Honey Finance

All right. GM, GAG gang. Welcome to what's going to be another great installment of DevNTell. If you didn't know what DevNTell is, it's a 30-minute window for members of the DAO to showcase something they are passionate about or have been working on. This can be an awesome project you've been working on, demonstrating unit testing best practices, automation goodies, smart contracts, how to structure a project, etc. Basically, if you've got a passion for something, this is your opportunity to share it with the community. And today, I am happy to introduce BowTiedHeron and faren, who are going to be introducing us to Honey Finance. Take it away, gang.

Sure, yeah. So I'm going to go ahead and share my screen. Probably the best thing to do here. All right. Yeah, so while people kind of connect to that, I can just briefly give a TL;DR of the platform. What we're trying to solve is the illiquidity of NFTs. So the way that we try to do this is basically issuing loans with NFTs as collateral. So yeah, happy to dive into kind of all the issues that we had to face. Right here you can see this is the basic interface. You have kind of a dashboard at the very top, your health factor, kind of an easy bar here that will tell you how it's going, your borrow balance, and your supply balance. So something that we kind of tried to build into the platform is the fact that it's not peer-to-peer, but peer-to-contract. So how we do this and how we structure it is that we have these different lending markets. So here we have one for Solana Monkey Business. I'm not sure how many people here are familiar with Solana, but it is one of the bigger collections. So you go into this lending market. Here we show the NFTs in your wallet that are ready to be used to create a new position. You just pick one, you'll have your availability to borrow, you can borrow 100% of that, or 50%, or these different rates. And that will be in USDC.

If you want to pay back down as the interest accrues over time, I'm not going to go into it too deeply because if you're familiar with Aave or Compound, I think this is pretty trivial. What is interesting is that DAOs get to create their own lending markets, so we kind of have a permissionless approach to it. And yeah, another, this is like one of the verticals for Honey Finance. And then there's a second vertical that's already live. And that would be the farms right here. And basically, what it allows you to do is select NFTs, deposit them into a vault, and they will yield tokens. So yeah, I think here you have yield farming, and here you have borrowing. And then obviously, if you want to be a lender, you just go here, and you'll have your own lending portal. You deposit USDC, you earn interest. Obviously, the interest is quite high because you're lending on riskier assets that are not very liquid.

And then you withdraw just as easily. I think and then yeah, governance. We kind of have the VE system that is not as straightforward on Solana as it is on Ethereum, even though it's not super straightforward on Ethereum either. But you basically select a period, and you get this multiplier that's pretty nice. You deposit the tokens, and then it'll display your balance. Here we'll show the different governance votes, we call them Honey Improvement Proposals. And yeah, I think that's pretty much the TL;DR on this. We're adding farms over time. We have 20 different projects that are ready to launch for these farms, and you can kind of see the allocations that they have.

So, yeah, happy to maybe dive into some of the other elements if I'm missing something, but that's pretty much it. I think one thing that I can cover is how we do the liquidations, since I'm assuming that's like the most common question. So right here, you know, you have this borrow APY and that's basically the interest that you have to pay. If too much interest accrues, then you hit your liquidation threshold, just like any other lending protocol. When that liquidation threshold is hit, we use NFT AMMs to liquidate the NFT as fast as possible. And for those who don't know NFT AMMs, maybe like NFTX and NFT20 on Ethereum, and then on Solana, we use Solvent. So what happens is you deposit the NFT in the AMM, and you redeem tokens, and through arbitrage, the price of those tokens is roughly equal to the floor price of the collection. So once we receive these tokens that are worth the floor, we send it back to the lenders and trade it for USDC. So that means that our app, because it's built on this liquidation system, it's built on top of Project Serum. So if you're familiar with Solana, it's kind of bootstrapped by Project Serum, and it's a central limit order book for Solana. And yeah, we just kind of built on top of it and added this NFT element in order to do our liquidations. The Oracle is a TWAP Oracle from this AMM that I discussed, and we also receive price feeds from the different marketplaces.

So yeah, I think the most difficult part is definitely the Serum implementation. There's a lot of compute limits that you're going to run into when you're implementing Serum. So yeah, if people have questions, I can dive into it a little bit more in detail on how we fixed those issues, because all this is open source, and if anybody's curious, you can dive into our code. I think, BowTiedHeron, we might post the GitHub so that people can check it out, but it's just github.com/honeylabs to check all this out. So yeah, I think that pretty much covers everything unless I'm missing something.

No, this is pretty sweet. I guess, maybe if you can take like one step back. How did you and BowTiedHeron kind of meet, and what was the inspiration for making this platform?

Yeah, sure. It's funny enough, I met him through Developer DAO, actually. We started the platform earlier last year, and originally it was more of the yield farming side of things because that's obviously a lot easier to develop. And then when we started to branch out into the loans and the collateralization, we were trying to find people who could help out and who had experience. So we went over to a couple of DAOs to see who we could source, and then ended up meeting BowTiedHeron. So yeah, he since then has helped source a lot of developers, and now there's a dozen of us working on the project. So I'd say the project is, the loans are relatively new, the farms have been worked on for a while, and BowTiedHeron has been of great help through Developer DAO.

