BlockTalks x Tidal Finance AMA Transcript!
Hello! BlockTalkers & Blockchain Enthusiastic!
We recently hosted an AMA with Tidal Finance, on January 29that 02.00 PM UTC. Many of you might have participated or many of not. But we make sure no one missed out from the knowledge shared by Chad Liu, Founder & Dan Raykhman, CTO , at Tidal 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.
Introduction Questions Asked By Team BlockTalks
Q1. Could you please introduce Tidal Finance to our community in layman’s term?
Ans —Basically user can come on to the platform to sell covers or buy covers. sell cover the user just need to provide liquidity, and select the protocols they feel confidence to backup with. The estimated earnings will be calculated base on their customized choices. On the cover buyer side, just search for the protocols you want to get cover and purchase the amount you want to get covered.
A bit more detail — Tidal will launch different risk category pools with multiple protocols inside each pool. For each protocol, depending on which risk level it is in, it will have a different premium price (insurance cost). Just like the healthy insurance costs are different depending on each person’s condition. The pricing model will be released at launch governed by DAO over time. User can provide liquidity into each pool and select the protocols they want to backup, and start to earn returns from the cover sold. Buyers can directly buy covers from each pool as well.
Q2. What are the advantages of Tidal Finance to other alternatives in the Blockchain field?
Ans — Nexus Mutual and cover are two protocols on the market. Our competitive edge is to increase the capital efficiency. I always like to give an example of how people sell insurance in a traditional insurance world, if you have $1 dollar, and you want to sell insurance. If you only sell 1$ cover (a reasonable insurance premium is pretty low 2% ~ 5%), you are only making a small return by putting all your capital at risk. No one would sell insurance this way. What you want to do is to sell to 20 people, 50 people, and each person buys $1 from you, but at the same time managing the risk of claim payout to make sure you have enough capital to cover the losses. This is how insurance funds make returns. Tidal’s core design is to implement this concept to increase the capital efficiency.
Q3. What are the major milestones Tidal Finance achieved so far & what are in the future pipeline?
Ans — On the product side we finished the architect and design for alpha, we are aiming for testnet ready by the end of Feb and mainet launch by end of March. Our v1 will be launched on ethereum and migration to polkadot after. Our new site with more information on the product will be released soon.
On the funding side we had great success on private raise. we’re currently working on incentive schemes to attract users, drive adoption and ensure retention. we’ll be sharing details of these mechanisms and their respective incentives with the launch of our alpha
Here is the published fund raise link on coindesk:
Questions Asked on Twitter For Tidal Finance Team!
Q1. What are the requirements to successfully launch an insurance pool on Tidal finance ecosystem? Also How many pools can be created per user?
Ans — Anyone can participate in the insurance pool and customize their strategy on which protocols to backup. At beginning we will launch 3 pools with different risk level. low, mid, high. And pricing model in each pool are different.
Q2. What types of insurance will Tidal Finance offer to Equilibrium users when lending, borrowing and guaranteeing their assets? How will Tidal maximize the type of capital efficiency to attract limited partnerships and offer a competitive insurance premium that will attract buyers?
Ans — Ha, I had a similar question with the joint ama with Equilibrium team.
The collaboration is for tidal to bring equilibrium users safety and security. I think mainly twofold — 1. Provide more covers for potential hacks and malicious attacks. 2. Increase the efficiency of equilibrium treasury insurance funds(we see a lot of protocols teams setting up the safety fund in their treasury now) to attract more capital from the Tidal liquidity pool and earn additional yield.
The value of adding the other protocol into the Tidal risk pool can help Tidal LPs earn additional returns by providing insurance for those protocols. The more protocols that we could add into the Tidal risk pool, the more options that Tidal LPs would have to utilize their liquidity.
The more options that LP can provide insurance at the same time, the lower price that an insurance premium could be, therefore benefitting the buyers.
Q3. For creating a pool on TidalDeFi what are the necessary steps that I should follow? Also can a user create multiple pools on TidalDeFi?
Ans — Initially we are creating three pools, by grouping the protocol based on the risk: low risk, medium risk and high risk pools. Our LPs can choose one of these pools and then choose any number of protocols within the pool they would like to stake their capital to provide cover. Later on we’ll be adding functionality to allow Tidal token holders to propose their own pools. These proposals will be approved by our Assessors and voted on in our DAO process.
Q4. To me, your major competitors are Nexus mutual and Cover. Both of them are already focusing on some areas in the space. What area is TIDAL focusing on that is different from what both are focusing on and how is TIDAL better than both?
