# Overview

Cross-chain DeFi yield products

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Clip Finance is building a plug-and-play, AI-driven liquidity management platform for DeFi strategies that simplifies and maximizes profitability. Clip Finance is addressing a huge problem in the DeFi space where half of the liquidity providers are losing money providing liquidity to decentralized exchanges.

## **The suite of products Clip Finance is bringing to the market**

* DEXes: Active liquidity management

* Stable Pools

* Smart Vaults: Risk-managed and automated yield optimization for liquidity pools & multi-pool vaults
  * Volatile Pools
  * Real World Assets
  * Liquid Staking

* AI-driven Liquidity Hedging and Rebalancing

* Community-owned: Decentralized AI Node Network

* Market-making for Token Liquidity Management

* Upfront Fixed-rate Yield

* **DEXes**: In-house developed strategies enable algorithmic, real-time range management tailored for the new generation of DEXes built on concentrated liquidity architecture, such as Uniswap V3, KyberSwap, and the Algebra DEX engine. Properly managed ranges can earn higher trading fees compared to other liquidity providers in the same pool. This means that liquidity providers who use Clip Finance Smart Pools to deposit into DEX pools can accumulate more fees. Additionally, these DEXes can offer better swap prices for end-users, which in turn drives greater trading volume.
  * Link to tech paper: *will be linked here soon*

* **Stable Pools**: Provide a lower-risk investment option for users seeking steady returns. These pools typically involve stablecoins, offering predictable yields with minimal price volatility. This stability is attractive for conservative investors prioritizing capital preservation in the DeFi space.

* **Smart Vaults**: combine all possible yield sources that Clip Finance can utilize across DeFi landscape. Our Vaults benefit from a range of automated, risk-managed, and multi-strategy earning approaches. Clip Finance automatically transitions into higher-yielding strategies to maximize your returns.
  * **Volatile Pools**: Target users willing to embrace higher risk for potentially higher rewards. Users can capitalize on market movements by engaging in pools with volatile assets. Risk management and automated rebalancing help mitigate potential losses.
  * **Real World Assets (RWA)**: Expand investment opportunities beyond digital assets, allowing users to gain exposure to tokenized versions of real-world assets. This diversification can enhance portfolio resilience and offer returns uncorrelated with the broader crypto market.
  * **Liquid Staking**: Enables users to participate in network security and consensus mechanisms by staking their tokens in return for rewards. This approach combines the benefits of earning staking rewards with liquidity provision, offering a balanced risk-reward profile.

* **AI-driven Liquidity Hedging and Rebalancing**: Utilizes advanced algorithms to optimize investment strategies dynamically. This technology-driven approach can enhance yield optimization, manage risks more effectively, and ensure that users' portfolios always align with the most favorable market conditions.

* **Community-owned: Decentralized AI Node Network**: Empowers the community by distributing ownership and control over the platform's infrastructure. This model fosters a more secure, resilient, and transparent system, allowing for collective decision-making and benefit sharing among participants.

* **Market-making for Token Liquidity Management**: Streamlines liquidity provision for tokens, enhancing market depth and stability. This aids in reducing slippage for traders and provides consistent returns for liquidity providers, contributing to a more efficient and liquid market environment.

* **Upfront Fixed-rate Yield**: Offers liquidity providers a predictable return on their capital, providing clarity and stability in earnings. This feature attracts those looking for secure, dependable income streams from their DeFi engagements, without the uncertainty associated with variable yields.


# Why Clip Finance

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Yield has been one of the key pillars of the DeFi industry since its inception. **People want their money to work for them, but it isn’t. More than 50% of Uniswap V3 liquidity providers are losing money. That is $2.5B of capital put at risk with no upside.**&#x20;

Hence, there needs to be new ways for liquidity providers to earn yield without putting their capital at such risk. Additionally, with the advent of concentrated liquidity, many LPs lose money because they have neither the time nor expertise to manage the ranges of their positions.

Liquidity provision is also very complicated. You need to research, analyze, diversify, and monitor your positions manually. And while there are tons of exciting financial innovations, not every blockchain enthusiast has the know-how to use these products.

Clip Finance is designed to empower both the DeFi-savvy users who craft their yield strategies and manage liquidity, as well as newcomers seeking straightforward avenues to deposit assets and earn yields. Anyone seeking efficient, automated tools to maximize yields and mitigate risks. To Institutional Investors & Hedge Funds, Token Issuers & DeFi Protocols, Crypto Wallets, Exchanges & DeFi Platforms.

For institutional players seeking a compliant, user-friendly platform for smart liquidity provision, we invite you to contact us to explore partnership opportunities. Token projects looking to improve their token management but lacking expertise in managing V3 liquidity can benefit from our non-custodial token vaults, where we adeptly handle your liquidity ranges.

Our team, with strong hands-on experience

* Artur, co-founder of Paxful - Times 100 Most Influential Companies 2022, a P2P Bitcoin marketplace with over 10M users and $5B trade volume.
* Alex a former CTO of a DEX with over $80M in TVL and previously before AI was cool founded AI startup for model scouting.

As a crypto-native team, we understand the challenges and are committed to solving them.

Clip Finance aims to make liquidity management effortless, secure, and interoperable. As a flagship product, it will integrate with various DeFi protocols, offering professionally managed yield products. Serving retail users, institutions, and token projects, it seeks to provide compliance-oriented and on-chain market-making solutions. With a proprietary, decentralized AI-driven execution layer, Clip Finance will improve over time, benefiting from community adoption.


# Clip Finance ALPHA

How we generate ALPHA

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In DeFi, "Alpha" refers to the active management of strategies used to outperform the market or generate higher returns.

## Concentrated liquidity

Concentrated liquidity involves strategically positioning liquidity within certain price ranges on automated market makers (AMMs) to maximize fee earnings and minimize impermanent loss. This approach requires deep market analysis and understanding to anticipate price movements and adjust positions accordingly. Successfully managing concentrated liquidity can provide significant Alpha by optimizing the balance between risk and reward in DeFi liquidity provision.

Providing liquidity in concentrated liquidity pools with tight ranges can offer significant leverage compared to wider ranges or providing unconcentrated liquidity. The fees collected for providing liquidity depend on price movement and the chosen range. Thus, it becomes important to choose optimal ranges and consider possible risks of price movements to the liquidity position value or as an impermanent loss, by managing the delta risk and considering gamma exposure. Another input to choosing optimal ranges is the cost in terms of gas fees associated with adjusting the liquidity position range in both absolute terms and as a proportion to the employed capital as also shown by Li et al. (2023).

## Our approach to adjusting ranges

Our approach to adjusting ranges depends on various quantitative measures about the market state and price volatility and movement which are used as input to the algorithm that suggests a recommended range for a liquidity position. We employ active liquidity management strategy as the volatility of the crypto market tends to be high so passive liquidity management would require a wide range of selections which in turn means less capital efficiency and in certain cases might even result in harder-to-manage gamma risk to hedge the underlying liquidity position value risk.

Our approach has the following components:

1. Choosing or creating attractive liquidity pools that enable to collection fees in attractive proportions relative to the amount of employed capital.
2. Using volatility prediction models, including autoregressive models in combination with realized volatility modeling and machine learning models to make both short- and long-term predictions of market volatility.
3. Feeding volatility predictions as well as current market volatility measures to a custom algorithm to estimate optimal range width as well as range adjustment timing in relation to the volatility pool characteristics and the amount of employed capital.
4. Using market sentiment measures in combination with machine learning models (incl. a custom implementation of an LSTM neural net model) and traditional technical analysis market indicators to predict and react to the changes of market sentiment and price trend or channel changes to estimate necessary hedging measures.
5. Using outputs from volatility and market price estimation models, employ hedging strategies to hedge against adverse price movements, dependent on the ranges and open risks of opened liquidity-providing positions.

The following outlines the basic principles and models used in various steps. The exact algorithms and models remain proprietary. Additionally, we run a general market regime estimation model which classifies the market as:

* Trending positive
* Trending negative
* Trading in a range

And based on volatility:

* High volatility
* Medium volatility
* Low volatility

The general market regime estimations are based on longer-term trends and outlooks, whereas range and liquidity management models and algorithms consider more short-term fluctuations as liquidity management is performed actively which can mean multiple adjustments per day in certain volatility situations but can, in contrast, result in rare weekly adjustments during low-volatility markets.

## How do we choose liquidity pools

The choice of liquidity pools for providing liquidity depends on the fee accrual rates but is also dependent on the characteristics of the traded assets. For low-volatility assets (like stablecoins) the price movements are usually small which means that optimal ranges should also be small to provide higher capital efficiency. Small price movements also mean that trading in such pools may not be that profitable for arbitragers and thus the current characteristics of the pool (e.g. total value locked (TVL) in the pool and fee accumulation metrics) play a more important role. For volatile assets (e.g. WETH/USDC pair) it is more likely that arbitragers will trade in the pool if the spot price changes. In the first case, the fees earned will be lower, and thus, price movement risk is smaller; in the second case, the opposite is true.

Our volatility prediction models are inspired by the results of Bergsli et al. (2022) and Dudek et al. (2024) who have shown that various GARCH-type models can successfully be used for long-term volatility estimation in cryptocurrency markets, whereas realized volatility models and machine learning models help to predict volatility more accurately in the short run.

The range selection algorithm is a function of volatility estimation to determine a suitable width of the range, at the same time, considering the cost of rebalancing as a function of gas fees, pool fee tier, and allocated capital amount. In addition to volatility estimation, the range selection algorithm considers the state of the market regime, as for example Li et al. (2023) show that range management in trending markets is more challenging, however, our algorithm can suggest a more frequent adjustment of ranges in such an environment, if the cost function does not restrict such a position rebalancing.

Depending on the market sentiment (from technical indicators to more elaborate news sentiment and order flow-based indicators) and prediction of market movement, LPs may prefer different risk profiles. We offer a choice of pools without or with an included hedging layer. Thus, users can decide based on their expected (or our model suggested) market direction the degree or direction of hedging liquidity position loss or impermanent loss. Such choice is warranted as all hedging strategies come with a certain cost and our default hedging approach may not correspond to the risk appetite of every user.


# Tokenomics ($CLIP)

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## Why token?&#x20;

Clip as an active liquidity management protocol can exist without a token. We don’t believe that any tokenomics design can substitute a good product. Our user experience has to be so captivating that people come and stay for the product. In the light of this, why are we releasing a token?

* Cold start problem&#x20;
* Community ownership

### **Cold start problem**

The cold start problem is a known issue in the startup world, and tokens have been a particularly useful method of overcoming that problem in the crypto space. This is why you’ve seen all the inflationary tokenomics, where early adopters have been richly rewarded for using the protocol and farming yield. This is why the mercenary capital comes in (whales), exhausting the reward structure, followed by dumping the rewards (causing the price of the token to plummet).

It’s likely that in the bull market, a lot of the people behind these protocols didn’t care, because they got to dump their team tokens as well and make a lot of money. But it’s not always the case. Many builders just didn’t have a better framework. The hope for builders is that users will come for rewards, but stay for the product.

For that to happen, the product has to be great, the token has to have a utility that outweighs the desire to sell, and you need both incentive and disincentive mechanisms in place. We will cover these potential mechanisms for Clip later in this document.

### **Community Ownership and Competition**

DeFi is a fiercely competitive landscape, and without an engaged community, contributors, and ambassadors, it’s a hard game to win. Individual economic incentives outweigh everything else for most participants in the space.

It’s difficult to have community engagement unless the community is a stakeholder in the protocol. Building an engaged community should be a goal for every Web3 project. We don’t see any better way to grow and incentivize Clip’s community to participate in governance and contribute to Clip Finance than having our own token as an incentive reward.

## **Token Objectives**

As an issuer of tokens, we set some logical objectives when thinking about token characteristics. For Clip Finance, these are:

1. Incentivise more users to make deposits&#x20;
2. Higher TVL (total value locked/deposited)&#x20;
3. Generate demand for the token&#x20;
4. Community engagement&#x20;
5. Long-term staking&#x20;
6. Liquidity

**Desired consequential effects:**

1. More deposits lead to
   1. Higher TVL
   2. More revenue
   3. Bigger revenue share for token holders
   4. Better token utility
   5. Long-term staking
   6. A more engaged community with a long-term view
   7. Demand outpaces supply
   8. Price appreciation
   9. More interest -> more users -> more deposits

## **Incentives**

To achieve these objectives, Clip Finance will incentivise desired behaviours and disincentivise undesired behaviours.

We need incentives for:

1. Bigger deposits&#x20;
2. Long-term deposits&#x20;
3. Long-term staking&#x20;
4. Demand for the token

To incentivise bigger deposits and long-term loyality, Clip plans to reward users based on their:

1. individual deposit amount;&#x20;
2. how long the user deposits (loyalty rewards);&#x20;
3. collective success, i.e. rewards emission will increase for stakers based on the overall TVL of the protocol.

## **The Solution: Clip Finance Tokenomics**

### TLDR:

* Clip rewards are unlocked when TVL (total value locked) milestones are hit. We don't see why we should be emitting tokens based on time if the protocol itself isn't growing and succeeding.
* Team and investors' tokens vest based on hitting these milestones, which forces the team to work on scaling the platform instead of just waiting for the tokens to vest. In this scenario, the team and investors’ interests are aligned with the users.
* Rewards are bigger during the first milestones to incentivize adoption in the early stages.
* There’s a loyalty multiplier for users who use Clip for longer periods.
* We use a different method to measure the platform TVL than simply the raw TVL. It’s one of the ways we try to fight against gamification.
* Stakers will receive a portion of the protocol revenue (and potential fee reduction).

### Solution

Clip Finance combines the simplicity of a centralized yield aggregator with the non-custodial protection of decentralized protocols. Using a custom-built Strategy Router, users’ deposited funds are split across a basket of risk-audited, yield farming strategies. The router manages and balances these positions in real-time based on performance.

Thus, Clip enables anyone to maximize yield on their crypto assets, without giving up custody, and without having to actively manage strategies.

Furthermore, Clip takes the success of their users seriously - it’s time to do away with tokenomics models that reward the team regardless of the success of the protocol and users. Clip Finance is leading the way with tokenomics that directly ties token rewards, emissions, and vesting to the growth of the Clip protocol and value generated for Clip users.

How does this work? Rather than unlocking CLIP tokens based on the simple passage of time (i.e. 6 month vesting period), CLIP tokens are unlocked based on the protocol hitting specific TVL milestones.

Put simply, the circulating supply of CLIP tokens only increases as the protocol succeeds and grows TVL (thus revenue too subject to user behaviour). CLIP holders can never be diluted if the protocol is stalling or shrinking in usage. Furthermore, the core team’s vesting schedule is tied to TVL milestones, not time, meaning the team cannot simply keep the project alive long enough to get rich at users’ expense - the team’s success is bound to the protocol’s success, and the protocol’s success is bound to users’ success.

This is in stark contrast to the current prevailing issuance models, where token holders are continually diluted as time passes - even if the project is not growing.

