[RFC] The Path to $1B+ TVL: Onboard Medium - and High-Risk Vaults for Lazy Summer Protocol

Title: {RFC} The Path to $1B+ TVL: Onboard Medium - and High-Risk Vaults for Lazy Summer Protocol

Author(s): @samehueasyou

Related Discussions: Unified stablecoin strategies with variying risk levels , [RFC] Onboard EURC to Base , SIP2.1 onboard ETH Euler Vaults on Mainnet

Submission Date: Wednesday, March 5th, 2025

“Winning has a price.” - Michael Jordan

Summary

This proposal calls for the creation of two new vault categories—Middle Risk and Higher Risk—to expand Lazy Summer Protocol’s existing suite of low-risk strategies. By offering more diverse yield opportunities, particularly those with higher APYs, this proposal aims to attract DeFi-native users who currently self-manage higher-risk strategies. This expansion will showcase the protocol’s full potential as an automated, one-stop solution for both stable and higher-yielding DeFi strategies.

Overview

Lazy Summer Protocol has rapidly grown by focusing on “Automated Exposure to DeFi’s Highest-Quality Yields.” However, this promise is only partially fulfilled: while current vaults cover low- and moderate-risk strategies (e.g., Morpho, AAVE, Compound, Sky sUSDs), we have yet to incorporate higher-yield opportunities that many DeFi natives seek. These volatile, more advanced strategies are precisely where Lazy Summer’s Rebalancer can excel.

To address this gap, this proposal introduces two new vault categories:

  1. Middle Risk Vaults: More aggressive deposit caps, beyond lending and new networks.
  1. Higher Risk Vaults
  • Key Property #1: 100% allocation to the highest-yielding strategy among supported protocols.
  • Key Property #2: Inclusion of niche strategies beyond lending, including fixed-rate protocols (Hyperdrive, Pendle) and ETH staking optimizers (Super OETH - Origin).
  • Key Property #3: Small % allocation for speculative point or token farming (e.g., ReSolv, Rumpel), appealing to advanced DeFi users and offering upside asymmetry to the vault portfolio.

Note, because these new strategies may be unsuitable for all users, they will be hidden behind a toggle or filter—similar to a “Safe Search” feature on Google—so only those actively seeking higher-risk opportunities will see them. Clutter and overwhelm is the enemy here.

Motivation

Expand TVL Beyond $1B

Solely relying on low-risk strategies won’t support the TVL milestones we aim to achieve.

Meet User Demand

Many DeFi users are manually pursuing higher yields; Lazy Summer can automate and simplify this process.

Fulfill Protocol Promise

Our mantra, “Automated Exposure to DeFi’s Highest-Quality Yields,” can be fully realized by adding more diverse and lucrative strategies. (See vaults.fyi)

Differentiate in a Crowded Market

Supporting both conservative and higher-risk strategies ensures we remain a one-stop solution for a wide range of DeFi participants.

Specification

1. Middle Risk Vaults

Vault Deposit Token(s): USDC, ETH

Networks: Sonic and established networks (e.g., Ethereum, Base, Arbitrum)

Contract Address(es): TBD

Supported Arks at Launch (Purposely vague) :

Silo Protocol on Sonic

Aave USDC on Sonic

Euler on Sonic

Morpho & Euler (with higher deposit caps)

Morpho & Euler (Higer APY Strategies)

Risk Level: Middle Risk

2. Higher Risk Vaults

Vault Deposit Token(s): Varies by strategy (e.g., USDC, ETH)

Networks: Ethereum mainnet, Base, Arbitrum

Contract Address(es): TBD

Supported Arks at Launch (examples):

100% Allocation Strategies (targeting the single highest APY among supported protocols)

Fixed-Rate Protocols (Hyperdrive, Pendle)

Speculative Point-Farming (ReSolv, Ena, Rumpel)

ETH Staking Optimizers (Origin)

Risk Level: Higher Risk

These vaults will be gated in the UI with a “Safe Search” toggle or risk acknowledgment flow. Users must opt in to see and deposit into them.

Voting :
To be defined as this is the RFC.

It is not lost upon me that some of the suggestions break the current architecture and divert from the status quo, but its main purpose is to signal a motion for a more aggressive push towards growth, higher APYs, and taking more advantage of the automated rebalancer for more volatile yield markets.

