Saffron’s Native Token (SFI)
In our previous blog posts we’ve skimmed over the details of the SFI token, hinting at its current and future uses within the Saffron smart contract system, but without going into much detail.
2020–11–14: Saffron Minting and Uniswap Listing
2020–11–01: Saffron begins: epoch 0
2020–10–31: Introduction to Saffron
The SFI token, soon to be released, attracted $18.3 million worth of DAI to mine it into existence.
This leaves us wondering what the SFI miners will do with their tokens.
The A tranche
The A tranche is an important part of the Saffron platform. Without it, there wouldn’t be any coverage provided by high-risk participants, who pay for the AA tranche’s losses in the event of an underlying platform failure. The A tranche LPs gain a yield-enhancing multiplier because they lock their SFI tokens in Saffron’s contract while their DAI is sent to a lending platform to earn interest. In case of a catastrophic failure in DAI or the lending platform, the A tranche’s SFI is transferred to the AA tranche LPs who are effectively a buyer of the A tranche’s loss-protection contract.
SFI required for staking into the A tranche have a calculated value assuming a relatively stable interest rate on an underlying platform. For example, if access to the A tranche’s 10X interest would increase an LP’s yield by $X, then it is rational for them to price SFI at a ratio of $X according to how many are needed to access the A tranche. In epoch 1, the A tranche will offer 10X yield, and the SFI ratio will be 1 SFI for every 1,000 DAI.
SFI required to participate in the A tranche is locked until the end of the epoch alongside the DAI it gets added with.
AMM Liquidity Token Pools
In our previous article we introduced the new concept of a Saffron AMM Liquidity Token Pool. This pool type acts as a short-term staking mechanism while also providing a service to the community. Epoch 1 and all subsequent epochs will include a pool for locking Uniswap V2 LP tokens where LPs compete for a mining subsidy. The first AMM Liquidity Token Pool subsidy is 3,750 SFI, shared among LPs in the pool proportionally with dsec, similar to the DAI lending pool mining reward distribution.
Governance
There have already been a number of initiatives brought up by community members that should have gone to a vote. Without a token minted, however, it is nearly impossible to coordinate and ensure stakeholder value is maintained. In addition, centralized governance comes with EOA key risk, something that should be mitigated as soon as possible.
Variables that help the system maintain efficiency need a voting process to change. The Saffron team would like to open that process up to its community and encourage others to vote on initiatives and suggested changes to the protocol.
Staking pool
The SFI staking pool, which holds and stakes your SFI for an epoch, can be used to increase SFI holdings based on your initial deposit. The staking pool is one of the first pools that will have its rewards converted to pay out based on a share of Saffron platform fees.
Fees
When SFI token generation winds down, AA tranche users will rely on platform fees to compensate them for their forfeited interest. AA tranche users as well as SFI holders (stakers) will receive a percentage of reward shared between competing stakers.
Value added services
Saffron, in its current format, does not have many features that allow us to offer value added services. However, as the market continues to expand, Saffron’s value will continue to become apparent to users who demand products beyond risk adjustment.
One such use-case for SFI is leasing it to an A tranche participant who just wants to gain some exposure to the trading volume and volatility. The SFI leasing pool should be released some time between now and 2 months from now.
Community
Join the Saffron community and don’t miss an update:
Web3 app: https://saffron.finance
Telegram: https://t.me/saffronfinance
Discord: https://discord.gg/pDXpXKY
Twitter: https://twitter.com/saffronfinance_
Github: https://github.com/saffron-finance/saffron
