The global decentralized finance (DeFi) economy has been on the receiving end of a lot of innovation over the last couple of years, something that is showcased by its expanding total value locked (TVL) since last year. To put things into perspective, since Q1 2023, the TVL of the DeFi market has risen from $49 billion to approx. $87 billion, thus showcasing a growth of 77.5%.

Amid this surge, CIAN, a decentralized automation platform designed to help clients onboard complex crypto delta-neutral yield strategies via a simple transaction, has emerged as a popular solution for DeFi investors worldwide. In fact, since the project’s inception back in July 2022, its USD TVL has increased dramatically, standing at a sizable $102 billion (as of Feb 2024).

As part of this article, users can get a detailed understanding of the key technicalities associated with the CIAN protocol. So, without any further ado, let’s jump straight into the heart of the matter.

What is the Cian Protocol?

CIAN enables users to create, manage, and enhance multi-protocol strategies using their cryptocurrencies, offering protection against liquidation risks with its automation features. By focusing on liquid staking tokens (LST/LSD), liquid re-staking tokens (LRT), and real-world assets (RWA), Cian aims to maximize returns for ETH, AVAX, Matic holders, etc., allowing clients to earn passive income without locking up their assets.

How Does the Cian Protocol Work?

Automated Strategies

CIAN uses multichain vaults, offering delta-neutral yield strategies for various assets. Each vault is designed for holders of specific tokens like ETH, sDAI, wBETH, and wstETH, enabling users to leverage financial methodologies that can amplify liquid staking yields on platforms like Spark, Venus BSC, and AAVE V3. The delta-neutral yield strategies aim to optimize annual percentage yields (APYs) — ranging from 4% to 16.38% — while minimizing risks, thereby catering to both specific tokens and networks. Key offerings include:

• sAVAX-AVAX Recursive Staking (8x): Facilitated by CIAN in collaboration with BENQI, this strategy offers a secure way to amplify staking rewards and supply APY for sAVAX holders. It provides users the advantage of liquid staking without the limitations on token quantity or hardware requirements, promoting increased flexibility and yield.

• MaticX-Matic Recursive Staking (3x): Developed through a strategic partnership between CIAN and Stader Labs, this strategy allows for enhanced staking rewards and supplies APY on the Polygon network. MaticX, as Matic's staking derivative provided by Stader, mirrors the stETH to ETH relationship, offering Polygon users a liquid staking option that increases network security and yields without token or hardware limitations.

Vaults

CIAN's vaults allow users to enhance their returns through a leveraged staking strategy known as ‘recursive staking.’ The distinction lies in the smart contract architecture utilized. Unlike automated strategies that employ smart-contract wallets for executing individual user positions independently, vaults facilitate asset pooling among users. This collective approach allows for shared fees and profits, enhancing user-friendliness and efficiency in the investment process.

• wstETH/wETH vault: It seeks to amplify an investor’s wstETH staking yield 6.5x by recursively borrowing ETH on AAVE and using the 1inch DEX for swaps. Users can deposit and withdraw in either ETH or wstETH. TotalAPY = 6.5 x (wstethStakingYield + wstethSupply APR) - 5.5 x (ethBorrowRate)

• wbETH/ETH vault: It seeks to enhance wbETH's yield 4x by recursively borrowing ETH, utilizing Venus for lending and PancakeSwap for swaps and staking. Deposit and withdrawal options include ETH or wbETH. APY results from the difference between positive yields (staking and supply APRs) and the borrowing rate, with the formula: TotalAPY = 4 x (wbethStakingYield + wbethSupply APR) - 3 x (ethBorrowRate).

• rETH/wETH vault: It multiplies rETH's staking yield by 6.5x through recursive ETH borrowing on AAVE V3, with 1inch facilitating swaps. Deposits and withdrawals are flexible between ETH or rETH. The strategy's APY calculates the net positive yield from staking and supply APRs against the borrowing APR, following the formula: TotalAPY = 6.5 x (rethStakingYield + rethSupply APR) - 5.5 x (ethBorrowRate).

What Makes CIAN Unique?

CIAN's introduction of liquid and leveraged staking practices marks a significant innovation within the DeFi landscape since the approach not only simplifies the staking process but also amplifies the potential yields through a host of carefully calibrated strategies. By employing LSDs in tandem with various lending protocols, Cian enables its users to significantly enhance the returns from their staked assets — all without having to engage directly in the complexities and risks traditionally associated with the staking process. Lastly, the protocol comes replete with a suite of advanced automation tools designed to mitigate the risk of liquidation and to facilitate seamless position adjustments in real-time.

Team, Partners, Audits

At CIAN’s helm is its CEO, Luffy He, a Delft alumnus who previously also worked as a software engineer for Intel as well as a strategy consultant for professional services giant Accenture.

CIAN's partnerships span major financial entities, including Matrixport, a company offering a suite of crypto financial services; Stader Labs, a firm specializing in decentralized finance (DeFi) solutions and investment products; AAVE, a decentralized lending protocol; Loopring, a protocol for building decentralized exchanges; Ava Labs, the company behind the Avalanche ecosystem and Trust Wallet, a secure, multi-cryptocurrency storage solution, among several others.

From a security and safety perspective, it should be noted that CIAN has undergone a total of five security audits from renowned firms like Peckshield, Omniscia, and Paladin. The investigations were carried out between April 2022 and May 2023, with the results of all five reports having been made available online.

Conclusion

As the crypto ecosystem continues to evolve and grow, projects like CIAN stand ready to transform the burgeoning digital finance landscape. Most recently, Rivo — a DeFi platform combining a smart-contract wallet with a DeFi Yield marketplace — integrated CIAN's wstETH vault.

The vault recursively borrows ETH on AAVE and converts it to wstETH, thus amplifying one’s Ethereum staking yields and offering a sustainable method to earn higher returns. With a risk level rated 'A,' it represents a strategic choice for investors aiming to benefit from increased on-chain activity while managing additional lending risk — marking a pivotal step towards simplifying and enhancing yield generation for cryptocurrency investors all over the world.