Growth DeFi x ApeSwap AMA Recap
Read our complete compilation of questions ahead of the launch of MOR from our recent AMA with our official partners ApeSwap!
Q: There are many DeFi projects around who partner with ApeSwap. What do you think is the most important feature that distinguishes you from others?
A: What MOR is offering is currently not available on BSC. Our main advantage is that we offer leveraged yield farming (2 Billion $+ market on BSC alone already) and the user gets a fixed low borrow rate which is critical for being profitable. If you are borrowing a huge amount because you want to 20x leverage long the BUSD/USDC yield you don’t want high and variable borrow rates because the moment that the borrow rate is higher than the yield you are getting then you start losing a lot of money, fast.
With MOR it is very unlikely that this situation happens (yields would have to cut in half or more).
Q: There’s been a lot of hacking lately. Can we get information about your security system? Are you going to apply for a Certik audit?
A: We recently did an audit with Consensys Diligence: https://consensys.net/diligence/audits/2021/06/growthdefi-wheat/
Diligence is the security company of Consensys, Consensys in itself has many ventures including Metamask and Infura. Their audits are in my honest opinion the best together with Trail of Bits and Open Zeppelin, this is why they charge 4–5 times more than auditors and they only do a few audits per month.
Q: We all know how Complex Defi Platform can be for users, and actually some users don’t like it all. How are you making it simple for the users? What’s your idea behind it?
A: Most of the complexity actually happens in the backend, if you are depositing BANANA in the platform you won’t even notice how it gets converted to stkBANANA and is staked in ApeSwap but you will start seeing your BANANA balance go up which is what users want in the end. We have also tried to make the UI/UX as simple as we could think of tho I’m certain there is always room for improvement.
Q: Apart from the features that are currently available, are there any new features that you will add in a short time?
A: The product as it is when launched is pretty complete but one future product to be developed are self managed leveraged tokens, similar to what FTX offers but with yield collateral and MOR instead of using perpetuals.
Q: Do you believe MOR can offer greatly enhanced returns for ApeSwap users by staking their BANANA? If so, can you outline the main benefits please?
A: Not only in terms of yield but also in terms of profits from the price going up. If you are 2x leveraged long BANANA using MOR then you are getting 2 times as much yield and 2 times the profit if BANANA goes up in price.
200% price exposure. From a 177% APY without leverage to 769% with 2x leverage (power of compounding).
If I’m being completely honest I think that 2x leverage might be a little bit too much for a BANANA position, you basically want to avoid getting liquidated if the price dips a bit. But you can apply the same logic to a 1.1x 1.3x or 1.5x leveraged position, the benefits are the same. If you are bullish on something then MOR allows you to capture that even better whilst not having to sacrifice the yield earned through staking it.
Q: Every day a new DeFi platform emerges. What will make you different?
A: Leveraged Yield Farming with low borrow rates, maximum capital efficiency and returns for users. That is our motto.
Q: Will you be on the Polygon and Eth networks?
A: We have plans to expand cross-chain, Polygon would be easier due to gas fees and the fact that ApeSwap is already deployed there.
Q: In addition to the audit with Diligence, are you planning to carry out another audit with someone else? What other security measures did you take besides audits to protect people’s investment?
A: There are basically two main parts of the code.
One is the smart contract architecture inherited from Maker which has already been tested and audited in DAI (we are talking about a lot of contracts so it would be impossible to schedule a normal audit for them). Most of the added risk comes from the yielding collaterals which is why they were audited by Consensys Diligence.
We might add a bug bounty to increase security.
Q: I like the stability mechanisms within MOR to maintain the peg. Can you expand on how exactly the ‘system surplus’ element created through fees will be managed to support this, but also be used to create buying pressure for the GRO token?
A: The formula for calculating system surplus is:
Outstanding MOR Debt + BUSD in the PSM − MOR in Circulation = System Surplus
The two main purposes of the surplus are:
1-Create a safety buffer in case a position becomes undercollateralized (this can happen in very extreme conditions and it is why the surplus and the liquidation penalties exist).
2-All the excess surplus goes to GRO one way or another, the main one is through surplus auctions. A lot (of for example 10,000 MOR) is up for auctions and anyone can bid with their GRO to win it, the winner burns their GRO (sent to the 0x0dead addy) and they keep the MOR.
Arbitragers can buy GRO in the open market pushing the price up and then bidding with it in the auction for a profit. It adds constant buy pressure to GRO and a big deflationary mechanism.
Q: When you started the project, did you ever think you would achieve this success?
A: In crypto the range of possibilities is extremely wide. 1 month after MOR’s launches the TVL could be 10 Million or 1 Billion, neither of those cases would surprise me since basically anything can happen in the space.
Q: What is your strongest point compared to other projects?
