DEFI: SHAPING THE FUTURE OF FINANCE
Decentralized finance (DeFi) has the potential to revolutionize the traditional financial industry by offering a new financial infrastructure that is more accessible, transparent, and efficient. DeFi protocols have grown significantly in the past few years, with billions of dollars locked in various DeFi projects. In fact, we firmly believe that the future of finance will run on DeFi rails, where traditional financial services such as lending, borrowing, trading, and insurance will be facilitated by decentralized protocols, rather than centralized intermediaries.
DeFi has several advantages over traditional finance, including lower transaction costs, faster settlement times, and greater accessibility. DeFi protocols are accessible to anyone with an internet connection, regardless of their location or financial status. They also enable peer-to-peer transactions without the need for intermediaries, which can reduce costs and increase efficiency. Additionally, DeFi protocols are open-source, meaning anyone can access and review the code, which increases transparency and helps to build trust in the system.
DeFi’s growth has been exponential in the past couple of years
Even though it is a very new technology, DeFi has experienced significant traction
DeFi has demonstrated remarkable potential; however, it faces several challenges that need to be addressed to ensure its continued growth and adoption. Here is a more detailed and professional account of the challenges DeFi faces:
Transparency Issues: Despite DeFi's promise of decentralization and open access to on-chain data, many investors encounter a lack of transparency from protocols. This includes inconsistent use and calculation of APR and APY, unclear fee structures, and ambiguity surrounding rewards information. Furthermore, there is a lack of standardized definitions, anonymous teams with no accountability, and insufficient clarity regarding multisig address management.
Risk Evaluation: High yield opportunities in DeFi may appear lucrative but can entail significant risks. Accurately assessing and comparing risks across different protocols is a complex process, requiring an understanding of numerous risk factors such as financial, technical, operational, and governance risks, among others. Comprehensive risk analysis can provide a clearer picture of risk-adjusted yields and inform better investment decisions.
DeFi Exploits: DeFi exploits have resulted in the loss of $3.7 billion in 2022 alone, highlighting the importance of protocol security. Common exploits include phishing attacks, flash loan attacks, rug pulls, and code exploits. To mitigate these risks, users must have a thorough understanding of protocols and access to appropriate tools for risk management.
Complexity and Time Consuming: Capitalizing on DeFi opportunities requires significant time and effort spent on discovering and selecting suitable investments, monitoring positions, and reallocating portfolios. The rapid evolution of the DeFi ecosystem and the sheer number of available protocols make manual management exceedingly complex and time-consuming.
Leverage Mismanagement: Leverage can be a powerful tool when used appropriately, but improper use can introduce significant risks. Managing undercollateralized lending in DeFi requires active position management and an understanding of optimal leverage levels and rebalancing strategies.
The DeFi ecosystem has witnessed tremendous growth, mainly propelled by retail users who have wholeheartedly adopted the technology and committed significant time and effort to navigating this space. In contrast, institutional investors have predominantly stayed on the sidelines, confronted by distinct challenges that impede their entrance into the DeFi arena. Tackling these challenges is essential for broadening the scope of DeFi and unlocking its full potential by engaging institutional players.
Sector Expertise: The decentralized nature of DeFi, coupled with the rapidly evolving ecosystem, presents a steep learning curve for traditional finance professionals. Gaining familiarity with various protocols, smart contracts, and other DeFi technologies, as well as understanding the associated risks, can be daunting. Institutions may also hesitate to allocate significant resources to exploring DeFi due to concerns about regulatory clarity and compliance.
Building and Maintaining Infrastructure: Implementing DeFi solutions can be resource-intensive, especially for large institutional investors with complex needs. Building and maintaining DeFi infrastructure demands substantial technical expertise, investment in hardware, software, and other infrastructure components. The exponential growth in blockchains and protocols makes it time-consuming and resource-heavy to maintain and stay updated with the best opportunities. This can be a barrier for institutions lacking the necessary resources or expertise to build and maintain their own DeFi infrastructure.
Risk Management and Compliance: Risk management is a critical component of any investment strategy, and DeFi is no exception. However, risk management in DeFi can be intricate, with numerous potential risks to consider. Traditional risk management tools may not be well-suited to the unique characteristics of DeFi, making it challenging for institutional investors to effectively manage risk in their DeFi portfolios. Without efficient risk management tools, institutions may hesitate to allocate significant resources to DeFi.
