AquaFi Protocol | SWOT Analysis + Questions #XIOfeedback

After watching the video and deck presentation, please provide your own SWOT analysis of the token project! Also, include any questions you may have that we not clearly explained in the video.

Strengths and Weaknesses
Are related with things that we can control or that are inside aspects of the project: Team, Community, Protocols, etc…

Opportunities and Threats are macro or outside aspects like consumer behaviour (DeFi adoption)
or Government regulations, Internet infrastructure, Ethereum GAS,

If you haven’t done so already please consider giving the video a like :+1: on Youtube. You can also comment there for additional credits: https://youtu.be/zi-E0AXJsDY

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Hey guys, for those who are not familiar with the terms on SWOT, here is some highlights:

Strengths and Weaknesses
Are related with things that we can control or that are inside aspects of the project: Team, Community, Protocols, etc…

Opportunities and Threats are macro or outside aspects like consumer behaviour (DeFi adoption)
or Government regulations, Internet infrastructure, Ethereum GAS, etc…

Here is a short video for those who want to take a look before start…

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Governance and Buy and Burn: I wonder which would be better for a token’s health:
A) buying and burning
B) buying half as much and adding more permanent liquidity.

Example: There is enough ETH funds to buy 100 AQUA tokens
A) buy 100 Aqua and burn them
B) buy 50 AQUA and add 50 AQUA + ETH equivalent to liquidity pool

I would guess that A) might be better, since many other tokens have approached it that way. Does anyone else have a strong opinion on this?

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Strength
Very obvious upside to the user. Almost no downside. they are not at risk with AQUA price falling down (which is the case for Flash now). The only risk is smart contract risk, which I think is fine.
Weakness
I am not convinced the LP tokens we get from the pools will be enough to sustain aqua.
Opportunity
Easy connection to other protocols. We are not competing with Uniswap we are building on top of it,.
I think this is a great trial run for our index fund. It’s not exactly the same concept but it has a lot of similarities.
Threat
Marketing - If we have x tokens we have to market x time to get that one person to be a part of them all. If we get a new person to join our community now, they will most likely also be a part of aqua and future tokens. But we still have to market flash to them separately. If the token aqua is out we have to do this three times (once for blockzero, once for flash once for aqua).
I am worried that we focus too much building and not enough on marketing what we already have (namely flash).
Can be easily copied - If we prove that the fees are enough to sustain the inflation what is stopping someone else from doing paqua token that return 20% instead of 10%? Ohh I see you just said it in the video few minutes after I wrote this (I write as I listen)

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It could also be C) combining A) and B) i.e. adding more permanent liquidity by burning it right away.

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Should we discuss the zyntethic idea here as well or will there be another thread for it?
Okay first of all the idea of yield staking any tokens for upfront yield is awesome but I wanna raise a concern here.
Does zynethtic not kill FLASH?
If we can stake any token why would we ever swap to flash, which is a much smaller and much riskier token than the token I already wanted to hold.
I would be very careful about making a new protocol that kills one of our own. Because it creates a dangerous precedent, that some of the current tokens might be rendered worthless (by us not the market) in the future. Hence people might try to sell quickly to ensure at least some profits.
Now it had been said that zynthetic protocol might not need a new token, so maybe it could be integrated with flash to keep flash’s value.

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The protocol, presentation and trailer are all amazing!
This I think is the best yet.

Weakness:
I think that we are going to need a big initial liquidity pool to provide enough security to gain trust from investors.
I understand that we will always get our vested LP tokens back, but we also need to trust that the Premium paid in AQUA is actually worth more when sold.

Strengths:
The business model seems very solid and easy to grasp.
Combined with the Index Fund, it has great potential to build stability and long-term growth into both XIO and AQUA.

The split governance model makes complete sense to me.
We definitely need solid ground to walk on before we hand over the reigns to us holders.
This also feels like a good model moving forward, although that will likely vary between releases.

Threat:
This seems quite similar to what BonFi calls “Liquidity Staking”.
That does seem limited to pairs with their native BNF token however, so AQUA is next-level.
Maybe a more thorough comparison would be a good idea.
Source:

So hyped to AquaFi my FLASH/wETH LP tokens from the FLASH dApp!

edit:
I found another competitor of sorts to both AquaFI, Zyn and the XIO Index Fund, to be aware of:
DeFiPulse has a DeFi Index Token (=DPI), which consists of the top DeFi coins.
You can stake that on Uniswap together with wETH 50/50 and then Farm (=stake it again) on IndexCoop (owned by DeFiPulse), rewarding you IndexCoop tokens (current APY 15.91%).
This is in a sense quite similar to what we are doing, but it is as far as I can see only for this specific DPI token.

edit2:
For a great break-down by Denome of DPI and farming DPI/wETH LP tokens check out this clip.

