Venue : Crypto Scape
Date :30 SEPT 2021
Time : 02:00 PM UTC.

Guest : Mr. Tom Cheng
They shared detailed information and opinions about the Project WATERFALL DEFI.


1) please introduce yourself and your team to our community and tell your crypto story

Tom | Waterfall DeFi:
Hi guys! Tom here, I am the Project Lead of Waterfall DeFi, the risk tranching protocol offering structured risk products to the DeFi space...I started off my crypto journey back in 2017, my buddy was at MIT Lab and was using the lab to mine ETH, so I kinda joined on his bandwagon, and have been on and off since then.

Gradually during last year's DeFi summer I decided to put more attention into the space, looking into yield farms and applications of derivatives, and finally earlier this year decided to go all in, and take on the Project Lead role for Waterfall DeFi.

Before going full time in crypto I was working in management consulting, operations and strategic planning, having worked at McKinsey & Co, before moving to a food delivery tech unicorn Deliveroo. As the Project Lead in Waterfall DeFi I am basically in charge of handling everything and making sure Waterfall gets to become one of the projects that stands out across the space and offers what the DeFi community needs especially in terms of risk management options in yield farming.

Now onto our team.

Our team is comprised of professionals with years of experience from both TradFi, consulting, fast-growth tech and Crypto/Defi markets. We strive to deliver the best risk tranching product in this ever-changing industry.

With the spirit of decentralization, our team is formed by nerds all over the world, with half of the team currently based in Hong Kong.

Apart from me, here are two other key members of the team

Founder: 0xWaterfall
10+ years of experience in Tier 1 Investment Bank specializing in Cross Asset Structured Products. 4+ years in crypto trading. Will be responsible for all aspects of the project.

Product Lead: 0xNiagara
Master of Finance and an Electronics Engineer. 10+ years experience in structured derivatives and fixed income trading. 5+ years in crypto derivatives trading. Defi OG (YFI farmer). Will be responsible for designing product strategy.

2) What is WaterfallDefi all about , it’s usecase and how you got the Idea of creating it??

Tom | Waterfall DeFi:
So Waterfall DeFi is a yield aggregator protocol that aims to bring true risk tranching to the DeFi landscape.

We are built on BSC initially, and would develop portfolios that include different farms. Instead of just offering a yield aggregation product, we actually would slice the portfolio into different "tranches" - essentially each tranche represents a risk/reward combo that would allow the users to select

The senior tranche would receive a reduced yield return, in exchange for first lost protection. Junior tranche would receive a much higher, leveraged yield return, but their capital is used to cover any losses suffered from the portfolio.

For example - a portfolio with 10% expected yield, after we slice it into 2 tranches, the senior tranche will receive 5% return, while the rest will flow to the junior tranche. So in a perfect world, the junior tranche will get 15%

The senior tranche is essentially using their future return to buy protection against any capital lost

So in this example - if the farm underperform and the return is only 3% - senior will still get their 5% (as they are being paid out first), while junior might see a 2% lost in their capital

Like I mentioned earlier, we are launching first on BSC, with the first portfolio focusing on 3 BUSD farms. Going forward, once we are more matured and the community is more educated to the product, we will be pushing out not just safe, sustainable return package with major farms and high TVL, but also risky leveraged products and new farms with high APY

Goal is to create different types of investment options and risk factors that users can select based on their preference!

So the motivation for creating this project is simple, our founder spent over 10 years at a tier 1 investment bank, focusing on fixed income and risk tranching structured products. He realized as DeFi got more and more mature, users would demand for more complex and advanced structured products to compliment their investment strategy, and risk tranching products are something that could fit the community needs.

However, there is no true risk tranching products in the space right now, and we believe by bringing the team's years of experience in TradFi and DeFi, we are able to bring this concept to the community and work with them to figure out what would work for DeFi

3) Elaborate on your roadmap and mention the estimate dates of happening of each event mentioned in the roadmap

Tom | Waterfall DeFi:
sure thing - let me give you some background of our milestones

The first milestone for us is to decide which blockchain to focus on, and we decided to go with BSC, due to its negligible gas fee and presence of high TVL farms with sustainable return.

Then the second milestone would be launching our first product - which would include 3 BUSD farms. Going forward, once we are more matured and the community is more educated to the product, we will be pushing out not just safe, sustainable return package with major farms and high TVL, but also risky leveraged products and new farms with high APY

Goal is to create different type of investment options and risk factor that users can select based on their preference!

