# Introducing Coolwater.xyz
DeFi credit platform for BLUR farming and other high-yield strategies created by Thaw Digital
# Overview of Thaw Digital and Coolwater
**Thaw Digital** is a U.S.-based technology company that develops trust-minimized capital and collateral solutions for tokenized, non-fungible assets across a variety of blockchains. Thaw is pleased to present Coolwater.xyz, a peer-to-peer credit platform that enables Depositors to coordinate trust-minimized ETH deployment on Blur.io’s Blend NFT lending protocol.
**Coolwater** allows Depositors to passively supply ETH to active managers who deploy funds to earn yield and/or “farm” Blur points.\
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The platform’s technology:
* Automates deposits and withdrawals for Depositors.
* Tranches liquidity between senior and junior Depositors.
* Tracks lender's rewards based on the underlying strategy.
* Automatically distributes reward to Depositors.
Ultimately, Coolwater aims provide access to additional liquidity for established NFT lenders while also helping passive Depositors earn attractive risk-adjusted returns by contributing to NFT lending portfolios managed by strategists with proven histories of past performance.
# Overview of Blur.io and Blend
Blur is the #1 NFT secondary marketplace platform on Ethereum. The platform’s governance token, $BLUR \[0x5283d291dbcf85356a21ba090e6db59121208b44], is distributed to users who bid to buy NFTs and bid to offer collateralized loans. You can learn about the BLUR Rewards and Loyalty system in the relevant [links ](/introducing-coolwater.xyz/relevant-links)section.
Blend, Blur’s collateralized-NFT lending product, launched on May 1, 2023 and is already the #1 NFT-collateralized lending protocol on Ethereum in terms of loan volume originated, transactions, and unique users.
# Relevant Links
Coolwater.xyz:\
Thaw Digital:
[Link to Discord](https://discord.com/invite/Mb6zMbnp)
Blur:
# Blender Strategy
The first Coolwater Strategy focused on $BLUR token farming
There are many participants involved within the Coolwater Blender Strategy. See below for definitions:
* Lead Strategist - The collateralized NFT lender who manages the lending Strategy that will be deployed on Blend.
* Strategy - The pool of capital managed by the Lead Strategist, which Depositors can contribute ETH into.
* Depositor - The individuals who loan (i.e., deposit) to a Lead Strategist's Strategy.
* Coolwater - The Coolwater.xyz platform, developed and serviced by Thaw Digital, which securely custodies Depositors assets, tracks and manages performance, and processes and distributes withdrawals and returns ($BLUR) to Depositors.
* Borrower - The wallet holder who owns an NFT and enters into a collateralized-loan agreement with the Lead Strategist's Strategy on Blend.
* Farmer - Generic term for anyone who bids to purchase and/or bids to lend on Blur.
* Lender - Generic term for anyone who originates loans on Blend
# The Blend Lending Process
A Lender can make loan offer bids against an NFT collection collateral base by suggesting both a principal amount and interest rate. Borrowers can use those loans in one of two ways: to take a loan on an NFT they already hold or to “buy now, pay later” (i.e., buy a NFT on credit). Lenders receive Blur points, which are future claims to $BLUR airdrops, while bids remain open.
Once a Borrower agrees to take out a loan, their NFT collateral goes into an escrow wallet maintained by Blur and the borrower receives ETH from the Lender from a wallet pre-funded by the Lender on Blur. When the Borrower pays back the loan, the NFT collateral is returned to the borrower’s wallet and the principal and accrued interest goes to the lender.
Once originated, a loan can be called by the lender at any time. However, there is a 250 Blur point penalty for calling a loan within 24 hours of origination. Once called, a loan goes into auction for 24 hours at a steadily increasing APY. If no lenders claim the loan, then the borrower has 6 hours to repay. If the loan is not repaid, the lender can foreclose on the loan and claim the underlying NFT.
# Advantages of Aggregating ETH to lend on Blend
There are two main advantages for aggregating ETH into a single wallet for bidding on loans on Blend:
1. Minimizing downside risk for Depositors - Lending on Blend can be lucrative, but the risk profile is similar to writing a put option. Lead Strategists are Lenders who use their expertise to minimize downside risk while maximizing returns. They use the Coolwater platform to receive loans from Depositors to aggregate bidding capital to provide passive return to Depositors while gaining leverage on their capital.
2. Blur provides multipliers to top Farmers:
1. Top-100 farming wallets receive 1.2x Blur points.
2. Top-50 farming wallets receive 1.5x Blur points.
3. Top-25 farming wallets receive 2x Blur points.
4. Top-10 farming wallets receive 2.5x Blur points.
# Trust-Minimized Pooling on Blend
A wallet seeking to lend on Blend will deposit ETH from their wallet into the Blur bidding pool. Coolwater’s breakthrough technology allows for:
* Bidding and transactions from the Lead Strategist lending wallet.
