Anybody with the slightest interest in, or knowledge of DeFi, should keep an eye on Reef Finance.
Decentralised Finance has seen an immense rise in popularity over the preceding year. However, its growth has been stunted compared to the predictions that were made by many aficionados, in 2020. The year when the concept initially took off.
Even though, multiple projects have gotten increasingly popular over the year, they continue to suffer from the same limiting factor, interoperability.
Decentralised Finance or DeFi is not a singular application. The real potential of DeFi comes in the eco-systems that encompass the idea.
You have all these different applications that carry out various functions and provide unique opportunities not found outside DeFi. This is what gives it such potential.
Nevertheless, using all these different applications can become a major drawback. This is because when you are interacting with multiple applications, each one works off a separate interface.
This is where the team at Reef Finance come in. They have created the ultimate solution for this problem.
What does Reef Finance do
The actual structure and functioning of the system are quite complex. But in short, Reef Finance attempts to unify all the different DeFi applications through a single platform.
This gives you ease of access to all the users engaged in the DeFi ecosystem. Thus, you can use one single platform to Buy, Loan, Trade and other transactions related to Defi.
The concept behind Reef
At its core Reef finance is a liquidity aggregator. Conversely, it is not only a liquidity aggregator. it is also an AI based smart yield engine.
This system allows the user to integrate any DeFi protocol into its midst.
Likewise, since Reef Finance has integrated Polkadot into its system, all its security benefits automatically warp into Reef Finance as well.
Reef Finance in other words, allows retail investors to find their way around DeFi without hitting those big technical barriers. Reef Finance will also help investors in the act of decision making.
According to the CEO and co-founder of Reef Finance, the core concept revolves around the system simplifying the psychological barriers associated with DeFi.
DeFi ecosystems, to put it mildly, can be difficult to understand. This is due to the large number of products and expansive systems.
This complexity deters would be investors from embracing DeFi. Many feel out of place and overwhelmed.
Reef intend to make interacting with Defi, more user friendly, even to the non-tech savvy noob.
How, you may ask, can they hope to accomplish this?
The answer is quite ingenious. They manage it through a smart contract chain.
The smart contract chain will hold the ecosystem together and make sures everything works together.
The basic structure of Reef is known as the basket engine. The basket engine you to exit and enter positions on different DeFi platforms through a single interface.
How does it do this
The core or the basket engine manages it. It does so by communicating with the liquidity aggregator and analytics engine.
What else does the system provide
Reef eliminates the need to manage each respective LP tokens of the different DeFi ecosystems separately.
Equally important, the engine will also have additional features and functions that go beyond the basics. These include, Extension of Insurance cover and multi-hop strategies are two of them.
The final goal of the system is to support Ethereum alongside other co-existing blockchains to give users the most streamlined DeFi experience possible.
Is Reef Finance secure
Reef Finance is a non-custodial platform. This means, you do not ever have to worry about handing over their private keys.
Additionally, it is built on the Polkadot eco-system.
Therefore, when Polkadot is used, all its security features migrate to the Reef DeFi system.
In fact, when both protocols are combined the risk of theft becomes minuscule.
Reef Finance has its own governing token. This is known as the REEF token. You use the token to pay the fees required by the system and to govern its growth.
Governing the system
By holding onto your REEF tokens, you can use its power to vote and change different parameters in the system. It is like having a share in a company.
Moreover, you have the capacity to stake your REEF into different pools. This will permit you to earn interest with different annual percentage rates.
By using the REEF token users can determine the payout ratio. This can be from the profits you generate from your activities.
Not to mention, you have the chance to generate their own REEF token. You can generate the tokens by actively maintaining the system and helping it improve.
This group, known as “Network Collators”, have a complete copy of the parachain.
They create blocks that help to create the Polkadot ledger.
So, by volunteering to withhold the accuracy and reliability of the network, these participants will be awarded the REEF token.
They receive these from the gas fees/transaction fees that everybody pays within the protocol.
Everything from smart contracts to transaction processing, to proposals for governance require a gas fee.
Why did Reef founders use Polkadot?
Even though most DeFi projects are Ethereum based, Reef founders decided to use Polkadot.
The main reasons for this were the high gas fees and slow transaction completion times on the Ethereum network. Parachains effectively cut down on the delays.
Reef Founders will continue to use Polkadot until Ethereum 2.0 comes out. This new improved Ethereum platform promises to solve these problems.
However, Ethereum 2 is still in development.
The main components of Reef finance
Reef Finance is made up of three main components. The smart yield farming aggregator, global liquidity aggregator and management of smart assets.
Smart Yield Farming Aggregator
The basket engine present in Reef allows you to obtain rewards from yield farming when you stake in different asset baskets. This allows you to make extra profit whilst holding Reef tokens.
This will automate different DeFi services such as lending, borrowing, and mining. The basket engine will combine the AI and yield engine. Therefore, you do not have to worry as much.
Reef AI will manage everything based on the goals of the individual user.
Global Liquidity Aggregator
Reef Finance offers unmatched liquidity. This is mainly due to the partnered crypto based trading platforms.
The system allows users to do something special.
Every bit of aggregated liquidity passes through CEXs and DEXs. This allows you to bypass the usual negatives associated with Defi, that is, high trading fees and slippage.
This also protects you against risks, such as manipulation of the market and front running.
Smart Asset Management
This is provided by the AI that is integrated within Reef Intelligence. The Artificial intelligence system will give recommendations you based on your goals, while effectively rebalancing the holds between different baskets.
Thanks to this, you can automate the process of staking and trading. As a matter of fact, due to the AI having machine learning, the asset management will only get better.
Reef pool and staking yield
You have the chance to get rewarded with even more REEF tokens by staking REEF tokens in the Reef pool.
The annual percentage yield generated by the reed pool is available through the different income streams present in Reef Finance such as protocol fees.
The management has also decided to introduce the Reef Treasury at some point in the future. The DAO can use their power to decide how to use the funds by voting on it.
Governance or the power to vote in the Reef ecosystem is created through the staking of Reef tokens.
As a result, staking Reef tokens you have a say in the direction the system progresses. A few examples of such voting sessions are changing the attributes of the liquidity pool and amending the structure of the asset basket.
In summary, Reef Finance is in an extremely healthy state as of now. It has partnered with a lot of valuable entities that will further its progress.
Binance Access is just one example. This partnership allows users affiliated to Reef to buy crypto using fiat currency and to take part in non-custodial trading.
In particular, Reef Finance gives you the chance to enter the Defi eco-system by simplifying everything involved.
This simplicity will undoubtedly play a major role in normalizing and increasing the publicity for DeFi and its applications.
As of now, we highly recommend you keep a close eye on how the system progresses.