Superposition: Pioneering High Fidelity DeFi on Extremely Performative Blockchains

By Alex Hoffman, Head of Ecosystem, Superposition

Opportunity

Let's talk about the exciting new generation of highly performant, optimally parallelized blockchains that are changing the game. Latest layer 1 and layer 2 technology introduces high throughput solutions that push the boundaries of on-chain execution speed. These infrastructures are laying the groundwork for High Fidelity DeFi, enabling seamless cross-chain liquidity and offering us a peek into the future of decentralized finance.

The Problem

But here’s the catch—despite all these technological advancements, current DeFi solutions are still stuck in low-fidelity mode. Why? Because they rely on static and arbitrary risk models that just can't keep up with the dynamic nature of crypto markets. This leads to inadequate collateral risk management, heightened security risks, and a lack of borrower empowerment. The result? A DeFi landscape that's not living up to its full potential.

Challenges with Current DeFi Solutions

Let’s break it down a bit. Most DeFi platforms use over-collateralization to manage risk. For instance, platforms like MakerDAO require you to deposit more collateral than the amount you want to borrow. So, if you want to borrow $10,000 worth of stablecoins, you might need to deposit $15,000 worth of ETH. Sounds protective, right? But what happens if the value of ETH drops suddenly? Your collateral might be liquidated prematurely, even if you had every intention and capacity to repay the loan. This rigid, one-size-fits-all model just doesn’t cut it in a market that’s as fast-moving as crypto.

Current DeFi lending models don’t offer the flexibility needed for borrowers to express their unique risk preferences. Instead, users are forced into fixed collateral requirements and interest rates, limiting their ability to optimize returns or manage risks effectively. It's like we're stuck in the 1950s finance world but in the crypto space.

We desperately need High Fidelity solutions in DeFi. So, what exactly is High Fidelity DeFi?

High-Fidelity DeFi is a precise, reliable, and detailed solution, leveraging advanced technologies and high-performance infrastructure to deliver superior financial outcomes.

Here are its core principles:

1. Accuracy: sophisticated models that accurately reflect real-world financial behaviors and conditions. This means the data inputs and outputs are precise and closely aligned with actual market activities.
2. Reliability: systems that are dependable and consistently provide accurate information. This reliability is crucial for making informed decisions and managing risks effectively.
3. Transparency: systems and services that are transparent, providing clear visibility into how data is processed and how models operate. This transparency helps audit and verify financial activities.
4. Real-time Processing: data that is processed and updated in real-time, allowing for timely and informed decision-making.
5. Adaptability: systems that adapt to changing market conditions and incorporate new data dynamically, maintaining their accuracy and relevance over time.

A Paradigm Shift in Credit Towards High-Fidelity DeFi

Superposition harnesses the vast data available within blockchain technology and employs advanced AI learning modules to create High-Fidelity DeFi on extremely performant blockchains. As a High Fidelity DeFi platform, Superposition is fundamentally different from existing models. Here's how:

• Adaptive:
  • Asset Management: Utilizing Concordia's dynamic risk engine, we assess the real-time market volatility of collateral portfolios
  • Borrower Assessment: Leveraging Concordia's AI module and on-chain data, we construct comprehensive borrower profiles, incorporating both on-chain behavior and verifiable off-chain credentials
• Efficient: We offer optimal borrowing experiences and maximized capital efficiency by advancing the understanding of asset and user behaviors.
• Secure: We create purpose-built integrations with popular dApps to pool borrowed assets, isolate lending use cases, and reduce the potential for misuse or exploitation.

Roadmap

Stage 0 - Adaptive Asset Management (Completed): focuses on identifying asset-level risk context and creating purpose-built integrations based on borrowing intent.

1. Superposition Mainnet Beta went live on Aptos Mainnet in April 2024

2. Natively integrated with Concordia’s dynamic risk engine to derive data-driven, fully-optimized maintenance margin on multi-collateral portfolios.

3. Achieved industry-leading 20x leveraged LSD with purpose-built flash loan

4. Testnet live on Solana and EVM

   
   

Stage 1 - Ecosystem and Product Expansion

1. Ecosystem Expansion: strategic deployment on a short list of highly performative blockchains

2. Product Expansion:

   1. Re-staking product: expand leverage support to staking product with dedicated risk parameters.

   2. Purpose-built credit expansion: enabling instant and composable leverage yield products with dedicated use cases while enabling tranche products for lenders based on risk appetite.

      
      

Stage 2 - Adaptive Borrower Assessment

1. Transaction Pattern: leveraging Concordia’s AI module to identify and score users’ transaction risk behaviors based on historic transaction patterns.

2. Transaction History: bringing in on-chain history to assess borrower behavior in credit use cases in different market cycles.

3. Social Pattern: leveraging Concordia’s AI module to gain context on users’ social behaviors, such as NFT activities and DAO engagements, to derive social and reputational metrics.

   
   

Stage 3 - High Performance, High Fidelity Cross Chain DeFi

1. Cross-chain integration: cross-chain liquidity alignment, borrower identity merge, and chain abstraction provide a deeper level of borrower behavior context to enable an optimized borrowing experience.

2. High-Fidelity DeFi Pillar Extension: enable additional High-Fidelity DeFi pillars such as cross-chain swap, CDO, and yield products.

   
   

By incorporating these innovative features and adaptive strategies, Superposition aims to revolutionize the DeFi landscape, offering a secure, efficient, and user-friendly platform that is continuously optimizing to meet the ever-evolving needs of the crypto ecosystem.

About Alex Hoffman

Hoffman has navigated a life rich with diverse experiences and a relentless drive for entrepreneurship. Growing up in various cities across the Northeast and later relocating to Texas during high school, his sense of wanderlust was evident early on. His journey has taken him from Nashville to Atlanta, New York to Boston, and even overseas to Bali and Thailand. Hoffman’s entrepreneurial spirit was apparent from a young age. Determined to buy a computer, he undertook a paper route to earn the necessary funds, eventually purchasing a Sony Vaio that symbolized his independence and drive.

After college, Alex ventured into the consulting world, handling large international projects. Despite the success in consulting, his passion for creating something of his own remained strong. This led to several entrepreneurial endeavors across different industries, including a notable success in the healthcare sector, which resulted in two acquisitions and a significant exit to a billion-dollar conglomerate.

Alex's interest in cryptocurrency began with experimenting with Bitcoin mining on his MacBook in 2011, which sparked his curiosity, which further intensified during a series of Solana hackathons with a friend. Today, with 14 years of entrepreneurial experience, Alex Hoffman is the co-founder and head of ecosystem at Superposition, an omnichain credit hub.

About Superposition

Superposition is pioneering High Fidelity DeFi on extremely performative blockchains. Our first product is an omnichain credit platform powered by institutional-grade risk management, built on top of optimally parallelized blockchains using advanced AI learning modules to offer precise, reliable, and detailed solutions. We're currently in mainnet beta on Aptos. Superposition solves the DeFi bottleneck of inadequate collateral risk management, heightened security risks, and insufficient borrower empowerment. By analyzing real-time market volatility of collateral portfolios and incorporating on-chain behavior, Superposition offers maximized capital efficiency for the ecosystem and precise, personalized borrowing rates to users, pioneering the space and paving the way for High Fidelity DeFi.