Satay Finance is an innovative decentralized finance (DeFi) protocol that optimizes asset allocation through automated vaults to maximize returns. Understanding how Satay works requires familiarizing yourself with its core components: Vaults, Blocks, and Strategies.
What Are Automated Vaults?
Vaults are capital pools that securely store and increase the yield on digital assets. Users can deposit BaseCoin, which vaults then utilize in various strategies to optimize returns.
VaultCoin
When a user deposits BaseCoin into a vault, they receive a VaultCoin, representing their share of the vault’s underlying assets. VaultCoin can be traded like any other cryptocurrency token and can be burned in exchange for a corresponding amount of BaseCoin.
What Are Blocks?
Blocks are composable DeFi primitive operations that operate through trusted third-party protocols. They are the fundamental building units of Satay Finance, enabling the creation of Strategies that span multiple DeFi protocols.
Examples of Blocks:
- Liquid Staking: Allows users to earn rewards on staked assets while maintaining liquidity.
- Borrow/Lend: P2P markets that facilitate lending assets for interest or borrowing assets to leverage positions.
- Liquidity Providing (LP): Users provide liquidity to decentralized exchanges (DEXs) to earn yield from trading fees and liquidity incentives.
Strategies
Strategies consist of Blocks that withdraw BaseCoin from vaults and deploy capital into structured products. Each strategy must be approved by the vault’s manager before it can execute withdrawals.
Strategy Approval
Managers can approve any number of strategies for a vault, indicating the debt_ratio, which represents the portion of the vault’s holdings that the strategy can withdraw. The sum of all debt_ratios for a vault cannot exceed 100%.
Fees
Vaults charge a performance fee and a management fee. The performance fee is applied to realized gains for a vault, while the management fee is charged annually based on the vault’s assets under management (AUM). Fees are distributed to the dao_storage module.
Conclusion
Satay Finance combines advanced DeFi strategies with user-friendly features like automated vaults to create a sustainable financial ecosystem. With its innovative solutions, Satay Finance promises to provide greater returns and transparency for all users.
