AraFi: Pioneering a New Era of DeFi Innovation

AraFi
6 min readJun 7, 2023

In the rapidly evolving world of decentralized finance (DeFi), AraFi stands out as a project with a unique value proposition. But what makes it so unique? This article delves into AraFi’s distinct advantages, its role as a meta-protocol, the value of integrating Hermes, Maia, and Hummus, and their promising future.

Solidly primer

In the world of decentralized finance (DeFi), the concept of ‘Curve Wars’ has been a hot topic amongst cryptocurrency enthusiasts. The Curve system evolved on the standpoints to properly incentivize user direction and action.

Curve is a decentralized exchange (DEX) that specializes in trading stablecoins with low slippage. This means that users can exchange stablecoins such as USDC, USDT, and DAI with minimal price impact, making it a popular platform for traders and liquidity providers.

Curve Finance was a groundbreaking protocol that set the standard for many different incentive model types in DeFi. The competition for liquidity in the crypto space, especially on platforms like Curve, has led to competitive protocol designs and the emergence of the “Curve Wars.” All profits made by the platform are directed to both token holders and liquidity providers, with innovation on top of the Sushi Swap Master chef liquidity mining model that encourages users to deposit LP and in turn be rewarded for doing so. Curve Finance takes this one step further by giving incentive direction power to token holders.

Solidly then refined the model by utilizing the Ohm 3,3 rebasing mindset to create non dilutive vote locking systems that rewarded ecosystem participants that helped direct liquidity incentive direction by token voting weight. Like Curve, with fee structure rewarding active participants and integrated protocols, Solidly evolved the Dex ecosystem to provide an affordable liquidity market solution to protocols that need to rent liquidity through incentives. This mechanism nurtures long-term engagement, weaving a vital connection between stakeholder interests and the protocol’s success. Yet, as with any novel approach, it carries its unique suite of opportunities as well as challenges.

AraFi enters this landscape aiming to balance ve tokenomics’ promises and pitfalls.

Like Convex did for Curve, AraFi intends to aggregate governance for Hummus, Hermes, and Maia, building on top of their vote escrow models. AraFi provides participants an exit via liquid wrappers, refining ve tokenomics, enhancing user experiences, and increasing governance token demand.

In the evolving DeFi arena, AraFi balances innovation and prudence, ensuring the protocol and its token holders thrive in this new age of DeFi progress. As we forge ahead, we’ll delve into the specific protocols AraFi aims to aggregate governance for, affirming our commitment to bolster Metis’s DeFi ecosystem growth.

Understanding veHermes, veHum, and sMaia: The Building Blocks of the AraFi Ecosystem

Before diving into the benefits of aggregating these tokens we’d like to explain how they work.

veHermes: The Vote-Escrowed Version of Hermes

Let’s kick things off with veHermes, the vote-locked version of Hermes, with locking periods of up to 4 years. These locked positions receive weekly rebases, ensuring they don’t get diluted from new token emissions. veHermes offers a plethora of attractive properties; it’s not dilutive, earns ‘bribes’ from the gauges being voted upon, allows yield farmers on the Hermes DEX to earn up to 2.5x higher APR, and facilitates control over the governance of the Hermes Protocol.

veHUM: The Power of Locked HUM

Moving from the benefits of veHermes, let’s explore another key player: veHum, the vote-locked version of HUM. This can currently be obtained in 2 ways, either by staking your HUM and earning veHUM linearly for 18 months (180x), or by locking it flexibly up to a year to receive all your veHUM upfront (120x). Similarly to veHermes, veHum grants its holders the ability to vote on the Hummus gauges which currently earns them HUM rewards, it grants them boosted APR’s on their farming positions and lastly enables holders to receive a share of protocol fees and metis rewards.

Maia and sMaia: Potential Awaiting Release

Having covered veHermes and veHum, let’s now turn our attention to another crucial component of the ecosystem: Maia and its staked version, sMaia. Currently, the options and functionality of this token are limited, the staked version earns real yield generated from the Hermes dex as well as controlling Maia governance proposals. Maia is highly scalable into the future as the treasury allocation of Hermes will be tokenized for vote lockers to utilize its boosting capabilities. This allows for layered fee based incentive systems as it’s further integrated into boost direction for decentralized vaults.

The Role of Meta-Protocols in DeFi

Now that we’ve examined the individual tokens, it’s time to take a step back and view the bigger picture: the concept of meta-protocols in the intricate, fast-paced world of decentralized finance. A meta-protocol is a DeFi protocol that is designed to act as an overarching layer above other DeFi protocols, akin to the role of the Federal Reserve in the US economy. Just as the Federal Reserve underpins the US economy and influences a significant portion of the global economy, with the USD serving as a principal medium of exchange, a meta-protocol provides a comprehensive framework for DeFi, streamlining operations as well as increasing capital efficiency and governance participation!

At its core, a meta-protocol facilitates an interconnected and sustainable DeFi economic framework that addresses the challenges of fragmentation in decentralized financial systems. It serves as a unified set of mechanics, interface, and tools that simplifies the management and trade of DeFi assets. By navigating through a singular interface, users can manage assets without having to grapple with the complexities of multiple protocols. This not only enhances the user experience but also elevates the efficiency of DeFi operations.

Expanding on this, meta-protocols also empower developers, paving the way for more sophisticated DeFi applications. By providing an integrated platform that allows for simultaneous interaction with multiple applications, meta-protocols enable the development of complex, innovative solutions that push the boundaries of what’s possible in DeFi.

Yet, it’s important to note that the influence of meta-protocols isn’t confined to operational efficiency and innovation. By addressing the challenges of fragmentation and complexity in DeFi, meta-protocols enhance its accessibility and usability, making it more appealing to a broader user base.

AraFi, as a meta-protocol, will exemplify this transformative potential. By aggregating governance power from different DeFi protocols, it streamlines governance and enhances the influence of its users across multiple platforms. This aggregation will not only boost the influence of AraFi holders, but it also enhances the functionality of the protocols they govern. Thus, AraFi is not just a participant in the DeFi landscape — it’s a powerful influencer shaping its future.

Final Thoughts

Surveying the vast landscape of decentralized finance, AraFi’s role as a pivotal innovator becomes clear. It not only bridges gaps but fosters synergies among various DeFi protocols. Through its efficient management of aggregated base layer tokens, AraFi amplifies its influence, fueling a rise in active governance.

The potential outcomes are staggering. AraFi’s union with Hummus, Maia, and Hermes promises to catalyze governance participation, boosting decision-making capacity and ecosystem dynamism. Moreover, the emergence of perpetual value accrual ensures continuous capture and reinvestment of value, promoting sustainable expansion.

But what does this mean for stakeholders? AraFi offers benefits in abundance. By enhancing yields, it optimizes returns, making the DeFi space more appealing. By alleviating the apprehension associated with token locking or management, AraFi fosters greater involvement, building a sturdy, diverse, and resilient ecosystem.

AraFi’s prospects are significantly amplified due to its strategic synchronization with its base layer protocols. This synergy doesn’t merely expand AraFi’s influence but also drives the advancement of Metis’s DeFi landscape.

As we peer into the future, the prospects for cooperation and growth are immense. With imminent developments poised to make significant strides in the DeFi space, AraFi, through its ingenuity and strategic alliances, is uniquely positioned to reshape DeFi dynamics. The future of Metis stands on the brink of a transformative leap, heralding improved accessibility, efficiency, and value.

Keep an eye on this space as we embark on this thrilling voyage.

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AraFi

AraFi is a sophisticated Omni-Chain governance aggregator designed to optimize the potential returns and governance capabilities of DeFi stakeholders.