• Crypto / Web3

Updated 79 days ago

Ethereum · Polygon · Avalanche · Arbitrum · Optimism · Chainlink · Defi
Updated 79 days ago
Ethereum · Polygon · Avalanche · Arbitrum · Optimism · Chainlink · Defi


Optimize FraxLend Lending Yield



This submitted BUIDL meets the Product Expansion track, as the project optimizes the Fraxlend pairs through the use of a $FRAX-Based ERC4626 vault (we are calling FRAXIMAL). The idea was conceptualized, created, audited, and deployed during the Frax hackathon timespan!

It is now holding over $2 million TVL as seen here.

NOTE: The APY shown in the Sommelier UI (demo link in submission) is inclusive of $SOMM rewards whereas the base yield generated by the vault is visible in Frax Facts.

It can be complex, gas intensive, and time consuming to constantly track and react to the Fraxlend market movements. Fraximal aims to provide depositors with a simplified option to receive optimal yield on their FRAX while simultaneously being beneficial to the Fraxlend protocol. Increased FRAX deposits to Fraximal leads to more FRAX lending on Fraxlend. Deep liquidity on Fraxlend benefits the protocol in a number of ways including more liquid borrowing pools and a smoothing of borrow costs in high utilization pairs, both of which increases usage of Fraxlend.

The Fraximal vault is different from other vaults in that it is intelligent, meaning it has the ability to react, optimize and evolve to DeFi conditions whereas other vaults are static and limited to simple functions like auto-compounding or lending a single asset to one pool. The vault uses these intelligent capabilities to provide Frax depositors with the optimal yield available for collateralizing FRAX on Fraxlend. This is achieved through advanced modeling of past and real-time data from Fraxlend including interest curves, available liquidity, borrowed liquidity, and loan characteristics.

Details of the build can be seen at the GitHub repo.

Key-Points around the core functionality of the BUIDL

  • $FRAXIMAL is built upon the decentralized, battle-tested, Sommelier protocol, a top 10 Cosmos chain by TVL that passes msgData to smart contracts on various blockchains to carry out bespoke transactions in vault smart contracts.

  • $FRAXIMAL is built with v2 Fraxlend pairs as the default pair version, although it also works with v1 Fraxlend pairs. The product smart contract architecture is designed to allow for extensibility, where later versions can be approved and used within the aggregating vault.

  • The main Strategists behind this vault, Seven Seas and Define Logic Labs, rebalance the vault composition to either attain yield or reconfigure the asset portfolio to maintain optimal FraxLend lending conditions. The computation to determine the optimal portfolio allocation is done off-chain through a numerical optimization procedure which accounts for TVL impact by simulating Fraxlend interest rate dynamics.

  • The process of Strategists rebalancing this cellar is built upon 0xMacro audited Sommelier Protocol architecture and smart contracts which have over $20 Million TVL.

More about Sommelier:

Fraximal is a vault on Sommelier, an innovative asset management protocol whose mission is to make DeFi more accessible, profitable, and efficient for everyone. Sommelier’s advanced technology built on the Cosmos SDK enables intelligent vaults that can optimize portfolios, trade long-short, borrow-lend, and farm. Independent strategists can leverage the power of off-chain computation to inform on-chain vaults, allowing vaults to dynamically adapt to market conditions and provide enhanced opportunities and risk mitigation to users. All vaults are enabled by smart contracts audited 0xMacro and controlled by the blockchain’s robust validator set, protocol governance, ensuring transparency and security. Once a Strategist is approved through governance, they have certain privileges, such as rebalancing and maintaining their proposed vault(s) without voting requirements (within limits).

Team Information

Crispy Mangoes: Solidity Dev for 2 years. EinCodes: Solidity Dev for 2 years.