4 Likes

I’m aligned with the core vision of this proposal. Expanding into Middle and Higher Risk vaults is a necessary evolution for Lazy Summer Protocol, allowing us to capture a broader segment of the DeFi market. The Rebalancer’s capabilities are ideally suited for navigating the complexities of higher-yield strategies.

It’s imperative, however, that we maintain a rigorous standard of protocol selection. We’re not simply chasing yield; we’re aiming for calculated degen. We need to identify protocols with genuine alpha potential, those that offer asymmetric risk-reward profiles.

Is the proposed risk profile so ‘degen’ high that it falls outside the scope of standard curation practices, or does it remain within the boundaries of acceptable risk for a high-quality curation process? Understanding this distinction is crucial before moving forward. Ultimately, it would be ideal to have Block Analitica’s continued support and expertise in navigating this expansion into higher-risk strategies.

While the ‘Safe Search’ toggle provides a level of user discretion, we must acknowledge that those opting for higher-risk strategies are inherently seeking elevated returns. Our focus should be on providing access to vetted, high-potential opportunities within a framework of responsible risk management.

In essence, let’s proceed with this expansion, but with a strategic approach that balances the pursuit of alpha with a commitment to quality and security. This will allow us to solidify Lazy Summer’s position as a leading platform for both conservative and sophisticated DeFi participants.

Ultimately, it would be ideal to have Block Analitica’s continued support and expertise in navigating this expansion into higher-risk strategies."

2 Likes

Thanks, @halaprix, for bringing up this important discussion. I have no objections incorporating multiple risk-level strategies within the protocol. In a recent interview, @chrisb highlighted that Lazy Summer Protocol’s flagship product will be an auto-rebalancing vault designed to optimize risk-adjusted yields across all chains—set for launch in 2025.

@halaprix’s proposal suggests implementing multiple risk-tiered vault strategies across the protocol. Ultimately, the direction depends on development priorities, target user segments, and growth objectives. Summer.fi must evaluate whether to prioritize a low-risk multi-chain auto-rebalancing USDC vault on Mainnet, Base, and Arbitrum—catering to risk-averse users, DAOs, and institutions—or to introduce multi-risk vaults across chains, appealing more to degen users.

My recommendation is a gradual rollout, scaling up as the product matures and incorporating user feedback. Some of the UI and backend complexities have already been addressed, but further refinements will be needed as the protocol evolves.

1 Like

I am particularly interested in being able to choose all of the arks I am willing to deposit into, and then have the vault auto-rotate into whichever ark has the highest APY (either every standard epoch, (i.e. 1 hour, 6 hours, etc) or whenever it’s worth doing, given gas considerations.

2 Likes

Thank you, @Shadow_Holder and @halaprix , for your thoughtful responses.

@Shadow_Holder , I strongly disagree with a gradual rollout. My stance is simple: aggressive speed, conservative value at risk. Practically, that means getting these vaults to production as early as next week with controlled risk—e.g., a $10M vault cap for higher-risk vaults.

@halaprix , I fully agree on continuing the proposal with a focus on alpha, quality, and safety—let’s make this concrete.

Concrete Proposal for Vault Creation:

I’d like ** @halaprix and others to review and provide feedback on technical feasibility** .

  1. ** Onboard Middle-Risk Vaults on Sonic**

Deposit Tokens: USDC, ETH

Networks: Sonic

Strategies:

Risk Level: Middle

  1. Middle-Risk Vaults w/ Higher Deposit Caps and focused on Higher more aggressive APYs
  • Deposit Tokens: USDC, ETH
  • Networks: Base, Arbitrum, Mainnet
  • Strategies:

Morpho (Higher APYs)

Euler (Higer APYs)

  • There are several Euler markets with higher APYs, of which I would defer to a Euler representative to propose some higher APY markets.
  • Increased deposit caps (@BlockAnalitica to determine) to maximize yield exposure in a more the “lower risk” manner.

