Introducing our new product suite on Avalanche!
As Waterfall DeFi embarks on our cross-chain journey, we are excited to announce our latest product suite on Avalanche — MAXI Falls, AVAX Falls and DAI Falls!
Ape in now: avax.waterfalldefi.org
What are AVAX and DAI Falls?
AVAX and DAI Falls are new portfolio strategies that combines the yield of AVAX and DAI.e lending pools respectively on Trader Joe and Benqi, and slices into multiple tranches for users to choose based on their risk appetite.
Both pools function as a single-sided lending pool, where user deposits $AVAX or $DAI.e, and in return they will earn both the native lending yield plus its respective platform token reward ($JOE and $QI). The formula for yield is calculated thus:
What is MAXI Falls?
MAXI Falls is a portfolio strategy that combines the stable and consistent yield from the DAI.e lending pools on Trader Joe and Benqi, along with the high yield, high reward farming on Maximizer. Just as with our other products, MAXI Falls will also be sliced into three tranches — Senior, Mezzanine and Junior — from the safest to the riskiest returns.
Users will be able to deposit $DAI.e stablecoin into the tranching product, and MAXI Falls will then deploy the proceeds into Trader Joe, Benqi and Maximizer respectively.
On the Trader Joe and Benqi pools, the deployment serves exactly the same as the basic single-sided lending pool, which we detailed in the AVAX and DAI Falls above.
On the Maximizer deployment, $DAI.e will be used to mint $MAXI, then staked for further reward. In the case where minting $MAXI on Maximizer is not possible or financially unreasonable, we will swap the $DAI.e deposited into $MAXI for other protocols. At maturity, , $MAXI will be converted back to $DAI.e based on the prevailing market price. As it takes 5 days for the minted $MAXI to be fully vested on Maximizer, the strategy will receive a gradual increase of staking returns, and as such, will have the following return formula from Maximizer for our DAI deposits:
The cycle period of the MAXI Falls is 21 days — slightly longer than our previous product cycles. The rationale behind a longer period is that Maximizer has a supply rebasing mechanism that would adjust returns based on the price of $MAXI, versus its underlying backing, which is prone to high fluctuations. With a 21 day period, we allow ample time to farm the yields on Maximizer, aiming to cover and outpace potential price depreciation on the token. Junior tranches will take on the majority of capital risk and in exchange will receive a much higher leveraged yield premium that offers even higher returns than Maximizer Staking on positive market outcomes.
Why MAXI Falls?
With the increased price volatility on MAXI, we believe Waterfall DeFi is well positioned to leverage our tranching mechanism to serve the Avax community.
Since MAXI Falls package together a relatively high risk strategy (Maximizer) with a relatively stable strategy (Trader Joe and Benqi) — we are able to offer a truly unique value proposition to both our $DAI.e lending vault farmers or Maximizer frogs:
For $DAI.e lending vault farmers, Senior and Mezzanine tranches will offer a fixed rate return that will potentially outperform the yield of $DAI.e on Trader Joe, leveraging the high yield windfall from Maximizer to boost returns while isolating them from the market risk on $MAXI.
For our Maximizer frogs, the Junior tranche will offer a leveraged return that would outperform the yield earned from purely staking in Maximizer (unless the price of MAXI drops over 25% during a 21 day cycle).
MAXI Falls showcases the magic and strength of risk tranching — by packaging assets of different risk profiles, we are able to structure a fixed rate product that beats traditional lending pools in the market while offering protection through asset diversification and subordination, while having a leveraged product that turbo boosts returns of riskier farming models. There are still considerable amount of risks in the Junior tranche due to its implied first loss risk, but in exchange they will enjoy a significantly leveraged return should the market go the way they predicted. In the future we look forward to be providing native insurance to our tranches, even on Junior tranches, so the returns will yield a payoff curve similar to a long call option: limited downside, unlimited upside.
With cross-chain compatibility being one of our core aspirations, we continue to deploy more tranching strategies across BSC, AVAX, and even other EVM compatible chains in the future. New strategies on our active chains are already formulated and will soon begin production. We are also conducting market and security research on popular, innovative vaults and farms across the space, looking to further compose our tranching legos on top of the best yield opportunities across the DeFi stack.
Last but not least, we are also working on a major upgrade to our veWTF staking module, with the aim to greatly decrease $WTF circulating supply, thus making Waterfall DeFi a $WTF supply blackhole! For more information on how we plan to achieve this, stay tuned for more updates in our social media channels! .