We are thrilled to announce our fourth major update, which incorporates multi-protocol yield farming into Idle.
DeFi space on Ethereum has been growing at a fast pace lately, and new opportunities are popping out every day. It’s becoming more and more difficult for users to keep up with the best yields available to them. Additionally, it’s been clear that may users are hungry to use an automated system to move their funds to whoever is offering the best yields.
Since August 2019, we have been working on this rebalancing protocol: adding new yield providers and assets, improving the optimization algorithm, and solving issues that might cause yield aggregators to get stuck in a single provider have been our priorities.
Our mission is to optimize money across savings, lending, and yield opportunities in DeFi, putting it all to work effortlessly. Deposit your idle funds and, with the click of a button, you can have the protocol automate the rest.
Proceeding along this path, we’re excited to present a brand new upgrade for Idle Protocol, and it will be built upon all the feedback we received in the last couple of months.
Multi-Protocol Yield Farming
In the last couple of months, yield farming opportunities have been an exploding new trend in the DeFi ecosystem. However, its complexity turned away many users due to the time and cost needed to do it efficiently.
Strategies in Idle now will be able to support and distribute a vast range of yield opportunities across multiple protocols. Users will be able to receive their equivalent share of governance token that the protocol is receiving while allocating liquidity to yield farming opportunities.
In this way, users are only required to pay the gas fees when depositing or redeeming funds into a strategy, resulting in a radical cost reduction.
The yield generated by various governance tokens distributions is now taken into account by Idle’s optimization algorithm, finding the best allocation in terms of yield+interest rate. Starting with BestYield strategy, COMP will be ready to distribute from the beginning, AAVE/BZRX will be available as soon as they start their distribution schedule, and CRV & BAL pools will be available soon. New features for RiskAdjusted strategies will be deployed in the following days.
We will always be monitoring other yield farming opportunities and thanks to the new architecture, we’ll be able to ship faster without any hassle for our users.
Gas Optimization for Deposit/Redeem
The main hassle for DeFi users in the last few months has definitely been the very high gas cost. Since Idle protocol interacts with different protocol in the ecosystem, depositing and redeeming tends to be a costly transaction.
With this upgrade, we implemented a new system to significantly reduce the gas cost needed to interact with Idle. When a new deposit/redeem occur, the system is now pooling those funds before forwarding them to Idle’s underlying protocols. When the pool size reaches a minimum threshold, the protocol performs a rebalance and productively allocates those funds.
This translates in a lower gas cost for the user, particularly during network congestion periods. Technically speaking, entering in a strategy now costs 290k gwei using the batched deposit system, and exiting is about 500k gwei thanks to a small pool of ready-to-redeem assets (similar to a fractional reserve, now is 1% but can be changed by the governance).
Additionally, for this product update, we’re offering the first 30 migrations for free thanks to our partnership with Biconomy.
Security & Audits
As per every new Idle protocol update, we went through an incremental audit with Quantstamp. Here you can find our latest report.
Idle has always been built with security in mind, and we want to stick with it. Even though audits aren’t a silver bullet, we believe that spending time and money on multiple third-parties security reviews is a way to show respect to our users.
Decentralized Governance Iteration
Finally, we want to introduce the community to the $IDLE Token Distribution Model.
Having decentralized governance has always been in our roadmap. As explained further below, Idle is going to be powered by liquid democracy.
Sustainable Business Model
In the long run, the $IDLE token’s value will be determined by its ability to capture sustainable cash flows from the platform. Bearing that in mind, we are now implementing a performance fee for Idle strategies.
Initially, these fees will be used to sustain operational overheads (mainly rebalances and development), and then proportionally distributed to $IDLE token holders. We are starting with a 10% fee on earned yield (eg on a 5% profit, the protocol now charges a ~0.5% fee).
Later on, with governance implementation, we might switch to a “buy&pool” model: the fees (denominated in the strategies’ underlying token) will be used to purchase $IDLE tokens on the open market and then added to the governance staking rewards pool and distributed to all stakers of $IDLE tokens as a streamed reward.
Retroactive Liquidity Mining
Finally, we want to reward our early customers. Providing liquidity to Idle will be retroactively rewarded, more details will follow in the next couple of weeks.
Please note that IDLE token doesn’t yet exist at the time of writing. It will be minted and distributed in the coming weeks: again, in the meantime, users are able to earn it by providing liquidity to the protocol.
Wrap Up and Next Steps
This is just the beginning of Idle in the yield farming realm. We will be working on new additions, yield strategies, and LPs tools.
In the next few weeks, we will reveal more about:
- 🏛 $IDLE governance model and distribution
- ☂️ Built-in insurance service
- 🧩 New supported protocols
Stay in the loop
We’re building Idle for the Ethereum ecosystem and its great community. We’d love for you to be part of our development process.
Here you can find our documentation: developers.idle.finance