* Transparency in viewing all activity (bids, loans, liquidations, etc.) for any lending wallet.
* Gated deposits and withdrawals from the Lead Strategist lending wallet.
* Strict rules for withdrawals from the Strategy pool at the end of the Strategy's lifecycle.
* Automatic distribution of rewards to individual Depositors.
# Coolwater and Lead Strategists
Lead Strategists are able to use the Coolwater platform once they provide the following to Coolwater:
* A summary of their Strategy.
* Rules and rewards for each tranche.
* Predefined conditions for loan bids and loan terms (e.g., LTV, APY, loan hold length).
* Proven ownership of wallets that have deployed strategies, so that Coolwater may publish historical performance and results.
* Short biography.
The Depositor and the Lead Strategist bear the risk associated with lending on Blend, including (but not limited to): loan offers, originated loans, defaulted loans, Blur platform risk, and value of $BLUR token. Thaw does not endorse or recommend any Lead Strategist, or any of the products, rates, or offerings of any Lead Strategist. The availability of any Lead Strategist or other service provider through the Coolwater platform does not constitute a recommendation or endorsement of that Lead Strategist or other service provider.
# Functional Overview
Overview of the Coolwater dApp and platform
# High-Level Platform Overview
The Coolwater dApp enables Depositors with different levels of asset origination expertise (passive vs. active) to participate in yield-generating lending and investment strategies. Active investment managers, or Lead Strategists, can borrow capital from passive Depositors in return for an ongoing royalty of the proceeds of the underlying strategy. Coolwater:
* Securely custodies Depositor assets via MPC wallet infrastructure and address whitelisting for fund withdrawals.
* Tracks and manages investment performance via discrete investment periods called epochs.
* Processes withdrawals and airdrop distributions based on capital priority (i.e., Depositors are paid before Lead Strategist).
The below diagram shows the system architecture used for the Blender Strategy:
# Investment periods: Epochs
Coolwater’s technology utilizes discrete contribution periods called “epochs” to allow Lead Strategists to manage how funds are deployed in Strategies. Each Coolwater Strategy has its own epoch duration after which another epoch begins. When Depositors deposit funds, they get deployed in the next epoch. When Depositors submit withdrawal requests, they get processed in the next epoch. This ensures that deployed funds and Depositor contribution amounts stay locked during each epoch which enables accurate contribution performance tracking.
Example (illustrative):
The Blend Strategy starts a new Epoch on the 1st and 15th of every calendar month. Epoch #1 starts on August 1st and has 100 ETH (50 Depositor and 50 Lead Strategist) and the following actions are made before August 15th:
* Depositor deposits 20 ETH.
* Lead Strategist deposits 10 ETH.
* Depositor submit 10 ETH in withdrawal requests before August 12th (\*Blend Strategy requires that withdrawal requests take place at least 72 hours before the start of next epoch to get processed in the next epoch).
Epoch #2 starts on August 15th with 120 ETH (60 Depositor and 60 Lead Strategist). Net S inflows are each 10 ETH for Depositor and Lead Strategist.
# Deposit Flow
Depositors can deposit funds via the Coolwater dApp by connecting their Web3 Wallet, submitting address whitelisting requests, and initiating deposit transactions. Deposited funds are held in the Deposit vault and transferred to the Trading vault when the next epoch begins. Depositors can view their epoch deposit contributions and pending deposits in the dApp.
Coolwater bears no responsibility for deposits made outside the Coolwater interface (e.g., directly into the deposit wallet).
# Withdrawal Flow
Depositors can withdraw funds by submitting withdrawal requests through the dApp. Depending on the Strategy, there may be a cutoff time at which withdrawal requests need to be made to be eligible for processing before the start of the next epoch. All withdrawal requests made within the cutoff time window will be processed and Senior Depositors will receive their funds back in the wallet they originally deposited from.
Note: if there are any capital losses from the Strategy, Lead Strategists take the first capital loss and withdrawals to Depositors are still processed. If losses ever exceed Lead Strategists’ balance contributions, then funds deployment will be halted to ensure Depositors can recover their principal as best as possible.
# Accruing Blur Points
Depositors can see their total accrued Blur points and points accrued during the current Epoch via the Coolwater dApp. The investment origination / bidding wallet can be tracked publicly via [Blur’s airdrop leaderboard](https://blur.io/airdrop#1). The Coolwater system tracks the wallets total Blur points on a daily basis and calculates each Depositor’s accrued points based on their contribution to the Epoch balance.
#### $BLUR Airdrop distribution
Once Blur Season 2 ends, the bidding wallet can claim $BLUR tokens via the Blur dApp. Once $BLUR tokens are redeemed by the Lead Strategist, Coolwater will calculate how much $BLUR to distribute to each Depositor based on their % share of the Blur Points accrued by the Strategy. Once all Depositors have received their $BLUR, the Lead Strategist will be transferred their $BLUR.
