Cardano's share of total DeFi TVL has increased from roughly $1.7 million to over $135 million as of late March 2023. Charles Hoskinson of IOG has revealed that there are over 500 projects set to launch on Cardano following the Vasil hard fork which was completed in September 2022.
One of these high-profile projects is Genius Yield--a project built from the ground up whose smart contracts have been audited by the IOG-recommended Tweag. Genius Yield is the all-in-one DeFi platform, that combines an AI-powered yield optimizer with a concentrated liquidity DEX.
The Smart Liquidity Vault
Besides its priority on quality, in lockstep with the high standards set by IOG—the developers of Cardano, Genius Yield’s Smart Liquidity Vault allows users to earn passive rewards from yield optimization strategies. The Smart Liquidity Vault is a layer built on top of Genius Yield’s DEX, operating as an AI-powered yield optimization protocol. Users can deposit liquidity in any supported vault, select a trade management strategy, and allow AI-guided trading bots to take over, maximizing yield opportunities.
The Smart Liquidity Vault exists to leverage the Genius Yield DEX's concentrated liquidity and Smart Swaps features. It is a well-thought-out innovation—and is a distinguishing solution pointing at the lengths the Genius Yield team has gone to increase efficiency and lean on automation. Notably, the protocol leverages the exchange's advanced functionalities and expressiveness to execute AI-powered algorithmic strategies.
Leveraging Smart Swaps and Automating Concentrated Liquidity Positions
As explained in our previous articles, concentrated liquidity allows liquidity providers to supply liquidity within a specific trade range to capture trade volumes, increasing capital efficiency and rewards. Each concentrated liquidity position is unique and eliminates impermanent loss. Therefore, it needs to be monitored and manually adjusted to keep liquidity within the active price range where traders are swapping assets.
In Automated Market Maker (AMM) systems, shifting liquidity NFT positions to earn maximum fees is not yet automated in-app and is done by third-party applications. Genius Yield is automating this activity using the Smart Liquidity Vault and Smart Swaps which are buy and sell orders that execute automatically based on customizable logic.
Because of Smart Swaps, Genius Yield platform users can cheaply trade in ways they would be familiar with in centralized exchanges, accessing sophisticated order types beyond market orders such as limit, algorithmic, dynamic, and stop orders.
The Smart Liquidity Vault Strategies and Fees
The Smart Liquidity Vault will use a combination of dynamic and algorithmic order types leveraging Smart Swaps and concentrated liquidity positioning functionality to execute strategies such as Dollar Cost Average (DCA), Smart Rebalance, and more. All a user has to do is choose a liquidity management strategy developed by the Genius Yield team for an opportunity to earn passive rewards.
The strategy chosen by a trader is designed to suit their various risk profiles and approaches. Specifically, each strategy is refined and developed using a powerful back-tested machine learning platform that draws its data from historical and blockchain data streams. Notably, the performance of each strategy will be methodically tested and validated before being deployed.
Users who automate their yield optimization strategies will pay a vault fee—a sum of management and performance fees. The Genius Yield platform will constantly monitor and optimize the vault's strategy.
The platform charges a management fee for their work, which is a percentage of the total value locked (TVL) in a vault. On the other hand, the performance fee will be charged as a percentage of the profits generated by the vault's strategy. 20 percent of the vault fee is distributed to $GENS stakers.
Empowering the Community
The expressiveness, composability, and flexibility of algorithmic and dynamic orders in Smart Swaps ensure users can create their own strategies to compete with Genius Team's strategies. There will be a leaderboard where users can learn which strategy works best, arming users with valuable and empowering knowledge.
Apart from the leaderboard, Genius Yield plans to launch community-designed vaults. The objective is to encourage users, empowering them to benefit from democratized yield optimization strategies that can be applied within the rapidly growing Cardano ecosystem and beyond.