INTRODUCING RUMI FINANCE: THE NEXT GENERATION YIELD PROTOCOL
Rumi Finance is a revolutionary, permissionless platform that aims to redefine the DeFi asset management landscape by offering a comprehensive, user-friendly, and secure solution for both DeFi native and institutional investors. As the next generation yield protocol, Rumi Finance is designed to tackle the challenges and complexities of navigating the decentralized finance ecosystem, providing investors with unparalleled access to a diverse range of sophisticated investment strategies, superior yields, and cutting-edge risk management tools across multiple chains.
By leveraging advanced technology and the expertise of a dedicated team of professionals, Rumi Finance simplifies the process of participating in DeFi, allowing users to make informed decisions and optimize their returns on a risk-adjusted basis. The platform is committed to fostering trust, accountability, and innovation in the DeFi space, ultimately making decentralized finance more accessible and mainstream.
Whether you're a seasoned DeFi investor or an institutional investor, Rumi Finance is the go-to, multi-chain platform that empowers you to capitalize on the full potential of DeFi, with confidence and ease.
WHAT IS RUMI FINANCE
Rumi Finance is an all-encompassing protocol that provides a complete DeFi asset management solution, catering to the needs of both retail and institutional investors. The protocol encompasses several modules and features that synergistically deliver a cutting-edge DeFi experience. Rumi Finance's key components include:
Permissionless Protocol - Vaults: Rumi Finance's permissionless protocol is built on a foundation of smart contract vaults designed to cater to both retail and institutional investors. These vaults are designed to provide a secure, transparent, and efficient means for users to interact with the platform's services, including advanced investment strategies and risk management tools. Rumi Finance is designed to operate across various blockchain networks, with current integrations with EVM blockchains.
Prime - Rumi’s Advanced Lending Module: The lending module offers key functions, including leverage and hedging mechanisms, to optimize user returns and manage risks. It provides instant liquidity for single asset lenders, ensures capacity utilization, and incorporates mechanisms to free liquidity, such as the Rumi liquidity reserve and strategy deleveraging. Additionally, the module maintains an insurance reserve to cover potential eventualities, further safeguarding user investments.
Sophisticated Yield Strategies: Rumi Finance employs a range of advanced techniques and optimization tools such as impermanent loss management, active liquidity range management, leverage management, automatic rebalancing, and optimal portfolio creation to optimize user returns and effectively manage risks.
Strategy design and back testing environment: A key component of Rumi Finance is its strategy design and back-testing environment, which enables developers and quantitative analysts to create, test, and refine investment strategies before deploying them on the platform. This environment allows users to simulate various market scenarios, stress test their strategies, and evaluate their performance under different conditions.
Embedded Risk Management: The platform integrates a robust risk management framework, which includes real-time analytics, risk scoring, automated kill switches, and regular strategy reviews to mitigate potential risks and safeguard user investments.
Now we will describe in detail each of these components.
Permissionless Protocol - Vaults
Rumi Finance's permissionless protocol is built on a foundation of smart contract vaults. These vaults are designed to provide a secure, transparent, and efficient means for users to interact with the platform's services, including advanced investment strategies and risk management tools. The following are some of the key features and design principles of the smart contract vaults:
Modular Design: Rumi Finance's smart contract vaults are designed using a modular architecture, which allows for individual components to be updated or replaced without affecting the overall system. This enables continuous improvement and adaptation to the rapidly evolving DeFi landscape, as well as easier integration with other protocols and blockchains.
Security: The smart contract vaults prioritize security, with rigorous testing and auditing processes in place to ensure that user funds are protected. This includes regular smart contract security audits and bug bounties to encourage the identification and resolution of potential vulnerabilities.
Vault Accounting: Rumi Finance's smart contract vaults implement a robust accounting system that tracks the deposits, withdrawals, and earnings of each user. This ensures accurate and transparent record-keeping, enabling users to monitor their investments and returns over time.
Decentralized Vault Governance: The smart contract vaults are designed with decentralized governance in mind, in the future allowing users to participate in decision-making processes and contribute to the development and direction of the platform.
