Vault Strategies
Last updated
Last updated
The page explains how Spice Protocol diversifies capital allocation to ensure that investor funds are always liquid and generate the most optimized yield. This page will dive into our RWA-DeFi allocation strategies to help you understand how we reduce liquidity risk while generating yield.
To ensure yield is always being generated for assets locked into our Hybrid Yield vaults we require dynamic auto-allocation of assets as they get staked. This can be done through highly liquid DeFi strategies like lending before they are manually allocated by strategists (or AI agents in the future) into longer term strategies like Ethena staking pools or even Pendle vaults.
The following is an example of what a Spice vault will look like and below it is a scenario of capital being deployed into the vault over a period of time.
Throughout section 2 you can see the allocation as a percentage of capital to the RWA vault decreasing; this is caused by users depositing more capital into the Hybrid Vault and auto-allocation to the DeFi vault's base yield strategy mentioned above.
The auto-allocation can be seen through out the graph above and very clearly in section 1 where the initial liquidity is straight away staked into DeFi strategies. At the start of section 2 you can see a capital allocation into RWA strategies via the redistribution of unallocated liquidity from the Hybrid Vault. This is achieved through the liquidation from base yield DeFi positions before reallocation to the RWA vault. The RWA vault then coordinates distribute to RWA strategies through .
The RWA vault allocates capital to trade financing of real-world businesses
The DeFi vault allocates capital to Aave (base yield strategy) and Ethena (long-term high yield strategy).
During the auto-allocation of funds, the vault may have a free liquidity requirement. This will usually be set to 0 since DeFi vault base yield strategies are highly efficient.
