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80-20 Vaults

What are 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

Which protocols is 80-20 composable with?

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)

How do 80-20 Vaults recycle liquidity?

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.

What is the inspiration of 80-20?

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

Why should I use 80-20 vaults?

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.

What are the risks of 80-20 vaults?

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.

Want to learn more?

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).

Updated 04 Jun 2022
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TABLE OF CONTENTS
What are 80-20 Vaults?
Which protocols is 80-20 composable with?
How do 80-20 Vaults recycle liquidity?
What is the inspiration of 80-20?
Why should I use 80-20 vaults?
What are the risks of 80-20 vaults?
Want to learn more?