Mean Finance, a decentralized fixed investment protocol, allows users to save gas for installment investment and reduce the risk of MEV attacks. It also supports the purchase of CryptoPunk #7171 token HOODIE after the split in the form of fixed investment.
Written by: Zhang Jingjing
The trading volume of CryptoPunks has skyrocketed recently. The daily trading volume on August 24 alone exceeded 100 million U.S. dollars. The current floor price has risen to 78.75 ETH, or approximately 249,000 U.S. dollars. Driven by high prices, there have been instances of NFT splitting. In the NFT fragmentation protocol Fractional, CryptoPunk #7171 has been split and minted into ERC20 token HOODIE. What is interesting is that a recent agreement called Mean Finance was announced. Allows users to buy HOODIE tokens by way of fixed investment. So what is Mean Finance, I will briefly introduce it next.
What is Mean Finance
Mean Finance is a decentralized fixed investment agreement that allows users to buy another ERC20 token on a regular/fixed basis with one ERC20 token.
In traditional financial markets, some intermediaries often directly provide fixed investment tools. However, in the DeFi chain world, transaction prices, cycles, and transaction pairs require smart contracts to confirm and execute, so the difficulty of implementation has increased. However, Mean Finance took advantage of the composability of DeFi Lego to successfully bring this user-friendly investment method to the chain.
The positions created by users in Mean Finance are ERC721 (NFT) standard assets. This means that positions can be transferred, and can also be bought/sold. The ERC721 (NFT) standard supports the transfer of control of one person’s tokens to other addresses.
In Mean Finance, the oracle machine is responsible for calculating the exact price of exchange between two ERC20 assets at a specific point in time. Mean Finance feeds the price through the Uniswap V3 TWAP oracle machine, and guarantees the price of the transaction through the DeFi header application. The time lock function extends the support for other TWAP oracles. However, because the price feed relies on Uniswap V3, only tokens with certain liquidity in Uniswap V3 can be created in Mean Finance as a trading pair.
In addition, Mean Finance supports flash loans using the balance in the fund library. Users can borrow the balance of the entire currency pair, including two tokens in the transaction pair, or only borrow one asset in the transaction pair, as long as the transaction ends before the end of the transaction. Return the borrowed amount and fees.
Fixed investment principle
Fixed investment, as the name implies, refers to regular investment. Investment income is not only closely related to the amount of money, but also the investment timing. However, the investment psychology of most investors to chase the rise and fall when investing can easily lead to miss the rise of high-quality assets. Chance. For those assets that have real growth potential, fixed investment can make long-term wealth accumulation “simpler.”
In the traditional financial market, fixed investment has been widely used in fund investment, and the advantages of fixed investment can be seen from the principle of the “smile curve”. For the same beginning price and ending price, in a market that first fell and then rose, the income obtained by the batch buying strategy has obvious advantages compared with one-time investment. Take the simplest smiling curve as an example. Assume that the net asset value drops from 1 to 0.5 and then back to 1, as shown in the figure below. The fixed investment is divided into three purchases and finally 3000 investment funds can get 4000 accumulated investment after 3 months If you buy directly at a lump sum of 3000 investment in January, you will get only 3000 shares after 3 months.
This is because the fixed investment is an equal investment in each period. You will inevitably get more shares at low points and less shares at high points. It automatically realizes the pyramid position strategy of “increasing positions at low positions and lightening positions at high positions”. The large share accumulated at a low level constitutes an important part of future earnings.
Although there is a big difference between the real market and the extreme cases of the smile curve, the market fluctuates most of the time and can be divided into smile curves with different degrees of smoothness. In the field of crypto investment, some cryptocurrencies with a small market value but still have dozens of times of upside potential may not be applicable to the fixed investment method. They are more suitable for early one-time purchases. However, for Bitcoin and Ethereum, the market value is relatively large and fluctuates relatively. For a stable cryptocurrency, fixed investment is a good way to invest.
There is no gas fee for the user to execute each transaction
When investors use Mean Finance, they need to select a trading pair, and then set the fixed investment interval and the number of fixed investment. The current fixed investment interval supported in the agreement is daily fixed investment, weekly fixed investment and monthly fixed investment, and the supported fixed investment times are 5 respectively. Times, 15 times, 30 times. For example, if an investor chooses to exchange 10 DAI for WETH every day for 30 days, then the investor’s position created in Mean Finance must first deposit 300 DAI.
And the user only needs to pay the Gas fee when interacting with the position. The interaction refers to the execution of position creation, modification of the position, withdrawal of the position, and termination of the position. This means that when each fund in the fixed investment agreement is executed, the user does not There is no need to pay gas fees, which are paid by the market maker who executes the transaction. However, when the transaction is executed, both the user and the market maker need to pay an agreement fee. The rate is currently 0.6%. If the user modifies the first deposit, withdraws the first deposit or terminates the first deposit, there is no need to pay for funds that have not been executed. The cost of the agreement.
After Mean Finance receives the funds deposited by the user, since it will cost a lot of gas to execute each transaction separately, Mean Finance will aggregate the positions of all transactions, determine the transaction time, and settle each transaction pair internally daily , When the two funds in a certain trading pair are unbalanced, they will conduct “Flash Swaps” similar to flash loans with market makers or users who provide liquidity, that is, Mean Finance will send the remaining funds in the trading pair as a reward To the market maker, and the market maker only needs to return 99.4% of the other cryptocurrency in the trading pair, which is why the market maker is willing to provide liquidity.
Image source: https://docs.mean.finance/
Mean Finance’s design minimizes users’ MEV-related activities. For users, it not only reduces MEV attacks, but also obtains the best execution price. For market makers, they can use the balance of the entire fund pool to execute transactions and earn a certain percentage of fees, giving them the incentive to execute transactions.
Support to buy HOODIE with WETH fixed investment
In Mean Finance’s new tweet , it supports users to use WETH to buy HOODIE tokens.
HOODIE is an ERC20 ownership token minted by CryptoPunk #7171 issued by DeezeFi in the NFT fragmentation protocol Fractional. CryptoPunk #7171 is a punk with a combination of a hoodie and a pipe, with an implicit value of 361.5ETH (about 1.162 million US dollars) ), the total supply of HOODIE is 10,000 pieces. According to CoinGecko’s data , the price of HOODIE is currently US$118.36.
Under the combination of different DeFi agreements, the token HOODIE minted by CryptoPunk #7171 can be bought in Mean Finance’s fixed investment in WETH. The combination of Mean Finance is prominent, and it may bring different investment ideas to investors in the future.
summary
At present, the construction and realization of the functions of Mean Finance are relatively simple, but it is the perfection of the functions of the decentralized financial field. From then on, it can be combined with different DeFi protocols to derive more different gameplay. The officially created trading pairs include WETH/DAI, WBTC/DAI and YFI/WETH. Users can create new trading pairs but require higher gas costs. Mean Finance also offers a $2500 bug bounty program, which can be awarded to those who disclose the bug. Officially, the smart contract has not been audited yet and there may be risks.
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