  • Risk Level: Middle

Higher-Risk Vaults w/ signifcantly more concreated deposit caps, ie - 70/30, 80/20 Allocations

• Same as Middle-Risk Vaults but with the ability to allocate 70%+ to one strategy. cc @BlockAnalitica

Higher-Risk Vaults Expanding Beyond Lending for ETH and USDC

• Categories: Staking, Leveraged Yield Looping, Token/Point Farming

Protocols: Fluid Lite and Smart Lending, Contango, Rumpel, Pendle, Hyperdrive, Sky Rewards

Call for Comments

It is obvious that this proposal for Middle and Higher Risk vaults is still far from refined. The goal is to be the most competitive place for yield on chain, whilst preserving the key properties of convenience, accessibility and safety.

Medium-Risk Vaults: Morpho, Silo, and Sonic teams—please provide feedback on the potential integration.

Higher-Risk Vaults: Fluid, Contango, Rumpel, Pendle, Hyperdrive, Sky —please provide input.

Let’s move fast and aggressive with conservative value at risk.

Veery exciting to have this option. But: If users lose money they hate it and tend to tell a lot of others about it.

I think this should be part of a UX development where there’s a “PRO” mode or somesuch.

Wouldn’t want grandma DeFi to lose her savings…

1 Like

High Risk Category:

"Items in the high risk category will require substantial development work due to the lack of existing solutions, unless any of the mentioned protocols have an ERC4626 wrapper (which is unlikely).

Based on my experience:

  • Pendle Arks: Some work has been done, but we need to clarify the entry and market tokens.
  • Sky Rewards: This should be relatively easy to implement, provided we have a trusted oracle. We could use the Uni v2 SKY-USDS pool and the PSM to swap USDC to USDS.
  • Hyperdrive: This might be the easiest to implement, based on discussions with Delv developers. They’ve offered implementation support.
  • Rumpel: I’m unable to assess this as the application won’t launch.
  • Contango: We need more details regarding the strategy. Will Contango maintain it, or will it be actively managed by keepers? (Note: I’ve experienced multiple liquidations on stablecoins, so I might not be the best person to advise on this.)"

Medium Risk Category:

"The medium risk category primarily involves infrastructure:

  • Subgraph support
  • Frontend support for Sonic
  • LayerZero support (which I believe is already implemented)
  • Minor adjustments to the Summer.fi RPC gateway, etc.

Protocol-wise:

  • Deployment of all governance and core contracts
  • Business Analyst (BA) support

We have existing integrations for Euler and AAVE. Silo v2 appears to be ERC4626, but we need to verify if there’s any custom rewards logic. The same applies to AAVE, as it has both awS merit rewards and points.

5 Likes

@halaprix thank you for the thoughtful response

Once again, I believe our mantra here should be aggressive speed with conservative value at risk.

Thus, I think within the next week we should be able to move forward on the middle risk vaults, and we should in the next week seek to refine the details of higher risk vaults with input from the teams behind the protocols and or strategies.

Middle Risk Action Items

  1. Determine the higher APY strategy basket from Morpho and Euler, perhaps with other lending strategies as well, but with lower allocations.
  • The current suggestions are as follows:

Request for comment from Morpho Team and Euler Team: What high APY strategies would you recommend in a middle risk basket?

  1. Decide on the higher % Allocation and its reasoning. Ie - will middle risk vaults have an upper bound of ~60%, ~70%, ~80% per strategy to optimize for shorter term returns taking into account the balance of risks?

  2. Sonic Network integration, and the notion of its vault being Middle or Higher risk based on the risk criterion presented by @BlockAnalitica

**Request for comment from Sonic, Silo, AAVE and Euler - teams all familiar with Sonic.

Higher Risk Action Items

Given the increased technical effort and uncertainty of risks, I believe we should first seek to solidify the strategies that would compose a higher risk strategy.

Based on @halaprix feedback, my take would be:

Fixed rate: Pendle vs Hyperdrive vs Otther
Blueship pure play token farming: Sky Rewards
Levered Yield Loops: Fluid lite vs Contango vs Summer.fi Bespoke
*Optimized ETH Staking: Origin OETH vs Basket of LSTs
Basis Trading: Ethena SUSDE

Hopefully the above is clear and I look forward to comment from @BlockAnalitica @definikola @MasterMojo

1 Like

Overall in favor of offering more options along the risk curve.

