What is our product? What is its primary purpose? What are some of the things people can do using it? Get ready for a long read.
DeFi Saver is an asset management application for decentralized finance (DeFi) protocols, focused on creating, managing, and tracking all sorts of positions. It is an application built on top of Ethereum, a blockchain network which values we share and uphold.
DeFi protocols present the essential building blocks on the Ethereum network - decentralized applications and autonomous organizations running on top of it, providing additional value or serving a particular financial purpose or demand. They create novel trading and lending models based on non-discriminatory rules embedded in smart contracts running on the Ethereum blockchain network. Protocols allow people to lend or borrow funds from one another, trade digital assets, provide liquidity to collect trading fees, speculate on price movements, earn interest in savings-like accounts, insure against risk, etc. The key element for these new financial models and instruments is the interoperable and composable nature of the Ethereum blockchain, allowing these protocols to interact with one another and users access to options otherwise unimaginable in traditional finance.
DeFi Saver supports popular protocols and decentralized exchanges like MakerDAO, Compound, Aave, Reflexer, Liquity, dYdX, Uniswap, 0x, and Kyber providing a broad set of features like portfolio management, lending, borrowing, leveraging assets, token swapping, loan refinancing, and other advanced features like building custom transactions. We’ll get to each one in a minute.
The signature features of DeFi Saver are “Boost” and “Repay”. These allow for instant leveraging or deleveraging of positions created using lending protocols, increasing or decreasing the risk involved or longing and shorting digital assets. What’s great about these functions is that they use assets currently deposited as collateral to clear the debt (Repay and decrease leverage) or borrow more (Boost and increase leverage) in a single transaction.
However, our flagship feature is Automation. Automation is a unique, trustless system for automatic liquidation protection and leverage management of collateralized debt positions. Users input their desired collateral and debt ratio and Automation takes care of the rest. It actively monitors debt positions and automatically increases or decreases leverage when the price of the underlying collateral changes. This is done using our aforementioned signature features “Boost” and “Repay”.
To interact with DeFi Saver, or Ethereum blockchain for that matter, you are required to have a cryptocurrency Web3 wallet. We support software, hardware, and mobile crypto wallets like MetaMask, Ledger, Trezor, Coinbase, Trust wallet, Rainbow, as well as login protocols such as WalletConnect, and more.
What makes DeFi Saver unique?
Now, let’s talk first about the unique feature that we built DeFi Saver for - Automation. As we already mentioned, it is trustless - meaning it can only perform operations as configured by the user, non-custodial - as in users always retain ownership of their funds through smart contracts, automated - relies on smart contracts and provided inputs to execute transactions without the need for additional user input.
Currently, Automation provides two important user benefits:
- Automatic liquidation protection
- Automated leverage management
In utilizing our Boost & Repay functions automatically, Automation simply allows the user to configure Auto-Repay to execute if your collateral-debt position ratio drops below a configured minimum and Auto-Boost when the ratio rises above the configured maximum. In essence, it removes the burden of always keeping track of the market and price movements regarding supplied assets and incurred debt, and performing manual corrections. By relying on Automation, you can step away from your computer, log off, enjoy your day or sleep easily at night knowing you are safe from the scourge of liquidation.
Because its primary function is protection from liquidation, the Auto-Repay function is mandatory, while Auto-Boost, which serves the function of increasing leverage, is optional and can be disabled in settings. When you decide to enable Automation, you give its smart contracts rights to make adjustments to your positions - to perform those automated functions. Once enabled, it actively monitors your position, executing necessary actions and adjustments based on configured thresholds. It’s worth mentioning that those can happen only in the user-defined range.
Automation can be used for nearly all assets supported by the chosen protocol. Currently, the service is available for MakerDAO, Compound, and Aave protocols with the plan to provide it for all other protocols we decide to integrate. An important caveat to mention here is that although protocols like Compound and Aave allow for multi-asset collateral and debt, Automation works best with single collateral positions. If you nonetheless opt-in for a multi-asset position, it can work by making any auto-adjustments using the highest value supplied and borrowed assets. Still, we don’t recommend multi-asset collateral positions to be automated since each additional asset used increases transaction costs slightly and can potentially result in unwanted assets being used for auto-adjustments. Lastly, there are some requirements and fees we charge for using Automation.
