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Single Vault Model - The Base of DeFi Lego



Innovations in the automated market maker (AMM) space have fueled the growth of decentralized exchanges (DEXs) in recent months. Uniswap released its V3 version, which introduced centralized liquidity, which increased the capital efficiency by 4000 times compared to its V2 design, while Bancor V2.1 introduced an interesting token economic model to solve the pain point of impermanent loss and realize unilateral flow sexual offering. Other DEXs have been innovating in different directions, among which the Single Vault Model has been increasingly adopted. In March 2021, SushiSwap released its single vault BentoBox, all users can deposit their tokens into this box (Box) - a decentralized "app store", this box can be used by many different applications program access. For example, the funds in BentoBox can provide flash loans while performing income farming in Onsen, and even provide liquidity on SushiSwap’s AMM in the future. Likewise, Balancer launched its single vault in their V2 announcement. Balancer's protocol treasury aggregates and manages tokens added to each Balancer pool. Automated market maker (AMM) logic is separate from token management and accounting. Token management and accounting counting are done by the treasury, while AMM logic is done by each pool individually. Data: The Beacon has a total of 17,952 single players, attracting 15,816 new users for the Treasure ecosystem: According to the data from Dune Analytics on December 5, the number of single players of the Treasure ecological chain game The Beacon is 17,952, and the number of Founders is 31,041. In addition, the total number of players in the Treasure ecological chain game is 36,415, and the number of new users through The Beacon is 15,816. In addition, the total transaction volume of TheBeacon props on Treasure Marketplace reached 471,000 MAGIC (about 275,000 US dollars). [2022/12/5 21:23:28] A single treasury can be seen as a Lego base, allowing other Lego parts (different DeFi applications) to be built on top of it. Protocols like Uniswap focus on building a Lego block, while protocols like SushiSwap and Balancer take a different approach — synthesizing these Lego blocks. The base securely stores tokens and automatically yields underutilized assets to reduce opportunity cost. Developers can develop directly on top of the base, and the DApps they develop can leverage the underlying assets and attract more users to increase the overall adoption of the protocol. The holy grail of DEXs is to provide LPs with maximum capital efficiency and yield. In this article, we will try to explain how the single vault pattern optimizes this goal. LedgerPrime, which was acquired by FTX, launched a single lending pool on Clearpool: On October 26th, digital asset investment company LedgerPrime announced the launch of a single lending pool on Clearpool’s DeFi protocol, which is only available on the Clearpool Polygon market. LedgerPrime is a multi-strategy digital asset investment firm launched by Ledger Holdings in 2017 and subsequently acquired by FTX US in 2021. Clearpool is a decentralized capital markets ecosystem for institutional borrowers, enabling institutions to securely access digital assets and DeFi. [2022/10/26 16:39:09] gas efficiency Omakase, the core front-end developer of SushiSwap, described BentoBox as . "A layer 1.5 solution with everything in one tokenbase". A single vault allows internal token balances to be maintained within the vault, thereby reducing unnecessary token transfers and ensuring gas efficiency. Today, gas fees are wasted on multiple approvals for the same token. This situation does not occur in a single vault. Once a token is approved for use in the vault, it can be used in all protocols built on the vault. Previously, the potential savings from lower price impacts had been outweighed by increased gas costs due to the complexity of Balancer's smart order routing algorithms. The new model completely solves this problem and optimizes the price. Bancor V3 is officially launched, and the new version integrates liquidity into a single vault through the Omnipool architecture: On May 12th, Bancor V3 was officially launched, and the new version integrates liquidity into a single, virtual vault through the Omnipool architecture to reduce Gas and Improve efficiency and usability. The features of the new version also include support for single-currency staking and real-time impermanence loss protection, transaction fees and incentives for automatic calculation of compound interest. Partners who provide incentives in the new version include Polygon, Brave, Flexa, Synthetix, Enjin, Nexus Mutual and WOO Network. [2022/5/12 3:08:53] With Balancer's new vault, transactions can be executed against multiple pools, and only the final net token amount is transferred back and forth between the vaults. This will reduce the number of transactions under the hood and save a lot of gas for users. High frequency traders can also avoid posting ERC20 trades for any short positions, which is especially useful for DEX aggregators. In addition, through the use of flash loans, arbitrageurs can conduct information transactions between fund pools to achieve arbitrage even without holding tokens, thereby improving process efficiency and reducing capital-intensive operations. Source: Balancer Medium Gao Liankui: The theory of "single financial control" has more advantages than monetary control: On March 24, an economist in the "Huobi Peak Dialogue" column of Huobi Research Institute, a subsidiary of Huobi Group, cited "US stocks are strong, A What's the secret behind the stock's weakness? " as the theme and held online. Cheng Zhipeng, head of the Huobi Institute, had a dialogue with Gao Liankui, a distinguished professor at the European University Business School in Switzerland. Gao Liankui said in the dialogue that the so-called monetary regulation is mainly low interest rate regulation, and the current low interest rate monetary policy in the United States is not conducive to the incentive compatibility of financial institutions. Compared with monetary regulation, fiscal regulation is a regulation that is relatively easy to quantify. The amount of reduction and increase can be completely consistent with the economic growth rate. When private investment is weak, the government should increase investment, and vice versa. However, fiscal inflation will not cause pain to entrepreneurs, so the theory of "single fiscal control" has a strong advantage over monetary control. [2021/3/24 19:14:49] In general, developers can build dApps without worrying about gas overhead. At the same time, traders will also choose to trade on these platforms because gas fees have less impact on their profits. By separating the AMM logic of the pool