Growth DeFi AMA (24/03/21)
Check out our first AMA with Growth DeFi
I am Dr. Gemhunter and I am running the AMA with @SafeGRO today. If you don’t follow me on Twitter yet, here’s my link: https://twitter.com/Dr_GemHunter 😉
Hey @SafeGRO 🙂
it’s good to have you back with us. The last AMA took place in December, and a lot has happened since then.
Then let’s get started right away:
We have had a real roller coaster ride. You went from $15 since our last AMA to $224 with $GRO. Then came the rAAVE-launch and 2 days later the exploit. No one expected it, a black swan event happened.
Let’s work through the problem now so we can put it behind us and look to the future with confidence.
What exactly happened back then, how did it happen and why couldn’t it be prevented?
Correct, two days after launch the GRO/rAAVE farming contract was exploited due to a contract bug.
As soon as we found out about it (less than 1 hour after it happened) we started working on mitigations and urging people to withdraw.
After everything settled the attacker took 1.4 MM $ out of which close to 90% belonged to team and treasury funds.
In order to compensate those who were in the pool we issued a token called SAFE on BSC which will be converted 1:1 with a stablecoin like BUSD in the coming months.
Ever since the exploit we’re being a lot more cautious with new launches and reusing proven components and libraries if possible to minimize risk.
Throughout this time we have worked on many things including BSC/ETH CrossChain plans, WHEAT, the launch of gROOT, gROOT Harvest, GRO Yield and many other things which is what I’m most excited to share info about today.
Yeah, I remember, the attacker got a lot out of it. It was crazy, but you handled it really quick, which was good!
I will also talk in a sec about the SAFE token
What did you learn from the exploit and what will you do differently and better in the future to prevent such an event?
One thing that does remind us is that software and specially open source code can be risky which is why nobody should ever invest anything anywhere that they can’t afford to lose.
Since we’re doing many things in BSC it actually enables testing many more things directly on mainnet (this isn’t very feasible on ETH due to the high fees).
We’ve also improved security wise in terms of the code structure (I’ll talk a bit more about this when we get to WHEAT and how the contracts are structured and interact with each other).
Additionally we’re exploring the possibility of working with insurance protocols such as Soteria to offer a hedging mechanism for those that want to.
The core structure for the new contracts we’re about to launch has already been battle tested by the existing automated BNB/gROOT strategy contracts so I’m pretty confident in their security.
One thing that I do want to add is that we’ll be working with an EOA only whitelist mechanism, in essence it prohibits any non whitelisted contract from interacting with our contracts (this is a big deal in terms of security given that exploits can’t usually be carried in EOA only wallets).
EOA stands for Externally Owned Accounts (those owned by regular users).
Non EOA accounts are smart contracts.
It also prevents competition from farming and dumping WHEAT (more on that later).
Oh thats pretty interesting!, Then lets talk about it later
One more question about the past, then we move on
As you mentioned in your first post, you created a SAFE token corresponding to the stolen amount and distributed it to all affected LP providers according to their loss. With this, you intend to pay back the stolen sum over time. This is an absolutely generous move on your part. From what source will you pay back the amount and when can we expect it? You said „in the coming month“. Do you have a specific time frame for us? Will the sum be paid off step by step or all at once?
April is when the TVL and revenue of the Growth DeFi ecosystem as a whole should start blooming (with the new launches coming).
I can’t tell a precise date on when it’ll be paid because it depends on the evolution of TVL, volume and other metrics in the protocol, the criteria is being able to pay it comfortably without it affecting any of the other tokens (inflating the supply of GRO at a low supply would have been a terrible idea for example).
In the most optimistic scenario which would be a great WHEAT launch it could be repaid as early as April.
In terms of source of funds we can’t forget that Growth DeFi as a whole focuses a lot on cashflow generation, whether that’s from treasury investments, farming of its own, or products such as WHEAT strategies PMTs and others.
