Project Spotlight: Furucombo
Furucombo may appear like the ultimate DeFi sandbox, but novice users should still proceed with caution.
- Still in beta, Furucombo lets users stack "combos" and simplify much of the complexity in DeFi
- The community is active in creating new stacks of combos and sharing the results.
- Novice users should proceed with caution. The clean interface may make it difficult to identify the risks in one's stacks.
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Furucombo takes the “money legos” slogan and turns into a single platform.
The slogan refers to the reduction of traditional financial tools into their constituent parts. Once reduced to these parts, builders throughout the blockchain and crypto community can combine them in new and interesting ways.
These new stacks can unlock huge amounts of liquidity. The latest breakthrough can be seen in the newest yield farming craze. By moving various digital assets between DeFi protocols, so-called yield farmers can earn yields on their holdings upwards of 100%.
I farm $COMP on @Instadapp
I farm $REN on @CurveFinance
I farm $ETH on @tokensets
🌱 I farm yield in DeFi 🌱
What yield are YOU farming?
— Showtime Farmer 🌾 (@Yield_Farmer) June 20, 2020
Indeed, many with deep backgrounds in engineering are doing just that.
Unfortunately, those with a slightly less technical background must wait until these advances can be translated into digestible and actionable walkthroughs.
Failing to offer simple guides that include even more users could mean that DeFi, and the bounty of open finance, remains centralized in the hands of the few.
This is the impetus behind Furucombo. The project seeks to turn complex operations into simple, user-friendly buttons that can help experienced DeFiers earn a bit of extra money.
What Is Furucombo?
Furucombo is a product that enables users to take advantage of the intricacies of DeFi without coding skills. Broadly, it’s a toolkit that DeFi users can leverage to build DIY financial products.
DeFi is overcome with financially-savvy individuals. But frequently, these individuals are unable to leverage the complete functionality of DeFi because they cannot code and execute custom transactions.
Furucombo helps this demographic rise above these obstacles, with a system they refer to as “drag and drop DeFi.”
The app allows anyone to bundle transactions to create a meta-transaction.
Meta-transactions are transactions that have multiple transactions inside them. It turns three operations into a single click of the mouse. This tool can be used to set up a DeFi ETF, a passive income stream, or execute a flash loan for arbitrage.
iEarn Finance is one such protocol that facilitates meta-transactions to divert user funds to the money market with the best returns for a particular asset.
Likewise, Furucombo lets users create their own meta-transactions. The product bundles transactions to enable interoperable activity between any set of DeFi protocols in one fell swoop.
Further, it brings infamous flash loans to non-technical users.
Another video showing you guys off!
Defi Cubes and the Decombo Experience makes it so easy to teach people these revolutionary new concepts!#defi #furucombo #Ethereum #aave #kyber #compound #maker #uniswap #crypto #blockchain #busd $eth
— Alex Klein (@mylife4thehorde) June 23, 2020
The bundles are referred to as “combos,” and each step of the combo is visualized as a “cube.”
Let’s first look at how DeFi works without such a bundler:
- Bob owns USDT and wants to open a CDP and supply his freshly minted DAI to Compound because the return for lending DAI on Compound is high.
- Bob uses Uniswap to convert his USDT into ETH, BAT, USDC, or wBTC; any asset that can be deposited in Maker Vaults. For the sake of simplicity, let’s assume Bob converted to BAT.
- Bob now deposits his BAT in a Maker Vault. He proceeds to mint DAI in line with Maker’s collateralization norms.
- Now that he has DAI, Bob lends it out on Compound and receives cDAI in return.
This sequence requires Bob to execute four separate transactions (swap USDT for BAT, deposit BAT, mint DAI, deposit DAI), excluding contract approvals. He also needs to interact with three unique dApps (Uniswap, Maker, Compound).
Furucombo simplifies this by offering a single platform to execute this entire sequence, saving users time and energy. Users can move from USDT to supplying DAI minted from a Maker Vault to Compound in one transaction, via Furucombo.
If a person fancies themself as a diligent investor and wants to build a custom DeFi portfolio, they can leverage Furucombo to construct a custom ETF and lend out these assets in one transaction.
Or if the investor has 1,000 USDT to take advantage of lending yields in DeFi, but the highest returns are for DAI and USDC on Aave. Using Furucombo, the investor can convert the 1,000 USDT to DAI and USDC in whatever split they desire, and supply it to Aave in one transaction.
The use cases for Furuocombo are diverse, but the real utility lies in its ability to simplify DeFi.
Competitors and Product Differentiation
There are no direct competitors for the product Furucombo built. However, some of the functions have competitors.