from token management and accounting, the single treasury model provides a strong foundation for developers to work on. Low-level minutiae can be delegated to the vault, removing any technical overhead for developers. This modular architecture allows teams to become more focused and efficient. SushiSwap voice | Founder of Amber: It is not scientific to judge the net profit and loss of investment only from the floating loss of a single account: In response to the "FTX CEO's book floating loss of more than 13 million US dollars", Michael Wu, founder and CEO of Amber Group, said that only from the Bitfinex ranking list (Leaderboard) data to judge the net profit and loss of investment is not scientific. "As a professional trading service platform, it naturally has a large two-way hedging position. Although FTX is an exchange, FTX CEO Sam is also the boss of its own market maker Alameda, so this position may represent the combined value of FTX and Alameda. Of course, we don’t know whether the funds are separated and their respective proportions.” According to previous data from the Bitfinex leaderboard, since February 24, the account certified as FTX CEO Sam Bankman-Fried has been registered on Bitfinex’s account since February 24. Book losses amounted to 13126252.43 US dollars. Michael Wu explained that when the rumor spread, Sam had deleted his account from the Bitfinex leaderboard, and now Amber Group’s account ranks first in the Bitfinex leaderboard, but Amber Group’s accounts on Bitmex and other exchanges Substantial profit, actual net profit. [2020/2/27] The first dApp built on BentoBox is Kashi, which utilizes assets on BentoBox for lending and one-click leveraged trading. Since all tokens are stored in a central vault, the number of transactions and overall gas fees for internal token transfers can be reduced. For example, through BentoBox and Kashi, short selling with more than 1 times leverage can be completed in one transaction. MISO will also be built on BentoBox. It is a launch platform for project founders to launch new projects on SushiSwap. MISO has created a set of smart contracts so that non-technical founders can initiate liquidity through MISO and migrate to SushiSwap to easily launch their new tokens. Smart contracts contain these functions: creation of new tokens for the project, a vault option to lock tokens over time, initial coin offerings and crowdsales, and a mining farm for new tokens. Balancer Balancer's token library can now serve as the team's AMM innovation strategy and a launch platform for DApps. It already has 2 official partners: Element Finance, a fixed-rate interest agreement, will build a customized transaction curve on Balancer V2 to Avoid the hassle of forking or building an AMM from scratch. The Balancer-Gnosis-Protocol, a collaboration between Balancer and Gnosis, will bring Gnosis's DEX aggregator and batch auction to the market, aiming to ease the value that miners can extract. Both BentoBox and Balancer's vaults will allow dApps integrated in the vault to connect to each other, thereby providing synergy between these dApps and leveraging the value of network effects. At the same time, dApps bring new users to the treasury, enabling TVL and protocol growth. Capital Efficiency Pools have full control over the underlying tokens they add to their vaults. This opens up a wide design space for capital efficiency, asset managers and dApps can be built on top of the treasury. Once nominated by the pool, external smart contracts that have full control over the pool's tokens can function by using the underlying tokens for other purposes, such as voting, yield farming, and lending. Assets on BentoBox can be used to provide flash loans, even though the same tokens are being used for mining in Onsen. Even if assets are not lent out, users can still use their tokens to earn yield or LP fees. This enables the user to get the maximum benefit at any point in time. Kashi's target utilization is between 70-80%. This utilization rate refers to the percentage of the total supply of an asset that is currently on loan. It will attempt to achieve this with a flexible rate that fluctuates based on changes in utilization. Source: SushiSwap, BoringCrypto's blog Balancer is similar to BentoBox, and the assets in the Balancer vault can also be used for flash loans. In addition, Balancer cooperated with Aave to build the first Balancer V2 asset manager, allowing idle assets in the V2 pool to earn income on Aave. The following GIF diagram describes such a situation: only a small part of the assets in the liquidity pool are traded, and most of the assets in the liquidity pool have been idle. Through the asset manager, these assets can be programmatically deposited into the Aave pool based on certain thresholds. As time goes by, the proportion of assets in the asset pool becomes more unbalanced, and large transactions may fail. When this happens, the asset management company will automatically replenish the fund pool with DAI and send more WETH to Aave to maximize the yield. Currently, only a fraction of the TVL in AMMs is generating revenue. We can expect the liquidity utilization metric (percentage of yield-generating assets) to improve dramatically with the implementation of asset managers in a single vault. Source: Balancer Dashboard When all assets are in one vault, the risk of smart contracts increases due to complexity. While both the Balancer and SushiSwap teams have put enormous effort into ensuring the safety of funds, this innovation also represents a degree of risk. In particular, dApps and asset managers are highly privileged on Vault assets and may represent other attack vectors, and the complex logic involved should be carefully reviewed. An important factor to consider, in addition to the various tangible benefits from the treasury, is that it brings enormous competition to the integration protocol. Such advantages are difficult to obtain in DeFi, and it will make the complexity of the protocol almost impossible to be forked and copied. Imagine that Yearn is in the same vault as SushiSwap, and Aave is also united with Balancer. These protocol complexes will effectively become the entry point to participate in DeFi and create sustainable benefits for users' assets. This will also raise the barriers to entry and prevent other upcoming DEXs from eroding the market share of SushiSwap and Balancer. In this transition, it can be seen that SushiSwap and Balancer are targeting passive liquidity providers, as more active-zce liquidity providers flock to Uniswap after Uniswap’s V3 upgrade. For retail liquidity providers who want to passively manage their liquidity, SushiSwap and Balancer are good choices, while Uniswap will provide a more active-zce strategy to attract more mature participants into the field.


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