So it won’t need to inflate any token supply to pay for it.
Sounds good to me, Safe! And I guess, we all can wait to receive it. I guess, it will be paid step by step then?
There’s a good chance it can be paid all in once, by providing a simple UI to convert it 1:1 to BUSD
Awesome! I think we have covered the past sufficiently. If the community has any other questions, please feel free to ask them later.
You didn’t give up after the exploit and continued to work diligently. You have, by community vote, rAAVE renamed to gROOT and started on BNB. However, gROOT is different from former rAAVE. How is it different, what is gROOT all about? Could you also explain in more detail the 3 key elements: gROOT Treasury, gROOT Incentivized Farming Pools and gROOT Harvest?
gROOT works as a DeFi and yield farming aggregator, the main focus is going to be diversyfing within Growth DeFi ecosystem products (examples of this could be WHEAT strategies or PMTs, providing Liquidity to our Options AMM protocol or selling fixed yield contracts).
The two main parts of gROOT are its treasury and gROOT Harvest, the treasury is the one that allocates the capital and it then uses the profits made to either buyback gROOT or inject BNB to gROOT Harvest.
The management of the treasury is currently centralized because we want to build a solid DAO system governed by GRO, this is something that can’t be rushed given that funds are at stake.
gROOT Harvest is the place where gROOT holders can stake their gROOT to receive BNB (from the treasury profits), there is a 11% fee when staking and unstaking which is paid in BNB (at current BNB/gROOT market price), the fee is distributed in the following way:
7% goes to the treasury (higher cashflows = more BNB flowing into gROOT Harvest)
3% goes to buyback gROOT and burn it
1% Development Fee
The idea of gROOT Harvest is to reward those with a long term holding perspective with a continuous stream of BNB.
gROOT’s circulating supply is only a bit above 1600 gROOT atm and with the introduction of WHEAT it’ll enter in its deflationary phase (the incentivized gROOT pools of BNB/gROOT will now be incentivized with WHEAT).
As a side note I was asked today to make a quick diagram visually explaining how it all connects, I’ll publish that in our main telegram group @growthdefi when it’s completed.
Thats great! To be clear for the community, gROOT Harvest is not a new token, it’s the name of the staking contract, correct? 😉
There are going to be three tokens (no more), they have different risk and reward profiles which is why it can’t be concentrated in one.
Right now with gROOT we have a 0.2% inflation rate. This is not sustainable in the long run. How are you addressing this challenge? Is WHEAT, which we will cover in the next question, the answer?
That’s the answer, gROOT is already very scarce (1.6k supply and barely over 1 MM $ marketcap) so with this mechanism we’ll push this scarcity a step further (gROOT Harvest and the treasury buyback gROOT which makes it deflationary).
WHEAT is going to incentivize Liquidity for both gROOT/BNB and GRO/BNB
Awesome, thats move quick to the most interesting question
Soon you will be launching WHEAT in addition to GRO Bridge and gROOT Harvest.We already know GRO and you just mentioned gROOT Harvest, but what’s the deal with WHEAT? Can you also go into more detail about the EOA only whitelist mechanism. Thats pretty new to me
We’re having four launches in the coming weeks so I’ll go through them briefly and then talk a bit about EOA only whitelist and why that’s important.
It enables swapping GRO from the Ethereum chain to BSC and the opposite way too, the key thing here is that the same bridge structure can be used in the future to bridge pretty much any transferrable token from any EVM compatible chain to another, this expands a lot the yield and composability opportunities, it’s a good thing to have in the short term because it allows doing things with GRO on BSC but it also means we’re a step closer to some of our plans.
gROOT Harvest & GRO Yield:
They have a very similar structure, both pay in BNB and it works like I explained before, the only difference is that for gROOT Harvest it comes from the treasury profits and for GRO Yield it comes from revenue sources such as WHEAT contracts.
The idea is to create scarcity for both tokens and reward holders with liquid BNB.
