Dedicated Vaults
Customizable DeFi strategies for sophisticated investors
Last updated
Customizable DeFi strategies for sophisticated investors
Last updated
DeFi is a sophisticated space, yet most opportunities existing today are one-size-fits-all, pushing all investors regardless of their profile toward the same setup. With the launch of Dedicated Vaults, Definitive empowers every sophisticated investor to navigate DeFi to their precise preferences.
The majority of DeFi strategies today pool all customer funds into the same strategy smart-contract. For example, all depositors in the Yearn WETH vault deposit their funds into a single “vault” contract for combined execution. While this approach has benefits (i.e. amortized execution costs), all depositors are beholden to the generic configurations set by the strategy manager.
Regardless of amount deposited, customer profile, or risk preference, all depositors have no choice but to be exposed to same strategy parameters and risks.
Definitive recognizes that every investor is unique, with distinct needs, risk profiles, and investment goals.
With Dedicated Vaults, a bespoke smart-contract is deployed per client per strategy, with the client’s wallet designated as the strategy owner (only wallet that can deposit and withdraw funds). Effectively, a Dedicated Vault is a private and fully-secured smart contract for an individual.
Clients can then customize strategy parameters tailored to individual risk profiles and investment goals on the Definitive Platform. These configuration parameters are completely private and held off-chain.
Dedicated Vaults represent a significant shift from the collective strategy paradigm, offering a more nuanced and personalized DeFi experience.
Benefits of Dedicated Vaults
To truly grasp the advantages of Dedicated Vaults, let’s examine a specific example. Consider the crvUSD/USDC pool offered by Curve Finance, a popular choice among DeFi clients looking to provide liquidity and earn delta-neutral yield. crvUSD is a dollar-pegged stablecoin that can be minted on Curve Finance by posting collateral and opening a loan within the protocol.
A Dedicated Vault for crvUSD/USDC offers every client a slew of customization options to cater to their individual needs.
The crvUSD/USDC pool emits CRV rewards for liquidity providers as yield. With Dedicated Vaults, clients have several choices for processing the yield:
Claim and hold CRV
Claim and divest CRV to USDC or another asset
Auto-compound CRV back into the pool
Clients can also tailor the frequency of claiming/compounding CRV.
Given that crvUSD is a dollar-pegged stablecoin, it‘s not immune to the de-peg risk of its predecessors. With Definitive’s Peg Price Monitor, clients can track the price drift between crvUSD and USDC.
Clients can configure the Peg Price Monitor to automatically exit the crvUSD/USDC pool if crvUSD price depegs beyond threshold (or, for the more degen, buy more crvUSD as it dips).
Definitive offers additional monitors such as Relative Liquidity, Leverage LTV, Liquidity Flight Risk, and more; all of which can be customized to suit the client’s unique risk profile.
Entering and exiting DeFi positions in size can lead to slippage and price impact that eat into yield.
Dedicated Vaults proactively avoid high execution cost scenarios by enabling clients to scale into positions in smaller chunks over time (TWAP position entry). Slippage and price impact threshold are customizable ensuring best execution per the client’s preference is achieved!
As mentioned earlier, each Dedicated Vault contract is deployed specifically for each client. An AccessControl layer is included in every contract with the client’s wallet(s) set as the owner to enforce that only the client can deposit or withdraw funds. Additionally, with Dedicated Vaults, clients are proactively shielded against many common DeFi exploits, particularly those arising from flawed share calculation methods in pooled contracts.
The next evolution of DeFi will bring forth many new modular protocols and primitives, and composing them optimally for institutional participation demands a higher level of granularity in risk management and customization.
Definitive’s approach is at the forefront of this trend, where personalization and individual strategy alignment become the norm. Tools for position management and automation are not just beneficial, but essential.
Definitive is pioneering a new paradigm in decentralized finance, setting a benchmark for how investors should be interacting with DeFi. Our approach empowers investors, granting them unprecedented control over their DeFi journey, ensuring that their investments are, not only secure, but also perfectly aligned with their specific financial goals and risk tolerance.
Reach out to jai@definitive.fi or @jp6pe on Telegram to gain access to Dedicated Vaults!
