RoboVault is a unique yield optimizing protocol on the Fantom network specializing in single asset staking. This article will acquaint users with the platform and its latest developments over the last year. This article is primarily based on RoboVault\’s own in-depth documentation.
What do they do?
The RoboVault application exclusively focuses on executing single asset strategies that heavily utilize other yield farming & lending protocols.
Here is an example of one of their strategies:
A user stakes their tokens, USDC, for example. RoboVault\’s strategies take a percentage of the USDC and deposit it on CREAM, a lending protocol, as collateral. Next, the strategy borrows a secondary token, say, FTM. It then adds the FTM to a liquidity pool and stakes the resulting LP token in one of the varieties of yield farming protocols on Fantom.
Over time, RoboVault will harvest the farming rewards from the LP and rebalance the pool to limit impermanent loss.
Even though RoboVault\’s strategies limit IL, it is an important concept to understand. Please see my article on impermanent loss for more information.
Now that we have a general overview of what RoboVault does, let\’s go through the different features & improvements that have been released over the last year.
RoboVault launched with four strategies:
- USDC – SpiritSwap
- USDC – SpookySwap
- WBTC – SpiritSwap
- WBTC – SpookySwap
Vault tokens were deployed as follows:
- 5% — put in vault reserve fund
- 65% — deposited as collateral on CREAM to borrow FTM
- This gives a collateral ratio of 53%
- 35% — combined into an LP with the borrowed FTM
As borrowing is involved in the strategy, the vault needs to rebalance the LP to avoid liquidation. Certain price thresholds are set to monitor possible liquidation. The keeper function calls the rebalance function if the threshold is breached.
- If the debt position is < 97% or >103% the keeper function is triggered and the position is rebalanced to 100%
- If the collateral ratio is < 45% or > 60% the keeper function is triggered and the ratio is rebalanced to 53%
The RoboVault Keeper checks the debt ratio & collateral ratio every 5 seconds to confirm that the pool is balanced. Farming rewards are harvested every 10 minutes. A maximum harvest fee of 5% is sent back to the protocol to fund development.
If a user withdraws from a vault, there is a possible 0.5% fee. The fee is only collected if the withdrawal exceeds the amount in the vault reserve fund. Users can break up withdrawals into multiple transactions to avoid the fee.
- If we withdraw 100 USDC and there is only 80 USDC in the reserve fund, we pay 0.5%
- If we withdraw 100 USDC and there is 200 USDC in the fund, we don\’t pay 0.5%
TVL has grown to over $1M.
The team released an analytics page allowing users to view historical data on their vault strategies. The UI also shows real-time APY of all active vaults.
The protocol\’s success and stability encouraged the development team to increase the collateral ratio from 53% to 60%. With this change, the strategies became more capital efficient as 12% more funds were allocated to the yield farming strategy.
Several experimental vaults were created to test novel strategies and integrate with other AMMs (Automated Market Makers).
With the release of SCREAM, more vaults were created to leverage this protocol. Given SCREAM rewards for both lending & borrowing, the APY for these vaults was relatively high.
V2 introduced new contracts following Yearn Finance\’s v2 architecture and several new features. The main advantage of v2 is the multi-strategy vault. Multi-strategy vaults enable the implementation of up to 20 simultaneous strategies in one vault; this significantly increases yield.
Some of the key differences between v1 & v2:
- Rebalancing: The rebalancing mechanism is updated to ensure the rebalancing does not fail.
- Fees: Fees have changed to be a % of vault profits. If the vault is not in profit, then no fees are paid.
- Deposit Limit: Limits on deposits based on the size of holdings along with vault TVL. This limit allows for the easier introduction of experimental vaults.
- Flexibility: With Yearn v2, RoboVault now has more flexibility to implement new strategies while maintaining critical architecture & security.
- Improved Harvesting: Improved harvesting that allows for more gas-efficient transactions and the ability to increase harvest frequency.
- Oracles: RoboVault can now query external Oracles to determine the price. This improves the collateral ratio of the vaults.
Planned Robo DAO & Token Release
(Both DAO and ROBOT are currently pending release)
Towards the end of September, RoboVault released details regarding the launch of a token (ROBOT) and DAO.
ROBOT will have a maximum supply of 10M. The token will be distributed through a fair release with tokens allocated to a combination of early vault users, RoboVault’s founding team, and early project contributors. ROBOT will also serve as a governance token for the DAO managing the RoboVault protocol.