### Benefits

Clip’s approach to the vesting and emissions of $CLIP tokens has multiple benefits:

* The team and early investors are only rewarded as the protocol grows, encouraging continued contributions to grow the project, and removing the possibility to do the bare minimum just to dump their tokens.
* Early users of the platform are rewarded with CLIP token emissions. Since reward rates decline as the protocol grows, emissions are non-dilutive on net when comparing the total number of circulating tokens to protocol TVL. This means that user rewards are far more stable than protocols that continually dilute users simply as time passes.
* Since the team, investors, and users are all directly rewarded for the growth of the protocol, everyone shares the same incentives to sustainably grow the protocol’s TVL.

## How it Works

### TVL Milestones

Instead of tokens being issued every block, or unlocked based on a specific milestone measure in time (ex. 6 months after launch), CLIP tokens unlock based on predefined milestones measured in TVL of the platform (ex. an emissions event when protocol TVL reaches $20M).

To avoid exploits and gaming the TVL, total protocol TVL is measured as the rolling 30-day geometric mean of the daily sum of each user’s individual TVL. This means that the platform TVL can not be heavily influenced by short-term fluctuations in any one given user’s TVL. For the sake of clarity, staking CLIP tokens are also considered as part of TVL calculations.

The circulating supply of $CLIP tokens only increases when the TVL increases (when the 30-day geometric mean TVL hits a new milestone for the first time).&#x20;

### Protocol Revenues

The Clip protocol’s smart contract earns revenues from a portion of the yield generated on user-deposited TVL. Protocol revenues are thus a direct function of platform TVL - all else equal, higher TVL means higher recurring platform revenues.

Unlike heavily dilutive protocols, where emissions are entirely uncorrelated to protocol growth since $CLIP tokens are only emitted when a new TVL milestone is hit, token emissions and protocol growth are tied together, resulting in net non-dilutive rewards.

### Team & Investor Vesting

Token allocations to core contributors and investors vest when TVL milestones are hit, not after arbitrary amounts of time have passed since launch. In other words, token vesting only occurs when TVL increases. This ensures the team is incentivized to grow the platform, not just wait until they can dump.

### Token Vesting&#x20;

As each TVL milestone is achieved for the first time, a $CLIP token emission event begins. The first unlock will occur when Clip’s TVL reaches $1,000,000. Each milestone is explained in detail under the “Lifetime Vesting & Emissions” sheet of [the CLIP Tokenomics Spreadsheet](https://docs.google.com/spreadsheets/d/1RONoLt-taXwKRQ1q6KOP6rzBNpFSKAucAwzZ1Kg5Ox0/edit#gid=496114049)**.** Token vesting is over a 90-day period. This means each user will be able to claim 1/90th of their total allocation each 24 hours for 90 days. Think of this as escrowed token if you compare with other protocols in DeFi. It is important to emphasize that tokens are rewarded based upon the previous rolling 30-day geometric mean of the daily sum of each user’s individual TVL. As explained above under TVL milestones, this is done to ensure no exploitation of the token takes place upon each milestone being achieved. Clip Finance wants to reward its active and long-term users instead of simply rewarding mercenary capital whales hunting tokenomics exploitation. For more details on the formula used, see below 'Share of CLIP Rewards Formula' section.

### Emissions

TVL providers earn $CLIP token emissions when TVL milestones are hit. The rate of emissions in $CLIP tokens per dollar of TVL declines each milestone until emissions eventually reach zero, when the full total supply of $CLIP tokens have been emitted. Currently, though subject to change and governance votes, the total expected supply is 1 billion $CLIP tokens, 100% of which will be emitted by the time the Clip protocol reaches $1bn ($1,000,000,000) in TVL.

***Update:*** *as of March 2024 Clip DAO decided to increase supply by 100x (basically a token split). All the distribution ratios remain the same. Previous participants were not diluted.*

The declining rate of emissions means that the amount of TVL (and recurring protocol revenues) per circulating token increases each milestone, whereas emitting tokens simply as time passes often results in declining TVL per token.

This results in proportionally more $CLIP rewards for earlier users of Clip, more stable rewards for Clip users, and emissions that are net non-dilutive.

Since TVL milestone emissions are discrete events, to smooth out emissions, tokens released when each milestone is hit linearly and start vesting for users over the next 90 days.

The total number of $CLIP tokens that are emitted each milestone is known ahead of time per the milestone emissions schedule, which you view on the “Lifetime Vesting & Emissions” sheet of [the CLIP Tokenomics Spreadsheet](https://docs.google.com/spreadsheets/d/1RONoLt-taXwKRQ1q6KOP6rzBNpFSKAucAwzZ1Kg5Ox0/edit#gid=496114049)**.**

For example, in the second milestone after launch, when TVL grows from $1,000,000 to $2,000,000, a total of 5,349,144 tokens are expected to be emitted.

The distribution of how many tokens each user of Clip (each TVL provider) earns is based on several factors.

In summary, the more TVL a user provides, the more consistently a user provides TVL, and the earlier in a new milestone, a user provides TVL, the higher their share of rewards will be.

You can view a sample calculator of the share of rewards earned by different users based on their behaviors within a given milestone by viewing the “Intra-Milestone Reward Share Calculator” sheet of [the CLIP Tokenomics Spreadsheet](https://docs.google.com/spreadsheets/d/1RONoLt-taXwKRQ1q6KOP6rzBNpFSKAucAwzZ1Kg5Ox0/edit#gid=927026324).

### Staking

Beyond the control of Clip Finance and Clip Finance core team and investors, $CLIP token holders may elect in a future decentralized governance vote to make use of the protocol’s smart contract’s revenues.

A decentralized govern vote may elect to distribute protocol revenues to $CLIP token stakers, similar to Curve’s model of distributing protocol revenues to CRV tokens.

Long-term stakers may qualify for fee reduction using the protocol.

## Share of CLIP Rewards Formula

When a TVL milestone is hit the total amount of CLIP tokens emitted is known according to the emissions schedule. The relative share of rewards earned by each user is dependent on users’ collective behaviors.

$$
\begin{align\*}
P\_i &: \text{Percent Share of Rewards for any user } i \\
W\_i &: \text{Adjusted TVL Weight for user } i \\
L\_i &: \text{Loyalty Multiplier for user } i \\
U\_i &: \text{Unadjusted TVL Weight for user } i \\
T\_i &: \text{Daily TVL Snapshot for user } i \\
D\_{M} &: \text{Daily Multiplier Factor} \\
D\_{C} &: \text{Current Day in Milestone} \\
D\_{T} &: \text{Total Days in Milestone} \\
R &: \text{7-Day Rolling Median of Daily TVL Snapshot for user } i
\end{align\*}
$$

**Percent Share of Rewards for any user&#x20;*****i***

$$
P\_{i} = \frac{W\_{i}}{\sum W}
$$

**Adjusted TVL Weight for any user&#x20;*****i***

$$
W\_{i} = L\_{i} \times U\_{i}
$$

**Loyalty Multiplier for any user&#x20;*****i***

$$
L\_{i} = \frac{\sum (T\_{i} \times D\_{M})}{\sum T\_{i}}
$$

Each user’s Daily TVL Snapshot is determined by taking intraday snapshots of that user’s TVL within the Clip protocol. The minimum value of the intraday snapshots is used as that user’s Daily TVL Snapshot value.

Each day’s Daily Loyalty Multiplier is a factor that starts at 2 on the first day of a new milestone and decays linearly to 1 on the last day of a milestone. This rewards users for depositing TVL earlier in new milestones, rather than waiting until the milestone is already mostly elapsed. As the total number of days to complete a milestone can not be known ahead of time until the milestone is finished, each day’s multiplier factor can not be calculated until after the milestone in question has been completed.

**Daily Multiplier Factor Calculation**

$$D\_{M} = 2 - \frac{(D\_{C} - 1)}{(D\_{T} - 1)}$$

For example, for the 3rd day in a milestone that takes 30 days in total to complete:

$$D\_{M} = 2 - \frac{(3 - 1)}{(30 - 1)} = 1.93$$

**Unadjusted TVL Weight for any user&#x20;*****i***

$$U\_{i} = \sum \left( \frac{T\_{i}}{7} \right) + \sum (R \times 7)$$

## **Token emission schedule**

Please see the Excel sheet for an overview of the $CLIP emission schedule:

<https://docs.google.com/spreadsheets/d/1RONoLt-taXwKRQ1q6KOP6rzBNpFSKAucAwzZ1Kg5Ox0/edit#gid=496114049>

## Token Allocation

<figure><picture><source srcset="/files/JfxPHZF8A50bWhRg6E2G" media="(prefers-color-scheme: dark)"><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FrkVAVIKIHnkCnhewVTlz%2F%24clip-chart-21.02.2024-for-light-bg.png?alt=media&amp;token=eb904c70-496e-4af4-b9eb-8cc87e491917" alt=""></picture><figcaption></figcaption></figure>


# Fee capture

How Clip is earning fees

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FPeZApiQPtpVUi5tQO4lR%2F5.png?alt=media&amp;token=1e2b60b8-e0db-4e66-af5e-4374b21e261a" alt=""><figcaption></figcaption></figure>

## Performance fees

* Trading Fees
* Governance Token Sales

## Transaction Fees

* Share Swap Fees - Smart Vaults

Clip Finance revolutionizes the DeFi experience by condensing the traditionally complex process of depositing assets into yield pools into a seamless one-click operation. In conventional scenarios, users navigating through DeFi protocols undergo multiple steps, including

* approvals
* swaps
* deposits across various smart contracts

Accruing significant gas fees along the way.

Clip Finance's innovative approach minimizes these steps and the associated gas fees, while adding a modest service fee that remains below the total cost users would typically incur on the blockchain. This efficiency is achieved through the use of 'intents', a sophisticated mechanism that not only simplifies transactions but also offers substantial savings on fees.

Clip Finance is committed to delivering a user-friendly DeFi investment experience without compromising on efficiency or cost-effectiveness.

## Service Fees&#x20;

* Market-making for token issuers&#x20;

These are the core fee-capturing mechanisms we’re implementing. Clip Finance also has a unique approach to tokenomics where the issuance of tokens is tied to the protocol's performance and the community’s voice is utilized to hit token unlock milestones. [You can read more about our tokenomics here](broken://pages/T8giaQzEGfQVDouNjOeg).


# Roadmap

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2F5nuQfoePHZsdv6lE2CIo%2FClip%20Finance%20Roadmap.png?alt=media&amp;token=45827517-d1a4-4d6e-8423-e3eb064901b9" alt=""><figcaption></figcaption></figure>

## What's next

* Negotiating with a major liquidity provider to secure deposits in the range of $5-$10 million.
* Clip Finance & Linea collaboration campaign. (Exclusive dedicated campaign with multi-layered incentives including Linea XP)
* $CLIP token launch & distribution campaign - DEX & CEX
* Smart Pool integration into Pancake Swap, Izumi, QuickSwap, Horizon Dex, and any other DEXes
* Strategic chain partnership expansion
* Onboarding of 27 token projects for Clip Finance V2 active liquidity management and market-making

## V2 product iteration

* Intent-Driven Transactions: Elevating smart contract capabilities, and intents allows complex, customized transactions combining different protocol actions allowing on-chain hedging, saving cost on strategy development, and enhancing time to market.
* Decentralized Node System: Ensures robust security and efficient execution, underpinning the platform’s strategic and operational integrity
* AI Analytics: Powers proactive strategy adjustments and predictive market responses, leveraging advanced data analysis


# FAQ

Q: I have deposited to the multi-strategy vault and my balance has decreased. How so?

A: Balance is shown in dollar value, so the fluctuations of stablecoin price can affect how much you're seeing. Additionally, when pool rebalancing occurs, the swap from one asset to another can result in a minor fee being charged. However, this is compensated over time with earned rewards. This is not a Clip Finance fee but an exchange swap fee. Pool rebalancing is necessary to keep the pool within range to continue earning rewards.

Q: Why does the multiplier reset when I stake CLIP token? I want to stake after I claim my share why would it reset?

A: It does not reset but decreases proportionally. This behavior is a protection against the situation when you have staked 1 CLIP token, got some big multiplier and deposited another 1000 CLIP tokens.


# Clip Finance V2 (current)

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2F1MQNOiruqQ1CaS4cNafM%2F8.png?alt=media&amp;token=c2d2953b-c33b-4d6f-bb6c-818d40e388d2" alt=""><figcaption></figcaption></figure>

## Introduction

Clip Finance V2, leveraging intent architecture principles, offers a leap in DeFi liquidity management with dynamic adaptability and secure, complex strategy execution. Utilizing AI for predictive market insights ensures optimal asset performance in varied conditions. With unparalleled security, backed by a decentralized node system, Clip Finance V2 emerges as a pioneering solution for efficient and proactive DeFi strategy management.

## What are “Intents” in the blockchain context

**Definition:** In the Web3 and blockchain context, an “intent” refers to a declared purpose or plan to execute a specific operation or set of operations. It essentially signals a desired action within a blockchain network or a decentralized application (dApp).

**Functionality**: Intents are used to indicate a user’s or a system’s planned actions within the blockchain or dApp environment. They represent a preliminary step, outlining the intended actions before actual execution on the blockchain. This could range from initiating a transaction, updating a smart contract, or executing a complex series of operations.

**Use Cases:** In decentralized finance (DeFi), intents are crucial for structuring complex financial actions like token swaps, liquidity provisions, or a series of automated trades. They ensure actions are organized, transparent, and predictable, facilitating smoother and more efficient blockchain operations.


# Use Cases

## **Off-Chain Strategy Formulation**

Ability to analyze real-time data from various market indicators to identify the most beneficial placement of the ranges, and deposited assets, considering factors like expected yield, pool stability, and the user's risk profile. For withdrawals, the analysis ensures the most efficient execution of the withdrawal request, minimizing the price impact as well as pool stability and ensuring user assets are returned promptly.

## **Hedging Strategies**

Mitigating risks associated with market volatility and asset price movements through hedging in DeFi. Clip Finance's platform can predict market trends and adjust the positions within Smart Vaults and Pools to hedge against potential losses. This proactive approach to hedging allows users to safeguard their investments while still participating in the upside potential of the DeFi markets.

## **Market Making for Individual Tokens**

Non-custodial vaults that manage multiple price ranges for individual tokens. This feature is particularly beneficial for token issuers or projects seeking market-making services without relinquishing control of their assets.

## **Boosted Yield Generation from Idle Assets**

Allocation of idle assets into strategies that generate additional yield, enhancing the overall return for the token holders.


# Intent-Based Active Liquidity Management

## Formation of Intents

The formation of intents is a critical precursor to their validation and eventual execution by the decentralized node infrastructure. This architecture facilitates complex decision-making processes off-chain while maintaining the transparency and security inherent to blockchain transactions.