Excellent, excellent. And I know you guys said that for now, at least, this is all Solana-based. Are there any plans to be multi-chain?

Yeah, that's actually like the first reason that I had reached out to BowTiedHeron was to see if we could build something on Solidity. And that's been much more enjoyable to work with than Rust and Solana, or at least it's been much faster. So in the last five weeks, we've built this MVP for Ethereum, and we've deployed our smart contracts on testnet, I believe like two days ago. So most of these functionalities are available on EVM chains as of a couple of days ago. We just want to implement it on the front end, which, as you know, can either be really short or take forever.

Yeah, totally. Awesome. So does anyone have any questions for BowTiedHeron or faren?

Yeah, I'd be interested in hearing more about some of the Solana challenges. I've been working a little bit with Solana lately.

Sure. Yeah, I think the one that we're even working on right now is for these positions. So as I talked about, when we liquidate an NFT, we send it to an NFT AMM, and that's built on top of Project Serum. And that means that we have to pass in 48 accounts into a Solana transaction because we're passing in another protocol for liquidations and the Serum protocol, and we have to do all of this in one transaction. So the way that Solana works is that each transaction has a certain amount of compute units, and you have to import accounts into the transaction, and each of these accounts obviously takes up a certain amount of space. So we're not actually able to liquidate an NFT in one single go. So what we have to do is make a first transaction that sends it to the AMM, and then another transaction like right after that calls upon it and that serves to actually liquidate the NFT on that AMM. And what we have to be very careful about is a price change in between the two transactions and actually having the Oracle present and called upon in both transactions and taking into account like the slippage between the two. So what we're trying to do is kind of have an incentive structure for other people or just have a crank mechanism for other people to run that for us and hopefully create an incentive for the second transaction to always go through if the first one goes through. So yeah, I think what's kind of annoying is having to split transactions into a bunch of smaller ones in order for them to go through. And that's been kind of our biggest problem on Solana. When you compose with other protocols, it becomes really challenging.

Yeah, that sounds pretty intense. I've played with some of the accounts already, and just having a few accounts in there is interesting. What happens if something fails then on that first transaction? Or I guess the first one is fine. What happens if it fails on the second one?

Well, if it fails on the second one, you're just left with an NFT that's been liquidated, and you don't retrieve any of the funds. So yeah, you kind of want the transaction to go full circle and give you the money back. So what we're doing now as well is, in case the first transaction fails, if somebody else gets liquidated, it'll check that there isn't another half transaction somewhere else that has to pass first. And then the person who's been liquidated second will finish the first transaction and then they'll be liquidated. So it's like really hacky stuff that we have to work around with. But yeah, those are the drawbacks to Solana, but there's obviously a lot of advantages too, you know.

Yeah, so far, it's very much a work in progress, and if anyone has any feedback with regards to that, that is greatly appreciated. That's one thing that we would like to focus on as well while we are building this, making everything open-source and being as transparent as possible, trying to involve communities in the development of this platform and also structuring incentives around that. That's also something that we are still working out but that we plan to do because we believe that building something open-source may be an opportunity for this platform to scale past what we would be able to develop ourselves. And so far, we've already received a pull request from one other person from within this DAO, and I see he's also present in this presentation, so that's nice. And also briefly wanted to mention that the Solidity, actually the EVM product that we are building with the Solidity smart contracts, most of the people that we hired for our Solidity team was actually Mario. Mario, I met also through the Developer DAO, and many of our things always find its way back to this DAO in some way or another.

Yeah, I think the mechanisms that we're going to try to do for just open-source contributions are mostly going to start with this DAO and trying to get as many eyes as possible on the code. Now that we have our token launched, now that we have the NFTs launched, and that we've been able to raise enough capital to have incentive programs, that's the first thing that we're going to be working on throughout the next couple of weeks. If anybody is indeed interested in contributing to this, I think going over the issues is for sure one way to start out. And if you have any questions, feel free to send me a DM, and I will be happy to talk you through it or explore opportunities of how you could maybe contribute to the project. Yeah, we've been moving over to GitHub from our internal system where developers were a little bit more behind like a walled garden. We decided that we wanted to build in the open and involve the community as much as possible, so that's why we are now also implementing all the GitHub issues, moving everything over to there, and we started working with GitHub Projects. But that's also something that we are in the works of setting up.

I'm a front-end dev, mostly Web2. I'm very new to the Web3 world. I was the guy who put a PR into this project because I'm trying to have a play with it and learn. Just wanted to know a bit more about the front-end architecture and why certain things were chosen. Was it more because there aren't many options right now and they were the best, or were there reasons behind some of choices?

