AquaFi Protocol | SWOT Analysis + Questions #XIOfeedback

S: In the speculative sphere that is crypto, I don’t think it will be hard to get people initially interested in the protocol itself. Everyone loves the idea of earning/keeping more cash. People want their money to continue to work for them, so adding another derivative to locked tokens has already been shown to work by other ‘liquidity mining’ using liquidity tokens.
I think the idea of keeping the liquidity tokens and paying out Aqua is so cool. Then aqua will just be able to gain fees indefinitely.

W: What’s stopping someone from just dumping all the aqua that they get? From what I could tell, there doesn’t seem to be any reason to continue to hold/use it. Seems more of an exchange service that will cause a type of hyper-inflation to Aqua. I personally don’t seem to understand how it won’t go into hyper-inflation, or what I would use Aqua for, besides selling at this point.

O: (i think this is a good idea ->) Aqua protocol could be used as an ‘on-boarding’ mechanism to an Aqua ecosystem (a coral ‘reef’ if you will :upside_down_face:). Similar to how Apple gets people into their ecosystem (like an iphone). But the amazing thing that apple does is keep people in the ecosystem by facilitating and promoting its other products by increasing ease-of-use, benefits, ease of interoperability, consistency, etc. Then it makes the user have a hard time leaving the ecosystem because everything is already there! Aqua could do something similar using its token. Whether it interoperates with xio, xio index fund, flash, creates its own ecosystem based off the primary entry point (if there is a way to limit use by only tokens that were just minted by the Aqua protocol and not bought from an exchange), or just creates an ecosystem of simple uses for Aqua itself; just something that keeps people in the Aqua/Aqua ecosystem. (of course that would take a lot of development work, etc. and might cause the team to be spread too thin/not focusing on core strategy)

T: As other people have mentioned, fees, alternative tokens, doesn’t reach the network effect to naturally grow and be utilized, etc. But I see the inability to operate (or large development/maintenance overhead) with future updates to ETH protocols or the respective decentralized exchanges (e.g. Uniswap changing protocol from v1 to v2). If Aqua doesn’t have a way to quickly handle those types of updates or changes, Aqua would be forced to be deprecated relatively quickly or be unsustainable.

It exists already, but I have yet to try out any service except for 1inch.

Well, buying and burning is a proven valid method. A lot of other projects do thst (binance for example). So, I guess, we should follow what other successful projects are doing

Strenghts
No loss system for LP in terms that, they’re not losing anything by putting their LP tokens in the protocol.

AMMs have already pooled a pretty impressive amount of liquidity

The community we have behind the project already, and a pretty huge pool of liquidity in XIO/ETH and Flash protocol to get the Aqua protocol off the ground

Weaknesses
Like many have mentioned and with one of the proposals is regarding it. The token needs an actual utility - personally, I hate the cur of ‘staking’… Locking up a token, to earn more of the token, when that does not contribute to any consensus or security mechanism is not a real use case

Opportunity
AMMs are a hugely growing market, TVL in Bitcoin terms has gone from 1/2k mid last year to around 38k at present (better to look at rather than USD as the huge price increases in the last couple months will skew that)

A number of AMMs are releasing impermenant loss solutions, this is probably one of the biggest barriers to AMM liquidity provision. Both Bancor and Balancer have released their solutions, and Bancor in particular have seen huge increases in their TVL, although that is due as well to liquidity mining

With these solutions, we’ll see even more money flow to liquidity on AMMs, more potential market share for AQUA too

Getting the word about Aqua protocol really shouldn’t be that difficult, if we can get a good marketing plan in place that can connect with a least a couple of the major AMMs and throw some AQUA in as a reward in their Telegram groups for an AMA could go a very long way… Obviously, if any sort of connection can be made with the UNI community, that’s a huge step (I’m not the marketing specialist that’s for sure)

Threats
In it’s present form there’s not really a lot to the protocol from what I see. As Zach said during the reveal, what’s stopping someone copying it? It really wouldn’t take long to code so someone could come along in the next month and make something similar

These other vampire LP staking portals offering huge rates of return, we need to show the community and Blockzero labs behind AQUA and our story to instill trust in the protocol allowing LPs know with confidence that their earning a nominal, but steady return and they don’t have any risk of rug pulls past smart contract risk and don’t have to worry about constantly swapping between different protocols chasing gains, some will still do this with a portion, but I would expect they would majority stake their liquidity in Aqua

well, not really, since fees go into your liquidity, and losing a part of fees, you are actually losing a small part of your liquidty and coumpunding effect, i guess

I don’t yet know if this is a competitor, a possible LP source for AquaFi or something else, but it will be interesting to follow their journey and to be aware of, since their business plan seems to be much in line with the current types of DeFi protocols we are looking at.

