Getting Granular

The idea behind Granary sprang to life in mid-2021, when its founders saw unfairness in the world of DeFi. High fees, lack of revenue sharing, and inflexible control structures meant the average user wasn’t getting a fair shake. Beyond that, many of our soon-to-be competitors seemed more like pump-and-dump schemes than well thought out financial protocols.

Later that year, after months of community-building, the team approached Byte Masons to help make their vision for fair and open finance a reality. In the following few months, a senior engineering team from Byte Masons worked with the Granary crew to train their lead developer and build out deployment and management infrastructure.

Since then, we’ve expanded Granary to 6 networks together, built out our own liquidation infrastructure, and grown our audience significantly, with over 30k Twitter followers, 15k Discord Users, 30k lenders, and 20k borrowers.

We’ve also grown closer as friends.

Byte Masons x Granary

What began as a service agreement evolved into deep cooperation with Granary on nearly every aspect of their business. We saw a future for Granary that would make other lending platforms obsolete, and over time the line between Byte Masons and Granary blurred into nothing.

Over sushi dinners, warzone meetings, and romps through San Francisco, the vision for Granary matured into a vision for all of finance: where DeFi could be more than just a niche or an experiment. We see an opportunity to build and mature a business capable of taking on Wall Street monoliths — not in theory but in reality.

Now that we’re nearing production with Reliquary and Ethos Reserve, our engineers have set their sights on Granary as our next big opportunity for innovation.

Using the same asset management system we built for Ethos and the same incentive flow described in my last article, we seek to close the gap between traditional and decentralized finance through the active management of Granary’s reserves.

Granary V2 Asset Flow

Leveraging its re-hypothecation vaults, Granary will be able to absorb capital from the surrounding ecosystem in the form of interest, fees, and incentives, and distribute that capital back to Granary users in the form of $GRAIN. Over time, as growth continues to accelerate, it will become a gravity well for capital and yield, and its users will collectively determine the flow of capital throughout the entire DeFi ecosystem.

Another exciting aspect of Granary V2 is that it gets better with time. As Reaper‘s risk and asset manage improve and as other protocols create more impactful yield opportunities, Granary users will directly benefit without needing to do anything but collect interest. This value will percolate through the entire Byte Masons technology stack and give us and our users the tools to build up financial weight.

To visualize the value Granary is capable of delivering, I’ve compared Aave’s revenue generated over the past 20 months to what Granary would have earned in the same context. This was done by calculating the earning potential month-over-month using Yearn’s average interest rate over that same period multiplied by unborrowed assets sitting in Aave.

Granary vs. Aave

I think the simplest insight to draw from this chart is scaling potential. Beyond that, you may see the potential for new interest-rate models entirely, as revenue from borrowing will contend with broader ecosystem yield.

Reaper will also enable margin lending and under-collateralized borrowing through Granary, giving us the ability to build unique options and derivatives products, driving more and more value into Granary and $GRAIN. Below is a high level of this value-sharing mechanism:

This leaves one question… where does $OATH come into play? I’ll leave that for the tokenomics article coming up next week.

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Justin Bebis

Justin Bebis

768 Followers

Smart Contract engineer focused on high-performance blockchain networks