We are now hard at work to get everything ready for test net, which is a few weeks away. We are working with our auditor to review our smart contract, finalizing our DAPP's interface and likely will launch our testnet soon - stay tuned!

For mainnet, it will depend on our test net process. Once we get the feedback from the community and adjust based on the suggestions, we will be ready!

And finally, and upcoming milestone is that we are working hard to confirm our public sale, which we will have more information in the coming days - please stay tuned to our channel for updates!

I don't have the dates yet - as some details are still moving, but I promise the details will soon be revealed!!!!

As for our rough timeline:

2021 Q3 - initial funding, product development, initial marketing
2021 Q4 - public sales, test and v1 product launch, with BUSD stablecoin farm introduced
2022 Q1 - v2 product launch, introduce DAO, expand selection of DeFi assets in the portfolio, and user originated portfolio
2022 Q2 - v3 product launch, introduce variable and perpetual expiry tranches

4) You are mainly dealing with yield farming so what are your plans for diversification as in recent times yield farming projects have witnessed serious issues of inflation ??

Tom | Waterfall DeFi:
Thats a very good question - since one of our core strength is diversification

Our first tranched products are deploying on a disverse set of yield farms, for example our first product BUSD Falls after users' capital are aggregated in our contracts they will be deployed on to C.R.E.A.M., Venus and Alpaca respectively - therefore minimizing the risk of a single farm's failure: for example smart contract exploit risk or specific yield farm's return volatility

This will be our first step, and beyond stablecoin farms we also are looking into offer more risk tranching options for the DeFi space, for example LP tranching or anything that includes risk and reward that can be properly restructured - but we want to set the stage right first and secure a smooth launch

5) Share in your Tokenomics and mention about locking of liquidity and locking of team tokens. Additionally mention transaction fees charged on every transaction

Tom | Waterfall DeFi:
Our project is fully committed into making the protocol as decentralized as possible. Even our team members are formed across the world of yield farming strategists and DeFi OGs.
As in our tokenomics, we have committed 60% of the tokens allocated to our community, via user incentives like staking, liquidity provisioning, public sale and our treasury — the usage will be decided in our future DAO.

For more information about our tokenomics, can refer to this article:

As you can see team tokens are locked for 9 months after TGE, before being released to the team members. This way we are demonstrating to the community that the team is really in it for the long haul

For the question of transaction fee - those are charged for every transaction user made on the platform, and the % would be very small - we are still tuning the numbers and users would be able to see it during our testnet launch. Just want to also let the community know that when they stake our tokens ($WTF) on the protocol, they will earn our governance veWTF - which would entitle them with a share of the transaction fee

We are trying to show the the users, other than utility right, there are actually monetary benefit for staking with our project :)

we are doing audit review now, and internal testing

so in a few weeks we will have that ready and go :)


Q1 Do you have any plans for pre-sale (private and public) & how’s the development of your product ongoing ?? @Grumpyb14017909

Tom | Waterfall DeFi:
Yes we will have public sale coming - finalizing the details with the platform, and we will be able to announce it soon - follow our social and stay tuned!

Development wise I was talking a bit about it in the previous answer - we are working hard now on tweaking the system, internally testing the product and having audit reviewing our code

so in weeks, we will be able to deploy test net and have the community come and test it with us :)

Q2 Waterfall DeFi bringing true risk tranching to Decentralized Finance. So can you summarize how #Waterfall works and how it can help protect users' gains even during a #BearMarket? Also, tell us how you’re different from other similar protocols in the market? @Wormz29

Tom | Waterfall DeFi:
I prepare a long example for questions like these:

Think of this: Alice and Bob are two big whales. They both love yield farming and enjoy the high APY offered in the DeFi space. Alice is very aggressive with her capital: she likes putting her money into the latest yield farms that offer crazy high APY. Bob is conservative with his capital: he prefers having a guaranteed return of yield that endows him a stream of fixed cash flows over time.
The thing about yield farms is even DeFi’s biggest farms contain a certain risk of a full loss of capital due to protocol attacks, and the returns in yield farms often vary so that a guaranteed and predictable return is difficult to achieve.

