Asset Management

Maximizing Yield with underutilized liquidity and money market yield integration

Unlocking Idle and Underutilized Tokens:

Liquidity provision is vitally important to the way an AMM functions. These provided funds grant users attempting to swap tokens the liquidity needed to make the swap. However when the pools become more saturated with liquidity these pooled tokens often remain idle or underutilized in other protocols, failing to generate their full potential yield. Reservoir Finance addresses this issue by leveraging idle tokens, ensuring that no opportunity for yield is wasted.

• Reservoir Finance’s asset manager combines the power of idle tokens with the lending capabilities of AAVE, a prominent lending protocol in the DeFi ecosystem. By integrating with AAVE, Reservoir Finance unlocks the potential yield of idle tokens by utilizing them as collateral for borrowing or lending.

• In the future, the Reservoir Finance team may also add the capability for the platform to interact with additional money markets and yield protocols.

Auto Rebalancing

Reservoir Finance’s asset manager features an intelligent auto-rebalancing function that triggers every time a user adds or removes liquidity. This automated process ensures that the asset manager continuously adjusts the allocation of idle tokens to different pools, optimizing yield generation.

The amounts are calculated using a threshold. The set thresholds are 30% and 70% on launch. This means that when the amount of assets managed exceeds 70%, some will be recalled back. If it falls below 30%, more will be put into management. The target amount is determined by the mean of the lower and upper thresholds (i.e. (30 + 70) / 2 = 50).

By automatically reallocating resources, Reservoir finance allows investors to sit back and let the automated system adapt to changing market conditions without manual intervention.

Instant Liquidity Recall:

Reservoir Finance’s asset manager has the ability to recall liquidity from AAVE instantaneously. This feature ensures that if a user requests a large swap or a redemption of their LP tokens, the necessary liquidity can be swiftly retrieved from AAVE without delays or slippage. By enabling instant liquidity recall, Reservoir Finance enhances the efficiency, availability, and reliability of its asset management solution, providing users with a seamless experience with no extra wait times and near instantaneous transactions.

Security and Transparency:

Reservoir Finance prioritizes the security of users’ funds and maintains transparency throughout its asset management processes. Smart contracts have undergone rigorous audits, ensuring that the platform is robust and resilient against potential vulnerabilities. By providing clear and concise documentation, Reservoir Finance offers investors peace of mind and builds trust within the community. ABDK, the team who handled Reservoir Finance’s audit, also handled audits of AAVE and Uniswap V3. You can read the audit findings of Reservoir Finance here.