development <> price balance, its the most challenging part of executing a crypto project. Its like a public company that has to publish quarterly reports every week. I have been working closely in the past with other projects and have learned from what should and shouldnt be done.
Q12. Most DeFi projects especially those ones offering yield farming are driven up by hype and scarcity, so when the hype dies the project dies. What’s the key to sustaining COMBINE FINANCE yield farming?
Ans — Reef being cross-chain gives us flexibility, which means we are able to shift our product and features based on where the users are (currently on Ethereum) and what the users want/need in the future. This is our greatest strength really because we will adjust all the time.