### **Intent Creation and Signalization**

1. **Forming Intents with Structured Requests**
   * **User Actions**: In Clip Finance user's primary actions are: depositing, collecting rewards, or withdrawing assets. The user's intent in either action is clear and straightforward, intending either to increase their position in a particular liquidity pool, collect the accumulated rewards, or retrieve their assets.
   * **User Experience**: From the user's perspective, the process remains straightforward: Users use the front end to deposit, harvest, or withdraw. The complexity of intent architecture, strategy formation, and optimization for market conditions is abstracted away, and handled by the platform's off-chain and on-chain components.
   * **RPC:** Though forming structured RPC requests users specify the intent's nature. This means that even without a Clip Finance custom-built front-end, users can directly communicate with the smart contracts, as long as the node network is operational.
   * The request structure adheres to a predefined schema that ensures all necessary information is included for the intent's formation, validation, and execution.
2. **Communicating Intents to the Validation Network**:
   * Once an intent is formed, it is communicated to the Clip Finance validation network via an RPC call. This network consists of nodes validating the intents against the current state of the blockchain and the Clip Finance protocol rules.
3. **Validation and Transaction Preparation**:
   * Upon receiving an intent, the validation network processes it through a series of checks to ensure its legitimacy and compliance with protocol constraints. This includes verifying the sufficiency of funds for deposits or withdrawals, correct fund distribution across pools, the latest price per share, possible swaps, and the validity of the target liquidity pool.
4. **Executing Intents on the Blockchain**:
   * The broadcasting process is conducted either by the user or execution layer of Clip Finance maintaining a decentralized and secure communication channel between the proposer, validator, and execution layer. The prepared transaction is then broadcast to the blockchain network for execution.
5. **Integration with Clip Finance Smart Contracts**:
   * The entire process, from intent formation to blockchain execution, integrates seamlessly with the Clip Finance smart contracts. These contracts act as databases recording and securing on-chain user data. Additionally provide protocol-specific interfaces to perform operations, ensuring that intents are executed according to the defined rules and parameters.


# Architecture

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2Fheeu2t17A0FihTB4qlmf%2FIntent%20Based%20Arc.png?alt=media&amp;token=5c7b418d-2cad-4ca8-81e5-eef912aa4db6" alt=""><figcaption></figcaption></figure>

Clip Finance's decentralized node network comprises numerous independent nodes operated by community members. This distributed architecture enhances the system's resilience, ensuring no single point of failure can compromise the network's integrity or performance.

* **Validation Layer**: Before any intent-triggered action is executed on the blockchain, it undergoes validation by the decentralized validation nodes. This process involves verifying and ensuring that only legitimate actions are taken on the chain.
* **Execution Layer**: Nodes oversee the execution of validated intents, monitoring the blockchain for successful completion and correct implementation of the intended strategies. This oversight function serves as a safeguard against execution errors or discrepancies.
* **Incentivization**: Node operators are incentivized through a reward mechanism that distributes tokens for their participation in validation and oversight activities. This incentivization ensures active and continuous engagement from the community, maintaining the network's operational integrity and responsiveness.
* **Adaptability**: The infrastructure is designed for adaptability, allowing for the integration of new nodes, the updating of strategies, and the evolution of consensus mechanisms in response to changing market conditions and technological advancements.
* **Scalability**: With scalability in mind, the node network can expand to accommodate increased transaction volumes and more complex strategies, ensuring that Clip Finance can grow alongside the DeFi ecosystem without compromising on performance or security.

## Approach

Clip Finance's approach to intents deviates from the proposed standard EIP-7521 by focusing specifically on liquidity management and strategy execution within the DeFi space. Unlike the broad application of intents for various user operations as outlined in the standard, Clip Finance specializes in automating and optimizing DeFi strategies through a proprietary standard. This involves using blockchain primarily as a settlement layer, where the execution logic is not fully embedded in smart contracts but rather a community operated node layer, offering flexibility and efficiency. Instead of relying on a general MEV network, Clip Finance operates its own network of nodes running predefined algorithms, ensuring strategy adjustments and executions are aligned with its objectives and secure for its users. Signed intent-to-earn messages to Clip Finance decentralized node service. Transactions are collected to be settled in batches. For each transaction, a set nodes to find the best execution by finding the best path receiving “solver reward”.

In this scenario with USDT-USDC:

1. **Staker 1** initiates a deposit of $10,000 USDT into Clip Finance.
2. **Staker 2** requests a withdrawal of 4,980 shares, equivalent to $5,000 USDT.
3. The process unfolds as follows:
   1. 4,980 shares are transferred from Staker 2 to Staker 1 for $5,000 USDT
   2. The $5,000 USDT is then partially exchanged for USDC, ensuring the best possible exchange route based on liquidity pool ratios.
   3. The exchanged USDC, along with the remaining USDT, is allocated into the strategy, yielding new shares and compounding earnings for existing depositors.

This streamlined interaction encapsulates multiple operations such as finding paths, token prices, and calculations, significantly optimizing transaction costs. Clip Finance system blends the advantages of both permissionless and permissioned networks, focusing on liquidity management and strategy execution rather than open transaction orders. This hybrid approach allows for efficient intent sharing and execution within a secure environment, relying on Clip Finance's proprietary node network. This network ensures high-quality execution by leveraging off-chain computations for strategy adjustments, with the blockchain serving primarily as a settlement layer. This method not only streamlines transactions but also safeguards against the vulnerabilities associated with open mempools, like DDOS attacks, and price manipulation, without heavily relying on trust-based intermediaries. Clip Finance's model maintains the decentralization ethos by minimizing reliance on a central authority, aiming to offer a balanced solution that promotes efficient, secure, and trustless execution of liquidity management strategies.

*Coming soon - Instructions to acquire a node operation right & installation guide to operate a node a validator and executor node*


# Decentralized Solver Network Litepaper

## TLDR

### Core Concept

Clip Finance is democratizing access to cross-chain transaction fulfillment through decentralized solver pools, addressing the fragmentation of liquidity across blockchain networks.

### Benefits

1. Uniting Blockchains:
   * Solves liquidity fragmentation across chains
   * Enables seamless cross-chain transactions for users
2. New Yield Opportunities:
   * Users can stake in decentralized solver pools
   * Earn yield from real actions and capital utilization, not just token emissions
3. Enhanced User Experience:
   * Simplifies cross-chain interactions
   * Reduces the need for users to understand complex blockchain technicalities

### Key Technical Elements

1. Decentralized Solving Architecture:
   * Proposer Nodes (open source): Monitor events, generate and sign transaction proposals
   * Central Validator Node: Validates proposals, aggregates signatures, and executes transactions
2. Secure Key Distribution: Utilizes threshold ECDSA for distributed key generation and management
3. Multi-Party Signing Process: Enables secure, decentralized transaction authorization

### Usefulness for Blockchain Users

1. Access to Better Liquidity: Tap into a unified pool of liquidity across multiple chains
2. Improved Transaction Efficiency: Benefit from optimized cross-chain transactions
3. New Investment Strategy: Participate in solver pools for potentially higher, more sustainable yields
4. Reduced Complexity: Interact with multiple blockchains more easily

### Benefits for Blockchains

1. Increased Interoperability: Facilitates easier movement of assets and data between chains
2. Enhanced Liquidity: Improves overall ecosystem liquidity by connecting fragmented pools
3. User Growth: Attracts more users by simplifying cross-chain interactions
4. Innovation Catalyst: Encourages development of cross-chain applications and use cases

### Clip Finance's Unique Approach

* Democratizes access to a previously exclusive market of cross-chain transaction fulfillment
* Introduces a more sustainable yield model based on actual capital utilization
* Aligns incentives between users, liquidity providers, and the broader blockchain ecosystem

### Conclusion

Clip Finance is pioneering a new paradigm in cross-chain interactions, offering a solution to liquidity fragmentation while providing users with novel ways to earn yield. This approach not only benefits individual users but also contributes to the overall growth and efficiency of the blockchain ecosystem.

## Litepaper

## Abstract

Cross-chain transaction fulfillment is currently centralized due to the complexity of developing competitive solvers. While lucrative, this high barrier to entry creates a gatekeeping effect. This concentration hinders solving liquidity fragmentation issues and unlocking the full potential of cross-chain liquidity, ultimately impeding broader blockchain ecosystem growth.

Clip Finance is democratizing access to a previously exclusive market, empowering liquidity providers to tap into the lucrative yields generated from fulfilling cross-chain transactions while helping solve the broad liquidity fragmentation problem.

## Introduction

Intent solver pools are the gateway to onboarding more liquidity into intent networks, enhancing their ability to process transactions of any size with equal speed and efficiency. Building intent solver pools presents multiple challenges, from decentralizing control of funds to maintaining competitiveness against other solvers competing for the same transactions. Unlike simpler processes such as staking ETH to secure the network through services like Lido, these pools require dynamic node updates to enhance performance. This unique landscape creates both opportunities and challenges, which we will explore in detail throughout this litepaper.

## State of Relayers/Solvers today

Based on our observations, current solver networks are predominantly operated by a small group of individuals and institutions. These operators are earning substantial returns, significantly outperforming classical yield pools. Despite the lucrative nature of solving, the barrier to entry remains high due to technical complexity. It additionally requires significant liquidity to cover operational expenses and remain profitable, which further reinforces the barrier to entry. We believe that this could impede the overall intent network growth if the increase in cross-chain transaction demand outpaces the growth in solver capacity. This imbalance suggests that the current state of solver networks may be hindering the full realization of cross-chain liquidity potential and, by extension, the broader thesis of scaling blockchains through modularity.

Further confirming these observations, our deeper look into solver networks of Across protocol reveals intriguing dynamics. We've noticed strong competition among community-run solvers, who tend to focus on transactions below $10,000. Surprisingly, these transactions are often solved at a loss or breakeven, with unclear motivations driving this behavior. The competition is so intense that solvers operate on razor-thin profit margins. In fact, we've observed scenarios where a solver needs to successfully complete three profitable transactions just to cover the cost of a single failed transaction. This hyper-competitive environment raises questions about long-term sustainability and the evolving incentive structures within solver networks. Revealing that operating solvers purely for solving intents as a standalone business model is putting you at a disadvantage. Algorithmically it is not a difficult task compared to looking for optimal swap routes for example.

The additional risk consideration is dependability on the order flow of the intent network the solver is solving for. If one day the decision is to channel all orders to a specific network, it will cut the solver off from the earning opportunities.

In conclusion, solving for intent networks delegates capital risk to the solvers themselves. This risk stems primarily from potential transaction failures due to competition with other solvers and the possibility of chain reorganizations. Solvers face a critical trade-off: waiting for more chain confirmations enhances security but reduces speed competitiveness while prioritizing speed by acting on fewer confirmations exposes solvers to higher security risks and potentially unprofitable transactions. This balance between speed and security is crucial to the solver's operational strategy and overall viability in the network.

### Sustainable participation in solving and relaying.

To achieve sustainable participation in solving and relaying, a paradigm shift is necessary. Our analysis reveals several key strategies:

* **User Ownership and Exclusive Relaying:**
  * Owning the user relationship is essential for long-term sustainability in the solving and relaying ecosystem. As Clip Finance, we are able to enable users to move capital while acting as their exclusive relayer. Building relationships with other cross-chain protocols through revenue-sharing concepts, either via direct solver network integration (like Router or Across) or by creating our own SDK for them to integrate. This approach not only ensures a steady stream of transactions but also allows for better risk management and customized user experiences.
* **Universal Liquidity Coordination Protocol:**
  * Clip Finance's user-facing interface will act as a universal liquidity coordination protocol that aggregates various yield strategies and offers one-click intents. This protocol will enhance the user experience by providing a unified interface with three primary actions:
    * Allocation: Enabling one transaction cross-chain allocation into & between yield strategies
    * Swap: Facilitating seamless asset exchanges within and across chains.
    * Bridge: Enabling efficient cross-chain transfers of assets.
  * By consolidating these functions into a single, intuitive interface, we aim to simplify complex DeFi operations for users while maintaining control over the relaying process.
* **Leveraging Deep Liquidity for Competitive Advantage:**
  * Operating with deep liquidity allows solvers to sidestep the highly competitive landscape of small-margin transactions. Instead of engaging in cutthroat competition for high-volume, low-profit transactions, deep liquidity enables solvers to focus on transactions that others cannot solve due to a lack of capital. This strategy emphasizes quality over quantity, targeting complex, high-value transactions that require substantial liquidity and sophisticated execution.
  * By concentrating on these more challenging transactions, solvers can:
    * Maintain higher profit margins
    * Reduce the risk associated with failed transactions
    * Establish a niche in the market for handling complex, high-value intents
    * Build a reputation for reliability and efficiency in executing difficult transactions
* **Risk Mitigation Through Protocol Design:**
  * The proposed protocol will incorporate risk mitigation strategies at its core. By controlling the entire process from user intent to execution, we can implement sophisticated risk assessment models and liquidity management techniques. This approach will help balance the need for quick execution with the requirement for transaction security, reducing the exposure to chain reorganizations and other blockchain-specific risks.
* **Scalability and Network Effects:**
  * As the protocol attracts more users who build habits and perform their DeFi activities in a single place as well as liquidity, it will benefit from strong network effects. Increased liquidity will enable the handling of larger and more complex transactions, attracting more users and creating a virtuous cycle of growth. This scalability will be key to long-term sustainability in the evolving DeFi landscape.

<div data-full-width="true"><figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FUTf2q0or3cUMSKtneXvQ%2F1%20(20).jpg?alt=media&amp;token=b425f235-2a55-4900-9bdd-d016b1a67425" alt=""><figcaption></figcaption></figure></div>

By implementing these strategies, we aim to create a sustainable model for participation in solving and relaying that benefits all stakeholders - from individual users to large-scale liquidity providers. This approach not only addresses the current challenges in the solver network ecosystem but also paves the way for building a sustainable DeFi protocol, aligned with the broader thesis of scaling blockchains through modularity.

In conclusion in order to maintain competitive advantage you need to secure as many touch points closest to the user where user intent is allocated exclusively to our Relayer. Who controls the order flow controls who is earning profits. In addition, you need to maintain deep liquidity which will enable solving large transactions. This liquidity can be built with solver pools.

## A Path to Decentralized Solver Pools

### Security Considerations and Decentralization Challenges

To decentralize solver pools, we face several critical security considerations and operational challenges. Our observations and analysis have led us to identify key areas that require innovative solutions to maintain security, efficiency, and decentralization.

Solvers designated for bridging transactions for Across and Router protocol are predominantly operated as Externally Owned Accounts (EOAs). Moving it into a smart contract style multi-signature “Wallet” will decrease gas efficiency as it will introduce another external contract call. Therefore we have chosen to decentralize our EOA through multi-signature key generation which involves multi party participation.

## Decentralized Solving Architecture

Our decentralized solving system is designed with two primary components: Proposer Nodes and a Central Validator Node. This structure enhances efficiency and maintains security while allowing for third-party auditability.

### Proposer Nodes (Open Source)

* Monitor intent events on the origin chain
* Upon detecting a relevant event, generate a transaction proposal
* Sign their part of the multi-signature
* Send the proposal with a partial signature to the Central Validator Node

### Central Validator Node (Closed Source)

* Receives and validates transaction proposals from Proposer Nodes
* Verifies that the proposed transaction matches the original intent event
* Aggregates signatures from Proposer Nodes
* Makes final decisions on transaction parameters (gas price, execution speed)
* Executes the validated and fully signed transaction

<div data-full-width="true"><figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FwzxL1p89rfv1IolfL1j7%2F2%20(9).jpg?alt=media&amp;token=78d89ceb-7fba-4e72-80c7-09db7471683d" alt=""><figcaption></figcaption></figure></div>

### Flow of Decentralized Solving

1. Proposer Nodes continuously monitor the blockchain for intent events.
2. When an event is detected, a Proposer Node creates a transaction proposal and partially signs it.
3. The proposal is sent to the Central Validator Node.
4. The Central Validator Node verifies the proposal against the original event.
5. If valid, the Central Validator aggregates signatures from multiple proposal nodes and finalizes transaction parameters.
6. The fully signed transaction is then submitted to the destination chain.

