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GAINS Associates

Tidal Finance— Telegram AMA — March 26

On Friday, March 26, we had the pleasure to welcome to our Telegram chat:

Chad Liu, Co-Founder.

We asked him questions about the development of Tidal Finance.

Some sentences have been slightly edited for readability but the meaning has been conserved.

Summary

Tidal Finance is a cross-chain decentralized insurance marketplace in the DeFi space to connect insurance sellers and buyers to cover smart contract hacks risk.

The Tidal protocol is designed to help LPs generate attractive returns while lowering the risk to their capital. Tidal functionality allows LPs to stake their capital to cover multiple protocols.

Tidal token holders can propose new coverage pools. Each pool will combine protocols LPs will be able to stake capital to provide coverage. Tidal is non-custodial and doesn’t require KYC.

The Tidal protocol is governed by its governance token holders. The public can submit changes to Tidal’s code or parameters that guide the performance of the protocol. Token holders can vote on these proposals in our normal DAO process using TIL tokens.

Introduction

Q — Ayeley Commodore-Mensah from GAINS: Let’s begin by learning a bit about you. What did you do before crypto and did you have any other previous venture in crypto? What is your role at Tidal?

A — Chad Liu from Tidal: Sounds good. A bit background about myself — I have a mathematics, engineering and finance background, started my career in the energy SaaS industry, came to crypto space in 2017 working in a venture fund and fell in love with the space. The amount of creativity, innovation is definitely ahead of other industries. Earlier last year around April, I co-founded this company with a couple of other friends by realizing the DeFi space has a high demand for insurance service.

About Tidal Finance

Q — Ayeley Commodore-Mensah from GAINS: You mentioned that you started Tidal to meet the demand for insurance services. Can you please share more with us? What is Tidal really about and what kind of insurance services do you provide?

A — Chad Liu from Tidal: Tidal is an insurance marketplace to connect insurance sellers and buyers to cover smart contract hacks. The platform offers the functionalities to create custom insurance plans for one or more assets from multiple protocols. The platform's main objective is to maximize capital efficiency and return to attract LP’s while offering competitive insurance premiums to attract buyers.

Q — Telegram user Nikn 1: How do your custom insurance plans work? Who decides how they work?

A — Chad Liu from Tidal: By saying customizable meaning insurance sellers can select multiple protocols when selling insurance. basing on their own risk tolerance and the confidence with each protocol. What protocol to onboard will be controlled by DAO. Initially, we are launching 30–40 protocols as a starting point.

Q — Telegram user Mamberroi: Is it easy for any user to create custom insurance groups? Or is approval from any Tidal team required for them to be valid and qualified?

A — Chad Liu from Tidal: Right now, it’s governed by the community. The process would be to submit the proposal then go through a vote.

Q — Telegram user James Daniel: Do I need KYC to be able to use the Tidal Finance platform?

A — Chad Liu from Tidal: There is no KYC required.

Q — Telegram user Key Mant: Is there a reason why Tidal Finance building a consensus module with Polkadot’s Substrate? What advantages does this provide for your project?

A — Chad Liu from Tidal: Our current plan is to move on to eth compatible parachain in the Polkadot ecosystem in Q2. The answer is twofold: 1. Gas fee — Polkadot’s lower gas prices will also help users, particularly if some pools eventually require more frequent payments to reflect changes in variable rates. 2. From a user case point of view, Polkadot-base will attract more types of liquidity from different chains, therefore attracting more insurance cover buyers and sellers to participate on the platform.

Q — Twitter user @NguyenQ32225128: You say that for any withdrawal of funds it will be required to wait a certain time to check its security, but that “security check is not the same as the common confirmations that are made in each transaction”? or do they really make sure the receipt wallet is reliable?

A — Chad Liu from Tidal: Withdrawal fund needs to wait for at least 1 week to make sure there is no valid claim against the capital. If there is a valid claim, the payout process could take another 2~3 weeks to determine the residual capital for withdrawal. It is a bit different from the transaction confirmation.

Token

Q — Ayeley Commodore-Mensah from GAINS: What is the token use case and how does it capture the value of the ecosystem you’re building?