Automation: The smart contract vaults are designed to automate various aspects of the platform's services, such as investment strategy execution, asset management, and risk mitigation. This enables the platform to provide sophisticated, data-driven strategies and tools that operate efficiently and transparently.
Upgradability: Rumi Finance's smart contract vaults are designed with upgradability in mind, allowing the platform to evolve and adapt to changing market conditions and user requirements. This ensures that Rumi Finance remains at the cutting edge of DeFi innovation and continues to deliver the best possible services to its users.
Whitelisted Vaults for Institutional investors: These vaults are specifically designed for institutional investors, providing them with the necessary tools and services to navigate the DeFi ecosystem securely and efficiently. With these vaults, institutional investors can customize the strategies they want in the vaults, and white list the addresses that can interact with the contracts.
Multichain infrastructure: Rumi Finance design incorporates integrations with multiple chains. We are currently integrated with EVM chains: Arbitrum, Optimism, Avalanche, Fantom, and in the future we will expand into other blockchains such as Polygon, ZKSync among others.
Prime - Rumi’s Advanced Lending Module
Rumi Finance's lending module, Prime, is designed to cater to the needs of both lenders and borrowers (Strategy Investors) by offering undercollateralized leveraged positions. This innovative approach allows investors to maximize returns by borrowing funds from Prime. The module achieves a harmonious balance between the interests of lenders, who seek lower-risk yields, yield stability, instant liquidity, and security, and Strategy Investors, who have a higher risk tolerance and focus on yield maximization.
Prime's key features include:
Single-Asset Vaults: Prime comprises a series of single-asset vaults, compliant with the ERC1155 MultiToken standard, where investors seeking more secure investments can deposit their funds. These vaults carry lower risk as they are single-sided, eliminating impermanent loss, and are protected by Rumi Finance's insurance mechanism.
- 1.EOA Accounts: External accounts provide liquidity to the Lending Vault in exchange for ibTokens, representing a share of the lent asset and accrued interest. For security reasons, only external accounts are allowed to provide liquidity, avoiding contract-to-contract interactions.
- 2.IbTokens: Interest-bearing tokens (ibTokens) represent a share of the lent asset and the accrual of interests. They are minted when lenders provide liquidity to the vaults and accrue value over time based on the interest rate model.
Utilization Rate: Rumi Finance's interest rate model is inspired by Aave's triple slope model but enhanced to provide undercollateralized loans. The availability of capital determines the interest rate offered on the platform, with all calculations programmed in smart contracts. By tracking the utilization rate, Prime dynamically adjusts interest rates to either attract new lenders or prompt borrowers to close less profitable positions.
- 1.Interest Rate Model: Prime follows a triple slope model based on utilization rate (U_t), similar to Aave's model. The interest rate for a token (R_t) depends on U_t and is adjusted as follows:
- If U_t <= Uo_t: R_t = R0_t + R_s1 * (U_t / Uo_t)
- If U_t > Uo_t: R_t = R0_t + R_s1 + R_s2 * (U_t - Uo_t) / (1 - Uo_t)
- 1.Utilization Rate Calculation: Utilization rate for a token (U_t) is calculated as the ratio between the total amount borrowed for the token (B_t) and the total amount deposited for the token (D_t). This influences the interest rate and credit limits, which are controlled by Governance to maintain an optimal setpoint for interest rates.
Leverage Controller: The leverage controller orchestrates interactions between the reserve, the lending vault, and the leveraged borrowers. This contract controls the amount of leverage each strategy-borrower should have to provide instant liquidity and an optimal utilization rate. The leverage controller allows the system to deleverage the strategies when the utilization is at its maximum, ensuring instant liquidity for lenders.
Instant Liquidity Mechanism: Prime's architecture ensures instant liquidity for lenders in various scenarios, such as when the lending vault holds partial or no funds for withdrawal, or when the reserve has partial or no funds available. This is achieved through a combination of reserve contract interactions, potential deleveraging, and the leverage controller:
- 1.Tapping into the Rumi Reserve: When the utilization rate is at its maximum, and lenders want to withdraw their funds, the system first tries to provide instant liquidity by tapping into the Rumi Reserve. If the reserve holds enough funds, it covers the withdrawal request, and the lenders can withdraw their funds seamlessly.