This maintains decentralization through multiple Proposer Nodes while centralizing final validation and execution for efficiency.

The open-source nature of Proposer Nodes allows for community verification and auditing, while the closed-source Central Validator protects proprietary strategies and execution logic.

### Secure Key Distribution and Management Process

Enabling this process requires an element of **secure key distribution and management.** Distributing private key shares securely to multiple participants while ensuring no single entity can reconstruct the full key. One of the considerations is the implementation of advanced secret-sharing techniques, possibly leveraging Shamir's secret-sharing. Regular key rotation and participant verification will be part of a routine process to onboard more validator nodes and increase security.

Our current consideration is to implement a threshold signature scheme to ensure secure and decentralized key management. Here's how it would work:

1. **Distributed Key Generation**: Instead of generating a single private key, we use a threshold ECDSA (Elliptic Curve Digital Signature Algorithm) scheme. This process creates key shares for all participants without ever constructing the full private key on any single device.
2. **Threshold Signature**: The system is set up so that only a subset of signers is required to create a valid signature. This provides both security and flexibility, as not all signers need to be available for every transaction.
3. **Partial Signing**: When a transaction needs to be signed, each participating signer creates a partial signature using their key share. These partial signatures are then encrypted using homomorphic encryption.
4. **Homomorphic Combination**: The encrypted partial signatures are combined using homomorphic addition. This crucial step allows the signatures to be aggregated while remaining encrypted, ensuring that individual partial signatures are never exposed.
5. **Final Decryption**: Only after the combination is complete is the final signature decrypted, revealing the complete signature that can be used to execute the transaction.

This process ensures that the full private key is never reconstructed in any single location, significantly enhancing security. It also allows for flexible and efficient signing, as only a subset of signers is needed for each transaction. The use of homomorphic encryption serves a dual purpose: it adds an additional layer of security by protecting the partial signatures throughout the combination process, and crucially, it enables precise detection of any signers who abort or fail to participate correctly in the transaction signing.

By implementing this advanced cryptographic technique, we create a system that is both highly secure and operationally efficient. It balances the need for decentralization with the requirements for speed and reliability in transaction processing, while also providing a robust mechanism for accountability and fault tolerance. This approach allows us to swiftly identify and respond to potential signing failures, maintaining the integrity and performance of the decentralized signing process even in the face of individual signer issues.

### Multi-Party Signing and Validation Process

#### What Participants Are Signing

When we have byte data that needs to be signed by multiple nodes before execution, the participants typically sign a hash of the transaction data, not the raw byte data itself. Here's the process:

1. **Transaction Data Preparation**: The original byte data (which could include transaction details like recipient address, amount, nonce, etc.) is prepared.
2. **Hashing**: This byte data is hashed using a cryptographic hash function. This produces a fixed-size hash that uniquely represents the transaction data.
3. **Signing the Hash**: Each participant node signs this hash using their part of the distributed private key (their key share in the threshold signature scheme).

#### Validation Process

To ensure that the signed byte data is indeed correct, we implement several validation steps:

1. **Hash Verification**:
   * The executor (and each signing node) independently hashes the original byte data.
   * They compare this hash with the hash that was signed. If they match, it confirms that the signed data hasn't been tampered with.
2. **Signature Aggregation and Verification**:
   * The executor collects the partial signatures from the signing nodes.
   * Using the threshold signature scheme, these partial signatures are combined to create the full signature.
   * The executor then verifies this full signature against the public key of the multi-sig wallet.
3. **Quorum Check**:
   * The system ensures that the required number of signers have provided their signatures.

#### Joining as a Validator: Ensuring Network Security and Reliability

For entities looking to become validator nodes in our intent solver network, we've established a straightforward process that maintains network security and incentivizes reliable operation:

1. **Application Submission**: Prospective validators submit applications to join the network. These applications include basic information about the entity and its capacity to operate a validator node.
2. **DAO Review and Voting**: DAO reviews the applications and conducts a vote to determine whether a specific validator will be accepted to join the network. This process ensures decentralized decision-making in validator selection.
3. **Staking Mechanism**: Accepted validators must stake a predetermined amount of Clip Tokens. This stake serves two primary purposes:
   * **Economic Security**: By requiring validators to lock up valuable assets, we create a financial disincentive for malicious behavior in the intent-solving process.
   * **Performance Incentive**: The stake also serves as collateral against poor performance, encouraging validators to maintain high uptime and accuracy in processing intents.
4. **Slashing Mechanism**: We implement a slashing mechanism to penalize misbehavior:
   * Slashing involves the confiscation of a portion of a validator's staked tokens.
   * In our intent solver network, slashable offenses include fraudulently aborting transactions or consistently failing to validate intents accurately.
   * The slashing amount is calculated based on the amount of lost profit.

This system of staking and slashing creates a self-regulating network where validators are economically incentivized to act in the best interests of the Clip Finance ecosystem, ensuring reliable and secure cross-chain transactions.

## Secure Capital Allocation For Decentralized Solving

Our system implements a secure method for managing capital flow between users and decentralized solver nodes:

Smart contracts serve as the initial point of interaction for users, accepting deposits and issuing staked ETH rebase assets which are redeemable 1:1 for the original asset. This creates a secure entry point for user funds into the solving ecosystem.

Since solving requires holding funds in Externally Owned Accounts (EOAs) operated by decentralized nodes, we've developed an automated process to securely move capital between smart contracts and these nodes. This automation is crucial for maintaining both security and operational efficiency.

Proposer nodes continuously monitor the blockchain for withdrawal events. This event monitoring is similar to how bridge nodes operate in cross-chain systems, ensuring real-time awareness of capital movements.

When a user makes a deposit, the funds are automatically channeled to the node address for use in solving operations. For withdrawals, the process is more complex:

1. Proposer nodes listen for withdrawal requests.
2. They create batch withdrawal proposals based on the time sequence of requests.
3. These proposals are sent to the validator node.
4. Validator nodes, having independently observed the same withdrawal requests, validate the proposal and execute it.

To ensure transparency and foster trust, all event-tracking components of our system are open-sourced. We consider this functionality fundamental and not a competitive differentiator. This approach allows for community verification of the capital movement process and encourages collaborative improvement of the system.

This comprehensive approach to capital allocation ensures that funds are securely managed throughout the solving process, from user deposit to withdrawal, while maintaining the decentralized nature of the network.

## Q & A

<details>

<summary>How do solver network operators earn returns while solving at a loss or breakeven?</summary>

The concern of a race to the bottom exists, but there are always opportunities where solvers are able to fill intents with profit. For example whoever owns the end-user can set themselves as exclusive solver. Most solvers focus on small-value intents (up to 3 ETH), but our pooled liquidity lets us handle higher-value intents (e.g., 25 ETH). Bridge operators often lack enough liquidity for large transfers, making our solution valuable. Additionally, bridges are improving by assigning intents exclusively to solvers, reducing inefficient competition—like splitting intents equally among a set number of solvers.

</details>

<details>

<summary>Is the validator node always intended to be centralized, or will it become decentralized later?</summary>

For the MVP, we’re focusing on minimal decentralization, ensuring no ownership of user funds. As we scale, we plan to add more decentralization, but we will keep the execution code closed-source to maintain a competitive advantage. The goal is redundancy and no custody of pooled user funds, but without opening up our strategic execution logic.

</details>

<details>

<summary>What incentive does the DAO have to accept new solver node operators? Wouldn't adding more nodes reduce profits?</summary>

To become a solver node and earn a share of the fees, operators must acquire and stake CLIP tokens. The community votes on new solver nodes, ensuring that operators are aligned with the ecosystem’s interests.

</details>


# Interconnected Liquidity Network (ILN)

Blazing-fast, decentralized cross-chain bridge by clip finance. Connect your blockchain to other blockchains under 1 hour.

## TLDR

The **Interconnected Liquidity Network (ILN)** is a 2-second cross-chain bridging solution, evolved from Clip Finance’s decentralized solver pools into a blazing-fast bridge. By leveraging a solver-as-a-service model and retail liquidity pools, ILN provides near-instant asset transfers and high APYs across 30+ chains. Critically, any new chain can onboard in under one hour via a self-serving kiosk, eliminating the need for manual approvals or lengthy integrations. This plug-and-play approach empowers blockchains, liquidity providers, and users to access unified liquidity, frictionless cross-chain movement, and a streamlined user experience.

For more background on our decentralized solver pools, please see the [Clip Finance Decentralized Solver Network Litepaper](/clip-finance-infrastructure/decentralized-solver-network-litepaper).

***

## Introduction

### The Cross-Chain Challenge

Decentralized finance (DeFi) has expanded across a multitude of blockchains, Layer 2 networks, and app chains. While this growth is promising, interoperability has become a significant challenge. Many existing bridges suffer from:

* Slow Transaction Speeds: Transfers can take minutes—or even hours—to finalize.
* Limited Liquidity: Bridges often lack robust liquidity pools, leading to high slippage or blocked transactions.
* Complex Integration: Onboarding new chains typically requires permission and lengthy manual processes.

### Evolution from Decentralized Solver Pools

Clip Finance pioneered decentralized solver pools, where solvers compete to fill user transaction intents. Building on this technology, we’ve evolved into a blazing-fast bridging solution called the Interconnected Liquidity Network (ILN). By combining solver-as-a-service with retail liquidity and self-serve chain integration, ILN addresses the fundamental challenges of cross-chain asset movement.

***

## Core Principles

1. **Solver-as-a-Service**
   * ILN transactions are facilitated by our flagship solver, with future plans to open this model to other solvers.
   * Solvers handle the heavy lifting of bridging, locking assets on the source chain, and releasing liquidity on the destination chain—ensuring fast and cost-effective transactions.
2. **Retail Liquidity Pools**
   * Inspired by the pool-based approach of other solutions, ILN’s liquidity pools are funded by retail liquidity providers.
   * Instead of spinning up servers and managing infrastructure to become a solver, users can simply deposit their liquidity into ILN’s pools.
   * Liquidity providers earn high APYs for enabling instant cross-chain transfers.
3. **Blazing-Fast Settlement**
   * By using intent-based transactions and solver-as-a-service, ILN achieves 2-second bridging speeds (as opposed to minutes or hours).
   * This near-instant experience is a key differentiator in user satisfaction and DeFi adoption.
4. **Self-Serving Kiosk for New Chains**
   * Unlike many bridging solutions that require manual approvals or complex integration, ILN offers a self-serving kiosk.
   * Any new chain—whether it’s a Layer 2 or an app chain—can add their RPC endpoint, deposit an initial amount of liquidity, and connect to the ILN in under one hour.
   * This plug-and-play approach dramatically reduces onboarding time and grants immediate access to 30+ chains in the network.
5. **Unified Liquidity Layer**
   * Once integrated, chains tap into a global liquidity layer that’s shared across all participants.
   * Users benefit from consistent access to capital, minimal slippage, and near-instant transfers across a growing ecosystem of chains.

***

## How It Works

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FoErIzR4LU3SKb4DIZPa3%2Fimage.png?alt=media&amp;token=78b9335c-cf85-4521-9508-5a3ae2c509be" alt=""><figcaption></figcaption></figure>

1. **User Initiates a Cross-Chain Transfer**
   * The user specifies the source chain, destination chain, and asset amount.
   * An intent is created and broadcast to the solver.
2. **Solver Locks Source Assets**
   * The solver locks or otherwise secures the user’s asset on the source chain.
   * Simultaneously, it releases an equivalent asset amount from the retail liquidity pool on the destination chain.
3. **Near-Instant Delivery**
   * The user receives their bridged asset on the destination chain in about 2 seconds.
   * Meanwhile, off-chain settlement finalizes any outstanding transactions or liquidity adjustments.
4. **Liquidity Provider Rewards**
   * Liquidity providers in ILN’s pools earn fees or APYs for enabling the solver to deliver instant cross-chain transactions.
   * This model scales as more users and blockchains join, increasing total liquidity and fee revenue.

***

## General EVM Layer 2 Chain Case Study

### Background

An emerging EVM Layer 2 (L2) chain has a native Ethereum-L2 bridge but seeks to onboard users from multiple ecosystems (Polygon, Arbitrum, BNB Chain, etc.) in near real-time, not just from Ethereum.

### Integration Steps

1. **RPC Access**
   * The L2 chain provides ILN with an RPC endpoint, enabling the solver to read and write transactions on the chain.
2. **Initial Liquidity Deposit**
   * The L2 (or a designated liquidity provider) deposits a base amount of ETH (or another asset) into ILN’s L2-side pool.
   * When a user on Polygon bridges 1 ETH to the L2, the user instantly receives that 1 ETH from the pre-deposited pool.
3. **2-Second Bridge**
   * The bridging process typically completes in 2 seconds, drastically outperforming conventional 5-10 minute solutions.
   * The solver-as-a-service handles cross-chain settlement behind the scenes.
4. **Outcomes**
   * **Frictionless Adoption**: Users can move assets from 30+ chains to the L2 with near-zero wait times.
   * **Liquidity Gains**: The L2’s total value locked (TVL) increases as users bring more assets over.
   * **Competitive Edge**: Instant bridging differentiates the L2 chain in a crowded market, attracting dApps and end-users.

***

## Comparison with Existing Bridges

| Feature                  | ILN (Clip Finance)                                         | Stargate                      | LayerZero                | Across                 | Others (Wormhole, Axelar, etc.)                 |
| ------------------------ | ---------------------------------------------------------- | ----------------------------- | ------------------------ | ---------------------- | ----------------------------------------------- |
| **Bridging Speed**       | \~2 seconds                                                | \~5-10 minutes                | Minutes                  | 1-15 minutes           | Minutes to hours                                |
| **Liquidity Model**      | Retail Liquidity + Solver-as-a-Service                     | Pool-based                    | Bootstrapped liquidity   | Cross-chain relayers   | Varies: typically selective or aggregator-based |
| **Chains Supported**     | 30+ (and growing)                                          | Selective                     | Growing                  | L2-centric             | Typically limited, slower expansions            |
| **Transaction Flow**     | Intent-based, solver executes instantly                    | Single-route bridging         | Multi-route bridging     | Single aggregator      | Usually aggregator or single bridging approach  |
| **Integration Model**    | Self-Serve Kiosk (No Permission, < 1 hour)                 | Permissioned                  | Usually permissioned     | Usually permissioned   | Usually permissioned or partial                 |
| **Settlement Mechanism** | Off-chain solver finalization                              | On-chain finality             | On-chain finality        | On-chain finality      | On-chain finality                               |
| **Security Approach**    | Solver staked collateral, fast settlement reduces MEV risk | Protocol-level security model | Configurable trust model | UMA-based verification | Multi-sig or guardian-based                     |

*(Exact times vary by chain load and finality.)*

***

## Conclusion

The **Interconnected Liquidity Network (ILN)** is the next evolutionary step from Clip Finance’s decentralized solver pools, now adapted into a blazing-fast bridging solution. By utilizing a solver-as-a-service approach and retail liquidity pools, ILN delivers 2-second cross-chain transfers for a growing ecosystem of 30+ chains.

