88mph - Fixed Interest Rate Lending Protocol

Nick Sawinyh on 15 Feb 2021

Guillaume talks about 88mph backstory, community building, DeFi structured products, and how we could derisk lending.

Hello! What’s your background, and what are you working on?

Hey everyone. I’m Guillaume Palayer, alias McFly, working on various dApps and DAO projects since late 2017 with Zefram Lou, co-founder of our Dev shop baconlabs.dev.

I was a product developer over the last decade for various industries: ecommerce, banking, insurance and assets management companies. Teaching in design and business schools. Early members of Metacartel and Raidguild. And co-founder of Nutrita.app. I like building products and communities.

Since October 2019, we geared our focus on 88mph.app. It’s an Ethereum protocol allowing you to lend your crypto assets at a fixed interest rate or buy some floating-rate bonds. By doing so, you earn upfront $MPH token and system rewards.

What’s 88mph backstory?

We started working on an MVP in October 2019 when the DeFi space was at its apogee of boredom. We wanted to build a product that offers fixed and passive incomes, useful and if possible, cool. As far as I know, nothing existed at that time except random ideas on paper. So we started drafting some contracts around a swap rate concept. Though, it was definitely not UX friendly and not easy to scale (cf current traction of protocols based on this model). So, we decided to explore another direction. The first mainnet version was launched in April 2020 https://88mph.app/v0, offering upfront fixed-rate interest, with a peer-to-contract approach, explaining the time travel reference #future-fwded-money, that we linked to Back to the future concept of 88mph, the required speed to time travel in the movie.

Though as you can imagine, upfront interests was a bad idea in terms of performances. So we discontinued the feature and just kept the brand when we launched the current version in late November 2020 https://88mph.app/. We are 2 members in the core team. Zefram and myself. We bootstrapped everything on our own and financed our first audits by selling a white labelled version of betoken.fund. Betoken was our first DeFi project, started in late 2017. Since then, we work in duo under the baconlabs.dev umbrella, a company created in early 2020. Since mid-January 2021, 88mph has had its own legal entity.

What went into building the 88mph?

The v0 released in April 2020 was definitely a catalyzer of feedback for us. And to be honest, the traction wasn’t there. So we started working on a new version of the protocol in June and we did our first security audit at that time, with the help of an Aave grant. But we got distracted by other things (whitelabelling our on-chain assets management tech to bootstrap ourselves (cf betoken.fund)) during the summer of 2020, so we postponed the launch of the v1.

Another thing about this last summer is this famous “DeFi cambrian explosion”. It was probably the best thing that could have happened to us. It was immensely inspiring regarding what to do in order to fair-launch and build a community-driven protocol. Inspired, we started working on a v2 in September 2020. It’s the core of the current version of 88mph.

The vision and mission of 88mph was always to offer a working product on mainnet on day 1, with a native token allowing us to socialize the revenues generated and the governance power. We tried our best to remove all the usual nonsense around the tokenomics.

Our core business for the upcoming years will stay close to this vision and mission, with a focus on smart contracts and financial risk management (More on the latter in the next questions). As everyone knows, security audits aren’t the panacea but they are extremely important to increase the awareness in the team of the best practices to write high-quality smart contracts and handle better the human factor risks. We work with PeckShield, Quantstamp, and Certik to help secure our code base, and we’ll announce soon new partners to help us with the security and economics audits.

Talking about code, 88mph is a good example of a product that couldn’t exist without the permissionless composability of the DeFi ecosystem. We are dependent on the success of other protocols like Aave, Compound, Harvest, Yearn, Curve, The Graph, you name it. And the most interesting part is that 88mph is currently used as a base layer by other protocols to build cool stuff (Debasonomics, Mushrooms Finance, Dollar protocol, etc).

