Mozaic: A Bull Case

Oct 24, 2023 | Community Guides, Decentralised Exchanges

You lot know how much we enjoy playing the narrative game. While few actually have staying power (*cough cough* governance blackholes), it’s hard to imagine that AI and Omnichain will never return to centre stage.

Mozaic, a yield generator that leverages both AI and Omnichain tech, has flown under the radar, having launched just after some major runs by AI coins. This low profile makes it an interesting play for those looking for “the next big thing.”

How it works

Those of you who have been following us have no doubt already come across our previous pieces on Mozaic (here and here). 

For everyone else, the basic premise is simple: active management of farming opportunities leads to the best yields but can be time-intensive. Mozaic takes the guesswork away by forecasting the optimal yield strategies and allocating user funds constantly. Think Beefy, but without chain-hopping restrictions and with an AI-enabled manager built in.

Their initial results have been very promising, with the live tests boosting yields by over 50%. 

When popular farming pools become too crowded, yields evaporate quicker than our hopes of ever owning a home. Thanks to the machine learning in the background, funds in Mozaic vaults actively hop between pools in order to frontrun the crowds.

Progress so far 

Mozaic has continued to execute its roadmap, having launched the mainnet beta for the Hercules vault recently. Results have been very promising, yielding over 7% on stablecoins.

Having completed their initial launch, the team is currently executing towards a 5-aspect roadmap. Here’s what we of it know so far:

  1. The DAO
    1. A council of 7 elected members will facilitate DAO discussion, help draft proposals, and push proposals to Snapshot
    2. The DAO will be in charge of managing changes to the Treasury strategy – allocating resources for the long-term success of the protocol
    3. The DAO is tasked with fostering discussions about additional utility of the xMOZ governance token
  2. AI
    1. Archimedes V2 (AKA ‘Smart’ Archimedes) upgrades – implement lessons learned via self-teaching in live environment
    2. Implement ‘Black Swan’ protections, with the help of domain experts
    3. A new model will be trained to rapidly detect anomalies, which can work hand-in-hand with the main AI, switching to more conservative strategies when necessary
    4. Human-in-the-loop capabilities to be added – further risk reduction, for the chance that offchain events could impact vault performance

The remaining three aspects are yet to be disclosed. I know, I know, we usually give you the alpha first, but patience is a virtue, and some things in life are worth waiting for. The other three parts of this roadmap are coming soon, so keep your eyes peeled, anon. 

Competitive landscape

Yield products are loved around DeFi, with over $4B in value locked currently. Mozaic’s strategic positioning is unique amongst the landscape, offering hands-off active management. 

Some of the major players:

  1. Beefy – offers automated strategies across DeFi. Automatically maximizes rewards from various Liquidity Pools, Automated Market Makers, and other yield farming opportunities.
  2. Yearn – DeFi OG that also offers automated strategies, generally with ETH and stablecoins. 
  3. Concentrator – Platform that boosts rewards for Curve and Convex stakers/LPs.

Yield farming was DeFi’s first growth catalyst. After DeFi summer, crypto natives and non-natives alike were all intrigued by DeFi yield. Unfortunately not many were well equipped to effectively play the game of yield farming musical chairs. 

The natural result was a suit of automated yield management products. The sector now has a combined TVL of approximately $600M and is poised to keep growing as DeFi grows. However, the sector has lacked innovation for a very long time. 

This stagnation means that the sector is ripe for disruption, and Mozaic is perfectly set up to do exactly that. 

Mozaic sets itself apart from the pack with its Hercules/Theseus vaults:

  • These other protocols often rely on farm-and-dumping native protocol tokens in order to generate yield. Whereas Mozaic yields are “real,” originating from swap fees and/or protocol revenue.
  • These other protocols are limited to strategies within a single chain. Because Mozaic is built on LayerZero, their strategies can move between many chains with ease, opening up the potential liquidity aperture. 

It’s really cool to see a project focusing on a novel concept, instead of the 100th Yearn fork.

The Omnichain narrative

[LayerZero cumulative transactions, from Dune]

While DeFi today is mostly dispersed into tiny islands of liquidity on different chains, cross-chain messaging protocols like LayerZero are offering a life raft. LayerZero allows apps to operate seamlessly across multiple chains, abstracting the experience for users.

