Rethinking “Money LEGOs” for Sustainable Yield Strategies

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Follow DeFi for long enough and certain behavior patterns emerge. One observes that DeFi farmers tend to jump from pool to pool, chasing the next hottest contract that offers +1 yield more than the previous flavor-of-the-month. When this happens, the old, now-stale pools drift into obscurity.

But not everything forgets them. The aggregators that leverage these pools (new and old) may continue to fund pools that no longer actively produce yield. As a result, millions in assets sit stagnant in various contracts.

Fighting “Strategy Fade”

The solution: While “LEGO-brick” modularity is a popular metaphor for how different DeFi services might connect to one another, it’s even more useful in terms of building more sustainable services themselves. This will mitigate the possibility of “strategy fade” and pool abandonment.

Platforms like Yearn Earn, for example, aggregate yield across a predefined number of platforms. We asked, “What if a platform was similarly designed to aggregate across various strategies?” New and improved strategies could be deployed over time and integrated into the existing stack, while old and non-competitive alternatives can be phased out.

Essentially, we sought to deliver an internally modular approach to DeFi products, in the same manner that the external plug-and-play “money LEGO” modularity is already widespread.

Modularity = Sustainability

Vesper’s modular approach and multi-pool capability allow for better and safer upgradeability of pools. As existing strategies become overplayed, newer, higher-yield alternatives can be gradually integrated into the existing pool with only a percentage of users’ funds being deployed in the new strategy. Eventually the new strategy will overtake the original strategy altogether after it has proven itself in the new pool and performing better than its predecessor. (This is akin to how Amazon rolls out updates to its website, surfacing them to an ever-larger percentage of users on the way to 100%.) These strategies can be built out over time and integrate with platforms that don’t yet exist.

In this model, the end user funds are redeployed automatically. This capability helps support a truly “set-and-forget” experience that is as sustainable as possible.