Example (illustrative):
Season 2 ends with 50,000 Blur Points for the bidding wallet. The 50,000 Blur Points are redeemed for 500,000 $BLUR tokens. Depositors in total have accrued 30,000 Blur Points or 60% of the Strategy total. Coolwater transfers 300,000 $BLUR tokens to Depositors before transferring the remaining to the Lead Strategist.
# Security
# Wallet Security
Restrictions have been imposed at the Deposit vault, Trading vault and Blur vault levels to prevent unauthorized withdrawals by the Lead Strategist. The Deposit vault is governed by a \[2 of 3] MPC arrangement with the keys held by Thaw; funds deposited in the Deposit vault may only be transferred to the whitelisted addresses of Depositors, Lead Strategists, or the trading vault. The Trading vault is also governed by a 2 of 3 MPC wallet with the keys held by Thaw; funds in the trading vault may only be transferred back to the Deposit vault or into the Blur vault as whitelisted addresses before the end of Blur Season 2. Finally, transfer authority over funds deposited into the Blur pool will be controlled by Thaw, meaning that the Lead Strategist cannot withdraw funds but can exercise signing authority to actively trade and manage bid positions; deposits from the Blur pool may only go back to the trading vault as a whitelisted address.
# Fireblocks
Fireblocks is an established custodial software provider that uses a multi-layer security framework to secure assets and manage transaction flows for digital assets. Fireblocks utilizes as a security feature, among other features, a Policy Engine which enables institutions, like Thaw, to set up specific approval policies for each transaction. Coolwater uses the Policy Engine to allow only whitelisted addresses receive funds from the Deposit and Trading vaults where Depositors funds are stored.
For more detail on Fireblocks security, see .
# Blend Smart Contracts
Blend is an open source smart contract protocol created by the Blur Foundation and Paradigm. Blend’s smart contracts have been audited by Chainlight (see [Audit report here](https://drive.google.com/file/d/13rmzXIdy138gxPwiGNH8kk-yob4Bjzll/view)). Blend launched on May 1, 2023 and has had over 100,000 loans worth over $1.3B in value since launch without any security issues.
More detail on Blend can be found in the [Blend Whitepaper](https://www.paradigm.xyz/2023/05/blend).
# Privacy Protection and Data Handling
Coolwater’s services are provided primarily using the Ethereum (“*ETH*”) blockchain and related ERC-20 tokens such as $BLUR and are therefore subject to the privacy policy available at .
Additionally, most blockchains utilize distributed ledger technology, and blockchain transactions are often publicly available and permanently preserved. That information includes date and time of transaction submission and confirmation, tokens exchanged in any transaction, and digital wallet addresses involved in that transaction. Coolwater has no ability to alter or obscure transactions on blockchains used in connection with the Coolwater Services. Please be aware of the information you provide when entering into blockchain transactions and conduct yourself accordingly for your desired level of privacy
# FAQ
1. **What protections are in place to make sure the Lead Strategist doesn’t steal the funds?**
All Lead Strategists and Depositors contribute ETH to the pooled lending wallet via Fireblocks. Both the Deposit vault and Trading vault are governed by a \[2 of 3] MPC arrangement with the keys held by Thaw; funds deposited in the Deposit vault may only be transferred to the whitelisted addresses of Depositors, Lead Strategists, or the Trading vault. See [Wallet Security ](/security/wallet-security)section of this document for further information on Fireblocks and its utilization by CoolWater.
2. **How soon after the airdrop claim opens will I receive my $BLUR?**
The Trading vault wallet will claim $BLUR within 24 hours of the claiming window opening. While maintaining our strict security standards, Coolwater will distribute $BLUR to all wallets within a commercially reasonable period after the lending wallet makes the $BLUR. As both the claim and distribution will be recorded on the blockchain, that status of this process will be fully transparent on the blockchain.
3. **When does Blur Season 2 end?**
There has been no formal announcement from Blur regarding when Season 2 will end.
4. **Is there any way to transfer my claim of Blur points?**
For security reasons, our system links earnings to the wallet that made the deposit. So unfortunately, there is no way to transfer your claim of Blur points.
5. **Does Coolwater own or operate any of the strategy pools?**
Neither Coolwater nor Thaw Digital own or operate any of the strategy pools.
Thaw Digital provides the Coolwater application software which allows one wallet to lend to another wallet for the purposes of deploying funds in Blur lending.
6. **Is Coolwater or Thaw affiliated with Blur?**
Neither Coolwater nor Thaw are affiliated with Blur in any way.