Any new chain can self-onboard in under one hour by simply adding an RPC endpoint and depositing initial liquidity—instantly gaining access to a unified liquidity layer and a vast user base. Liquidity providers benefit from high APYs, while users enjoy a frictionless, near-instant bridging experience.

As the blockchain landscape evolves, ILN stands out as a scalable, permissionless, and efficient solution for cross-chain interoperability, shaping the future of decentralized finance.

***

**Get Involved**

* **Developers & Blockchains**: Integrate your chain using our self-serve kiosk for instant cross-chain liquidity in under one hour.
* **Liquidity Providers**: Deposit assets into ILN’s retail pools and earn high APYs for enabling near-instant bridging.

**Website**: [Clip Finance](https://www.clip.finance/)


# Clip Finance V1 (legacy)

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FT71lxdUS8BIiAu6K8nmL%2F7.png?alt=media&amp;token=4431dcac-4d14-4f6d-8f3f-8e8592e4f7cc" alt=""><figcaption></figcaption></figure>

**Smart Vaults**

* **Definition and Functionality**: Smart Vaults in Clip Finance are advanced vaults encompassing multiple pools with varied weights. They're designed for users who prefer a hands-off approach to managing their DeFi investments.
* **User Benefits**: Users delegate the rebalancing and strategy optimization to the underlying system by depositing into a Smart Vault. This allows them to benefit from a diversified DeFi strategy without the need to constantly monitor and adjust their investments.
* **Technical Mechanism**: Each Smart Vault dynamically adjusts its allocation across different pools based on market conditions and predefined metrics. This is accomplished using AI-driven algorithms and off-chain computation to optimize returns and minimize risks.

**Smart Pools**

* **Overview**: Smart Pools are individualized strategies within Clip Finance. They can vary widely, encompassing concentrated liquidity strategies, bridge strategies, real-world asset (RWA) integrations, and more.
* **Flexibility for Advanced Users**: Users with specific strategy preferences can directly invest in individual Smart Pools, allowing them to target particular DeFi strategies that align with their risk appetite and investment goals.
* **Technical Mechanism**: Pools support both compounding and not compounding deposits. Pools can target different yield-generating protocols, which can have various underlying requirements for generating yield. Pools that route funds into a decentralized exchange with a concentrated liquidity model require hands-on range management. At the same time, pools that deposit into a bridge liquidity pool can be operated completely passively.

#### **Integration and Adapters**

* **Integration for DEXs and Websites**: Decentralized exchanges (DEXs) and other DeFi websites can integrate with Clip Finance to offer their users enhanced liquidity management and yield generation solutions.
* **Building Custom Yield Solutions**: Projects and platforms can utilize Clip Finance's infrastructure to build their own tailored yield solutions, leveraging the platform's advanced strategies and security features.
* **Adapters and Expansion**: Clip Finance's system includes various adapters to interact with different DeFi protocols. New adapters can be added following a specific protocol, enabling the system to remain agile and responsive to new opportunities in the DeFi space.


# Step-by-Step Guide

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FhvmYSnZ1VYKoPlVw3d32%2F9.png?alt=media&amp;token=48639613-f542-4519-86e2-debb8d90af66" alt=""><figcaption></figcaption></figure>

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2F9QDxbND0sMqhWSwXNOGQ%2F1.png?alt=media&amp;token=b61eacf5-ef7e-44ae-bd8c-a7f3321064a2" alt=""><figcaption></figcaption></figure>

You will naturally start on our homepage ([https://clip.finance](https://www.clip.finance/)). From here you will want to launch our app and you will have to accept the acknowledgement you can see below.&#x20;

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FhgvoZk2uZwnsnGrcauwP%2FScreen%20Shot%202024-02-06%20at%204.26.48%20PM.png?alt=media&amp;token=347f1998-b64d-4148-a4e7-69be42314d25" alt=""><figcaption></figcaption></figure>

Once you have accepted the acknowledgment, you will be routed to the "Earn" page.  This is our live stablecoin vault that combines simple AMM, CLMM, and bridge stablecoin yields.&#x20;

With one click you can gain exposure to all of these sources of yield in one place. You won't have to pay the gas fees to deposit into each of these protocols, the yield is more stable given the diversified basket of assets the yield is coming from, and you will gain more yield as Clip Finance has an auto-rebalance mechanism building into our stablecoin vaults.

Submit the amount you want to deposit: we currently accept USDC and USDT. Next, click "Give Permissions."

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2Fsz9SLlw26TtvvkunUMUt%2F2.png?alt=media&amp;token=bd8cedca-87d3-4f5c-8e23-f017544f934f" alt=""><figcaption></figcaption></figure>

This permission you are giving is pretty simple: you are giving Clip Finance the ability to spend x amount of stablecoins. Select an amount larger than the maximum you ever might deposit so that you do not have to give permissions again.

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FoJhasPgd5SZ61EQRgHKW%2F3.png?alt=media&amp;token=40136cf8-05e9-4d08-bc6b-0005525a8a5f" alt=""><figcaption></figcaption></figure>

Confirm this in your wallet.

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FL1UZ4VBuY33JKM3RZdjg%2F4.png?alt=media&amp;token=183efb3f-71a3-4f22-9e9c-e0d8284b9179" alt=""><figcaption></figcaption></figure>

Finally, click "Deposit" and your transaction will need to be confirmed in your wallet. Once this is done your deposit will start earning yield.

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FjYAfIAO9vnv7ADAg4XDk%2F5.png?alt=media&amp;token=1482076d-4ab0-4212-80e9-498fcd7671ce" alt=""><figcaption></figcaption></figure>

Above you can see where we are currently (at the time of this writing) allocating the funds deposited into the BSC and Linea stablecoin vaults. You can check these allocations in real time by scrolling down on the "Earn" page you deposited on.

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2Fb5Iz0lE6rovuaHAshjGm%2F6.png?alt=media&amp;token=d4e40393-974e-4164-8998-90e04ac19359" alt=""><figcaption></figcaption></figure>

To see the funds you deposited into the stablecoin vault, select "Manage."

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FGPsPkiSD7MoI2jGPW4Ao%2F7.png?alt=media&amp;token=4631a55e-708e-4188-ac12-2cdb157a9809" alt=""><figcaption></figcaption></figure>

You will see the total amount deposited here, along with your yearly, monthly, weekly and daily yield projections. You can also see your live reward accumulation here.

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FbltT5LQyKsfaVVP9OXtJ%2F8.png?alt=media&amp;token=576f5228-e95e-451b-8cd5-d32d87ef6b1b" alt=""><figcaption></figcaption></figure>

To withdraw your assets and cumulative yield or some part your stablecoins, simply click "Withdraw Assets."&#x20;

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2F4PHhupv5xpPZWADklrWx%2F9.png?alt=media&amp;token=b0dff430-82ad-4656-be1b-af64a48da27c" alt=""><figcaption></figcaption></figure>

Select the amount you want to withdraw and select "Withdraw."

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FDjjYvWzvyrXSkUYYt34w%2F10.png?alt=media&amp;token=6dffc5ec-9b86-4d28-a95b-37baf2f10b99" alt=""><figcaption></figcaption></figure>

Confirm the transaction in your wallet and then wait for the transaction to process.

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2F6kb2OUpTwjYtolg4ezkj%2F11.png?alt=media&amp;token=bf59ba22-89f2-4d13-ae3a-6ac7af8636c4" alt=""><figcaption></figcaption></figure>

You can check in your wallet for your incoming funds or confirm in the "Manage" tab that you in fact have had your withdrawal deducted from your balance.&#x20;


# Introduction to Yield Farming Strategies

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2F52IQmxg38xMQpc1jW6dS%2F10.png?alt=media&amp;token=d31fd710-2474-47c4-bdb5-b5f68dd11fa5" alt=""><figcaption></figcaption></figure>

Yield farming strategies are the leading product of Clip's ecosystem.

## What are Strategies?

Clip Finance's modular smart contracts execute stablecoin yield farming strategies and return profits to Clip's users. All strategies go through a risk scoring procedure and are rigorously tested by the Clip Finance contributors before implementation.&#x20;

These smart contracts are pieces of code that autonomously execute yield farming actions by interacting with the relevant external protocols. The strategies auto-compound token rewards to maximize profits. Despite the automated nature of Clip's strategies, users can withdraw their initial investment and profits from the protocol at **any** time.

Clip Finance is initially building on the Binance Smart Chain (BSC) but will be implementing yield farming strategies across 10+ leading blockchains.

## How are Strategies Chosen?

Yield farming strategies are researched and deployed by the Clip Finance contributors. We regularly monitor stablecoin opportunities across the leading blockchains to identify the safest and most lucrative yield farming strategies. Our crypto native team (building since 2013) uses its industry know-how in the assessment of each yield farming strategy.

Clip also analyzes new strategies against a comprehensive risk scoring matrix. The resulting risk score plays a vital role in the strategies we choose to implement. [Read more about the risk scoring procedure here.](/clip-finance-yield-strategies/risk-scoring-matrix)


# Example Strategy Types

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FJkf1C0z0xTAzWr8km72M%2F11.png?alt=media&amp;token=0f15d0d3-41ff-48b8-a612-6e8dadc2cfa5" alt=""><figcaption></figcaption></figure>

## CLMM (Concentrated Liquidity Market Making) Strategies

### **Narrow Wide Strategies**

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FKQHsiz4u8am11DRHljgs%2FGITBOOK%20WALKTHROUGH%20(1).png?alt=media&amp;token=c92bd7de-1f99-4ff5-bcf6-4d48d5980a31" alt=""><figcaption></figcaption></figure>

**Functionalities**: Narrow/Wide strategies focus on setting liquidity within either tight (narrow) or broad (wide) price ranges on Concentrated Liquidity Automated Market Maker. Narrow ranges are optimized for earning higher fees in stable markets, whereas wide ranges aim at capital efficiency during volatility.

**Operational Mechanisms**: Utilizing concentrated liquidity features of protocols like Uniswap V3, these strategies dynamically adjust the price range of liquidity provision based on market trend predictions and volatility assessments.

**DeFi Benefits**: Users benefit from potentially higher yield in stable conditions (narrow) and reduced impermanent loss in volatile markets (wide), enhancing overall capital efficiency.

### **Pegged Strategies**

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FqQECZmwI1t0E0PT9cR51%2FGITBOOK%20WALKTHROUGH%20(1).png?alt=media&amp;token=35fab3ef-817f-4fc1-8c88-36c88b57203b" alt=""><figcaption></figcaption></figure>

**Functionalities**: Pegged strategies are designed for assets expected to maintain a stable price relation, such as stablecoin pairs. The focus is on managing liquidity for minimal impermanent loss.

**Operational Mechanisms**: Smart contracts monitor the pegged price relationship, adjusting liquidity parameters to maintain optimal positions within AMMs, ensuring minimal deviation from the peg.

**DeFi Benefits**: These strategies offer users a reduced risk of impermanent loss, making them ideal for conservative investors seeking stable returns from liquidity provision.

### **Multi-Range Vaults**

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FC0yuX4vqPNoyBdVHzBU5%2FGITBOOK%20WALKTHROUGH%20(3).png?alt=media&amp;token=7f7869a6-28d0-4208-a768-f1f2fd6a925e" alt=""><figcaption></figcaption></figure>

**Functionalities**: Multi-range vaults allow liquidity to be distributed across several price ranges, maximizing fee-generation opportunities across different market conditions. Also great for market-making opportunities for custom token projects that wish to have more control over the supply and demand of specific price ranges

**Operational Mechanisms**: By leveraging algorithmic models, these vaults dynamically reallocate liquidity to the most optimal ranges.

**DeFi Benefits**: This approach gives more control over price exposure.

### **Hedged Up/Down Strategies**

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2Fn3ZSHtaBlhdIrGNvijNZ%2FGITBOOK%20WALKTHROUGH%20(4).png?alt=media&amp;token=745b3dc6-f7f2-4994-9b8c-b1453cd3d990" alt=""><figcaption></figcaption></figure>

**Functionalities**: Hedged Up/Down strategies involve taking positions that are inversely related to the market movements to protect or profit from price changes. "Hedged Up" positions benefit from price increases, while "Hedged Down" positions gain when prices decline.

**Operational Mechanisms**: These strategies typically employ derivatives like perpetual contracts to hedge positions, using projects like Kwenta to automate the hedging process based on market signals and volatility indicators on-chain.

**DeFi Benefits**: By minimizing exposure to adverse price movements, these strategies can help reduce impermanent loss.

## **Non-CLMM Strategies**

### **Bridge Liquidity Pools**

**Functionalities**: These pools facilitate asset transfers between different blockchains, providing liquidity for cross-chain swaps.

**Operational Mechanisms**: Smart contracts manage the liquidity in these pools, ensuring that assets are available for bridging.

**DeFi Benefits**: Users benefit from single-sided liquidity deposits which means having no impermanent loss.

### **Liquid Staking, Real-World Assets (RWA) Pools, Derivatives**

**Functionalities**: These strategies offer additional yield opportunities by engaging in liquid staking, investing in tokenized real-world assets, or participating in derivative markets.

**Operational Mechanisms**: Deploying smart contracts that interact with various DeFi protocols, these strategies optimize yields across different asset classes and financial instruments.

**DeFi Benefits**: They provide diversified income streams, enhancing portfolio resilience against market volatility and offering access to novel DeFi yield opportunities.

### **Liquid Staking Strategies**

**Functionalities**: Liquid staking strategies enable users to participate in network security and consensus mechanisms without locking assets or losing liquidity. Users can stake their cryptocurrencies in exchange for staking derivatives that represent their staked assets plus potential yields.

**Operational Mechanisms**: Through smart contracts, Clip Finance interacts with liquid staking platforms to stake assets on behalf of users. These contracts handle the issuance of staking derivatives, track yields, and allow for the seamless exchange back to the original asset or trading within the ecosystem.

**DeFi Benefits**: This strategy offers users the dual benefits of contributing to network security while earning staking rewards. It also maintains liquidity, allowing users to utilize their staked assets in other DeFi activities without withdrawing from the staking mechanism.

### **Real-World Assets (RWA) Pools**

**Functionalities**: RWA pools involve the tokenization of real-world assets, such as real estate, commodities, or art, into tradable tokens on the blockchain. This strategy allows users to invest in and derive yields from assets outside traditional cryptocurrency markets.

**Operational Mechanisms**: Clip Finance pools distribute yields, and facilitate trading or liquidity provision within RWA pools.

**DeFi Benefits**: By diversifying into real-world assets, users can potentially reduce portfolio volatility and access yields from economies outside the cryptocurrency space. This strategy also democratizes access to investment opportunities previously available only to large investors or institutions.

