CIAN - Yield Layer of DeFi 🟡

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Yesterday’s Space with @aave went well beyond a high-level discussion of lending and RWAs. The conversation moved from protocol architecture to the actual failure modes loopers face when they try to exit. 🎙️ Simo @alphaleaked framed a viable looping strategy around three conditions: • A positive spread between collateral yield and borrowing cost • Enough rate certainty to keep the trade predictable • Deep and fast exit liquidity That third condition is easy to underestimate. A looper can be right on the carry and still lose on the unwind if the spread compresses, the collateral’s risk profile changes, or the liquidity needed to close the position disappears. Simo explained how Aave V4 approaches these risks at the lending layer. Its hub-and-spoke architecture separates liquidity management from individual market configurations: liquidity can remain unified at the hub, while different spokes apply asset-specific collateral and risk settings. 🛡️ When Bonna @bonnazhu asked about exit routes under extreme market conditions, Simo laid out the order of defense clearly. The interest rate curve is the first line of defense. Risk parameters, including supply and borrow caps, provide a preventive layer, while V4’s risk premium allows the protocol to respond when the risk profile of a specific collateral asset changes. An additional borrowing cost can be applied to loopers using that asset, creating an incentive to reduce or repay their debt without repricing every borrower in the market. In an extreme scenario where the redemption queue becomes significantly longer, however, Simo described a secondary market for Looping Positions as a valuable complementary solution. Instead of waiting to unwind every leg through the redemption queue, a looper could transfer the position to another buyer, creating an exit route without requiring the protocol to liquidate the underlying assets prematurely. He gave the example of a 10x loop where each redemption takes roughly one week: closing the position leg by leg could take around two and a half months. During that period, the looper remains exposed to changing rates, asset prices and opportunity costs. 🎙️ Luffy @Luffy_Cian approached the same problem from the perspective of a strategy builder and looper. Deep, dependable liquidity is why so much institutional looping activity has historically been built on Aave, while fragmented liquidity makes these strategies difficult to run at scale. The problem becomes more serious with yield-bearing RWAs. Luffy shared a past case involving an asset with a 30–35 day redemption cycle. Unwinding the full loop eventually took around six months, during which the position stopped generating yield on the redeemed legs and remained exposed to changes in the underlying asset. The experience showed why an exit path needs to exist before an illiquid yield-bearing asset can become useful collateral at scale. 🔄 This is one of the core ideas behind Bondify. Instead of forcing every looper to unwind one leg at a time, Bondify standardizes the existing Looping Position and its future yield. A looper can migrate the position into a dedicated, user-owned smart contract, then choose to sell the full JR exposure or sell YT/GYT to hedge and lock in future yield. On the other side, a buyer can acquire an already-built looping exposure without recreating every step from scratch. The seller’s cost of waiting or unwinding can be reflected as a discount, while dedicated liquidity pools and OTC execution can serve different trade sizes. This is where the two layers connect: Aave builds the liquidity and risk infrastructure needed to support more assets and more specialized lending markets, while Bondify works on making the resulting Looping Positions, future yield and exit liquidity tradable. Listing more yield-bearing assets onchain is only the beginning. If those assets are going to support sustainable looping markets, users need to know not only how they enter, but how they can exit. 🙏 Thank you to Simo and Luffy for going deep into the mechanics, and a special thanks to Bonna for hosting and guiding the conversation from Aave V4 architecture all the way down to the practical experience of loopers. We look forward to more conversations ahead and to continuing this discussion with Aave, builders, loopers and the wider community.

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Inside Cian AMA is coming. Bondify, Yield Layer, and What Comes Next. Join us on Cian Space with Luffy to talk about what the team has been building, why Bondify @bondify_xyz matters now, and what’s coming next for Cian. 🗓️ 10 July, Friday 🕑 14:00 UTC / 22:00 UTC+8 📍 Cian Space 🎙️ Luffy @Luffy_Cian - Founder, Cian & Bondify 📍 Hosted by PanPan @Pigupigudidi - Operation Manager, Cian& Bondify Bring your questions and join us live.