To solve this, we ask Alice and Bob to bundle their capital together as a whole and deploy into farms, so they are now a farming fund which Alice and Bob have 50% of ownership to the fund respectively. Suppose the predicted APY is 20%, Alice and Bob should be splitting the yield half-half, getting half of the yield each. However, as Alice is looking for high yield and doesn’t really care about risks, while Bob is looking for low risk and predictable return, Alice and Bob can negotiate a deal: As the yield starts getting farmed, say 20%, Bob will receive a fixed amount of yield first, say 8%, and the rest of the yield, 12%, goes to Alice. This doesn’t seem fair right? Both contributed the same amount of capital however Bob is getting less yield than what he deserves. However, imagine now the yield farms perform poorly and the yield generated is only 15%. Bob will still get his fixed payment: 8%, while Alice’s only getting 7%.

Now you see the idea: Bob is sacrificing his some of his fair share (8% vs 12% under 20% APY situation) plus potential extra yield gains (8% vs 16% under 24% APY situation) to Alice in exchange for maintaining the stability of his yield returns, and hence Bob transferred his portion of yield volatility risk to Alice, which Alice accepts taking on the extra risk in exchange for higher returns under situations when yield is equal to or better than expected. If Alice did not enter such agreement, her share of yield will be split equally, getting only 10% instead of 12%.

Tranches, as a concept came from TradFi, can be viewed as categories of risk and rewards in a pool of capital: a senior tranche in Waterfall DeFi is the fixed yield return side with the highest priority to receiving interest payments (a pool of many Bobs); while a junior tranche is the variable yield return side with the lowest priority to receiving interest payments (a pool of many Alices). Through tranching a pool of capital put into DeFi yield farms, users will have the autonomy to choose their desired balance of risk versus rewards, or essentially, insure their capital against yield volatility without upfront payment.

During a Bear Market, when there are more FUDs around - our fixed income product would be a very attractive option, as users would love to seek out investment that is more protected, hence being able to do that with Waterfall would be a great way to go.

Q3 I read that Waterfall DeFi includes its community in decision making, which is wonderful. You mentioned that governance will allow users to propose a list of DeFi assets to be included in the pool eligibility. How many tokens must we have to be able to submit our proposals?? @TayfunessTurrk

Tom | Waterfall DeFi:
@TayfunessTurkk - you are correct, users with our governance token would be able to participate in these events going forward.

We are still working out the mechanic of the exact numbers and % required - largely because the DAO concept is the next item on the roadmap and the team is not 100% focus on building a great first product, and conclude with a perfect launch (well as perfect as we can)

Q4 Pump-and-dump tactics are becoming a serious issue in the crypto world that has to be addressed, with investors' hard-earned money being lost. Could you kindly explain how waterfall defi will keep whales from manipulating prices and ensure price stability? @SharayLug

Tom | Waterfall DeFi:
I like the question @SharayLug

While we know that investors will sell tokens that suit their best interest, we don't randomly pick our investors. If you take a look at our backers, we picked them very carefully, and many like GBV, Ascensive, Divergence, they have great reputation in the market for supporting and working with protocol for the long haul.

Additionally, we have a very conservative tokenomics - where only a very small % of tokens would be available for circulation in the initial TGE - as a result the amount available for people to dump would be limited and we believe even if events like this happen, our project has the longevity and our team is passion to build for the long run, and we will be weather the storm :)

Q5 Any plans for audit also how you assure about the security of your product? @Rockydj834

Tom | Waterfall DeFi:
@Rockydj834 - Yes, security is key and we take very this matter seriously. We are now working with a renowned auditor - Slowmist - to work on reviewing our code, and already revised some based on their feedback - we are finalizing the engagement and will post announcement on our aduit soon


Q1-Jeraldine + Lister:
Can you give an overview of your Tokenomics, and the UTILITY of Token?

Tom | Waterfall DeFi:
So I have already shared a bit on the tokenomics earlier - details you can find in here

I do want to touch upon the utility part

There are three major use cases for our tokens:
1. You can stake our token to earn the governance token, which in terms would allow you to vote on upcoming protocol decisions such as approving new portfolio strategy
2. Holders of our governance token would have the right to earn a portion of the transaction fee we charged from users
3. Going forward, users with our governance token can propose their own risk tranching products and earn structuring fees.

Q2-TheI Mighty Potato:
Q1: Can you list 1-3 killer features of this project that makes it ahead of its competitors? What is the competitive advantage your project has that you feel most confident about?

