APWine - The Protocol for Future Yield Tokenisation

Nick Sawinyh on 01 Sep 2021

Founders of APWine shared how they get into crypto and what we could do when we can tokenize the yield.

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

Hello, we would like to introduce ourselves as the APWine team. We are a global team of 4 co-founders hailing from EPFL in Lausanne and five full-time core contributors. Gaspard Peduzzi is focused on the smart contract part of the protocol. Ulysse Ramage is developing the UI/UX, and asset management solutions for the platform. Antoine Mouran is managing the integrations with the other projects to leverage the composability of all defi ecosystems. He is also looking for ideas to improve the protocol. Finally, Jean Chambras is recruiting new developers and helping Ulysse on the front end.

Collectively, we are all very excited to be working in the decentralized finance industry as we believe it will become the standard for all of finance. Said differently, we expect all financial activities to occur on-chain and in a peer-to-peer manner. We were inspired to create APWine after witnessing first-hand the explosion of yield farming or “liquidity mining” that was established by the top DeFi platforms such as Aave, Compound, Yearn Finance, SushiSwap, Maker, StakeDAO, etc. The ability to tokenize the yield which billions of dollars is collateralizing is very exciting and opens doors to all-new strategies users can deploy. So, besides our love of wine and DeFi, we are banded together to create a platform for tokenizing and trading future yield through APWine! The APWine Protocol can tokenize the yield generated by interest-bearing tokens. It does this by splitting interest-bearing assets into Principal Tokens and Future Yield Tokens. This then leads users into the APWine custom AMM, where users can sell, buy and trade Future Yield Tokens ahead of time to speculate on the APY of DeFi platforms before they mature in 30 days. We want to create a financial instrument to trade future interest rates in DeFi. Also helping the farmers to hedge their risks, and farm with their own yield. Wine and yield; what’s not to love?

Traditional finance currently offers this service within the Bond market, which accounts for $119 trillion worldwide according to SIFMA. Future Yield tokenization is a beneficial tool for capital efficiency and risk hedging. Retail and corporate yield farmers are the primary beneficiaries as they seek to hedge against volatility in yield rates. That being said, all the funds running in and out of the APWine protocol are entirely non-custodial and interact with thoroughly audited smart contracts making this a genuine primitive of decentralized finance.

What’s APWine backstory?

APWine started in August 2020 amidst the bull run and “DeFi Summer” when yield farming was still very new and insanely profitable! First, we prepared an MVP on testnet to prove that it was doable. We got some support from Marc Zeller and Julien Bouteloup, our advisors. Then in early 2021, we released a beta version of the protocol on the Ethereum Mainnet. Again, we saw it being a success. And finally, we completed a successful seed round with forward-thinking actors such as Delphi Digital, Spartan Group, DeFi alliance Harvest Finance, and key DeFi builders.

We successfully launched a beta of our V1 in February of 2021, which was very exciting. Ironically, the best time to deploy such a platform is during a volatile market when the demand for hedging against volatility in yield rates may be high. We anticipated early on that demand for tokenizing yield would increase as TVL rose, volatility increased, and people became more accustomed to interacting with AMM’s, DEX’s, and popular DeFi protocols such as Harvest Finance which APWine indirectly operates with. Our approach has proven worthwhile as TVL continued to grow and DeFi ushered in an increase in the aggregate cryptocurrency market cap. We also proved our concept in production with the V1 Beta that we successfully deployed in February of 2021. Our motivation continues to be the industry’s overall growth and empowerment of people worldwide who are otherwise restricted in their ability to manage their assets the same way privileged financial entities can - with easy-to-use hedging and even arbitrage opportunities.

What went into building APWine?

It’s been almost a year of development, and we are excited to announce the imminent release of our V1 mainnet this month (August). We are completing audits along every step of the way from the leading specialists in the field - including Quantstamp and Peckshield. The safety of user funds is our top priority. We are prepared to onboard millions in value from leading platforms such as StakeDAO, Harvest Finance, Aave, Lido, and Yearn Finance directly, who have established working relationships with our team and supported us in creating a liquid platform that can utilize the native interest-bearing tokens users mint on their platforms. While we were building, it was fascinating to see the many curve balls thrown at yield farmers who migrated from one platform and one blockchain to another in search of yield instead of quitting. This hunger for yield continues to increase even with volatile yield rates and gas fees. Our design’s decisions reflect the needs of yield farmers and traders who prefer a simple user-focused UI that does not require multiple stops on different platforms and multiple transactions. The APWine app can accept interest-bearing tokens directly and mint them on the spot from base collateral assets. We have systematically run internal tests to account for all possible events, circumstances, and exploits that can negatively impact a DeFi platform and have ensured that there are no vectors for the attack on the APWine AMM without compromising decentralization. With all of this in mind, we are prepared to work with alternate L1 and L2 solutions to accommodate for the constant migration of yield to wherever transaction fees are cheapest, yet secure. The APWine community is preparing to participate in the upcoming APWine DAO that the APW (ERC-20) Token will power.

