The Optimist Twitter Space - All-in-one Defi App w/ DeFi Saver

In The Optimist’s Twitter Spaces which took place on March 20, 2024, Subli hosted Definikola and Nikola_j from DeFi Saver to discuss the evolution of DeFi Saver, origins, automation advancements, future on Layer 2 solutions, and more! Read our notes below to learn more.

Background

Subli (Host) – Founder of The Optimist

Definikola (Guest) – Research and Product at DeFi Saver

Nikola_j (Guest) – Community and BD at DeFi Saver

DeFi Saver – a one-stop management solution for decentralized finance protocols

DeFi Saver: Evolution, Vision, and Uniqueness in Automated Liquidation Management

Nikola_j discusses DeFi Saver, noting its history back to 2019 as a tool initially created for Maker protocol. He mentions the project’s presence on DefiLama and the introduction of automation options that contribute to its TVL.
Nikola_j shares his background, highlighting his journey with the team from its early days, including experiments with NFTs and scaling solutions, before focusing on DeFi Saver. As the primary non-developer for a long time, he handled marketing, support, and community work, and became a known figure to users.
Definikola mentions his late joining the DeFi Saver team after his colleague, during the launch of Liquity Protocol’s V1. He explains his role in researching various DeFi protocols to find sustainable models for integration, writing educational threads, and giving talks on DeFi developments.
Subli acknowledges Definikola’s and his team’s early involvement in DeFi, starting in 2019, and mentions DeFi Saver’s current TVL of over $400 million, with deployments on Optimism and Arbitrum. He prompts Definikola for an overview of DeFi Saver’s origins, its vision at launch, and whether that vision has changed.
Definikola describes DeFi Saver as an all-in-one management dashboard supporting Tier 1 protocols in the Ethereum ecosystem, including Maker, Aave, Compound, and others. He recounts the platform’s evolution from initially focusing on automated liquidation protection to incorporating a wide range of features.
Nikola_j says that the vision of DeFi Saver has remained consistent, focusing on supporting secure, highly audited Tier 1 protocols known for longevity. He highlights the importance of offering reliable and trusted options to users.
Subli asks what DeFi Saver offers to users, specifically regarding features that were unique at its inception and remain distinctive.
Nikola_j explains DeFi Saver’s flagship feature of automation in liquidation management, explaining that it uniquely provides various automation options to prevent liquidation across different protocols, a feature still exclusive to DeFi Saver.

Exploring Automated Trading and Leveraging in DeFi Platforms

Subli asks if liquidation management is the only automatic feature proposed or if there are other features users can utilize.
Nikola_j explains that initially, they viewed their platform as offering liquidation protection but quickly realized it could serve for automated trading, including automated buying, leveraging, take profit, and stop-loss options, among more advanced features like trading stops.
Definikola adds that besides automation, they provide features related to trading via DeFi lending protocols, such as one-click creation and closing of leveraged positions, with both automated and manual options for adjusting positions.
Subli notes the importance of user interface and experience in DeFi, especially the rarity of protocols offering a simple method to leverage positions through looping, and asks why leveraging on-chain through CDP and lending protocols seems less appealing to retail users compared to other methods.
Definikola addresses the differences between gaining leverage through decentralized perpetual futures protocols, which offer high leverage for short-term trading, and DeFi lending protocols, which are more suitable for mid-to-long-term trading due to their over-collateralized nature, explaining the process of using flash loans for efficiency.
Subli reflects on their hesitancy to engage in leveraged trading, noting the mental preparation required and observing that some traders slightly leverage their positions for risk management rather than seeking high leverage.
Nikola_j explains the main protocols their product supports, including Maker, Compound, Liquity, and others, highlighting the effort to integrate and support multiple versions of these protocols and markets for enhanced user options.

Leveraging with Curve Protocol: Simplified User Journey & Automated Position Management

Subli asks how a user can leverage a position using the Curve protocol with $crvUSD stablecoin and asks about the typical user journey and the number of transactions required. He asks about the steps a user must take on the protocol to leverage their position, specifically to a 2x leverage.
Nikola_j explains that from the user’s perspective, the steps are minimal and begin with accessing the app and the $crvUSD dashboard, where users can open a position in one transaction. Users choose between borrowing and leveraging, select their collateral type, input the amount, and adjust the leverage level with a slider.
Nikola_j mentions that the app handles complex background processes, such as using flash loans and swapping tokens through DEX aggregators, simplifying the user experience to just a few steps and a single transaction.
Nikola_j discusses various options for managing a position, including setting notifications for different health levels of the position and automated adjustments like stop loss and take profit options. This allows users to set up conditions on-chain for their positions, which the system monitors and acts upon when conditions are met.
Subli notes the similarity to intent-based trading, where conditions are set for positions, and actions are automatically taken when those conditions are met.
Nikola_j mentions that this approach has been in use since 2019, although not labeled as such at the time. He acknowledges the issues with leveraging through lending protocols and the superior user experience of perps, indicating plans to improve leveraging UX and explore more intent-based options in the future.