For example, DeFi Saver lets users manage their Compound and MakerDAO positions, even offering flash loan functionality to close CDPs and change the collateral type.
PieDAO builds asset allocation strategies to diversify one’s holdings across crypto. But it doesn’t have the customizability that Furucombo does.
Still, Furucombo’s diverse offering puts the application in a league of its own.
Furucombo’s Growth Drivers
As a first of its kind value-add product, Furucombo can grow into a crucial element of DeFi.
The main goal is to abstract complexity from the fragmented DeFi ecosystem. Anybody can utilize Furucombo to sit on a level pegging with code-savvy investors. This could help onboard many who have been intimidated by the technical skills required for building and using smart contracts.
The top traders in legacy finance don’t understand how the backend of their financial infrastructure works, for example. Yet, there isn’t anything that can be done in the legacy system that these traders don’t know how to execute.
DeFi must converge to this standard. But this introduces a unique problem.
DeFi’s capabilities stem from its use of nascent technology. Operations like flash loans are impossible in the legacy system. They are only possible because Ethereum can process meta-transactions, allowing a loan to be made and paid back in a single transaction.
As it stands, however, a regular user has to spend a lot of time and money approving contract interactions and transactions with several different dApps to enjoy the profits from this synergy.
Simplifying these operations is necessary for DeFi to scale for the average Joe. Without this, it will remain a niche for sophisticated speculators and idealists. Having a front-end for a protocol like Uniswap, for example, goes a long way in abstracting this complexity.
But Furucombo takes this one step further by unlocking the synergies among the various DeFi protocols from a single interface.
Are There Any Drawbacks to Using Furucombo?
There are no hard drawbacks or significant trade-offs to using Furucombo. Some minor issues – for the time being – are inevitable.
The application is still in beta, so it shouldn’t be used to transact with large amounts of capital. Naturally, the product will eventually go live for regular usage.
Furucombo also makes clear an interesting behavioral aspect among users.
Since Furucombo bundles transactions, the upfront transaction fee to be paid is massive. For the swap mentioned above (USDT to BAT, BAT into MakerDAO for DAI, and DAI into Compound), the transaction fee was a whopping $21.
This was for a slow transaction that would take around 25 minutes to confirm. For a faster transaction, one would need to pay approximately $30. (Note: Gas prices were 45 gwei per gas at the time this example was tested).
Considering the number of steps, this probably saves users transaction fees. But the upfront cost of $21 is still daunting for some. This is because users are used to seeing $3-10 fees for interacting with a smart contract.
Another considerable drawback is that of abstracting away too much of the financial engineering happening behind the scenes. For new users who may be attracted to Furucombo and its ease-of-use, failing to understand the underlying mechanisms could be costly.
Earning high yields and fusing lash loans may be appealing, but they remain complex operations regardless of a sleek interface.
Furucombo’s Team and Community
When scanning social media channels, it becomes clear that many tinkerers have been inspired to create combos on the platform. Many of these tutorials can be found on Twitter and Youtube.
It should be said, however, that the team’s Telegram group is the most active and where admins are the quickest to respond. Admins are Chris Fish, Ben Huang, and Hsin Fang.
To follow the experimentation on the Internet, simply type in “#combochallenge” on Twitter to learn more about where the community is taking the app. Other non-crypto users may eventually overtake this hashtag, however, so please keep this in mind.
The team behind the project is hoping to accelerate this tinkering trend via interactive workshops.
Our first workshop is on this Tuesday! You would learn how to earn passive income with Furucombo step by step, powered by @compoundfinance and @AaveAave
The event will be held in Chinese, detail 👉https://t.co/zSig5HuMu6
Comment if you want the next one held in English 😝
— FURUCOMBO (@furucombo) June 21, 2020
An added benefit of participating in this community is that Furucombo simultaneously educates users on its product, but also offers users a clear guide on how each of the various DeFi protocols operates. It demands users ask themselves why they are stacking certain operations to achieve their objectives.
Consider the latest yield farming craze as an example.
Shortly after the cryptosphere erupted around the promise of high yields on various platforms, Furucombo quickly whipped up a combo that could pin down some of this hype.
In the click of a button, users can earn a high rate on their BAT holdings as well as a steady stream of Compound’s COMP token. The whole time, users can see how each operation is happening.
Furucombo is a unique project that offers a unique onboarding ramp to users looking to explore DeFi. Through cube combos, they are genuinely manifesting the money legos meme.
That being said, users are advised that though these combos are presented clearly, they must still take the time to understand the operation that they are building. It is, for this reason, that novice DeFi users should tread carefully.
In this context, Furucombo is less about mass adoption and instead about creating a platform for the financially-savvy to experiment with crypto. It is for this reason that Furucombo demands your attention.