Introducing the FUD Vault
The Perfect Strategy for Those That Want to Mitigate Risk
Complementing the ETHphoria and stETHvv, we are excited to announce the third strategy on Pods Yield: the FUD Vault 😱 This low-risk, principal-protected strategy is designed specifically for individuals with a bearish outlook on the market and that want to hedge their positions.
How does the FUD Vault work?
Upon depositing USDC, the vault utilizes 100% of Aave’s lending yield to purchase ETH put options (Delta 0.01–0.05) with a 1-week maturity. If prices drop by over 10% within a week, the put options are exercised, and depositors enjoy the resulting profits. Importantly, the principal remains untouched in this strategy.
Who is this product for?
The FUD vault is the ideal strategy for those who are uncertain about ETH and wish to profit even when the market is going down.
Live on Mainnet
The FUD vault is live on Mainnet 🎉
https://app.pods.finance/
There is a 500 ETH TVL cap at the moment.
Strategy backtest
Had this strategy been accessible since ETH’s inception in 2015, how would it have performed until the present day?
The graphs below detail the vault’s performance with each exercise relative to simply depositing into Aave, the base strategy.
The exercise profit amount is incorporated into the initial deposit, and the subsequent week’s yield is compounded on top of the newly combined sum.
Please note that past returns do NOT guarantee future returns.
Scenario:
- DVOL (IV) assumption = 70%
- Buying 18% OTM puts
- Initial deposit = 100 ETH
- Benchmark (guaranteed yield) = Aave’s APR = 2.5%
- 10% of Staking Yield Fee
- 10% of Exercise Performance Fee
Product Values
Consolidating a single strategy into one token is crucial not only for DeFi composability but also for user convenience. Users can effortlessly transfer deposits between addresses, use them as collateral on other protocols, and readily verify their holdings in a specific strategy. Furthermore, the vault provides:
- Access to intricate strategies with a single click
- Withdrawal at any point after processing the deposit
- Display of actual historical returns
Risks Review
Aave is one of the most battled tested protocols in DeFi. However, it has risks. Risks such as smart contract risk, asset risk, oracle risk, and governance risk. You can read more about Aave's risks here.
Using Pods Yield entails that users understand and agree with the risks of Pods as a protocol and all the underlying protocols and counterparties Pods Yield uses.
In addition to Aave’s risks, there are risks related to Pods protocol that could affect the vault’s funds. Our understanding of the current risks on Pods are:
- Centralization risk
- Protocol level risk
- Smart contract exploit or bug
In its initial version, the vault is continually evolving, with certain manual functions being improved. We are implementing measures to limit our access to the vault’s funds, such as:
- The investor contract can only interact with the yield generated by the vault per week;
- The investor contract is held in a 2/5 multisig.
- The withdrawal fee is currently 1% and is limited to 10% at max;
- The admin keys do not have access to users’ funds however it can pause the system, preventing users from withdrawing during that period.
Contracts
The vault has undergone four audits by leading audit firms, including OpenZeppelin and ABDK. Audit reports are available at https://github.com/pods-finance/yield-contracts/tree/main/audits.
Our open-source contracts can be reviewed at https://github.com/pods-finance/yield-contracts.
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We’re looking forward to hearing from you!
About Pods
Strategies, vaults, primitives, or tooling. We are building DeFi as we would like to use it.
Check out the app at https://pods.finance/
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