LayerZero airdrop farming has brought a lot of hype into the omnichain narrative. Remember, the best narratives are those that actually have some substance to back them up – and omnichain is one of the few good ones. 

Mozaic is betting that cross-chain messaging will be a quantum leap in DeFi UX, removing unnecessary hurdles in the day-to-day activities of us crypto folk. And with the broader adoption of LayerZero, their strategies are in a prime position to rake in the yield that comes along for the ride.

Just imagine when hundreds of apps are using LayerZero in the background. Mozaic will be able to plug and play into different strategies with these apps, generating even more yield for depositors.

The AI narrative

We’re honestly very sceptical of projects that promise to be the next big thing because they are using AI. AI is in its infancy, so proper use cases for this tech are few and far between. 

But do you know what AI, in its current form, is really good at? Short-term predictions.

Mozaic uses LSTM (Long Short-Term Memory) in its back end to train its models. But, I am a simple ape, so I asked an AI what this means and how it could help with something like a high-frequency trading bot.

We just convinced an AI to snitch on another AI – it looks like we’re still at the top of the food chain. But this looks too technical, so here it is in ape speak.

Much better. Smart Robot = knows if it’ll be rainy or sunny tomorrow = knows which pools will give us the juicy yields.

Mozaic is leveraging AI for something that it is actually good at – relentlessly predicting the best strategy through real-time data analysis and trend forecasting.

AI caught a huge bid in both TradFi (NVDA) and crypto (FET, RNDR, AGIX, etc.) in early 2023. How much of these gains were due to speculation? Probably the majority of them. People were so convinced that AI was going to take everyone’s jobs, that no one stopped to look at the current state of these algorithms. 

[$90B valuation, by the way]

Mozaic emerges post-hype to bring an actual use case of AI, and not just another obscure GPU network that no one will end up using. Real yield generation using strong tech.

Some cool features

Mozaic is just getting started with the Hercules Vault, but there are also a few more things to be excited about:

  1. Theseus Vault – Built on top of GMX, Gains, and Gamma Strategies, this will be an Arbitrum-focused vault that will feature AI-powered dual-sided LPs. Bullish.
  2. mozStable Borrowing – Once you deposit into the Hercules stable pool, you can borrow against this yield-generating position. Capital efficiency on top of yield.
  3. Vault Incentives – Farming on top of farming? Yes, please. This is still TBA, but early depositors into these vaults will be rewarded with additional MOZ tokens on top of their promised yields.

In addition to all of this, I just want to shout out how freaking cool their Zap feature is. You can literally come from any of 15 chains, with any of 1500+ tokens, and instantly zap into or out of a Mozaic vault.

Want to enter the Hercules vault, but have 99% of your net worth in some shitcoin on BNB chain? You don’t have to muddle with bridges or DEXs, just let Mozaic handle it all for you. Truly a night-and-day upgrade over standard procedures. 

A strong Cult community

NFA or anything, but I think Hitesh isn’t wrong here.

The Mozaic Discord is a sight to behold. There are some super intelligent folks in there, but the beauty is where most tech-focused servers may run a little dry, the Mozaic lot brings the bang and beauty of your favourite meme coin crowd so there’s never a dull moment.

A strong community provides a base level of unwavering support. They are the true believers in the team’s vision and want to see the project succeed.

For a small project, Mozaic has been able to amass an impressive base of supporters in their community. Plus, their memes are on point. 

Putting it all together

A bet on Mozaic’s success is a bet that any combination of the following is true:

  • Cross-chain messaging protocols are the future
  • The AI narrative returns, with fervor
  • Yield farming returns with the re-introduction of stablecoin flows
  • Cult-like communities have a nonzero value

Mozaic’s launch was unscathed by the initial hype waves of the AI/Omnichain narratives in 2022/23, leaving it in a unique position. The team has continued to deliver on their roadmap, pushing the boundaries into real use cases for on-chain AI, and we can’t wait to see what else they’re cooking.

So go do yourself a favour, and dig into their docs to learn about the tech, try out their vaults if you’re interested, and slide into their Discord to peruse some top-tier memes. You might just run into some of us over there.

  • This article was written by 563, a DeFi researcher and analyst interested in exploring true innovation taking place in crypto. An engineer by trade, he enjoys simplifying complex topics and currently contributes to blocmates, Bankless, and Cryptonary.