Managed DeFi Yield Vault

Flexible term, variable rate on-chain loans fully secured by a basket of yield generating DeFi assets

Summary

The Managed DeFi Yield Vault aims to provide stablecoin holders with optimized returns by leveraging a diversified basket of blue-chip decentralised finance (DeFi) protocols. The strategy focuses on low-risk, high-liquidity DeFi assets to generate consistent and sustainable yield. The vault dynamically distributes funds across a variety of established DeFi platforms to maximize returns while maintaining the underlying stability of the invested capital.

Vault	Details
Vault Name	Managed DeFi Vault
Token Symbol	XDMM
Eligible Collateral	Diversified basket of blue-chip DeFi assets
Stablecoins Accepted	USDC, USDT
Networks Supported	Avalanche, Ethereum
Investments	Anytime, vault tokens minted immediately
Withdrawals	Anytime, repaid T+0 if made before cut-off time
Minimum Investment	100 USDC
Term / Lockup	None
Fees	100 bps per annum, deducted from the gross yield generated on the underlying collateral
Interest Accrual	Lenders earn a variable interest rate (“Loan Fee Rate”) which is calculated daily from the weighted average APY generated by the collateral portfolio less Fees
Exchange Rate Method	Reference price set by Investment Advisor each day at 23:59 GMT. Exchange rate between XDMM/USDC increases each day to reflect daily interest accrual.
Legal Structure	Leverages the same institutional grade legal framework, bankruptcy remote structure, and regulated service providers and counter-parties as our other OpenTrade Treasury Management & Yield Product.

Vault Strategy

Multi-Protocol Stablecoin Basket

This DeFi Yield Vault aims to provide stablecoin holders with optimized returns by leveraging a diversified basket of yield generating, blue-chip decentralized finance (DeFi) assets. The strategy focuses on established, high-liquidity DeFi assets to generate consistent and sustainable yield. The vault dynamically distributes funds across a variety of established DeFi platforms to maximize returns while maintaining the underlying stability of the invested capital.

Core Components

1. Stablecoin Allocation:

   • The vault exclusively accepts stablecoins as deposits to ensure minimal price volatility, providing a safe and predictable environment for yield generation.

   • Stablecoins are used as the base asset for all investments to maintain consistent value and minimize the risk of significant price fluctuations.

2. Basket of Blue-Chip DeFi Protocols:

   • The vault deploys funds across a curated selection of top-tier, blue-chip DeFi protocols with proven track records. These protocols have demonstrated a robust history of security, liquidity, and yield generation. Examples include lending platforms (Compound, Aave, Morpho, Spark), automated market makers (Uniswap, Curve), and yield farming strategies (Yearn Finance, Convex Finance).

   • Each protocol is assessed for risk-reward metrics, protocol governance stability, and ecosystem growth potential to ensure a balanced approach to yield generation.

3. Dynamic Rebalancing:

   • The vault manager rebalances the allocations based on real-time market conditions, yield performance, and liquidity availability. By optimizing exposure to different DeFi protocols, it ensures that funds are directed toward the most efficient yield-generating opportunities.

   • Rebalancing is done periodically to minimize risk and maximize returns, adapting to changes in market volatility or emerging opportunities.

4. Diversification for Risk Mitigation:

   • Funds are spread across various asset types within each protocol, reducing exposure to any single asset or liquidity pool. This diversification lowers the risk of impermanent loss, systemic failures, or adverse market movements that may affect individual protocols.

   • The vault also considers factors like collateralization ratios and liquidity depth, reducing risk exposure in volatile market conditions.

5. Security and Auditing:

   • Security is a top priority, and the vault relies on well-established, audited protocols. Regular third-party audits and protocol updates ensure that potential vulnerabilities are addressed and the funds are safeguarded.

   • Smart contract risks are mitigated through stringent risk assessment, leveraging battle-tested protocols with a history of successful security practices.

6. Transparent Reporting and Performance Tracking:

   • The vault provides transparent reporting of the underlying assets, yield performance, and risk metrics. Users can access real-time data regarding portfolio allocation, interest accrued, and overall performance.

   • Detailed analytics allow users to track the effectiveness of the strategy and make informed decisions about participation.

Key Benefits

• Stable Returns: By using stablecoins as the base asset and allocating to low-risk, high-liquidity DeFi protocols, the vault seeks to generate stable returns without exposing users to excessive volatility.

• Diversification: Exposure to multiple blue-chip DeFi protocols reduces the risk of a single failure impacting the entire portfolio, while maintaining high liquidity and yield potential.

• Hands-Off Yield Generation: With automated rebalancing and interest compounding, users can enjoy a set-and-forget approach, with returns continuously optimized by the strategy.

• Security-First Design: By prioritizing audited, established protocols and performing regular security audits, the vault aims to minimize the risk of smart contract vulnerabilities and safeguard user funds.

• Transparency: Users are provided with comprehensive data on yield performance, asset allocation, and protocol health, allowing them to stay informed and make confident investment decisions.