WTF is DefiSaver?

Bear Den member and DeFi power user, @G-Fi, almost lost everything in the big dip of 2021. As he watched his locked, leveraged funds plummet, he luckily found DeFi Saver: a one-stop dashboard with powerful tools. One of which are flash loans that saved him from a complete crypto catastrophe. We’ll get to that part later, and start with the big picture…

What Problem Does DeFi Saver Solve?

The main problem DeFi Saver solves is the volatility factor. Users of MakerDAO, Compound and AAVE & defi protocols can enable automation for their collateralized debt positions without worrying about sudden price swings liquidating their position.

You may have heard Tijo say, “Use A Fucking Stop Loss!” Tools like DeFi Saver enable additional ways for users to apply that mantra with automated positions — an important tool to support your enjoyment of time offline, even with open positions. For example, if the market drops during a meditation, DeFi Saver will unwind your position accordingly and protect you from the potential liquidation, preventing the massive 13% liquidation penalty (as it is in Maker) and possible total bot liquidation at auction.

Besides automated position management, they provide powerful tools that make advanced operations in Defi much more efficient and convenient to execute, like the option to create an instantly leveraged MakerDAO Vault. You could not play in this sector, but what fun would that be?

“A ship is safe in harbor,

but that’s not what ships are for.”

― John A. Shedd

Why was DeFi Saver created?

The idea for DeFi Saver came to Nenad, during the market crash of December 2018. At the time, Nenad and his team were on a workation in Chiang Mai, Thailand, sightseeing and riding around. But he had to keep checking the MakerDAO CDP he had open at the time, as it kept inching closer to liquidation.

The bad cell signal and lack of simple access to his wallet most of the time led him to envision a service that would trustlessly and automatically unwind his position. That’s an extremely convenient solution to a problem many have when traveling, sleeping and just unplugging from the computer.

Back at the office, they started working on what was first named CDP Saver. The app went live on Ethereum mainnet in April 2019. They rebranded a few months later to DeFi Saver as it became clear that decentralized finance would grow beyond MakerDAO. In September 2019 they launched the first Automation version, with options for auto-deleveraging and auto-leveraging

“Risk comes from not knowing what you’re doing.”

Warren Buffet

Leverage management features are what made DeFi Saver unique and attractive from the first days. Today, if someone wants to use the MakerDAO protocol to create a leveraged long ETH position, they can create an instantly long Vault, manage it actively using 1-transaction Boost and Repay options, and then instantly close it to ETH or DAI in one transaction once they’re satisfied with how the position worked out.

Today, the team has integrated these advanced leverage management options for all protocols, which includes MakerDAO, Compound, AAVE, Reflexer and Liquity.

Besides leverage management and Automation options, they recently launched a “Recipe Creator” feature where users can put together their own custom transactions interacting with any wanted defi protocols, all in one transaction. This allows anyone to migrate a position from one protocol to another, or potentially create a position, borrow funds and then deposit them into a different protocol, again in a single transaction.

If anyone wants to use DeFi Saver to leverage more ETH, all they need to do is go to the “Create” option in their Maker dashboard at https://app.defisaver.com/makerdao/create-cdp and select the “Leveraged” option in the bottom of the screen. Enabling this means that all borrowed DAI is immediately used to buy more ETH for the user’s position.

How can you use DeFi Saver to build wealth?

Using leveraged positions to increase one’s balance of assets should be considered an extremely risky and advanced trading strategy — one that definitely isn’t recommended for most, no matter how simple it may be to create a leveraged long position.

The theory is pretty simple. You deposit ETH and borrow stable coins, then use those stable coins to buy more ETH for the position. If ETH goes up in price, then you can clear the debt with a smaller part of that additional ETH, and walk away with more ETH than you started with. This is something they described in detail in their guide on longing and shorting using lending protocols.

Additionally, although their current Automation options are somewhat limited (in essence, the system in this current iteration can repay debt when the market goes down, or buy and leverage more when the market goes up), if they enter a continued market movement in your predicted direction, Automation can help increase your profits. They analyzed this in one of their articles last year and they also have a simulation tool available for testing various strategies. We suggest to anyone interested to do as much research as possible.

