In the previous article we learned how OptyFi’s Dynamic Strategies are especially suited for the ever changing and ever expanding world of DeFi.
In this article we describe OptyFi’s strategy graph and how it is used by the AI Engine to continually generate and manage optimal DeFi strategies.
DeFi on Auto-Pilot
OptyFi offers users a passive “set-and-forget” DeFi experience. Deposit your assets into a vault which matches your risk profile, and let our tech stack do the rest.
Optimization Process
OptyFi continuously performs the following five processes:
Technology Stack
At the highest level, the Optyfi tech stack performs two functions:
- Find the Best Strategy using advanced ML algorithms
- Execute any Strategy using smart contracts on chain
Universe of Strategies
The universe of possible strategies forms a Strategy Graph. The nodes of the Strategy Graph represent liquidity pools and inbound edges represent deposits into those liquidity pools.
Expanding the Graph
The structure of OptyFi’s Strategy Graph is determined by liquidity pools integrated with the Protocol. Integrating a new liquidity pool to the Protocol creates a new node which potentially generates many more possible strategies.
Scanning and Optimizing
OptyFi’s AI Engine constantly ingests data related to the liquidity pools in the Strategy Graph and runs optimization algorithms to forecast the returns of the different strategies (paths) within the Graph.
After applying risk framework screens (see below) the AI Engine recommends optimal strategies to Vaults. If the recommended strategy violates the on-chain risk constraints of the Vault, then the strategy will not be executed.
Filtering for Risk
OptyFi’s Risk Framework can be conceptualized as a filter on the Strategy Graph. For example, if a certain Vault disallows certain strategies, then the paths corresponding to those strategies are removed from the Strategy Graph.
For Partner Vaults, OptyFi is able to enforce customized risk constraints. The result is a custom Strategy Graph for each Vault. Since constraints can include quantitative risk measures such as Value-at-risk, the Strategy Graph structure can change as the market conditions change.
In the next article we’ll be diving into the risks presented in DeFi.
