Saffron Fiance is a liquidity mining platform that provides users with different levels of risk exposure and yields. It was launched on November 1st, 2020, by an anonymous DeFi development team. It is a protocol for tokenizing on-chain assets to give liquidity providers greater flexibility and access to their underlying collateral while allowing for leveraged staking and risk management.
Protocol is designed to give liquidity providers the option to select customized risk and return profiles via Tranches which are split through the future earning stream and the net present value of utilized principle. In total, there are three user-facing tranches to choose from with two more tranches that exist at the smart contract level.
The “A Tranche” is the highest-earning trance and liquidity providers earn more interest in this pool. However, if there is a case in which the platform loses the funds, these liquidity providers will lose their principal and any accrued interest. Liquidity providers also earn 10% of the SFI tokens generated per epoch.
The “AA Tranche” is less risky but it earns less interest. However, the funds are covered in the event that the platform loses funds. The insurance comes from the principal and interest earnings of the “A Tranche” liquidity providers. AA tranche liquidity providers can earn up to 80% of the SFI token generated.
The final tranche is called the “S Tranche” and this is used to balance the A and AA tranches so that they are in perfect equilibrium with each other.
Saffron launched with DAI liquidity mining which is deployed to Compound to earn interest. Whilst liquidity mining through DAI, users will earn SFI - the native token behind the platform which has a hard cap of 100,000 SFI. It runs through 14-day Epoch periods. During the fortnight, liquidity providers earn interest on underlying platforms and mine SFI tokens.