Daoism grant interview: automatic yield strategy on top of Curve’s crvUSD borrowing and Aura.finance

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PowerPool

5 min readOct 18, 2023

PowerPool is rapidly moving forward approaching the mainnet and delivering the smart-contracts automation network of Keepers to the Gnosis ecosystem. The network expansion strategy is focused on ecosystem development by attracting protocols, devs, and DAOs to launch automated products built on top of PowerPool.

To streamline the grants distribution, PowerPool partnered with Gitcoin and launched the Builder Grants initiative utilizing their brand-new Grants Stack product. Developers can receive up to $20,000 in grant funding to develop a product on top of PowerPool or integrate the PowerAgent v2 network into existing solutions.

Today we are thrilled to share a great piece of news and present the first PowerPool grants recipient — Daoism Systems. The grant is provided for developing an automated yield strategy. It has several core components: an automatically managed crvUSD borrowing against wstETH, subsequent liquidity provision into Aura.finance liquidity pools, and yield harvesting. This idea caught a lot of attention and finally, the SupremeDAO proposal was unanimously approved by CVP holders.

This article is devoted to the interview with the SupremeDAO team highlighting the overall product idea, automatic strategy features, execution plan, milestones, and team background. In our opinion, it is a reference for future grant applications and a source of additional inspiration for PowerPool builders.

Let’s get started! Here are the highlights of the interview:

1. Please tell us about yourself and the DAO you are a part of

We are Daoism Systems — a web3 venture studio dedicated to bridging DeFi and DAOs. Daoism Systems was founded in 2022 by Arseny and Ilja.

Arseny is a software engineer, entrepreneur, and investor building in web3 since 2017. Previously, he has worked on Ocean Protocol and API3 DAO, PrimeDAO, and was a founding member of Curve Labs. Currently, he is the co-founder and CEO at Daoism Systems.

Ilja is a serial entrepreneur with a background in finance and business development. He has founded several tech startups at the cutting edge of innovation. In 2021, he joined web3 as the co-founder, and COO-CFO at Daoism Systems.

Our project, SupremeDAO, facilitates simplified on-chain investments via smart DeFi strategies.

2. What are you building?

We are in the process of emerging a smart strategy for SupremeDAO that will facilitate one-click access to complex leveraged yield farming.

DeFi, a key component of web3, offers novel investment opportunities but comes with notable risks and complexity. Despite ongoing innovation, there’s a persistent need for more user-friendly solutions that balance risk and reward in the volatile crypto market. Currently, to engage with DeFi, users have to manually execute multiple complex interactions with various DeFi protocols and continuously monitor the state of their investments.

With SupremeDAO, users can simply allocate their assets to SupremeDAO, and it will handle the rest for them.

3. Why is automation important for your product?

In the rapidly changing crypto market, quick responses are essential. Therefore, automation plays a crucial role in enabling near-instantaneous reactions and adaptive strategies to diverse events. Our product involves a multi-step strategy that commences with the borrowing of crvUSD. It automatically converts the borrowed funds into liquidity tokens, manages yield farming rewards, and monitors CDP health. Without automation, all of these strategic steps would require a substantial amount of manual intervention.

Automation not only lowers entry barriers for new users but also enhances liquidity in DeFi, ensuring a safer, more sustainable DeFi environment through automated functions.

4. Could you provide details of your automation strategy — its goals, requirements, how it should work, what are possible issues and attack vectors

Our strategy, executed through the PowerAgent automation, is designed to optimize users’ wstETH holdings by actively participating in high-yield pools on Aura while streamlining leveraged wstETH staking and yield generation within a single transaction through PowerPool Agent. Initially, we initiate the borrowing of crvUSD against wstETH collateral to provide liquidity in the D2D/USDC pool on Aura.finance, which boasts an impressive annual percentage rate (APR) of over 100%. This strategy involves automatically converting the earned tokens from the liquidity pool into crvUSD, which is then used to systematically and continuously close the CDP (Collateralized Debt Position). This approach not only ensures the safety of our users’ assets but also mitigates the risks associated with partial or total collateral liquidation, particularly important in the current bearish market conditions.

Despite the inherent benefits, it’s essential to exercise caution due to the experimental nature of leveraged yield farming. Potential issues such as impermanent loss, flash crashes, and collateral liquidation remain a concern, and our strategy is tailored to address these challenges while providing a secure and automated experience for our users.

5. Why did you choose PowerAgent v2 as an automation solution?

At Daoism Systems, we have a longstanding collaboration and vision alignment with the PowerPool team. We are enthused about the opportunities presented by PowerPool’s decentralized network of Keepers. We believe that through the PowerPool agent, we can render DeFi more accessible and robust. The flexibility of PowerAgent V2 closely aligns with our long-term development goals for full integration.

6. Provide your roadmap

With the support of PowerPool, we aim to release our first automated strategy in the coming weeks. Moving forward, we plan to introduce more complex strategies and DeFi mechanics. We are also keen on forging strong partnerships with existing DeFi players. Through composability and interoperability, we strive to realize our long-term vision of delivering a fully automated reserve asset for DeFi.

As SupremeDAO develops new strategies, we will expand PowerAgent’s integration within the system.

7. How did you structure your proposal and what advice would you give to future grant applicants?

For our proposal, we outlined objectives, deliverables, and milestones clearly, showcasing our team’s competence and the project’s feasibility. We’d advise future grant applicants to follow a similar approach, ensuring to highlight how the project benefits the community.

8. Do you have any ideas for other products that could be built on top of PowerAgent v2 to benefit Defi and its users?

The top three products that could be built on PowerAgent v2 include an Automated Portfolio Management Tool, a Cross-Protocol Yield Aggregator, and a Next Gen Flatcoin, all aiming to further benefit DeFi users.

The end of the interview.

We are excited to have SupremeDAO on board and wish them good luck with delivering this awesome stuff. PowerPool believes that the web3 future is automated and invites developers to apply for grants via Gitcoin to build a better web3 experience through automated solutions.

About PowerPool

PowerPool is a DAO-managed protocol, focused on operating an autonomous network for guaranteed transaction execution — the PowerAgent Keepers network. Its mission is to provide various web3 protocols, dApps, and individuals with a truly decentralized and reliable on-chain automation solution.