What’s your business model?

APWine is a non-profit organization that will be governed by the APWine DAO in the future. However, to create a self-sustaining ecosystem that can scale and stand the test of time, we are exploring certain fee structures that can provide revenue for the DAO. This is easier said than done as our target market is very sensitive to unnecessary “rent seeking” activities that can affect their bottom line, especially when accounting for transaction fees that are required to get into and out of yield farming positions. Element, Pendle, Sense Finance are our “competitors”, or as we call them, “fellow forward thinking pioneers.”. Conceptually, we all offer similar services with the differences being technical approach, partner integrations, platform on/off ramp efficiency, and liquidity. Market participants who are involved in future cash flows and are looking for either upfront yields or APYs that are not volatile are our ideal target market. We are also supportive of and incentivize liquidity providers who make the entire system work. One key differentiator between APWine and other platforms, is our finely crafted user experience. Complimented by our lovely UI, the user experience is tuned into the immediate needs and wants of yield farmers and speculators, who are able to directly deposit their assets into the APWine protocol without having to first visit third party platforms and take an extra steps to deposit, tokenize, withdraw, etc. As such, we rely on partnerships to make such seamless integrations possible and so we continue to establish great relationships with top DeFi platforms.

What’s your position on the regulatory landscape today?

Today’s regulatory landscape is long overdue for a clear and open-minded stance on the ongoing financial revolution. Today, users can connect to DeFi protocols in a fully permissionless manner regardless of where they live and without compromising their privacy. We hope to see this trend continue, but we understand certain activities need to be monitored and regulated as realists. We hope to see the crypto industry mature. We empower individuals in their everyday lives, the same way that the internet has, and we are doing our small part by building a new DeFi primitive for tokenizing future yield.

What are your goals for the future?

Our goals for the future are oriented around becoming the go-to yield marketplace and platform for dealing with all future(s) cash flow. We welcome every user in the DeFi space to band together and join the battle against volatile yield! We would love to see our community grow into a massive movement that can price, trade, and leverage yield-bearing assets in the market for future yield. Although APWine is native to Ethereum, we aim to connect with cross-chain ecosystems to provide everyone with access to future yield markets. We are working towards accepting all forms of time-sensitive collateralized assets aside from interest-bearing tokens. We have put in a lot of work to ensure that the APWine Protocol and AMM is the easiest and most secure solution for users. Our personal goals are to ship the highest quality and most secure platform that caters to everyone dealing with future cash flow. If most DeFi users interested in upfront yield for their collateral, volatile yield hedging, or both, utilize APwine as a common pitstop within their rotation, we will toast to that. Speculators and liquidity providers are also at the forefront of our goals by tracking the TVL metrics in APWine to gauge success. We will continue our efforts to stay relevant in the fast-growing DeFi industry and accommodate new products and features that the market deems useful. Our backers from the seed round are engaging with us regularly to make introductions to platforms where mutually strategic collaborations can be made. Our milestones are based around TVL, and while we don’t expect a 1:1 reflection between collateralized assets and FYT value, we hope to get initial traction from experienced DeFi users while being accessible to new users who can follow our guides and documentation to get started.

What are your future thoughts on the DeFi market?

DeFi is in the very early stages, and we have yet to see the full potential of what permissionless finance can bring to the world. Nevertheless, we are incredibly bullish on cryptocurrencies and the DeFi industry as a whole. As more schools create curriculums and courses based around this disruptive technology, we expect a whole generation to be born that enters the workforce equipped with the knowledge, skills, and philosophy that drives open source development. Furthermore, it is essential to increase overall education and knowledge regarding the technical aspects of tokenized assets because the trade-off between having no “middle men” such as banks and clearing houses is self-custody and full responsibility of one’s assets. We believe this is a fair trade-off, and as more awareness is brought forth to the financial revolution in tandem with educational content, we hope to see a smooth transition from traditional finance into decentralized finance occur.

Where can we go to learn more?

You can join the wine family today by following us on the following platforms:

DeFi is coming. Don't get left behind

About the author
Nick Sawinyh
Nick Sawinyh is a crypto entrepreneur based in LA. He founded DeFiprime in 2019 to offer information on emerging DeFi ecosystem. He owns small amounts of different cryptocurrencies.

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