Vault

Asset lending costitutes a relatively low risk activity for decentralised finance (DeFi) users that are interested in putting their portfolio assets to productive use with a multitude of lending venues being available to facilitate decentralised lending activities. Platforms such as Aave, Compound, and Fraxlend allow their users to generate yield on their capital while keeping custody of their assets. Decentralised lending has facilitated a large part of DeFi's growth with the lending pool model becoming the dominant implementation in the space leading to the dominance of utilisation based interest rate models. Thus, in the presence of a surplus of available capital, interest rates on lending protocols decrease. The existence of multiple DeFi protocols leads to interest rate imbalances that come as a result of different utilisation rates in different lending markets.

Dynamo aims to optimise lending yields by developing a decentralised solution that utilises the underlying capital in a multitude of lending venues in order to extract the highest possible interest rate out of each supported asset. Dynamo vaults react in real time to interest rate fluctuations across DeFi venues by rebalancing their allocations in a manner that maximises yield between platforms such as Aave, Compound, and Fraxlend3. Dynamo vaults allows anyone to participate in their rebalancing process and encourage the decentralisation of the weight rebalancing process by incentivising the process with part of the yield that the respective vaults generate from a rebalancing proposal. The Dynamo infrastructure is designed in a manner that aims to maximise utilisation by the broader DeFi space allowing anyone to build on top of it.

Dynamo vaults can facilitate a wide array of use cases with the optimisation of liquidity provision in stableswap pools being just one example of Dynamo's capabilities. The upcoming integration of Dynamo vaults with the Balancer V2 boosted pool framework will act as a proof of concept by allowing liquidity providers to take advantage of Dynamo's boosted pools in order to optimise their liquidity. Dynamo's infrastructure can accelerate the development of liquidity for decentralised stablecoins and other assets by allowing liquidity providers to generate an optimised lending yield out of their idle liquidity. The integration of Dynamo vaults with stableswap pools will enhance base yields by enabling liquidity providers to use Dynamo pools in order to interact with a multitude of DeFi protocols in a passive manner.