- 2.Deleveraging Strategies: If the Rumi Reserve does not hold enough funds to cover the withdrawal request, the system initiates a deleveraging process. The leverage controller starts deleveraging the strategies in a prioritized manner to free up the required amount. This process ensures that lenders can still access their funds, even when the reserve is insufficient.
By combining these two steps, Prime's instant liquidity mechanism guarantees that lenders can withdraw their funds anytime they desire, even when the utilization rate is at its maximum. This innovative approach to liquidity management sets Rumi Finance apart from other DeFi lending protocols and provides a competitive edge for the platform.
Why should lenders invest in Prime
Rumi Finance's lending module, Prime, offers several advantages to lenders, making it an attractive option for investors seeking a secure and efficient lending platform:
No Impermanent Loss: By investing in single asset vaults, lenders avoid the risk of impermanent loss typically associated with liquidity provision in other platforms. This protection further enhances the security of their investments.
Lower Liquidation Risk: The optimal leverage management feature ensures that Rumi Finance manages the leverage on all strategies instead of leaving it in the hands of individual borrowers. This minimizes liquidations, reducing the overall risk for lenders.
Instant Liquidity: Prime's innovative instant liquidity mechanism, which combines tapping into the Rumi Reserve and deleveraging strategies, allows lenders to withdraw their funds anytime they desire, even when the utilization rate is at its maximum.
Insurance Reserve Fund: Rumi Finance maintains an insurance reserve to cover potential eventualities and safeguard user investments. This additional layer of protection gives lenders peace of mind knowing that their funds are secured against unforeseen circumstances.
Our lending Module will initially launch on Arbitrum, with more blockchains coming afterwards.
For more information about our lending module, visit our technical paper
Yield strategies are investment approaches designed to generate returns by utilizing DeFi primitives such as liquidity provisioning, staking, and lending in permissionless protocols. Rumi Finance focuses on leveraging these DeFi primitives to maximize yield, optimize liquidity ranges for platforms like Uniswap V3, and employ hedging mechanisms to manage risk effectively. Through our innovative strategies, we aim to help investors capitalize on the opportunities available in the DeFi landscape.
Investors can choose their desired asset exposure (e.g., USDC, ETH) and select the type of strategy they prefer: Pseudo Delta Neutral or Directional. Our yield strategies involve using pre-vetted permissionless protocols such as Uniswap (V2 and V3), Curve, SushiSwap, Trader Joe, Pangolin, SpookySwap, among others. By employing leverage and focusing on liquidity provisioning, Rumi Finance can offer superior returns while managing risk.
Pseudo Delta Neutral Strategies:
Rumi Finance developed these strategies for users who want to earn yield on US Dollars while providing liquidity and minimizing the impact of impermanent loss. The key components of the Pseudo Delta Neutral strategy include:
- Liquidity Provisioning: Deploy assets into a yield-generating liquidity pool from pre-approved AMM protocols, obtaining a receipt token that reflects the investment and incorporates the yield generated.
- Leveraging: Rumi Finance applies leverage to enhance the income (e.g., 3x APR) and serves as a hedging mechanism by shorting the volatile asset in the liquidity pair.
- Algorithmic Rebalancing: As prices fluctuate, Rumi Finance's system rebalances positions to maintain neutrality, adjusting the positions to mitigate impermanent loss.
[link to Delta Neutral Strategies]
These strategies cater to users who want long exposure to specific crypto assets while generating yield. Key components of the Directional strategy include:
- Liquidity Provisioning: Similar to Pseudo Delta Neutral strategies, assets are deployed into a yield-generating liquidity pool from pre-approved AMM protocols.
- Leveraging: Rumi Finance applies leverage to maintain a 1x Delta exposure to the desired crypto asset, such as ETH when farming Stable/ETH pairs on Uniswap V3 or a leveraged ETH/STETH strategy.
- Long Exposure: Directional strategies focus on maintaining a long exposure to the desired crypto asset while generating yield from the liquidity provisioning.
