Have you ever fancied being a sailor? Sailing through the vast oceans and the great seas feeling that brisk breeze in your face watching the sunset on the horizon with nothing but the tranquil shimmering of the water in sight. I mean who wouldn’t?
However, as any sailor knows, for all the serenity, beauty, and calmness the great seas offer, they are often turbulent, unpredictable, and wildly dangerous if you don’t know what you’re doing.
Now what do we do if we want to enjoy the picturesque beauty & tranquillity of the seas, but avoid the turbulent & dangerous conditions it offers? The answer is simple, we turn to the one vessel that gives life on the sea a whole new meaning. A Cruise.
While you sip your pina coladas at the bar or swim in the pool, or watch live performances on deck, this massive vessel often keeps you blissfully unaware of the difficult conditions of the sea just below you. You cruise into the beautiful sunset while remaining safe and secure on deck.
DeFi is quite similar to the vast blue seas. Volatile, predatory, filled with different land mines, and often very unpredictable. The seasoned veterans are well aware of how to stay afloat in these conditions, but the newcomers often hit the iceberg and many of them drown forever.
So far, DeFi hasn’t had its own cruise. A vehicle that allows users to be exposed to the upside while remaining protected from the predatory and volatile nature of this asset class.
That is until now.
Cruize Finance is here to allow you to cruise your way through the tumultuous waters of DeFi and straight to your desired financial dream.
Cruize Finance: Overview
Cruize Finance uses derivatives and bonds to create structured products which are volatility protected. This means users can get safer exposure to crypto assets as well as safer yields while receiving downside protection. Users get access to these structured products through vaults created by Cruize. They must simply stake their assets with one of these vaults to get access to them.
Put yourself in the shoes of your average normie who’s heard about crypto. They know how hard it pumps but are scared to allocate to it because of the volatility. They know ETH is one of the best assets to hold and forget, but having spot exposure to ETH also means you’re exposed to the downside which, as we know, can randomly nuke 20-30% over a short period of time and up to 85%-90% over a longer time frame.
For those of us in the depths of on-chain degeneracy, this is merely a flesh wound, nothing that we haven’t seen before. But for those not used to the swings of this industry, it can be daunting.
Cruize then arrives to make crypto accessible to everyone regardless of their risk appetite.
But isn’t volatility a feature, not a bug?
While some of us in crypto may agree, the larger masses in general are very averse to volatility and risk. Since we need to make products that cater to people beyond crypto native circles, these products are important.
However, volatility-protected products don’t only help your average newbie. They will prove to be very beneficial within DeFi itself.
For starters, it will prove to be a great form of collateral. This is because hedged tokens such as the ones mentioned above will minimize the liquidation risk which means margin trading, borrowing, and maintaining collateral ratios for synthetic assets becomes much easier and safer.
Another benefit is yield farming. As we know, yield farming is attractive but can be brutal during exceptionally volatile markets with things like impermanent loss becoming a major issue. Hedged tokens protect against downside volatility while allowing you to earn an additional yield on an asset which is price protected.
But these volatility products were only part of V1 for CRUIZE, they have since upgraded to V2 and created some capital-protected vaults. So, let's get into some of the finer details of the protocol’s vaults.
The Twin Peaks product at the moment is their main product and is used in almost all of the live vaults at the time of writing.
The Twin Peaks strategy is a weeklong strategy which identifies a range for a particular market and then generates a linear rate of interest on the deposited capital as the price moves closer to the upper and lower thresholds.
This strategy will always generate a return on investment regardless of the market condition, so your capital will always be protected. But the percentage return depends on the volatility of the markets. If price breaches the predetermined range, depositors will only earn the base rate, but if price stays within the range, they earn a much higher yield.
What does this mean? Let me explain with an example.
Suppose ETH is the underlying asset in this vault. Users deposit their ETH into this vault and the protocol has set the range for the week to be between $1,100 - $1,300. The protocol then auctions the vault with all the deposited capital to market makers and settles the trade with the highest bidder.
The market makers then pay a fixed interest rate to access this capital. A portion of the fees collected is assigned to the base rate which is typically around 2%. This means no matter what, the user is getting at least a 2% return. The remainder is then allocated to buying barrier options, specifically at-the-money barrier options.
Have no clue what barrier options are? Don’t worry, I got you.
A barrier option is an option that only becomes active once the price of the underlying asset reaches a predetermined level. If price falls below the level or does not reach the level at all then the option is nullified.
An at-the-money barrier option is one where the strike price of the option is the barrier level. So if the underlying asset's price crosses the barrier level then the option becomes active, but if price stays at the barrier level or within the tight range then the option remains inactive.
The Twins Peaks strategy buys two barrier options, one at the lower end of the vault range and one at the higher end of the vault range, so within the week, one of the options captures the payoff for price deviations of the underlying asset.
