The Term Summer.fi Vaults will generate yield through:
Active fixed rate, fixed term USDC / ETH loans originated on the Term Finance protocol, and;
Idle liquidity not active in Term loans deposited into the Summer.fi Lazy Summer Lower Risk USDC / ETH Vaults.
These (Term) Summer.fi Vaults would also be integrated into the Summer.fi Lazy Summer Higher Risk USDC / ETH Vaults on Mainnet as a yield generation source for Summer.if Lazy Summer Higher Risk vaults.
Overview The proposal seeks to make the following Term Strategy Vaults available for users to deposit assets and earn yield:
Yield Components: Native Interest + Incentives from Term and others
Projected Blended APR: Approximately 4% (current Term ETH Meta Vault Yield)
Address: To Be Deployed
Network: Ethereum
Motivation The primary motivation for this proposal is to develop vaults that grow users USDC/ETH holdings while increasing the deposits of Summer.fi and Term’s Vaults in an aligned way. Term will receive distribution from Summer.fi through its Higher Risk Vault and Term vault depositors will generate above market yields using Summer.fi’ Lower Risk Vaults.
Specification This proposal is to whitelist and integrate the following Term Strategy Vaults specifically for earn-side deposits within our protocol:
Integration: Enable deposits for users to earn underlying vault yields.
Voting It is proposed that these two (Term) Summer.fi Vaults be integrated into the protocol’s earn-side offerings. Should there be no significant objections or further suggested modifications from delegates and the community, this proposal should proceed to a formal governance vote (e.g., on-chain vote or Snapshot vote, as per the DAO’s procedures) to authorize their integration.
Thanks for the questions @samehueasyou. This wouldnt require to deploy any new vaults on Summer.fi. I can understand the confusion though.
Term would deploy Summerfi branded vaults on Term. Term has created Term Strategy Vaults that deploy capital into fixed rate loans originated on Term. A risk curators would allocated capital into these loans. A certain amount of the assets in the Term vaults (typically 20%) is also allocated into variable rate lending protocols to help maintain liquidity to support withdrawals. On existing vaults, this is deposited into Aave.
Here we proposed creating vaults on Term that allocates between Term loans and the Summerfi lower risk vaults on Mainnet.
Thank you for your clarification as well as now I understood that these are Term-hosted, Summer.fi-branded vaults that route idle liquidity back into our Mainnet USDC/ETH vaults. Make sure to check the differences and individual strategies deployed under each of these vaults:
Would love to understood a bit more about how the rebalancing between Term loans and new Summer.fi vaults will be governed—i.e. who the curators are, and how risk thresholds are managed.
I do not necessarily feel that there is anything else needed besides alignment from the Lazy Summer DAO (thanks to composability of DeFi), and once deployed some mutual communication published.
Excited to see this evolve, thank you for the reach out and keep us updated!
Hi @jensei - thanks for sharing the information. I believe the one aspect that should go through governance would be the Higher Risk vaults potentially deploying capital into the Term Branded Summer.fi vault that resides on Term.
Term currently has a few risk curators that participate in Term Strategy Vaults and rebalance and redeem fixed rate loans on Term. Risk Curators are responsible for establishing smart contract enforced risk parameters of the vault. This includes:
First Image
-Weight Average Life Caps
-Liquidity Required Reserve
-Concentration Caps Second Image
-Eligible Collateral that Vault would lend against
If any of these parameters are violated, any transaction being initiated would revert.
Risk Curators are able to modify these parameters via governance. Vault holders are able to reject any proposed changes through a 7-day time locked governance process (see Screen Shot 3 below)
In addition to setting the parameters detailed above, Risk Curators participate in Term auctions to originate fixed rate loans for the vaults. Curators are able to utilize funds that the vaults have deposited into the liquid portion of the vault (see Aave position in Screen Shot 1) to make Term loans. Once the loan has matured vault curators are able to redeem the loans which then are deposited back into the liquid strategy to continue to generate yield until the risk curator participates in a Term loan.
We would propose that the Risk Curator for the Summer.fi vaults on Term be Shorewoods. They have been very active on Term since inception and have a deep understanding of the protocol. Here is a link to their website: https://shorewoods.xyz/.
Curious to hear the thoughts of other @Recognized_Delegates maybe @halaprix could weigh in, in terms of technical setup alignment of the strategy to be possibly added into the HR ETH mainnet fleet.
Hey, from the technical point of view we’re all set, the standard ERC4626 ark can be utilized since Term uses Yearn v3 fro it’s vaults and metavaults.
Some changes in the interest rates subgraph were necessary, but that was already implemented.
Most of the funds deployed to the Term vaults will not be instantaneously withdrawable ( and small fraction of the idle assets reinvested to summer lower risk strategies) - that should be taken into account in rebalancing ( same applies to Origin, Fluid Lite etc - as a group - not to end up with majority of the funds in those arks)
