Mellow Permissionless Vaults
Overview
Last updated
Overview
Last updated
Mellow permissionless vaults is a set of smart contracts that allows anyone to create a multi-ERC20 token and a on top of different DeFi protocols (like Uniswap, Yearn, etc.) and blockchains (like Ethereum, Optimism, etc.)
There are three types of actors using permissionless vaults:
provides liquidity into to earn profits
manages liquidity in the by distributing it among different DeFi protocols. Typically would create a smart contract that transparently manages liquidity. However, can also be an offline algorithm or manual liquidity management.
manages common protocol parameters
Vaults are smart contracts that put liquidity into different underlying protocols. The underlying protocol could be some well-known DeFi protocol like Uniswap, Sushiswap, Yearn, Compound, etc., or another Vault.
The tokens managed by Vault are fixed and immutable, i.e. Vault cannot start managing additional tokens or stop managing existing tokens. Each Vault can only put liquidity into one fixed underlying protocol.
Examples of the Vaults are:
Vault that puts ETH and USDC into Uniswap V3
Vault that puts WBTC, DAI and USDT into Aave
Vault that puts ETH into Yearn
When the deposits liquidity into the Vault, he received LP tokens back (or NFT token - that depends on a particular Vault). On withdrawal, the burns the LP tokens and receives his liquidity and earned profits back.
The can only redistribute ERC-20 tokens between protocols. The tokens can leave the Vault only when the withdraws it.
The would use vault to earn profits generated by the strategy. Note that the generally bears some risks so the may earn profits but can also incur losses depending on the Strategy behavior. The liquidity can be provided and withdrawn at any time.
The would earn performance fees from profits generated on the Vault liquidity. The term profits generally refer to the profits of the underlying protocol like fees generated by Uniswap V3 or yield generated by Aave. For example, profits don't capture any price movements in UniswapV3.