Over time Automation has reached some amazing metrics, with the number of automated transactions, that’s Boosts and Repays, totaling 47591 and lifetime total automated volume crossing $2B across Maker, Compound, and Aave protocols. Users love to have the peace of mind in knowing their positions are safe and that there is an automatic, trustworthy, and reliable service for unwinding their positions in tough situations. That all being said, there are of course inherent risks as is the case with all Web3 services. Those include smart contract risk since each smart contract has a certain degree of security risk, economic risk (e.g. having many repays happen while the market is going down), and technical risk (e.g. network congestion, delayed transactions, potential oracle issues with any of the protocols which could instantly liquidate a user) one should be aware of. You can check them all in our Help section.
Where did the idea for DeFi Saver come from?
When one goes about creating a software product, finding product-market fit, and in fact, users willing to pay for any specific service is usually the first problem. That is unless the idea for a product is born out of necessity, a personal problem you or some of your friends are experiencing. That’s actually a great place to start with as many startup investors like to point out. Paul Graham had a great tweet about this.
Our team gathered back in 2017 with the idea of creating a blockchain project incubator, a mission to build decentralized applications and solutions, and contribute to the Ethereum ecosystem. Oh, and having some fun doing it. After developing and being active in the community for some time, the idea for DeFi Saver came about when we were in fact on a team workation. What happened is that it, unfortunately (or luckily?) coincided with one of the biggest drops in the value of Ether, in December of 2018. Nenad, our founder and then project leader, had a collateralized debt position (or CDP) open in MakerDAO. Sightseeing and riding around Chiang Mai with poor cell phone reception and no access to his wallet wasn’t really the adventure he was expecting, and so the idea of a service that could monitor your CDP and unwind it automatically if at risk of liquidation was born. January 1st we started working on what was initially known as CDP Saver, in April we launched on the mainnet and the rest is history.
In the beginning, DeFi Saver was created to support the only established lending protocol - MakerDAO. You might be wondering how lending and borrowing work with crypto assets being highly volatile? This is the first issue that comes to mind since the biggest drawback of volatility is that people can hardly lend and borrow and justify everyday usage. The solution to this challenge comes in the form of a new concept that MakerDAO, among others, introduced and later popularized - stablecoins. Stablecoins are crypto-assets whose value is tied or pegged to an outside asset such as a fiat currency to stabilize its price. Maker, however, uses a special mechanism of securely locking up digital assets using smart contracts in collateralized debt positions (CDPs), afterward allowing for the minting of a 1:1 USD dollar-pegged stablecoin DAI. Centralized stablecoins like USDC, USDT, GUST, Tether, and others are those tied to outside assets and controlled by companies that issued them. DAI, on the other hand, is a decentralized stablecoin without central authority there to control the system and peg. Instead, it maintains it through smart contracts and decentralized governance - encoded rules and economic incentives designed for this very purpose.
However, since digital assets provided as collateral are still highly volatile, the value of collateral can still rise and fall in value. It’s important to note here that established protocols provide solely overcollateralized loans due to the inherent volatility. If the value of collateral drops in value so much that it reaches a certain predetermined level, liquidations occur, in the pretty much same manner as they do in traditional financial markets. What is different in the case of DeFi protocols is that since everything is based on smart contracts and happens automatically, those happen automatically too.
In traditional finance, liquidation refers to the process of selling some assets or property to generate cash and provide solvency for different purposes, usually for repaying debt. Liquidations in DeFi are essentially the same thing but differ in such a way that, due to being predetermined and based on smart contracts, once certain conditions are met (debt value gets close to the collateral value), they automatically allow third-parties (liquidators) to bid on the collateral to cover the debt. Therefore, liquidations in DeFi are the process of selling crypto assets to cover the debt. This is also another reason for overcollateralization since once liquidation conditions are met, they are certain and instantaneous. Lastly, liquidations involve a penalty for occurring of either 13%, 8%, or a lot more during market dips and crashes. With these being only the basic information, for more details on liquidations please refer to our post on what they are, how they happen, and how to prevent them.
