Challenges
Product Design Challenge: Create a Demo for DeFi, NFT, or Smart Contract Automation
Chris from Ava Labs was super helpful. We brought him the concept, and shared how it works. He was very patient, asked questions, and provided clarity on Ava Labs Integrations. Chris also came by to view our website, and provided feedback which helped us to complete the project with confidence.
Project details
AeroVault is possible because of three market forces coming together in blockchain for the first time:
Aerodrome | Compound Finance | Ava Labs
Aerodrome’s unique tokenomics requires users to lock their positions for 1-4 years. While these positions cannot be touched until the staking period is over, they earn bribes and fees every week. This vAPR is liquid and, and is paid in a variety of tokens from the Aerodrome DEX.
Most veAERO holders perma-lock their positions, as they are the protocols which have their LPs listed on Aerodrome. This Dune Leaderboard shows 69 Protocols, competing with each other to accumulate veAERO positions.
Our goal at AeroVault is to give veAERO lockers more levers to control their level of risk. Market conditions change in real time, and over a three month period this year, AERO lost 76% in value from peak to bottom.
Without a hedge, these positions are at the mercy of market conditions, but with a more active and automated management strategy, these protocols can increase their veAERO holdings, and out-compete other protocols for vote power.
On Aerodrome, vote power equals reward incentives directed toward the LPs of their choice.
To do this we automate a number of processes for AERO stakers. We combine:
An Ava Labs enabled relay that automates weekly voting strategies to scout for maximum ROI in the form of bribes and fees.
Aerodrome Relay sells the long tail of different tokens received by bribes, and consolidates them into USDC or WETH. The bribe income is then deposited as collateral into Compound to enable Hedging.
An Ava Labs automated Dollar Cost Averaging strategy which can be used to incrementally build veAERO, or build a hedge position by borrowing on Compound to remove exposure to AERO volatility. Ava Labs can also automate a DCA unwind of the position, closing out the hedge over a period of time.
AeroVault users are given a slider to determine their ideal risk profile, and provided with recommendations on what actions to take based on desired outcomes.
Previously, veAERO users were locked into Long positions. With AeroVault, users Protocol Treasuries can manage their AERO exposure with a Delta Neutral position, or go Long | Short using Perpetuals already built on Compound Protocol by Contango.
AeroVault will be built by xVault DAO, a subset of the Compound Protocol Growth Team. We are intimately familiar with the inner workings of Compound having deployed a dozen markets and more than 20 new collaterals since the growth team was hired by the Compound DAO in December. This product is also perfectly timed to take advantage of the Aerodrome market that will launch on Compound on Base around Mid November.
This project is our MVP, when it is built, we will be able to offer similar services for other AMMs, as well as integrate with other Markets on Compound.