The Vaults Economy: Supercharging Crypto Market Money with ERC-4626 - Olaoluwa Oluwatunmise

And the speaker is

how we doing? How you guys doing now? Your face is strong. Awesome. So today I'll be speaking on um the vault economy supercharging crypto money market with ERC 4626.

And this is making DeFi simple, powerful and accessible. So my name is um um quantitative risk analysis. I work as a risk analyst at born credit. So a few meal I'm a developer and machine learning engineer. I also pioneer and lead onchain data analytics at analytics age where I've trained over 450 people in onchain analysis and I work as um a defy co research analyst at bond credit where I build um a credit layer for agentic vault economy.

So, let's be honest. Um, DeFi can be overwhelming when it comes to um catching up with trends and innovation. Every sector in DeFi is like a full-time job. Uh those who are chasing airrop, you can chase airrop and it's a full-time job. And if if you are like me, sometimes I do feel like I'm missing out because you know I'm here writing code and doing all that and somebody's talking about air drops, farming, blah blah blah.

And you as a developer, okay, how do you even make money from this crypto that you say you are building? Have you found yourself in that situation? So it can be very overwhelming. You want to be involved with farming. you want to be involved with liquidity provision and all those things.

These are major full-time work on their own because if you want to go into liquidity provision then you'll be taking much time looking into okay which um um which pool is giving the highest returns ROI and the likes like that and that is where the vault system is coming in. Now the problem is this. There are multiple protocols, constantly changing yields, complex optimization strategies, full-time monitoring requirements, high barrier to entry. But here is the solution. Automated G optimization, a set and forget strategy, universal standards like um the ERC 4626 and professional management and accessible to everyone.

Now what vault has brought to us here it has given us opportunity to assess the money market. Now in traditional finance because I also have a finance background. In traditional finance we have the capital market and the money market. So when you're talking about capital markets you're looking at the stocks you know and other volatile markets. But when we're talking about the money market, we are talking about uh assets that gives you fixed returns like treasury bills, bonds and the likes.

And these are some of the concepts that are now being applicable to crypto. And of course, defy being decentralized finance will try to integrate finance traditional concepts into the blockchain. And that is where the vault comes in. Now what are vaults? Now you think of vault as your personal defy assistant.

If you are familiar with portfolio management then vault um vault is your go-to um strategy. So in a vault now there is it automate complex defy strategies. It hunts for the best yield automatically. It rebalances your portfolio when needed. It moves your fund between different protocols seamlessly and it manage risk professionally.

Like I told you as a risk analyst what I do in in my place of work is to assess the risk of many of these agentic u trading systems that are being created. You know when there is a wave of something everybody in fact this guy might be an AI. So everything now is agent agent agent agent agent agent. But then who is vetting this agent? Who is looking into their risk?

Who is looking into their and that is what I do. So now before you have to yeah the system is scattered and there is no interperability. Okay. If you are on a you are on a if you are on balance you are on balance. You know if you if you if you are using CV you are on CV there is no much interperability and also if you if you even need to switch it's a manual switching so after the ERC 4626 there is a universal standard seamless integration automated optimization now how does this work I'll just give a quick rundown so how does the vault operate see yourself as the depositor here Now you bring in your crypto asset, say a stable coin, USDC, and then you deposit your USDT into the vault token pool.

Now the vault emits a share. So when you deposit USDC, right, how do you know that you now have your deposits in the vault? don't forget is different from you plugging in your account to Metamax and all that is different. So when you deposit your USDC into the um the token pool it emits a shares for you. Now that share is more like more or less the the the the concept of share stocks that we that we know.

So it's it just tells you the amount of ownership you own in this token pool. So when you put in your your USDC it gives you emits a share to you. So you have certain amount of share within this pool. Then the token emitted is being passed down into the strategy the strategy vaults. Now don't forget those who design the strategy vaults can you know blockchain developers who are knowledgeable when it comes to quantitative analysis or quantitative trading.

Now so these are automated. So that there's there is a system that does the yield farming for you, does the lending for you, does the um liquidity provision, um staking and arbitrage. Now each of these vaults are built on different strategy. So they can be arbitrage strategy, they can be staking strategy, they can be liquidity provision, lending and yield farming. So the vault manage your underlying assets, accepts your deposits, mints shares to depositors.