A couple of suggestions:

  • higher yielding strategies, especially token farming are often short lived. This could mean that for some strategies the engineering and risk effort is not worth the juice. Automating the on and off boarding as much as possible, and allowing third party providers to build the integration may speed up this process.
  • simplicity should be at the core of Lazy Summer. A third and perhaps a fourth dollar denominated stablecoin might make sense in the short term, but offering ten+ does not seem like it would help users enjoy lazy risk adjusted yields.
  • ultimately long term I see fintech integrators simply offering USD yield (so also the specific stablecoin abstracted away), in maybe three risk settings.
  • Any user will want to be able to understand the differences in risk between options in a clear cut way. I think some of the metrics proposed here by @samehueasyou are already great, and can be iterated on.
  • Testing other risk strategies by doing e.g. one stablecoin and one eth version, especially when undertaking leveraged/swapping strategies allows testing those strategies thoroughly.
  • the suggestion to begin with strategies that allow a higher percentage to be allocated and using strategies on already integrated protocols sounds like a great start. Publishing a backtest whether the strategy would actually be rewarding better than the current strategies should help adoption.
2 Likes

Friends, it is the halfway point in a new week! and I want to explicitly follow up with @BlockAnalitica @MasterMojo @definikola and @halaprix

What are our next steps for Middle and Higher risk vaults?

  1. Are we making progress on Sonic? if so what progress and should we gear up to start connecting with the team to help with marketing?

  2. @BlockAnalitica What is your proposal for Middle Risk vaults proposed? ie - Morpho, Euler vaults that have higher APYs only, and or Increased deposit caps as mentioned? (60/70/80% deposit caps)

  3. For higher risk vaults beyond lending - what is the general architecture / vault structure that is most feasible?

Practically speaking - in my view number 1 and 2 should be able to be approved this week. I want to emphasize that they require little technical oversight and the bottleneck, is in all likelihood governance. Fundamentally, these are growth initiatives (that need to be balanced with risk) but the market will not wait for us to act.

cc delegates: @FBrinkkemper @rspa_StableLab @0xtucks @MattGov @halaprix @MMOFO

UPWARD!

3 Likes

we are progressing with the infrastructure:

  • subgraphs infra :white_check_mark:
  • subgraphs code (needed some changes due to sonics variable block times) :white_check_mark:
  • rpc infra :white_check_mark:
  • @0xtucks is handling the Layer zero integration

we’re going to first handle the protocol deployment on sonic - as first proposal. Then proceed with the fleet.

4 Likes

Deploying on sonic is great; what is your estimated timeline of going live there? SOOON?

I would like to see a timeline on the middle risk vaults? How soon after Sonic is integrated?

1 Like

Thank you for the update @halaprix , looks like we are nearing the launch of sonic! and that means that we’ll soon be able start telling the broader community with the help of their marketers, of which I have already reached out to a few!

Below, I would like to address @MasterMojo point about Middle Risk Vaults which I believe the timeline should be the coming week of the 17 - 21 March 2025! @halaprix what is your view on timeline?

Title: Onboarding Medium-Risk Vaults for Lazy Summer Protocol

Author(s): @samehueasyou

Related Discussions: The Path to $1B+ TVL: Onboard Medium - and High-Risk Vaults for Lazy Summer Protocol - #11 by halaprix

Submission Date: March 16 2025

Summary

As part of the strategy to scale Lazy Summer Protocol to $1B+ in TVL, this proposal outlines the onboarding of new middle-risk vaults across Ethereum Mainnet and Base. These vaults offer higher yield opportunities with an increased deposit cap of up to 80% of max TVL, distinguishing them from lower-risk vaults.

Overview

This proposal suggests adding medium-risk vaults to Lazy Summer Protocol, contingent on a risk assessment by @BlockAnalitica . The key differentiators from lower-risk vaults include:

• Higher deposit caps, allowing up to 80% of TVL concentration.

• Exposure to vaults with a balance of risk and return, catering to users seeking higher yield potential.

• Increased concentration of assets (ETH, USDC only) and Networks (Mainnet and Base only), and including only new gen lending protocols (Euler, Morpho, Fluid).

Motivation

The primary motivation for onboarding these vaults is to attract users seeking higher yield opportunities. Expanding the vault offerings will facilitate the Lazy Summer Protocol’s goal of reaching $1B in TVL. For full context, see: The Path to $1B+ TVL: Onboard Medium - and High-Risk Vaults for Lazy Summer Protocol - #9 by FBrinkkemper

Specification

Deposit Cap & Maximum TVL Percentage

  • Medium-risk vaults will have deposit caps and TVL limits of up to 80% to allow for higher concentration.

