Year End Update
As we near our one year anniversary of Connect Financials vision and platform being released to the public we wanted to provide you all with a larger update and some new material to commemorate it.
Just as a note before we get into everything, that this will be our last Medium based update as we enter these final weeks of the year and the holiday season until January.
So sit back, and lets jump in!
Whitepaper
As the next stage of the go-to-market plan, the team is happy to announce that the Connect Financial white paper has been released. It has been a team effort to put together this extensive document over the last few months and it will continue to evolve as we release more of our product log. A big thanks to both the writers and the community moderators for their help in editing and providing feedback on the areas that have been previously released.
A few key mechanisms have been detailed out in the whitepaper that should answer some questions, such as:
Rebalancing
If the digital asset that you used to fund the collateral wallet appreciates, the line of credit may become over-collateralized. To alleviate this we allow users to rebalance their Credit products. When rebalancing a loan, a 90 day average of the value of the collateral asset is used to minimize daily fluctuations in price.
In example, if you have a $25,000 Credit Line for your card that you funded with $50,000 in Bitcoin initially and Bitcoin was worth $50,000 on that day so you deposited 1.00000 Btc. Over the course of the next 90 days Bitcoin experiences positive market movement and finds itself at a new all time high of $100,000. And the last 90 days rolling average price of Bitcoin is $75,000 we will allow you to remove $25,000 of bitcoin (0.25 in this example) from your collateral wallet as the remaining $50,000 in value is sufficient to maintain your credit line.
There is some risk in removing collateral but with a 90 day rolling average we feel it has been mitigated and that you should have access to that excess collateral.
Read more about the white paper at https://connect.financial/media/cf-whitepaper-biz.html.
Product updates
Over the last 12 months, the Connect Financial product has evolved so that the flagship crypto-backed credit card has become just a single offering within a suite of spend, earn, save and trade features for your crypto, all living on a single platform. As the product vision has continued to mature, the specifics of the program have also changed to deliver the best possible product.
The first of these changes is a move to a membership model. Originally our concept was that holding CNFI tokens gave you access to a tier of card based on your staked tokens. This model presented a few restrictions and adoption questions that we could not solve for elegantly enough.
Over the course of the last few months the executive team and advisors have met to determine how we could better present the utility behind holding the tokens in a clearer fashion.
The answer was to move to this membership model. Within this model certain benefits are account wide, while some are product driven. Examples of Account Membership perks are:
- Rates on Earn Products
- Rates on Borrow Products
- Eligibility tiers for free card products
- Invites to special events
- Fees on buying/selling/swapping Crypto
- Waiver of incurred fees based on account review or annual allowance
- Reimbursement of ATM withdrawal fees
Examples of additional perks based on the card product:
- Insurance against fraudulent transactions
- Priority Pass Lounge access at airports
- Unlimited usage of the concierge service
- Emergency Travel insurance for you and your family
- Auto Rental Insurance
With this move any user can be eligible for any card tier they wish, but you only receive the tier of card equal to your membership tier for free. In example, a basic tier member acquiring a Black tier card will be subject to an annual fee, account setup/delivery fees, minimum annual account activity and rates based on the basic tier for balances carry forward. A gold tier member with a black card will incur a pro rated fee on those the card.
When this change takes effect, you will be able to commit your CNFI tokens to be eligible for one of five membership tiers, each with its own benefits and fee schedule. Once you have a membership tier, you will be able to create unlimited wallets and enjoy the account-wide benefits associated with your tier.
As part of the move to the membership model, some of the account wide fees and benefits are also being updated. Of note, the interest rates on credit cards are being adjusted to range between 14.9% for a basic tier down to 7.9% for black membership tier.
In addition, membership tiers will also be eligible for cash back (paid in CNFI) on all eligible purchases made on credit cards across your account. Cash back rates start at 2% on the Silver tier up to 5% on the Black membership tier. These changes will be help continue to make the credit card tiers as attractive as possible for customers, while also balancing the costs of running the program.
Next, as many of you have pointed out in Discord and Telegram, the staking requirements up to this point make the cost-of-entry into the ecosystem unpredictable — as the price of CNFI fluctuates, so does the dollar cost of staking towards a membership tier. Our intent has always been that the membership levels would be closely tied to the USD value of your committed tokens with the DAO having the capacity to adjust the levels on a regular basis based on the performance of CNFI.