Tom | Waterfall DeFi:
There are a few similar concepted protocols in the space now, and Waterfall is a bit different from them due to the following features:

1. Diversification
Our portfolio strategies package multiple DeFi assets and yield farms to ensure risk and return diversification
In the future, we aim to include more diversified assets to ensure an abundance of options for the community.

2. Clear tranche differentiation
A TVL limit is set initially for each tranches in the initial launch to ensure clear tranche differentiation
Going forward will lift the limit but will introduce dynamic reward to incentive optimal user behavior

3. Three tranche approach
We will launch with a three-tranche product, expanding the optionalities for the community.

4. Fixed income product
Will introduce a fixed income product by locking up the user deposit for a fixed period of time (seven days) during the deployment period.

Q3-Araminah 💚 | AMA LOVER:
It says #WaterfallDeFi is a Defi yield aggregator that tranches risk & yield, providing a new way for the community to optimize their yield farming strategy. So what do you mean by “leveraging the protocol's risk tranching features”? Can you talk a bit more about it & how it works?

Tom | Waterfall DeFi:
In the Tradfi world, any structured products that have been:
(1) backed by a pool of income-generating assets;
(2) repackaged into different risk classes based on their repayment seniority known as “tranches”;
(3) then sold to investors,
would have leveraged the practice of “Risk Tranching”.

Risk tranched products are further categorized as “senior” tranches and “junior” tranches. Interest and principal payment is first paid back to the most senior tranches as they carry the least risk. Junior tranches on the other hand generate a higher yield to compensate for undertaking a higher default risk, and will receive the remaining principal and interest.

To visualize this, imagine every risk tranched product as a series of waterfalls. The senior tranches are the beginnings of the stream, starting at the mountain tops and taking their fixed percentage yield while the junior tranches will receive the remaining runoff. When the market is doing well, yield increases; like a rainstorm overflowing the river banks the junior tranches receive a higher cut as senior tranches are only entitled to their fixed percentage yield. Vice versa, when the market is in decline, yield decreases, like a drought where senior tranches remain entitled to their fixed cut as junior tranches are left with only droplets.

Essentially users are trading risk in the same pool, where those with lower risk appetite will stick with the senior tranche, while risk-seeking users that are going after big numbers in APY would look at the junior tranches - basically create a product that has use case for a wide spectrum of customers.

Q4-Giải Phóng:
Why did you choose BEP20 network to build a project like this, are you ready to face the current problems of BEP20 network, token price drop, bugs and other bugs, give feedback your?

Tom | Waterfall DeFi:
In our opinion BSC is the second most mature defi space, with a lot of mature, high TVL farms right now, and the gas fees are negligible. And we have invested in audit to ensure that we are focusing on protecting the users.

That being said, this is just the first step, and we are actively looking at expanding into other blockchains in the near future. Expanding to Solana and other EVM-compatible chains is on the roadmap, EVM side is easier since most of the codebase can be reused, Solana we will expand our team with rust developers to do the work.

Q5-BCH 10k$:
Did you consider community feedback/requests during the creation of your product in order to expand on fresh ideas for your project?

Tom | Waterfall DeFi:
Yes - absolutely - we value community a lot and we have been through a lot of discussions of a proper governance model to ensure a DAO with proper democratisation

Users with our governance token would be able to participate in a wide range of efforts, such as voting on product listing, tranching their own products, etc.

Eventually in the future we envision our tranched products to be structured by the decentralized community, and whosoever structured great tranching products that offer optimal risk and return combinations that are used by the DeFi community will earn the structuring fees!

In the future we will keep looking for new industry standards of implementing and upgrading our DAO

We are bringing our experience to DeFi, but in order to prosper we definitely need the community to work with us, telling us how to improve our product and make sure this is a win for all!

Thank you so much for having me today, we are really grateful to be interacting with the Cryptoscape community.

At Waterfall DeFi we keep building tirelessly to offer the DeFi community the autonomy of choosing between risk and rewards for everyone's yield farming journey. We believe our tranched products will be one of a kind and it's gonna be a great addition on top of the DeFi legos we have now...

While the testnet version with user bounty will be out there soon, just wanna also let you guys know that as our public sale is also coming up! If you guys are interested in participating in our public fundraising rounds, be sure to follow @waterfalldefi_annoucements and our group chat @waterfalldefi for the latest updates... until then stay safe and enjoy the Web3 revolution brothers and sisters!

Thank you from Crypto Scape 😍



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