Vesper Grow Strategies — Today and Tomorrow

Vesper Grow pools are now responsible for routing over $500 million in assets. Deposited assets are routed throughout the DeFi-verse to generate yield. Here’s how our different pools work today, and how they will continue to grow and scale in the future.

Right now, the three main pools are vETH, vUSDC, and vWBTC. There’s also the vDAI pool, which we’ll dig into separately. And lastly, there is the vVSP pool where depositors benefit from VSP buybacks — you can read more about vVSP specifically here.

State of Vesper Grow Pools

As discussed previously, our pools are made up of two components: the front pool where deposits and withdrawals are handled and the back pool, which is made up of any number of strategies to route assets and earn yield. You can see all strategies currently on mainnet for each pool (and their beta counterparts) on the GitHub.

Each strategy listed in the corresponding pool is currently active or available to swap out. Strategies listed under beta pools are well-testedlargely battle-ready but haven’t been pushed to the “Varsity” level yet, so to speak.

Here is the detail on all strategies as of this writing, what they do, and their current status (in use, ready for use, still in beta):

vETH

In use: AaveMaker

ETH is deposited as collateral to MakerDAO. This collateral is used to take out a DAI loan. DAI is sent to Aave where it collects DAI yield. Yield is used to pay the loan fees and purchase more ETH to deposit for additional collateral (and additional DAI loans to generate more yield).

The pool targets a conservative collateral ratio between 250–275% collateralization. (Depending on the type of loan, Maker requires 130–150% collateralization.). If the rate falls below 250%, DAI loans will be partially refunded. If it climbs above 275%, additional loans will be taken out.

In beta: AaveV2Maker

This is similar works similarly to the strategy in place, but instead connects to Aave v2. This means that additional yield is collected by harvesting AAVE and selling back for more ETH.

In beta: CREAM

ETH is sent directly to CREAM to compound yield.

vWBTC

In use: Compound

WBTC is sent directly to Compound, where it compounds yield. Additionally, the WBTC posted farms COMP tokens which are liquidated for WBTC and redeposited for more yield.

Ready to use: AaveMaker

Just like the vETH strategy, WBTC goes to Maker, takes out a DAI loan, and farms yield on Aave using DAI. The same targets of 250–275% collateral are enforced.

Ready to use: Aave

WBTC is sent directly to Aave to compound yield.

In beta: AaveV2Maker

This operates similarly to the Aave-to-Maker strategy but sends DAI to Aave v2 instead. On v2, the DAI generates yield and accumulates AAVE, which is liquidated back to WBTC and posted for more collateral.

vUSDC

In use: Aave

USDC is deposited to Aave to compound yield.

In beta: AaveV2

USDC is deposited to Aave v2 where it compounds yield and farms AAVE, which is liquidated back to USDC and deposited for more yield.

Next Step: Synergizing Strategies

Of course, more and more strategies will be offered to each arsenal. So long as it makes sense, it’s fair to assume that any strategy you see for one pool will be emulated to the others.

The process gets more exciting when you factor in this vDAI pool (which currently collects yield and COMP by sending DAI to Compound).

We have the ability to direct pools to other pools as funnels. In other words, vETH’s AaveMaker strategy can instead become vDAIMaker. Take out a DAI loan and funnel it through vDAI. Of course, we can do the same with vWBTC (and vUSDC, if there was some benefit to doing so). Now, we don’t need to make a new strategy for every destination with a DAI loan (like CompoundMaker, CREAMMaker, etc.). Everything just flows through vDAI, and now we have liberty to create additional strategies just by interfacing with DAI. The diagram below illustrates this flow (vWBTC ⇒ Maker ⇒ DAI ⇒ vDAI ⇒ Aave).

Of course, this can be applied to other pools as well. The vWBTC Compound strategy can be upgraded to take out an ETH loan to vETH (and vETH taking out DAI for vDAI). Now you have vWBTC ⇒ Compound ⇒ vETH ⇒ Maker ⇒ vDAI ⇒ ???.

From here, any collateral accepted by Maker becomes an easy pool to create — LINK, COMP, AAVE, UNI, and others. Just hook it up to vDAI under the same parameters as vETH and vWBTC. Now we can focus more energy on making more interesting and nuanced strategies for DAI specifically, perhaps integrating somewhere like Curve or Yearn.

Of course, this is just one avenue of how Vesper pools are able to upgrade and scale, thanks to Vesper’s underlying infrastructure. Multi-pool, where one pool can hit multiple strategies concurrently, is another way that APY can continue to grow and sustain at higher and higher TVL.

Ultimately, Vesper plans to serve as a “meta-layer” interfacing with all major DeFi platforms. The community is invited to think through potential strategies and share their thoughts and ideas to the #dev-general chat in Discord.