Use cases
Yield Accrual Without Impermanent Loss
Restakers on platforms that support SAFU can earn consistent staking yields while securing SAFU-enabled markets. These markets allow restakers to maintain exposure and potential appreciation of their assets (e.g., ETH or BTC). For example, by restaking ETH, a user can secure an Ethena market and earn validator rewards, MEV, and Ethena-generated yield—without impermanent loss. Liquidity providers (coverage sellers) can assess current APRs or estimate long-term returns, ensuring yields comfortably exceed perceived market risks.
Safe Stablecoin Infrastructure Based on CDP Models
Protocols like Maker and Liquity issue stablecoins using collateral such as LSTs (Liquid Staking Tokens) or LRTs (Liquid Risk Tokens). These protocols depend on collateral solvency and liquidation efficiency to maintain peg stability. Integrating SAFU-backed LSTs can mitigate slashing risks, reducing solvency risks and price volatility of the underlying assets. As a result, the stablecoin’s collateral is more robust, minimizing systemic risks in the ecosystem.
Capital-Efficient Layer 2s (L2s)
Inspired by pioneers like Blast, many L2s aim to enhance user experience with innovations such as self-repaying loans and base yield layers. These features rely on capital-efficient mechanisms backed by yield-bearing tokens (e.g., tokenized treasury bills or stETH). By incorporating SAFU-enabled assets, L2s can improve economic security while ensuring fair pricing and reliable yield for users, making their infrastructure more resilient.
Yield Trading
The yield from SAFU assets depends on the yield of the underlying tokens and the demand-supply dynamics of the SAFU market, including its optimal coverage level. Platforms like Spectra and Pendle can unlock significant opportunities by enabling traders to explore SAFU yield curves. These tools can cater to various risk appetites, from speculative traders to institutional investors, expanding the potential for yield optimization.
Arbitrage Opportunities
As demand for SAFU assets grows in secondary markets, arbitrage opportunities will naturally emerge. Market makers can capitalize on these inefficiencies, but to fully exploit these opportunities, they must understand the nuances of SAFU assets and how they interact within DeFi ecosystems.
DAOs and Treasury Management
DAOs and organizations with substantial treasuries often aim to maximize capital efficiency while prioritizing capital preservation. SAFU assets provide an ideal solution, combining yield-generation capabilities with risk mitigation. Dedicated teams or service providers can leverage SAFU to optimize treasury management strategies without compromising on security.
Hedging Strategies
Protocols and companies that depend on specific underlying DeFi infrastructure (e.g., Equilibria or Penpie) can use SAFU-backed versions of their assets as a hedge against black swan events. These assets provide a safety net, enabling projects to pivot effectively if unexpected risks materialize.
TradFi Insurance | Long-Term Vision
Looking ahead, SAFU’s framework could extend beyond DeFi into TradFi applications. Imagine tokenizing identity and future salaries to create a system where individuals allocate a percentage of their income toward insurance. This approach could revolutionize traditional insurance by reducing upfront costs, offering a more accessible and efficient model for medical and life insurance coverage.
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