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Nice video :slight_smile:

S: It taps into a huge ecosystem, where its hard to not see an incentive to switch to AquaFi with your LPs
W: Possible inflation in tokenomics as well as if people don’t have enough faith in Aqua, or there will be an overhanging fear of whales cashing out often, keeping the Aqua price suppressed while the tokens originally in the LP goes up - wouldn’t the inflation of the amount of Aqua minted run rampant to keep up with prices?
O: Collaborations with the LP platforms, where Aqua blends in and somehow makes it good for their ecosystems as well - perhaps let a % of the added yield go to all LP’s in that ecosystems pool?
T: I think like you already mentioned - someone just copying and making a better yield.

REALLY like the bonus reveal!!! Super super interesting to see what this can become :smiley:

Thanks for the nice presentation Zach, hope your voice is still kicking <3

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Awesome video, it was a wonderful premier! I enjoyed it all.
Now let’s get down to buisness.

Strenghts:
A new token release just means strenght of the devs team and the community. It means we are alive, just because we are doing this. So, the very existence of AQUA is a strenght.

A good point in favor of the aqua protocol would be that a lot of people have Liquidity Pools token just sitting idle in their wallets, and they do nothing with it ( XLP anyone? :sweat_smile: ). Having a place to put them in , to earn some extra rewards is something that will attract a lot of people.

Even without big % rewards, the aqua protocol could attract people with the simple fact that people would find finally a use case for their liquidity tokens! It is just nice to stake, unstake, interact with a new protocol, see new rewards accumulating. It is kinda of a game to play.

Another strenght is the UI and the general feel of the webpage. I love the colors, i love the atmosphere of the aqua ecosystem.

Weakness:
The tokenimcs. I am not 100% sure that te fees collected by the Aqua platform will be enough to keep the token and the whole system alive. Even if it would be 99% sure, well…that is just a very big risk. But i guess that we could just lose a % of our fees earned, and not the whole stack we are staking in AQUA, so it shouldn’t be big deal.

Another weakness is the high number of tokens being accumulated in the claim dapp. I just like small cap tokens. 10B tokens or alike, nowadays are not the talk of the town.

Opportunities:

Well, just advertising the opportunity to do something with our liquidity tokens, opens a good marketing campaign possibility.

Threats:

I think there are other similar projects (unicrypt comes to mind). Also, the big swaps like sushiswap already stake their own liquidity tokens, so how could we compete with, for example the 10=% APY rewards that sushiswap gives to their tokens?

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In a way the buy and burn is handing more control to those who maintain their holdings of aqua token which is beneficial for a strong community run project. The protocol being used to benefit those who most value it whilst also helping those who want out.

Just want to give my honest oppinion. I hope I understod everything correctly. The Video and the Presentation was great! Great scene from bruce lee :wink: as always and very informative, thanks Zachary!

Strengths
The liquidity provider gets extra rewards, just by adding throught your portal than through eg. uniswaps, but still provide liquidity to eg. uniswap. that is a very neat feature and who doesnt like any extra rewards! No matter what the price of aqua is.

Weaknesses
I dont see any use for holding the aqua token itself, than to just quickly sell your aqua after you get the bonus reward, so no value to hold it and no need to buy ever. In that case the aquafi premium rates must be amazingly hight, to get any value from it.
I dont know if those extra 10% are going to attract a lot of people, because eg. on uniswap we earn 0.3% fees proportional to their share of the pool, with 10% extra this will be a 0.033% reward for the liquidity provider.
As this says those 0.3% LP’s fees goes to the protocol and I guess the protocol will mint as many aqua to payout the same amount +10% in aqua.
If I get it right, this is the amount that will stay in the protocol after the people withdraw their liquidity, so how will this model work in the beginning? Because most people who add liquidity dont do this just for some days, like maybe in flashstake. So I guess there will be a BIG selloff inflation at beginning already, and hard to keep up with the fees after.
Also it will be really hard to attract people in the beginning because of the inflationary system and the small advantage. Many tokenpairs offer LP staking options where you can get up to 80% apy on the staked LP token itself and not on the fees, so much more gains.
I’m not sure what business model would be best, as I am unsure if the accumulated fees will be enought to keep the water flowing :wink:

Opportunity
because liquidity providing is more for long time investment and for bigger holders, maybe we could attract some more liquidity to blockzero in total, it really depends on the popularity of the protocol!

