Idle v3.0 is (a)Live!
Today, we’re extremely proud to announce our third major product update, which comprehends the introduction of Idle’s allocation strategies, renewed UI/UX, upgraded rebalance mechanism, and additional DeFi protocols and tokens in Idle ecosystem — this is fulfilling our vision of a protocol where money never sit still.
Check this new upgrade at idle.finance!
The last release of Idle was a roaring success: the community provided over 200,000 DAI in less than two weeks. With now a +900% growth on the AUM, Idle is growing organically and at an impressive pace.
At the same time, Idle’s resilience has been tested multiple times: flash loans exploits, illiquidity moments, and Black Thursday repeatedly challenged our protocol in the last few months. The results speak for themselves: no funds lost or irreparably locked, and no suspicious front-running activities or direct exploit events.
Our first iteration, after the inception in August 2019, introduced many improvements on the UI/UX side, resulting in a more pleasant user experience with additional features like multiple fiat on-ramps and a built-in token swapper.
Along our journey, Idle community has given us great feedback in our Telegram and Discord channels, and we’ve been intently listening.
These are the initial goals we distilled:
- Users must be able to monitor and manage the composition of their interest-bearing assets portfolio
- Users must be able to lend a broader range of stablecoins through Idle
- Users must be able to choose an allocation strategy suitable to their risk appetite
- Interest rates spectrum must be widened to cover most of the Ethereum money markets
We’re thrilled to present how we accomplished these goals in Idle v3.0!
Idle now consists of a smart contract architecture that allows to separately store funds, submit new allocations, and granularly manage different lending protocols. It allows us to keep this solution non-custodial and fully transparent, but at the same time to easily manage new tokens or additional protocols upgrades.
LPs’ Dashboard Interface
This is our renewed users dashboard, where anyone can start earning interest on their funds and manage their stablecoins portfolio right away:
- Chose the allocation strategy that fits your risk appetite
- Select the stablecoins you want to lend
- Deposit your funds and immediately start earning the highest interest rate or the best risk-adjusted interest rate, depending on the chosen strategy
- Monitor your funds’ performance, current allocations, and portfolio composition
Congratulations! You just started earning interest, beating every single-protocol performance and your funds will never sit still.
Idle Allocation Strategies
Our flagship strategy, the yield-optimizer, combines multiple money markets to provide interest rates that beat the best traditional offerings across the interest-bearing tokens and DeFi protocols.
This strategy has been much appreciated by the community, providing an average interest rate increment of ~15% on DAI and ~120% on USDC for our users. To give you more insights, in the last 3 months, Idle performed 4.71% on both DAI and 2.90% USDC, while Aave performed 4.16% on DAI and 2.80% on USDC, and Compound 3.73% on DAI and 0.86% on USDC.
There’s no need to worry about finding the best place for your funds — this allocation strategy will systematically and algorithmically rebalance funds when rates change.
However, it’s clear that in DeFi there are different risk profiles. In general terms, risk tolerance is an investor’s ability to psychologically endure the potential of losing money on an investment. Looking at this specific industry, that is the potential risk of a single lending protocol losing its funds or suffering long-lasting illiquidity phases.
All investors need to find their comfort level with risk and construct an investment strategy around that level.
That said, we are excited to announce the implementation of a brand new kind of allocation strategy: the risk-adjusted strategy. This strategy automatically changes the asset allocation in order to find the optimal mix between risk scores and yield.
The rebalance calculation involves assessing the total assets within a pool, incorporating underlying protocol rate functions and levels of supply and demand, skimming protocols with a bad score/rate mix, and finally determining an allocation that achieves the highest risk-return score possible after the rebalance happens. It has been developed in collaboration with DeFiScore, a framework for quantifying risk in permissionless lending pools, and its great team.
This will allow every liquidity provider to choose the strategy that most suits her/his risk profile, having a complete solution to automatically manage asset allocation either in terms of returns or risks.
New Protocols & Tokens Aggregation
Other than auto-rebalancing funds across DeFi protocols, another benefit for our users is yield aggregation. This feature vastly improves liquidity providers' activity. Instead of directly interacting with the liquidity layer, it allows a holistic experience.
Hence, we are introducing 2 additional protocols in order to widen the interest rate spectrum. These protocols are dYdX (widely acclaimed by our customer base) and MakerDAO DSR.
These two new entries will allow improving yield-optimizer’ profitability by enlarging the interest rate variability window and adding two reliable protocols with a remarkable track record in terms of the risk score.
On the asset side, we always prioritized the implementation of stablecoins.
Those tokens incorporate our vision of an omni-comprehensive platform to save, earn, and interact within multiple DeFi protocols.
In addition to it, we are introducing a well-known and widespread stablecoin: USDT. Now our users can build up their stablecoins portfolio using DAI, USDc, and USDT. We are already working on the next asset to add in Idle, sUSD.
At Idle, we want to prioritize security even if it’s going to slow down our development process. In DeFi, you only have one shot and there’s not really a silver bullet to protect you.
However, we believe that a fully transparent development process, where every single additional implementation passes through an audit held by multiple entities, is currently the correct process.
For this upgrade, we have entrusted Quantstamp for our full security audit, and ConsenSys Diligence for an additional code review.
Here you can find our full security audit report made by Quantstamp. It has been a pleasure to work with their team, and we are glad to announce that our security report will come with a built-in warranty. It covers up to $30k in case of a smart contract bug, and together with Nexus Mutual, adds more potential security to the insurance stack in Idle.
We want to thank ConsenSys Diligence team for the excellent review of the security audit, and for providing us with tools and procedures to manage potential turmoils in the DeFi ecosystem. We will publish a dedicated blog post to publicize all our procedures, security contacts, and PR plans for this kind of situation.
Additionally, we are aware that a pretty well known-known in DeFi lending is the occurrence of illiquidity moments: when liquidity starts to shrink, rebalances that surpass the available amount of liquidity will start to fail.
That’s why we improved our rebalance mechanism.
We implemented a liquidity-aware rebalance: this mechanism granularly redeems the required funds from each lending protocol, enabling this functionality to work even during near-illiquidity stages.
More efficient, more reliable, more composable.
Wrap Up and Next Steps
Lending was just the beginning. DeFi money markets are the first ones that erased the barriers for seamlessly moving between different financial instruments. And that’s why we started with them for our aggregation journey.
Our future plans include, but not limited, to the following:
- A full suite of DEXs aggregators directly available in Idle (ParaSwap, Totle, and 1inch: chose the one you most trust and like)
- Improved fiat on/off ramps experience thanks to our long list of fiat-bridge providers
- AMM pools implementation (aka stablecoins swappers)
- A more safe version of IdleTokens with bundled insurance
- A fixed-weights IdleTokens, which acts as a tokenized version of SOLR (Secured OnDemand Lending Rate)
- Innovative LPs services to start making your accrued interest work for you
They provided us with their knowledge, plenty of advice, a great community to bounce ideas with, and enough funds to navigate through our seed round. Thank you so much.
Last, but definitely not least, we want to thanks our current users. They provided us with great feedback and a lot of suggestions on how to improve our product. And thanks to our partnership with Biconomy, all the migrations from v2 to v3 will be completely free from any gas cost!
Keep yourself updated
We’re building Idle for the Ethereum ecosystem and its great community. We’d love for you to be part of our development process.
Here you can find our documentation: developers.idle.finance