DeFi Spotlight - Apricot Finance

20 Sep 2021
DeFi Spotlight - Apricot Finance Banner

It’s that time again good people of the cryptosphere. That’s right, we know you love DeFi, and so do we. While Ethereum may be the hegemon in the DeFi space, there are other platforms and protocols being developed on other promising ecosystems that hope to resolve some of the longstanding issues within Decentralized Finance. Allow me to introduce Apricot Finance, a next-gen lending protocol built on Solana…

A New Kid on the Block

I may have been born in the late ‘80s and missed the debut of New Kids on the Block in 1984, but it doesn’t mean I can’t appreciate their contributions to Pop Culture in general. I mean, who could forget hits like Tonight, You Got It (The Right Stuff) and of course, the inimitable Step by Step? Not me, that’s for sure!

OK, I’ll level with you…I can’t say I really know NKOTB (sorry Donnie!) all that well. Me? I’m more of a Marky Mark and the Funky Bunch kinda guy. Man was 1991 a great year to be alive! The USSR pretty much broke up, Operation Desert Storm kicked into high gear, and of course, Mark Wahlberg ‘s stone cold Hip-Hop project saw the light of day. What I wouldn’t give for an original copy of Music for the People, I tell you…

Do you have any idea how hard it is to find a picture of this guy with a shirt on?

Oh right, you aren’t here for trivia about musical projects of yesteryear that happen to feature one of the Wahlbergs. Forgive me, I just can’t help but feel nostalgic, ya know? Although I’m not sure nostalgia is really all it’s cracked up to be. See, not everything you used to think was ‘cool’ and ‘hip’ is anymore…and maybe it was never all that great in the first place (I’m not hating on the Wahlbergs by the way). 56k dial-up modems, telex, DVDs (feel old yet?) and fax machines (which have never been cool) all served a purpose once, and for a time they were the cutting edge of modern technology. Funny, isn’t it, that in a few short years, these once coveted technological marvels have become largely or completely obsolete? Ah, the transience of time…

See, this principle doesn’t just apply to music or culture or IT, no, no. In fact, it’s pretty far-reaching and all-encompassing. Given the accelerated pace at which tech is developing, technologies can be supplanted virtually overnight if uptake and buy-in is great enough. Now, that DeFi protocol you’ve been using…how’s it working out for you? Maybe you’ve had an awesome experience and made a ton of cash— more power to you! Or maybe, just maybe, it’s been a bit more ‘complicated’ for you and things haven’t gone as well as you would have hoped.

Perhaps it’s just bad luck, or maybe some earlier DeFi protocols just have a few unfortunate aspects that make them inefficient or less attractive: liquidity issues, impermanent loss, smart contract vulnerabilities…the list goes on and on. Accessibility and adoption depend largely on user-friendliness and protection, so if protocols consistently fail to address the very real concerns of their audiences, their longevity is far from assured…

The old is inevitably replaced by the new, and the more efficient, convenient and effective supplants the obsolete, redundant and impractical. That’s just the way the system works, and in DeFi, there are a few new kids on the block…and Apricot Finance is one of them.

Talkin’ ’Bout My (New) Generation

‘Next-gen’ was once just a buzzword that game developers and the like slapped onto their releases to build hype and sell their not-so-next-gen wares to the unsuspecting public. However, with the advent of truly revolutionary tech and software such as Unreal Engine 5 , ‘next-gen’ is finally here.

Now while it may not be a blockbuster game with high-end graphics, Apricot Finance is, for all intents and purposes, a next-gen DeFi platform. How can they claim such a thing, you may ask? Well, firstly, their protocol is built on top of Solana , the very same Blockchain platform the much anticipated Star Atlas calls home. It’s no secret that Solana is a major player in the cryptosphere and arguably one of the fastest growing ecosystems at present. It promises to be ‘low cost forever’ as well as ‘fast forever,’ not to mention highly scalable and fully decentralized. That definitely sounds like a winning combination to me.

Of course, being built on Solana doesn’t make Apricot Finance truly revolutionary or next-gen on its own. Naturally, a good portion of the real magic comes from the mechanics of the protocol itself. Simply put, Apricot is divided into three interconnected parts or products, namely Lend, X-Farm and Assist. However, before we dive deeper, Apricot just released their testnet , and if you ask me, the interface looks super slick and ultra streamlined.

I’m sure I recognize those mesmerizing colors from somewhere…

So without further ado, let’s check out each of Apricot’s products in turn. First up, there’s Apricot Lend, which, as you might have guessed, involves lending and borrowing. Lend serves as Apricot’s base layer protocol that allows you to deposit select cryptoassets to earn interest. In addition, you can borrow from Apricot’s platform and use your deposited assets as collateral. Now none of this is particularly remarkable, but the real difference with Apricot is that they are cross-margin, meaning you can deposit any assets, including LP tokens, in order to gain borrowing power. Freedom of choice anybody?

Now where things really start to get interesting is in Apricot’s second product, namely Apricot Cross-Farm (X-Farm). As Apricot themselves put it, ‘cross-margin farming is a logical extension for a lending protocol,’ and in all truth, it really is a mystery why nobody else has made any real attempts to go this route in the past. Perhaps the best part of X-Farm is that it allows users to start leveraged yield farming without ever having to actually own any of the underlying tokens. Normal yield farming takes place by using a stablecoin pair (such as USDC-USDT). What this means is that users have to convert their cryptoassets into those particular stablecoins and subsequently pool them.

