LST Compass Vault
Last updated
Last updated
The LST Compass Vault offers USDC depositors an innovative way to achieve boosted yields while maintaining no price exposure. By leveraging a diversified basket of Solana Liquid Staking Tokens (LSTs) and employing delta-neutral hedging strategies, the vault ensures stable, optimized returns.
The vault eliminates SOL price exposure by fully hedging all SOL positions.
Mechanism: Converts USDC deposits into SOL LSTs, loop and leverage the LST position, and hedges the entire SOL exposure through short positions on Drift
Result: Users enjoy the benefits of leveraged staking rewards and funding rates without being affected by SOL price volatility.
The vault optimizes yield generation and enhances risk management through a diversified approach to both SOL Liquid Staking Tokens (LSTs) and stablecoin debt.
LST Composition: A basket of SOL LSTs is held to maximize yield performance while spreading risk across multiple LST assets (dSOL, INF, and jitoSOL). This reduces the dependency on any single LST's performance.
Debt Composition: Borrowed stablecoins consist of a diversified basket, including USDC, USDS, and PYUSD. This lowers the overall borrowing cost for the strategy while mitigating risks associated with individual stablecoins.
Dynamic Portfolio Adjustments: The vault continuously monitors and adjusts the distribution ratios within both the LST and stablecoin baskets. It actively reallocates to the best-performing LSTs while borrowing against the lowest-cost stablecoin, ensuring optimal returns and cost efficiency.
Future Expansion: Plans are underway to integrate additional high-performing SOL LSTs and further diversify the portfolio to improve yield potential and minimize risk exposure.
The vault actively monitors staking yields, funding rates, and borrowing costs to dynamically adjust leverage.
Leverage Application: Increases leverage up to 3x when combined yields exceed borrowing costs by 15%.
Risk Management: Reduces leverage during unfavorable conditions to maintain profitability and minimize exposure to borrowing costs.
By integrating with platforms like Drift, Jupiter, and Sanctum, the vault captures potential airdrops.
Benefit: Rewards from collaborations and protocols are redistributed to users, adding an extra layer of yield on top of staking and funding rates.
Deposit: Users deposit USDC into the vault.
Conversion: The USDC is swapped into a diversified basket of SOL LSTs using Jupiter.
Collateralization: The acquired LSTs are used as collateral to borrow additional USDC on Drift.
Reinvestment: The borrowed USDC is swapped back into more SOL LSTs via Jupiter.
Hedging: The vault opens short positions on SOL to hedge the entire SOL exposure, achieving delta neutrality.
Through this mechanism, users benefit from:
Staking Rewards: Earned from SOL LSTs.
Funding Rates: Gained from shorting SOL.
Cost Efficiency: Borrowing costs are actively managed to maximize net yields.
The LST Compass Vault operates on audited platforms like Drift and Jupiter, with additional layers of monitoring from Vectis to ensure fund safety.
Short positions effectively eliminate exposure to SOL price volatility, safeguarding user deposits and maintaining stable returns.
Leverage is applied prudently, capped at 3x, and dynamically adjusted to ensure net positive yields even during market fluctuations.
The vault employs a transparent 25% performance fee, charged only on profits generated by the strategy. No additional fees are applied for deposits, withdrawals, or transactions, ensuring users keep the majority of their earnings.
Withdrawals are subject to a 1-day redemption period. Funds can be requested anytime but will be available after 24 hours. Profits accrued during the redemption period will not be credited, ensuring an efficient and fair withdrawal process.
Stability: Fully delta-neutral, eliminating market volatility risks.
Diversified Yields: Combines staking rewards, funding rates, and potential airdrop benefits.
Dynamic Optimization: Active leverage management ensures consistent and enhanced returns.
User-Friendly: No manual intervention required; fully automated strategies.
