80-20 Vaults

80-20 vaults run an LP strategy on Rage's ETH perp where:

• 80% of TVL earns yield on an external protocol (80% isolated risk)
• 20% of TVL provides concentrated liquidity on Rage

The 80-20 strategy is general purpose, and we plan to launch vaults that accept LP tokens from:

• AMMs (Curve, Uniswap, Sushi, Balancer)
• Borrow/Lending (Rari, Compound, Aave, Euler)
• Other Derivatives (GMX, Ribbon, Dopex)

The vaults allow external LP positions to generate additional yield by providing liquidity into our ETH perp. By segmenting 20% of the vault's TVL to collateralize a vAMM range order, the vault recycles the assets to create more liquidity.

The 80-20 strategy is based on a riddle posted by Hayden (Uniswap) and the solution posted by Scott (DeFi Pulse).

80-20 vaults have a few appealing properties:

• Isolated risk: At least 80% of assets earn yield outside of Rage
• UNI v2 Payoff: Impermanent Loss of 80-20 closely replicates UNI v2.
• Extra Yield: Depositors earn yield from the yield generating service, Rage trading fees, and $RAGE tokens.

80-20 vaults have no liquidation risk, but face two forms of exogenous risk:

• Arbitrum Downtime: If the Arbitrum network is down for an extended period of time, the vault payoff may deviate from the expected UNI v2 payoff.
• Yield Generating Asset Risk: Yield generating assets such as Curve's Tri-Crypto may experience their own impermanent loss which could cause the payoff to deviate from UNI v2. To see the specific risks of a yield generating asset visit the 80-20 Backtests section.

For a more detailed breakdown of 80-20 vaults. See the following sections: Operations (inner workings of 80-20), Payoff, Protocols and Chains (compatible protocols/chains).