Crypto Society Ama Recap with Friktion, 10th November 2021.
Friktion introduces an Automated Portfolio Manager (APM) into the DeFi ecosystem, offering both active and passive strategies, known as Volts. The APM provides a set of profit opportunities for Users, finding ways to maximize returns while capturing volatility yield in various market environments. Starting with options and non-linear products, Friktion aims to identify sustainable sources of yield and bring risk management into the ecosystem!
Bilo | Crypto Society
It’s our pleasure to have you with us today. I would like to welcome you here on behalf of our entire community.
Let’s begin with a brief history of yourself and your team, and your roles at Friktion, and what you were doing before Friktion ?
0xFriktion
Thanks for having us.
I’m Leonardo from Friktion team.
We’re a team of quant traders, researchers, and engineers who recently left tradfi to build friction.
Bilo | Crypto Society
Cool — What is a Quant trader?
0xFriktion
Quant traders/researchers can do many things — from short term (low latency) trading system design and execution to monetise alpha from the markets.
Bilo | Crypto Society
I see. Thanks
How and where did you first encounter crypto?
0xFriktion
We started hacking on random stuff in Bitcoin and Ethereum Dev in 2017.
Bilo | Crypto Society
Can you tell us about why you thought Friktion needed to be built and what problem it solves?
0xFriktion
We were frustrated DeFi users who were tired of having to spend a lot of time being active farmers and wanted to build a platform for sustainable yield! This is because risk of asset is inherently the main source of returns in markets — not native token emissions.
Bilo | Crypto Society
Love this.
0xFriktion
Friktion introduces a sophisticated and transparent method of getting yield from crypto assets.
Bilo | Crypto Society
Thanks — We will get into this further down in the questions.
How would you describe Friktion if you were talking to someone unfamiliar with digital assets?
0xFriktion
Friktion is the source of sustainable yield, whether through a DeFi app or a fintech consumer product.
Bilo | Crypto Society
What chain is Friktion built on and why did you make that choice?
0xFriktion
Friktion is built on Solana — a very powerful, low cost blockchain.
We made this choice because of how useful this is for trading applications.
Bilo | Crypto Society
Totally agree — We love Solana here 😍 We even had an AMA with @anatoly_solana not long ago. Maybe he surprises us and comes in for a quick hello 🥸
+
0xFriktion
Awesome 😃 we just ran into him in Lisbon
Bilo | Crypto Society
Is or will Friktion interoperable and if so on which chains?
0xFriktion
We’re looking forward to building our brand on Solana and then expanding to other chains!
Bilo | Crypto Society
Why is it important in your view to have this future interchain operability?
0xFriktion
We are strong believers that different chains will have different communities as they scale.
And bringing in more users into crypto is all our goals
Bilo | Crypto Society
I seem to be agreeing with everything you are saying so far 🤔
I like you 😂
🥰🤯🤘🏽
What is the Friktion token used for? Can you describe the Tokenomics?
0xFriktion
Currently we are developing these but are looking forward to sharing these in the future 😃
It will be for utilities to grow DAOs involvements within the Volts.
Volts = Friktion’s native investment products.
Bilo | Crypto Society
Fair enough. Looking forward to the publication of this 🙂
Is Friktion disruptive and if so, how so? What are the advantages of trading with Friktion?
0xFriktion
Friktion is built for HODLers, Degens, and DAOs since each Volt is tailored for a specific risk/reward profile.
Disruption is to the way DAOs manage treasures and their risk!
Bilo | Crypto Society
I will ask you some related questions now concerning your “Active Portfolio management”. I will divide the questions up into a few questions.
Firstly, what is “Active Portfolio Management”?
0xFriktion
This entails the analysis of a user’s portfolio of assets: features like inter-asset correlation, beta vs leading assets like BTC, ETH, SOL.
Bilo | Crypto Society
How does your platform guarantee more yield and less impermanent loss?
0xFriktion
The first Volt is focussed on covered calls and cash secured puts, second Volt is focussed on volatility yield so users can monetise when the market moves up or down.
The third Volt is a hedge against IL for stable-unstable LP token pairs.
Bilo | Crypto Society
How does your platform ensure no liquidations occur?
0xFriktion
We do this through the construction of a structured products which are built on options rather than instruments with liquidations possible.
Bilo | Crypto Society
Please describe the following three features:
Covered Calls
Volatility Yield
Intelligent yield farming
0xFriktion
Options inherently are leverage instruments with liquidations!
Covered Calls are the sale of call options against underlying assets to collect options premiums as returns.
Volatility Yield is a way to tokenize and monetise large changes in price of an asset — either up or down, done through options positions.
This will introduce Volatility as an asset class in Solana!
Intelligent Yield Farming is the integration of Friktion’s hedged product. So, let’s say you deposited SOL-USDC LP token to get yield from an AMM, that position loses money if the price of SOL moves sharply up or down. Better way to think of this as opportunity cost of holding SOL instead of SOL and USDC. This Volt provides protection against this loss!
Bilo | Crypto Society
Thanks — that was a great explanation. Also, great features!
When will Friktion be up and running?
0xFriktion
We’re looking to roll out a public devnet in a few weeks! And will be launching a quiz for access to the alpha mainnet.
Bilo | Crypto Society
If there was one thing you could hope to see Friktion achieve next year, what would it be?
0xFriktion
I think bringing 1 million more users into DeFi is our goal!
Join the Friktion Discord Server!
Check out the Friktion community on Discord — hang out with 263 other members and enjoy free voice and text chat.
BTW here is the discord link:
Bilo | Crypto Society
I’m sure you will succeed.
Do you wish to let us know anything else that was not covered in the questions above?
0xFriktion
Also being the home for DAO Treasury and risk management is a big goal of ours!
Bilo | Crypto Society
Thank you for your time in answering our questions here today. We are all very appreciative of your time and of the answers you have provided
Julius
Why did you choose “friktion” as a project name?
0xFriktion
As a portfolio management protocol, it’s vital to protect downside risk aka apply “friction” to losses. We think there’s not enough effort focused on providing this service in defi! We’re still converging on what best represents our brand, so lookout for something new in the near future.
puzzle123
How exactly will friction generate yield?
0xFriktion
We’re building a source of sustainable yield here at Friktion. Returns from investment products on Friktion are NOT from the emissions of tokens, they have a real reward attached to them that is driven by the risk/reward trade off of any portfolio. We think there’s a lot of miscommunications regarding yield in Defi and will be putting out educational and thought pieces soon.
L B | Crypto Society
Amazing ama, thx for this. Huge project ❤️
0xFriktion
Awesome! thanks again for having us.
Bilo | Crypto Society
It’s our honour and pleasure Sir.
0xFriktion
Cheers
👉Relevant Links
⚜️ Friktion Labs Website: https://friktion.finance/
⚜️ Friktion Labs Twitter: https://twitter.com/friktion_labs?s=21
⚜️ Crypto Society Chat: https://t.me/cryptosocietyy
⚜️ Crypto Society Announcements: https://t.me/CryptoSocietyyy
⚜️ Crypto Society Twitter : https://twitter.com/