Therefore, if price stays within this $1,100 - $1,300 range the vault can generate a 15% return, but if the range is breached then it will generate a 2% return.
The team backtested this strategy using price data for the year of 2022, and the strategy generated a 7% yearly return with 100% capital protection. Pretty impressive.
This Twin Peaks strategy is just one aspect of the protocol. The other aspect of the protocol comes from their partnership with Ramses.
Ramses x Cruize Finance
Ramses is one of the rising star DEXs on Arbitrum so it only makes sense that as an Arbitrum native project themselves, Cruize works with Ramses.
There are two facets to this collaboration.
· Ramses LP Amplifier Vault
· Liquidity Generation Event (LGE)
While Twin Peaks was the first vault strategy on offer, the Ramses LP Amplifier is the second type of vault on offer at Cruize Finance.
The Ramses LP amplifier vault simply builds up on the Genesis vault (i.e. Twin Peaks vault) to allow for depositing LP tokens. So rather than requiring additional capital lock-ups, users can simply deposit their LP tokens into this vault to earn boosted yield. This yield primarily comes from the trading fees generated through trading activity on Ramses and additional boosted yield from the Twin Peaks strategies.
This vault first collects trading fees from Ramses, a portion of these fees is set aside for the base APY to ensure 100% capital protection and the remainder is used as funding for the structured product strategy to generate additional yield. This happens at the end of every epoch which in this case is 3 days.
Now that’s just the vaults covered. This next bit is the fun bit. The bit where you can get involved and hopefully make some money.
The LGE will be live on Ramses exchange for 1 week, spanning from the 3rd of May to the 6th of May. There are no whitelisting requirements, the sale is open to everyone. These are the details you need to know for the event.
- Event Hard Cap – 500k USDC
- Tokens Sold – 4M CRUIZE (More on the token later)
- Hard Cap FDV: 12.5M USD
- Max Listing Price: $0.125
- No Vesting
To participate, simply load up some USDC in your Arbitrum wallet, go to Ramses Exchange, and make your purchase.
There will also be referral links. People with ref links get 2% commission on each sale made through their ref links.
Now that is not all, there are of course some additional incentives for users to participate.
Participants who contribute to the first 200k USD raised will be eligible for a 5% bonus in the form of esCRUIZE.
An added bonus if you are a veRAM holder. People who hold above 3k veRAM in their participating address will get a bonus airdrop. 0.5% of the CRUIZE supply has been allocated to this bonus airdrop.
Proceeds from this event will be used as follows:
· 50% will be allocated to the CRUIZE/USDC pool on Ramses to ensure there is always sufficient liquidity to trade.
· 50% will be allocated to operational expenses. Things like marketing, contributor compensation, development costs etc.
Now let's look at the two tokens on offer
CRUIZE is the native token of the protocol. Currently, the primary purpose of CRUIZE is that staking it gives stakers an equivalent amount of esCRUIZE tokens (i.e. 1:1).
esCRUIZE is a non-transferrable token. Not only can it be earned through staking, but also as rewards for providing liquidity to the Cruize vaults mentioned above.
Now what do esCRUIZE holders get?
There are 4 key benefits that a user gets.
I'm pretty sure you all can guess the first one. Yep, it’s governance. esCRUIZE holders can vote on things like whitelisted assets, custom vault parameters, DAO contributor compensation, and market integrations.
There are also 2 rewards-based benefits in the form of revenue share & Boosted yields.
40% of all protocol earnings are distributed to esCRUIZE holders proportional to their holdings. Rewards are distributed and available for claim on a 90-day basis. esCRUIZE holders also get a boost on the yield that they are generating from their deposits. This reward is paid in esCRUIZE tokens so a depositor’s balance will automatically keep going up as they earn yield from the platform.
The final benefit is access to exclusive vaults. There will be a minimum threshold of esCRUIZE tokens that one must hold. Users who hold enough tokens to be above the threshold will be able to access the exclusive vaults.
In terms of distribution for the CRUIZE token, it looks like this.
The primary form of communication for the community is discord where they are 7.7k members strong. The chat is always active and lively with fruitful discussions going on all over. The team is also very active and is prompt to respond to any community concern and questions.
The twitter has 21k followers and is primarily used for updates, explanatory threads, and to retweet community content to ensure everyone stays engaged.
All in all, I’d say it's one of the better communities to be a part of.
Cruize Finance hopes to use their structured products to steady the ship and help people safely navigate through the tumultuous waters of DeFi. It's an innovative and ambitious product that should capture the mindshare of a decent amount of people. I mean who doesn’t want returns with guaranteed capital protection.
If you think this platform is right for you, head over there and get depositing. Also take part in their LGE to get yourself some exposure to their success.