After some long conversations behind the scenes, and experimenting with different models, the team has decided that staking requirements will move to a flat USD equivalent amount over the next few weeks. What this means is that the cost of purchasing CNFI to stake towards membership tier is stable and will remain attractive for new users into the future and relieving the DAO from consistently having to update staking requirements.
The USD equivalent amount of CNFI staked for each tier is as follows:
- Basic membership tier: $0
- Silver membership tier: $1,500
- Gold membership tier: $7,500
- Platinum membership tier: $50,000
- Black membership tier: $250,000
Of course, if you already have staked tokens on the portal, you will be grandfathered and will not have to stake further tokens to make up the difference. As previously announced, once you have a membership tier, you will be able to rebalance your staked CNFI once every six months to allow for you to keep your committed balance in parity with new(er) users. This mechanism will also allow users to “recycle” the previously committed tokens into the liquidity pools for new users to acquire, allowing us to stave off any necessary requirement for an increase in token supply as the system should be able to maintain a balance of tokens cycling out of the staking system from users rebalancing, staking rewards, cash back rewards and new users locking those tokens back up.
As a final product update, the platform will now also include staking wallets, capacity to purchase CNFI directly on the site, and stake your CNFI through the portal using easy one click processes. When you contribute assets into eligible staking pools, you will earn rewards in exchange for helping to make certain networks more secure and more efficient. For example, you may choose to stake ETH for ETH2.0 and contribute towards collective validator nodes run by Connect Financial. This will offer another way of earning passive rewards on your idle crypto (as well as making the cryptoverse a better place!).
Overall Status Update and Year End Review
The pandemic and state of the world in general has caused a great number of changes to how we all operate, most not for the better but some have come with silver linings. We at Connect have suffered and benefited from both sides of the same coin. As the world has turned to more things digital the opportunity laying in wait for an evolutionary financial platform such as ours has grown exponentially. Unfortunately, the need for qualified, experienced developers has sky rocketed and we’ve felt the brunt of that during this year.
As a whole, Connect has seen over a dozen developers leave the team during the year for various reasons, from better job offers to severe illness. We have been very fortunate though and have been able to source some phenomenal core team members though. As we end the year our current staff consists of nine developers and ten corporate staff members including members of compliance, marketing, and project management.
We had recently planned our release for Q4 of ’21 but we will need to re-commit to Q1 ’22. Our biggest hurdle at the moment awaiting our card partner to finish upgrading their systems to complete our integration.
The team has spent months working with our card partner and processor to develop an exclusive process that allows us to operate in a way that gives us necessary controls over the cards and in depth access to the processing flow. This integration has taken our partner longer to complete due to their own staffing issues and passing their necessary legal and regulatory testing of the systems.
Our factory order for the physical cards is just awaiting the email that says go. All art, designs, contracts, finishes are completed. So you may ask why we don’t have them printed yet, well, the factory has guaranteed delivery within seven days of when we send the email. So if we factor in the logistics of having a high six figure order inventory of cards just sitting around and account for natural disasters, insurance, or other issues we felt it was best to wait on the physical cards until the processor has given us the green light on their system updates. Which when they do will require a short window of stress testing, during which we will be green lighting the ordering of cards, having them printed, packaged and delivered to some bright smiling faces around the world.
This year has been a fantastic experience for our team. I am constantly astounded to be working with individuals of this caliber. Our commitment to deliver this product to market has never been stronger, our path clearer and the future as bright.
We’ve had bumps and slow downs, every real project would be lying if they said they didn’t but nothing that has deterred us. We continue to gain a foothold in other areas of the market with payment processing, liquidity provision, and digital asset custody in our b2b side. So thank you to our community for what you’ve grown into and the support you continue to show. We look forward to delivering your cards in the new year and pushing forward in our value propositions.
P.S. The smart contract developer just told me he expects to be ready next week for the conversion to Arbitrum on staking. It was a little late to form that into the update elsewhere, so look for announcements on it through Discord/Telegram. If it does look like it requires any type of walk through we will create one for medium to post.
We wish everyone a very Happy Holidays and New Year however you celebrate it.
We will be rolling out more details in the support documentation on all of these updates and on https://connect.financial over the next few days. In the meantime, please feel free to ask any questions in Discord or on Telegram.