The DAO will handle key decisions such as
- Allocation of protocol fees
- Boosting Vaults
- Voting on strategies
SCREAM & RoboVault Partnership
RoboVault & SCREAM collaborated on a new one click leverage feature for the SCREAM UI.
One click leverage works like so:
- Pick which asset to use as collateral
- Pick which asset to borrow
- Choose number of loops (how many multiples you want to leverage your position)
Once approved, the protocol then does the borrowing, swapping & leveraging under the hood.
Overtime, the user can adjust their position by
- Adding/withdrawing collateral
- Deleveraging the position
This makes leveraging quicker, easier and cheaper as there are less transactions to be made.
Warning: Use leverage at your own risk.
Liquid Driver & RoboVault Partnership
RoboVault partnered with Liquid Driver to develop a series of single asset vaults utilizing Liquid Driver pools.
The asset flow is similar to what RoboVault\’s strategies already do, except with one extra step. The LP is still created using a DEX, but instead of being staked on that same DEX, the LP is now staked on Liquid Driver.
During October, a vulnerability was discovered by the Yearn team which involved using a flash loan to alter the value of a vault. Fortunately, no funds were lost.
They exploit worked like so:
- Get a flash loan of 10M.
- Swap the funds to reduce the value of the LP.
- Deposit funds back into vault which now has a decreased in value.
- Swap back funds to increase LP value.
- User withdraws from the vault with extra funds and pay off the loan.
After being notified of the vulnerability, RoboVault froze deposits and moved vault funds from their strategies into reserves so that the value of the share price could not be manipulated.
RoboVault provided an overview of what the next steps would be to secure the protocol
- Have vaults reviewed by experts.
- Write more comprehensive test suites.
- Introduce a bug bounty.
After the exploit, it took time for the team to make the required changes to eliminate the vulnerability.
The new vaults continued using the Yearn v2 architecture and introduced the following:
- Performance Fee was increased to 20%.
- The increase was intended to fund security measures such as bug bounties, audits & code reviews from experts. Additionally, RoboVault shares a portion of the performance fees with Yearn as RoboVault uses the Yearn V2 architecture & the Yearn team provided a great deal of support in addressing the vulnerability.
- UI Release – A new UI was released.
Keeper Infrastructure Improvements
One of the main mechanisms within the RoboVault protocol is the Keeper. The Keeper bot regularly harvests rewards, constantly assesses the current loan health of the vault, and triggers rebalancing functions when the collateral or debt ratio goes above / below a set threshold.
There was a “flash crash” of the Crypto market in December, which led to congestion in the network, and hence, the keeper could not perform optimally; gas prices were very high, and as a result, some funds were lost in the WFTM vault.
The loss was reimbursed to all impacted users.
The main issue was that the protocol had only one Keeper running, leading to a single point of failure. To alleviate this, RoboVault introduced redundancy by launching two more keeper nodes.
The secondary issue was gas pricing. The RoboVault Keeper has a built-in formula to calculate gas prices; however, when the network was congested, the bot\’s calculations became inaccurate. The solution was to increase the limit on gas prices and active monitoring during periods of network congestion.
Introducing Yield Redirect
Yield Redirect is a feature being introduced to minimize the volatility of yield farming.
Usually, users deposit an LP and over time accumulate a token. With Yield Redirect the rewards from the LP are converted to a more stable token i.e. USDC. This protects the earned yield from market volatility.
It doesn\’t stop there.
The USDC is then deposited into an interest bearing product such as a Yearn Vault to continue earning yield. This means users can earn stable yield without having to withdraw.
Rewards are emitted through an Epoch system to track and disburse user rewards. Each time the Yield Redirect harvests, the farming rewards are automatically converted to the target token. The RewardDistributor function then splits out the target tokens to eligible users.
April brought about DegenVaults. This feature introduced higher risk/reward strategies for the “degen” user. DegenVaults are far less risk averse and contain strategies that push the boundaries and experiment with a much wider range of approaches with broader risk profiles — targeting the highest potential yield.
New Yield Generating Strategies
RoboVault appears to have taken a discrete approach in terms of publicity in the Crypto sphere (7k followers on Twitter). Instead the focus appears to be on the development of the RoboVault protocol. As you can see from this timeline to date, there has been a lot going on and a lot planned given the vibrant roadmap which can be viewed here. Hope you enjoyed this article, if so please share!
Some useful links:
- Twitter – https://twitter.com/robo_vault
- Medium – https://medium.com/@RoboVault
- Discord – https://discord.com/invite/5FwsPJWjSK
If you\’d like to discuss this article, join us on Discord!