Position Notifications & Trading Dynamics in DeFi: Options, Rates, and Protocols

Subli asks about the different options available for receiving notifications regarding users’ positions. Definikola says that notifications can be received through Telegram, email, in-app (which are turned on by default), and block chat on EtherScan. Definikola mentions the addition of the block chat as a recent feature and suggests that notifications can also be sent there.
Definikola introduces a comparison between trading via perpetual futures and lending, emphasizing the difference in the cost of trading.
He says that funding rates on perpetual futures are more volatile and can spike significantly, while borrowing from money markets like Aave offers more predictability due to rates being determined by utilization, which, though still volatile, can be managed with automation and one-click management options.
Subli brings up the predictability of costs in liquidity pools, highlighting that some platforms offer fixed borrowing rates, which are more predictable for leverage positions.
Definikola agrees, noting that fixed rates, such as those offered by Liquity, provide benefits but also come with trade-offs like the redemption mechanism that can trigger before liquidation levels are reached.
Definikola discusses borrowing rates, particularly mentioning MakerDAO’s governance-driven process for rate adjustments, which differs from the algorithmic adjustments based on utilization seen in platforms like Aave and Compound.
He says that MakerDAO’s approach allows for somewhat more predictable rates, despite being slower to react to market conditions.
Nikola_j comments on the observed increase in activity and trading volume across protocols since December, attributing it to the market’s upward movement. He mentions the diversity of trading activities and protocols used by their users, which has contributed to a significant jump in TVL.
Definikola introduces Saver, a sub-product tailored for leveraged $ETH staking. He explains its features, including a one-click creation of leveraged positions using liquid staking tokens and a variety of underlying protocols. He highlights the novel fee model of Saver, which takes a performance fee only from the profit of positions.
Subli asks about the integration of liquid staking tokens from other protocols into Saver. Definikola says that integration depends on the underlying protocols’ decisions to onboard new tokens as collateral, implying that the availability of new liquid staking tokens in DeFi Saver would follow the protocols’ adoptions.

Understanding Ethereum Mainnet Dominance: Layer 2 Solutions and Future Perspectives

Subli asks why the TVL is predominantly on the Ethereum mainnet despite the presence of layer 2 solutions like Arbitrum and plans for integrating lending protocols on layer 2 platforms, noting the variety of existing and emerging layer 2 options.
Nikola_j explains that liquidity remains on the mainnet due to its longevity and the stickiness of liquidity. He notes the relatively recent launch of layer 2 solutions like Arbitrum and Optimism.
Nikola_j mentions that during the bear market, lower Ethereum gas prices reduced the incentive for moving to layer 2, but interest in layer 2 is increasing as activity grows and transaction costs on the mainnet become prohibitive for smaller liquidity holders.
He discusses the perception of security on the mainnet as a significant reason why larger users and whales may prefer it over layer 2 solutions but anticipates improvements as layer 2 solutions develop.
Nikola_j highlights upcoming technological updates, such as fault-proof architectures on layer 2, which could increase their appeal to whales and institutions.
Subli envisions the potential for automation in DeFi portfolio management on layer 2, given the significantly lower transaction costs compared to the mainnet.
Nikola_j highlights that automation on layer 2 is more viable due to the lower transaction costs. He expresses hope for increased liquidity movement to layer 2 solutions and notes that Arbitrum has already contributed significantly to their platform’s revenue.
Subli asks about the future of DeFi Saver on Layer 2, questioning whether there’s a wait for larger lending protocols to deploy on Layer 2 as they have on Mainnet.
Definikola explains that they are indeed waiting for Tier 1 protocols from Mainnet to deploy on Layer 2, focusing on integrating sustainable models and blue-chip protocols.
Definikola says that the majority of their users are retail, not institutions, highlighting that DeFi Saver is permissionless and has seen mostly retail usage on both Mainnet and Layer 2 solutions.
Definikola announces a major infrastructure-related upgrade planned to go live next week and mentions plans to integrate other lending protocols on Layer 2 solutions, along with introducing new features.
Nikola_j says that there are no immediate plans for new Layer 2 integrations, focusing instead on potentially integrating new ZK rollups in the coming months and improving the product overall.

Check out these important links

Show Information

Medium: Twitter (Audio)
Show: The Optimist Twitter Space
Show Title: All-in-one Defi App w/ DeFi Saver
Show Date: March 20, 2024