Revelo Roundtable #12 - Asset Management Landscape

In this episode of Revelo Intel’s Twitter Spaces on May 9, 2024, Kirk hosted Corn from Yearn, Nach from Jones DAO, and Block Daddy from Superform to discuss the integration of advanced DeFi strategies, the challenges of managing asset risks, and innovations in yield aggregation. Read our notes below to learn more.

Background

Kirk (Host) – Head of Business Development at Revelo Intel

Corn (Guest) – Contributor at Yearn

Nach (Guest) – BD at Jones

Block Daddy (Guest) – Contributor at Superform

Jones DAO – a protocol that helps make DeFi strategies simple

Superform Labs – a yield marketplace

Yearn – a yield aggregator

Intro

Block Daddy says that Superform is a yield marketplace that simplifies access to vaults from various projects like Yearn and Jones DAO, enhancing user experience by integrating all functionalities into a single interface.
Corn describes his role and background at Yearn, which includes managing Yearn Vaults and starting an audit firm, yAudit. He mentions Yearn’s integration with Superform and looks forward to discussing it.
Nach discusses his role at Jones DAO, focusing on simplifying complex strategies for easier consumer access. He highlights their shift towards active management on v3 strategies.
Kirk asks the panelists how they select assets and yield opportunities for their platforms. Block Daddy says that Superform is a permissionless marketplace where users independently find and choose vaults to invest in, facilitated by tools like DefiLlama, Zapper, and Zerion integrated into Superform’s platform. He mentions that Yearn strategies are particularly popular among their users.

Risk and Collaboration in DeFi

Kirk asks Corn about Yearn’s approach to evaluating and listing new strategies. Corn says that Yearn uses a risk committee and a framework to evaluate strategies, focusing on avoiding impermanent loss, ensuring minimal slippage on large deposits, and favoring strategies that allow for automation. He mentions recent experiments with riskier strategies, such as lending liquidity to other projects.
Corn recounts a recent incident with Yearn’s staked $yCRV product where an unforeseen borrower’s action could have triggered significant market liquidations, illustrating the complex risk management involved.
Nach details Jones DAO’s strategy of simplifying complex asset management tasks for other protocols, focusing on providing bespoke strategies tailored to the needs of their clients. He highlights the importance of user-friendly approaches and transparent documentation in their offerings.
Nach talks about Jones DAO’s specific strategies aimed at managing liquidity and risk, including bull and bear strategies and a ‘parachute’ strategy designed for market downturns, aiming to cater to both conservative and aggressive investors across multiple blockchain networks.

Strategies for Assessing and Integrating New Assets

Kirk asks how the protocols assess the risks and decide the timing for listing assets like LRTs or integrating new strategies such as those involving EigenLayer.
Nach suggests different integration methods, like running new assets in Aave Fork in isolation mode with lower LTV to test performance, and discusses the challenge of incorporating fast-evolving assets into lending protocols.
Nach praises the Silo team for their capability to quickly integrate new types of assets and mentions Radiant‘s innovative approach with a strategy named RIZ, highlighting the importance of adaptable lending layers and the role of indexers and oracles in managing risks.
Corn says that Yearn is planning to integrate with Silo and potentially Radiant, providing $ETH to their markets, and shares that one strategy is already in a non-production testing phase.
Nach comments on the challenges Yearn faces with assets that cannot be easily liquidated at strategy harvests, hinting at potential future solutions.
Kirk asks Superform about their handling of new and risky opportunities like Ethena and how they manage disclosures for users.
Block Daddy explains Superform’s approach to distributing vaults quickly and the importance of risk metrics. He discusses initiatives to ensure code safety and compliance with ERC-4626 standard and future plans to provide users with actionable insights on vault strategies and associated risks.

Challenges and Opportunities Ahead

Kirk asks how Superform can act quickly in case of an exploit or malicious intent by a vault creator, given the platform’s permissionless nature.
Block Daddy says that while Superform operates at the app and backend levels, they cannot intervene at the protocol level, meaning users need to do their own research since Superform doesn’t offer special protections. However, he mentions potential future features like emergency withdrawals in response to unusual liquidity movements.
Block Daddy highlights that unlike Uniswap, which was slow to implement protections against scam tokens, Superform is proactive in verifying protocols and monitoring vault functionality to ensure user assets can be withdrawn successfully.
Corn discusses the shift in user behavior towards self-custody and more direct management of investments, noting a significant decrease in TVL due to users moving to higher treasury yields and direct product usage. He mentions Yearn’s strategy to integrate more deeply into projects to cater to these savvier users.
Nach comments on the current state of DeFi, suggesting that significant activity and innovation are occurring with Liquid Restaking Tokens (LRTs) and platforms like Pendle, which have captured substantial TVL. He predicts that narratives around these platforms will persist and evolve.
Nach also touches on the fee compression in DeFi, indicating a competitive pressure to lower fees, and highlights the need for teams to be nimble and innovative to stay relevant in the rapidly changing DeFi landscape.

Navigating DeFi’s Wild West

Block Daddy says that while Superform can act quickly at the app and backend levels, it cannot directly intervene at the protocol level. He suggests potential future features like emergency withdrawals and highlights their focus on better protecting users compared to other platforms.
Block Daddy highlights Superform’s no-fee strategy, focusing on growth and user experience. He mentions potential monetization through partnerships and referral fees with vaults, DEXs, and bridges, particularly benefiting new protocols like Aloe which saw significant deposit growth through Superform.
Nach discusses the excitement around Jones DAO’s upcoming projects, particularly their work on integrating v3 across chains and leveraging ‘hooks‘ to access untapped liquidity in DeFi. He compares Superform to a shopping mall, making it easier for users to find and utilize various DeFi products.
Corn shares Yearn’s innovative projects, including a DeFi-powered credit card and native integrations with other platforms. He expresses enthusiasm for upcoming products like Juiced and mentions active development efforts, including contributions from prominent team members.
Block Daddy announces the official open access launch of Superform, removing any access restrictions. He introduces ‘Super Pools,’ aimed at making L1 yields accessible on L2s by reducing transaction costs and simplifying cross-chain yield positioning.

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Show Information

Medium: Twitter (Audio)

Show: Revelo Intel Twitter Space

Show Title: Revelo Roundtable #12 – Asset Management Landscape

Show Date: May 9, 2024