Hillrise Research
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Hillrise Research

AMA Highlights: Stone DeFi

By Daniel Dal Bello, Director.
March 30, 2021–10 min read.

On Monday 29 March we welcomed Vincent Khoo from Stone DeFi into the Hillrise Capital Telegram Chat for a conversation about their yield aggregation platform.

Stone Protocol is positioning itself as the go-to anchoring yield aggregation platform for DeFi. The team will deliver a platform for ‘Rock Solid Yield’ by creating innovative asset pools motivated by maximizing returns whilst keeping liquidity provider capital secure.

Stone Protocol aims to create a robust passive income platform for the DeFi ecosystem.

Technical development are initially led by the team from RockX, a consulting and institutional staking firm cofounded by Xinshu Dong, Partner of IOSG Ventures and previously of Zilliqa.

Recently Stone’s Alpha Test Mining Phase concluded after attracting over $50m TVL within 3 weeks of launch — in which Hillrise Capital participated.

As Stone Protocol is moving development towards its upcoming beta release we were excited to learn more about what’s in store in the (near) future!

In this post, we have compiled key questions and answers from the event.

Daniel Dal Bello
Hi Vincent and welcome, we’ve been looking forward to this conversation for some time and especially as you have our support as a portfolio company of HIllrise Capital.

Could you please start with an introduction to yourself and to Stone DeFi?

Vincent Khoo
My name is Vincent. I used to work with traditional financial institutions in Malaysia, then from 2017–2020 I was with a crypto-focused VC called Chain Capital, posted as their Head of Business Development.

Along the way, I studied a lot of projects and was also involved in some incubation. From time to time, we know that Web3.0 and DeFi definitely are the new trend and future. We (Stone) came out of the vision to achieve cross-chain asset aggregation and in the long run, we aimed to be the largest yield marketplace in the space.

Rowan Zwiers
The initial Huobi listing is quite different from the typical IDO playbook that we have been seeing for DeFi projects. Can you walk us through your internal process for the decision between DEX launch and direct CEX listing? How will the cooperation with Huobi benefit the Stone ecosystem?

Vincent Khoo
In the midst of deciding between DEX and CEX, we ended up with CEX first as we know that CEX has more stable and greater liquidity, meanwhile, they also have larger communities.

We wanted to make sure Stone has more attention in this way, and this could help build our community more efficiently and in the near future, more people can participate in our products and this will definitely help Stone to do better.

And of course, we will also be on a DEX very soon, the details will be announced after the 31st of March.

Daniel Dal Bello
Of late you launched and just recently closed your Alpha Test Mining Program where you achieved over $50m in TVL.

For a test program that is extremely impressive.

How was this success received internally and did you outperform your expectations about the program?

Vincent Khoo
Basically, we are building the most secure and innovative yield aggregation platform for cross-chain assets and liquid staking assets. STONE is built upon “SOLID” principles including, “Make incremental improvements with extensive testing and constantly learning from other projects.”

The purpose of the Alpha Test Mining program was to ensure our platform works as it was designed and we could apply it in real scenarios in order to identify the market risks, operational risks, and many uncertainties. The Alpha version of STONE was launched especially for our community to try out for a few weeks and now, we can concluded that the Alpha version was working successfully with no security issues!

A few highlights about the STONE Alpha test mining:

  • Over 1,000 unique wallet addresses participated in the program with over 50 million in TVL.
  • Increased the trading liquidity for rETH (a liquid staking asset developed by Stafi) by 400% on Uniswap.
  • Stablecoins deployed to different strategies worked s planned.
  • Website withstood DDoS attacks with no disruption and penetration test was done during the process.
  • The development team managed to solve some known unknowns, such as gas fee optimization (although still high on Ethereum), some limitations on Metamask, fixing further unknown unknowns along the way.

“Over 1,000 unique wallet addresses participated in the program with over 50 million in TVL.”

Our team would like to thank the community for supporting the Alpha Test Mining Program and providing valuable feedback for product improvement, the rewards of which will be announced in the near future. The Alpha version is just the very beginning!