### **Borrowing & Lending Strategies**

**Functionalities**: Borrowing and lending strategies involve the provision or acquisition of liquidity through DeFi protocols, enabling users to lend their assets for interest or borrow against their holdings.

**Operational Mechanisms**: Through smart contracts, Clip Finance participates in DeFi lending protocols, automating the process of lending assets for yield or creating leveraged positions through borrowing. These strategies carefully manage risk and optimize the interest rate differential between lending and borrowing.

**DeFi Benefits**: This approach provides users with interest on lent assets and access to liquidity without the need to sell holdings. It also introduces financial leverage into yield strategies, amplifying potential returns while managing the associated risks.


# APY calculation

The **Total APY** for each pool calculates in the pool asset.

Firstly we fetch and calculate several values:

* Supply rate APY (for leveraged lending)
* Borrow rate APY (for leveraged lending)
* Reward market state (which could include additional supply or borrow rates APYs)
* Leverage factor (which is multiplied by all the above APYs)

Then calculate the **Base APY** and **Reward APY** (subtracting Borrow from Supply).

For wstETH and ezETH, we also calculate the Liquidity staking APY, which we receive from third-party sources.

Finally, to get the **Total APY** we sum up the **Base APY** (and add its compound factor), **Reward APY**, and liquidity staking APY.


# Adding Strategies

Clip Finance process to add new strategies into yield farming pool

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FW3OnNVUrmaZYU61k9nRV%2F12.png?alt=media&amp;token=8aee84c9-8f30-4843-935a-a87439e63ba0" alt=""><figcaption></figcaption></figure>

## Power of the collective

We believe in the power of collective ideas when it comes to building yield strategies. As a community, we recognize that each individual brings their own unique perspective and expertise to the table and by coming together, we can achieve better investment outcomes than any one individual could achieve alone.

## Our philosophy

Our philosophy is rooted in the concept of the wisdom of crowds, and we believe that by harnessing the collective intelligence of our community, we can build more comprehensive and effective yield strategies. We are committed to fostering an environment of collaboration and knowledge-sharing, where members can learn from one another and benefit from the diverse perspectives and experiences within the group.

## Possibilities

As a developer, you are incentivized to build the most secure and profitable strategies. If your strategy is selected to be included in the Router, you get paid a share of the revenue generated by the strategy.

If you’re launching a pool as a protocol, your biggest challenge is attracting liquidity. Protocols can submit their strategy to the Clip Finance community for inclusion in the Strategy Router. If the risk-scoring process is passed and the submitted strategy gets deployed to the Router, a portion of Clip’s TVL will be directed to the protocol’s pool.

As a community member and Clip governance token holder, you can vote on which strategies should be included in the Router and help shape the future of Clip Finance.

Below you will learn about the process of adding new strategies to the Strategy Router.


# STEP 1 - Evaluation

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FlQhZS5WgsTGMlH5PKS91%2Fclip_gitbook_hero_images21_1.jpg?alt=media&amp;token=3ce9e080-9cc3-498e-bb1b-f68b5447c62c" alt=""><figcaption></figcaption></figure>

At this stage, you are welcome to open a discussion on the governance forum. Explore with the community if the strategy would be interesting before moving forward. Get feedback on your ideas and suggestions for improvement. Clip’s governance forum & discord are the best way to go through the discovery phase and get input from other community members.

Inside the governance forum, you will see the proposal structure we’d like to see for proposing new strategies.

Please head over to link below to see the format of the discussion creation.

{% content-ref url="/pages/e8iM86EjWWALHG6epCvn" %}
[Strategy Discussion](/clip-finance-yield-strategies/adding-strategies/strategy-discussion)
{% endcontent-ref %}


# STEP 2 - Strategy Development

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FAalxLkDsyuNQsG68qdnL%2Fclip_gitbook_hero_images21_2.jpg?alt=media&amp;token=f5813669-d5a9-4276-9db6-2bff8d399cb8" alt=""><figcaption></figcaption></figure>

Follow the following steps to develop the strategy.

1. Fork the Clip Finance StrategyRouter repo.
2. Add a new contract with the name of the strategy to <mark style="color:red;">**`contracts/strategies/`**</mark>.
3. Write a new strategy contract in the new folder, making sure to include the necessary functions and structure as demonstrated in the previous strategies (e.g., <mark style="color:red;">**`deposit`**</mark>, <mark style="color:red;">**`withdraw`**</mark>, <mark style="color:red;">**`withdrawAll`**</mark>, <mark style="color:red;">**`compound`**</mark>, etc.). Ensure that you are using the appropriate libraries provided below.
4. Write tests in the <mark style="color:red;">**`contracts/tests/strategies/`**</mark> for your new strategy contract, ensuring comprehensive coverage of all essential aspects, such as depositing tokens, withdrawing tokens, compounding tokens, etc.
5. Make a Pull Request with the changes on your fork, to the main Clip Finance StrategyRouter repo, with a comprehensive explanation of the strategy.
6. Head over to the governance forum and submit your strategy.

By following this process, you can ensure that your DeFi project is listed on Clip Finance and that it adheres to the standard structure and best practices for strategy contracts within the Clip Finance ecosystem.

1. <mark style="color:red;">**`@openzeppelin/contracts/token/ERC20/utils/SafeERC20.sol`**</mark>: This library provides a set of utility functions to interact with ERC20 tokens safely. The <mark style="color:red;">**`SafeERC20`**</mark> library ensures that interactions with tokens are handled correctly and do not result in unexpected behavior.
2. <mark style="color:red;">**`@openzeppelin/contracts/access/Ownable.sol`**</mark>: This library provides the <mark style="color:red;">**`Ownable`**</mark> contract, which is a widely-used access control mechanism
3. <mark style="color:red;">**`../StrategyRouter.sol`**</mark>: This library defines the <mark style="color:red;">**`StrategyRouter`**</mark> contract. The <mark style="color:red;">**`StrategyRouter`**</mark> contract is responsible for managing and routing the interactions between different strategies and the various components of the system, such as farming contracts, liquidity pools, and exchange plugins. By importing the <mark style="color:red;">**`StrategyRouter`**</mark> contract, you ensure that their strategies are compatible with the overall system architecture and can be seamlessly integrated into the platform.

**Smart Contract Structure:**

Every strategy smart contract should have the following functions:

* <mark style="color:red;">**`depositToken`**</mark>: This view function returns the address of the token that the strategy accepts for deposit.
* <mark style="color:red;">**`deposit`**</mark>: This function should handle the deposit of tokens into the strategy. It should take the necessary parameters, such as the amount of tokens to deposit, and update the relevant state variables.
* <mark style="color:red;">**`withdraw`**</mark>: This function should allow the withdrawal of a specified amount of tokens from the strategy. It should take the necessary parameters, such as the amount of tokens to withdraw, and update the relevant state variables.
* <mark style="color:red;">**`withdrawAll`**</mark>: This function should allow the withdrawal of all tokens from the strategy. It should update the relevant state variables and ensure that the token balances are correctly updated.
* <mark style="color:red;">**`totalTokens`**</mark>: This function should return the total amount of tokens managed by the strategy.
* <mark style="color:red;">**`compound`**</mark>: This function should reinvest the accrued rewards earned by the strategy back into the underlying asset, thus increasing the overall value of the strategy. This function should perform the following tasks:
  1. Claim any pending rewards from the relevant farming contract or liquidity pool.
  2. Convert the rewards into the underlying asset, either by swapping tokens on our exchange plugin.
  3. Deposit the converted rewards back into the farming contract or liquidity pool to increase the strategy's position and potential future rewards.

**Testing Strategy Smart Contracts:**

Tests should be comprehensive and cover all essential aspects of the strategy smart contract, including:

* Token: <mark style="color:red;">**`depositToken`**</mark> function: Verify that the function returns the correct token address as expected.
* Depositing tokens: Test that the <mark style="color:red;">**`deposit`**</mark> function works correctly by checking the token balances and state variables before and after the deposit.
* Withdrawing tokens: Test the <mark style="color:red;">**`withdraw`**</mark> function by simulating various withdrawal scenarios (e.g., partial withdrawal, full withdrawal, etc.) and checking the token balances and state variables before and after the withdrawal.
* Withdrawing all tokens: Test the <mark style="color:red;">**`withdrawAll`**</mark> function by simulating various scenarios (e.g., with and without pending rewards, etc.) and checking the token balances and state variables before and after the withdrawal.
* Compounding tokens: Test the <mark style="color:red;">**`compound`**</mark> function, and ensure that the <mark style="color:red;">**`compound`**</mark> function correctly claims the pending rewards from the farming contract. Verify that the function successfully converts the claimed rewards into the underlying asset. Confirm that the function deposits the converted rewards back into the farming contract or liquidity pool. Ensure that the <mark style="color:red;">**`compound`**</mark> function handles edge cases and error conditions correctly, such as when there are no pending rewards to claim, when the conversion rate is unfavorable, or when the liquidity pool has insufficient liquidity to support the conversion.

**Code Quality and Maintainability:**

Ensure the code is clean, well-structured, and adheres to best practices. This includes:

* Using clear and descriptive variable and function names.
* Writing modular and reusable code, including the use of libraries and helper functions where appropriate.
* Documenting the code with comments to explain the purpose and functionality of each function and any complex logic.
* Adhering to the Solidity style guide and best practices, such as proper function visibility, error handling, and gas optimization.


# STEP 3 - Vetting Process

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FVNpJxstXZNK90krFPzMt%2Fclip_gitbook_hero_images21_3.jpg?alt=media&amp;token=ba7d12be-c498-41eb-ac2f-4e28ca51bf3e" alt=""><figcaption></figcaption></figure>

The strategy will then undergo a thorough vetting process by the Clip Finance core contributors and specific DAO working groups. This includes a review of the smart contract code, security audits, and a review of expected returns and risks.

If the strategy passes the vetting process, it will be put up for governance proposal.

If the strategy does not pass the vetting process, the developer will be given feedback on how to improve the strategy for future consideration.


# STEP 4 - Deployment and Governance Proposal

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2Foffu5WD4CUrofHaHGkN4%2Fclip_gitbook_hero_images21_4.jpg?alt=media&amp;token=a9c33eeb-d3ae-47a2-a651-312b6f4a217a" alt=""><figcaption></figcaption></figure>

Once all security procedures are finished, Clip’s DAO will deploy the necessary smart contracts and initiate the on-chain governance proposal.

To prevent governance decisions from being made hastily or without sufficient consideration, Clip Finance uses a timelock contract. A timelock contract is a smart contract that introduces a delay between when a proposal is submitted and when it can be executed.

Once a proposal has been submitted to the Clip Finance DAO, it must be approved by a quorum of token holders before it can be executed. This ensures that proposals are supported by a significant portion of the community before they are implemented.

If a proposal is approved, it is added to the timelock queue for execution. The timelock contract then waits for the specified delay period to elapse before executing the proposal. This provides an additional layer of security and oversight, as it allows the community to cancel a proposal before it is executed if necessary.

Please refer to a more detailed overview of the governance procedures.

{% content-ref url="/pages/cskUa3rsUiSyVUnxZj6c" %}
[Governance Procedures](/about-us/governance-procedures)
{% endcontent-ref %}


# Strategy Discussion

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FJ4WO51mStf2mOadexyP1%2Fclip_gitbook_hero_images21_5.jpg?alt=media&amp;token=50779105-dc6e-45de-b164-6b7b6c3e2f1d" alt=""><figcaption></figcaption></figure>

**Title:** Yield Earning Strategy: \[Strategy Name]

**Introduction:** Provide a brief introduction of the yield-earning strategy idea, and potential benefits to the CLIP Finance ecosystem.

**Strategy Overview:**

1. **Assets Involved:** List the assets that will be part of this strategy.
2. **Protocols Involved:** List the protocols that will be part of this strategy. And give a brief overview of these protocols with websites.
3. **Doxxed:** Are the founders of protocols involved in the strategy known? If not, please add your comment on why you trust them.
4. **Mechanism:** Explain the mechanism behind the proposed yield earning strategy, including how it works, potential risks, and ways to mitigate those risks.
5. **Fees:** Address if there are any deposit or withdrawal fees.
6. **Insurance:** Are involved protocols insured?
7. **Bug Bounty**: Does the protocol have a bug bounty program?
8. **Expected Yield:** Provide an estimate of the expected yield from implementing this strategy and any factors that may influence it.
9. **Desired Allocation:** Provide % allocation of Clip total pool towards the given strategy.
10. **Development:** Provide information concerning the development of the strategy. By who, for how long, and what necessary funding will be needed?
    1. **Develop the strategy yourself:** If you have the necessary skills and expertise, you can develop the strategy independently.
    2. **Request funding to develop the strategy:** If you have a solid strategy idea but need financial support to bring it to fruition, you can request funding from the Clip Finance community. This funding could be used to hire developers, perform audits, or cover other costs associated with the development of the strategy. Present a detailed plan outlining the funding requirements and how the funds will be utilized.
    3. **Ask the core contributors to develop the strategy:** If you believe your strategy idea has significant potential but you lack the technical expertise to develop it, you can request the core contributors of Clip Finance to take on the development. Be sure to provide a thorough explanation of the strategy, its benefits, and the reasons why it should be prioritized by the core contributors.
11. **Longevity:** Evaluate the sustainability of the proposed strategy. Do you have a napkin calculation of how much the growth of the pool will dilute rewards (or are the protocol fees paid to LPs growing rapidly as well, etc)?
12. **Risk assessment:** Evaluate where the proposed strategy stands in the risk scoring matrix.
    1. Ensure that your strategy aligns with the protocol's risk appetite. Risk categories considered include yield farms and connected services, stablecoins, liquidity risk, and impermanent loss risk. Strategies are classified into four risk levels: Low, Medium, High, and Reject Risk. Review the risk following the [**Risk Scoring Matrix**](/clip-finance-yield-strategies/risk-scoring-matrix)
13. **Similar Strategies (optional):** Mention any similar strategies that have been successfully implemented in other yield optimizer protocols or platforms, and explain what differentiates your proposal.
14. **Miscellaneous:** Links to POCs and other relevant resources that would help study the underlying strategy.
15. **Disclosures:** State any affiliation to the protocol.


# Risk Scoring Matrix

Detailing the protocol's internal procedure for evaluating and monitoring yield farming strategies.

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FGAkXoc7IV7OC0MDhPrIH%2F13.png?alt=media&amp;token=00963568-059c-4865-b341-395a04f6835c" alt=""><figcaption></figcaption></figure>

Clip Finance has defined the “risk appetite” as the total level of exposure to risks associated with different yield farming strategies we’re deploying to earn a yield for our users.

Clip Finance has taken into account the level of risk that the protocol is prepared to assume and chooses its yield farming strategies accordingly. As part of our governance decentralization efforts, we plan to delegate the deployment of strategies, including the risk assessment, to a strategy deployment council which includes the most professional smart contract developers and strategists.

The risk scoring procedure is developed to detect and monitor deployed strategies in order to keep our users out of harm’s way.

