The father of Decentralized Finance returns, can FlyingTulip continue the legend of YFI?

The market is cold, the players are disheartened, and AC is back with his new project.

Author: Scof, ChainCatcher

On March 10, Sonic Labs, Yearn Finance, and Keep3rV1 founder Andre Cronje updated his personal social platform profile to include the title of 'flyingtulip founder'.

As a competitor to Hyperliquid, FlyingTulip has attracted much attention as soon as it was launched. It adopts an Adaptive Curve AMM, offering lower funding rates, better loan-to-value ratios, and higher LP returns, and relies on SonicLabs to achieve higher TPS.

Andre Cronje: The 'Madman' and Disruptor in the DeFi Field

To introduce FlyingTulip, we have to introduce its legendary founder Andre Cronje.

Andre Cronje, a legendary figure well known in the DeFi community, whose name always quickly stirs up market sentiment once mentioned. However, unlike traditional programmers, Cronje originally studied law and graduated from the University of Stellenbosch in South Africa with a degree in law.

However, fate played a joke on him, allowing him to accidentally come into contact with computer science. As a result, he taught himself to become successful, and even became a lecturer. This leap-like growth trajectory also laid the foundation for his style in the DeFi field in the future—unconventional, highly creative, and somewhat crazy.

After entering the world of encryption, Cronje quickly demonstrated his technical talent and extreme execution power. His masterpiece, Yearn Finance (YFI), emerged in 2020 and quickly became one of the most influential projects in DeFi history with the concept of fair launch (no pre-mining, no team allocation). Since then, he has led or participated in many well-known projects such as Keep3r Network, Solidly, Fantom, igniting market sentiment time and time again.

Today, FlyingTulip has once again made a bold attempt in the field of derivative trading protocols. Faced with this developer who is a combination of 'genius' and 'madman', the market is still waiting for an answer: can he once again lead a DeFi revolution?

What is FlyingTulip?

FlyingTulip is a DeFi integrated platform based on Automated Market Maker (AMM), integrating functions such as trading, liquidity provision, borrowing, etc. Its core feature is to eliminate liquidity fragmentation, allowing users to conduct spot trading, leverage trading, perpetual contracts, etc. within the same AMM system without the need to transfer funds between multiple protocols. This all-in-one liquidity solution improves capital utilization, makes trading experience smoother, and reduces trading costs.

In the lending function, FlyingTulip adopts a dynamic LTV (Loan-to-Value Ratio) model based on AMM. Compared to traditional DeFi lending protocols, it not only considers the collateral price but also combines market depth and volatility for real-time adjustments, ensuring a balance between loan security and capital efficiency.

Adaptive Curve AMM: Making Liquidity Management Easier

The traditional AMM model, such as Uniswap V2, adopts the constant product formula X * Y = k. Although this mechanism is simple, it can lead to liquidity being evenly distributed across all price ranges, whereas in reality, most trades are concentrated in specific price ranges. Therefore, liquidity often cannot be efficiently utilized. Uniswap V3 introduces concentrated liquidity, allowing LPs (liquidity providers) to choose specific price ranges to provide funds. However, this method requires a higher level of financial knowledge, which is relatively complex for ordinary users, and when prices fluctuate significantly, LPs may face significant impermanent loss.

FlyingTulip addresses this issue through a dynamic AMM mechanism. It can automatically adjust the curve shape based on market volatility, enabling liquidity to intelligently match market demand:

When the market is stable (low volatility), liquidity will automatically concentrate around the current price, similar to the 'constant sum curve' in the form of X + Y = K, which can increase capital utilization and reduce trading costs.

When the market is highly volatile, liquidity automatically disperses, approaching the 'constant product curve' of X * Y = K to adapt to possible large price changes and reduce losses caused by unilateral market fluctuations.

FlyingTulip relies on oracles to continuously monitor the real-time volatility (rVOL) and implied volatility (IV) of the market, and dynamically adjusts liquidity distribution based on these data. LPs do not need to manually set complex price ranges, just deposit liquidity, and the system will automatically optimize the allocation, allowing them to achieve the best return in different market conditions while significantly reducing impermanent loss.

This mechanism makes FlyingTulip a more user-friendly DeFi platform for ordinary users - even if you are not familiar with the LP mechanism, you can easily provide liquidity without worrying about complex operations or potential losses.

AMM-based Dynamic LTV Model: A More Flexible Borrowing Method

In traditional DeFi lending protocols, LTV (Loan-to-Value ratio) is a fixed value, usually set based on the token's risk level. For example, if a token is considered to be of medium risk, users can borrow up to 70% of the collateral value. However, this fixed LTV ignores two key factors:

1. Market Depth - If the loan amount is too large, it may significantly affect the token price, leading to a sharp decrease in market liquidity.
2. Real-time Volatility - When the market is highly volatile, a fixed LTV may lead to assets quickly falling below the liquidation threshold, increasing the risk of liquidation.

FlyingTulip solves this problem through the adaptive AMM mechanism, creating a dynamic LTV model that can adjust borrowing limits in real time according to market conditions. For example:

• When the market is stable (low volatility, sufficient liquidity): users can get a higher LTV, for example 80%, that is, mortgaging $2000 worth of ETH can borrow $1600.
• When the market is turbulent (with increased volatility): LTV will automatically decrease to 50%, meaning the same 2000 US dollars' worth of ETH can only borrow 1000 US dollars to reduce liquidation risk.
• When the collateral is too large (occupying a high proportion of market liquidity): LTV may be further reduced, e.g. 45%, to ensure that large loans do not have a significant impact on market prices.

This dynamic LTV adjustment makes borrowing and lending more flexible, allowing users to not constantly monitor market changes or adjust positions frequently. The system will automatically optimize borrowing and lending limits based on market conditions. This not only reduces the risk of liquidation by large holders leading to market collapse but also makes the entire DeFi ecosystem more stable, creating a safer environment for borrowers and liquidity providers.

Opportunities and risks coexist, is the market frenzy or a deep pit?

When the market began to hotly debate whether FlyingTulip would issue coins, the discussions on X have become more and more intense. Looking back at AC's past projects, almost all of them have relied on token incentives and community promotion to rise rapidly, so it seems only a matter of time before FlyingTulip launches 'Tulip Coin' in the future. Currently, various speculations surrounding TGE are emerging endlessly, and information such as public offering prices and private placement discounts continues to ferment within the community.

However, AC's projects have always been characterized by high returns and high risks. In the past, YFI surged to a thousandfold myth after a fair launch, but EMN (Eminence Finance) also suffered a total loss due to vulnerabilities. In the midst of market frenzy, balancing speculative impulses with risk management is the question that rational players need to consider.

In addition, AC has once again continued his 'mysterious marketing' style this time, not making explicit publicity, but stirring up the market through subtle actions. For example, he recently liked a tweet about Magpie Protocol (another related DEX project) on X, immediately sparking various speculations. Chinese-speaking KOLs have also begun to pay attention to and discuss FlyingTulip, fueling market sentiment.

The charm of DeFi lies in the coexistence of high risk and high returns. In the past, AC has always been able to bring new imaginative space to this field. However, whether FlyingTulip can replicate the brilliance of YFI, perhaps only the market will provide an answer.