In our continuing series on projects that help liquidity providers in the Uniswap v3 world manage more complex market making strategies, Cyberfi CEO, Geralt, stopped by Sommelier’s liquidity provider (LP) AMA to discuss with Zaki implementing trading features on DeFi automation protocols
Cyberfi CEO, Geralt, stopped by Sommelier’s liquidity provider (LP) AMA to discuss implementing trading features on DeFi automation, generating volume in a super active community of nearly 10,000 members, and launching and keeping them functioning to add value. He says it’s a pretty long story, but he’ll try to make it shorter:
“I’ve been in crypto for quite a while and been working for a lot of DeFi stuff back in 2018 when I first got my hands kind of dirty with all the DeFi stuff. I had a team and we went through building about a dozen POCs [proof of concepts] in the span of eight months, which solidified my beliefs in DeFi and got my brain pumping with ideas on DeFi stuff after that.The market wasn’t so good back then so it was pretty difficult to do something, plus I didn’t have a large network at the time.”
After taking time to work on corporate projects, Geralt came back in 2020 and asked a friend who had previously done a lot of cyber work to join as CMO and together they started CyberFi. He says:
“I had an idea about the beginning of 2020, but in the middle of summer of 2020 we started to open. Once we had a solid MVP [minimum viable product], we started approaching people and in November we launched pretty fast. It literally took 10 days from the time we announced to when we launched. It was pretty crazy. I still don’t know why we did that.That was the only chaotic and disorganized event that we ever had.”
After that, Geralt says he just wanted to get down to business.
“We started working hard on development and started onboarding partners for future growth and that went pretty well. Then around early December I decided that we were also going to build a launchpad. Which wasn't originally in the whitepaper but I was like this is going to be a good way to diversify us a little bit and bring more users to CyberFi. If you look at Samurai, the launchpad is like that. It’s just an ideal platform and a stake form in one place just made for good usage of the IDO [initial dex offering] space we’re growing in.
“On the LP side, the story is I had my hand around developing cross-chain solutions for a time. I initially thought it was going to be much more difficult for Uniswap to grow because I didn’t fully believe that they would be able to drop so much funds around the LPs themselves that would provide liquidity, but the issue was solved with the emergence of proper LP staking. Once I saw where they were going with the LP stuff, and seeing how manual everything was, that led me to the idea of automating the work with LPs for users. That’s how our initial beta came to life. It was a primitive limit order trigger-based LP asset management system.
“The biggest problem it had was we could not scale based on the basic nature of the LPs themselves. Which was, the situation that we could only automate a transaction if we were the last transaction of the user. So, let's say you put a trigger to exit an LP forum and then sell your LP tokens to UST, both of them -- like Ethereum and some staking coin, whatever -- it would only go through if it were the last transaction from you.
“And this would be perpetual. So, if a trigger to sell would happen two days after the fact, we would also need our transaction to be the latest one on your wallet. The way our smart contract worked is we would have authorization on the LPs and the activities of the user. One of the bigger things was with LP tokens you would be able to kick them into custody, such as escrow, through a smart contract. The bigger problems occurred when we would have to withdraw your funds through your staking place. For example, you were staking on SushiSwap, that transaction could only be pre-prepared in time. You cannot take an action of a user into escrow. What ended up happening is potentially, we could ask the user to sign thousands of transactions, and that would allow us to choose a higher nonce transaction if you already did a few from his wallet at the time that trade was happening.
“To put it simply, all of the DeFi is very manual. The only thing you can really do is to freeze a transaction in time. And if you do that it would carry the nonce of the transaction. And the nonce is the number of activities you have done from your wallet. If this is the 10th transaction you are doing from your wallet the nonce would be 9 -- I think the first nonce is zero. The problem was that those are pretty difficult to generate.
“That led to the situation where we understood that we could not properly scale in the current form of the product so we built it into a working beta and had to pivot to a scalable product.”
We’re going to give a part of our community access to v2 of the platform (mid-June 2021), which is like a full- fledged asset management system, where we’re going to start off with tokens, then move over to LP tokens, then yield creation and stuff like that. We’re really excited about it. We’re still working on it a lot, trying to do everything well but it takes time to polish stuff.
