The year 2021 saw rapid growth in the decentralized finance (DeFi) sector with total value locked (TVL) surpassing $240 billion by the year’s end. The market is now poised to see growing interest and innovation in 2022 with liquidity mining as the main driver. Yin Finance, a DeFi protocol integrated with nonfungible tokens (NFT), decentralized autonomous organization and SocialFi, is seizing the opportunity by combining yield farming and trading into a single-step solution with Chi Strategy.
Chi Strategy is a permissionless investment strategy platform allowing strategy designers to create Chi contracts to attract a broader audience of crypto traders and traditional investors. A wide range of strategies will be supported on the platform, from trading strategy to liquidity management and DeFi derivatives to meet the investment needs of users. The project will leverage token incentives and multi-chain compatibility on Ethereum, Polygon, BNB Smart Chain and more to build a decentralized Web3 social network to reach a combination of DeFi with social layering.
The YIN, YANG and CHI system
Chi: Programmable liquidity smart contracts
Each liquidity smart contract is created as a Chi contract in the form of an NFT following the ERC-721 standard. One of the key differentiators is to increase capital efficiency by redistributing rewards back into investments while minimizing impermanent loss to ensure the safety of funds. Users can manage funds in their Yang smart vaults through the use of Chi with the following benefits:
- Liquidity management is achieved by interactions between NFTs, and the isolation levels of the NFTs ensure fund security.
- Programmable Chi contracts allow for agile adaptation of different liquidity provider price intervals, which in turn maximizes yield for users.
- Customized Chi contracts provide the potential for simultaneous liquidity mining on multiple protocols with simultaneous rewards.
- Users with farming strategies could create their strategies for Chi, from which the contributors to the strategies can share a portion of the profits made by the vaults subscribing to Chi contracts.
The initial Chi Strategy concept was introduced by Shadow Labs, a premium research institution concentrating on creating active liquidity strategies for decentralized exchanges (DEX) with an automated market maker mechanism. As the key partner of Yin Finance, Shadow Labs is responsible for the research and development of Chi strategies to ensure users get the most benefit from active liquidity management.
The current Chi model focuses on:
- The Uniswap version 3.0 layer-1 strategy — Analyzes key indicators and historical data to actively fine-tune the strategy and manage the positions of Ether (ETH)/USD Coin (USDC) and Tether (USDT)/USDC trading pairs. Past performance has proven that the strategy has successfully reduced maximum drawdown and impermanent loss, ensuring steady returns in bull and bear markets.
- The UniSwap version 3.0 layer-2 strategy — Designed with shorter-term trading action leveraging the benefits of the Polygon chain, which has low transaction fees, high-throughput transactions and rising TVL. The strategy utilizes a short-term prediction model based on analyzing moving average, breadth, volatility, correlation, volume profile factors and more to determine the position size signal.
The Uniswap version 3.0 layer-2 strategy performance
Chi Strategy will transform into an open platform soon where all users can create and mint their own Chi contracts. Meanwhile, Yin Finance will continuously work on developing more diversified financial products for users.
About Yin Finance
Yin Finance is a multi-strategy NFT liquidity-management platform allowing users to subscribe to the project’s various strategies to achieve effective high-yield liquidity management. Yin Finance aims to provide proactive liquidity-management services on different public chains and DEXs. Currently, Yin Finance is deployed on the Ethereum, Polygon and BNB networks and will be deployed on Solana soon.
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