About

Saffron is a peer-to-peer risk adjustment protocol for decentralized finance (DeFi). The company allows users to customize their risk and return profiles by choosing their degree of exposure to underlying platforms. They offer risk-adjusted tokenized tranches that provide users with a balanced approach to earning returns in the DeFi space. Saffron aims to provide a transparent and efficient way for users to manage risk in their DeFi investments.

History

Launched in October 2020 by pseudonymous founder "Psykeeper", Saffron Finance is a protocol that allows users (i.e. liquidity providers) to have access to customizable and dynamic risk/reward exposures on the pools that they choose to interact with. The protocol's main use case is to act as an intermediary between liquidity providers and lending protocols, where liquidity providers can provide liquidity to lending protocols through various SFI tranches. The protocol's native token SFI is used to gain access to specified tranches on the protocol via staking as well as to govern the protocol. Upon its upcoming V2 release, SFI holders will also have a future entitlement to protocol fees.

The protocol currently offers 3 tranches for liquidity providers (S tranche, Yield Enhanced A tranche, Risk Mitigated AA tranche). While returns of the A tranche can be meaningfully higher than the AA tranche, in exchange for enhanced return, participants of the A tranche must stake Saffron’s native tokens (SFI) to mitigate against failures on the underlying lending platforms (i.e. Compound or Aave). In the event of a failure of an underlying lending platform, liquidity providers in the riskier tranches will be in a position of first loss, while liquidity providers in more senior tranches are effectively insured. In exchange for this "insurance" liquidity providers in the senior tranches receive a lower yield.