For the purpose of identification, assessment and analysis of risks, Clip Finance has prepared the following risk assessment, and in doing so takes into account at least the following risk categories:

* risks relating to yield farms and other connected services (bridges, swaps, etc)
* risks relating to stablecoins;&#x20;
* liquidity risk and impermanent loss risk

As a result of the risk assessment we identify the risk levels as follows:

* Low Risk&#x20;
* Medium Risk&#x20;
* High Risk&#x20;
* Reject Risk

Clip Finance does not deploy any strategies in the Reject Risk category. However, we may deploy strategies in Low, Medium, and High-risk categories.

### Rules of procedure to evaluate yield strategy risks

Clip Finance has established the following rules of procedure that will allow for the effective mitigation and management of risks relating to yield farming strategies:

* a procedure for the application of due diligence measures of the specific yield farming strategy;&#x20;
* Clip Finance has designed a risk matrix model for the identification and management of risks relating to yield farming strategies and related risk categories (as described in this document);&#x20;
* Clip Finance has documented the process of approving or rejecting the deployment of new yield farming strategies, as well as monitoring the existing yield farming strategies;

### Deploying new yield farming strategies

Before deploying new yield farming strategies, Clip Finance will create a risk score for the particular strategy. If the strategy is not in the Reject Risk category, the core contributors will vote on whether to deploy the strategy, which includes the deployment timeline and stress testing results. In the future, the voting process will be carried out by the specialized council.

### Risk Scoring

Factors that have been considered in order to evaluate the risk of a strategy:

* External protocols: risks relating to yield farms and other connected services (bridges, swaps, etc).&#x20;
* the risk relating to stablecoins;&#x20;
* liquidity and impermanent loss risk

The risk factors have been subjectively weighted in order to provide a score for each risk:

<table data-full-width="true"><thead><tr><th>Risk categories</th><th>Percentage given to each risk (assessed separately)</th><th>Weight in the overall Risk Assessment</th></tr></thead><tbody><tr><td>External protocols</td><td>100%</td><td>70%</td></tr><tr><td>Stablecoins</td><td>100%</td><td>15%</td></tr><tr><td>Liquidity and impermanent loss</td><td>100%</td><td>15%</td></tr></tbody></table>

**External Protocols**

We’re always looking for the best risk and reward relationships. Whenever possible, Clip Finance will prefer low-risk external protocols as counterparties. Even so, third-party AMMs, bridges, yield farms, and other DeFI protocols which Clip Finance protocol interacts with, pose the highest risk to our service. We can’t always ensure safety and foresee potential risks and adverse events that may occur, and must rely on the reputation and public information of these protocols.

**Stablecoin Risk**

Stablecoins hold numerous risks depending on the type of stablecoin being used. These risks include, but are not limited to:

* Regulatory risk (if the regulators ban the usage of stablecoins to the extent they can);
* De-pegging risk (if the stablecoin de-pegs from the pegged underlying asset like the US dollar);
* Technology and business risk of the issuer;
* Algorithm risk (algorithmic stablecoin algorithm fails under the market conditions).

While we don’t assign a lot of weight to stablecoin risk category, a realisation of the risk may cause harm to our users. We will mitigate the stablecoin risk by using collateralized stablecoins and hence believe the small overall weight to the total risk score is justified.&#x20;

**Liquidity and Impermanent Loss**

There may be, even if momentarily, insufficient liquidity of any particular token on the external protocol Clip Finance uses to generate yield. This may lead to delays in withdrawals. Clip Finance auto compounds yield on a daily basis (or in smaller time intervals depending on the specific strategy contract), which means we shall detect any liquidity issues quickly.

Clip Finance positions may experience an impermanent loss with extreme price movements. The protocol will rebalance (auto compound) Clip Finance positions with small time intervals, but even so, there could be short term value decreases in positions held in external protocols.&#x20;

### Factors characterising the risk

When we’re evaluating strategies we will take the following factors into account:

* longevity of the external protocol;&#x20;
* whether the external protocol has had any issues in the past and how these issues were handled;&#x20;
* the team and community behind the external protocol;&#x20;
* administrative permissions (i.e. how protocol wallets are controlled and by how many people);
* audits and bug bounties of the external protocol; our internal audit of the code;
* tokenomics of the external protocol;&#x20;
* liquidity on the external protocol

### Thresholds

The levels of risk are as follows:

* 1-35%: Low Risk&#x20;
* 35%-55%: Medium Risk&#x20;
* 55% - 75%: High Risk&#x20;
* 75% -100%: Reject

### Example of a strategy risk score:

Let’s use the farming yield on Aave protocol as an example. Stablecoin risk contributes 15% (for the sake of simplicity for this example). IL and liquidity risk, in this case, is 3% in the overall risk score because we’re assigning only 20% of the risk to it when perceived separately (in reality this would be even less due to Aave’s deep liquidity). As Aave is a well-established protocol, we’d assign a 10% risk to it separately, meaning it would contribute 7% to the total score. The total risk score of this simplified example would be 25%, i.e. it would qualify as a low-risk strategy.

Aave strategy example risk score:

<table data-full-width="true"><thead><tr><th>Risk categories</th><th>Percentage given to each risk (assessed separately)</th><th>Weight in the overall Risk Assessment</th></tr></thead><tbody><tr><td>External protocols</td><td>10%</td><td>7%</td></tr><tr><td>Stablecoins</td><td>100%</td><td>15%</td></tr><tr><td>Liquidity and impermanent loss</td><td>20%</td><td>3%</td></tr></tbody></table>

### Hard Rules For Monitoring Strategies

After the initial risk scoring of each specific strategy, Clip Finance must monitor the deployed strategies and the potential changes to the risk profile of these strategies. In the table below, we're listing our current hard rules for the deployed strategies.&#x20;

This is a work in progress, and we will be updating the table and how we must react if any of the described events occur.

<table data-full-width="true"><thead><tr><th>Criteria</th><th>Clip's action</th></tr></thead><tbody><tr><td>Exploit of pool</td><td>Reallocate to other strategies</td></tr><tr><td>At least 60% of Clip's TVL in low risk strategies</td><td>Reallocate to other strategies if the rule is broken</td></tr><tr><td>Up to 30% of Clip's TVL in medium risk strategies</td><td>Reallocate to other strategies if the rule is broken</td></tr><tr><td>Up to 10% of Clip's TVL in high risk strategies</td><td>Reallocate to other strategies if the rule is broken</td></tr><tr><td>Up to 20% of Clip's TVL can be deployed in one strategy (one external protocol)</td><td>Reallocate to other strategies if the rule is broken</td></tr></tbody></table>

<table data-full-width="true"><thead><tr><th>Funds allocation boundaries by TVL on specific chain</th><th></th></tr></thead><tbody><tr><td>Clip's funds can count for up to 10% of the strategy protocol total TVL</td><td>Exit strategy to idle balance / other strategies</td></tr><tr><td>Clip's funds can count for up to 20% of the specific pool in the strategy protocol</td><td>Exit strategy to idle balance / other strategies</td></tr><tr><td>2+ asset pools where the stablecoin ratio becomes imbalanced, the ratio of a larger asset to a smaller asset in the pool should be a maximum of 1.4x (i.e. 70% MIM - 30% USDT).<br>3+ assets: DAI/USDC/USDT if one of assets has 46%+ ratio.</td><td>Exit strategy to idle balance / other strategies</td></tr></tbody></table>

Stablecoin related risks and risk management rules:

<table data-full-width="true"><thead><tr><th>Base stablecoins: USDC, USDT, BUSD</th><th></th></tr></thead><tbody><tr><td>Strategy stablecoin (BUSD, FRAX, DAI, ...) depegs $0.98</td><td>Exit strategy and swap to another base stablecoin</td></tr><tr><td>One base stablecoin loses value below $0.98</td><td>Swap to another base stablecoin</td></tr><tr><td>At least 50% of stablecoins deployed in strategies should always be in base stablecoins (USDC, USDT, BUSD)</td><td>Swap to base stablecoins if the ratio of base stablecoins falls below 50% (for example, swap from FRAX -> USDT)</td></tr></tbody></table>

### Clip Finance Risk Disclosure

As a technology product Clip Finance may be a target of a malicious hacking event. We mitigate the risk via doing continuous third-party code audits by top security firms, opening a bounty program, and directing part of the revenue to the Clip Finance insurance and recovery funds.


# Our Values

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2F8d9SusKcXtnxclBniUMm%2F15.png?alt=media&amp;token=c71d2fb3-728e-444b-aca1-1f74fbd60e4e" alt=""><figcaption></figcaption></figure>

The Clip Finance team is dedicated to providing the best user experience in DeFi. At the same time, we recognize the need for proper values and principles to set an example for the whole industry.

DeFi is often seen in a negative light by both its participants and those looking in. This is the result of greed and poor moral judgment - two traits that plague every emerging industry. This greed has resulted in significant financial loss to innocent users and caused outsiders to question the intentions and safety of our industry.

At Clip, we accept this reality but also celebrate that the best and brightest minds in the world are building this industry to create a better future. We recognize the power that DeFi has to transform the imperfections of our global financial systems. Our team intends to further that mission.

Clip Finance believes in the positive impact that can come from sharing our guiding values and principles. The most relevant (for the users) of these business principles are the following:

## Commitment

Many projects in crypto do not have a good roadmap or real experience in building a business, or they have raised a lot of money and thus have lost the motivation to execute, or contributors just lose interest due to the number of opportunities in the space.  This often leads to a lack of long-term commitment. At Clip, we're hyper-focused on a long-term vision of building the very best future for our users.

## User Experience

Clip builds everything to create a great user experience. We live and die by the experience of our users. DeFi's complexity continues to make it inaccessible for many. We're changing that by placing simplicity, safety, and transparency at the core of our product thinking.

## Transparency

We're 100% transparent with our users about the yield they're earning, the strategies we use, and the protocol fee structure. Always.

## People and Processes

Projects are made successful by a high-quality team and a process-oriented mindset. At Clip, we're bringing in A-level builders and contributors with experience executing at a high level. A process-centric protocol with great people is the path to sustainable success.

## Decentralization

Our team is spread across Europe and North America. We're transitioning to a community-governed protocol with delegated councils. Decentralization is a vital part of Clip's identity.&#x20;

## Safety

Our code will be audited by two third-party security firms before launch. We'll also be performing periodic audits to monitor the safety and performance of Clip's smart contracts. In addition, each strategy will be rigorously examined by our risk-scoring[ matrix](/clip-finance-yield-strategies/risk-scoring-matrix) before going live. To further protect our users, we're engaging with an insurance provider and will be setting up an internal recovery fund. Safety is a pillar of Clip Finance - our actions speak for themselves.

## Balanced Growth

Startups make mistakes as they grow - we likely will too. But when people's funds are at stake, it's critical to prioritize the safety of the protocol in every decision made. We emphasize balanced growth to ensure the long-term sustainability of Clip Finance while bringing continued value to the community.&#x20;

## Community

Building a vibrant and organic community is difficult. We're focused on attracting people who create value, foster interesting discussions, share cool memes, and support the protocol's success. [We hope you'll join us.](https://discord.gg/SvB38aP8rw)


# Governance Procedures

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FAtLkVZhMujTQLEgpSmxE%2F6.png?alt=media&amp;token=ca17057f-8e26-49cd-a637-68ef531e342e" alt=""><figcaption></figcaption></figure>

Clip Finance will undergo a three-stage governance process, ensuring the smooth and efficient development of the protocol while gradually transitioning to a fully decentralized system where both on & off-chain governance systems are implemented.

## Stage 1: Multisig Governance

In the initial stage, most of the governance will be conducted through [snapshot.org](http://snapshot.org) and executed by the core contributors' multi-sig wallet. This approach ensures swift and continuous development of the protocol while allowing the community to participate in decision-making.

During this stage, governance will include:

* Creating and discussing proposals on the Clip Finance forum
* Voting on proposals using [snapshot.org](http://snapshot.org)
* Execution of approved proposals by the core contributors' multi-sig wallet

## Stage 2: Implementation of On-Chain Governance

As Clip Finance progresses, the governance structure will transition to a combination of on-chain & off-chain governance. In this stage, the ownership of the contracts will be transferred to a timelock contract, providing an additional layer of security and decentralization.

### Delegating Governance Power to Core Contributors

To ensure that core contributors can actively participate in the governance process from the start, an equivalent amount of **voting rights of** the first milestone allocation will be delegated to their wallets. This delegation will enable core contributors to create proposals and vote on them until they receive their token allocation.

Once the first milestone is reached and tokens are allocated, the governance structure will progress to the combination of the on-chain & off-chain governance system outlined in Stage 2.

By following this governance process, Clip Finance aims to strike a balance between the efficiency and agility of off-chain decision-making and the security and decentralization of on-chain governance. This approach will allow the protocol to adapt and evolve while maintaining the highest standards of transparency and community involvement.

### Proposal

In Clip Finance, a mechanism is implemented to encourage well-thought-out proposals and discourage spam or malicious proposals. To submit a proposal, users are required to lock a certain amount of Clip (CLIP) tokens. The locked tokens function as a deposit, ensuring that the proposer has a vested interest in the success of the proposal and the protocol.

Step-by-Step Guide for Locking Tokens to Submit a Proposal

1. Acquire CLIP tokens: Before you can submit a proposal, you need to have a sufficient amount of CLIP tokens in your wallet. You can acquire CLIP tokens through various methods such as purchasing them on decentralized exchanges or participating in liquidity mining programs.
2. Access the Clip Finance Governance Portal: Navigate to the Clip Finance Governance Portal using a web3-enabled browser. Ensure that your wallet is connected to the portal.
3. Lock CLIP tokens: In the Governance Portal, find the "Lock Tokens" section. Here, you can specify the amount of CLIP tokens you wish to lock. Please note that there is a minimum requirement for the number of tokens that must be locked to submit a proposal. Enter the amount and click "Lock Tokens" to proceed.
4. Receive Governance Clip Tokens (GCLIP): Once the transaction is successful, you will be issued Governance Clip Tokens (GCLIP) equivalent to the number of CLIP tokens locked. GCLIP tokens represent your locked CLIP tokens and your voting power in the governance process. These tokens will be visible in your wallet and on the Governance Portal.
5. Create a proposal: With GCLIP tokens in your wallet, you can now create a proposal. Navigate to the "Create Proposal" section in the Governance Portal and fill out the required information, including a title, description, and any necessary links to supporting documentation. Once complete, click "Submit Proposal."
6. Proposal review and voting: After submitting your proposal, it will be reviewed by the community and may proceed to the voting stage. If your proposal reaches the voting stage, other CLIP & GCLIP holders can vote for or against your proposal.
7. Unlocking CLIP tokens: If your proposal is approved and executed, or if you no longer wish to participate in governance, you can unlock your CLIP tokens 30 days after the lock or proposal outcome by navigating to the "Unlock Tokens" section in the Governance Portal. Specify the amount of GCLIP tokens you wish to unlock and click "Unlock Tokens." Confirm the transaction in your wallet, and your CLIP tokens will be returned to you, while the equivalent GCLIP tokens will be burned.

By implementing a token-locking mechanism, Clip Finance ensures that governance participants have a genuine interest in the protocol's success and helps maintain the integrity of the governance process.