Rowan Zwiers
What are your future growth targets for TVL and how do you plan to keep this growth going and achieve your goals?

Vincent Khoo
STONE is heading to the next milestone — the largest liquid staking ecosystem connector! The team has started developing the next phase of products and we would like to summarize the key features here.

  • Add more staked Eth2 assets (aETH, stETH, vETH are in the pipeline).
  • Add STN staking function for yield boost.
  • Introduce first staked DOT on Ethereum.
  • Launch SWAP function with the largest liquid staking token liquidity.
  • Apply ZK-rollup on SWAP to reduce gas fee (in R&D).
  • Launch high-performance DEX on Substrate.
  • Develop the first crypto-index on Substrate.
  • Develop other yield-based derivative products (in R&D).
  • Deploy secure cross-chain bridges to aggregate cross-chain assets (in R&D).

We are working hard to address the fast-growing liquid staking market and building innovative decentralized financial products on substrate leveraging the cross-chain capability of Polkadot. Stone will not be able to achieve these goals without our community “Stone Fortress”.

Stone strongly believes that there will be continuous community engagement and a growing ecosystem, and the market shall embrace the Rock Solid Yield.

Gabriel Tan
You’ve written a Medium post on exploring new yield strategies with coverage of Alpha Finance being the first post so far. Has your view on utilizing Alpha changed given newer developments in the project? E.g. more clarity on value-accrual methods to token holders and more.

Vincent Khoo
We do not consider Alpha Finance at the moment. The reason is we will be sticking to focusing on liquid the staked asset especially PoS asset and make them more useful and create more applications for those assets. As we know those liquid staked tokens need a place to land and we (STONE) are the place for them to create value and liquidity.

Of course, we hope that we can use the benefit of Substrate and Polkadot in the long term to create cross-chain asset aggregation and end goal marketplace.

Daniel Dal Bello
PeckShield was used to audit the Stone platform in its current form. Given that many audited platforms have still been successfully exploited, can you share with us your views on auditing?

What will the team do to secure the platform as TVL continues to grow and it becomes a more attractive target for malicious actors?

Vincent Khoo
For Stone, an audit is one part, and we are also very careful about the strategies. We are glad that we have passed the audit by PeckShield and in addition, we were using our own funds to test before public launch.

We totally agree with the idea of using smart contracts to control fund flow and set authority clear. Besides, we understand there are many exploits after an audit, so we opt to take a more careful approach for the product release, we have been releasing a more stable version like the Alpha Test and also continuously engaging with third-party security service party and other developers to enhance product safety. Again to emphasize, we are pushing all functions at once, but making sure we are right at each release.

We do not blindly trust code audit. Our approach is to launch features one by one and have checkpoints to test out things in a real environment. That’s what the alpha version is for. For future features, we will do additional audits for security.

As TVL grows, more feedback comes from the community, our team is also gaining experience in improving the process. We have hired more external experts to stress test our platform.

All this is to ensure security and we wish the community and users could participate as part of us and go far with us.

Rowan Zwiers
You’ve previously partnered with RAMP DeFi and Stafi. Even though the partnership with Stafi came later, Stafi has been integrated while RAMP has not.

What difficulties have you faced trying to develop a strategy for RAMP? What is the progress like?

Vincent Khoo
Well as you can see, we have actively expanded the partnership base, until now, we have announced the partnership with StaFi, Ramp, and Ankr. We will be announcing more soon in the coming days and we will also be continuing to look for more partners.

But there’s only StaFi pool integrated. For Stafi, we are targeting the eth2.0 market actually we are also working with Ankr, and one other, stay tuned for our updates.

We have been progressing quite well with RAMP DEFI too, but there are two different things. RAMP have been focusing on unlocking liquidity from other chains by issuing stablecoins, but we do think of launching rIOST, rTOMO, and rXTZ in the near future.

However, our current focus is on the liquid Eth2 market, while exploring other assets. We will carefully review before we officially launch related products and this is for security purposes. Not simply partnering for the show.