The difference with X-Farm is that users can deposit non-stablecoin cryptoassets as collateral and borrow both with up to 3x leverage. In other words, no conversion is necessary, optimizing the process and allowing users a higher degree of control over their cryptoassets (not to mention peace of mind). After both stablecoins have been borrowed, they will be auto-pooled and consequently staked for Liquidity Provider (LP) Tokens, leading to 3x farming yields. The great news with Apricot X-Farm is that it encourages borrowing within the platform which results in a higher deposit rate, thus leading to more deposits.

Please note: At present X-farm only supports stablecoin LP pairs in order to negate the risk of impermanent loss

Of course, DeFi, and in particular yield farming, isn’t exactly a risk-free business. Heck, even some of the most experienced and savvy DeFi users find it time-consuming and strenuous to effectively manage their positions. Although X-Farm is awesome at increasing users’ access to additional yield without requiring them to sell any assets, there’s still the big L-word that every DeFi user fears when it comes to leverage: Liquidation. And this is where Apricot’s third and final offering comes in…

Don’t like being liquidated, do ya? Nobody does, unless you’re some kind of maniacal money masochist. Anyway, one of the worst feelings is being watched, especially by the nefarious scourge of liquidators, all salivating and wringing their greedy hands at the thought of depriving you of your hard-earned collateral the instant your position dips underwater. It’s great to make money, but users need sleep, and they need to have some kind of safety net in place. Arguably the most innovative part of Apricot’s overall value proposition is Apricot Assist, ‘an automated self-deleveraging assistant’ (fancy, no?) that you can carefully configure to aid you in reducing your account’s leverage with your specific risk profile in mind.

So in principle, Apricot Assist gives you control over three different aspects:

  • When to sell or begin redeeming your collateral assets,
  • What assets should be sold or redeemed, and
  • How much of your chosen assets should be sold or redeemed

So imagine the following scenario: You decide to open a 3x leverage USDT-USDC LP position against your SOL and leave it overnight. Unfortunately, due to some unforeseen circumstance, the price of SOL falls substantially while you sleep. But you anticipated this possibility, (which is exactly why you slept soundly) and used Apricot Assist to take care of any less-than-desirable eventualities by configuring the following:

In essence, Apricot Assist ensures the ‘borrow limit used’ decreases to 90% and thus well within the realms of safety. As a result, all of your initial SOL principal is kept intact, and the overall size of your USDC-USDT LP position is similarly decreased since a lower leverage ratio means reduced rewards.

Apricot Assist is fully programmable and will trigger in the event of any unfortunate circumstances, automatically managing your risk and maintaining your positions in your absence. In periods of high market volatility (which in crypto is something of a regular occurrence), Apricot Assist means that you can avoid liquidation all together.

Kick Out the Jams!

Greater freedom and peace of mind through innovative tools that do a lot of the heavy lifting for you, and the ability to more easily avoid liquidation are enough to qualify Apricot Finance as a next-gen DeFi platform. However, this isn’t the end of the story…not yet at least. Here’s a couple of major benefits I just have to highlight for you:

  • If a given user deposits LP tokens (which cannot be borrowed on Apricot’s platform), Apricot will auto-farm for them. LP tokens grant users borrowing power which effectively allows them to farm stablecoin pairs
  • Users can also deposit stablecoins and get up to 3x leverage in order to farm stablecoin LP pairs, meaning that rewards can be earned simultaneously from both Apricot and Automated Market Makers (AMMs)
  • Finally, users can deposit non-stable tokens such as SOL or BTC (which isn’t actually an option in other leveraged yield farming protocols as collateral) to leverage yield farm. As long as users ensure that they use Apricot Assist according to Apricot’s specifications, there is little to no chance that their principal balance of SOL, BTC or other non-stable token will be negatively affected

To me, this all sounds like one thing…a winning combination! No matter what kind of cryptoassets you deposit, you receive some kind of borrowing power or benefit. While other protocols are bound by stringent limitations and overly technical interfaces, Apricot Finance has created an intuitive, open and, best of all, intelligent lending protocol. Now that’s something to get excited about!

I’m all for extended metaphors, especially if synchronized dancing’s involved…

You Got It (The Right Stuff)

(See what I did there?) Apricot Finance may be new to the DeFi space, but having received $800,000 in initial seed funding and a further $4 million in their latest financing round, it’s pretty clear they mean business. And when I say business, I mean taking the DeFi industry to the Dry Cleaners and getting every stain, wrinkle and fold out of every single suit in record time. Now if that ain’t service, I don’t know what is…

Solana definitely boasts some truly impressive projects, and Apricot Finance is no exception. These guys have their own style, their own moves, and, who knows? They could very well be the next big thing in the world of DeFi. In any case, their offering isn’t some cheap copy-paste of another protocol or a ham-fisted cash grab. Nope, this is DeFi done right with a profoundly more focused approach to the very specific needs of end users, and that’s something we here at MarketSquare are very much behind.

It’s little wonder why Apricot made the cut for this edition of DeFi Spotlight. I gotta say, the more I find out about these protocols, the more excited I get about the future of DeFi. And am I sure glad to be part of this unstoppable shift towards a decentralized global economy! With this much momentum propelling them forward, I can say without hesitation that Apricot Finance is poised to make an invaluable addition to the DeFi industry, and I have no doubt their contributions will be substantial indeed.

This won’t be the last you’ll be hearing about Apricot Finance. I’ll be sure to keep up with their progress and continue to bring you all the latest insights in the ever-evolving world of Decentralized Finance. Till next time!

Brynn is the Content Manager at ARK.io, lead DeFi writer for MarketSquare and die-hard metalhead. When not researching yield farming, he spends his time crushing demons in DOOM or shredding his favorite axe.
Tags:
DeFi
Lending
Solana

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