Trustless L2-native yield has arrived on StarkNet
Earlier this year, Yagi launched as the first keeper network on StarkNet. On the way, we've hit several milestones such as powering innovative applications (e.g., Topology's Isaac game), building a community and collaborating with many teams in the space.
In terms of verticals, there is promising early adoption of Yagi Automation in Gamefi but we are only scratching the surface in terms of DeFi use cases.
Vaults as a major use case for keeper networks
Keepers thrive when automation can add value in an economically sustainable way and one of the most common applications is the re-balancing and management of automated vaults.
As we started thinking about how to spur more innovation on the vault side, we met with other great teams that are building yield solutions on StarkNet: Yearn (bringing L1 yield to StarkNet), Magnety (building managed vaults) and Sandclock (building multi-chain vaults). These products are fantastic and we expect to be passionate early adopters, however, these teams are not yet using keepers at the scale we would expect given their importance.
We think that keeper networks on StarkNet will enable a fourth use case that so far has been neglected: trustless L2 native yield.
What do we mean by Trustless L2-native yield?
L2-native yield comes from economic activity on L2 protocols like AMMs, lending markets and other primitives rather than from mainnet. We see StarkNet as more than just a cheap way to interact with existing protocols on mainnet — it will become a thriving financial ecosystem in its own right.
To be trustless, assets need to be managed by smart contracts and economic systems rather than individuals. Any intervention by individuals or concentration of power should be limited through strict incentives (e.g., such as those managed by a keeper network).
We think the recently launched ERC4626 vault standard will be an enabler for the development of more trustless vaults. ERC4626 facilitates composability of yield sources and vaults by enforcing clear patterns and guidelines. Earlier this year we built a reference implementation of the ERC4626 vault standard in Cairo.
The above ideas led to a hackathon project in StarkNet's DevConnect event in Amsterdam which we are now happy to release…
Introducing Yagi Vaults
Yagi Vaults is an aggregator for ERC4626 vaults that complements Yagi Automation, our keeper network. As a demonstration, we developed an xBank lending vault that you can use to lend ETH to xBank's algorithmic money market (detailed in a future post). At this time, it's one of the earliest fully-functional ERC4626 vaults on StarkNet and you can interact with it starting today.
Existing vault users may wonder why this interface is so simple.
We didn't hesitate to take advantage of StarkNet's architecture. For example, StarkNet account abstraction supports native multi-calls so deposits only require 1 transaction. We don't need to issue a separate approve transaction anymore.
For now, this is still an experimental testnet release which will more than likely to contain bugs. Our goal is to create more opportunities for our community to interact with StarkNet and fix issues to make the product more robust. As always, you can get in touch with us on Twitter or Discord to report any issues.
We have plans to improve the interface while developing more yield sources directly with other early partners and pave ways to integrate our keeper network at the heart of these vaults.
We are particularly excited to work with teams building new types of primitive financial markets such as exchanges, stable coins, derivatives, lending products or other vaults we could build on top of. We also hope that this inspires other teams building vaults to use the ERC4626 standard and Yagi Automation and we would be happy to help there as well.
Dive into L2 yield with us
Interested in L2-native and trustless yield opportunities on StarkNet whether as a developer, investor or user? Join our Discord.
This launch would not have been possible without the following individuals:
- Thanks to Nick Chikovani from Altzone for help in exploring XBank's contracts and building a lending vault prototype
- Thanks to Timothy Arslan from xBank for kindly answering questions about the integration
- Thanks to Janek from Argent and StarkWare team for debugging help during the hackathon
- Thanks to Francesco Ceccon from Apibara for help in leveraging his excellent hooks library
- Last but not least, thanks to Louis Guthmann, Uri Kolodny and the rest of the StarkWare team for relentless help and support.