Savvy DeFi is prepping for the fair launch of our SVY utility token on March 21st and the mainnet launch of our protocol! This article will provide an overview of Savvy and how it works. Subsequent posts will detail other aspects of the protocol, including svToken price correlation mechanics, tokenomics, SVY utility, boosts, and SVY fair launch mechanics.
What is Savvy?
Savvy DeFi is a decentralized credit platform that lets anyone take out an auto-repaying, interest-free loan against their crypto (including AVAX, BTC, and stablecoin derivatives) without liquidation risk. Savvy users can safely leverage their cryptocurrency holdings through a credit advance backed by their tokenized future yields.
Auto-repaying: The loans are auto-repaying because the collateral that you deposit is used to generate yield in various DeFi protocols. The yield generated by the collateral (minus a fee paid to Savvy) is used to repay your loan over time. Another way of viewing it is that you are getting an advance today on the yield your collateral will earn in the future.
No liquidations: You are not at risk of being liquidated because the loan you take out is denominated in an asset that is correlated to the price of the collateral that you deposited as collateral. For example, if you deposit AVAX as collateral, you receive svAVAX as a line of credit. The value of AVAX and svAVAX are correlated, so you can’t be liquidated due to fluctuations in dollar value.
With Savvy DeFi, you can deposit and borrow against stablecoins (DAI.e, USDC, USDC.e & USDT), AVAX (WAVAX, with sAVAX & ggAVAX coming shortly after launch), and BTC (BTC.b & WBTC.e).
— — — — — — — — –
Let’s use an example to illustrate this:
Alice has 1,000 USDT that she would like to borrow against.
She goes to Savvy DeFi and chooses from the available strategies. At launch, Savvy will integrate with yield strategies provided by Yield Yak, Beefy Finance, and Vesper.
Alice deposits 1,000 USDT into a strategy from Yield Yak.
Savvy allows you to borrow up to 50% against your collateral. Alice decides to borrow 500 svUSD. The yield from her 1,000 USDT collateral will repay her loan over time.
What can Alice do with the 500 svUSD that she borrowed? She can swap it on a decentralized exchange for any other asset she wants. She swaps it for USDC and off-ramps through a centralized exchange to US dollars.
Alice’s loan is automatically reduced over time by the yield from her initial 1,000 USDT. As her collateral earns yield, 90% of it gets credited against her outstanding loan amount. However, since she’s already taken an advance on her yield in the form of a loan, the funds become owned by the protocol (to be detailed in the next blog post. Stay tuned!). The other 10% of the yield is paid to the Savvy Treasury.
Alice doesn’t need to make interest payments or monitor collateral ratios. However, if she wants to close her loan early and get back her asset, she must repay the remaining balance with USDT or svUSD to retrieve her original collateral.
For a visualization of the flow of funds for the deposit/borrow/repay mechanism, see the below diagram:
In our next blog post, we’ll detail how the correlation between Token and svToken is maintained, which should further explain the purpose of the Savvy Swap module listed in the diagram above.
We invite you to browse our whitepaper if you are interested in the finer details of how the protocol works.
Participate in Savvy’s Community-First Fair Launch
To learn more about how to participate in the fair launch that starts on March 21st (3/21/23), go to Savvy’s fair launch page.
There you should find all the information you need to DYOR. If you have more questions, you can reach us on Discord, Twitter, Telegram, or chat via Intercom on the fair launch page: fairlaunch.savvydefi.io.