Also I still think the index fundis a great thing and you should go ahead with this first and also put some flash in it before the actual coindrop, to gibe blockzero more sustainability in total

Threats
Because I see no value in aqua itself, and I guess you need to mint a lot of aqua tokens to payout those extra rewards this will be a very inflationary coin and it will always get worse because you always have to mint more tokens

At all I’m still not sure about what to think about the coin, I hope you can convince me more in the next couple of weeks and month. I hope I get it right, pls correct me when I interpretated something wrong

edit
one more opportunity or idea to attract people to provide liquidity
What I dont like about providing liquidity on uniswap etc is you dont see your impermanent loss, if you want you have to calculate it yourself. if the aqua app would show me also the actual impermanent loss, and better statistics over it than on uniswap, maybe it could attract some more people. I only seen this once in a portfolio app before and wish I could see everywhere I provide liquidity

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Strength: Great opportunity to find another avenue for staking and esrning residual income on tokens the user already holds. The option to burn XIO or stake XIO for unlocking the token is a great idea, and will also help to control the inflation of the token.

Weaknesses: Possible overlap with protocols already established by XIO. The FLASH protocol does seem to hold a lot of the same values, although the methods are different.

Opportunities: A detailed explanation of the tradeoff between your original LP amount and fees earned, versus a withdraw that will keep some of the original amount/currency (ETH/DAI, for example), and reward the user with a premium on the balance in the protocol token. Many users may misunderstand this and expect to receive their entire LP balance back in the same currency they provided, then take the fees in the protocol token. Could be a point of friction if not fully understood.

Threats: This sort of protocol may become.very popular over the next year. Saturation could be a threat if there are many markets like this.

SWOT analysis to follow, but having seen the trailer, I want to see the movie! You should be in Hollywood!

I may be missing something, but AquaFi seems to be to DPI-Farming, what Zyn is to Flash.
Is that a correct analogy?
AquaFi and Zyn are LP-token-agnostic, while DPI-Farming and FLASH are mono-token-specific.

Strength- you will be gaining more on your fees, wonderful protocol.
Weakness- initial liquidity needs to ne sufficient percentage needs to be decided on
Opportunity-It creates a wide market for person to know about the protocol.
Threats- not quite sure of the use of aqua but there needs to be a reason why i would need to have it vs sell it

Great intro video gives me goose bumps and very inspirational.

Aqua should be liquifiable if that makes any sense be able to adjust

First of all congratulations on the presentation and idea of the new token

Strength: So here is clear, getting more bang for your buck, if you can get 25% earnings, you don’t settle for 15% so this is bound to attract demand

Weakness: I can see 2 weaknesses, without L2 and with the escalating gas fees, might be prohibitive for small purses to act on Aqua and also the risk of dump AQUA after collecting the fees.

Opportunity: Use the AMM marketing machines to work on our behalf because AQUA benefits both sides and act on the weakness to protect AQUA holder somehow

Threat: The one mentioned in the video, projects with the same use with either better fees or better reach

First of all, I am very excited about aquafi, the teasing video is wonderful! very calming and relaxing!

Strength:
very interesting for Liquidity providers, as they can earn more from their investment

weakness:
What prevents Liquidity providers from selling aqua token right after they collected it in fees? I would be worried, that they sell it after collecting the premium, swapping it into the token they prefer.

opportunity:
good coordination with other protocils, as aqua wants to achieve symbiosis with other protocols instead of competing with them

threat:
similar projects already existing
someone copying the aqua protocol, although I hear Zachs contra-arguments, that they won’t be able to copy our strengths and community
not enough marketing

My questions:

  1. The token is AQUA and protocol AQUAFI, right? (It was a bit confusing throughout the video)
  2. Is the total supply of aqua tokens limited or infinite?
  3. How often will be decided by the community, whether aqua tokens should be bought/burned?

I was thinking about another possible weakness.
It is jot technically a weakness of aqua, but a weakness for blockzero labs.

If we continue to develop such big and complex projects, wouldn’t we risk to leave flash and the xio token behind?
I mean, I am a firm believer that, right now, 100% of the energies of the team should be focused on flash and xio, expecially on marketing them. Like, heavily market them. (and improve the dapp).

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If we continue to develop such big and complex projects, wouldn’t we risk to leave flash and the xio token behind?
I mean, I am a firm believer that, right now, 100% of the energies of the team should be focused on flash and xio, expecially on marketing them. Like, heavily market them. (and improve the dapp).

I agree with this 100%. I know we are token studio and want to develop new stuff, but flash is still a baby. Let’s focus on it!