Welcome to our review of EZ Finance, a cutting-edge financial platform that aims to make managing finances easy and accessible for everyone. Let’s take a closer look at EZ Finance, and discover how it can help you reach your financial aspirations.
EZ-Fi is a leveraged yield farming protocol on Sui and Aptos. It involves three parties: Lenders, Yield farmers, and Liquidators. Lenders can lend assets to earn a higher lending interest rate. The interest comes from leveraged yield farmers and liquidity providers who borrow assets to yield farm and provide liquidity. Yield farmers and liquidity providers can perform leveraged yield farming on various asset pairs within various DEXes for higher APY and trading fees. Liquidators can perform liquidation on active positions at a 100% debt ratio for a chance to earn a 5% bounty incentive.
EZ Finance aims to address three market opportunities by offering high lending interest rates through leverage yield farming, a simple and convenient way for users to leverage their positions and earn a higher yield, and acting as a bridge for projects to bootstrap liquidity in their pools on selected AMM protocols. The platform continues to expand on new networks to support lending on various assets and integrate with more AMM protocols.
Yield Farming
EZ offers high yields on farming, but it also comes with risks associated with the volatility of assets. The platform has a strong pool screening and due diligence process to ensure that it offers high yields on quality pools from top DEXes, while maintaining high protocol security to protect users. To ensure high security and transparency, the platform has multiple audits from top-tier auditors, operates under a non-anonymous team and more insurance options are coming. To enhance the quality of farming experience, the platform has certain criteria for listing new pools and assets such as:
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Assets should have supported price feed from shortlisted oracles & popular trading pools from top DEXes with strong demand;
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New pools should have high liquidity, high trading volume; tokens in the asset pairs should have high circulating market cap, low volatility, certain degree of decentralization and a track record of presence in the market for a decent amount of time.
EZ Finance allows users to begin yield farming with just one type of asset. It gives the option to supply any combination of assets, without having to supply an equal amount of assets for a liquidity pool as in traditional yield farming. This brings customized yield strategies which can suit any market conditions. Moreover, flexible borrowing of multiple assets allows users to hedge their positions on EZ-Fi and farm even in a bear market. Existing LP providers can easily migrate their position to EZ-Fi by supplying in the LP token, as long as the pool is already listed on EZ-Fi.
Alpha Oracle Aggregator uses top-tier cross-chain oracle services to ensure accurate price feeds and stability for the platform even when one oracle service is out of sync.
Potential risks
One of the risks is impermanent loss, which occurs when the price of one token in a liquidity pool changes in comparison to the other token.
Another risk is liquidation, which happens when the value of the collateral assets is less than the value of the borrowed assets. Additionally, there is a risk of price slippage when using the advanced farming mode, where users can choose to borrow multiple assets and decide the percentage shares of the borrowed assets in the liquidity pool. If not chosen carefully, it can result in high price slippage.
EZ-Fi offers solutions to mitigate these risks such as opening positions on pools with tokens that move in correlation with one another, making sure the value of collateral assets is higher than the value of borrowed assets and choosing the right percentage shares of borrowed assets in the advanced farming mode.
Lending
Lending on EZ-Fi allows users to supply assets into a lending pool for leveraged yield farmers to borrow. Lenders earn a lending APY from the borrowing interest rate paid by leveraged yield farmers. ibTokens specific to the underlying asset are generated to represent user's stake in the pool and accrue lending interest over time. Lenders don't bear risks from impermanent loss and liquidation, but share the risk of illiquidity of the pool. EZ-Fi mitigates this risk by partnering with other lending protocols or liquidity pools to adopt the Triple-slope Interest rate model to incentivize a healthy utilization ratio.
Hedge farming
Neutral Hedge Strategy is a farming strategy that takes a long and short position in an asset pair simultaneously to minimize the effect on your portfolio when the asset’s price fluctuates. It aims to provide a positive profit when the price change against the current asset is between -35% ~ 50%, and the longer the money is deposited, the wider the margin of safety is. However, it has a maximum drawdown of 10% and may not increase in value as much as Leveraged Yield Farming when token prices increase significantly.
Rebalance
Auto-Rebalance Vaults are a type of investment strategy that utilizes a market-neutral approach by combining a long and short position in an asset simultaneously. This allows for potentially high returns while minimizing portfolio risk when the asset's price fluctuates. The EZ-FI Auto-Rebalance Vault specifically automates the process of rebalancing these positions to maintain neutral exposure, and it does not have any liquidation risk. Additional features of the EZ-FI Auto-Rebalance Vault include one-click deposit, ease of use, and an auto-rebalance strategy based on sufficient back-testing.
PDN
The Pseudo-Delta Neutral (PDN) strategy is a market-neutral approach that combines a long and short position in an asset simultaneously in order to minimize the effect on the portfolio when the underlying asset's price moves. This strategy aims to increase capital utilization rate and profits by providing liquidity and being rewarded with yields in DeFi, while minimizing the risk of liquidation in the volatile crypto market.
PDN Imbalance Ratio is a metric that measures deviation of a position from market-neutral status by comparing the amount of an asset held in the total position to the amount of the asset held as debt. It helps to identify if the position needs to be rebalanced to maintain market-neutrality.
Summing-up
At the moment, the EZ website is only working in test mode, however we can say that this DEFI platform in theory have very rich functionality and can find its end users.
Btw, tokenomics is known. Roughly half of the tokens is reserver for liquidity mining & ecosystem. Hmmmmmm.
Official resources of EZ Finance:
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Article prepared by CryptoBelka – team member of Sui Ecosystem.