[link to directional strategies]
Rumi Finance's innovative offering, Yield Portfolios, enables investors to benefit from a predetermined set of strategies combined in a smart contract vault. These portfolios diversify investments across multiple strategies, further optimizing returns and managing risk. By investing in Yield Portfolios, users can access a combination of Pseudo Delta Neutral and Directional strategies, as well as other innovative strategies developed by Rumi Finance.
Strategy design and back testing environment
Rumi Finance places a strong emphasis on developing and refining robust yield strategies using advanced techniques, such as artificial intelligence (AI), to ensure their effectiveness. To achieve this, Rumi employs a comprehensive strategy design and back testing environment, which includes an on-chain simulation environment. This allows the Rumi Finance team to test, analyze, and optimize various strategies before deploying them in the live DeFi ecosystem.
The back testing environment simulates market conditions and applies historical data to validate the performance of proposed strategies. It also offers a modular approach, enabling the team to analyze specific aspects of liquidity provisioning, delta hedging, liquidity range optimization, and portfolio creation, among others.
Key components of the strategy design and back testing environment include:
- Data Collection: Rumi Finance gathers historical market data, including price movements, liquidity pool data, and protocol-specific metrics, which are essential for back testing and strategy design.
- AI Integration: Artificial intelligence is used to analyze large datasets, identify patterns, and optimize strategies based on complex algorithms and machine learning models, ensuring the strategies adapt to changing market conditions.
- On-chain Simulation Environment: Rumi Finance utilizes an on-chain simulation environment to replicate real-world market conditions and test strategies in a more accurate and secure manner.
- Strategy Simulation: The Rumi Finance team develops algorithms and strategies, simulating their performance using historical data to evaluate their effectiveness under various market conditions.
- Modular Back Testing: The back testing process is designed to be modular, allowing the team to analyze specific components of strategies, such as liquidity provisioning, delta hedging, and liquidity range optimization, as well as create and evaluate portfolios.
- Performance Metrics: Key performance indicators, such as yield, Sharpe ratio, and maximum drawdown, are analyzed to assess the risk-adjusted returns of each strategy.
- Optimization: Rumi Finance continually refines and optimizes the strategies based on the back testing results and performance metrics. This iterative process helps ensure that the strategies deployed in the live environment are robust and adaptive to changing market conditions.
- Risk Framework: The back testing environment enables Rumi Finance to assess and manage risks associated with the strategies. By understanding the potential risks, the team can make informed decisions and adjust the strategies to minimize potential losses and optimize returns.
Back testing Framework
Rumi Finance's backtesting framework is a comprehensive toolset that allows for the evaluation and optimization of various yield strategies. The framework integrates a wide range of mathematical models, machine learning algorithms, and visualization tools to test and refine strategies before deploying them in live DeFi environments. The backtesting framework consists of the following components:
Mathematical Models: Rumi Finance has developed an extensive inventory of mathematical models for executing and analyzing strategies, including liquidity pools (UniV2 and UniV3), impermanent loss modeling, hedging models, UniV3 price prediction for range optimization, liquidity pool slippage, rewards modeling, liquidation thresholds, and lending & leveraged borrowing models.
Rebalancer: A generic rebalancing function that receives instructions on how to rebalance strategies based on various parameters and signals.
PnL Construction: The framework processes historical data to generate historical PnL and a rich dataset of parameters.
Data Visualization: The backtesting framework enables the visualization of output data, allowing for the charting of any data point, such as PnL data generated from a Delta Neutral Simulation.
ARIMA Modeling: Rumi Finance uses a fine-tuned ARIMA model and AI to generate future historical data for scenario analysis, creating thousands of historical paths to better simulate models and estimate potential future returns and behavior.
Quantitative Optimization: The framework processes the generated paths using a quantitative optimization technique to determine the best rebalancing parameters and evaluate if the strategy has the desired risk-reward profile. Metrics such as CVaR, Sharpe ratio, and drawdown values are used to quantify the profiles.
Portfolio Optimization: If the strategy involves a set of aggregated strategies, the backtesting framework consolidates the results from step 6 and runs them through a portfolio optimization process using Risk Parity optimization. This process determines the correct portfolio composition and provides risk metrics such as CVaR, Sharpe ratio, and drawdown values to quantify the portfolio's profile.
