Who we are
FujiDAO is a project that was born during ETHGlobal hackathon back in January 2021 when the three co-founders first met. We launched our mainnet alpha version a month ago and since then, we are focused on optimizing the protocol and expanding the core team.
We are genuinely interested in contributing to Rari’s ecosystem and especially, in building a product on top of Rari Fuse. We believe there is a lot of space for synergies beneficial both for our protocols and communities.
What is Fuji and How It Works
FujiDAO built the first borrowing aggregator. It aims to optimize loan expenses for DeFi users. The protocol achieves this by constantly monitoring borrow markets and whenever there is a better rate, it automatically refinances the whole pool of debt with a flashloan.
We create vaults where users deposit a single asset as collateral and borrow against it another asset. For example, in the ETH/DAI vault, users deposit ETH and borrow DAI. Thus, isolating debt positions allows for better risk management and the most effective interest rate optimizations.
When users borrow from a Fuji vault, the needed liquidity gets sourced directly from the base protocol proposing the best rate (Compound, Aave, dYdX or IronBank). The protocol keeps track of users' individual positions and assures the overall vault's health through a classical liquidation mechanism.
When market conditions change and there's a provider with a lower borrow rate for a certain asset, the protocol triggers a rebalance operation and refinances the whole position of the vault. In that way, users instantaneously get a better rate on their loans without the need to take any action on their side.
The advantages of Fuji compared to interacting directly with a base protocol are:
- costs optimization - minimize the interest paid by borrowers
- economics of scale - pooling funds together reduce the transactional costs by sharing fixed costs
- time-saving - removal of constant attention users need to pay to find optimal rates
Proposal: Build Fuji instance to serve exclusively Rari Fuse pools
Rari Fuse is a set of Compound-like pools that offers a big choice of assets and a horizontal diversification of risk.
Fuse gives a great flexibility for creation of highly customizable pools but this comes at the cost of fragmenting liquidity. That’s why, we believe we can answer to some extent to this challenge by plugging Fuji’s vaults engine and thus forming the vertical axis of Fuse markets.
How will Rari Fuse benefit from this integration?
This integration addresses users who want to borrow a specific asset from Fuse markets and would like to reduce the exposure to rates’ volatility. They will effectively isolate the risk to a given pair and obtain at the same time the most optimal borrow rate. Another benefit for those users is the fact that they don’t need to manually manage their debt positions.
On a protocol level, this integration allows for even further composability of Fuse with other products because the vaults create another way to access these markets.
Why is this partnership important for FujiDAO?
We believe that the foundations of an active community are both the shared vision and a great product. We started FujiDAO’s borrowing aggregator as a hackathon project but our ambition is to develop around it a community that will evolve towards a fully decentralized autonomous organization. We perceive this process as a long-run challenge and we need to acquire expertise on how best to navigate it. Rari’s community is one of the most vibrant in the space. By contributing to your ecosystem, one of our goals is to get deeper insights on the ways your community gets organized and on how it functions which eventually would be beneficial to our own.
Next, by plugging Fuji’s engine into Rari Fuse we’d like to see in practice a B2B (protocol-to-protocol) approach and get feedback from a real use-case. We are developing the borrowing aggregator as a product for end-users but we’d also like to see it in the future as an infrastructure tool serving other protocols. The integration with Fuse is the first step in that direction and we’d like to learn more about users’ needs for such a solution and adapt ourselves accordingly.
What are the next steps?
We are confident about the value added of this partnership for both protocols and communities. We are ready to invest human resources and efforts to make this integration done and we’d be happy to apply for a Rari Capital DAO grant to partially fund it.
We are aware that the proposed work requires good coordination from both sides and we’d like to suggest going step-by-step by establishing milestones and regularly evaluating them.
- creation of Fuji instance: smart contracts, refinance bot
- aggregation of one pair across two pools: ETH as collateral, DAI as borrow asset
- Rari's dev team validates what's already done in order to continue to step 2
- timeline: 2-3 weeks
- aggregation of two more pairs across two/three pools
- liquidation bot
- timeline: 2-3 weeks
Grant: 6000 USDC or RGT equivalent.
Summary and more details for this proposal here.