### Quorum

In order for a proposal to succeed, a minimum of XXX CLIP or GCLIP must participate in the vote. Any changes to the quorum requirements must be amended by the community through a CIP (CLIP Improvement Proposal).

Each vote has to reach the minimum quorum, even if it has a majority, for it to be considered an official proposal. It is the responsibility of the proposal author to enlist voting participation from the community in order to reach a quorum.

## Policy

Clip Finance Governance enacts policies on key parameters that are determined within the protocol. A policy is defined as a set of governance-defined rules that control specific aspects of the protocol or individual strategy. Policies set the governance-defined rules and can be classified as follows:

1. Protocol Policies: These policies govern the overall behaviour of the protocol and the entities belonging to it. They regulate specific aspects of the protocol related to safety, economics, and expansion.
2. Strategy Policies: These policies are defined in the context of each strategy and, for strategies belonging to the Clip Finance ecosystem, they are specified within the boundaries identified by the Protocol Policies. A strategy participating in the Clip Finance ecosystem needs to operate under safety policies that do not violate the protocol safety policies.

The governance of these Policies is the core function of Clip Finance as a protocol for yield optimization.

### Protocol Policies

* Risk Policies: The Risk Policies define the set of rules that ensure the safety and protection of the protocol and the users participating in it. Risk Policies include, but are not limited to, decision-making for:
  * Assets compatible for integration within Clip Finance: The list of assets for which risk is deemed acceptable for the safety of the protocol.
  * Base risk parameters for strategy implementation and liquidation: The risk parameters that are governed affect all yield optimization strategies and set global boundaries for those strategies.
* Improvement Policies: Improvement policies define rules under which ecosystem improvements are incepted, developed, and applied to the ecosystem, including but not limited to:
  * Smart Contracts
  * Governance processes
  * Governance contracts
* Incentives Policies: Incentives Policies define the rules under which token incentives in Clip Finance are generated. Financial incentives are used to shape behaviours within the ecosystem to achieve a common objective. For Clip Finance, the common goal is to ensure the safety of the protocol, cost-efficient usage by the market participants, and proper ecosystem incentives to drive innovation and long-term growth of the ecosystem.


# Deployed Contracts

Clip Finance is currently deployed on Binance Smart Chain (BSC) and Linea blockchains. All contract addresses are so-called predictable addresses meaning they are the same across different chains.

## BNB Chain

**Strategy Management:**

* **StrategyRouter:** [`0x03A074D130144FcE6883F7EA3884C0a783d85Fb3`](https://bscscan.com/address/0x03A074D130144FcE6883F7EA3884C0a783d85Fb3)

**Batch Operations:**

* **Batch:** [`0xfCcc0ECE0daD2Ef38c84de53168dC0923c6c68d1`](https://bscscan.com/address/0xfCcc0ECE0daD2Ef38c84de53168dC0923c6c68d1)
* **BatchOut:** [`0x0839691c82F5B0231c97fdD5Af8073491fa0998c`](https://bscscan.com/address/0x0839691c82F5B0231c97fdD5Af8073491fa0998c)

**Token and Receipts:**

* **SharesToken:** [`0xDD49bF14cAAE7a22bb6a58A76C4E998054859D9a`](https://bscscan.com/address/0xDD49bF14cAAE7a22bb6a58A76C4E998054859D9a)
* **ReceiptNFT:** [`0x4661Ac8b3Dbf8Db241Cc89a3EdeAD3c884900839`](https://bscscan.com/address/0x4661Ac8b3Dbf8Db241Cc89a3EdeAD3c884900839)

**Oracle Module:**

* **Oracle Aggregator:** [`0x8482807e1cae22e6EF248c0B2B6A02B8d581f537`](https://bscscan.com/address/0x8482807e1cae22e6EF248c0B2B6A02B8d581f537)

**Exchange Module:**

* **Exchange Aggregator:** [`0x10D4Df9A82131a2707fE2F529F18177Aa5B08FbA`](https://bscscan.com/address/0x10D4Df9A82131a2707fE2F529F18177Aa5B08FbA)

**Exchange Adapters:**

* **PancakeV2:** [`0xBa0F3227827e70a2462e2F669B7f437f995BdbE8`](https://bscscan.com/address/0xBa0F3227827e70a2462e2F669B7f437f995BdbE8)
* **PancakeV3:** [`0x7c42c186a9Ecc027d2f4957A2F08C6d503700cDb`](https://bscscan.com/address/0x7c42c186a9Ecc027d2f4957A2F08C6d503700cDb)
* **Wombat:** [`0x82A5f499adBbB509F44d76458528912eb7E93B77`](https://bscscan.com/address/0x82A5f499adBbB509F44d76458528912eb7E93B77)
* **Biswap:** [`0xD894241ccD889a49762C7232925E850F3ECDd549`](https://bscscan.com/address/0xD894241ccD889a49762C7232925E850F3ECDd549)
* **Thena (Algebra):** [`0x0D18aa1C6AAAA2FdcA4D42AEA990b30B57f59f3A`](https://bscscan.com/address/0x0D18aa1C6AAAA2FdcA4D42AEA990b30B57f59f3A)

**Strategy Modules**

* **DodoUsdt:** [`0x4Cf8EB987ba724D690A5Bba80D607F58E1b7C020`](https://bscscan.com/address/0x4Cf8EB987ba724D690A5Bba80D607F58E1b7C020)
* **DodoBusd:** [`0xac7Ba31eCDF6a2e1a8dac10494B552C2CEeED917`](https://bscscan.com/address/0xac7Ba31eCDF6a2e1a8dac10494B552C2CEeED917)
* **StargateUsdt:** [`0xfAcd8A564Db63A984Cc7E98B04388E297bB29CF2`](https://bscscan.com/address/0xfAcd8A564Db63A984Cc7E98B04388E297bB29CF2)
* **BiswapHayUsdt:** [`0x53B29D8c8191d94Aaedf7cDd7cD3A18113bb3457`](https://bscscan.com/address/0x53B29D8c8191d94Aaedf7cDd7cD3A18113bb3457)

**Idle Strategy Adapter:**

* **Busd Idle Strategy:** [`0xaE592F7Eff121974C80436148FBE82a82bbc6716`](https://bscscan.com/address/0xaE592F7Eff121974C80436148FBE82a82bbc6716)
* **Usdc Idle Strategy:** [`0x2a4088eB99bEE65123bacD00047108c3846c3b3A`](https://bscscan.com/address/0x2a4088eB99bEE65123bacD00047108c3846c3b3A)
* **Usdt Idle Strategy:** [`0x8C927DfD7c3aA5f85f57d69B8e8F4E3f9435f003`](https://bscscan.com/address/0x8C927DfD7c3aA5f85f57d69B8e8F4E3f9435f003)
* **Hay Idle Strategy:** [`0xf7E13f7A1328e7918C4a60533995f791B1f253a1`](https://bscscan.com/address/0xf7E13f7A1328e7918C4a60533995f791B1f253a1)

**Administrative Operations:**

* **RouterAdmin:** [`0x1a23D1Fb27197dee889A2Acd5dda9CC7656694C4`](https://bscscan.com/address/0x1a23D1Fb27197dee889A2Acd5dda9CC7656694C4)

## Linea

**Strategy Management:**

* **StrategyRouter:** [`0x03A074D130144FcE6883F7EA3884C0a783d85Fb3`](https://lineascan.build/address/0x03A074D130144FcE6883F7EA3884C0a783d85Fb3)

**Batch Operations:**

* **Batch:** \
  [`0xfCcc0ECE0daD2Ef38c84de53168dC0923c6c68d1`](https://lineascan.build/address/0xfCcc0ECE0daD2Ef38c84de53168dC0923c6c68d1)
* **BatchOut:** [`0x0839691c82F5B0231c97fdD5Af8073491fa0998c`](https://lineascan.build/address/0x0839691c82F5B0231c97fdD5Af8073491fa0998c)

**Token and Receipts:**

* **SharesToken:** [`0xDD49bF14cAAE7a22bb6a58A76C4E998054859D9a`](https://lineascan.build/address/0xDD49bF14cAAE7a22bb6a58A76C4E998054859D9a)
* **ReceiptNFT:** [`0x4661Ac8b3Dbf8Db241Cc89a3EdeAD3c884900839`](https://lineascan.build/address/0x4661Ac8b3Dbf8Db241Cc89a3EdeAD3c884900839)

**Oracle Module:**

* **Oracle Aggregator:** [`0x6Eb57a62e466c628858092Eb8cB281dD6381BE42`](https://lineascan.build/address/0x6Eb57a62e466c628858092Eb8cB281dD6381BE42)

**Exchange Module:**

* **Exchange Aggregator:** [`0x10D4Df9A82131a2707fE2F529F18177Aa5B08FbA`](https://lineascan.build/address/0x10D4Df9A82131a2707fE2F529F18177Aa5B08FbA)

**Exchange Adapters:**

* **Pancake Swap:** [`0xBEcaE84e794E5Bd567c105ee92ADeA95CbaBb754`](https://lineascan.build/address/0xBEcaE84e794E5Bd567c105ee92ADeA95CbaBb754)
* **Izumi Swap** [`0xBaDBEe493bED00850eEC6820D4e86e7D58Ba91B5`](https://lineascan.build/address/0xBaDBEe493bED00850eEC6820D4e86e7D58Ba91B5)

**Concentrated Liquidity Single Pool Adapter:**

* **PHyperLPool - Pancake USDCe-USDT:** [`0xEEea7dD3c998aFd9f298C041E4AA8A3c41b02A6C`](https://lineascan.build/address/0xEEea7dD3c998aFd9f298C041E4AA8A3c41b02A6C)
* **PCLBase - Pancake USDCe-USDT::** [`0x7811D7B33747F854cf918b9b64Ee4531944467C0`](https://lineascan.build/address/0x7811D7B33747F854cf918b9b64Ee4531944467C0)

**Idle Strategy Adapter:**

* **USDCE Idle Strategy:** [`0xfA0f2045a1785f8B76E077Ade65630616c0c9771`](https://lineascan.build/address/0xfA0f2045a1785f8B76E077Ade65630616c0c9771)
* **USDT Idle Strategy:** [`0x8C927DfD7c3aA5f85f57d69B8e8F4E3f9435f003`](https://lineascan.build/address/0x8C927DfD7c3aA5f85f57d69B8e8F4E3f9435f003)

**PancakeSwap Strategy Module:**

* **PancakeUSDCE:** [`0xcC5A0f241B8f2e8e66359Bc3BB5f84F7382E9116`](https://lineascan.build/address/0xcC5A0f241B8f2e8e66359Bc3BB5f84F7382E9116)

**Administrative Operations:**

* **RouterAdmin:** [`0x0d598920fc65439e71D2CE359E4A933d82900A46`](https://lineascan.build/address/0x0d598920fc65439e71D2CE359E4A933d82900A46)<br>


# Security

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FSOKbBHSj00ZM1Ov9K5Uz%2F16.png?alt=media&amp;token=f9ef3d15-49e6-4ac2-a88b-f56abd37156a" alt=""><figcaption></figcaption></figure>

Clip Finance is dedicated to ensuring the security of its users. Our preventative strategies include multiple third-party code audits, protocol insurance funds, and a bug bounty program. We've also implemented risk mitigation techniques to proactively monitor safety and security as the Clip ecosystem expands.

## Audits

The Clip Finance code is audited by Three Sigma. The audit report is uploaded as a PDF.&#x20;

{% file src="/files/Lb4D7AbQrnHKaU3mO9T4" %}

Automated liquidity management component

{% file src="/files/jpn3T5rLbFMkHb6j2QaZ" %}

{% hint style="info" %}
Public references of audits <https://github.com/threesigmaxyz/publications>
{% endhint %}

## Protocol Insurance

Clip will have an insurance and recovery fund to protect users in the case of an exploit. As our TVL increases, we will also be implementing third-party insurance to further protect investors.

Our insurance fund is funded by the protocol revenues. If any of the risks realize and Clip's protocol or any of the external protocols are exploited, the insurance fund is used to cover the losses of our users. If the insurance fund can't cover the losses, we'll deploy the recovery fund. The recovery fund (also funded by the protocol revenues) will distribute payments to the affected users on a pro-rata basis for up to three years or until the loss has been reimbursed. The size of the payments depends on the protocol revenue, as a fixed percentage of the revenue is directed to the recovery fund.

## Risk Scoring Matrix

All strategies are assessed by our comprehensive risk-scoring matrix. The resulting score heavily influences the strategies we choose to deploy. More details on this matrix can be[ read here. ](/clip-finance-yield-strategies/risk-scoring-matrix)

## Bug Bounty

Clip believes its preventative measures and risk mitigation strategies will be effective. That said, when it comes to protocol security - you can never be too careful.&#x20;

Our code is 100% open-source, enabling the community to identify concerns and provide feedback on our contracts. On top of this, we will have a bug bounty program which will be announced before the launch. This will financially incentivize white hat hackers to search for imperfections in our protocol.&#x20;


# FAQs

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FrHYQB6NMskWk7Nr1Avdy%2F17.png?alt=media&amp;token=69540339-e9ea-4fe4-b37a-ff021ae24ac0" alt=""><figcaption></figcaption></figure>

### Will there be a token?

Yes. Clip Finance will have token generation event (TGE) once protocol hits $1 million in TVL.

### Is Clip Finance audited?

Our code will be audited by ThreeSigma, please see audit report [here](/about-us/security).

### Who is on the Clip team?

We're a team of 10. We have 5 full-time developers, business, community, and marketing operations.

The Clip team's crypto journey started in 2013. Our core contributors have built retail-focused crypto products with over 11 million users (>$7 billion volume transacted), founded tokenization and FinTech platforms, won a Chainlink hackathon, and spent the past four years immersed in DeFi.&#x20;

We're experienced builders and yield farmers turning passion into reality with Clip Finance. We're looking to expand our team. If you're interested in joining us, please reach out on [Discord](https://discord.gg/SvB38aP8rw) or [Telegram](https://t.me/clipfinance).


# Socials & Contact

Where can I find the Clip Finance community?

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2Flgh35gBY3qcVBjYA8cYW%2F18.png?alt=media&amp;token=4c17a48b-c892-468f-b9a0-d2d16f47f0b0" alt=""><figcaption></figcaption></figure>

* Follow us on [Twitter](https://twitter.com/ClipFinance)
* Read our blog on [Medium](https://clipfinance.medium.com/)&#x20;
* Join our community on [Discord](https://discord.gg/SvB38aP8rw)
* Contact our team on [Telegram](https://t.me/clipfinance)
* See our development on [Github](https://github.com/ClipFinance)


# Brand Assets

<figure><img src="https://2437159720-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FN6q1bVEIwJ69YdzhGzDS%2Fuploads%2FhRZRELivC2e18N9Jp7UL%2F19.png?alt=media&amp;token=bf08f1a3-f729-4e0c-a36e-d0359f2b0815" alt=""><figcaption></figcaption></figure>

All assets are available in vector, PNG and PDF formats.

<https://drive.google.com/drive/folders/1SQG3S5OukhiJKZvphiQZ9SIu7VA98qKk>