Rumi Finance's backtesting framework allows the team to evaluate and refine yield strategies comprehensively, ensuring that they are optimized and well-suited for deployment in live DeFi environments. By utilizing AI, advanced mathematical models, and optimization techniques, Rumi Finance can provide users with high-performing, risk-adjusted yield strategies that meet their investment goals.
Strategy Optimization tools
Rumi Finance uses an extensive range of optimization tools to enhance the performance of its yield strategies, manage risk, and achieve superior returns. These tools enable the platform to maintain optimal levels of leverage, minimize impermanent loss, and provide efficient liquidity provisioning. Below is a detailed overview of the key optimization tools employed by Rumi Finance:
Automated Leverage Management: Rumi Finance employs keeper bots to manage leverage ratios for all strategies. The platform's quant team determines optimal leverage levels for each strategy, based on their in-depth analysis of market conditions, risk profiles, and underlying assets. The automated system ensures that leverage stays within these predetermined levels through regular rebalancing, minimizing the risk of liquidations and maintaining a consistent risk-reward profile for investors.
Automated Liquidity Range Optimization: To improve capital efficiency and reduce impermanent loss, Rumi Finance has developed an automated range liquidity management solution for Uniswap V3. This innovative tool uses proprietary algorithms to predict optimal liquidity ranges for pool pairs based on historical data, market volatility, and other factors. An automated rebalancing system manages range positions, adjusting them in response to market movements to maximize APR while hedging against impermanent loss. This allows Rumi Finance to provide its users with efficient and high-performing yield strategies in the rapidly evolving DeFi landscape.
Impermanent Loss Hedging: Rumi Finance addresses the challenge of impermanent loss by using leverage from Prime to create a hedging mechanism. This involves taking short positions on the volatile asset in the liquidity pair to hedge against price movements. The platform's quant team has developed an algorithm that determines the levels of price movements at which positions need to be rebalanced to maintain the delta hedge. Rumi Finance's keeper bot performs these rebalances when needed, ensuring that the strategy continues to perform optimally while minimizing impermanent loss for investors.
Click here to find out more about impermanent loss
Optimal Portfolio Allocation: One of the key innovations at Rumi Finance is the ability to create Portfolio Vaults containing multiple automated strategies combined. Our quant team designs these Portfolio Vaults using a risk parity approach, aiming to maximize the Sharpe ratio of the combined strategies. This is achieved by optimizing the allocation of each strategy within the portfolio based on factors such as historical performance, asset correlations, and volatility.
Investing in a Portfolio Vault offers several advantages to users:
- Higher Risk-Adjusted Returns: A higher Sharpe ratio implies that investors achieve higher returns per unit of risk taken, leading to more consistent returns in the long term.
- Diversification: Portfolio Vaults provide a better diversification tool as they smooth out volatility in the APR and potential issues in one particular pool. By spreading investments across multiple strategies, users can reduce the impact of underperformance in any single strategy.
- Time Efficiency: Investing in a Portfolio Vault reduces the time and effort required for users to research, select, and manage individual strategies. Instead, they can rely on Rumi Finance's expertise to combine and manage the strategies effectively.
- Adaptability: Rumi Finance rebalances the portfolio allocation every quarter or if there has been a significant allocation drift (+/- 30%). This ensures that the Portfolio Vaults remain optimized and responsive to changing market conditions.
- Personalization: In the future, Rumi Finance plans to introduce Portfolio Vaults that combine different strategy categories, catering to a wider range of user preferences and risk tolerances.
Future roadmap for optimization tools: Our team has a roadmap for developing additional optimization tools. Some of the tools we are researching are:
- Dynamic Risk Profiling: tool that periodically assesses the risk tolerance of users based on their investment goals, time horizons, and other factors. This would enable Rumi Finance to provide personalized strategy recommendations tailored to each user's unique risk preferences.
- Advanced Stop-Loss/Take Profit Mechanisms: advanced stop-loss and take-profit features to help users automatically lock in gains or minimize losses during extreme market movements. This can provide an additional layer of risk management and enable users to better control their investment outcomes.
- Sentiment Analysis: sentiment analysis tools that monitor social media and news sources to gauge market sentiment and predict potential price movements. This information could be used to inform strategy adjustments and improve decision-making.
