Inside Vesper: Modularity

[Ed. note: Leading up to the Feb. 17 launch, this week’s four-part series will outline some of Vesper’s key components and innovations.]

Modularity refers to the popular notion of “Money LEGOs” — the idea that DeFi components can seamlessly plug-and-play with one another. In a previous post, we reflected on the lack of internal modularity in the current DeFi state-of-the-art and how a larger emphasis on this quality translates to superior products. Here, we’ll discuss this under-the-hood aspect of Vesper pools and the role modularity plays.

The Modular Pool Approach

To address our requirements for pool optimization and longevity, the Vesper pools are designed differently than what you typically see in DeFi. Each pool is actually made up of two or more components — the front pool, which handles deposits and withdrawals, and the back strategy that directs the deposits and compounds yield.

This approach allows a developer to create any number of yield-earning strategies and seamlessly compound these strategies on one another. Or, they can replace existing strategies to consistently capture high-yield opportunities as individual strategies fluctuate and DeFi trends shift emphasis towards new types of lending and yield farming.

This feature has already been utilized during the Vesper beta. Our vWBTC front pool has interfaced with two different strategies: Maker-DAI-Aave and direct-to-Aave, swapping when one strategy outpaces the one currently in place. (More on strategy approaches in our GitBook.)

There is no action required by the end user participating in these pools and there is no limit to how often the backend is swapped or how many strategies can compound onto one another. What matters is ensuring that the pool supports its stated strategy.

We can also aggregate assets by interfacing front pools as “gateways” for other front pools. For example, we’ve created a vDAI pool (currently designated “experimental”). If called for, we would just need to point vWBTC’s Maker-DAI strategy to deposit to vDAI. From there, one set of vDAI strategies can be built out to service DAI positions from vWBTC. The same can be done for vETH and future pool assets that are accepted as DAI collateral. (See below.)

Because we’ve only launched a handful of strategies so far, there is a lot more to explore in order to leverage the full impact of this feature.

Tomorrow, we discuss Vesper’s “multi-pool” capability.