The State of Affairs pt. 2
A lot has happened since the last update. A lot of good, and a lot of bad. Get the scoop straight from the source.
Terra’s Collapse and its Ripples Across the Ecosystem
You may be aware that Anchor was being used as a placeholder for our strategy. You may also be aware, provided you have your ear to the ground, that Terra’s ecosystem imploded due to the thoughtless actions of an individual, which may have cemented that the bear is here to stay.
We were aware of the ecosystem’s reflexive nature. Internally, we wrote about it and held presentations (which will be open in due time as they have value beyond finger pointing), even long before the collapse occurred.
Still, we did not predict it would come so soon, but alas, hubris has a way of accelerating the inevitable. However, it was due to our skepticism that we never intended to rely on Anchor in the first place, and embarked on a journey toward Sandclock’s structured products early. A quest to discover novel ways to generate market-uncorrelated yield, sustainably.
The bad news is that a $40b+ ecosystem got wiped off the map, damaging countless projects and speculators. It also forced us to accelerate the implementation of our flagship strategies and deploying on L2 — this is not wholly bad. On one hand, we have accelerated our roadmap, at the cost of skipping over the Anchor integration, which has earned us the scorn of a few.
The good news is that we did not get caught in the blast. If we had, the project would have surely suffered as a result.
Other nuggets of wisdom have surfaced as a byproduct of this situation.
1. Resist the urge to give in to the demands of speculators to accelerate development of a novel product.
2. Do not attempt to time when an unsustainable mechanism will fail before phasing it out — reject it entirely.
Sandclock’s centerpiece, a 0 to 1 innovation in the DeFi space. A vault that can split principal from yield and allows its users to further subdivide and stream either one, continuously. The DAO-owned performance fee is recycled into the system and boosts the yield for everyone, rewarding long term users with perpetually boosted yields. This value will one day be exclusive to $QUARTZ stakers and is yet another innovation in our vault architecture.
It has been an arduous journey, but a fruitful one. When building something new, it is easy to underestimate the time it will take to get it right, and Sandclock is no exception. The more granular the view, the higher the complexity of the system. Even seemingly simple concepts share this universal law and so, Sandclock has undergone various transformations as a result—for a fun thought exercise, think about how a programmable yield optimizer should behave when the vault incurs debt after an account has claimed their yield. This is all part of the R&D journey.
With this last audit by Watchpug, we have finalized the architecture of the vault. This is not to say it will never be improved upon, or that there are no longer any improvements to be made. As blockchain technology morphs, so will our product, but right now we believe that, given blockchain-specific constraints, this is the right architecture for our goals. As we march toward a rollup centric future, the horizon of what is possible will broaden.
As for the audit itself, not much was uncovered. A couple of gas optimizations, a denial of service attack, and an easy to fix, hard to execute share manipulation attack. All of which have been fixed. The audit will be made available relatively soon on our repo. In the mean time, feel free to check out the fixes.
Why of course, there can only be principal<>yield separation if there’s yield, and yield comes from a strategy. With Anchor dead, Sandclock has been working with the brightest minds to create non-adversarial, market-uncorrelated strategies for any macro outlook. Now coming to you on Ethereum Mainnet, but also an L2 near you. Oh, the wonders of low gas fees. In the same vein, we are also working with Yearn to be able to support their strategies out-of-the-box.
The first strategy is developed by Rysk and trivial to integrate. It will be deployed on Arbitrum and be formally verified by Lindy Labs to ensure everything adheres to the spec. It is currently being audited by Dedaub. The strategy consists of a dynamic hedging AMM that strives to be delta neutral at all times through the continuous sale of options, and represents one piece of a broader structured product puzzle. In the future, other delta neutral strategies will be offered (as outlined in previous articles), as well as two speculative strategies with capped downside, one for the 🐂, one for the 🐻.
It is important for us to provide high quality strategies for various risk appetites. Nevertheless, as Sandclock aims to provide its users a bespoke experience, we will artificially limit the maximum number of strategies on the official frontend to 6.
What is Rysk?
Rysk is a primarily B2B project that conducts research on structured products. They are a bright team focusing on options, perps, and the like, with the goal of generating uncorrelated return streams regardless of market structure. We have been brainstorming with them on potential research paths, as well as best security practices.
“If the mountain won’t come to Muhammad, Muhammad must go to the mountain.”
… is perhaps a phrase not many utter in this space. Stigma against non-natives, a “build it and they will come mindset,” have historically been massive barriers to adoption. We are staunch believers of the former, which is why for months we have painstakingly created a moderate sized network of institutional clients and through Lindy Labs begun the process to obtain SOC 1 SOC 2 Type II, as well as traditional insurance with Hub International, one of the biggest insurance brokerages in the planet. This approach has been so successful that we now get pinged fairly routinely by interested parties we don’t know.
Nothing will be divulged clearly, but so far we have had interest from hedge funds, small bank treasurers, and accomplished startups, not just for treasury management, but that of their users’ funds, when applicable (FinTechs!).
This phase of our business development plan will be set into motion once we have formally verified all contracts end to end, vault and strategy alike, all for the sake of sticky capital.
UI, UX, and User Research
Unlike many in the space, Sandclock is committed to providing the absolute best user experience. Our goal is to have an incredibly powerful protocol abstracted away by a best-in-class user interface and user experience. To this end, we conduct weekly interviews with willing volunteers, ranging from battle hardened Yam farmers, to new entrants.
The first phase of our approach is to be able to onboard crypto natives with differing levels of experience. As we move forward, more features will be added to increase the number of users we can reach. A fiat ramp will lower the barrier to entry and is extremely easy to implement. Automating the whole flow from fiat-2-vault will be a game changer for retail.
On a closing note, the landing page is being updated in order to more clearly display Sandclock’s strengths.
- Meatspace insurance with HUB International has gone from Policy Draft, to Feasibility Study, which will be presented to underwriters soon, with the goal of being offered to any institutions we onboard via Lindy Labs.
- On-chain insurance is being worked on.
- The number of high quality contributors is growing steadily.
We will launch as soon as the strategy’s audit ends and fixes have been submitted and thoroughly reviewed. Keep a close eye on our GitHub and check out all the links in this article. In the meantime, relax, eat well, ☀️ sunmax ☀️, and we’ll catch you on our socials.