- Gas Fee Optimization: Develop a tool that helps minimize gas fees by recommending the optimal time to execute transactions and rebalances, based on factors such as network congestion and gas prices.
- Machine Learning-Based Strategy Improvement: Use machine learning algorithms to continuously analyze the performance of various strategies and refine them based on real-time market data. This could help improve the overall efficiency and effectiveness of Rumi Finance's yield strategies.
- Customizable Alerts: Offer users the ability to set up customizable alerts based on specific events or performance metrics, such as yield changes, market movements, or changes in asset allocation. This would enable users to stay informed and make timely adjustments to their strategies as needed.
- Account Extraction: tool that allows users to automatically extract and analyze their crypto investment history across multiple platforms and wallets, giving them a comprehensive view of their portfolio and making it easier to track and optimize their investments.
Embedded Risk Management
Rumi Finance emphasizes the importance of risk management in DeFi and has developed a comprehensive approach to ensure the safety and stability of users' investments. The platform's embedded risk management framework consists of several key components:
Strategy Design and Approval Process: All strategies undergo a thorough proposal, quantitative analysis, peer review, governance approval, and deployment process. This ensures that only well-vetted and robust strategies are implemented on the platform.
Financial Operations and Risk Management: Rumi Finance employs leverage management, rebalancing, and diversification techniques to optimize returns and mitigate risks associated with DeFi strategies.
Rumi's Risk Engine: A powerful risk engine collects and processes data, calculates risk metrics, and generates risk scores and assessments. The engine also features an alerting framework (+100 alerts), real-time monitoring dashboards, and automated risk management actions to address potential issues promptly.
Risk Management Practices: Rumi Finance adheres to best practices in risk management, including proprietary risk framework scoring, investment committee governance, risk management operations engine, automated kill switches, real-time analytics dashboards, weekly strategy reviews, risk reporting and monitoring framework, drift and portfolio allocation rebalances, risk committee monthly reviews, API services for reporting financial and risk metrics, MPC wallet management, and client controls. The platform also ensures smart contract security through audits and bug bounties.
For a complete guide to our risk management function, visit our Risk Management document
Curated Strategy Catalog: Institutions can choose from a catalog of rigorously back-tested yield strategies, each offering superior returns and advanced risk management. These strategies are developed by our experienced quant team and cater to diverse investment profiles.
Permissioned On-Chain Vaults: DeFi Blue allows institutions to create permissioned, on-chain vaults containing investment portfolios of one or multiple DeFi strategies. These vaults provide enhanced security and customization options to meet institutional requirements, including the ability to whitelist specific addresses for added security and control. It also features shared Vault governance, where the parameters can be customized and the governing of the vault is made in cooperation between the client and Rumi Finance.
Customized Account Management and Risk Reporting: DeFi Blue offers tailored account management and risk reporting services to keep institutional clients informed and compliant with their unique regulatory and reporting requirements.
API Data Services: Institutions have access to API data services for both internal and external reporting, ensuring transparency and seamless integration with their existing systems.
Self-Custodial Management: DeFi Blue is self-custodial, allowing institutions to manage their vaults through platforms like Fireblocks or any other preferred solutions.
Integrations with Key Institutional Tools: DeFi Blue will integrate with essential institutional tools such as KYT and KYC, facilitating compliance and seamless onboarding.
Please note that all the fees below are subject to change
The following type of fees are charged on a pro-rata basis, on the yield strategies:
- 1.Performance fees: taken only on positive yields earned by the Vault; per Epoch
- 2.Management fees: taken only on total deposits in Vault; per Epoch
- 3.Withdrawal fees: taken upon withdrawing from a Vault; one time. We decided to add this minimal fee to prevent ill manipulation
Please check each vault details to find out its fees
Rumi Finance's technology architecture is designed to provide a comprehensive DeFi platform that caters to a wide range of users, from retail investors to institutional clients. The platform's architecture comprises multiple components, including a Web3 Frontend, Smart Contract Suite, Keeper Bots, and a Kubernetes Node.js - GraphQL API Backend, all working together to deliver a seamless user experience.
Platform Architecture: The Rumi Protocol features a modular design, focusing on security, risk management, and scalability. The architecture enables seamless interaction with multiple DeFi protocols and supports cross-chain compatibility, tapping into the best opportunities in the DeFi landscape.