What can I do with DeFi Saver?
Lending and Borrowing
Now we’re finally getting to some of the essential stuff you can do with DeFi Saver. The protocols we mentioned before first started providing basic and rudimentary financial services, available since the early days of banking - lending and borrowing, this time using digital assets in the Ethereum ecosystem.
Using DeFi Saver you can lend out assets and earn interest from protocols we integrated. You lend your digital assets by supplying and locking them as deposit in secure, battle, and time-tested smart contracts. This is the simplest and at the same time safest activity in DeFi space generally, as long as you pick and use safe protocols. How do you know which protocols are safe in DeFi? Well like with anything else, some basic research is recommended. Those are usually projects which exist for some time now, have a strong user base, or already have a significant amount of value locked. We only integrate projects after performing some due diligence. One of the first ones we integrated DeFi Saver with - Compound remains to this day one the most secure ones in DeFi space.
The other side of this coin is of course borrowing - the ability to take out a loan using cryptocurrencies at any time. Using DeFi Saver, you can borrow digital assets - most often people borrow stable assets against volatile ones and this is something that people do to get some funds into fiat, while effectively maintaining their exposure to ETH or whichever used asset. There are different scenarios why one might want to do this. One that is most obvious is that some people want to keep their hard-earned crypto assets and not spend them but still require some solvency. There's a legendary example of Mariano, an ex-MakerDAO dev, taking out a DAI loan to buy a car while getting to keep his ETH exposure. Another, quite recent and pretty cool example, is from Aaron Ng which bought a Tesla model Y by taking out a loan with Liquity for the down payment and staking his ETH with Convex Finance for paying back the lease and loan using income from it.
It’s clear that in decentralized finance, lenders and borrowers rely on DeFi protocols as they would on banks (middlemen in traditional finance), the main difference being that protocols are not middlemen but in fact eliminate them. They just match parties, while maintaining stability using economics and game theory.
Using DeFi Saver, you can lend and borrow in MakerDAO, Compound, Aave, Reflexer, and Liquity protocols with more to come.
Long & Short Digital Assets
The next thing you can do using DeFi Saver is to create leveraged long or short positions using those lending DeFi protocols. In DeFi you can long and short digital assets much like you can in the traditional trading and investing with stocks. This is, of course, considered a highly risky activity as you are exposing yourself to liquidation risk, especially during big market movements, though it can also be very profitable if the market moves in your predicted direction. A long position is created by depositing volatile asset and taking out a loan in stablecoins, afterward using those newly borrowed funds to purchase more of the volatile asset, you are looking to long. As its value increases, you’ll spend less and less of the volatile asset to repay the stablecoin amount. Shorting is on the other hand done by doing the reverse, depositing stablecoins to borrow a volatile asset, therefore repaying the lesser amount if the value goes down.
Using Maker, we’ve added an option to create a leveraged position in this protocol using a single transaction. Due to Maker being a protocol where you can lend or supply various digital assets but only borrow DAI, there are some nuances, meaning you can only long but can’t short other assets. With Maker, you can count on one nifty thing though - “1-hour price delay” when trying to long. Without going into technicalities, Maker updates its price once every hour, which provides a solid 1-hour window for both the user to manually, and our Automation to automatically adjust the position, and deleverage to avoid liquidation in tough market situations. Maker has a great track record as a lending protocol in terms of stability and security. The only downside is the minimum 13% penalty we mentioned before.
Creating positions using other protocols like Compound or Aave offers some lower liquidation penalties and more assets. Shorting digital assets using these protocols is entirely possible and even pretty user-friendly, with options available directly from the dashboard in case of Compound for example, or doing so with a long list of assets in the case of Aave. As we add and integrate more protocols in the upcoming months there will be a lot more ways to employ these trading strategies.
