[FSVP-7] VCX Smart Vault

  • Yes
  • No
0 voters

Summary & Links

Smart Vault Details

Protocol Description:

VaultCraft is a DeFi yield-optimizing protocol with customizable asset strategies that instantly zap your crypto from any chain into the highest yield-generating products across DeFi in 1 click.

Strategy Description:

Using Aura adapter, stake the user’s VCX/WETH Balancer LP Token in an Aura gauge, earning the platform’s governance token. Earned tokens are swapped for more LP Token. To complete the compounding cycle, the new LP Token is added to the farm, ready to go for the next earning event.

Additionally, the vault will have an oVCX gauge to boost rewards.

Vault will be on Ethereum mainnet.

Vault shares to be used as receipt of deposits to track points. User redeems vault share for underlying deposit.

Value proposition

This vault will offer VCX holders a high yield venue to deploy their VCX while contributing to DEX liquidity.

Currently, VCX holders can deposit into Balancer, and lock the VCX LP for veVCX, which in turns gives them Balancer trading fees, voting power, and increased oVCX rewards for Smart Vaults in which they have deposited. The current system has led to $1.29M in liquidity, with 93% ($1.2M) being locked for veVCX.


This vault offers a complimentary product where users can instead choose to deposit their VCX LP into a Smart Vault, essentially forgoing the voting power of veVCX for the higher yields offered from Aura auto-compounding and oVCX rewards. Depositors will also directly earn oVCX for staking their VCX, rather than needing to deposit into an additional Smart Vault.

This offers more flexibility in strategies for users to allocate across veVCX, the VCX Smart Vault, and other Smart Vaults depending on their desired yield source and long-exposure.

Additionally, this simplifies the user’s VCX flow. When they acquire VCX, whether from a DEX or by exercising oVCX, they can deposit directly into the Smart Vault to earn trading fees, Aura emissions, and oVCX.

Mechanically, the vault will accept deposits and zap them into the Aura vault by depositing the Balancer VCX LP. As the strategy receives AURA and BAL emissions, these rewards are sold into WETH and single-side deposited back into more Balancer VCX LP, mitigating sell pressure for VCX.

Commitments

Since [VIP-33], VaultCraft has deployed bribes on Hidden Hand’s Aura market to incentivize rewards towards the VCX/WETH Balancer pool. These bribes have resulted in a sustained triple-digit APR:

Additionally, VaultCraft will use protocol veVCX to bootstrap the voting weight of the Smart Vault to guarantee oVCX emissions.

Audits

Can I deposit my VCX in here?

Yes, you can deposit VCX

Does that create sell pressure for VCX? Perhaps introduce in future and leave zaps open using blue-chip for now. We get more liquidity, more tvl, with no sell pressure.

1 Like

While VCX-holders who zap using VCX would create some sell pressure, or imbalance the pool with a single-sided deposit, the effect should be minimized as the pool is 80/20 and not 50/50

Additionally, the strategy compounds the AURA and BAL emissions back into the pool exclusively as WETH, which will help counterbalance any weight-shifts

Ultimately, this should attract more liquidity with the boosted APYs both from oVCX and Aura emissions, and the alternative is VCX holders selling regardless or holding passively (which they already can do)