CyberFi is auditing their contracts, Geralt says: “We have an advisory with Halborn working on that. So that’s all good.”
He concludes with CyberFi’s position on Uniswap v3:
“We first need to polish our project and then move into v3. It took me a lot of tears to decide on that because I'm really a proponent of doing everything as fast as possible. But right now we understand that we need to keep a straight line on what we’re doing. One of the most important things we need to focus on is the base product. We’re a pretty big team, developing the launchpad, developing the v2. We just don’t have the capacity to jump around. For the time being, the most important thing is to first finish v2, finish what we started.
“With v3 I published an article five months ago laying down some thoughts on LP automation coming down with Uniswap v3. The main ideas that I had that we might be exploring soon enough was that using automation for the concentrated positions for LPs to drive them around the board as long as the price changes.
“One of the other pretty interesting things that I discovered recently is if you’re manually setting yourself up for an LP position on a stablecoin to stablecoin, you have only a three decimals range. Programmatically you can increase that to almost 10 decimals, I think, which I also found pretty interesting. So basically if you want to put down an LP position from 0.9998 to $1, for example, right now you’re not able to do that manually on Uniswap v3.”
Geralt explains that currently, “We only have people using Samurai, which is both a stakepad and a launchpad. We have around 3,000 stakers and we raised over $3 million in total IDO volume. Right now we also have the stakepad, which generates some interesting activity now and we’ve started to receive some revenue from it pretty recently, so that’s nice.
“The way it works right now is that we have, obviously, multiple projects there. With CyberFi we have around $10 million worth of TBL, and with the other projects altogether I think we have around $4-5 million TBL, so that puts us at $50 million total TBL total, which is obviously nice. But, the goal is to have the projects that we list on the stakepad overtake our TBL of CyberFi so that could grow well on its own.
Geralt says he was really waiting for the market to go bear in February.
“I’ve been through the 2017 cycle so I think all of us have PTSD around the bear market, so anything happens I’m already ready to surrender. You kind of get used to that long-ass period of nothing happening. But, that’s the feeling that I had. But, overall, nothing really changes for CyberFi’s strategy. The best thing about ourselves is that I have a lot of friends now through the success of CyberFi we’ve been lucky enough to surround ourselves with many kind of great projects and great people. It all comes down to that. It’s the most important asset.
“I’m going to be truthful, we don’t have a very large treasury, I didn’t sell a lot of CFI during the bull run, I didn’t want to create any kind of sell pressure so the token went as it did. Maybe it would have been smarter to sell a bunch of CFI and sit on a pillow of money. But, we are where we are. My goal is just to create a product that will have actual usage. I think we’re a couple months away from a polished out, large-amount-of-users-ready platform, and we’ll get there. I’m mostly excited about that.
“It’s pretty obvious that the launchpads all take a hit during a bear market because it’s not super sexy to invest etcetera, etcetera, which I understand as well. When we were building the launchpad the idea was to gather users for future implementation for the main product of the platform.”
What’s going to stay are the stakepads, they’re going to survive.
“For me, I think as long as we polish out the trading piece of the platform, I think we’re going to be in a good position from there on. Because even on the trading side we have a number of things that many projects don’t have. Basically, nobody has them. The kind of situation there is that we will have the ability to put down stop-loss, buy stops, and orders on both sides of the spectrum. It’s going to be on Uniswap v2 first and then we’re going to upgrade it to sustain the other ones.”
The theory piece of it is that for proper stop-loss you need reverse front running, which Geralt explains is basically front running a large sell order.” And that’s something we’re working on at the moment as well to create,” he says. “That’s something in theory you would need and we’re trying to establish that as well with CyberFi.”
“The most difficult thing right now is that we’re not building like your usual DeFi product that is very UX/UI not heavy, but rather a platform that has a lot of buttons to click and a lot of things to do, which creates obviously many development problems doing everything correctly. So, we are working on that range to establish everything nicely. It’s going to take some time but I’m cool with that. And as long as we create a product that people can use we’ll be fine. And then we’ll have the opportunity to add other things to them that we’re sure they will find interesting. We’ll be good.”
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