Synergetic Vaults invented by easyPI built by german scientists.
Synergetic Vaults work by creating a set of interlinked vaults, each with its own collateral and three borrowing tokens. The four supported currencies are USDC, WBTC, Link, and ETH, with each currency having its own dedicated vault. They interchange assets and GLP with each other for zero fees.
Why is this type of vault system called Synergetic Vaults?
The reason why it is called synergetic is that when prices move, the adjustment that a certain type of vault wants to do is the opposite of another. Thus, they can be seamlessly matched within the vault system at no cost to restore balance.
When volatile assets such as WBTC, Link, and ETH increase in value, stablecoin vaults need to sell some of their GLP to pay back parts of their loan on Aave to avoid liquidations. However, this incurs fees and can be costly. On the other hand, volatile asset vaults want to increase their capital efficiency since the collateral value increased compared to their stablecoin loan and buy more GLP.
When do Synergetic Vaults make sense?
The image below (2) shows how the vaults help each other out in case of crypto increasing.
This is where the concept of Synergetic Vaults comes into play. Instead of having to buy or mint GLP on the open market, the vaults can help each other out and interchange assets and GLP with zero fees. This way, the amount of GLP that needs to be bought or sold can be reduced, resulting in more efficient transactions and cost savings. The image below shows that if the market moves in the opposite direction, a synergetic effect can also be observed by just reversing the actions. (3)
Synergetic vaults — the next important improvement for DeFi
Synergetic Vaults can also be opened up to the public, allowing anyone to participate in increasing the efficiency of our vaults while profiting from fewer fees. For example, users could sell their GLP without fee or buy it with the underlying assets, further reducing the cost of maintaining the system. By providing a more collaborative and transparent DeFi lending experience, Synergetic Vaults represent a significant step forward for the DeFi ecosystem. This is one of the outstanding new innovations which easyPI entails.
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