Vive La Florence Finance: The Revolution Behind the Shitcoin

February 16, 2024

In conclusion

Tradfi is buying our bags, anon; we may actually make it. After a grueling year and a half filled with bankruptcies, hacks, and collapses, we may finally be back. 

Now, do me a favor, look into the future, and picture yourself as your bull market self. Looks nice, doesn’t it? Browsing for houses on Zillow, looking at what the next watch you’re going to buy is, or deliberating whether $10M is enough to retire on. 

Unfortunately, at the tail end of a bull market, many get caught out. Assuming you actually took profit this time, you will be just sitting on a fat stack of stables in your wallet. You won’t be able to withdraw all of it in one go, but you also don’t want it sitting idle in your wallet, not earning any additional yield. 

As euphoria turns into mayhem, every user will naturally be looking to allocate capital somewhere that is uncorrelated and non-volatile. Simply a safe haven to weather the storm that is set to come. 

Florence Finance may well be that protocol that all of us are looking for. A phase three bull market protocol in which you can deposit your stables to earn real & uncorrelated yields. 

Florence Finance Vs. The Real World 

The typical path for most people would be to off-ramp their money into the tradfi system and just chill in fiat. While we aren’t going to recommend against doing that, there is evidence to suggest that tradfi is struggling.

If we take the example of the FED, at the most basic level, it boils down to the FED having more liabilities than assets. In terms of assets, they mainly have treasuries and mortgage-backed securities, but these products are earning the FED less interest than they are paying in liabilities. 

However, when we look deeper, there’s an even bigger issue starting to rear its ugly head. Borrowers are encountering an increasingly tedious loan process with increasing interest rates, while depositors are earning little to no interest income. 

Looking closer at SMEs, the problem is similar. SMEs, which make up 90% of businesses and 50% of employment worldwide, continue to struggle with access to credit.

The ones who do manage to get access to funding often get unfavorable rates, while the vast majority are left stranded due to this sector being massively underfunded. Seeing that it makes up a significant chunk of the global workforce, there obviously needs to be a closer eye paid to the problem. 

To this end, DeFi proves to be a great solution. 

For starters, DeFi offers an unparalleled level of transparency which is close to non-existent in tradfi. For a system that’s been around for decades, very few people have a fundamental understanding of what actually happens behind the scenes. Once the money is with the bank, what they do behind the scenes with your money is entirely unknown. At least DeFi offers you transparency. 

Additionally, with the advent of RWA protocols building bridges between DeFi and tradfi, the tradfi users have a somewhat familiar experience but on crypto rails. As DeFi infrastructure continues to improve and the applications become more user-friendly, we will most likely see a lot more amalgamation of activity.

At the end of the day, businesses will always be on the lookout for capital. If DeFi applications have provided them with a solution that the banks haven’t, then the companies will begin to use said DeFi protocols. 

With Florence Finance, they put most of their focus on the all-important sector of SMEs. 

Florence Finance creates vaults in which DeFi users can deposit their stablecoins. Through these vaults, Florence Finance gives SME companies the funding they need. By getting access to this SME credit exposure, the DeFi users parking the stablecoins in these vaults get a certain yield which is uncorrelated to the crypto industry. 

How do you, the user, benefit? 

As we’ve mentioned before, Florence Finance is targeting a very important sector. Getting credit exposure to SMEs offers DeFi users an uncorrelated yield. This becomes very important in the latter stages of a bull market. 

Imagine a person who finally hit their net worth goals and cashed out (rare). What often happens is that a portion of it is withdrawn into a bank account while the remainder is put in a stablecoin farm of sorts so they can keep earning yield while the rest of us get liquidated. 

The issue with this is that crypto is a very correlated industry. The money lego nature of DeFi means that most protocols and tokens are in some way connected to one another. So, if one collapses, it often has a brutal ripple effect that hits many other parts of the industry. 

So, while your stable farm may be cozy, you really never know from what angle your farm can get affected and collapse. 

Another issue is that as people look to suck out the last little bit of liquidity left in the market, hacks and exploits become much more rampant, and in the event an important protocol collapses, the protocol you are yield farming on could also be affected. 

However, using a protocol like Florence Finance, where yields are completely agnostic to crypto market conditions, you get access to non-correlated yields without needing to dip your toes into a dwindling tradfi system. 

Vive La Florence!

With that being said, it's time we give you some tips on how to maximize your earnings from Florence Finance. 

Maximizing your Florence Finance earnings

For the time being, Florence Finance has two main vaults. The Caple Vault and The Junior Vault. 

To participate in these vaults, you first need to get your hands on some FLR. You can swap your stablecoins (USDC/EURS) to FLR on a DEX and then use those FLR tokens to participate in the Florence Finance vaults. 

The Caple vault comprises loans originated by their partner Caple, with whom they have made an ESG-compliant, short-term capital-focused loan product. This vault offers a 7.25% APY and has already loaned funds to six different European SME companies at the time of writing. 

The Junior vault will be focused on underwriting short-term loans made to various SME companies. Currently, this vault offers a 9.5% APY and has two active loans aggregated through their partner SwishFund. 

These yields are very competitive with real-world rates, with the added bonus being that while everyone else in the industry is scrambling to hold on to their internet shekels, you will be sitting comfortably earning between 7%-9.5% APY on your stables. 

But this is just the beginning; Florence Finance is working on making even more dynamic vaults to give users more flexibility over how they would like to adjust their yield based on their risk appetite and other preferences.

You don’t have to take my word on Florence Finance; the proof is in the pudding. 

In the short span of time since being live, they have rocketed to having $4.4M in TVL. Now I know that TVL has become a bit of a meme metric that is often gamed to give users (and investors) a facade of success. 

Some protocols can boast deep liquidity and high TVL, but the fact of the matter is that they are supported by incentives. As the incentives dry up, the mercenaries leave, and this eventually plummets TVL. 

With lending protocols, lending and borrowing are often subsidized, which draws TVL, but what happens is these protocols often count these assets twice on top of the native token rewards they give out. So, while they can boast billions of dollars in TVL to investors, the reality of the situation is that, in real terms, they actually have half the value locked. 

Additionally, most DeFi protocols calculate their TVL in USD terms when the value locked in their protocol is mainly in ETH or other ERC-20s. So once these tokens plummet 50%-90%, TVL also heavily plummets with them. 

With Florence Finance, the TVL is not a meme. 

They are a bridge between DeFi and SME companies, and all the value locked in the protocol is in stablecoins. So, the amount deposited through the protocol for lending is directly reflected in TVL. There is no real way to fabricate the data. So when you see Florence Finance cross $100M, $1B, $10B, and beyond, just know that it is real growth and not fabricated to boast to investors or the public. 

Concluding thoughts 

The gradual shift from tradfi to DeFi is underway. It will take many years, but you can see the foundations start to set in. RWA protocols such as Florence Finance will play an instrumental role in propelling this shift towards real-world companies using DeFi. 

The recent token sale conducted by Florence Finance should be enough evidence to suggest how bullish people are on them. Sold out within 5 seconds. Absolutely crazy. Just know that there is a lot more to come. 

Beyond the shitcoinery, there is a revolution going on, and Florence is at the frontlines. The only question remains: will you be joining in, anon?

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