How does DeFi Saver eliminate the risk of liquidation in Maker, Compound, AAVE, Reflexer and Liquity?

As mentioned earlier, they have Automation options available for Maker, Compound and AAVE protocols. In terms of Reflexer and Liquity, these features are currently unavailable, but they should roll out later this year.

The way DeFi Saver Automation can eliminate the risk of liquidation is pretty simple, at least for end users. If anyone wants liquidation protection for their position, they simply go to DeFi Saver, configure the desired minimum ratio below which auto-repay (the option that clears debt using supplied collateral) will trigger, and that’s it! The system then continuously monitors the position moving forward.

How do flash loans work?

Flash loans are an incredible concept introduced within DeFi. Anyone is able to borrow any amount of funds available for their needs, as long as they return the full amount (as well as any potential fees) at the end of the same transaction.

One of the best use cases for flash loans with DeFi Saver are refinancing tools. A user can take a flash loan to clear debt within one protocol, then move assets to a different protocol and borrow the needed sum there to pay back the flash loan debt. This is something that anyone can do using DeFi Saver’s Recipe Creator and it’s pretty amazing what kind of instant management actions flash loans enable. Without this tool, @G-Fi would be screwed. From zero to hero back to zero ← no one wants this to be their story!

Are boost and repay transactions anonymous on Tornado?

Boost and Repay transactions include a token swap step which is always made using decentralized exchanges, with liquidity aggregated from multiple sources to ensure that you get the best rate. These transactions are publicly visible on the Ethereum blockchain and they’re as private as the account using them is.

Here’s how Tornado works: users deposit funds from one account and later withdraw them at a random time with an alternative account. It’s this time difference, among other things like all deposits being of the same amount, that make it impossible to tell which funds are withdrawn when.

Why don’t these protocols have this feature built in?

The teams developing protocols are most often focused on creating the protocol itself and the basic options for end users (e.g. depositing, lending and borrowing), as well as growing their communities and gradually adding support for more assets and growing liquidity in the protocol, etc. The options they create, such as leveraging assets, aren’t, in a way, meant to be original protocol options, so you won’t usually find them in the default protocol apps (such as the Oasis app for MakerDAO).

What are fees per transaction?

There are service fees for some transactions at DeFi Saver — those actions that include asset swaps (as disclosed here), while standard protocol transactions have no additional fees.

Specifically, the fees for Boost or Repays are 0.25% of the amount being transacted in case the user is running these manually, or 0.3% when these are automated adjustments.

These fees are the core of the DeFi Saver revenue model.

Where can I find liquidations stats for Maker, Compound and Aave?

Currently, the most up to date place for finding MakerDAO liquidations is the makerburn site which has a number of useful statistics regarding the Maker protocol. In terms of Aave, there’s the great AaveWatch, while for Compound I don’t actually know of a good place to check (though they are working on adding Compound stats to DeFi Explore).

What’s on the horizon with DeFi Saver?

This year alone, the DeFi Saver team launched the Recipe Creator and four new protocol integrations are already live, and many more are in the works.

In addition to expanding the integrated protocols, and allowing new protocol interactions in the Recipe Creator, they also have plans for launching on the upcoming Ethereum L2 networks, which will make everything more accessible to everyone, with significantly lower transaction fees.

Currently, they are working on the next version of Automation, which will provide more interesting options, like full stop-losses for user positions, auto-farming options for liquidity providers and DeFi farmers, and more. In conversation with their team, they relayed to us that their ultimate goal is to allow users to automate any custom recipe they create with a customizable trigger based on some specific asset price, or time, or other options.

Next Steps!

To learn more about DeFi Saver, click the embedded links above! And if you want the full scoop using this tool, connect with Geoff at the Bear Den @G-Fi.

I hope you are enjoying the insane profits so many of our early plays have been making. I have been adding many new positions and will discuss these more broadly in our next group webinar! www.arcanebear.com