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

General Discussion
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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

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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.

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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."

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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.

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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.

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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.

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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…

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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.

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@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

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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.
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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!

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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.

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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?

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