The metric we should be using to track the present-day health, long-term viability, and eventual triumph of DeFi is Capital Efficiency (CE). The protocols that will win are those that maximize CE. When we look at the state of DeFi through this lens, we find a less optimistic situation with many DeFi protocols not performing well at all.

Supported by Particle B and its founder, Gary Or (co-founder and former CTO of Crypto.com), along with some of the smartest minds I know, we came together to create Tectonic: a new DeFi protocol that prioritizes capital efficiency above all. Tectonic will achieve the highest rates of capital efficiency by offering a three-part solution consisting of an asset exchange, lending, and stablecoin minting.
Source:

https://twitter.com/TectonicFi
https://t.co/LRj4IFFjVp?amp=1

The Aqua will be minted

Stable coin minting.

. Where are they going to take the assets to back the value of their stable coin?

One week late not much to add by myself, but perhaps a summary can be of help.

Some things that resonated with me is the risk of
weakness that too many parallel projects can result in lack of focus or that the recent discussion if aquafi should be added gain or insurance against IL can be perceived as lack of clarity in vision.
Threat of people misunderstanding the details.

The biggest strength I see is the match in the current BlockZero suite. It adds up and is a good sign of activity.

And here the opportunity to add it to the indexfund idea fits also right in.

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I have been sharing the same fear for some time now, even though I fully trust the team. I am pretty sure that the development of aqua will take some time so I don’t think we will see a new tokens in the ecosystem for a long time and that the team will focus on flash, xio and aqua for this year (my opinion, nothing official was said already)

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There’s always the possibility. But so much time and effort have already been put into $FLASH, since $FLASH was of course the previous $XIO. So they have that huge advantage, not to mention that it’s undoubtable that they’d like the initial tokens and usecases to be successful, in order to gain investment confidence in the next ideas.

Oh, yes, that’s an interesting concept to explore…nesting Aqua within other ecosystems. Perhaps Zynthetic could as well. And there, continuing to have Flash within the Zynthetic ecosystem.

Yes, they have the advantages of the first movers. But just look at the market and defi ecosystem. There is obviously something wrong that they/we are doing. There are newer projects with half the devs power and half the quality of their community that are already on defi swap, have millions locked and millions in marketcap. Flash has 0 volume and under 500k in value locked, even though the concept is literally great and one of the best and more revolutionary of the defi ecosystem… So, what are we doing less than those other projects? And we cannot blame all on the high gas fees, because the high gas fees are here for everyone and still there are defi paltaform with millions in daily volume

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Yeah I think the main reason has been the lack of marketing.
Just in the last day flash has gone up 100% in price and while I don’t have proof I think it might be the result of the twitter initiative we have now. So we can see that once people know about it, there is high interest.

(I know we shouldn’t talk about price but I just wanted to illustrate my point, about interest in the coin).

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You are welcome to continue commenting.

Evaluation of main discussion points:

0 Evaluation Communtiy SWOT AquaFi Protocol.pdf (65.6 KB)

Strenghts

Weacknesses

Opportunities

Threats

Strategies and possible Solutions




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I think most of our issues with gaining traction within the ecosystem is our lack of paid marketing… It honestly pains me to say it, but the crypto space is all about creating hype. It’s one big speculative hype machine, I personally hate that aspect of crypto, but I cannot change that.

The new projects that have half the team, value, and devoted community are gaining awareness because they have paid shills on YouTube that hype their projects, its unfortunately the stark reality of this market.

I have an incredible amount of respect for the BlockZero Labs team for not wanting to stoop to the level of these other projects, but we may need to incorporate some of their strategies into our marketing campains…

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Weakness:
The Lp token received may be low,hence we need a large liquidity pool to attract more investors

Strengths:
The community will benefit more from adding liquidity on our platform than uniswap. Hence more rewards.
This also comes as a for of advertising for the block zero community and our good products

Opportunities:
The community will benefit more from adding liquidity on our platform than uniswap. Hence more rewards.
This also comes as a for of advertising for the block zero community and our good product hence foster partnership with other protocals

Threat:
High gas fees, migration to other protocols,