Operational Flow

SFI Vaults are designed to optimise yield generation and manage liquidity while maintaining a high degree of user trust.

Overview

Instantiating a new vault

• Deposit Token: This cannot be changed after initial setup.

• Reference Token: : This token also remains fixed post-initialisation.

• Reserved Token: While this can be updated through vault governance, the Vault Manager cannot change it.

• If zappers are available, users can convert their assets from any specified contribution token to the deposit token. This process is not part of the vault's initialisation.

The vault operates under the management of a Vault Manager, who can swap between the deposit and reserve assets. Each swap updates the Deposit Debt Ratio, which should only change due to manager actions. Any rebalancing, whether manual or automated, aims to achieve these target ratios or weights.

Rebalancing

Rebalancing can occur in two ways:

• Manual Rebalancing: Conducted by the Vault Manager.

• Automated Rebalancing: Executed by the system's execution engine based on predefined rules.

Deposit and Share Minting:

• Users deposit assets in either the base token or supported contribution tokens.

• Contribution tokens are converted to the base asset via zappers

• Vault shares (SFI Tokens) are minted to represent user ownership.

Strategy Deployment:

• Vault managers allocate base assets across various yield-generating strategies.

• Examples include yield farming on Curve Finance or index automation strategies.

P&L Management:

• The locked profit streams over a specified period, providing an annual percentage rate (APR) to users. This mechanism protects the vault from potential flash loan attacks, as any amount gained through such hacks would be returned or streamed over time.

• Performance and management fees are deducted proportionately.

Rebalancing and Adjustments:

• Rebalancing is triggered manually by managers or automatically by Keepers based on predefined rules.

• Adjustments account for new deposits, withdrawals, and market fluctuations.

Withdrawals:

• Users redeem their vault shares in either base assets or in contribution tokens.

• The reserve asset ensures immediate liquidity for withdrawals, minimising disruptions.