Introducing support for six more tokens
Institutional investors looking to diversify their portfolios can now custody six more DeFi tokens with Finoa. We are excited to introduce support for Aave (AAVE), Uniswap (UNI), The Graph (GRT), SushiSwap (SUSHI), Compound (COMP) and Yearn Finance (YFI)!
With the equivalent of over 27.8B USD in locked value at the time of writing, these six tokens showcase a clear and increasing demand for true decentralization and services, previously only offered by centralized providers.
We are proud to support token holders with our institutional-grade custody and further asset management services while also contributing to the innovative momentum of DeFi!
Aave is an open-source and non-custodial liquidity protocol that enables users to lend and borrow cryptocurrencies in a trustless manner, thus earning interest on deposits and borrowing assets. Unlike other lending protocols, Aave allows its users to choose and switch between a variable and stable interest rate to ensure receiving the optimal rate based on the pool. Another exciting feature of Aave is flash loans that allow users to borrow without collateral, as long as they repay the loan amount by the time the next block is mined.
AAVE is the native governance token of the Aave protocol, which enables holders of the cryptocurrency to discuss and vote on proposals that affect the project. Additionally, AAVE introduced a new concept called “Safety Module” that protects the system from a shortage of capital. In cases where there is not enough capital in the protocol to cover lenders’ funds, the AAVE in the Safety Module will be sold for the assets needed to cover the deficit.
Uniswap is an Ethereum-based decentralized exchange that enables users to swap ERC20 tokens without the need for buyers and sellers to create demand. The protocol focuses on maintaining a high degree of decentralization and censorship-resistance. Any ERC20 token can be listed on Uniswap without requiring permissions. Each digital asset then has its own smart contract and liquidity pool, allowing users to trade the tokens and contribute to their liquidity while also partaking in liquidity provider fees.
Uniswap’s native token, UNI, is a governance token that gives holders the right to vote on Uniswap developments and changes to the platform. Thus, Uniswap democratizes its parth forward among its vibrant network of participants, influencing the distribution of minted tokens to the community and developers, changes to the fee structures, funding of grants, partnerships, liquidity mining pools, and more.
The Graph is an open-source and decentralized protocol for indexing and querying blockchain data, facilitating the creation of fully decentralized applications. The protocol enables developers to easily build on blockchains by allowing anyone to build and publish subgraphs, which are open APIs that applications can query with a standard GraphQL API.
The protocol focuses on decentralizing the query and API layer of the decentralized web (Web3) by removing the need for dApp developers to choose whether to build a performant app or one that is truly decentralized. Instead, teams have the chance to focus on their dApps’ core functionality. The Graph simplifies finding subgraphs of the most popular protocols such as Uniswap, Compound, Balancer, thus powering many of the most used applications in DeFi and the broader Web3 ecosystem today.
The Graph’s native token GRT is an Ethereum-based token used to allocate resources to the network. Among its many purposes, the token allows developers or end-users to signal which subgraphs are worth indexing. Additionally, node operators (indexers) stake GRT to provide indexing and query processing services. Meanwhile, token holders can also delegate their GRT to indexers and, in turn, earn a portion of the reward. Lastly, consumers pay for their queries using GRT.
SushiSwap is an Ethereum-based automated market-making (AMM) decentralized exchange, operating through a collection of liquidity pools that allow users to buy and sell crypto assets without the need for the support of one central entity. Through its token, SUSHI, the protocol introduced revenue-sharing and forum-driven network efforts to the popular AMM as incentives for the network participants.
When SushiSwap launched, the protocol was a fork of Uniswap with added community-oriented features. Similar to Uniswap, tokens traded on SushiSwap are maintained by smart contracts: users lock up their crypto assets into smart contracts that can then be accessed by traders, swapping one token for another. Those who trade against locked assets on SushiSwap pay a fee. With the introduction of SUSHI, this fee is then distributed to all liquidity providers proportionally, based on their contribution.
SUSHI entitles holders to governance rights, as well as a proportionate amount of all transaction fees paid to the platform. As a community-governed platform, anyone holding SUSHI can propose changes to the software operation and vote on proposals submitted by other holders.
Compound is an algorithmic, autonomous interest rate protocol that allows users to lend and borrow crypto assets. Furthermore, users have a say in the governance of the protocol through its native token — COMP. Anyone who holds any of the cryptocurrencies supported by Compound can lend and borrow crypto immediately, thus earning or paying interest. Similar to other decentralized lending protocols, Compound uses crypto assets as collateral when users choose to borrow assets. However, what sets Compound apart is the tokenization of the assets locked in the system through the use of cTokens.
Once a user deposits their crypto-asset, Compound awards the lender a new cryptocurrency called a cToken (e.g. cETH, cDAI, etc.). Those tokens can then be transferred and traded without restrictions, yet they are only redeemable for the cryptocurrency that was initially locked in the protocol. As an incentive, Compound also introduced another cryptocurrency native to its service — COMP.
COMP is the governance token of the Compound protocol, distributed to all lenders and borrowers on the protocol daily. A predetermined amount is allocated every time an Ethereum block is mined based on the proportion of the interest accrued by each asset. By providing governance with the COMP token, a significant, centralized point of failure — the Compound team, is removed to ensure decentralization.
Yearn Finance is an Ethereum-based vault and yield aggregating platform built to help users generate the optimal yield farming profits by automatically switching between different lending protocols. It is a sophisticated protocol aimed at diverting liquidity to different DeFi sectors to find the best returns. When a user deposits tokens, they are converted to ‘yield optimized tokens’ or yTokens, which allow for earning not only lending fees but also trading fees.
Yearn Finance’s main feature is called Vaults, and it allows users to deposit crypto assets and earn yields. The purpose of vaults is to mitigate the high costs of transacting on Ethereum, which is accomplished by pooling capital, where only the controller of a vault has to pay transaction fees to yield farm.
YFI is an ERC-20 token that governs the Yearn Finance ecosystem. Token holders receive voting rights for new Vault proposals from other holders as well as the future benefits of the token’s upside potential. To participate in governance, a user has to stake their YFI, where the token is held for three days, while the user earns a fee for voting. Yearn Finance distributes YFI tokens to liquidity providers who supply certain yTokens.
Want to learn more?
As the DeFI ecosystem continues to evolve, we are excited to enable our clients to securely and intuitively store and manage their tokens with Finoa! Are you holding AAVE, UNI, GRT, SUSHI, COMP or YFI? Get in touch with us to learn how we can support you!
Your Key to Digital Asset Banking — Finoa is a regulated custodian for Digital Assets, servicing professional investors with Custody and Staking. The platform enables its users to securely store and manage their crypto-assets, while providing a directly accessible, highly intuitive and unique user-experience, enabling seamless access to the ecosystem of Decentralized Finance (DeFi). Reference customers include the world’s most renowned Venture Capital firms, large corporations and financial institutions. Finoa was founded in Berlin in 2018, has received a preliminary crypto custody license (§64y Para. 1 KWG) and is supervised by the German Federal Financial Supervisory Authority (BaFin).