Keeper Technology

YieldFi’s vaults integrate sophisticated Keeper Technology which together with regularly harvesting rewards constantly look at the current position of the vault and trigger rebalancing functions when the collateral ratio goes above / below predefined thresholds or the debt ratio goes above a predefined threshold. Keeping the collateral ratio between a certain band width ensures the vault does not experience any liquidation events from the lending protocol.

The Keeper is a crucial part of the strategy. “Keeper” is a common term used in DeFi, these are systems that monitor the blockchain and trigger transactions automatically following predefined logical triggers. The rebalancing functions are time-critical, if they are slow to land on-chain, either the performance of the hedge is impacted or the lending position could be liquidated, both situations will cause drawdowns for the vault. To operate the Keeper there is a variable cost involved which will be covered by YieldFi or our B2B customers. The cost will ultimately be a function of the volatility in the market. During times of high volatility the Keeper will be undertaking more work to rebalance the strategies.

Each Keeper works with a ‘top-up wallet’ system which is prefunded. The Keepers draw funds from these wallets as required to function.

Collateral ratio : (value of short token borrow) / (value of vault token lent)

Debt ratio : (short token borrowed from the lending platform) / (value of short token held in the LP position)