New Product & Integration with Alpaca Finance!

Waterfall DeFi is always looking for new and innovative ways to portion the risk in the industry better and present it in a way that would provide exciting options for our users to pick. Waterfall DeFi will be launching a BNB-based Bull / Bear product suite. The products are powered by Alpaca Finance’s Farm pools, and allow users to leverage yield farm based on their expectation of the market trend (going up-Bull or down-Bear) in a fixed period of time.

What is Bull / Bear product suite?

The concept of the Bull / Bear product suite is to create a tranching product that portion out the market trend risk, so risk averse users would be able to enjoy fixed rate return of the senior tranche, while risk-seeking users can leverage yield farm by picking either the up/down trend of the market.

The product consists of two farming pools on Alpaca, the BNB-BUSD pool and the BNB-USDT pool. Users would either deposit BNB, or BUSD/USDT in the product, which represents their view on how the market will go in the next set period, either Bull (BUSD/USDT) or Bear (BNB). Assuming a conservative farming return of ~13.5% APR — we can estimate the return (in APR) of Bull and Bear products based on the change of BNB here:

How does it work?

Users would deposit into Waterfall’s Bull / Bear products — and Waterfall’s smart contract will route the deposit into the farm pools on Alpaca, and deposit in the single-sided farm and swapped into a pair (based on the deposit asset type). When the deposit is deployed to the pools, it will continue to earn farm rewards and trading fee rewards (in the form of CAKE tokens). Once the deposit period is over, the product will convert all the tokens in the vault, including CAKE tokens earned from the trading fee, back into the original deposit token back to the users.

For a detailed breakdown of how the Alpaca farm pool works, can refer to the Alpaca Finance description here

Why Bull / Bear product suite?

It is Waterfall DeFi’s principal goal to introduce more diversified products to our community, and also leverage our risk tranching mechanism to diversify the risk that users are exposed to. We have not yet introduced a proper market risk product that looks into segregating this risk. With the Bull / Bear product suite, users can deposit in the senior tranche and earn above-market return on a fixed rate product. On the other hand, users of the junior tranche have two reasons to deposit, either they want to bet on a market trend that they are seeing, or they want to diversify their portfolio risk a bit, so moving some BNB into the Bear product in case there is a market downturn, which in this case is a hedge play.

What is the risk?

Of course — with leveraged up yield, there will be a considerable risk for this product. Due to the products are heavily tracking with the market movement — so in the case users at the junior tranche bet on the wrong direction of the market, they will face a situation where a portion of their principal will be reduced to cover the return of the users at the Senior Tranche. So for all our users who want to try out this leveraged yield farming position, please note that the risk in this product is much higher than our other products