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yVaults, an ELI5 explaination:
I just had a little chat with the man, the legend, @AndreCronjeTech himself. I now have a general level of understanding of how the yVault tech works.
Interested?
Read below.
I just had a little chat with the man, the legend, @AndreCronjeTech himself. I now have a general level of understanding of how the yVault tech works.
Interested?
Read below.
The system is comprised of three components.
1. Vaults
2. Controllers
3. Strategies
1. Vaults
2. Controllers
3. Strategies
Vaults are pooled liquidity. They are separated by the asset that you pool. For example, USDC goes into a yUSDC vault. LINK would go into a yLINK vault, etc, etc.
These assets are then controlled by the… Controller!
These assets are then controlled by the… Controller!
The Controller has access to this pool of liquidity and has permission to use it in order to farm yield across the DeFi fields. It deploys Strategies in order to farm.
For example, if the current highest yielding farm is the mUSD/USDC farm, it will do all the necessary work to convert your tokens to farm that yield for you!
However, if all of a sudden, that is no longer the optimal yield Strategy, the Controller will take the pooled funds in the Vault and deploy a better Strategy, for example, the mStable savings account.
If the Strategy harvests governance tokens in the yield farming process, for now it liquidates them into the asset of the Vault. So essentially you deposit USDC, and when you withdraw, get more USDC than you deposited.
There may be an option to not liquidate gov tokens in the future, however, for those interested in accumulating these tokens.
What about other non-stablecoin vaults?
Well, they will be deposited as collateral in the popular lending protocols. That collateral will then borrow other crypto from that collateral and use the borrowed funds for yield farming.
Well, they will be deposited as collateral in the popular lending protocols. That collateral will then borrow other crypto from that collateral and use the borrowed funds for yield farming.
So if you have assets, and you want to earn some yield on them that is greater than the lending markets can provide (and you are comfortable with taking on additional risk), yVaults are a compelling option.
TLDR:
Vaults are automated farming strategies. They will always seek the best performing farming pools. Simply deposit a bag into a vault, and withdraw a bigger bag later on. Farming pros might do better on their own, but small-time farmers will save a ton on gas crop rotation.
Vaults are automated farming strategies. They will always seek the best performing farming pools. Simply deposit a bag into a vault, and withdraw a bigger bag later on. Farming pros might do better on their own, but small-time farmers will save a ton on gas crop rotation.
