Steadefi Vaults V3 Migration + LRT Vaults for Enhanced Security and Performance

Steadefi V3 vaults migration + Liquid Restaking strategy vaults
profile photo
Jeff Lam
Image without caption
At Steadefi, our commitment to improving our offerings and ensuring their security has always been paramount.
With this, we would like to share that we would like to push Steadefi users to migrate to our (version 3) vaults and to also share the reasons why, as we understand many users may need clarification or clarification.

A bit of context:

At Steadefi, we took the approach to deploy contracts (vaults) that are not upgradeable as upgradeable contracts also open up a risk where the contract you deposit your assets to today may suddenly change in the future. This eliminates the risk for depositors on the protocol/protocol development team changing the contract down the road for any reason, which helps with user trust as well since what you see in the contract code is indeed what it will be forever (instead of it suddenly changing down the road on a whim).
However, this decision also means that every time we discover any issues we can fix or any improvements we can make, we have to decide on whether to deploy new contracts with these improvements; as doing so means we have to get users to migrate manually (in contrast to protocols that can upgrade their contracts so it’s seamless to users; but this also could mean that they upgrade contracts to include nefarious functions).

Upcoming Migration from V2 Vaults to V3 Vaults

During a recent audit of the new lending vault, we identified several non-critical findings. While not urgent, resolving these issues will ensure the highest standards of security and reliability, thereby boosting confidence among our larger liquidity providers (LPs).
We thought long and hard as to whether to do another round of migration as we had just done one not too long ago (V2 vaults) and ultimately we believe that we should do it
  1. New Lending Providers to our LendingVaults should feel confident that our LendingVaults are as secure as possible to reduce any risks
  1. Steadefi is still at a relatively small stage of growth (in terms of TVL and users); although migration is tedious now, it is not something that gets easier as we grow
  1. We will look to integrate with more protocols (more below) for more StrategyVaults and these protocols will also be keen to see how much we care about security
With that said, we hope that users who have migrated previously from our V1 to V2 vaults can appreciate that we do our very best to ensure an easy and smooth migration for all users with a Migrate page to let users know where their assets are and to withdraw them + where to deposit them in the newer version of the same vault.
We also work to ensure that your esSDY airdrop points will continue to count correctly.
And of course, if you encounter any issues please do not hesitate to open a support ticket with us on Discord.

Changes to Interest Rate Models for Strategy Vaults

At Steadefi, we believe that Lenders should be rewarded well for providing lending liquidity to leveragors.
Since migration from the Isolated Lending Vaults (which was very complicated to most users and rather inefficient in liquidity utilization) to the Combined Lending Vault of V2, we have indeed noticed that the current lending rates have been lower.
To address this, we're updating our Interest Rate Models for different vaults:
  • Delta Long and Delta Short Strategies to have Utilisation-Based Interest Rate Models: Delta Long and Short depositors are depositing mostly for the price appreciation (or depreciation if Delta Short) of the volatile asset. The focus is more on short-term P&L rather than longer-term APR yield. As such, we believe that utilization-based interest rates would be more fair for these strategy vaults as they are more willing to pay more in interest rates to leverage up.
  • Delta Neutral: For Delta Neutral strategies, we will continue to implement yield-sharing interest rates, which are better suited for longer timeframes and allow a focus on profiting longer term via higher annual percentage rates (APRs).
These changes aim to create a more equitable system for lenders and leveragors, aligning returns more closely with market dynamics.
Image without caption

LRT Strategies: Adapting to Market Demands

In bullish market conditions, the demand for USDC to go long increases. We've also seen rising interest in leveraged LRT strategies from ETH enthusiasts and other point farmers. To meet this demand, our leverage LRT vaults will now borrow not only USDC but also other non-ETH assets.
While borrowing ETH for LRT is technically neutral, borrowing non-USDC/ETH assets is considered long. However, most volatile crypto assets, like BTC, ARB, and ETH, tend to be correlated. This correlation allows for relatively neutral borrowing of assets like BTC, enabling safer higher leverage options (e.g., 5x, 8x), while allowing neutral LRT strategies to have 10x leverage.
All these with Steadefi’s usual offering of No Risk of Full Liquidation with automated monitoring and rebalancing.
We will look to roll out leverage LRT strategies to KelpDAO, EtherFi, and Renzo on Arbitrum. If there is demand for other LRTs on Arbitrum or ETH, please let us know on Discord!
Aark Digital <> Steadefi: Continued Expansion to other Protocols for more Yield/P&L
We are also working on strategies that integrate with Aark Digital, an exciting perpetual DEX that can significantly boost yield earnings with our existing vaults. AALP could potentially add another 10% APR (averaging 13%), and with 2x AALP, this could double the APR, albeit with increased risk.
While this integration promises higher yields, it also introduces more risk. Therefore, we will offer leverage vaults, allowing users to decide whether the potential yield justifies the risk.
For GMX strategies, this could mean an additional 10-20% APR in yield.
For LRT strategies, this means that yield sharing can be implemented with yield earned from AALP being used to pay lending vaults for leveraging into LRTs, effectively “borrowing more free” to leverage more. We believe there is nothing in the market yet for this.
Aark Digital is also a recipient of the ARB LTIPP and we will look to do more cross-collaboration together. We also believe that Aark Digital offers a unique approach to liquidity provision for perpetual exchanges, and we are looking forward to the integration!

SDY TGE: Launching Soon

We know many of you OGs are waiting on this.
We are actively working with launchpads to bring SDY TGE to fruition. April/May 2024 was a little bearish for the markets which delayed talks, but we see that the market is picking up again and our goal is to launch soon, providing our users with the opportunity to also participate in the protocol fees/have a stake in Steadefi.
Additionally, we will look to extend the esSDY campaign as the intention was to let liquidity providers earn esSDY right up to SDY launching. We understand that there are some concerns on the extension without increasing the number of incentives being distributed and we are looking to increase the amount of the incentive as well. More details will be finalized and shared soon on this.
Stay tuned for more updates as we continue to enhance our platform and deliver the best possible experience. If you have any questions or feedback, please reach out to us on Discord. Until then, stay safu lads!
Related posts
post image
Steadefi V2 Vaults migration
post image
Details about Steadefi’s esSDY Airdrop Campaign: how to participate, period of campaign, how to earn points and more.
post image
Details about Steadefi v2 secure relaunch to GMX v2 pools, enhanced security measures, compensation plan details, new investors and advisors and more.
Powered by Notaku