Disclaimer: our Decentralised Basis Liquidity Pool is running on a test network with the team's own funds. The information presented is for educational purposes and does not constitute investment advice or a solicitation to buy or sell assets or make financial decisions. Please talk to your accountant or financial advisor.
As mentioned in our previous blog posts, our next set of posts will focus on the strategies we have been developing. The first strategy we are going to dive into is the Auto-Lending Optimiser.
Currently, there are a number of DeFi protocols offering lending services on the Solana network, with the following projects retaining the majority on TVL: Solend, Mango Markets, Tulip and Francium.
Normally, when a user wants to lend their crypto assets, they have to be aware of several metrics, such as: Deposit APR, Utilisation %, Pool TVL, Protocol TVL, Protocol risk and have to constantly monitor these metrics by themselves, creating an arduous and time consuming task.
The concept of return optimisation is not new, it is the process of moving capital depending on the returns offered by the different protocols. Returns, however, are not the only thing that should be taken into account. It is important to strike a balance between returns utilisation, TVL and risk.
The auto lending strategy provides users with the optimum rate of return available on the market and can be used with any asset, stable or volatile, for example USDC or SOL. Deposits, rebalancing and withdrawals are automatically undertaken to ensure the best performance at all times. This negates the requirement for the user to monitor their assets and search for the best rates and optimizations in the market.
This strategy is beneficial for both Projects & DAO treasuries, or individuals who are interested in getting optimal returns on lending their crypto assets while minimising the risk when compared to other strategies.
The auto lending and return optimisation strategy will be available to both stable and volatile assets, initially, USDC, USDT and a variety of volatile assets including SOL & BTC.
Auto-Lending and return optimisation Strategy will launch supporting Solend, Tulip and Francium. These protocols are audited, have a significant share of lending TVL on Solana and pass our in depth assessment and risk criteria including time active.
Protocols currently supported are reviewed and monitored regularly for liquidity and may be subject to change.
Will new protocols be added in the future?
New protocols will be added to the strategy in due course, however a new protocol must have a completed audit, pass our in depth assessment and risk criteria and meet TVL thresholds.
Do you monitor supported protocols?
Yes, the system has been built to assess the health and liquidity of each protocol. This way, if there is a possible liquidity problem, all funds are withdrawn and deposited in to another lending protocol.
This mechanism exists to protect funds from getting stuck (100% utilisation) or when there is a large loss of TVL from a protocol in a short period of time.
What are the risks?
- Smart contract risk from the strategy or supported protocols
- Untimely Liquidation Risk from supported protocols: when a liquidation takes place but there’s insufficient assets to pay back lenders in full
The strategy has been implemented on a number of different assets and was backtested (historical data and live performance) against other Solana protocols. The images below highlight how the performance of the auto lend strategy compared with simply depositing in a protocol during the last month.
The illustrations above highlight the lending possibly returns and out performance the Auto Lending and Return Optimiser can achieve. Allowing for the dynamic movement and re-balancing of assets between protocols resulted in superior returns for every asset back-tested.
Example of a test wallet can be seen below using automatic strategy execution over the last month.