A: Lower borrow costs and not relying on lenders (you mint MOR, you don’t have to borrow BUSD from another user)
Q: How do you ensure that the TVL does not drop abruptly and affect the platform?
A: The profits that MOR generates through stability fees (borrow fees), liquidation penalties and swap fees on the Peg-Stability Module spread are all accumulated as system surplus.
The formula for calculating system surplus is:
Outstanding MOR Debt + BUSD in the PSM − MOR in Circulation = System Surplus
What this means is that the larger the system surplus is relative to the MOR in circulation, the bigger the artificial demand push will be. In other words, there is simply too much MOR that needs to be bought to repay debts and too little in circulation. Since MOR has a Peg-Stability Module, the price of MOR during these supply shocks is capped at 1.001 BUSD, and anyone can mint MOR at this price through the PSM and arbitrage the difference.
The result of this is an increase in the BUSD held in the PSM contract. In order to reduce this, the debt ceiling for stablecoin vaults can be raised. These vaults offer a decent yield spread with a very high max leverage which can get swallowed up quickly.
It is important to have sizable BUSD reserves before raising the debt ceiling on these stablecoin vaults. If not, the sell pressure caused by users minting MOR and selling it for BUSD and USDC could deplete the PSM resources.
Note that all of the extra MOR minted by stablecoin vault users has to be repaid at some point either from the market, or minted through the PSM (future supply shock), and is accruing a stability fee that increases the system surplus. Then users can just rinse and repeat based on artificial demand.
Q: Knowing the great success they have achieved, I would like to know if the team has a reference or an idea that prompted them to make this possible?
A: We already have a yield aggregation platform (WHEAT) that launched a few months back and has several millions in TVL. We have seen that there is product market fit for MOR and hence we decided to build it.
For leveraged yield farming you have three options at the moment (Alpaca, Rabbit and Alpha), only two of those offer borrowing stablecoins but the borrow rates are variable and high (as an example this morning the borrow rates for USDT on Alpaca were 15% compared to the 5% stability fee that MOR will offer).
And when it comes to a functional stablecoin that is native in BSC and isn’t fiat backed there isn’t a successful one, closest thing is VAI but it has failed to maintain the peg for a long time now (trading at 77 cents atm).
Q: They always talk about the achievements and success of the project but for that to happen there has to be a committed team behind it. That is why I would like to know the sacrifices or personal difficulties that they had to overcome?
A: We have been building since late February 2020 and launched Growth DeFi in August 2020. I’d say we have been in the space longer than most teams and have no reason to not continue building it.
The biggest challenge we have faced was migrating to BSC because ETH gas fees made our products not viable (we used to have yield tokens merged with Balancer V1 token pools and it was very gas consuming)
Q: Actually I am seeing it for the First time that Any Platform is Composed of three tokens, GRO WHEAT & gROOT. What role do these different tokens have in the whole ecosystem? As we know tokens without utility don’t add benefit to a project, how do you plan to increase their use cases?
A: You have a summary right below, this week the docs site will be updated (docs.growthdefi.com) and you will be able to read in a lot more detail about MOR and the ecosystem tokens in there. All three tokens have utility and revenue sources that buyback and burn them.
GRO is the governance token of the ecosystem. MOR’s system surplus buybacks and burns GRO.
Wheat is the incentive token of the ecosystem. Buyback and burn mechanics are implemented through performance fees on stkTokens in combination with fee collectors.
gROOT is the index token of the ecosystem. It uses the ecosystem’s products (as well as other BSC DeFi platforms) to generate yield. Extremely low supply.
Q: Why didn’t you guys consider a Rebased Algorithmic Stablecoin mechanism for the Growth Defi system?
A: Short answer: We don’t want our users to get rekt.
Throughout 2020 and 2021, many attempts have been made to create the most capital-efficient stablecoin. This has mainly been tried through different algorithmic stablecoins which back the peg either partially or totally by having different game mechanics/incentives to return the “stablecoin” to the peg when it has deviated too much. However, they all share one major obstacle: if a user doesn’t have the necessary collateral to fund token redemptions, a single black swan event (which resembles a bank run) can wipe out a borrower’s position.
The most popular example of this type of algorithmic stablecoin was IRON, which was a mismanaged version of FRAX. Users could mint IRON with BUSD (in the BSC version; USDC on Polygon) and redeem it for BUSD + some protocol tokens (STEEL in BSC, TITAN in Polygon). Whenever someone minted IRON, it used a portion of that BUSD to buyback the protocol’s token, which caused a pump in the price of the token, but left IRON only partially backed with collateral. The promise was that the remaining part of the stablecoin’s value relied on the protocol’s token marketcap to be able to redeem the full value of $1. In a bank run — which is what happened — many holders attempted to redeem their IRON, but the portion of reserves that the protocol token was supposed to cover quickly became worthless, leaving IRON holders with only the value in actual collateral (BUSD or USDC) for redemptions.
