Hello CAKE holders! 🥞
We held an AMA (Ask Me Anything) with Max from the Overnight Finance Team to get to know the project more! If you missed participating in the AMA, read this article and learn about their project!
Max: I'm Max, founder of Overnight since 2 years. I'm a TradiFi guy turned degen. JPMorgan, Morgans Stanley, BCG - doing Overnight since 2 years.
Overnight.fi is a 2 year old DeFi protocol behind stablecoin USD+. The platform focuses on asset management, specializing in Delta-neutral strategies. I.e. USD+ is a yield-driven stablecoin fully backed by collateral. This collateral is rooted in DeFi strategies that generate returns, including lending to platforms like Aave, Uni V2 based delta-neutral strategies and perp based defi strategies
[Q1]: What is the Overnight Finance?
Overnight is an asset-management protocol, behind stablecoin USD+. it is a stablecoin pegged to USDC 1:1, fully collaterized with onchain strategies, so people can see where their money is at any point in time.
Our key specialty is delta-neutral yield, thats how we are able to generate attractive returns with acceptable risk on stables
Biggest usecase is people either holding USD+ in wallets, where it rebases once a day or they LP into liquidity pools
[Q2]: Please tell us more about USD+ and its underlying strategies
USD+ is a yield-bearing stablecoin that generates return through collateral deployment, such as collateralized lending and stable-to-stable liquidity pools, but most importantly into delta-neutral strategies. The examples include Uni v2 delta-neutral strategies, e.g. borrowing ETH against USDC, and farming USDC/ETH pools, but also perp based delta-neutrals, e.g. buying spot ETH and sell ETH perps to capture funding rate.
The idea of delta-neutral strategies overall is one borrow a volatile asset like ETH and then invests it generate return. When ETH pumps, the loan goes up in value and position is neutral, same when it dumps. it stays neutral. Hence, delta-neutral yield. Sounds simple, but is very complex. And thats what we specialize in.
Same with the perps. We hold ETH but sell forward via ETH Perps. Thus, we are ETH-neutral. Perp based startegies are a very big deal, thats where we see the future of Defi and key to its scalability. And we are obviously not limiting outselves to ETH. It is about BTC, BNB and many other liquid volatile assets.
[Q3] How does the bribe mechanism works in your project?
Overnight.fi does not accept bribes) but we tend to be the largest briber with the ve3,3 dexes we work with.
For USD+ pools, we incentivize them with OVN. We emit OVNs to bribe USD+ pools, roughly equal to the weekly revenue from USD+. Thus, all incentives are backed by real revenue, and there is no inflation of tokens. For the OVN pools, the opposite occurs. They are incentivized with USD+.
The protocol always aims to provide good bribes and expects to see good bribes efficiency, better than 1. For example, in our first week, we provided 18k in bribes and USD+ LP providers received 3.6x that much (around 66k rewards).
[Q4] What is the main focus for the team now and what role Arbitrum chain play?
The main focus for us is to finish R&D for Spot + Perp strategy. Based on that technology, we will move on to the biggest DEX on Arbitrum, GMX. GMX has the biggest TVL on Arbitrum so far, over $550m, and we expect more liquidity over there.
Arbitrum will be our first showcase of the highly effective Spot+Perp strategy. That's why we launched a significant campaign on the Intract platform, titled the 'USD+ on Arbitrum campaign,' to highlight the opportunities that this strategy presents. It will run for three weeks starting today, divided into two phases:
**1st Phase ** - Delve deeper into how USD+ works and explore the world of effortless income. 2nd Phase - Explore this opportunity alongside our fantastic partners, including PancakeSwap, and learn how to maximize your earning potential with USD+ by providing liquidity to USD+ and OVN pools. Currently, these pools offer up to 320% APR for OVN and up to 50% APR for stable pools—very lucrative options.
I am happy to invite everyone to participate in this adventure!
Besides that, In the near future, we plan to expand this strategy to other chains: zkSync, Base, and Optimism. And to integrate with the new chain, Blast.
[Q5]Why did the protocol decide to move attention to the PancakeSwap farming pool?
In addition to PCS's being the most popular dapp in the world, there were a few reasons:
2)DEX sustainability - most dexes are born and die very fast. Hard to make long term partnerships. PCS has a great trackrecord, has been and should be around for a long time. so we like to partner for the long-term 3)Chain-coverage - we are multichain and PCS are multichain. Too few partners are able to offer similar chain coverage and can be relied upon outside of their home chain
We see a lot of benefits coming from this partnership and have a clear goal in 2024. We are determined to be one of the biggest incentivizers for the PancakeSwap DEX for a long-term period, streaming rewards to the Overnight pools, which currently include four: on Arbitrum (USDC/USD+, USD+/USDT, OVN/USD+) and on BNB (OVN/USDT).
Q1: What are the key advantages of using stablecoins like USD+, DAI+, USDC+, and USDT+ on the Overnight platform?
Ans: Yield on stables!
Q2: How does Overnight finance approach risk management and mitigation within its yield aggregation strategies, and what measures are in place to address potential vulnerabilities and market fluctuations?
Ans: We specialize in producing retuns, so thats why i wanted to be concise with teh previous one.
It is a whole system:
Most importantly, we take risk management super seriously.
Q3: What is the role of the Optimism Collective in supporting the growth and development of overnightfi, and how does the project plan to leverage this partnership?
Ans: Optimism played a big roleto help us grow from a stratup to a mature protocol. In particular, we received a grant from OP of 300K OP tokens which we used to grow our presence on OP chain. Beyond gratitude to our partners at OP Foundation, we dont expect OP to play a role different to other chains further
Q4:What are the key challenges faced by Overnight Finance in terms of adoption and scalability?
Ans: The biggest challenge is finding sustainable onchain sources of yield that can scale beyond 50 M TVL. Once you are beyond 50 M, every M decreases revenue, not increases. We believe spot + perp delta-neutral strategies are the answer to that.
Q5: What advice would you give to someone who is new to DeFi and interested in investing in Overnight Finance?
Ans: DYOR
Q6: Why did you guys need to introduce a new USDC+ rebase token?
Ans: USDC+ is meant to replace DAI+. we noticed that DAI+ on specific chains had very limited depth and liquidity, so we are replacing it.
USDC+ is meant to complement USD+. We always need at least 2 tokens per chain as when we incentivize pools, we want to max out the efficiency, max out the TVL. with 2 tokens we can have a pool full of + tokens, thus doubling the efficiency of our bribes as measured by bribes-to-TVL
The Overnight Finance team prepared a few questions in a form. Users had to fill their public wallet address (not your private keys), Answers and Telegram/Discord username. Some lucky users who answered all correct have received a reward!
If you want to participate in this kind of events, follow up in our social channels to find out when the next AMA will be!
We are excited about partnering with the most popular dapp in the world, which has largest and brightest community, we are extremely committed to this partnership long-term.
Since inception, we have earned over 3 M USD in cash, not tokens, and distributed it to USD+ holders. we would like to do the same and more for you!
That’s all from AMA! It was a very informative Q & A session.
Keep an eye on our socials to don't lose any of this events!
The Chefs 🐰