Tokenize Automated Vault Strategies and allow use as collateral

Summary: Tokenize Automated Vault strategies and allow as collateral to mint AUSD.

Abstract: I propose that Automated Vaults Strategies positions be accounted for in the form of tokens, similar to LP tokens. These tokens will then be allowed as collateral to mint AUSD.

Overview: With the upcoming feature of Automated Vaults, we are presented with the opportunity to unlock more capital efficiency in the protocol. We should, on a case-by-case basis, allow these automated strategies to be tokenized and used as collateral to mint AUSD.

For example, the first automated strategy will be a market-neutral strategy with no risk of liquidation (by design) and a predictable and positive rate of return . This is a healthy form of collateral as the principal will barely fluctuate in value over long periods of time while accruing interest.

Motivation: Two words, Capital Efficiency.

As a AUSD minter, you can earn a massive yield on your collateral by creating an Automated Vault Strategy position (market-neutral in that case) and using the resulting tokens as collateral for your AUSD position. Additionally, this could open up the possibility of trading in and out of Automated Vault Strategy positions directly without minting (think subscribe/redeem for leveraged tokens on vs buy/sell).

References: See this medium article for more information.


Very interesting idea :eyes:


Love it, thank you for the proposal.

If that can be done I think that it would be glorious.
The loop strategy would bring a ludicrous apr with a neutral position.
The only negative point I can think of is that this will bring more selling pressure on AUSD.

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While that is true, I think keeping the peg is it own separate problem that requires it’s own solutions. We should strive to onboard as many collateral types as possible to push the TVL of the protocol upwards (in a healthy way of course).

One solution to the peg problem would be an interest rate on AUSD like Maker did for DAI with the DSR.


I think it’s a very interesting strategy.

I agree this is a nice idea if it can be implemented safely.

Thanks for the proposal mathrio.

This is how we are actually implementing it. :grinning: Users will receive tokens which represent their share of ownership in the market neutral strategy when they make a deposit. It will be a BEP20 token so it will be composable for other protocols as well.

As for accepting these share tokens as collateral for AUSD, it won’t happen immediately as we would like to make sure everything is running smoothly and safely first. But it’s something we have in our plan.


Can you make an estimation of what could be the global APR with delta neutral vaults looped through AUSD?
Because I have the feeling that a 100-150% APR on a delta neutral strategy can be easily achieved.

The prior estimation on BNB chain was 30-100% APY for the market-neutral vaults, but there are a lot of moving parts such as volatility and APY on the underlying DEX. It will be much higher on SpookySwap at current APYs.

As for AUSD, it would just add another layer of APY on top, like 10-15% additional based on current APY. The more useful thing would be to have an additional stablecoin that you can use for whatever, to increase capital flexibility, but that will take time to develop AUSD’s ecosystem

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I see the AUSD looping through delta neutral an improved version of the current AUSD looping strategy, I bet that many users will migrate to it when it’s ready.
Also do we have an idea about how high the collateral factor will be to mint AUSD using neutral vault tokens as collateral? Could it be 90% like for stablecoins?

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Thanks for the reply. I’m happy to know this is in the works.

Can you comment on the possibility of exchanging collateral without unwinding a position?

For example, If I have minted AUSD using ibUSDT, would it be possible to swap my collateral into a market-neutral token without closing out the AUSD position?

If not, should that be another proposal?


To be determined.

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I presume it would go:

  1. Sell AUSD into token to deposit into market-neutral automated vault
  2. Get synthetic token in wallet from automated vault position
  3. Collateralize synthetic token
  4. Mint AUSD. Repeat step 1

I want to point out we have not considered how to collateralize the market-neutral vault tokens(It currently only accepts ibTokens) or even that we will certainly do this. The team will need to analyze potential risks and implementation feasibility.


This assumes you have the AUSD on hand.

What if the AUSD was already spent? Would it be feasible to have a “replace collateral” function to switch the collateral without unwinding the position?

I think that would be a huge plus to attract institutional investors (assuming we are able to collateralize automated vault strategies of course).

I do not think that would be possible

I’m thinking it could be it’s own separate module like the StableSwapModule. I will think about it more and revisit once we have a clearer vision of the features that come with Automated Vaults.

By the way, what happens with this proposal now since the core team was already thinking about implementing it?

we could have a separate module that automatically splits your position in all the available delta neutral vaults to average the gains and give you back the collateralizable token

We’re going to launch Automated Vaults. After some testing from market use, and pending AUSD’s stabilization and commercialization, we will then consider the priority of allowing auto-vault tokens to serve as collateral