A — Chad Liu from Tidal: Our business model is to take a small transaction fee when cover is purchased and tidal token holders will benefit from the profit made. Of course, the fees that are earned by the platform will be one of the key indicators for the platform’s success. But it also depends on other factors too — e.g. the total amount of cover being sold, the LP’s return, especially at the beginning of the launch, and user growth.

Regarding governance — Tidal token holders can vote on the proposals on risk evaluation, LPs participation guideline, pricing model, claim process, etc. Our goal is to have a fully decentralized DAO overtime for the platform to sustain its token holders. Of course, it will take some time to educate the token holders.

Competitive Advantage

Q — Ayeley Commodore-Mensah from GAINS: What sets you apart from other insurance service providers in the market now?

A — Chad Liu from Tidal: Our competitive edge is to increase capital efficiency compared to current players (NXM and cover) on the market. I always like to give an example of how people sell insurance in a traditional insurance world if you have $1, and you want to sell insurance. If you only sell 1$ cover (a reasonable insurance premium is pretty low 2% ~ 5%), you are only making a small return by putting all your capital at risk. No one would sell insurance this way. What you want to do is to sell to 20 people, 50 people, and each person buys $1 from you, but manage the risk of claim payout to make sure you have enough capital to cover the losses. This is how insurance funds make returns. Tidal’s core design is to implement this concept to increase capital efficiency.

Q — Twitter user @dtv1907: How does Tidal Finance differentiate itself and what plans do you have to overcome the first-mover advantage of other insurance platforms currently on the market such as Nsure or Nexus Mutual?

A — Chad Liu from Tidal: Our core competitive advantage is to increase capital leverage. and we designed 3 risk pools (low/medium/high) for insurance seller to participate. in a low-risk pool, they can select up to over 20 protocols to backup at the same time. To mitigate insolvency risk, the cover plan is sold weekly. if one protocol gets hacked this week, next week’s available cover will be reduced accordingly until more sellers provide liquidity into the pool.

Partnerships

Q — Telegram user Femi Oyinloye: I read somewhere that Tidal Finance just made a partnership with Polygon, how will this benefit both of you and also crypto users, what new things will be done?

A — Chad Liu from Tidal: We will deploy on the polygon to save user gas fees. our insurance pool requires weekly rebase and if, on the mainnet, it could cause users over $1000 just on the gas fee. Tidal will also provide insurance cover to other defi protocols in the Polygon ecosystem.

Security

Q — Twitter user @Dorothy279knot: Tidal Finance makes DeFi safer by providing insurance coverage for assets across chains. Do you check all the clients' security details like doing an audit to their smart contract before signing agreements?

A — Chad Liu from Tidal: yes. we have a thorough onboarding process. protocol’s audit reports, team background (non-anonymous), time been tested on the market, and total locked value are the factors we will look into and assign the risk level of each protocol.

Financial

Q — Ayeley Commodore-Mensah from GAINS: Cool. Did you raise funds so far? If so, how did you handle them? Are you planning to do any future raises?

A — Chad Liu from Tidal: Yes. We completed the private raise a couple of months ago with tier 1 funds. e.g. KR1, Spartan group, Hypersphere, QCP, etc. As of right now, there are no future raises planned. We are conducting a public sale token distribution event on Balancer LBP at the moment. Here are a couple of articles regarding the previous fundraiser.

Business Development

Q — Ayeley Commodore-Mensah from GAINS: Before we switch to the community questions from Twitter, let’s talk about your plans for the year. What stage is the project at now and what should be expected in the coming months?

A — Chad Liu from Tidal: We are busy preparing the testnet launch next week. The mainnet launch should be 4 or 5 weeks followed by a testnet launch. Next month, we will form more launching partnerships. Once launched, we will focus on increasing the total cover sold in the DeFi ecosystem.

Chad, It was a pleasure having you in our group today to talk about Tidal. Anything else you’d like to say? Where can we follow you to stay updated? — Ayeley Commodore-Mensah from GAINS

Thanks again for having me here. I would just say check us out on our website. Join our Telegram group. A lot of new announcements will be made from there. We will have an incentive program with a testnet launch very soon. I hope more people participate. — Chad Liu from Tidal

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