With WHEAT there are three goals:
1-Heavily increase the value of GRO and gROOT
2-Gather more TVL/volume/utility through incentives (this has become a DeFi must since the DeFi Yield Farming Summer of 2020)
3-Fix the long term hyperinflationary nature of yield farming.
In regards to 3 I’ll describe first what happens with 99.999% of yield farming projects out there:
They usually have a very weak value proposition which revolves around charging some fees and directly buybacking their token with the fees, the problem is that first of all the fees collected are no where close to mitigating the inflation and secondly when the highest amount of fees is being collected (at the peak of the hype) it’s also when the token price is the highest, it’s essentially a model that guarantees that overtime the majority of the $ spent on buybacks were buying the top (very inefficient considering that some of this tokens can have drawdowns of 90%+ within days).
The way WHEAT fixes this is by having a bit of an unconventional approach, we’re launching WHEAT with PancakeSwap strategies (the CAKE is compounded into more LP tokens) so I’ll put the example of the CAKE/BNB contract to illustrate my point.
First of all the user deposits their CAKE/BNB LP tokens and converts it into compounding shares (this represents a share in the strategy contract.
Then they would stake their compounding shares to farm WHEAT and benefit from the double compounding.
In this scenario there are two types of fees applied here, first of all is the deposit fee (which can bring huge amounts in a short time period but is more inconsistent).
The second type of fees are performance fees which in the example of the CAKE/BNB pair they’d be charged on the CAKE received as farming incentives from the PancakeSwap incentives.
Both of this fees are paid in the form of LP tokens and are sent to a Fee Collector contract (each strategy contract has a Fee Collector).
The Fee Collector instead of buybacking WHEAT directly it stakes it and starts receiving CAKE perpetually, it then collects regularly that CAKE and sends it to a buyback contract (this buyback contract receives CAKE from all the Pancake Swap strategy Fee Collector contracts).
What it does next is very straightforward:
Swaps all the CAKE for BNB and uses it to:
70% to buyback and burn WHEAT
15% to buyback and burn GRO
15% to inject into GRO Yield
Yep, this approach is indeed unconventional, but ingenious!
It’s following the “spend the interest, not the principle” system and there are a couple of benefits by doing so:
1-The amount of CAKE being used to buyback both WHEAT and GRO is mostly just going to go up, because more fees are being accrued from either deposit or performance fees, which increases the LP token balance of the fee collector contract.
This means that a price drop is inversely correlated with the amount of WHEAT of GRO that the contract can buyback, higher price means more fee accumulation and lower buyback rates, lower price means lower fees and much higher buyback rates.
In the example I gave before of the token’s price falling down 90%+ it’d mean that buybacks would easily more than 10x in volume bought back.
2-It’s very consistent in the long run and only gets stronger as more protocols and strategies are supported.
3-For GRO it’s a big deal because it’s deflationary in itself and this contract promises to buy it everyday in perpetuity regardless of the circumstances.
In terms of game theory what we usually see is a TVL migration towards other protocols when the APRs drop, if this doesn’t happen then WHEAT would sit comfortably enjoying a high amount of performance fees coming in everyday, however TVL migrating isn’t necessarily a bad thing, because when the APRs boost again that TVL will have to go through the deposit fee again.
Price volatility for WHEAT will be uncertain for sure, but it has a much more solid long term view which only gets better the harsher the price drops (there’s an inverse correlation between amount bought back per day and the price)
Makes it more appealing to DCA down and buy the dips compared to most other yield farming tokens which could go to 0 at any moment
And for GRO it scales very well, since it suffers 0 downside from this model and everyday that passes by there’s:
1-Less GRO in circulation, aka higher earnings per token (EPS if you’re a stock guy)
2-More LP tokens being accumulated in Fee Collector contracts, which increases the buyback rate
Imho it’s appealing for all three holders, WHEAT, GRO and gROOT holders in its unique way, that’s why I was saying earlier that this type of system couldn’t be done with a single token (separating inflation from GRO and rewarding WHEAT for the extra uncertainty is the best example).
