BetFi

BetFi solves a critical gap in the DeFi ecosystem by creating a transparent, trustless platform where traders can showcase their strategies and users can bet on their success. In today's DeFi landscape, skilled traders often lack capital to execute their strategies at scale, while retail users struggle to identify profitable opportunities or lack the expertise to execute complex multi-step strategies.

Let's take a real-world example: A trader has identified that a combination of depositing USDC into Morpho's lending vaults, providing liquidity to a specific pool, and staking in another protocol can yield 15% returns over 48 hours. However, they only have $1,000 to invest, limiting their potential gains. Meanwhile, other users who believe in this strategy want to participate but don't know how to execute it or want to hedge their bets.

BetFi bridges this gap by allowing the trader to propose their multi-position strategy with a clear target (15% yield in 48h), duration, and commission structure. Users can then bet YES or NO on whether the strategy will achieve its target, with bettors' funds placed in AUSD yield vaults for additional returns.

Project Overview: BetFi is a decentralized protocol on Katana that enables trustless betting on DeFi strategy outcomes. The platform consists of smart contracts that manage strategy creation, execution, betting, and resolution. Traders propose multi-position strategies by specifying target yields, durations, and commission rates, while bettors wager on outcomes using AUSD stablecoin.

Core Features:

Multi-Position Strategy Creation: Traders can propose complex DeFi strategies involving multiple positions across different protocols. For example, a strategy might include depositing tokens in Morpho vaults, providing liquidity to specific pools, and staking in other protocols. The trader specifies the allocation for each position, target yield, duration, and commission structure. Their funds are immediately deposited and the strategy executed, providing a live preview during the betting phase.

Automated Betting System: Users can place YES/NO bets on strategy outcomes using AUSD stablecoin during a fixed betting window (typically 48 hours). All betted funds are automatically deposited into AUSD yield vaults (currently Morpho), generating additional returns during the strategy period. This creates a separate yield stream from the trader's strategy positions.

Trustless Resolution & Distribution: At the end of the strategy period, smart contracts exit all DeFi positions, calculate final values, and determine if the target yield was achieved. Winners receive their original bet plus a proportional share of losers' bets and the generated AUSD yield (minus the trader's commission). The trader receives their commission and any remaining strategy funds.

Protocol Support & Extensibility: Currently, the platform supports ERC4626 vaults (like Morpho) for strategy execution, with plans to expand to any DeFi protocol. This modular approach ensures the platform can adapt to new opportunities across the ecosystem.

Why This Project Matters:

By combining prediction markets with DeFi execution, BetFi creates a unique intersection that could revolutionize how capital is allocated in decentralized finance, add an extra layer of yield and allow anyone to bet on it. The platform's ability to support multi-position strategies across different protocols makes it particularly valuable for complex DeFi strategies that require diversification across multiple yield sources.

Technical Architecture

Smart Contract Infrastructure: The protocol is built on Katana mainnet using Solidity smart contracts with Foundry for development and testing and the help of the Katana Development Starter Kit (notably the mcp) . The core architecture consists of a StrategyFactory contract that deploys individual StrategyBet contracts for each proposed strategy, ensuring modularity and gas efficiency.

ERC4626 Vault Integration: Strategy execution leverages ERC4626 vault standards for seamless integration with DeFi protocols like Morpho. The contracts automatically handle deposits, withdrawals, and yield calculations through standardized vault interfaces, ensuring compatibility across different DeFi platforms.

Multi-Position Strategy Execution: Traders can propose strategies involving multiple positions across different ERC4626 vaults. The smart contracts execute these strategies atomically, depositing specified amounts into each vault and tracking individual position performance while calculating aggregate strategy returns.

Automated Betting, Yield Management and trustless resolution: Bettors' AUSD funds are automatically deposited into yield vaults on Katana (currently Morpho) during the betting phase, creating a separate yield stream. The protocol implements sophisticated algorithms for proportional distribution of both losing bets and generated yield among winners. The smart contract calculate final values, determine winners, and distribute funds according to predefined rules, eliminating the need for centralized arbitration.