USDC ETH Mainnet Vaults

ETH ETH Mainnet Vaults

USDC Base Vaults

ETH Base Vaults

Voting

Voting is not applicable for this post, though time is increasingly of the essence and next steps to get to voting would be appreciated from @Javier @BlockAnalitica

LayerZero configuration changes
Connects the Sonic Chain Lazy Summer Protocol deployment to existing chains

Adds SUMR rewards to the new USDC Fleet on Sonic

A first step towards meeting the goals of this thread are the two proposals above.

The Lazy Summer Protocol has already been deployed to Sonic along with the new USDC Fleet that includes an Aave V3 USDC Ark + 2x Euler USDC Arks.

Please note:
The Fleet name features Lower Risk in it’s name - not Medium Risk, as discussed in this thread. The rationale behind this at we do not want to make specific claims about the precise risk of a fleet - which stating Medium Risk does. Directional risks are more appropriate here eg. lower and higher.

Secondly, the nature of the fleet is of a similar risk profile to existing USDC centric fleets. Any additional risks stems from the Sonic being a nascent protocol.

Whilst onboarding this Fleet I think we should simply state that it’s a new protocol both here, in Discord and on Summer.fi’s frontend.

Why two proposals?
The Lazy Summer Protocol and new USDC Fleet have already been deployed. The new Fleet has already been enlisted with the HarborCommand contract on Sonic.

So, by voting ‘yes’ to the first proposal (and thereby connecting Sonic to the rest of our ecosystem) you are giving tacit approval to the onboarding of the USDC fleet.

The second proposal adds SUMR rewards to the new fleet once cross-chain communication via LayerZero has been established. It also includes a bridging transaction to move 5M SUMR to Sonic.

2 Likes

Hey, we at Block Analitica want to share our views and thinking regarding the proposal above to introduce medium and higher risk vaults as we think this can be a start of the potentially very important discussion about how the Lazy Summer protocol evolves as a yield product.

In general, we do support the proposal for listing other tiers of fleets (based on risk), and while we believe this will capture wider DeFi audiance/user spectrum we wanted to address the proposed ways/strategies of introducing higher risk (aka “key properties” from the proposal) individually.

1. Higher deposit caps / more aggressive parameters

  • So far we’ve been computing parameters based on the model we’ve shared in this forum thread to accomodate both risk-adjusted returns (based on multiple factors, as can be seen in the model overview) and the flexilibity of the Keepers.
    While we don’t believe setting more aggressive parameters on the Fleet and ARK levels is going to bring a non-marginal APY increase, if the community agrees on this, we would strongly advise on making it clear on the official SummerFi UI that supplying into those kind of yield strategies impose higher risk than the current (low risk) vaults. Based on the discussed parameters in this proposal, we’re concluding that main focus here would be on setting higher caps and max % TVL.

2. Inclusion of new networks and protocols.

  • Similarly to (1), while computing and proposing risk parameters for the (current) low risk fleets and ARKs we’ve tried to avoid exposure to certain protocols (e.g. Usual protocol, as already stated on the forum) and curators (based on their historical performance and collateral/oracle choices) completely. Therefore, we’d want to put emphasize on the risks involved if the governance decides to introduce some of the proposed networks and ARKS, and on the importance of the transparency/accessibility of those risks to the end user.
  • Furthermore, additional technical note, this can require some time to gather all the necessary data into the model to compute the needed parameters.

3. 100% allocation to the highest-yielding strategy among supported protocols

  • While we already have examples of high max % TVL (e.g. 95% for Aave v3 on USDC - Mainnet), those can be justified by the model (reliability, lindyness, TVL, audits, etc of the underlying yield source). With that being said, we’d advise against making the %TVL parameter completely irrelevant for specific ARKs (which is what would setting it to 100% for the higher risk yield sources effectively do), although it’s important to note that this parameter also falls in the scope of params that can potentially be set to a more aggressive value to address the higher yield/risk proposal (see (1)).
  • Additionally to the %TVL onchain parameter, we wanted to propose implementing a threshold (e.g. 70%) for a max supplier pool share (this is not available as an onchain parameters on the protocol level, it’d need to be implemented offchain as an additional threshold for the keepers) as an additional risk measure.