Can we get some details on Oasis Network (ROSE)? I saw that in the STN roadmap.

Vincent Khoo
We are now focusing on ETH2.0 market. Other public blockchains will be following steps for us to approach and we will do it step by step. Once Polkadot ecosystem becomes more comprehensive. Not only oasis, but also other chains like Solana and Algorand can all cross over.

Gabriel Tan
Given that the community is paramount to any project’s success, what is your take on the allocation distribution between public and private investors? There is no doubt public demand for it.

Vincent Khoo
Apart from the public auction on Bounce, we’ve also had an open event of lucky draw offering to the public to involve in our sales. I think our colleagues are working on the further announcement for that lucky draw. And for private investors, in fact, investors like Hillrise are actually part of the pillars to support Stone in order to deliver a promising product to market. So that people tend to invest and get a Rock Solid Yield.

And for private investors, in fact, investors like Hillrise are actually part of the pillars to support Stone in order to deliver a promising product to market.

Rowan Zwiers
Yes, if I’m correct I’m seeing the lucky draw announcement on Medium right now! Since this event was only launched last Friday it occurred over a relatively small time frame. Still I see all 90 slots have been filled (winners), so how has participation been and do you feel your community is switched on and keen to participate?

Vincent Khoo
The event feedback is definitely positive and we have received numerous feedback and I strongly believe that our community will still stick with us. Of course some of them are speculators, but definitely people tend to agree and will grow together with us.

For me myself, even if I can’t get allocation to participate in any other good project’s IDO or sales, I will choose to buy in secondary and so far my move made my PnL positive too.

In short, as long as you agree with the vision of project, you know what you are holding and the return will reward you in my opinion.

Losers usually don’t know how they lost, but winners are always well prepared or studied for victory.

Gabriel Tan
In your whitepaper, you talk about optimal asset allocations via Modern Portfolio Theory (‘MPT’) (please correct me if I’m wrong).

In my opinion (and many others), the effectiveness of MPT in traditional finance is no longer what it used to be due to market distortions.

In DeFi, we have little historical data on many projects and they are also subject to distortions due to P&Ds, fleeting flows, and token incentive models with a myriad of emission structures.

Can you tell us why you think it might be suitable to apply MPT here? How are you altering the model to make it fit better?

Vincent Khoo
First of all, we are not referring to MPT, we know there are other projects mentioning about it. I agree that due to lacking historical time series data it will be difficult to justify (not even calculate) the efficient frontier.

Our approach is what we describe as the guided tool for the Sharpe Ratio allocation. So instead of the Modern Portfolio Theory, through Stone, users can adjust their allocations of assets between the vaults of multiple DeFi tokens and exposures via Stone’s portfolio management section.

However, Stone’s core philosophy is not to encourage the active balancing of the portfolio in the current DeFi market due to the high transaction costs and potential non-robust yield farming protocols. We aim to create Rock Solid Yield for our users, which provides sustainable and safe returns.

We are not whitelisting all strategies underlying but instead choosing the strategies with relatively stable and longer proven data points, however, we are not pushing active rebalancing which we don’t think works on the current layer-1 framework. We focus more on providing a guided tool for users to manage their holdings in a more passive way.

Daniel Dal Bello
What are you most looking forward to over the next couple of months?

Vincent Khoo
We will be focusing on the Beta version of our product and by the following months we will be announcing more partnerships and more testing for PoS Eth2 assets. This is a journey to prepare for when the time of cross-chain aggregation is realized.

Same vision, same goal. We want to make sure we can become the biggest cross-chain asset aggregation platform and market place and this is for the innovation of Web3.0 and not only DeFi.

Hillrise Capital is an independent research and advisory firm exclusively focused on blockchain startups and crypto-assets.

Stone DeFi is an anchoring yield aggregation platform for investors with a wide array of offerings through cross-chain assets and liquid staking.

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Hillrise Group is a blockchain-native venture capital and consulting firm supporting emerging Web3 startups.

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