Longing and shorting cryptocurrencies is something that DeFi Saver simplifies greatly, with options to create instantly leveraged positions, use our Boost and Repay options to instantly and manually leverage and deleverage in a single transaction, or to just rely on Automation to stay certain you’re not missing on market movements or getting into the dangerous territory of liquidation. You can learn more about this feature in our blog post devoted to this strategy.
Another quite interesting concept introduced in DeFi is yield farming or liquidity mining. Some protocols and decentralized exchanges in the DeFi ecosystem offer additional rewards in the form of tokens as incentives for providing liquidity in their system. Albeit a bit advanced, liquidity mining has proven to be quite a lucrative strategy for many early users of those big lending & borrowing protocols and DEX’es, earning them a high APY. It’s a time-tested strategy protocols rely on for attracting new users and activity to their products and DeFi ecosystem.
Using DeFi Saver, you can employ this strategy and mine Compound or Aave rewards in the form of their tokens, in exchange for using their services. Both are automatically awarded to users and easily claimable within their respective dashboards. Aave recently also introduced protocol liquidity mining program, using which you can further put those tokens to use, stake your earned AAVE tokens directly using our dashboard, and earn additional rewards.
Another thing you can do, although a bit more advanced, is to make the best use of the Reflexer protocol. Reflexer allows you to do all kinds of things like supply to a pool and provide liquidity for the protocol or just lend and borrow their token receiving in return their governance rewards. Using DeFi Saver you can try out most of the token-rewarding activities.
It’s important to note that although liquidity farming is currently quite a lucrative strategy and vetted and stable protocols like Compound or Aave even make it secure and accommodating, protocols can still change the borrow and staking rates on the go, and they often do. Incentives for using them have dropped significantly since the early days of generating user adoption, but they still remain quite compelling.
Single Transaction Building
This is where things become really interesting. Recently, we introduced a big update that provides quite a unique feature enabled by the composability and interoperability of DeFi protocols and applications. Using our Recipe Creator feature you can now mix various DeFi actions from multiple protocols we integrated and execute them in a single transaction. It allows you to combine several actions, such as flash loans, asset swaps, and other DeFi protocol interactions to perform all sorts of tricks. Some of those include maximizing AAVE and COMP liquidity mining rewards we just mentioned above, or moving positions between different protocols, converting debt or collateral assets, and creating instantly leveraged positions.
Recipe Creator makes it really easy to play around and enables less technically skilled folks to wrap many actions together, which was until recently considered quite an advanced skill and feature used mostly by developers. Our desire here was to provide this functionality through an informative, approachable, and highly functional interface. Some quite nice usage numbers, and occasional community praise for the tool, are telling us people find value in this feature.
One of the options available in the Recipe Creator is flash loans, a powerful tool that allows all sorts of refinancing and leveraging options in a manner not possible before. Using flash loans you can borrow instantly and easily, without provided collateral as long as that liquidity is returned to the pool within the same transaction block. This enables some incredible use-cases for creative and skilled people.
Loan Shifter - Refinancing
Loan Shifter is an easy-to-use, but very powerful tool for refinancing. It provides an instant and simple way to change collateral or debt asset and shift between protocols with just a few clicks. It’s a DeFi refinancing tool for protocols.
Although much of what this feature provides can now be done with the new Recipe Creator, Loan Shifter offers a direct and convenient interface for you to:
- Switch to a different protocol
- Change your collateral asset
- Change your debt asset
It makes sense to use Loan Shifter in several situations. For example, you perhaps assume that an asset will simply perform better in the following period, or maybe another protocol starts offering higher returns on your investment, better interest rates on borrowing, lower liquidation penalties, or introduces some desirable changes you want to start relying on. This feature has you covered for any of those as long as the protocol that you have the position in is integrated with Loan Shifter.
Smart Savings - Savings using the best APY
This is another quite simple feature we developed to provide you with quick access to the best lending interest rates across DeFi protocols for your DAI. We use this feature in a similar way to the previous one, integrating and offering various protocols within a single dashboard. Using the Smart savings feature you can track the best APY, estimate your earnings, move or withdraw your DAI assets with the least amount of risk.