# Resources and References
# External Resources
Blur’s announcement of Season 2: [Season 2 Rewards & Loyalty — Blur.io (mirror.xyz)](https://mirror.xyz/blurdao.eth/LLhgasyLS8m-MgtZGslvbMoajlFjKbVGsHc9nASfXb0)
Fireblocks website:
Thaw Digital website:
# Glossary of Terms
* Coolwater = the Coolwater.xyz platform, developed and serviced by Thaw Digital
* Strategy = the pool of capital that is managed by the Lead Strategist, which Depositors can contribute ETH into
* Lead Strategist = the collateralized NFT lender who manages the lending Strategy that will be deployed on Blend, providing returns to Depositors of their Strategy
* Depositor = the individual who loans (i.e., deposits) to a Lead Strategist’s Strategy
* Borrower = the wallet holder who owns a NFT and enters into a collateralized-loan agreement with the Lead Strategist’s Strategy on Blend
* Farmer = generic term for anyone who bids to purchase and/or bids to lend on Blur
* Lender = generic term for anyone who originates loans on Blend (Lenders are a subset of Farmers)
# Lead Strategist Documentation
Disclaimer:
All Lead Strategist Documentation is provided by the applicable Lead Strategist, and that Coolwater makes no warrantees or endorsement of their services or past performance. Links are provided to blockchain documented histories, and users are encouraged to research themselves the validity of claims made. Coolwater disclaims any liability for any third party information provided,
# Blender Strategy by Homerfan33
The Blender Strategy seeks to maximize $BLUR farming from Blend by aggregating liquidity and taking a risk-mitigated approach to loan bidding. Homerfan33, a top Blend farmer and long-standing NFT lender, is leading the strategy and making loan bids. His strategy for bidding follows the below guidelines:
* The bid pricing does not exceed 90% of the value of the NFT collection. The value of NFT collection is the highest bid. For example, if BAYC floor is 38 ETH and highest bid is 36 ETH, loan bids will be made at a max 36 ETH \* 0.9 = 32.4ETH.
* All loans are called after 24 hours. Blur points are given out based on outstanding bids. Once a bid is accepted by a borrower, then that capital is not being used to farm. After the 24 hour penalty period has passed, the loan will be automatically closed.
* Bids are diversified across all eligible collections. There are currently 13 eligible collections that receive Lending Points on Blur.
Homerfan33 will also be supplying the Junior Depositor contribution for this strategy at an initial funding amount of 200 ETH. The Blender Strategy is directly open for Senior Depositors on the Coolwater dApp. Additional Junior Depositors can contact the Thaw Digital team to inquire about possible junior opportunities.
Senior Depositors are eligible to receive a 70% royalty of the $BLUR airdrop earnings from their contribution to the Strategy. The royalty earnings can be tracked via the dApp as an accrual of Blur points and an estimation of the value of Blur points in $BLUR and $USD. The Blur team has communicated that over 300M $BLUR will be distributed in Season 2 (current airdrop time period). The value of Blur Points should thus roughly equal 300M / Total Blur Points distributed in Season 2 but is ultimately based on factors determined by the team behind Blur.
# Epoch Timing
Epochs are semi-monthly and will begin on the 1st and 15th of each month.
# Deposits and Withdrawals
Deposited funds will accrue Blur points at the beginning of the next epoch.
Withdrawals requested 72 hours before the end of an epoch will be distributed at the end of that epoch. If a user misses the 72-hour window, then the withdrawal will be processed with the next epoch.
For example, if a withdrawal is requested on the June 29, the withdrawal will not be processed for the epoch beginning July 1st and will instead be processed before the epoch beginning July 15. Any share of Blur points earned for the epoch July 1st-July 14th will accrue to the Depositor.
# Early Withdrawals
All rewards will be claimable at the end of season 2. Users can withdraw their ETH at any time without forfeiting BLUR points accrued to date.
# Royalties
Junior Deposits act as first-loss capital for ETH. Junior Depositors pay 20% royalty.
Senior Depositors pay 30% royalty.
Points are accumulated and distributed proportionally to ETH deposited in the Strategy.
For example, a Senior Depositor has deposited 20 ETH that is utilized in an Epoch with a 200 ETH balance i.e., has a 10% share of the Strategy. 750 Blur points are awarded to the bidding wallet during the day. The Senior Depositor accrues 70% x 10% \* 750 Blur points = 52.5 Blur points for the day.
# End of Season 2
This Strategy will close at the end of Season 2. At that time any ETH deposits in the Strategy will be returned to Depositors. And $BLUR rewards will be airdropped to Depositors.
# Homerfan33 Bio
Homerfan33 began collateralized NFT lending on NFTfi.com in 2021. During his time on NFTfi, he became a top-25 lender on the platform, earning yield of 43% with below-average default rate.
In under 1 month lending on Blend, he has become a top-30 farmer and has had zero defaults.