It also um generates yields on assets through the strategy. And this is automated. So you don't need to sit and be and and be monitoring your trade or decide to swap or decide to uh move your money from a lending protocol to provide yield or to farm. the strategy, the vault does everything for you. So assets is the token deposited into and managed by the vault and the shares is a token minted by the vault and issued um to the vault's funds.

Now how vault works a simple example. So first step you make a deposit. Second step the vault then packs your money in a The third step there's an auto switch either to unis swap when unis swap is offering a better returns right so it helps you to optimize your yield the vault then optimize your yield looks out for the best yield sell um your portfolio on a and jump to where the best yield best yield is right those things were stuffs that you would have you would have you know sit in front of the screen and spend all day you know to figure out. But now the vault system creates an automated um system that helps you to manage um your fund. And then of course step four, you watch your balance grow and you can also go down.

Okay. But it grows. Let's give oursel okay. Yeah. So the key point here is this.

You don't need to understand the mechanics. So you don't have to worry about okay um okay somebody tries to on board you into crypto now and then tells you um about yield farming the the the the explanation can be very long how you're going to put your money here and then before you know you swap it to this ecosystem you bridge you do this and all that but now all those things are now made very very easy now why vaults are the game changer 247 automated management like I said they're your personal portfolio management optimize yields. They look for the best yields and are always finding the best returns across protocols. Then professional risk management, you know, is being set like Espar strategies to minimize potential losses and also it is universally compatible. All right, it works across the entire DEFA ecosystem.

Now, a real example here is Yen Finance Vault is a USDC vault strategy. So first you deposit your USDC and then what does the strategy entails? The strategy lends you know to a for a stable 4% APY part of your deposit and also part of your deposit is used to provide liquidity to CV for 6% AP APY plus rewards. Okay. and then it leverages compound for an additional 2% APY automatically rebalances your portfolio on on on a certain market condition either you know the vault has been set to rebalance weekly monthly or across any time frame that your the developer um has programmed into it and then manages gas cost and timing likewise the result the user earns 12% APY with zero manual work zero manual work without doing anything the vault has lend part of your funds to a get 4% there provide liquidity to curve get 6% there and also you know leverage um compound and got 2% there so what are the technical features of evol you know standardized functions like for develop developers who care deposit withdraw mint redeem Um the share mechanism uh the share mechanics is vault shares represent ownership like I mentioned earlier shares in quote is ownership and value appreciates over time.

Now what's the composibility vaults can use other vaults so vaults can use other vaults and their infinite strategy is also what is also complex. Now why is this a gamecher for Africa? We have regul regulatory and trust. We have defy vault. We have traditional system and in between them are some of these um should I say um interrelated um concepts like between regulatory and trust and the traditional banking system.

Now we have compliance burden is lifted. compliance boarding if you want to invest in bit and stuffs you know how how many forms and all you need to fill then onchain governance is there financial services are also provided in a vault yeah how many of you are enjoying my lecture because I I feel I'm I'm put on the spot I'm just rushing all enjoy the lecture right okay thank you thank you I love to take my time but I'll forgive them so traditional banking challenge of course we know we have traditional banking limited access to quality financial products, high fees, minimum balance, poor saving rates, complex bureaucracy. But when it comes to D5 Vault solution, there is global market access plus um with phone. I mean with your phone you access um global market, low fees, minimum um no minimums, competitive global yield, simple and transparent process. Now join the vault economy revolution.

make a deposit, relax, earn and repeat. Now, why am I having this talk is also to bring to your notice the um the innovation around vaults that you as um a developer or someone who is busy, you know, you don't have the time to start looking around um crypto markets and the like, you can always leverage on vaults. There are several vaults, you know, already established um in the ecosystem. Now I will just want to skip this navigating D5 vault risk challenges. So there are several challenges that vaults also um face like smart contract vulnerability, yield volatility and etc.

And these are the things that um at bond credit we are trying to solve where we um want to assess the risk across vaults and also help users make decision as to which vault is best for them to use and all. Um I remain uh Olaua also known as the apostle of finance and you can follow me on Twitter apostle of thank you and God bless. [Applause]