Yeah, I think the first decision that we made was using Degen UI. So some of you might even recognize this, it's very similar to the UI that you'll find on Mirror XYZ. And that's because they have a theme library that we decided to use because it's very clean. Working with it, I do agree it's difficult to work with. And then it's built with Next.js. That was kind of a decision that we made early on; we originally were just doing it in React, and we decided to go with Next. So I think a lot of the front-end decisions have yet to be made, and if you feel like you can contribute to it, then feel free to go ahead. The decision to use Degen was more because it was just very consistent and very readable, so that's kind of what we're going for as well. But introducing new CSS elements is quite difficult with this. And by the way, for the logic of the application, because we are building some SDKs around it, I think right now the way that the farm architecture works is not as clean as it could be, and so we have an SDK being built, and that will make a lot more sense in the front-end repo as to how we kind of fetch these NFTs, which currently is kind of a big strain on the RPC node to get all the NFTs in your wallet and then, you know, being able to deposit them. I think that'll be much more readable and much clearer, probably in the next couple of days is when I expect the SDK to be done.

Is scaffold-eth your main backend? Is that the main piece in the repo?

Well, sorry, I meant the Solana side. Is it the scaffold repo? Oh, right. So for the farms, it's actually a different repo because it's built on top of Gem Farm. So it's not actually in our organization; I guess that's a little bit confusing. We can add it in. But yeah, so visual staking v3 is an integration of a more widely used farming contract for Solana, and you can look at that as Gem Farm and Gem Works. So we build on top of it, and this is kind of a front-end layer on top of that SDK. And then for the loans, that would be the only piece of code that we haven't open-sourced yet, pending a couple of audits. So yeah, before any exploits can be found, we're just going to have two audits that are going to be pending, and then we're going to open-source that.

I thought maybe that's a nice bridge as well to what we've done in the past, faren. You can probably tell more about that as well. The project first started out with the farms actually in v2 on the legacy side, maybe you can show that as well.

Yeah, sure. So obviously, it's not a ton of farms right now because this was our older site. I'll let you decide if you prefer the old UI or the new UI, I think people are still divided. But so these are the different farms that we've featured. Some bigger Solana collections, some lesser-known ones. But basically, you would just click on the farm, get a little bit more data, and you would stake. It would call a Solana transaction here. And then there was a dashboard as well. So our approach to this was, before our IDO and before our official token came out, we had a pre-IDO token. See here, it would give you a yield, I think it was at the time like 3,000 pHONEY per day, and that was diluted across all the stakers in kind of a traditional DeFi farming approach, where the more participants you have, the lesser the yield. And you would stake an NFT, and you would receive this pre-IDO token.

And then now on the app, if you go here on governance, we gave people two different choices on what to do with the pre-IDO tokens that they acquired. Either they can go here and convert it one-to-one, so one pHONEY is now equal to one HONEY, and that conversion happens over a three-week period of time. And then here, if they would like to vest it, they have three different vesting periods, and each one includes a multiplier. So if you vest it for 3 months, it's a 2x multiplier; vest it for 12 months, it's a 10x multiplier, and say this is 5. So yeah, and that was great just because projects kind of reached out to us and, you know, having their NFTs staked on the platform was really beneficial for their community and their floor price and just everything that went around that. It was great marketing for them and for us, and that allowed us to bootstrap the project. So a little bit less technical, but from a business development perspective, I think this was massive for us. You know, it allowed us to have 70+ partnerships and actually allowed us to become like a profitable protocol really early on. So I think that kind of growth hack, I'm hoping maybe it can be implemented by others, but I highly recommend it.

And I might have missed this, but on the token, what chain is that token on?

Solana. So we just had our IDO, and that was, so it's a Solana token, so it's SPL as the standard for Solana tokens. And here if I go on aldrin.com, which is one of the bigger DEXes, you can go ahead and trade it.

Cool. And when you guys eventually launch on the Ethereum side of things, are you planning to launch an Ethereum-based token as well, or are you going to use bridging to just keep it to one token?

Yeah, so actually, I probably should have mentioned this, but one of our bigger partners is Wormhole, and we're partnering with them for everything cross-chain. So basically, what you can do is these lending markets, they each have liquidity on different chains, and if you use a bridge or some kind of messaging layer, they can actually communicate between each other and allocate capital where it's most required, and that's just really capital-efficient. So Wormhole allows us to do that, and also they allow us to port our token over to Ethereum and all EVM chains, similar to what you probably saw with like Wormhole Terra, right? So same approach. And then what's great about that is they also include governance cross-chain. So people will be able to like vote on Ethereum, and vote on Fantom, and vote on Solana, and then Wormhole will help us to add up all those votes together and have cross-chain governance.

That's dope. Awesome stuff. So we're coming up on about two minutes left. Are there any final questions for faren and BowTiedHeron? Going once, going twice, sold. All right. This was an awesome presentation, gang. Thank you so much for taking the time to share it with all of us, and we're all really looking forward to seeing where Honey Finance goes. And hopefully, some members of the DAO can start grabbing some of those issues and start creating some PRs. So yeah, I look forward to it. Right on, right on. All right, I guess with that, just as always, after the presentation is done, I'll post a link in the developers-voice text for people to claim their attendee POAPs. And faren and BowTiedHeron, I will send you your speaker POAPs through DM. But I wanted to wish everybody a very happy Friday and very happy weekend. Hope you all recharge and get ready for another great week coming up, and we will see you all back here next Friday for another great presentation. All right. With that, we will say bye. See you, gang.