Ans — Our competitive edge is capital efficiency. Like in the previous question I mentioned, on Tidal LP can backup multiple protocols at the same time to earn returns from multiple streams. Cover is 1 to 1 backed. Nexus mutual recently increased the leverage as well. The core design of tidal is to focus on this leverage efficiency.
Q5. Recently Tidal Defi announced its partnership with Bluzelle. What do you expect from this new partnership? What features of this company will contribute to the development of your project and what benefits will it bring to the users?
Ans — As with every insurance like product, there is a lot of relevant data we need to accumulate and analyze to be able to assess risk properly, calculate premiums and deal with claims. Tidal intends to make this process as transparent as possible. We are planning to use Bluzelle to store this data. From data related to protocols we cover (historical activities, staked capital, statistical “normal” operational activity data, etc.) to data representing activities on Tidal protocol and our competitors, we intend to use all this data to further build statistical models to help us assess risk properly and create models that would help our LPs make better decisions staking their capital while optimizing cost for buyers of Tidal coverage.
Questions Asked by our BlockTalks Community Members during live Session to Tidal Finance Team!!
Q1. What do you think if Ethereum starts to choke, DeFi will move to a new platform? And what is Tidal Finance strategy if that happens?
Ans — that’s why we position ourselves in polkadot ecosystem for the long run ;)
Q2. What is Most Special in Tidal Finance and give me a unique feature or key that is in Tidal Finance itself that is different from the others?
Ans — LPs can participate in different pools and customize their own plan to backup multiple protocols at the same time. This mechanism increase LPs return and brings down the insurance price.
Q3. What percentage of the market share do you hope to get? Who exactly is your best customer?
Ans — Total asset under coverage would be the top metric for the success of insurance cover protocols. Right now locked value in Defi is like 26 billion. NXM covers around 300 million. there is a big gap. Hopefully Tidal can become one of the leaders in the space. As a platform, our best customer are LPs and insurance buyers. To offer a competitive return for LP and competitive pricing for buyers is our main goal.
Q4. Each project has interesting stories before it is created. So can you tell people about the story that gave you the motivation to build and develop a great project like yours??
Ans — Myself was pretty active participating and investing in different protocols back in 2019. early 2020 I realized the need for insurance cover as more protocols coming onto the market so quickly and less secured. Used and studied existing solutions on the market quite a bit. That’s how Tidal was born.
Q5. While you build your project, do you take into account community feedbacks and demands?
Ans — Absolutely. A successful product demands constant feedbacks from user. Community will be a strong user base for any crypto project. So far we been collecting a lot feedbacks from some target users and ecosystem partners. In last month we did a few updates on the design.
Q6. What are some other highlights of the Tidal project so far? E.g. early backers, team members, partnerships, special technical insights, or anything else you think is part of the recipe for why Tidal is well-positioned?
Ans — You covered almost all the components 🙂 we are backed by leading investors as KR1, hypersphere, ngc, spartan ventures. team members have rich experience in startups and blockchain space. We are actively forming partnerships with good quality projects to bring safety to their users. name a few recent partnership — cere network, equilibrium, stakeDAO. More announcements will come when close to launch.
Q7. What are the most important features Tidal Finance project has and competitors don’t have?
Ans — Tidal allows LPs to stake their capital to provide cover for multiple protocols. This mechanism gives investors the ability to generate higher yields while still offering coverage at reasonable prices.
Q8. How do you plan to spread awareness about your project in different countries where English is not spoken well? Do you have local communities for them to let them better understand about your project?
Ans — We try to have a wide geographical coverage since defi space is very decentralized and there are strong communities everywhere in the world. I feel lucky that people from different part of the world reach out to me want to help to introduce tidal to their community. I was just doing one with Japan yesterday. Vietnam this morning. There are more to come am trying to cover as much as possible.
Q9. As We know P2P insurances are already quite well adopted on the market , Will you bring out P2P platform for buyer/seller Insurance tokens ?
Ans — There are couple on the market. P2P model is standard for any platform. but how user interact with each other on both sides are different on any platform. that’s how they all have some unique differentiators to their own.
Q10. How does Tidal Finance have an income plan to keep the project going?
Ans —Our business model is to take small transaction fee when cover is sold. Looking at the potential billions of dollar asset requires coverage, the revenue and profit of the platform have great potential.
Q11. Only getting users, holders etc is not everything. In my opinion, a project needs to deal with solving a real world issue or problem What is the problem that your project primarily focuses on??
Ans — For DeFi universe to grow it needs to be safe. There are hacks and other exploits being reported almost every day. Insurance type products is one component that can make DeFi safer and acceptable by all type of investors including large institutions. Tidal will help with that. We will help by providing research and analysis as well as providing coverage to DeFi users.