4. Small % allocation for speculative point or token farming.

  • We believe we can share more details/comments on this when specific points programs are proposed as ARKs.

Furthermore, the proposal also mentions hiding higher risk fleets behind a toggle on the UI. Here, considering this is more of a UX/product type of decision rather than risk, we’d feel free to leave a suggestion (again, from risk perspective) of having a solution to easily differentiate risk tiers (e.g. Lower, Medium, Higher) ideally with previews of APY/underlying yield sources.

Speaking of UI layout, we’re also like to remind and put emphasize again on the importance of the parameters transparency to users (for each and every fleet/ark), especially now when one of the proposed ways of increasing APY (and risk) is computing more aggressive parameters.
Our thinking is that if the governance is in favour of attracting more DeFi-native users by listing higher risk yield strategies, those users would appreciate the ability to check all related params to the strategy they’re considering putting their capital in.

Additionally, we believe it’s very important that the governance acknowledges the possibility of capital loss which is significantly higher in the fleets that’d be labeled as “Higher risk”, and its impact on the protocol overall reputation in the long run.

2 Likes

To address specific networks, fleets, and arks being proposed in the above forum thread, we will divide the discussion into two main topics:

  1. Sonic deployment (as this was the only new network mentioned so far) and proposed fleets and arks on Sonic network.
  2. Higher risk ARKs for the USDC and ETH fleets on Mainnet and Base.

Sonic deployment

  • As this is already on a vote and announced, stating that Lazy Summer protocol is already deployed on Sonic with USDC fleet, we’ll start gathering data to compute parameters for those ARKs, and share the initial parameters below.

Note: We advise that the USDC fleet on Sonic islabeled as “high risk” on the UI.

ARKs to be added to USDC and ETH fleets with more aggressive parameters on Mainnet and Base.

Here, we’d ask the community including summerfi team members, delegates, and others to narrow down the list of ARKs for each higher risk fleet (and network) so we can assess them individually.

Also, we’d like to address some details before proceeding with data collection.

  • Since ETH fleet is in discussion for the Base network, we wanted to gather community sentiment around having “Low risk” ETH fleet on Base before introducing the “Higher risk” one?
1 Like

@BlockAnalitica This seems counterintuitive. Can you elaborate on the reasoning here? even looking at the current vaults supported, it seems clear that more aggressive max % TVL would in deed have a material impact on current APYs.

We are fully in alignment here regarding the the clarity and transparency for end users. So much so that I would be happy to propose the user facing designs and metrics to @BlockAnalitica prior to release.

Okay, that makes sense thank you for the insight here.

Also agreed here that we can leave this notion of higher risk on pause for now, as we first focus on getting higher APY vaults to production. At the moment, farming presents increased complexity, and it is not the time or the place for it.

Thank you for the distinction, I am very pleased with the progress here from @halaprix and @0xtucks

First regarding community alignment, I would encourage delegates: @FBrinkkemper @rspa_StableLab @0xtucks @halaprix @Kaf_StableLab, Summer Fi team @chrisb and community members @Shadow_Holder @Brenner to review the proposed Fleets for USDC and ETH here:

Lastly, regarding the ETH Base vault to be Lower Risk first - I think that is a good idea, and am willing to modify the proposal with that suggestion.

@BlockAnalitica Thank you very much once again, and I look forward to pushing this proposal forward as we aim for rapid growth towards 1B TVL +

The Morpho Moonwell USDC and Fluid Lending USDC are already included in the USDC Lower Risk strategy on Base. Afaik, Euler vault wasn’t in the latest proposal.

Duly noted. @Shadow_Holder given the base USDC ecosystem, are there any higher risk strategies that you would suggest?

Heya, thanks for pushing this forward.

My suggestion would be to analyze the proposed vaults by testing it with the proposed parameter (e.g. 80% TVL limits for the higher concentration) and comparing it to the current available strategies when testing for the yield.

This would be to confirm the hypothesis you have that it would yield better, and also would be used as a marketing resource why someone would pick either option to deposit.

Perhaps a community resource could be created where users can just plug in parameters and historical yield data from vaults they want to add to show how it would update the yields.

2 Likes