My guess is that in the long run GRO will be trading at a premium in regards to buyback rate/marketcap compared to WHEAT
I really love this approach!
I haven’t seen any schematic illustrations showing the process yet. Have you created any or can you create something like that? I think then the whole process is very easy to understand
Awesome! So how does the EOA only whitelist mechanism come into play?
All of this contracts are EOA only with whitelist, which means that only individual users (not contracts) or whitelisted contracts (for our own composability purposes) can interact with the contracts.
This reduces the risk substantially because many exploits involve many txs in a single hash (which can only be executed with a contract)
Performing most exploits in a single account is close to impossible because it’s happen in different blocks, if it’s related to pricing formulas you can get arbed and lose a ton, and in general it makes things 1000x harder for attackers.
It doesn’t make it invulnerable because it’s code (even Bitcoin could be hacked tomorrow for all we know).
But it does reduces the risk and that’s something users appreciate.
We’re also using different interconnected contracts instead of having everything in one, making it a bit safer (the strategy contract, farming contract, fee collector and buyback contract are all separate ones)
This is all possible due to low tx fees in BSC
Yes, absolutely! This sounds amazing and will help a lot against these attackers! Is it also implemented in gROOT Harvest?
gROOT Harvest will have it 👍
As we are already talking about security aspects
You will soon get your 2nd audit from Consensys (who also audited the big players like Uniswap, 0x, Aave, Bancor, Balancer, mstable. Cost point I have heard is around $75k. Is that about right?). What exactly is being audited and when can we expect it?
This types of audits are booked with over half a year in advance because they’re highly requested.
Once our time in the list comes we’ll focus on auditing the contracts which have the highest amount of TVL/usage and that could carry a greater contract risk.
We’re getting closer to it but it won’t be in the next few weeks.
Got it, so it’s not decided yet, which will be audited.
Rough estimation: Q2?
The most likely type of contracts would be the core PMTs and strategy contract structure. Yup probably Q2
As we are already over time, my last question:
What’s in the pipeline and what can we expect from GROs-Ecosystem in the future? Can you also talk about your marketing strategy?
We’ve a lot of things in the pipeline starting with the four launches I was talking about earlier (GRO Bridge, gROOT Harvest, GRO Yield and WHEAT strategies).
The focus after that will be on adding Venus strategies, other protocols strategies, PMTs and following it up with other things we’re exploring such as an option protocol (there’s a huge demand for onchain options and in BSC there’s Liquidity for it), and fixed yield options.
For the marketing strategy I’m not an expert but there are some good things being prepared 😉
Sounds good to me 🙂
I’m really excited to see this project at new ATHs again
One more question, which just got into my mind:
You now have different contracts, like stkGRO, gROOT liquidity farming, gROOT Harvest, WHEAT, etc. The newcomer might not know, which is the perfect contract to dive in
What would you recommend for longterm, midterm and shortterm holders
By the time WHEAT is launched there’ll be strategies for pretty much any type of risk/reward profile.
stkGRO: GRO automatic compounding
GRO Yield: HODL your GRO whilst receiving BNB
gROOT Harvest: HODL your gROOT whilst receiving BNB
WHEAT/BNB, gROOT/BNB, GRO/BNB: If you like both tokens and the APR/APY been offered is good for you then it can be a good idea to provide some Liquidity.
Stablecoin PMTs and PancakeSwap stablecoin pairs such as BUSD/USDC are great if you’re scared of price volatility and just want to GROw your $ worth overtime without big swings.
And you can explore the rest of the pairs and strategies as they’re released.
Fantastic overview! By the way, what is your personal favorite?
I usually go with everything. So I’ll be holding some in all of the above 😂
hehe best answer!
@SafeGRO thanks for your time! I had a great AMA with you!