Yield Generation

Avant Protocol generates yield through a dynamic and actively managed multi-strategy framework. This framework is designed to be adaptable to evolving market conditions by diversifying capital across several distinct sources of onchain yield.

The protocol's treasury is allocated to strategies that offer the optimal risk-adjusted return. This approach avoids dependence on any single yield source and aims for consistent performance over time.

Transparency in Strategies

Avant provides a detailed breakdown of asset allocations across various chains and the specific protocols utilized on the Transparency page. Additionally, to ensure complete verifiability, all wallet addresses actively running these strategies are publicly disclosed on the Strategy Addresses page.

The protocol's yield-generating activities are organized into the following primary categories.

Basis Trades

This category includes strategies designed to be uncorrelated with directional market movements. A primary example is the basis trade, which derives yield from funding rates in derivatives markets. The strategy involves holding a spot asset while simultaneously maintaining a short futures position of an equivalent size, capturing the difference (the basis) as profit.

These strategies are designed to be market-neutral, meaning it profits from market structure rather than price direction.

Lending Rate Arbitrage

This strategy capitalizes on interest rate differentials across various DeFi lending and borrowing protocols.

The protocol identifies opportunities where the cost of borrowing an asset is lower than the yield earned from lending it elsewhere, capturing the net difference as profit while managing liquidation risk.

Yield Trading

Yield token related strategies actively engage with sophisticated yield markets like Pendle to capture enhanced returns. This involves strategies that capitalize on the native mechanics of yield-bearing assets. This includes trading the separated principal and yield components of certain assets, allowing the protocol to capture value from market inefficiencies and time-based arbitrage opportunities related to future yield streams.

Lending Markets

The protocol supplies capital to established, over-collateralized lending markets. Assets are deposited into premier lending protocols (e.g., Aave) to earn variable interest rates paid by borrowers.

Other Strategies

The protocol employs a suite of additional strategies to optimize liquidity and capture profitable market opportunities.

Liquidity Provisioning

The protocol provides liquidity to decentralized exchanges (DEXs). Assets are deposited into trading pools (e.g., Curve, Uniswap) to facilitate swaps. In return, the protocol earns a share of the trading fees generated by the pool.

Private Liquidity Deals

The protocol may provide liquidity directly to market makers or institutional borrowers. These are negotiated deals where the protocol provides liquidity directly to other projects or protocols, often securing unique yield opportunities not available on the open market.

Stablecoin Peg Arbitrage

The protocol capitalizes on temporary deviations of stablecoins from their intended peg ($1.00). If fundamental analysis and onchain metrics confirm a stablecoin's solvency despite a market depeg, the protocol may purchase the asset at a discount and hold or redeem it once parity is restored, generating profit from the price convergence.

Note on Strategy Flexibility

The categories listed above represent the protocol's primary areas of focus but are not an exhaustive list. As market conditions evolve, additional strategies with comparable risk-reward profiles may be incorporated within the protocol’s existing yield framework.

Strategy Composability and Management

A key feature of the protocol's architecture is strategy composability. Individual strategies can be combined to enhance capital efficiency and generate layered yield.

This dynamic allocation requires active management. The protocol relies on different expert trading partners to analyze, execute, and monitor these strategies, including identifying and safely acting on transient market opportunities.

The aggregate performance of all strategies determines the yield distributed to the holders of the protocol's yield-bearing tokens, which include both savAssets (e.g., savUSD) and avAssetX (e.g., avUSDx) tokens. The live Annual Percentage Yield (APY) for all products is available on the protocol's main dashboard.