Element Finance (ELFI)

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"Building a yield-maximizing marketplace for crypto interest rates."



"In this update, Element shares their official audit reports, officially open sourced the Element Protocol codebase, and introduce their bug bounty."

"Contract 0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48 is used at its very least 21166 times a day during the last month. A detailed, full code coverage report is available. No evidence of a Element Finance Formal Verification test was found in their documentation or in further web research."

With the comment:

"At 95%, Element Finance never ceases to impress us through their willingness to improve their overall transparency. This score is a direct representation of the team's dedication in collaborating with us to achieve a higher degree of visibility where it counts the most.

Most notably, Element does a tremendous job at detailing their smart contracts' immutability and ownership parameters. Paired with in-depth details about their upcoming governance module, users are assured that they will control all administrative powers in the near future.

Additionally, Element also has two high-quality audits under their belt, further highlighting an emphasis on protocol security. In the future, we would like to see an improved Bug Bounty and software documentation so that the protocol can get a well-deserved 100% score."

  • Previously also scored a 93% (10-9-2021):

"PeckShield has published a Element Finance audit report on April 14th 2021, which was before their mainnet launch on June 30th.

Runtime Verification has published a Element Finance audit report on April 26th, which was before their mainnet launch on June 30th.

Note: The Element Finance team has successfully implemented most of the fix recommendations from both audit reports."

With the comment:

"The element finance team is dedicated towards creating a transparent, trustworthy, and battle-tested protocol, built upon strong fundamentals."



Admin Key

"Ownership is clearly indicated as immutable, with a MultiSig wallet that has temporary (until governance system is implemented), limited administrative powers in this location. This protocol is immutable with the exception of 3 administrative powers. One of which is the ability to pause a contract that holds user funds. We can then assume that all contracts that do not hold user funds do not have a pause control function. No evidence of pause control tests were found. Element Finance has timelock documentation which can be found at this location. However, since their governance module is not in effect yet, their timelock is not in effect either. As it currently stands, the protocol has documented that it does not have a timelock. However, since there is a substantial restriction of admin controls, as well as control through a MultiSig wallet, this is a reasonable enough justification for the absence of a timelock."

"Admin control information is easily found on their documentation. All contracts are immutable. Pause control is mentioned in their admin keys documentation."





Token Allocation


Other Details

  • Will have a two token-system (1-4-2021).


Coin Distribution


"With 189 commits across 16 branches, this is a healthy software repository."


How it works

"The upcoming protocol is poised to enter an already bustling crypto lending and borrowing scene where established firms woo new deposits with the promise of lucrative rates. But those traditional interest rate schemes freeze up the underlying capital, a hallmark feature of lending one’s money that Villanueva sees more as a bug. Element works by splitting those deposits into two tokens – one representing the principal position and the other a stand-in for the interest rate. Users could then opt to sell the rights to their principal token while still hanging onto the interest-bearing one. “Because we split it into two positions you can sell your position at a discount so you can get more exposure to your interest,” he explained."

"Element Finance is yet another DeFi “money lego” being launched soon that does something quite cool - it splits base asset positions (such as ETH, USDC) into two different tokens - the principal token and the yield token. What this means in plain English is that you can lock ETH into something like staking on eth2 and then be issued a token for your original ETH amount (the principal) and a token that represents the yield generated on that principal (the staking APY). From here, using the magic of DeFi, the principal token could be put to work in other protocols (such as put into a trading pair on an AMM or used as collateral within a money market)."

"The process is as follows:

  1. Buying a crypto asset at a discount with principal tokens
  2. Holding it until maturity
  3. Redeeming the principal token for the crypto asset (1:1)
  4. Realizing your fixed APR"




Validator Stats

Liquidity Mining



Other Details

Oracle Method

"Element Finance does not use oracle(s) as documented here."

Privacy Method


Their Other Projects

  • From their blog (14-10-2021):

"We have introduced our Treasury Management initiative. This initiative has the goal of helping DeFi Protocols, DAOs, Funds, and Institutions diversify their treasuries by allowing them to earn fixed rates on their treasury capital (or a portion of it) while maintaining the flexibility to exit their positions if needed."


  • Can be found [Insert link here].


$56M total value locked

$46M in total liquidity

$13M in trading volume

  • From their blog (14-10-2021):
  1. "Surpassed the $180 million total value-locked (TVL) milestone
  2. Surpassed $70 million in trading volume
  3. Launched terms for seven different asset classes, including USDC, DAI, and WBTC
  4. Surpassed 9,000 active users"

Projects that use or built on it


Pros and Cons



Team, Funding, Partners


  • Full team can be found [here].
  • Will Villanueva; CEO
  • Charles St. Louis; COO and MIP Editor at MakerDAO (8-2021)
  • Most of the team seems to be pseudonymous, however at least 2 non-anonymous members were found in the github contributors page (17-2-2022).


"Raised $4.4 million from Andreessen Horowitz (a16z) and Placeholder. SV Angel, A.Capital, Scalar Capital and Robert Leshner’s Robot Ventures also participated in the round, Villanueva said.


"The round was led by Polychain Capital and includes previous investors Andreessen Horowitz, Placeholder, A_Capital, and Scalar Capital. New investors in the round include Advanced Blockchain, Republic, Rarestone, Yunt Capital, P2P Validator, Ethereal Ventures, and their limited partners; and Femboy Capital. We’re also happy to have some of the most respected builders in DeFi, join the round:

  1. Rune Christensen (Founder of MakerDAO)
  2. Stani Kulechov (Founder & CEO of Aave)
  3. Fernando Martinelli (Co-Founder & CEO of Balancer)
  4. Kain Warwick (Founder of Synthetix)
  5. Hart Lambur (Co-Founder of UMA Protocol)
  6. Julian Koh (Co-Founder & CEO of Ribbon Finance)
  7. Alex Svanevik (Co-Founder & CEO of Nansen)
  8. Santiago Roel Santos (Former partner at ParaFi Capital)
  9. Mariano Conti (Former Head of Smart Contracts at Maker Foundation)
  10. Cyrus Younessi (Former Head of Risk Management at Maker Foundation)
  11. Tracheopteryx (Yearn)
  12. Darren Lau and Daryl Lau (Not3Lau)
  13. Anthony Sassano (Ethereum educator)
  14. David Hoffman and Ryan Sean Adams (Co-Owners of Bankless)
  15. Dean Eiganmann (Co-founder Dialectic)
  16. Zachary Cole (CTO of Slingshot)
  17. Patrick LaVecchia (CEO of Oasis Pro Markets)
  18. Will Price (DeFi Data Scientist)
  19. Marc Bhargava (Co-founder of Tagomi, acquired by Coinbase)."