This is the simplest but at the same time most secure and stable way of earning interest on your digital assets. Still, although the rates are some of the lowest in DeFi, they outperform traditional finance savings rates by a lot. Using our application you can supply your DAI to Compound, Aave, or dYdX protocols and then move them across those, and other protocols we add to this interface, in search of the highest returns.
We set out to provide users with peace of mind using the power of Automation and to make advanced and complex actions more accessible to everyone. We wanted to level the playing field so regular users can do most of the stuff reserved for Ethereum natives. The journey to bridge the gap and make stuff more approachable to users is long. To help you out in your DeFi journey there are some really cool utilities that also came out of our kitchen!
Before deciding to use any of the DeFi Saver’s features and committing actual funds in fear of what could happen, you can test everything out and have fun playing around using our Simulation mode. The Sim mode lets you in fact check out all of our features, but it particularly comes in handy to test the different premade recipes or even to create some entirely new recipes yourself, without worrying about gas fees. If any of the protocol features confuse you or you’re not sure how you could create a leveraged or yield farming position, Sim mode is for you. Turning it on simulates any transaction on a private fork of the mainnet with the help of our friends from Tenderly.
Token Swaps - Exchange
What kind of a DeFi application would we be if we didn’t offer good old basic token swaps. Token swaps are the essential feature for when you’d want to swap your digital assets. In DeFi swaps occur on decentralized exchanges. We provide token swaps for a large number of tokens we always check and decide to add after proving their viability and usage in DeFi space. As an aggregator of multiple decentralized exchanges from the space, we source prices and offer the best quote among 0x, Uniswap, Curve, Sushiswap, Balancer, and a few others.
DeFi Explore is a separate project developed by our team. Visually it’s obviously quite similar to DeFi Saver and serves as a cool extension providing some essential Maker protocol information. It’s our homemade explorer providing several important functions like:
- Searching Maker CDP’s by ID, hash, or public address
- Giving essential info and global stats about its various vaults
- Keeping track of liquidations in the Maker protocol
- Simulating Automation settings for Maker positions to see how different Automation configurations would perform in different market conditions
DeFi Saver Gas Prices Extension
One of those nifty things we also developed for your convenience is our in-house built Ethereum gas prices extension for Chromium-based browsers like Chrome, Brave, Opera as well as Microsoft Edge and Firefox. It shows you current gas prices at all times and provides a 7-day averages chart to figure out a good time for management of your positions. It’s a useful browser extension without any intrusive permissions seen in some alternative extensions.
You can find the browser extensions using the links:
Here are some of the community shoutouts the extension has received in the recent period.
Where to from here?
As was the case in the short story of our humble beginnings and inception of the Automation idea, we actively keep track of what we are missing as users as well as builders and get right to building it. We also listen to our users and members of our community and do our best to incorporate their invaluable feedback. Of course, we do our best to do so by looking ahead at what’s in store for the Ethereum network as a whole, and DeFi as a promising, new financial frontier.
DeFi itself is quite new, and although it has witnessed incredible growth in just the last two years, there is a long way before it reaches broader masses, competes with traditional finance in any way, and in that sense becomes an appealing alternative. For us, it continues to be an immensely thrilling and fun journey that brought together a great team of crypto enthusiasts.
Recipe creator has already attracted a crazy amount of attention and we want to keep pushing those kinds of engaging features to users. It’s a glimpse of our future ideas regarding DeFi and how enabling different actions, triggers, automated transactions can create truly unique financial strategies. Speaking of which, we’ll continue improving our flagship feature, Automation, by providing custom triggers to work together with recipes and strategies giving you more room to decide what you want to accomplish in DeFi, without the requirement of non-stop looking at charts and screens.
Released together with the last update, our new architecture was prepared with Ethereum network scaling solutions in mind. These are coming in the form of layer 2 solutions such as Optimism, Arbitrum, and zkSync. We firmly believe that these teams will provide incredible solutions to the challenges that arose from the Ethereum network becoming so vastly popular. To that end, we’re staying dedicated and entirely devoted to the Ethereum ecosystem, the security, transparency, and innovation that it offers.