Filippo Moraschi - Next generation of DeFi lending: cross-chain monolithic meets vault based model

Hello everyone. I'm Philip Omari and I'm the community the head of growth of Fox Finance. First of all, it's nice to be back here in this beautiful location. I really like the city. Uh but yes, let's start.

It's also nice to kick off the conference. Uh so yes, as I said before, I'm the growth of Fox Finance. Fox Finance is a crosschain defy protocol that offers a wide range of decentralized tools including uh link staking, lending and borrowing, crosschain swaps, leverage trading and more. Uh before moving forward, I would like to clarify and make a distinction of these two terms. Uh when we talk about uh multi-chain we refer to a protocol that is deployed and fork on uh on multiple chains while with crosschain we refer to a protocol that is that can be accessed through uh multiple chains.

The multi-chain uh system uh though uh brings several inefficiencies. In my opinion, the two main points that uh nowadays multi-chain protocol are facing are the first one is the liquidity fragmentation and the second one is the tool fragmentation. Uh because why why liquidity fragmentation? Because since the the protocol is deployed and fork on multiple chain, these chains don't talk between each other. So there is no shared liquidity of uh of uh the the landing poles.

uh while for the tools fragmentation is because if I have a position on on one chain let's say on avalanche and I want to bring my uh collateral or my loan into another chain uh this the step that I need to take is I need to close the loan I need to repay the loan I need to bridge my collateral into another chain in this case even using another bridging tool I need to reopen a new loan with new asset in another chain. So as you can see the UX is not uh really smooth. The crosschain architecture really fixed this uh because with the uh crosschain um system you can have capital efficiency with share liquidity since the liquidity is share among uh all the chains and uh all the chains are aggregated into a unique uh infrastructure. uh there is no bridging because everything is abstracted using a messaging layer technology. In this case we are using uh SAP to do the the bridging operation.

It's called messaging. Uh but yes for simple terms we are calling it bridging. uh there is interoperability between chains because I can deposit an asset one chain let's say on Ethereum and I can borrow natively on on arbitum without having to deal with routs or bridging operation and obviously there is no need of switching neck tors between chains because it's just a unique interface. One of the most important aspect on of the crosschain uh capabilities is that allow lending protocol to have uh concentrated liquidity in the pools. It means that for example I'm a a USC lender on avalanche.

There is another uh USC lender on arbitum. All the liquidity will go into unique pool. The same for borrowers. If I'm taking out a loan on Solana or I'm taking out a loan on B&B chain, this loan is taken out on uh from the same pool. So this uh has three main benefits.

The first one is you can allow a deeper uh liquidity so greater borrowing power for the users. Uh the second benefit is the standardization of the interest rates since the the pools are not uh splitted between uh several chains but rather they are unified. This allow to have just a unique uh interest rates and obviously it's way better in terms of UX because a users can deposit, withdraw, repay uh do the operation they prefer uh from the same asset in the chain they prefer. So for example, I deposit USC on avalanche, I can withdraw it on on monad. I have a borrow of USC on Ethereum.

I can repay from Polygon. So it's really interoperable also on don management. Here I'm showing you uh some comparison between the multi-chain model and the concentrated model uh by folks finance. Here I'm taking as example uh a v3 since is the largest uh multi-chain model in in the landscape. Here the since a h has several chains that don't talk between each other.

per year we're assuming that the total uh USC liquidity amount is 1 billion uh but uh on a on the multi-chain model the USC liquidity splitted among uh so 700 million in all the chains uh but and 300 million on an arbitum since the the USC liquidity don't talk between each other in the chains the maximum borrowable amount uh that the borrowers can take up is 300 million on arbitrum While onfox finance concentrated model since uh all the liquidity is aggregated into a unique pool uh the maximum borrowable amount is 1 billion. So as you can see the uh concentrated liquidity model of finance is way more efficient than a multi-chain model. Nowadays the landing uh portal also are divided by their uh infrastructure system. So we have on the left side the new approach uh on the right side the bomb system just as ramp as the monol approach is the the fox finance approach the other approach the whole system model is the morph approach is as the owners of like it here I listed three main benefits of each uh system uh the monolithic approach has and a capital efficiency aggregated since the the pool is aggregated within on one place and not splitted between all the vault. There's a greater efficiency in the loan management as you can manage your loan as you prefer.

So you can uh withdraw the collateral, you can swap collateral, you can swap the depth, you can repay the loan with any asset with collateral with other asset in your wallet or using a DEX. So there is a composability management and there is a unifi. So you just need to scroll down the the dashboard markets. You just need to deposit you want in case the asset they want you want to borrow against it. Why for the vase system uh it's known as the risk is related bad event in in one asset.

This will not jeopardize the entire protocol. There is an Niger LTV per market. So since thanks to the to the nature that allow uh one collateral and one borrow you can enable an Niger uh loan to value. So the maximum borrowable amount against a specific collateral. uh and yeah you have also immutable parameters and this will also ensure the predictable in the market behavior for lenders and borrowers and this is the vision of Fox Finance V2.

The Fox Finance V2 will see a transition from uh being just a lending protocol to be a more an infrastructure layer to allow institution uh treasury, banks, asset manager, even other defy protocols to build their own lending environment using the forks finance stack. Uh so yeah, institution will be able to build their own custom lending environment with custom uh parameters using the Fox Finance system. The Fox Finance Exchange V2 will leverage uh the Fox Finance crosschain capabilities. Fox Finance V2 will support EVM and non EVM using uh the unified pools. It will have also vault crosschain.

Uh there will be uh par personal parameters. So a banks or whatever an asset manager can build their own lending protocol having uh the maximum the maximum option of parameters. So you can customize by having uh safe parameters in uh in caps pools. You can decide the oracle the liquidation model the interest rate model. You can decide also whether having privacy tool KYC, KYB, KAT.

So what we will offer is uh uh an infinite number of option that will bring the customization and configuration of parameter at the next level. Something that doesn't exist yet in the market and obviously there will be uh the protocol will be highly custom composable. So we'll see a lot of integration especially also in in the payi space since I already mentioned it there will be integration in the the payi area mobile area we are seeing nowadays lot of new banks that are coming on the market and uh given the the composability of fox finance vue this will be integrating in many apps uh basically these are the three uh category that fox finance will work on it. So the the savings users will be able to just deposit an asset in in their mobile app uh by earning a passive yield on their asset. Everything will be managed uh by vault by folks finance vault.

There will be integration with AI with agent. So users will be able to use EI to for payment automation uh rebalancing swaps uh monitoring and also users will be able to use Fox finance uh loans in everyday for everyday purchasing. So uh there will be a credit card backed by the philance. So I can uh use this credit card while I spending when I'm buying a gelato or I'm paying at the restaurant. I can use my collateral and take out a low one to pay the the real uh the real good while I'm earning yield on uh on my collateral.

So I'm spending but at the same time I'm earning yield on on my on my purchases. Uh final word on the security aspect of Fox Finance is uh the users found is what we care the most. Honestly, we invested a lot on it. uh the way that we approach security is that uh the protocol has been audited several times. We are also partner of immunifi which is the leading uh bug bounty platform in the space.

We also organ we are among the first partner that organize uh bugbantiakaton audit competition that will bring white hat and uh uh third party auditors and also at the same time we perform several audit economic review on on the mathematical model. So this is an important aspect that in my opinion should be the standard of the web free space and obviously we also have an ongoing bbantiakatan. So if there are any white hackers in uh in the room, they can just uh try to act the code and grab uh some prizes.