Another aspect to launch a successful protocol on Mainnet is the efforts to put on the community building. Since 2017, our experiences teach us that the best way to do this is via an organic strategy: community and partnership. If you are reading this meanwhile trying to launch something on Ethereum or elsewhere, don’t start with a paid channel strategy. Validate your idea with an organic approach. It doesn’t scale well but it’s good enough to start anything. When I say organic, I mean making friends in the DeFi ecosystem and trying to build constructive synergies beneficials for both parties. This is the way! And so far, it works well for us. Of course, none of the above could be done by only 2 human beings, so having a supportive community around your products is the ingredient to add in the organic mix. I’m receiving DMs on a daily basis from our community members asking me if I want an intro with another team, alongside valuable feedback on our products. A community is extremely powerful. So, we are definitely taking care of it, as much as the product itself.

What’s your business model?

Since day 1, 88mph distributes 100% of its revenues with the community. They come from the:

  • 88mph protocol fee: 10% is deducted from the interest when a depositor withdraws.
  • Yield-farming rewards: yield-farmed tokens earned from the protocols 88mph is connected to (COMP, FARM, etc.).

There are also two other components guaranteeing the longevity of 88mph. Whenever MPH is minted by new deposits in the fixed-rate bond pools, an additional 10% of the minted amount is minted and sent to the developer fund. These MPH is used to pay for future development & maintenance of the protocol.

The governance treasury also receives some MPH tokens, paid back by depositors when they withdraw their deposits. These MPH will be used by whatever the MPH holders decide on, ranging from protocol parameters to smart ways of using the capital assets stored in the treasury for creating new incentives, capitalization, and at the end growth.

Our main source of growth will come from cross-integration with various protocols looking for fixed yields to consolidate their products and iterating on our bonds and upcoming structured products.

Talking about business models, Coingecko did an excellent job at communicating the main differences between us and our competitors in the fixed-interest rate protocols landscape.

What’s your position on the regulatory landscape today?

DeFi is going to disrupt a lot of intermediary industries. But, we are definitely conscious of the necessity to work with the regulatory bodies to achieve this goal the fastest as we can. Dreaming about an utopian world where Wall Street and its institutional and regulatory entities are wiped out by DeFi anons devs is probably cute but completely disconnected from our financial history and how human civilizations work on a basic level Read. So, we are currently working with our law firm to get a ruling from the FINMA regarding the MPH token. It doesn’t mean much but it’s already a first step in the long journey toward compliance.

What are your goals for the future?

Apart from the usual new pools and protocols additions on top of our current set up, we are actively working on various ways to derisk 88mph and make it more liquid by unlocking new use cases.

Regarding the derisking part, let’s imagine that the current pooling effect, overlapping withdrawal period, floating rate bonds and MPH incentives to buy them, all fail to derisk the protocol, then several other mechanisms could be explored in the near future to derisk all of this. Some proposals currently evaluated:

  • An insurance fund financed by the gov treasury or something similar to a safety module, that grow according to protocol activity to be the buyer of last resort alongside insurance products like Cover or other insurance products covering specific financial risks.
  • Credit default swap build in partnership with another protocol.

Lastly, In a few days, we’ll release our ERC20 zero-coupon bonds that represent the first step towards structured products on top of 88mph.

With that in place, we’ll open a whole new universe of products built by us or by the 88mph ecosystem.

What are your future thoughts for the DeFi market?

Lending and structured products will be the main drivers of innovation with products like 88mph finding their way toward a “risk-free” DeFi. Everyone wants Main street users onboarded in DeFi, so we need to make it happen. And we definitely need to learn how to work with CeDeFi to onboard those users and scale the whole ecosystem in something useful for the layman. All great things started with some collaboration. So leggo!

Where can we go to learn more?

Tags:
About the author
Nick Sawinyh
Nick Sawinyh is an LA-based crypto entrepreneur. After having spent over four years in the blockchain industry, Nick founded DeFiprime in 2019, with the idea to provide information about emerging DeFi ecosystem. He owns modest amounts of various cryptocurrencies.

The Latest: