An overview of @USDai_Official protocol.

TL;DR: Underwriting loans against AI hardware infra (tokenized as NFTs), 30-day repayments, no oracles (collateral pricing risk mitigated mainly by LTV buffer, first-loss capital from curators, and rapid amortization). Robust tokenization model, and market-driven redemptions (epoch-based auctions).

1/n

Synthetic dollar, not a stablecoin.

Similar to USDe, USDai is a fully backed synthetic dollar, indicating potential higher deviations from its peg.

USDai currently trades at ~$1.036 (3.6% premium), mainly due to huge demand for points and limited minting (reached deposit caps), while the lowest price was ~$0.974 (2.6% discount) in mid-August.

The average deviation stands at 0.75%.

Brief technical overview.

- USDai is an @m0-derived synthetic dollar, mintable by depositing USDC & USDT, redeemable instantly at all times, collateralized by tbills & hardware infra (GPUs).

- sUSDai is a yield-bearing ERC4626 vault token, inherently less liquid, so holders are subject to redemption periods.

Collateralization.

The protocol is currently 100% backed by tbills, with mid-to-long-term plans to migrate to 100% AI hardware backing.

Starting with tbills allows for initial low-risk capital formation and avoiding cash drag due to the natural lag in physical hardware tokenization process (see CALIBER framework - one of the USDai primitives, below).

The USDai protocol is designed around 3 core components:

1. CALIBER - framework for tokenization 
2. FiLo - process for risk curation
3. QEV - redemption mechanism

All representing new DeFi primitives!

CALIBER - Collateralized Asset Ledger: Insurance, Bailment, Evaluation.

A new offchain-onchain framework utilizing UCC Section 7.

1. Borrower contributes GPUs to bankruptcy-remote SPV
2. SPV signs a Bailment Agreement with the Datacenter warehousing the SPVs 
3. Bailment enables enforceable ‘Electronic Documents of Title’ under UCC Articles 7 and 12, represented as an ERC-721 NFT 
4. This establishes digital property rights, enabling the borrower to post collateral digitally to borrow funds against their GPUs

Defaults handling.

If the Borrower fails to meet their loan payment requirements (i.e. interest & principal payment every 30 days, with one 30-day grace period at an accelerated APR), the Borrower will trigger an event of default. This will cause the NFT, which retains all rights to the underlying GPU, to be sold via (7-day) auction.

FiLo - First-Loss Curator.

USDai protocol utilizes a curators approach, with an important addition that requires them to take a first-loss position in exchange for higher yield.

These positions are illiquid and do not share the same benefits as the more liquid USDai & sUSDai tranches.

No oracles. Aggressive amortization.

Since the protocol is oracleless, alongside an equity cushion (70% LTV), first-loss by curators, the protocol aims to mitigate collateral pricing risk by implementing an aggressive amortization schedule, which front-loads principal repayments to reduce exposure.

While industry estimates suggest 5–7 year economic lives for top-tier GPUs (NVIDIA: 7, CoreWeave: 5), USDai underwriters use a more conservative 3-year depreciation curve. 

For example, an LTV that starts at 70% could drop to ~40% after one year.

QEV (Queue Extractable Value) - core dampener of USDai depegging volatility.

While utilization-based models work for short-term money markets, they are not a perfect design for fixed-duration assets (like RWAs).

To dynamically price the exit liquidity, QEV relies on the predictable liquidity unlocks (predefined repayments from RWA loans + Tbills yield distribution) to create a market-driven queue positioning, similarly to how MEV-boost (PBS by Flashbots) structures transaction inclusion.

QEV becomes more important as the protocol increases hardware backing.

Short recap of collateral risk mitigation tools.

- 70% LTV buffer
- First-loss tranche from the underwriter
- Rapid collateral depreciation curve 
- Robust underwriting process with clear legal structures
- QEV - market-driven redemptions
- Insurance fund (not clear how big, as of now) 

USDai vs USDe redemptions.

Ethena keeps more flexibility in unwinding as GPUs are significantly less liquid compared to closing perp shot positions. 

Hence, USDai is expected to maintain bigger buffer (%-wise to TVL) to meet the redemptions, alongside smoothening the process via mechanisms like QEV.

Protocol revenue.

Protocol takes 3%-10% of the total loan interest during (successful) repayments, subject to change by governance.

Note: Protocol can also earn from QEV.

USDai Protocol Overview

As debt is the main economic growth driver, the emergence of the first credit lines in DeFi will likely be a turning point.

Here is a breakdown of the relatively under-the-radar project aiming to tackle credit creation *at scale* by building a first permissionless DeFi credit primitive - @3janexyz.

Already over $600m of total verified value, backing the 3Jane credit lines. First credit lines to be opened in September 2025 to limited number of borrowers.

As this is going to be a new *tokenized* yield source (to crypto ecosystem), like Ethena was, it'll be very interesting to follow their development process and to what extend 3Jane yield-bearing LP tokens would be adopted as collateral across DeFi.

A short retrospective on earlier credit scoring initiatives in DeFi.

Not many attempts. Very scarce historical behavioural data. Regulatory uncertainty, and mostly focused on "consumption" (mortgages, car loans, credit card loans) as main use-case for debt.

3Jane protocol comes with a focus on "leverage" part of the use-case (business loans, real-estate loans, LBOs, etc), US-based borrowers, and integrations like Blockchain Bureau, Cred protocol, Plaid with VantageScore via zkTLS, to enable robust credit scoring.

The 3Jane protocol is a credit-based money market which enables uncollateralized loans to cryptonative entities (farmers, traders, businesses, DAOs, etc), underwritten against:

1. Assets/Income:
- DeFi assets
- Offchain assets (CEXs, banks)
- Future cash flows  

2. Creditworthiness.

There are 3 main components of 3Jane.

1. Core Money Market - Morpho-like USDC pool.
2. Credit Underwriter - Algo for setting credit line parameters.
3. Credit Slasher - Module for setting strategies for deterring defaults.

Core Money Market.

Two-sided, utilization-based USDC liquidity pool (instantiation of Morpho Blue contract), allowing lenders to deposit USDC, receive yield-bearing USD3 token in return and thus get the exposure to a diverse pool of credit lines.

Borrowers permissionlessly connect ETH address, back account via Plaid, and credit karma via zkTLS, and can generate 0% LTV, open-term, variable-rate USDC loan.

Suppliers.

- USD3 - yield-bearing proof-of-deposit token, senior claim on interest with no cooldown. 85% of the pool.

- sUSD3 - optionally, suppliers can stake USD3 to sUSD3 to receive additional yield while absorbing first-losses in case of defaults. 15% of the pool. 

Note: Those below are mockup APYs, real ones are yet to be discovered (expected to be higher).

Yield sources.

- Aave USDC pool (Mainnet) - keeping idle deposits on Aave v3
- 3Jane credit lines - liquidity moves from Aave to 3Jane borrowers

2. Credit Underwriter. 

The 3Jane Credit Risk Algorithm (3CA) is a 3Jane-operated offchain credit underwriting algorithm that underwrites credit lines against Jane scores and assets, and derives:

1. Credit line size,
2. Default risk risk premium %
3. Repayment rate.

3CA Algorithm.

The 3CA V1 algorithm is a composition of four discrete sequential engines:

1. Fraud Risk Engine 
2. Credit Risk Engine
3. Asset Risk Engine 
4. Portfolio Risk Engine
 
Note: 3CA will iterate, each engine’s logic, weights, and data inputs are upgradeable.

Full docs on each of those engines available here: 
https://docs.3jane.xyz/architecture/credit-underwriter/3ca-algorithm

Jane Score.

This score is an output of Credit Risk Engine, which consolidates the following data sources:

1. Onchain credit scores - Cred Score & Blockchain Bureau.
2. Offchain credit scores - TransUnion & Equifax VantageScores 3.0 (credit age, utilization, derogatory marks, payment history, etc).

3. Credit Slasher. 

The credit slashing module executes three strategies for deterring defaults:

- Slashing the 3Jane score which decreases future credit line sizes and increases future interest rates.
- Pooled upside model where a portion of late interest repayments from defaulters is distributed pro-rata across all existing borrowers. 
- Initiating a non-performing loan (NPL) auction which engages collections agencies to pursue legal recourse within the United States legal system. 

Non-Performing Loan (NPL) Auctions.

3Jane initiates an onchain dutch auction for licensed U.S.-based collections agencies to bid on collecting the debt on a contingency basis, meaning if they are successful in collecting they get to keep a share of the principal repaid.

Repayments in 3Jane protocol.

3Jane positions itself more like advance financing on future performance rather than a traditional interest-bearing loan.

Repayments are monthly, although there is no fixed repayment amount (neither time-based interest accrual nor minimum amortization) but rather triggered by portfolio gains or losses. 

- Gain-triggered - LPs earn a share of your upside
- Loss-triggered - top-up your position to bring health back 

If no (significant) gain or loss, no repayment that month, i.e. there is no "base repayment" amount.

Note: Portfolioes are however expected to move often (see next tweet).

Portfolio volatility.

Active strategies (trading, farming, structured products) tend to produce weekly and even daily swings, and since LTV and 3Jane risk models assume non-zero volatility, it's expected that flat portfolios are going to be very rare (e.g. holding stablecoins).

No loan maturity.

Under the 3Jane repayment logic, *there is no*:

- Fixed maturity date where the whole principal is due
- Ongoing interest accrual that must be paid regardless of performance
- Mandatory base repayment per month 

From borrowers perspective, 3Jane can be seen as a perpetual, performance-linked credit line. 

However, 3Jane has the luxury of doing borrower selection (targer active managers/traders), and introducing risk-based LTV to make low-volatility portfolios able to borrow less.

Strategic defaults > standard defaults.

One of the most tricky tasks needed to be solved was to alter the game theory payoff for strategically defaulting (willingness to repay < ability to repay).

Ethereum came into help here as it creates both certainty of enforcement and an undeniable evidence trail that makes traditional legal remedies more effective and increases the opportunity cost of attempting to strategically default compared to traditional offchain lenders.

DeFi's Future: Credit Innovation

All the ways of providing liquidity to @0xfluid protocol:

1. Supplying via Lend protocol - earns borrowing fees from Vault and DEX protocols.
2. Supplying via Vault protocol - this can be seen as supplying collateral, earns borrowing fees due to rehypothecation (like supplying liquidity to Aave).
3. Supplying via DEX protocol - same as (2) plus earns trading fees (if the collateral is dual token, eg wstETH-ETH, aka “smart collateral”).

Note that (2) differentiates from (1) by you being able to borrow against the collateral (that’s not possible via 1), and that (3) differentiates from (2) if you use smart collateral (to earn trading fees).

Furthermore, if you supply via DEX protocol on Fluid, you can also earn on your debt (assuming you generate some). Assuming you have an ETH / USDC-USDT position opened, with debt generated 100% in USDC.

The protocol flow of actions for trading USDC to USDT is the following:

1. Incoming USDC is used to repay part (or full) debt of a position.
2. Protocol then generates equivalent amount of USDT debt (sourced from liquidity layer) and returns this USDT to the trader.

Some interesting takeaways about @0xfluid from the above:

- Lend protocol is necessary for cases of supplying assets that are not available as collateral but are borrowable.
- Fluid DEX pool can have 0 actual liquidity (pair tokens deposited) while still being able to facilitate swaps thanks to the “smart debt” feature (assuming there is enough liquidity in the liquidity layer to facilitate debt generation).
- Deposits via Lend and Vault protocols are used solely for sourcing debt generation on Vault and DEX protocols (and potentially more protocols in the future).
- LPing into one of the Fluid DEX pools is technically depositing “smart collateral” (and generating “smart debt”), while you natively have an option to borrow against those deposits (ie LP tokens).

Providing Liquidity to 0xFluid Protocol

An in-depth overview of @0xfluid, the latest lending protocol that has taken DeFi by storm with smart collateral & smart debt (aka DEX protocol, built on top of Fluid).

TL;DR:
- Liquidity layer + protocols built on top (Vault protocol, DEX protocol, etc)
- New vault types like wstETH-ETH / USDC-USDT allow for both collateral & debt to be used as DEX liquidity (as long as you don't care if your coll is wstETH or ETH, or debt is in USDC or USDT)
- Liquidation of multiple vaults with the same LTVs in a single tx
- Max 20x leverage (borrowing), max 39x leverage (LP-ing)

Liquidity layer/pool.

Unified liquidity layer consolidating liquidity across protocols built on Fluid, eliminating the need for each protocol to independently attract liquidity (similar to the proposed "unified liquidity layer" in Aave v4).

A very simple contract with no advanced algorithm or logic from which all liquidity is sourced.

Lending protocol.

A direct access to the Liquidity layer. Follows the ERC4626 standard.

It's a super simple deposit & earn protocol to get a long-term sustainable yield. 

Yield is generated by protocols utilizing liquidity from the liquidity layer (Vault protocol, DEX protocol, & other).

Vault protocol.

CDP-based (Maker-like) borrowing protocol with no rehypothecation (collateral is not further lent out to others).

No cross-collateralization either, it's a single collateral / single debt asset protocol, e.g. WETH/USDC.

DEX protocol.

The release of the DEX protocol was the moment that really caught the attention of DeFi enthusiasts.

Namely, the DEX protocol is essentially an advanced version of the Vault (CDP) protocol, meaning it can be seen as a borrowing protocol as well, but with some additional features. 👇 

Smart collateral.

DEX protocol allows the creation of CDPs with two different collateral assets and a single debt asset.

For example, you can find a WBTC-cbBTC / USDC vault on Fluid.

By opening a position on this kind of vault, you're essentially accepting that your collateral can be a mix of WBTC and cbBTC (ranging from 0% - 100%) at any time.

This opens the opportunity to use collateral as DEX liquidity and earn trading fees. The ranges are automatically rebalanced by Fluid.

Namely, it can be seen as having an LP token as collateral.

Therefore borrowers can earn yield that is coming from trading fees, instead of lending out collateral (no rehypothecation on Fluid).

Smart collateral risk considerations.

Since there is no rehypothecation, there is no risk of illiquidity but one can argue there could be IL risk like all LPs are facing.

IL risk can be mitigated to some extent by having correlated assets as trading liquidity.

Smart debt.

This is where it gets interesting. 

The DEX protocol also allows the creation of CDPs with a single collateral asset but two different debt assets (e.g. ETH / USDC-USDT).

So, as long as you, as a user, don't care if your debt is in USDC or USDT, you can earn trading fees from this USDC-USDT trading pair on Fluid.

All while doing anything you want with the borrowed tokens (e.g. USDC).

DEX protocol - Swap execution.

For smart collateral, the protocol simply uses e.g. WBTC & cbBTC as a standard trading pair (similar to Uniswap).

As for smart debt, the protocol flow of actions for trading e.g. USDC to USDT is the following:

1. Incoming USDC is used to repay part (or full) debt of a position.
2. Protocol then generates equivalent amount of USDT debt and returns this USDT to the trader. 

Important to note the UX part of this, assuming the borrower chose to generate USDC as debt initially, he'd need to swap it back to USDT (fully or partially) to repay his debt (interestingly this can also be routed through Fluid DEX, using others' debt or collateral).

Smart collateral & smart debt.

There are already vaults like wstETH-ETH / wstETH-ETH live on Fluid meaning you can basically have both your collateral and debt earn trading fees.

Those fees are automatically used to pay back your debt on Fluid.

Efficient liquidations (Vault protocol level).

TLDR:
- Fluid enables liquidations of multiple positions with LTV above LT.
- Liq. penalty as low as 0.1%.
- Liquidate just enough to bring the position back above water again.

Liquidators on Fluid liquidate bad debt (and not a particular position), similar to Uniswap v3 where trade goes through active liquidity (and not through a particular range order).

Positions with the same ratio are grouped into slots. When the ratio falls to LT the protocol aggregates all vaults in that slot for liquidation in a single transaction.

All positions within a specific range are liquidated simultaneously, similar to Uniswap swap. The amount liquidated is just enough to put the position above water again.

High LTVs.

The more efficient liquidations you have, the higher the LTV you can offer.

Fluid relies on its novel liquidation design and offers LTVs from 95% on non-correlated pairs. 

That's ~105% LR, and gives max 20x leverage.

Capital efficiency.

Considering the max leverage of 20x, if a borrower opens such position by utilizing both smart collateral and smart debt pools, he can essentially earn 39x trading fees on his principal.

After maxing out, for each $1 you end up with:

- 20 USDC-USDT smart collateral
- 19 USDC-USDT smart debt

That is 39 USDC-USDT liquidity that can be earning trading fees.

Keep in mind that liquidity for looping (borrowing) needs to be lent out prior to this. 

Automated borrow and withdrawal limits (Liquidity layer).

The max borrow (aka debt ceiling) is set by $INST governance, although until it reaches this limit, the borrowing cap is gradually increased/decreased as borrowing demand grows/falls.

This prevents any large withdrawal or borrowing, regardless of hack or just a whale. (Similar to DC-IAM in @MakerDAO.)

Limits are adjusted every block when funds are nearing limits.

The same goes for withdrawal limits.

Oracles.

Fluid uses three different TWAP checkpoints and the @chainlink price, comparing them with the current @uniswap price to verify that it falls within a specific range and has not been manipulated in any way.

Future Vault protocol v2.

An "Oracleless" version of a borrowing protocol that'd utilize the upcoming Uniswap v4 is also proposed.

https://blog.instadapp.io/oracleless-lending-protocol-on-uniswap-v4/

The Rise of 0xfluid: A DeFi Game Changer

Risk & reward comparison of holding DAI vs USDS (new iteration of DAI).

TL;DR:
- DAI <> USDS always convertible 1:1 (USDS inherits DAI liquidity)
- DAI is immutable and is not going anywhere
- USDS is upgradeable, can add a freeze function later for regulatory reasons
- Upgrading DAI to USDS is incentivized with higher savings rate, SKY rewards, and @ChronicleLabs points.

A bit of context:

MakerDAO has recently rebranded to @SkyEcosystem. 

This came with new iterations of DAI (USDS), MKR (SKY), and sDAI (sUSDS) tokens.

Here we'll focus on the difference between holding/using DAI and USDS as stablecoins from the risk & rewards perspective.

Agenda:

- Brief intro to USDS.
- DAI is here to stay.
- DAI to USDS conversion.
- Contract upgradability (freeze function).
- Savings rates & rewards.
- Liquidity considerations.
- USDS usage since launch.
- Holders distribution comparison.
- Upcoming PureDAI token.

Brief intro to USDS.

As a successor to DAI, USDS will focus on scalability and utility by taking over the RWA and TradFi integrations of DAI.

To reach global scale, USDS aims for peg stability and scalability while introducing flexibility by being an upgradable token contract.

DAI is here to stay.

Upgrading to USDS optional (and can be reversed).

DAI will remain pegged to USD and will have no phasing out any time soon, so people can simply continue to use it for a foreseeable future as is.

Converting DAI to USDS (and vice versa).

Since the token launch DAI is convertible to USDS at a 1:1 ratio manually at sky[.]money (and other FEs).

Furthermore, multiple DEX aggregators have already integrated DaiUsds migration contract meaning "swapping" from DAI to USDS is available without slippage.

The conversion works both ways and can be done atomically via the DaiUsds contract (link available in the last tweet).

Contract upgradability.

- DAI: contract *is not* upgradeable, implying DAI's technical immutability.

- USDS: contract *is* upgradeable, with any potential changes being subject to a decentralized governance voting process.

Freeze function of USDS.

Currently, USDS doesn't have a freeze function implemented.

Still, as USDS will focus on mass market adoption by having compliant RWA backing, it's expected that USDS will be upgraded to include it eventually to meet regulatory requirements.

The implementation of the freeze function may take several months or even years, depending on the growth of USDS.

Savings rates and rewards.

Current state:
- DSR (sDAI) = 6% (soon to be 5.5%)
- SSR (sUSDS) = 6.25% (soon to be 6.5%)

Beside the difference in savings rate, DAI holders are also incentivized to upgrade to USDS with:

- SKY rewards (earning 7.6% APY atm)
- Chronicle points.

Future of DSR.

DSR will begin to be phased out by gradually decreasing the rate down over time. While there is no precise timeline for the pace of this process, it is expected that rate will remain for forseable future.

Eventually, yield will only be available for USDS holders.

Liquidity considerations.

With the 1:1 conversion put in place, USDS effectively inherits DAI's deep onchain liquidity.

Additionally, following the migration of USDC liquidity from PSM to the new LitePSM there is now ~$1.9b in USDC available for USDS holders wishing to unwind.

Future expected growth in USDS liquidity.

To increase USDS utilization, Maker plans for USDS to build upon DAI D3Ms by injecting USDS into various blue-chip lending protocols including Aave v3, SparkLend, Morpho, etc. 

This will contribute heavily to USDS's presence across DeFi.

Usage of USDS since launch.

Total supply of USDS currently stands at 1.09b.

The usage of USDS so far has mostly been related to:
- farming SKY rewards (482m, 44.6%) 
- depositing into SSR to earn yield (469m, 43.4%)

The remaining USDS either sits in users wallets, surplus buffer, UniV2 SKY/USDS pool, or earning Chronicle points.

Data: @BlockAnalitica 

Comparison of holders distribution.

After only 15 days since launch, there is effectively 767 wallets utilizing USDS, while 192 hold USDS in wallet, remaining 575 are either SKY or points farmers.

As anticipated, DAI is much more widely distributed given its age, with over 504k holders.

PureDAI.

To address the decentralization aspect of the stablecoin trilemma, Maker intends to launch a new stablecoin, temporarily named "PureDAI," in the coming years.

PureDAI will be immutable, completely independent from any centralized control, and will be backed solely by decentralized collateral.

Two paths.

With this approach, Maker aims to offer both scalability-focused and decentralization-focused stable assets in the long run.

Current DAI holders will eventually be able to choose between USDS and PureDAI.

Relevant links.

- DAI/USDS Exchanger contract: https://etherscan.io/address/0x3225737a9Bbb6473CB4a45b7244ACa2BeFdB276A#code
- Sky protocol (DAI & USDS) dashboard by @BlockAnalitica: https://info.sky.money/

Comparison: Holding DAI vs. USDS

Synthetix v3 is steadily rolling out. 

Here is a breakdown of all features the v3 system introduces (and a short history of @synthetix_io protocol development).

- "Liquidity layer of DeFi"
- CDP protocol with 0% interest + perps infra
- Delta-neutral debt pool
- Multi-collateral

Quick history of Synthetix protocol.

v1 - tokenized RWAs (synths) tradable onchain
v2 - debt pool-based perps
v3 - generalized version of v2

- Synthetix v1 - Introduced synthetic assets on chain (tokenized RWAs like sGOLD, also sETH, sUSD) minted against SNX token at 800% CR.

- Synthetix v2 - Alongside underwriting the trading of spot synths, the liquidity generated by SNX stakers is used for powering perpetual futures at oracle prices.

Stakers (perp LPs) are exposed to the combined performance of all traders, as well as earning trading fees.

If you want to read more on how perps work in general, wrote about debt pool-based onchain perps (and how DEX perps differ from CEX perps) below.

TLDR: Perps in DeFi utilize liquidity pools as a counterparty to traders, while on CEXs, perp markets are orderbook-based.

https://x.com/definikola/status/1663835204019167233

Delta-neutral debt pool.

Synthetix v2 also brought the delta-neutral debt pool to DEX perp design, effectively eliminating the need for LPs to hedge their positions like on other venues.

This was enabled by:
1. Dynamic funding rate mechanism.
2. Price impact function.

Dynamic funding rate mechanism.

Since in perp markets, one doesn't borrow actual underlying asset, but rather the exposure to it, the funding rates are used to balance long and short demand.

Dynamic funding rates in the V3 system take into account the skew AND *the velocity*.

When there is a prolonged long skew, funding rates will steadily rise over time. 

Conversely, when short positions are dominant, funding rates will decrease as long as the short skew continues.

By incorporating velocity into the funding rate calculation, the mechanism encourages traders to take positions opposite to the current market skew, promoting market stability and balance.

Here is the velocity formula:

Price impact function.

Another crucial mechanism for keeping the perp market in balance (enabling LPs to earn trading fees with no price exposure).

This function simulates orderbook-like behavior by adjusting the execution price based on trade size and the current market skew.

The price impact function creates a premium or a discount on the execution price depending on the direction of the trade (long or short) and the existing market skew (long or short).

In other words, if long OI > short OI, the price impact function incentivizes opening short positions (and disincentives opening long positions), and vice versa.

Synthetix v3.

It's worth mentioning that all previous iterations of the Synthetix protocol were improving and building upon the existing architecture (5 years in the making).

V3 system is a completely new, rewritten-from-scratch infra designed with modularity in mind.

Architecture design of Synthetix v3.

Vaults -> Pools -> Markets.

- Vaults: 1 vault = 1 collateral asset (eg ETH, USDC)
- Pools: Aggregate vaults & generate debt (liquidity) to be used in markets
- Markets: Diff. use cases built on v3 liquidity (spot, perps, options, RWAs)

Users deposit collateral into vaults and delegate their collateral to pools (optional, explained below), which in turn generate stablecoin credit against this collateral to provide liquidity to various markets.

Pools are like big (multi-collateral) CDPs underwriting perp market.

New stablecoin minted by the v3 system.

The legacy sUSD is being replaced with the new stablecoin called USDx, which is minted by the LPs using the v3 protocol.

Synthetix v3 Core - CDP protocol with 0% fees.

After supplying collateral, the delegation part (to pools) is optional, meaning that users can use the Synthetix v3 Core system solely as a CDP protocol (similar to Maker/Liquity) for borrowing USDx stablecoin *at a 0% borrow rate*.

This is enabled by having a "Zero pool" which backs no markets (can't delegate collateral to any of the markets) since it has no owner.

However, if one decides to delegate the collateral to a specific pool on Synthetix v3, the trading fees are used for auto debt payback.

To recap, here’s an overview of the 3 ways you can utilize Synthetix V3:

1. CDP protocol - Deposit collateral (e.g. ETH) and borrow USDx at 0%.

2. LP protocol - Deposit collateral into pools & delegate to markets (e.g. perps) to earn trading fees.

3. Both CDP & LP protocol. 👇 

Synthetix v3 used as both CDP & LP protocol.

- Deposit your collateral
- Generate USDx
- Simultaneously delegate collateral to markets (e.g. perps)
- Trading fees automatically pay down your USDx loan.

Better risk management.

Users can select one of many liquidity pools, which are connected to one or more markets, allowing more fine-tuned control of LP (counterparty) risk.

V3 also implements Dynamic funding & Price impact functions to bring the delta-neutrality for LPs.

The modularity and Vaults-Pools-Makers design also bring:
 
- Opportunity to onboard theoretically any collateral asset.
- Synthetix v2, GMX, PoolTogether, NexusMutual, NFT lending, etc, can be built on top of the v3 system (in the form of "markets").

Improvements of perps v3, compared to perps v2.

- Multi-collateral
- Cross-margin: margin can be used across multiple positions natively
- Liquidations: gradual, non-sandwichable
- Settlement: execution price is the earliest valid price post-commitment

Oracles in v3.

Synthetix took the oracle-agnostic approach (similar to Morpho Blue), meaning that market creators can specify the oracle(s) used for their market.

Tokenomics & SNX token overview.

- SNX inflation was turned off in December 2023.

- SNX holders now earn 40% of all trading fees from perps in the form of buy-back and burn mechanisms.
- Integrators like @Kwenta_io and @PolynomialFi earn 20%.
- The remaining 40% goes to LPs.

The current rollout status of the V3 system.

- Spot market is available on Mainnet & Optimism, SNX as collateral 
- Spot & Perp markets are live on Base, USDC as collateral
- Spot & Perp markets are live on Arbitrum, WETH, USDC, USDe, ARB as collateral

Currently, there are 2m $ARB incentives live for migrating to v3 on Arbitrum, yielding from 15% to 35% for LPs.

Decoding Synthetix v3: Features and History

What's new in @LiquityProtocol v2?

Complete breakdown of new Liquity v2 features.

- User-set interest rates
- ETH & LSTs as collateral
- New stablecoin - $BOLD
- Redemptions based on interest rates
- No Recovery Mode (LR at 110%)
- Immutable

Expected to launch in Q3 2024.

ETH & LSTs as collateral.

Besides ETH, Liquity v2 will have multiple LSTs as collateral.

Each collateral asset will have its own Stability Pool (a pooled $BOLD liquidity available for liquidations).

Updated fee flow.

In v2, stability pool depositors get the majority of borrowing fees *directly* (instead of fees going to LQTY stakers, and then SP getting LQTY rewards), alongside standard ETH (or LST) yield from liquidations.

Immutability.

The remaining portion of borrowing fees will go to PIL (Protocol Incentivized Liquidity), i.e. to LPs on Curve and/or Uniswap (targeting 10% of the BOLD supply).

Core protocol will be immutable, voting will be done only for directing fees to specific DEX pools.

User-set interest rates.

This is the main innovation in v2. 

Namely, upon opening a Liquity position, users need to specify the interest rate (IR) they are willing to pay (alongside supply and borrow amounts).

Rates can be set between 0.5% and 1000%.

Adjustment of IR.

Rates can be adjusted anytime, although a 7-day interest is paid upfront on each rate adjustment or when generating more debt.

This is to prevent position reopening and redemption evasion strategies where borrowers try to minimize their interest payments.

To be more clear, the upfront fee is not paid twice, it's just a minimum amount of interest you need to pay every time you change your interest or borrow more.

Thus, interest rate adjustments are expected to be made on a weekly basis (or average).

Automating IRs.

Users can manage the interest rate themselves or delegate the IR management to a third party like @defisaver.

Interest rates can potentially be automated based on the user configuration (i.e. keep it in the 4-10% range, or based on a min "debt-in-front" amount).

Short-to-mid-term borrowing.

Unlike in v1 which has a one-time loan origination fee (targeting long-term borrowers), user-set interest rate in v2 is a continuous one, making short-to-mid-term borrowing more attractive.

Liquity v1 Redemption Mechanism in brief.

Liquity pioneered a LUSD redemption mechanism to keep the peg of LUSD above $1, by letting anyone redeem LUSD in Liquity protocol for ETH at the face value of $1.

Profitable only if 1 LUSD < $1 on the market.

This (buying + burning) essentially increases the LUSD market price, bringing it above $1 again.

The point here is that ETH is taken from the least collateralized positions (aka Troves) in the protocol (Liquity v1 has an onchain list of troves sorted by collateralization ratio).

Liquity v1 has shown to work reliably in low-interest environments.

However, during times of high interest rates, LUSD experienced prolonged sell pressure due to the fixed borrow rate (0.5%). 

This led to LUSD price falling below $1 which caused redemption volumes to spike.

To avoid redemptions, users reacted by increasing their collateral ratios to very high levels (e.g. 600%) compared to the liquidation ratio in Liquity - 110%.

This caused a bad UX for borrowers since they were getting redeemed even at 550%.

Now, v2 comes with a new approach.👇 

https://x.com/definikola/status/1714977976310477055

Redemptions based on interest rate.

Liquity v2 is pursuing fewer redemptions of BOLD stablecoin by sorting positions in an onchain list *by their configured interest rate*, rather than the collateralization ratio (as in v1).

Higher interest rate -> lower redemption risk.

How does this lead to fewer redemptions?

Having interest rates increased (instead of collateral ratio) by borrowers during high leverage demand helps improve the stablecoin peg since the yield stability pool depositors earn increases (increasing the BOLD demand).

Delayed redemption.

The redeemer has to:
1. Commit to a redemption (send x BOLD)
2. Confirm the redemption within a permitted time window

This makes it harder to frontrun price feed updates while eliminating short-term arbitrage due to AMMs pools lagging.

Collateral split.

Since BOLD will be backed by multiple collateral assets, the protocol splits the redeemed amount between all collateral assets. 

The split is determined proportional to the "outside" portion of the respective debt.

Markets on Liquity v2 will be isolated. 

There will be multiple Stability Pools (one for each collateral asset), meaning that ETH SP LPs benefit from the interest paid only by the users borrowing against ETH (and receive liquidation gains in ETH only).

Based on the determined collateral split, the redemption is performed against the borrowers in all markets concurrently in ascending order of interest rates.

It's worth mentioning that, apart from lowering exposure to the collateral asset, redemptions do not incur any loss to borrowers.

To minimize the exposure risk, tools like @defisaver can be used to automate the process of creating a new Trove right after being redeemed.

More capital-efficient borrowing.

With no need to increase your collateral ratio to prevent redemptions in high-interest environments (but rather the interest rate), Liquity v2 enables more capital-efficient borrowing regardless of market conditions. 👇 

No Recovery Mode - Liquidation ratio fixed at 110% (for ETH).

ETH will have 110% LR (max 11x leverage) while LSTs will have higher LTV requirements, based on their risk characteristics.

Point being that you can't be redeem at 550% CR -> if you manage your interest rate right.

Instead of Recovery Mode, v2 includes:

1. Critical Threshold (CT, e.g. 150%) - disables the creation of new debt for a specific market.
2. Shutdown Threshold (ST, e.g. 110%) - disables all borrowing operations except closing Troves.

LR stays the same, avoiding liquidations.

Liquidation mechanism in v2.

The BOLD in SP is used to pay back the liquidated borrower's debt in return for collateral, resulting in net liquidation gains of up to 5% for the depositors.

Liquidation is a permissionless function that can also batch multiple Troves at once.

Transferrable positions - ERC721.

In v2, all positions will be an NFT, allowing users (and integrators) to transfer Troves as they wish, and to hold multiple Troves.

This was not possible in v1.

To sum up, here are all the v2 improvements in one place.

Exploring Liquity Protocol v2 Features

Minimizing some of the most common DeFi risks with a simple setup.

Risks covered:
1. Frontend downtime risk (avoiding the "walled garden" approach).
2. Liquidation risk.
3. Isolating lending positions.

The setup: @defisaver x @safe. 👇 

Brief backstory.

Starting as a "CDP Saver" back in 2019 with @MakerDAO being the only integrated protocol, we rebranded to DeFi Saver as other protocols like @CompoundFinance and @Aave were introduced.

Now what Maker protocol has is a built-in proxy contract called DSProxy, which we decided to utilize at @defisaver for all future integrations as a default "Smart Wallet" to provide one-click features by bundling multiple actions into one transaction.

Fast-forward 5 years, we received valuable feedback from users saying they get the sense of being "locked" to our platform, which over time became true since no other DeFi frontend implemented DSProxy architecture (despite the fact that it's a general-purpose proxy contract).

The positions opened via DSProxy (i.e. on DeFi Saver) weren't visible/accessible on other UIs, which brought legit concerns and questions like:

"What should I do if defisaver.com experiences some downtime, especially during market crashes?".

To address this, we decided to switch from DSProxy to @Safe, as a default Smart Wallet on @defisaver.

Reasoning:
- Industry-standard (open&neutral).
- Newer tech + more gas efficient.
- Can be used as proxy contract (1/1 safe - single sig).
- Plug&play if you already have msig.

Frontend downtime risk.

This can be crucial, especially for non-dev DeFi users who don't know how to quickly spin up their own FE, or interact with contracts directly.

Switching to @Safe implies native support for Safe wallets, meaning users can now use app.defisaver.com or app.safe.global which enables connecting Safe wallet directly to any supported dapp. 

Users can now access their positions on any frontend that supports Safe.

Liquidation risk.

To avoid paying high liquidation penalties (and losing collateral exposure), users can utilize non-custodial automation features available on @defisaver:

- Auto-rebalancing (set trigger & target collateralization ratio)
- Stop Loss
- Auto-payback.

Isolating lending positions.

If you wish to have multiple positions with a single EOA on lending protocols like Aave, Compound, and Liquity, you can do that by having multiple Safes (one for each position), and then switch between those.

https://x.com/definikola/status/1785727021127004613

Mitigating DeFi Risks with Strategic Setup

What's new in @Aave v4?

Complete breakdown of proposed Aave v4 features.

- Unified Liquidity Layer
- Fuzzy-controlled interest rates
- Liquidity premiums
- Non-borrowable collateral
- GHO soft Liquidations & redemptions
- Opt-in interest in $GHO

Expected to launch in 2025. 🧵

Unified Liquidity Layer.

With modularity in mind, IMHO the biggest (architectural) change in v4.

A single liquidity layer is a more generalized version of a "Portal" feature introduced in v3, as it can be used by different modules (v4 borrow module, RWA, cross-chain borrows..).

The unified liquidity layer allows for easier liquidity migrations from previous protocol versions, i.e. no further liquidity fragmentation, just adding new modules.

ULR also brings better support for natively minted assets (e.g. GHO).

Fuzzy-controlled Interest Rates.

Rates will not be managed by governance nor PID controllers, but rather with onchain fuzzy logic.

Both slopes and kink points (target utilization), will be auto-adjusted.

Liquidity Premiums.

TLDR: Different borrow rates depending on the collateral asset risk.

Each asset is assigned a risk factor from 0 to 1, resulting in a premium required to be paid as a borrower, on top of a ‘base rate’ (borrow rate for assets considered to be lowest risk).

Liquidity premiums should increase listings since the DAO would have the ability to charge more for riskier collateral assets.

The protocol will technically be incentivizing 'stronger' collateral, aligning with the goal of the protocol being backed by liquid, low-risk assets.

Aave v4 Borrow Module.

This module would be added on top of the unified liquidity layer, with some new UX, risk management, and safety features. 👇 

Smart Accounts.

Users will be able to create multiple 'smart accounts' and thus have many (isolated) positions in the Aave protocol *with a single EOA*.

PS. This is available even now for Aave v3 with @defisaver which uses @safe as default smart wallet.

https://twitter.com/definikola/status/1785727021127004613

Aave vaults.

An option to have a non-borrowable collateral (i.e. no re-use of collateral) by depositing the collateral asset into the smart account, instead of the (unified) liquidity layer.

This lowers the risk but implies no yield for collateral supplied.

Governance-related improvements.

1. Dynamic Risk Configuration.
2. Automated Assets Offboarding.
3. Automated Treasury Management.

Dynamic Risk Configuration.

Changing the risk parameters like Liquidation Threshold can result in bad UX since it can trigger unexpected liquidations. 

At the same time, this needs to be adjusted regularly to maintain protocol safety (introducing governance overload). 👇 

Dynamic Risk Configuration.

In v4, a new config instance can be created, leaving existing borrowers hooked to the previous one.

New config doesn’t fragment the liquidity due to the unified liquidity layer design and impacts only new users.

Automated Assets Offboarding.

Currently, assets are offboarding by lowering LTV to 0 and LT (progressively, to avoid liquidations), which again requires multiple gov proposals. 👇 

New offboarding mechanism utilizes dynamic risk config by creating new config with LT at 0.

The LT for existing borrowers will gradually be reduced on every action performed on the asset in question (starting from the highest ones) until all the configs have LT at 0.

Automated Treasury Management.

Sell DAO-earned tokens automatically to a preferred asset when a configured threshold is reached. 

This also reduces gov work.

Actions.

Automatically adjust position based on governance/parameter updates. 

In my opinion, this should be left out of the core protocol and handled on a higher level (e.g. via @defisaver), mainly for simplicity purposes.

Liquidation Engine v4.

Variable liquidation factor (% of collateral that can be liquidated in one tx), v3 had up to 50%.

Liquidators can batch multiple liquidations with the same collateral/debt asset pair to increase their efficiency.

Liquidation Engine v4.

Variable liquidation bonus - factually introducing reverse dutch auctions, linearly increasing the liquidation bonus (and decreasing the protocol fee) as the health factor of the position decreases.

Excess Debt Protection.

Since v4 builds on the shared liquidity approach, the liquidity pool is safe as the riskiest asset it contains. 

To prevent excess debt, Aave v4 will automatically set the LTV to 0 for the specific asset, if/when it reaches the threshold for excess debt.

New Oracle Design.

Not much info on this yet, but anticipating additional safety checks for @chainlink feeds with the goal of reducing trust assumptions.

GHO soft liquidations.

Aave v4 will utilize a soft liquidation mechanism (aka Lending-Liquiding-AMM-Algorithm) pioneered by @CurveFinance’s $crvUSD.

GHO will automatically earn interest if supplied as collateral.

This is planned to be an opt-in feature for GHO borrowers.

In case of multi-collateral positions, users can choose which collateral asset to liquidate to GHO during soft liquidations (and which one to buy back).

When combined with @defisaver liquidation protection, this can significantly decrease the risk of hard liquidations.

Stablecoin interest paid in GHO.

If you supply e.g. USDC, you can choose to earn boosted interest in GHO thanks to the lower reserve factor.

Interest is essentially converted to GHO by being collected to protocol controlled value (PCV) which directly backs the issued GHO.

Emergency Redemption Mechanism for GHO.

In case of a prolonged and heavy GHO depeg, ERM can be triggered which enables redemption of the least collateralized positions in the system.

This is similar to the LUSD redemption mechanism introduced in the Liquity v1 protocol.

Position tokenization & gas optimizations.

- No more rebasing tokens, but rather optional tokenization using ERC4626 vaults.

- Expected 30-50% reduction in gas fees in v4.

To sum up, I'd say that v4 takes some novel and useful mechanisms from the ecosystem, alongside a couple of new designs related to Aave protocol and GHO stablecoin.

A single liquidity layer surely the biggest challenge. Also good to have most of the features optional.

Aave v4: Exploring New Features

Following recent developments in the ETH staking ecosystem, including:

- Ethereum (minority) client bug
- Protocols using primary LST price (1:1) instead of market price
- Introduction of @eigenlayer and restaking

Decided to write a revised leveraged ETH staking risk analysis.

Agenda:

- The strategy and historical performance.
- Sustainability analysis: squeezing the spread (min spread at 0.2%).
- Risk analysis.
- Liquid restaking strategy.
- Minority vs majority client bug risks.
- Managing lev-staking positions: ethsaver.com.
- Summary.

The strategy for boosting the ETH staking yield via lending protocols has become quite popular since the last write-up, so I'll give just a short overview of it here.

Increased yield comes from leveraging the spread between ETH borrow rates and ETH staking APY. 👇

https://twitter.com/definikola/status/1515064356337246209

Before delving into the risks, it's worth mentioning that the profitability of the leveraged staking strategy has increased in the last couple of months, with the average APY being over 10% despite the recent LSTs' drop in average yield (from ~5% to 3.5%).

The sustainability of the leveraged staking strategy has been questioned many times ever since the first additions of LSTs as collateral.

One of the main concerns was that the spread between borrow rates and staking yield was going to be arbed away.

https://dune.com/queries/2235238/3665104

As it turned out, the spread has not been squeezed at all.

With the max leverage for LST/ETH positions being increased across all money markets (up to 18x on Blue), the required spread got down to a minimum.

Even 0.2% is now enough to perform better than simply holding an LST.

The conclusion is that there are just enough people wanting to earn mild APY (<3%) on their vanilla ETH, alongside people longing ETH or just using it as collateral to short other assets (not interested in the supply rate), to make this strategy sustainable (long-term).

Alongside new underlying protocols and LSTs enabling this kind of strategy, the associated risks have also evolved in the meantime.

Some are fully mitigated, but there are new ones, too.
Let's explore those below.

Revised risk analysis of leveraged ETH staking strategy.

1. Borrow rate spikes.
2. LST provider (big) slashing event.
3. LST depeg & liquidation hunting.
4. SC risks.
5. Governance risks.
6. Restaking.
7. Ethereum execution client bug.

Breakdown of each point.👇

Borrow rate spikes.

Users can end up having negative net APY in case of high ETH market utilization on the underlying lending protocol (i.e. borrow rates > staking yield).

However, this needs to be severe or very long-lasting to have an impact (which depends on the leverage).

Protocols like Compound v3 and Morpho Blue (can) avoid having huge rate spikes after hitting the optimal utilization since no collateral is lent out guaranteeing liquidity for potential liquidations.

Those are thus deemed to be less risky for borrowers in this regard.

LST depeg.

LST market price represented a significant risk factor because of their use as collateral especially after the stETH/ETH Curve pool 'depeg' in 2022, *but it's not anymore*:

1. Can redeem 1:1 in a few days (withdrawals enabled).
2. Protocols now using primary rate. 👇

Shanghai upgrade (enabling withdrawals) resulted in the 'peg' tightening since stakers can now unstake at a 1:1 ratio anytime by waiting a few days in the exit queue.

However, the market price is still trading at a small premium since it provides an instant exit.

While withdrawals have improved the peg, this is not of much help (apart from liq. risk) when it comes to unwinding the leveraged LST/ETH positions since it needs to be atomic (in 1 tx).

It can be a factor if one has enough ETH for the whole debt repayment (withdraw + unstake).

Currently, the only unwinding option is to sell an LST back to ETH (can't wait 3 days), which implies potential swap fees and trade size impact.

Partial unwinds combined with waiting for pools to rebalance can be a solution for some, of course.

Therefore, on-chain LST liquidity is definitely a significant risk measure one wants to keep an eye on when deciding to ape into the lev-staking strategy.

Not sure if technically feasible, but it'd be cool to have a protocol matching the entry queue with the unwinding liquidity.

Lending protocols switching to LST primary rates.❗

Another (arguably) positive impact on the liquidation risk for lev-staking positions is the switch from price feed using the market price of LSTs to the primary LST rates to assume a 1:1 LST/ETH peg.


https://twitter.com/0xtogbe/status/1744429996662259819

Find the full risk analysis and comparison of using primary vs secondary LST rates by @BlockAnalitica below.

TLDR: Using primary rates shifts the risk from market manipulation (e.g. liquidation hunting) to the health of Ethereum infra (less volatile).

https://blockanalitica.substack.com/p/analysis-of-market-price-vs-exchange

In case of a big slashing event, the primary rate *could* also drop, but:

1. Significantly less volatile than the market rate.
2. Would not cause cascading liquidations.
3. DAO-governed protocols can react accordingly.

The primary rates are currently used by:

- @Aave v3 (on both L1 and L2s)
- @Sparkdotfi (wstETH)

- @compoundfinance v3 is also considering this
- @MorphoLabs Blue is permissionless so technically anyone can create an LST/ETH market with a primary exchange rate as an oracle

SC risks.

This one is probably what we all are most familiar with.
*Leveraged* ETH staking smart contract risks include:

- Liquid staking protocols
- Underlying lending protocols
- Tools for opening/managing such positions (e.g. ethsaver.com).

Governance risks.

- Aave v3, Compound v3, Spark: DAO-governed.
- Morpho Blue: Immutable.

DAOs impose a risk of a malicious proposal but also have the ability to react to market changes (e.g. disable additional ETH borrowing if primary rate drops).

Restaking.

Restaking is essentially leveraging the existing validators set to secure multiple networks (even non-EVM). Thus, staking yield can be increased, but also the risk of being slashed (according to the new slashing rules defined by new networks).

Here, we will cover the risks imposed by restaking for:

- Ethereum security in general
- Leveraged ETH stakers
- and also the potential LRT/ETH strategy.

When it comes to Ethereum security, @VitalikButerin himself outlined his thoughts about the risk of restaking.

TLDR: Makes sense if used for low-risk purposes. Avoid building complex financial primitives with the help of re-staking.

https://vitalik.eth.limo/general/2023/05/21/dont_overload.html

As for leveraged staking strategy, restaking introduces a higher possibility of slashing. This extends to the % that can be slashed.❗

Under the current design of Ethereum, up to 50% of staked ETH can be slashed.

Eigen enables slashing the remaining 50% staked on the protocol.

Liquid restaking strategy.

Since @eigenlayer doesn't have its liquid restaking token, there have been a lot of projects building on top of EL introducing their LRTs.

If those LRTs are ever to be added as collateral on lending protocol(s), we'd have ourselves a new strategy.

Risks of potential liquid restaking strategy.

Clearly, potential leveraged LRT/ETH positions would be exposed to an additional 'Layer' of risk, alongside probably more complex process of leveraging up.

Will address those in detail if/when they become available ecosystem-wide.

Ethereum execution client bug.

TLDR:
- Minority client bug:
Penalties at the same rate as earning rewards (0.4% loss of the stake in 40 offline days).

- Majority client bug:
Increased penalties during *Inactivity leak* (90% loss of the stake in 40 offline days (no slashing).👇

This design actually incentivizes switching to a minority client by limiting the potential losses from 100% to 3.5% since this doesn't cause the chain to stop finalizing. Props to @ethereum core devs & community.

Team @Labrys_io wrote the best summary I've stumbled upon so far.

https://twitter.com/Labrys_io/status/1749746305738703217

It's a more difficult decision for those whose business model depends on uptime.

After @iamDCinvestor's initiative to get their attention regarding client diversity, @coinbase replied they're reevaluating alternative execution layer clients, aiming to add them to their infra.

https://twitter.com/iamDCinvestor/status/1749410364666606075

The risk of the majority client bug applies to all ETH stakers, including the leveraged ones, meaning we all can contribute by switching to a minority client.

Quick overview of the current landscape (geth):
- Coinbase, Binance: 100%
- Lido: 76%
- RocketPool, StakeWise: 42%.

To conclude, the risk/reward ratio so far has shown that a significant percentage of people are OK with the risks of (leveraged) staking with the APY offered in return.

As staking became more attractive after The Merge, so did the leveraged staking.

The top 3 liquid staking providers have seen a 2.5x average growth since September 2022 (The Merge).

@LidoFinance stETH: 212% (2.1x) - growth of ~5m ETH.
@Rocket_Pool rETH: 355% (3.5x) - growth of ~900k ETH.
@coinbase cbETH: 202% (2x) - growth of ~720k ETH.

Management: Pooled vs Isolated approach.

If you wish to join the lev-staking bandwagon, there are two types of management tools for such positions:

- Pooled: @Instadapp Lite, @sommfinance, etc.
- Isolated: ethsaver.com by @defisaver.

A short overview below.👇

Pool-based tools offer a 1-click option for depositing into a vault that's managed by a strategist.

Vaults usually have withdrawal fees (and limits!) to prevent spam, and likely a bit lower APY because of the idle liquidity and the potential unwinding losses.