The Ones in the Arena: Swivel Finance
“Standards surrounding continuous code development [in DeFi] need to be established. As seen in Compound’s recent proposal, siloed audits aren’t enough to guarantee system fidelity, and there likely should be continuous audit incentivization for every PR.” — Julian Traversa, Founder & CEO, Swivel
As more and more institutional players enter the DeFi space, we’re seeing some interesting developments addressing those institutions’ low risk tolerance and desire for predictable yields.
Perhaps ironically, this particular corner of DeFi is tackling a high-risk, high-reward problem: while there are still giant-neon-sign question marks as to just how much institutional investors will put into crypto today, the people and projects who manage to onboard those users stand to benefit massively over the coming years.
Swivel is a protocol for fixed-yield lending and tokenized cashflows, enabling both fixed yields and rate trading through a novel orderbook infrastructure.
Code4rena’s team asked Julian Traversa, Swivel’s Founder & CEO, to weigh in on the current state of security in DeFi and to tell us more about Swivel’s ambitions.
What are you building, and what sets it apart from similar offerings in the space?
Most simply, Swivel is “the protocol for fixed-yield lending and tokenized cash flows.” That said, there are a couple other similar protocols, but Swivel is set apart by a few important features/factors, largely extending from our novel orderbook infrastructure, and the issues that exist for AMM’s for the same fixed-yield instrument.
To cut to the point, AMM’s give up a LOT of efficiencies in general to spot markets, but these are exasperated in derivative markets. Slippage is more impactful, pricing is more unpredictable, and quotes fundamentally expire as underlying spot prices (lending rates) change, meaning LP’s are constantly losing edge to the market using an AMM.
TL;DR—
- 100%+ more capital efficient
- Alpha-decay protected liquidity provision
- Predictable yield-token pricing
- 0–2 tx instead of 3–6
- Gasless orders
What’s your vision for your project? What are you building towards in the longer view?
What we’re building most towards is a fixed-yield space that has the deep liquidity and open market-access necessary for wider market growth.
Currently things are quite fractionalized, and the AMM’s available are all simply minor variations of one another, and fail to fix the UX issues that exist. We hope to bring unification to the fixed-yield space through coordination with other protocols, and with our orderbook bring true capital efficiency and a professional UX to fixed-yields.
“The walled garden of smart contract audits is unnecessary and prevents both users and devs from understanding the full audit workflow. Code4rena’s open incentivization structure opens up this process, which then gives confidence to all participants that the contracts have been reviewed diligently.”
What’s the most innovative idea in your protocol?
Our unique instrument-tailored orderbook that optimizes for these principal & yield tokens. Without it, we share a lot of the same properties as other yield tokenization protocols (though we were the first to start publicly developing the concept) — but with the addition of our orderbook, not only can we offer a significantly enhanced UX, but significantly enhanced capital efficiency as well.
Should we want to place our tokens on an AMM, we can do so and not only cover our orderbook’s userbase/function, but the more basic AMM functionality that other protocols currently offer/plan to offer.
It takes courage to undergo a public audit by a swarm of anonymous security researchers. It also says a lot about how much you prioritize security. What advice would you give to those on the fence?
The walled garden of smart contract audits is unnecessary and prevents both users and devs from understanding the full audit workflow. Code4rena’s open incentivization structure opens up this process, which then gives confidence to all participants that the contracts have been reviewed diligently.
Security has become an increasingly vital topic in DeFi. How do you think the ecosystem needs to evolve in order to rise to the challenge?
There need to be a handful of changes for sure, but one thing I’d point to would be the fact that standards surrounding continuous code development need to be established. As seen in Compound’s recent proposal, siloed audits aren’t enough to guarantee system fidelity, and there likely should be continuous audit incentivization for every PR.
What gets you most excited about DeFi?
The most exciting thing about DeFi is really the composability and coordination that can exist when integrations are easily available. This composability has been harnessed by the asynchronous part of DeFi as far as most lending purposes go, but the synchronous, maturity based part of DeFi has remained fractionalized.
The next exciting step is then working together to coordinate these synchronous processes and elevate DeFi to the next level.
Complete the following sentence: “I wish more DeFi projects would…”
Verify their damn contracts and make ABI’s easily available…
What DeFi project name do you wish you’d thought of first?
Honestly… Compound. It’s just so fucking good. The branding tells you most of what you want to know about the project.
If we were to go in the other direction… Everyone keeps saying you need to build a cult, so something like “Heavens Gate.”
What do you geek out about, beyond DeFi?
I’ve been playing games since I was a kid, started professionally with AoE3 at 12 and have played just about everything professionally over time, with my main claim to fame being my time in the HOTS circuit / Tempo Storm and #1 ranking, as well as a brutal loss in the League of Legends relegation finals.
These days I mess around with Overwatch and Chess, and in any extra time attempt to make sounds with my synthesizers + keyboards.
Is there anything else you want to make sure we include?
A quick shill of dapptools so i can tweet @transmissions11 for free clout.
Learn more about Swivel:
- Website: swivel.finance
- Twitter: twitter.com/swivelfinance
- Docs: docs.swivel.finance
Swivel’s $75K security audit contest opened September, 2021, and runs for one week. Details at code4rena.com.
The Ones in the Arena spotlights emerging and established DeFi projects and their founders, with an eye to celebrating and learning from them. The series’ name is inspired in part by Teddy Roosevelt’s famous quote, which has a central place in Code4rena’s philosophy.
