Crafting Success in the Synthetic Assets Space
The DeFi universe remains an emergent ecosystem of islands of activity — like a volcanic archipelago, it’s in a fiery and formative stage. There is a lot of exciting activity, but visible and successful breakthroughs can be sporadic and isolated. A DEX here, a protocol there…
To compete with TradFi successfully, we need infrastructure which links these budding success stories together and raises the whole space above the waterline. That’s why Crafting Finance, a universal synthetic asset issuance and trading protocol, is the latest project to attract the attention of Signal Ventures.
Crafting is a protocol and decentralized contract trading exchange for forging and trading synthetic assets on Polkadot, which literally builds rafts to bridge the gaps in the DeFi ecosystem. It natively supports multi-token collateral, through a native token (CRF) issued by Crafting Finance, while simultaneously supporting Polkadot (DOT), Kusama (KSM), Bitcoin (BTC) and Ethereum (ETH).
Furthermore, it enables the creation of any cryptocurrencies or stocks, bonds, gold and any other off-chain assets directly through smart contracts and oracles, thanks to the FORGE module: By staking collateral (CRF, DOT, KSM, BTC or ETH), users can mint pretty much any synthetic asset of their imagination — subject to the over-collateralization policy set by the protocol, to minimize the risk of future margin calls, and which works to create fixed debt ratios across the system as a whole.
System rewards are earned for staking in the FORGE module, and these rewards can be maximized by opting for a higher collateralization ratio than the minimum specified, and also for using the native CRF token.
A Raft of options
Supported synthetic assets can be broadly categorized into 4 types:
RaftStable Stablecoins — underpinning the stability of the raft itself like a keel, stablecoins are a crucial element of any synthetic asset ecology. Assets like rUSD and rEuro can be used as denomination currency across the system, as well as being used in their own right for contract trading. As ever stablecoins provide the bridging function between old-fi and the new economy, so while they can be used for collateral lending, users can borrow stablecoins such as rUSD to exchange for traditional sovereign fiat dollars.
Simple synthetic assets (Raft) — familiar staples of the DeFi space, simple synthetic assets include cryptocurrencies such as rBTC and rETH, stocks such as rAAPL, gold such as rXAU and any real-world assets. Provided the collateralization requirements are met, virtually any asset can be ‘forged’ in this way.
Synthetic bonds (BondRaft) — synthetic bonds are synthetic assets paying interest issued by the system, which creates income generation and growth opportunities for investors seeking to extend the yield that they get from their involvement with the protocol.
Smart synthetic assets (UnivRaft) — smart synthetic assets means that users can issue a diverse range of financial contracts through the system, essentially creating a sophisticated derivatives market for the entire ecosystem, on top of the existing synthetic assets. This extends the functionality of the system for experienced investors seeking to maximise leveraged gains through complex trading strategies.
The Kingsman DEX
In addition to the Forge synthetic asset generation module, the Crafting system launches with the Kingsman synthetic assets trading DEX. Kingsman is an exchange that provides conversion of different synthetic assets and contract trading, using a bespoke debt pool trading mode.
Due to the design characteristics of the sharing debt pool, this DEX does not require a counterparty, and there is no issue of trading depth — but participation in the debt pool is optional (unlike in existing systems like Synthetix, the choice to engage remains with the user at all times). When a user newly generates or destroys rUSD, the debt ratio is re-determined, and the user’s profit is calculated based on the change in asset prices. This provides liquidity in an elegant and innovative form, with low slippage and high flexibility.
Crafting a bright future
The Crafting Finance team has an impressive roadmap before them with future releases to incorporate bond issuance and trading and oracle systems — working all the time to extend and enrich the asset pool to become a truly holistic system, for a universal DeFi ecosystem.
Signal Ventures is always seeking strong projects which meet a direct need in the evolving DeFi space, and consider that synthetic assets as an investment vehicle have been somewhat overlooked. Our thesis for the future of this asset category has grown with the rise of the leading synthetic asset projects like Synthetix and Mirror.
We always look to support the growth of the blockchain ecosystem by backing strong teams with outstanding vision, and when we came across Crafting Finance, we were determined to help them expand on the foundation that the earliest synthetic asset protocols have built.
Crafting Finance ticks all the boxes for us (product vision, experienced team, growth plans, tokenomics), to make them a strong contender to lead the Polkadot DeFi Ecosystem.
Crafting Finance
Website: https://crafting.finance/
Telegram: https://t.me/craftingfinanceofficialgroup
Discord: https://discord.com/invite/89upsrRUNY
Twitter: https://twitter.com/CraftingFinance
Medium: https://craftingfinance.medium.com/
Signal Ventures
Website: https://signal.vc/
Twitter: https://twitter.com/AtSignalVc