The Vault-Strategy Model

The Vault-Strategy model in Quasar draws inspiration from mathematical optimization and dynamic programming. The DeFi market constitutes the environment in which a Vault operates to optimize its high-level objective (e.g. long-term, stable percentage yield accural, short-term high return yield farming, statistical arbitrage, etc.). Strategies are then lower-level sub-optimzations built to service the higher-level objective set by the Vault.

A vault on Quasar is created by an individual or group — designated as the administrator(s) — who leads the management of the underdlying assets and mechanics for issuing/redeeming vault shares. Administrators select strategies to determine how assets within the vault are deployed. Liquidity providers can then join the vault to expose themselves to the vault’s chosen strategy/strategies.

From an infrastructure perspective, vaults should be able to adapt and change quicker than a full chain upgrade, thus they are implemnted as smart contracts, decoupled from core chain infrastructure. Still vaults should maintain some consistent, longer-term horizon for DAM objectives that are not overly reactive to transient market conditions. Strategies, on the other hand, should be maximally adaptable to quickly react to rapidly changing market conditions in order to best achieve the vaults high-level objective. Strategies are thus also implemented as smart contracts that vaults can flexibly attach and detach to their underlying liquidity.

From an application perspective, vaults and strategies together provide a unified UX to equip users (whether they are liquidity providers, vault administrators, or strategy developers) with the appropriate tools to interface with interchain DeFi from a single point of access. Both technical and non-technical users can benefit from bypassing the need to actively manage multiple wallets, connect to multiple blockchains, and interface with varying DeFi protocols. Vaults provide a critical social layer for DAM, so the process of forming and finding communities with aligned values is simplified. With vaults, liquidity providers can participate in multiple strategies within a vault that has good rapport, verifiable performance history, and quality curation of strategies versus constantly needing to research individual strategies. From the asset manager and quantitative strategist point-of-view, the vault provides a construct to cultivate a persitent community and require much less expenditure in time and energy continously finding new sets of liquidity providers to contribute to their objectives.