Web3 Frontend: The frontend of the Rumi Protocol is built using modern web technologies, such as React, and leverages open-source libraries to ensure a responsive and user-friendly interface.
Smart Contract Suite: Rumi's smart contracts are designed to be modular and extensible, enabling easy integration of new protocols and strategies. Key components include Investment Vault, Controller Contract, Yield Strategies, Lending Module, and Oracle Interfaces.
Keeper Bots: Keeper Bots are responsible for maintaining the platform's strategies, managing leverage, rebalancing positions, and performing other critical tasks. The infrastructure comprises both on-chain and off-chain Keeper Bots.
Kubernetes Node.js - GraphQL API Backend: The API backend is responsible for aggregating data from various sources and providing endpoints for frontend applications, risk management systems, and other services.
Risk Framework: Rumi's risk framework includes ETL pipelines, risk management functions, an alerting framework, and real-time monitoring dashboards to ensure the security and stability of the platform.
AI and Machine Learning: The platform leverages AI and machine learning for predicting optimal liquidity ranges, trend forecasting, and anomaly detection, contributing to enhanced performance and risk management.
For more information visit our Technical architecture paper
DOES RUMI FINANCE HAS A TOKEN?
While Rumi Finance currently operates without a native token, our roadmap includes plans for a public presale and subsequent token launch. The goal is to further enhance the platform's utility and incentivize users to participate in the ecosystem.
Token Launch Roadmap
The token launch roadmap consists of the following stages:
Public Presale: Prior to the token launch, we will organize a public presale to provide interested participants with an opportunity to acquire the Rumi token at a discount.
Token Launch: Following the presale, the Rumi token will be officially launched. The specific blockchain on which the token will be launched is yet to be determined, as we are currently evaluating various options that align with our platform's vision and goals. Further details about the token's blockchain, functionality, and distribution will be shared as the launch date approaches.
Airdrop for Early Adopters
As part of our commitment to rewarding early adopters and supporters of the Rumi Finance platform, we plan to conduct an airdrop event. Users who have actively participated in the platform, whether by investing in strategies or providing valuable feedback, will be eligible to receive a portion of the Rumi tokens for their contributions to the project.
More information regarding the airdrop event, including eligibility criteria and distribution details, will be released in due course. We believe that this airdrop will serve as a strong incentive for users to engage with the platform and become long-term supporters of Rumi Finance.
Co-founder and CEO Diego Lijtmaer is a seasoned entrepreneur, tech executive, and investor with a diverse professional background spanning start-ups, scale-ups, and large global enterprises across various industries, including finance, consumer tech, e-commerce, and web 3.
After completing his MBA at Wharton, Diego began his career in finance as a Financial Institutions (FIG) Investment Banker at UBS Bank in London. During this time, he advised governments, banks, and insurance companies in the midst of the 2008 financial crisis, gaining invaluable experience in navigating complex financial landscapes.
Diego's career trajectory also includes his tenure as part of the executive team at Just Eat Plc in UK, a leading online food delivery platform. There, he spearheaded business development and last-mile logistics functions, contributing to the company's growth and success.
In addition to his corporate roles, Diego has co-founded several companies across a range of sectors, such as web 3, technology, financial services, and hospitality. He is the co-founder of Decentral Art Pavilion www.decentralartpavilion.io, the first dedicated NFT art exhibition at the Venice Biennale.
Co-founder and CTO Jose Garcia brings 17 years of technology development experience to Rumi Finance. He began his career at Unico Inc., where he worked on tech projects for the industrial automation sector and discovered his passion for product development.
As a serial entrepreneur, Jose has founded and sold several companies, including TecnoJAR, an industrial automation firm that was acquired by Regal Beloit Corp. He also co-founded Eprezto and Moveo Ventures, both of which focus on investing in and developing technologies that advance the financial industry in Latin America.
Over the past four years, Jose has concentrated his efforts on blockchain technology and its applications in the financial sector, leveraging his extensive experience to drive innovation in the space.
Jose holds a degree in Mechatronics Engineering from Monterrey Tec and an MBA from EGADE Business School. His deep technical expertise, combined with his entrepreneurial mindset, makes him an invaluable asset to the Rumi Finance team.
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