Q: Launching process is easy, but to develop the ecosystem, stabilize prices & expand the market is a challenge for every project. So what are teams first steps towards solving this problem?
A: In the case of MOR it is all about system surplus and creating artificial demand with it. When you have a lot more MOR owed as debts than the supply that actually exists in circulation it is very easy to have supply shocks that keep it closer to the upper bound of the range (1.001 BUSD).
There is no need to worry about MOR going above 1.001 BUSD because users can mint MOR at that fixed price using the Peg-Stability Module (the PSM then holds the BUSD until someone wants to redeem their MOR for BUSD at a 0.99 BUSD/MOR rate).
Q: Do you have some system to burn tokens? Like when price go up every dollar or something like that? Tell us about that please.
A: For GRO the main mechanism is through surplus auctions, essentially the profits accumulated (denominated in MOR) are auctioned, users bid with GRO and the winner’s bid is burnt and they keep the MOR.
For WHEAT it is even more interesting, the performance fees that it collects aren’t actually used for buybacks directly, they are staked in contracts called “Fee Collectors” which stake it for more rewards which are then used to constantly buyback and burn WHEAT.
We currently have a CAKE Fee Collector that holds over 18,800 CAKE and buybacks WHEAT everyday.
With the launch of MOR we will be adding a BANANA Fee Collector so WHEAT holders are indirectly a permanent holder of BANANA!
Q: Why should I choose growth platform for yield farming? Other yield farm apps have better APR.
A: Simple, lower borrow rates lead to better net returns/yield. As of right now due to the borrow cost difference MOR & WHEAT would be the highest yielding option to get a return compared to Alpaca and Rabbit (the other two leveraged farming protocols that allow borrowing stablecoins to leverage yield)
Q: What are you most excited about with MOR?
A: Starting to see the system surplus build up tbh. That gives the ultimate edge as shown by Maker DAO and DAI
Q: If MOR is stable, why farm MOR when we can farm coins like Cake, which is mooning?
A: That’s the thing, you can borrow MOR and buy tokens that are appreicating like BANANA or CAKE. You are NOT farming MOR, such thing doesn’t exist. You are borrowing it and selling it for appreciating and yielding assets, once you have reached your desired profit target you simply convert part of it to repay the MOR amount (principal + interest).
Q: Clearly Growth DeFi is not an old project in the crypto space, therefore I would like to know in depth and detail, what are the main milestones it has reached so far and also how many local communities the Growth DeFi ecosystem has globally so far?
A: We have basically evolved from being a very small and niche community with less than 100k$ marketcap to having millions in TVL on BSC with WHEAT and now expanding to the major leagues with the launch of MOR.
Q: If collateral value drops to any certain degree, would it be liquidated?
A: Correct, there is a minimum collateralization ratio also known as liquidation ratio which you must maintain to avoid liquidations. Having a large safety margin is what ensures that MOR is backed at all times by a lot more collateral than the MOR in circulation.
Depending on the collateral the liquidation ratio may be higher or lower, for stablecoin vaults it is very low allowing up to 50x leverage. For most collaterals it is around 150% allowing a max leverage of 3x (more than that is financially irresponsible tbh unless it is a stablecoin vault).
Q: Can you tell us how the users who enter your platform can earn passive income? Are there any bug bounty, referral or airdrop programs? Or do you plan to bring these events to attract investors?
A: You are getting yield on your collaterals from swap fees, lending APY and token farming.
We are planning to launch a bug bounty in the future.
Q: Is MOR like a crypto loan against our collateral?
A: Yes, it is a loan denominated in USD (MOR is soft pegged to the $) and it is mark to market against your collateral. It enables you to do things which aren’t possible right now such as leveraging up your BANANA position whilst still earning all the sweet staking rewards (and it automatically compounds them for you).
Q: How does an average person navigate and get the most out of his investment with your platform?
A: It really depends on what you are looking for, if you are looking for big wins then you can leverage up your yield farming positions in volatile pairs and collaterals.
If you are looking for low volatility returns then leveraging on stablecoin pairs is your best bet for an excellent yield and consistent returns.
Q: GRO is the core token of the ecosystem so what are the use-case of the GRO and what are the key benefits that you offer for the governance token holders?
A: Governing the DAO and benefitting from the MOR surplus auctions (users bid with GRO to win MOR, the GRO of the winning bid is burnt).
Q: What attracted you guys to ApeSwap vs other AMMs as partners?
A: The simple answer is that ApeSwap cares about its partners. PancakeSwap has a much shorter term mentality and they are quick to dismiss the partnership in favour of new farms.
Additionally ApeSwap’s community is great and if we can get them to try our product I’m sure they’ll keep using it and combine ApeSwap + MOR to enhance their yields and returns.
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