Omnibaskets: Seamless DeFi Yield Farming

The Omnibasket products are ERC-20 tokens designed for passive investors getting into DeFi. By aggregating top-tier yield opportunities across all of DeFi and combining them into a single token, Omnibaskets aim to provide a safe and seamless experience for the new generation of DeFi participants.

The problem

For the longest time earning in DeFi in a sustainable manner required managing a dozen positions across multiple protocols and blockchains. Fragmented user experience makes it difficult for users to interact with DeFi apps and for apps makes it challenging to attract liquidity due to aforementioned friction on the user’s end. 

The Omnibaskets are designed to solve this friction through balanced baskets of yield farming strategies aggregated from most top-tier blockchains under the hood. Funds within the Omnibasket are allocated to a selection of carefully vetted protocols in a way to optimize the returns, while preserving diversification. 

At the same time, protocols looking to plug into Omnibasket liquidity will be able to apply to get whitelisted and get additional TVL in return.

Technical overview

On a high level, Omnibaskets are managed by a vault contract that allocates funds to a number of strategy contracts approved by a vault manager (i.e. the Rivo team during the bootstrapping phase). 

The Omnibasket can support an unlimited number of strategies aggregated from most of the EVM networks supported by Layerzero and Stargate, making Omnibaskets infinitely adaptable to the EVM DeFi landscape.

Core Protocols:

Protocols, upon which Omnibaskets are built on, are top-tier venues to lend capital or provide liquidity. Each one of them stood the test of time and remained functional even during the most adversarial conditions of a deep bear market.

• Fluid: https://fluid.instadapp.io/
  • Fluid is an all-encompassing protocol built by Instadapp, focused on optimizing AMMs and lending in DeFi. Omnibasket funds will be deposited in Fluid’s lending protocol, which allows liquidatable debt to be routed through DEX aggregators for more timely and efficient liquidations.
• Instadapp Lite: https://lite.instadapp.io/
  • Instadapp Lite is a long-standing one-click solution to earn ETH, BTC or stablecoin yields in a relatively low-risk manner. The ETH vault recursively borrows ETH, swaps it for stETH to effectively earn leveraged stETH yield. The management and automation is handled by Instadapp algorithms with a spotless security record.
• Aave: https://aave.com/
  • Aave is the leading lending protocol deployed on most of the major EVM networks.
• Compound: https://compound.finance/
  • Compound is an OG lending protocol similar to Aave and is one of the first protocols on Ethereum.
• Sommelier: https://www.sommelier.finance/
  • Sommelier optimizes lending and liquidity provision through their vaults, primarily leveraging protocols like Aave, Compound, Lido and Uniswap
• Pendle: https://www.pendle.finance/
  • Pendle is a yield tokenization protocol suited for both risk-averse and degen users. Omnibasket funds will be deposited into PT tokens at favorable rates, essentially locking in yields. Pendle PT can yield outstanding returns during bull markets with relatively low risks.
• Stargate: https://stargate.finance/
  • Stargate is a cross-chain bridge powered by LayerZero. Since its inception, LayerZero has rewarded liquidity providers with consistent returns slightly above market rates in the form of $STG tokens.
• Morpho: https://morpho.org/
  • Morpho is the next-generation lending protocol allowing users to tailor the risks through customized lending vaults. In Omnibaskets, funds will be allocated to one (or many) lending vaults curated and monitored by high-end risk management firms like Gauntlet, Re7, Steakhouse and others.
• Uniswap: https://uniswap.org/
  • While not being used directly, funds in Omnibaskets will be exposed to Uniswap through third-party protocols like Sommelier. Over the years Uniswap solidified itself as a leader in the DEX space, despite being challenged by protocols like Curve, Balancer and many others, making it an obvious choice for being on the list of core Metaindex protocols.

Allocations & Management

• The vault regularly rebalances the funds among all the whitelisted protocols and pools in order to achieve the highest yield possible with accordance to deposit caps.
• Deposit caps are set to prevent concentration of funds, while ensuring the indices as a whole earn competitive returns
• Once a “strategy” (a single pool in one of whitelisted protocols) exceeds its liquidity allowance, the remaining funds will be rebalanced towards the next highest-yielding strategy.
• The set of “strategies” is regularly expanded to reflect relevant market trends. 

In order to avoid liquidity crunches and preserve diversification, vault managers set the following limits:

• All the funds inside the index are allocated to each strategy with an allocation multiplier depending on strategy APY. The highest-yielding strategy would have the biggest multiplier and the largest allocation within the vault.
  • All whitelisted pools are initially assigned the same allocation, e.g. if there are four whitelisted pools, each pool would have a 25% allocation. A maximum possible multiplier is set at 1.5x for the highest-yielding strategy, incrementally decreasing down to 0.5x for the lowest-yielding strategy.
• Total funds allocated towards a single pool are limited to 15% of the TVL of each pool. This minimizes the risk of funds being inaccessible during high utilization periods (which is especially important for lending protocols), ensuring the funds are liquid at most times and are redeemable into the base asset.
• For liquidity pools and strategies where USDC or ETH are being swapped into other stablecoins or liquid staking derivatives, combined price impact of swaps in and out of USDC/ETH should not exceed 0.1% of the principal investment.
• For strategies involving lending pools, utilization of funds is being monitored. In a situation where available liquidity in a lending market is ≤= 120% of supplied funds a portion of assets will be withdrawn and rebalanced towards other strategies.

With the current set of whitelisted pools, the allocations for USDC Omnibasket will be ranked like this, from highest priority to lowest:

1. Pendle sUSDe 27MAR PT | 15% APY | 30% allocation
2. Morpho Moonwell USDC | 9.5% APY | 24% allocation
3. Morpho USDC [Steakhouse] | 9.3% APY | 20% allocation
4. Fluid USDC | 8.4% APY | 16% allocation
5. Stargate USDC | 7.6% APY | 10% allocation

Assuming there’s $10M worth of USDC waiting to be allocated, the Omnibasket will check the deposit cap for Pendle sUSDe, allocate the funds up to the cap, then check Morpho Moonwell and fill the deposit caps and so on until the funds are depleted.