Vesu Fusion - Rebalancing vaults

Vesu is a fully open and permissionless lending protocol built on Starknet. Users can lend crypto assets to earn, borrow assets, and build new lending experiences on Vesu without intermediaries. Vesu is built as a public infrastructure free for everyone to use.

What are rebalancing vaults?

Vesu lets you create different pools with their own curated assets. These can be used as collateral and borrowed. Independent curators can make custom pools with different risk levels. For example, Vesu has already seen curators like Re7 and Alterscope launch their pools. The downside of this approach is liquidity fragmentation. As a liquidity supplier, you may need to constantly monitor and rebalance your funds across multiple pools to optimize your yield for best returns. That’s where we come in—automating this process while ensuring diversification.

Why call it Fusion?

First, STRKFarm vaults supply deposited assets to mutiple pools on Vesu, creating a single token called vfToken , which stands for "Vesu Fusion token". For example, the STRK vault is called vfSTRK.

Second, it's cool.

Terminology:

1. Pool: Vesu's curated pools.

2. Vault: The strategies created by STRKFarm (e.g. Vesu Fusion STRK).

Technical details:

1. Vault standard: ERC4626

2. Source code: here

3. Audit report: here, audited by Cairo security clan.

Risk framework:

1. We only use verified pools on Vesu to invest funds (i.e. Genesis, Re7 and Alterscope pools)

2. We will only stick to low and medium risk pools (for now).

3. Each pool has a maximum weight parameter configured, which determines the exposure the vault can take. The weight configuration is determined by the following factors:

   1. The quality of collateral tokens in the pool: If a pool is fully made of blue-chip collateral tokens, the maximum weight of the pool will be higher compared to others.

   2. The history of the pool: Pools with less than 3-month history will be given less weightage over established pools. This is just an added cool-down period to avoid taking higher risk on new pools. However, there can be exceptions depending on the reputation of pool curator.

Current Weight mathematics:

Note:

1. The risk notation follows Vesu's criteria as outlined on their website.

2. For low TVL vaults (less than $1M), the quality of tokens isn't considered, as the overall risk is lower. This allows for the allocation of supply to high-yield pools.

Vault TVL	Condition	Max weight
< $1M	> 3month history	100%
	< 3month history	20%
$1M - $2.5M	> 3month history	80% (low risk pools) 50% (medium risk pools)
	< 3month history	20% (low risk pools) 10% (medium risk pools)
> $2.5 M	> 3month history	60% (low risk pools) 35% (medium risk pools)
	< 3month history	15% (low risk pools) 7% (medium risk pools)

Blue chip pool definition:

1. Contain highly liquid assets like BTC, ETH, wstETH, etc.

2. There is no counterparty risk.

Pro tip:

You can find real-time allocation of funds across these pools on the respective strategy pages through a flow chart like this. (supported only on desktop).

Sample flow chart of fund allocation. The actual numbers can be different.

Security approach:

1. The owner of the contract is an Access control contract which defines various roles. The roles are divided among critical to low risk operations like rebalancing, deposit, withdraw, etc. The exact details of the roles and their job is mentioned here.

2. The super admin of access control is a timelock contract which prevents immediate changes to access control changes or acting on super admin actions.

3. Hypernative monitoring: TBA

FAQs

1. Are Defi spring rewards considered?

Any rewards generated by corresponding pools on Vesu are automatically harvested every Saturday and added to the vault, increasing your token holdings. The STRK rewards are automatically swapped to underlying token of the vault.

1. If Vesu airdrops, will we get the airdrop?

Yes, any airdropped token will be given to users of the vault. We will work with Vesu to ensure the same. Note: Vesu hasn't announced any airdrop. We want to be clear upfront, as people may speculate on this.

1. Does the vault take fees?

As with any of our strategies, we take a 10% fee only on rewards generated. This includes interest, Defi spring rewards, etc.