As many of you know, we’ve just released v2 which has been extremely well received but we’re already well into our next release; Sulu. Today, we’re excited to share plans on Sulu with you and give you an idea for what you can expect in the coming weeks as we build out the one-stop shop for savers in DeFi.
The core tenets of Enzyme v2 were security, customisability, composability, upgradability and improved gas efficiencies. With Sulu, we leverage this new architecture to focus on extensibility & composability. Some planned highlights for Sulu include the following;
- Shares Transferability
- Curve pool integrations
- Idle Integration
- AAVE integration
- Balancer integration
- Support for staked ETH
- Multi-protocol Yield Farming (expanding current possibilities to farm)
- Exploring the possibilities for gas reimbursements to Portfolio Managers
Enzyme has supported lending for a while now — but we’re now about to enable borrowing too! This is a really useful feature for Portfolio Managers (both in TradFi and DeFi) who are holding positions longer term but earning no yield on it. In DeFi, ETH is a good example today. On its own, it earns little to zero yield but you may want to hold it longer term because you believe it’s going to $10,000. Imagine that you could do that whilst simultaneously taking a loan out against your ETH as collateral. So for example, you could deposit your ETH to finance borrowing DAI. DAI is currently earning much more interest on lending protocols than ETH. You could then deposit the DAI to earn interest on a lending protocol, and maybe even farm liquidity tokens too (eg. $COMP) depending on the various farming programs available at any one time! The possibilities are endless, and our goal is to enable them natively by the next release.
Vault Token Transferability
Until now, tokenized shares in any Vault have been non-transferable. We’re aware that many users want to see shares being transferable so that a multitude of new use-cases can be put into action! Every Vault built on Enzyme has it’s own tokens — if these tokens were transferable, here are just a couple of example use-cases this could open up.
Use case I: Pre-seeded Vaults
Rebalancing costs can become quite costly! Imagine if you never had to rebalance, or if you only rebalanced at certain intervals. One use case of this could be to create closed ended pools where LPs get rewarded. How would this work?
- Decide on a passive strategy (eg. an equally weighted L2 index).
- Form a group of early Vault curators that will pre-seed this Vault with capital (eg. target 25,000 ETH).
- Once the target is reached, close off the Vault to any new depositors.
- Deposit 100 ETH into a Gnosis Safe wallet.
- Use Gnosis Safe to create a Vault on Enzyme choosing from a selection of the fee options you want to embed.
- Collectively deposit 50 ETH into it the Vault for which you will receive back Vault tokens.
- Deposit 50 ETH and 50 Vault tokens into a Uniswap pool.
- The Gnosis Safe will be earning fees from the Vault and fees from the Uniswap pool.
- Distribute fees between Gnosis Safe seeders appropriately.
- Re-open the Vault for additional seeding phases periodically as and when required.
- Two sources of fees (whatever Vault fees you embed as well as liquidity fees)
- Gas savings: No need to rebalance regularly due to the secondary market.
- Users can buy the token on Uniswap therefore paying less gas costs.
Use case II: Tokenized fees to incentivize early depositors
Typically people like to see long term track records before investing. But what if we turned the incentives process upside down in order to encourage early support? If fees are tokenized, Portfolio Managers can incentivize LPs with farming rewards. Farming rewards could be paid out in different ways to incentivize things like early depositor support or longevity. The options this opens up are potentially unlimited!
Curve Pool integrations
Curve pools have been a huge source of liquidity in DeFi and it has become very profitable to deposit into Curve pools and earn tokens for providing that liquidity. We will be bringing this capability to our users soon!
Idle provides you with a range of risk-adjusted approaches to achieving the best yield on stable coins and wBTC. Their best-yield approach offers up to 44% APY on stable coins at the time of writing and their risk-adjusted yield approach gets you almost 14%. These returns are further enhanced because you can farm IDLE token for depositing into these savings pools.
Lending has been possible on Enzyme v2 for some time now but it wouldn’t be complete without access to AAVE’s aTokens! We’ll be giving users access to the whole range of aTokens in the next release cycle. AAVE’s lending rates and range of assets open up exciting possibilities for Vault Managers.
Enzyme has supported Balancer liquidity for some time (via Paraswap) but we’re looking to add support for pools too. This will enable users to deposit liquidity into balancer pools and earn any farming rewards which might be accessible as a result of being an LP in that pool.
Support for Staked ETH
Two forms of liquid, wrapped ETH already exist (by Stakehound & Lido). We’re excited to bring support for these into Enzyme so that managers can capture the additional yield available from staking ETH.
Multi-protocol Yield Farming
In addition to the possibilities to farm on Uniswap and Compound today, we will also be supporting more Yield Farming protocols related to the integrations mentioned above.
Exploring the possibility of Gas reimbursements for Portfolio Managers
Gas for trading costs typically comes out of the Portfolio Manager’s wallet. This hasn’t been a problem so far but we’ve noted that a high number of community members would like to see this cost expensed to the Vault instead. This helps spread out the cost burden to all Savers in a Vault proportionately.
Work on MIP7 has begun. The first phase is to implement a simple based AUM fee as approved by the Enzyme Council back in September and later endorsed by the user-representatives towards the end of last year. This implementation will continue during the next few weeks whilst in parallel exploring other suggestions made for a possible phase II for the tokenomics including staking, referral fees and more.
As the landscape continues to evolve, Enzyme is aiming to become the core infrastructure for savers looking to gain DeFi exposure through Vaults with the benefits of:
- Lower transaction costs (since they are shared across a group of people)
- Lower time commitment (let the Vault manager stay on top of the risks and returns of the various different DeFi protocols)
Work on Sulu has already begun and we’ll release features as they arise. If you want to keep up with Sulu progress, join our community led Telegram or Discord channels. If you want to make improvement proposals or feature requests here!