Pods - Yield
In this new project, Pods team is launching a 1-click exposure to strategy. The strategy consists in:
A) Allocate users deposits to a Yield Source (Lido, AAVE, AMM Pools). At the moment we're working only with Lido.
B) Each week, invest part of the yield generated weekly to buy weekly Call Options on ETH 10-20% out-of-the-money
By doing so, the depositor won't risk their principal amount and only take risks with the yield. This type of strategy is called Principal Protected.
Although we wished to build a strategy fully on-chain, for some reasons it's not possible right now. On the part B) (Buying weekly options) we don't have yet mature option protocols in the market with enough liquidity and low slippage. So, under the hood, on the part B) of the process, we transfer part of the yield to an Investor contract(Multisig) that will have the freedom to find the best place to buy those options (Ribbon auction / Pods AMM / OTC with Market Makers).
In case of Multisig hack, the only balances that the Multisig have access are the yield generated between rounds.
Red -> Any address can call this function
Black -> Only the Vault Controller
flowchart LR
classDef anyaddress fill:#f555;
A[Deposit]:::anyaddress -->|increase \nidleAmount| B(EndRound)
B --> C{Are there \ndeposits to process?}
C -->|yes| D[processQueuedDeposits]:::anyaddress --> E
C --> |no|E[StartRound]
E --> A
That EOA or a contract can interact with three functions: deposit, withdraw and processDeposits.
A contract or Multisig that would be weekly funded to buy options
That vault controller have the power to:
- Start round
- Process deposits
- End round
During end round the vault will perform 3 things:
a) Set the flag isProcessingDeposits to true. This should block any deposit or withdraw.
b) Check the interest generated between rounds
c) Pull tokens from the Investor. If the option from the last week ended up ITM, the Investor should leave the profit available in the contract before the Vault Controller calls the End Round function.
d) After checking interest generated, part of that yield will be transferred back to Investor based on the investorRatio variable.
During this step, we perform the following logics:
a) Re-enable deposits and withdraws by setting the isProcessingDeposits to false.
b) Store the initial round balance and initial round share price.
npx hardhat testYou will need to install echidna separately, and then run:
echidna-test test/invariants/ --contract STETHVaultInvariants --config test/invariants/config.yamlDeploy the contracts
npx hardhat run ./scripts/deployTestnet.ts --network <network>Populate the system with a few transactions
npx hardhat run ./scripts/populateTestnet.ts --network <network>