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Fractal is an omni-chain fixed yield protocol. Users deposit stablecoins from any chain (EVM for now) and get diversified yield exposure from all chains.
- USDF Master Vault: this is the only user facing component. It allows users to mint USDF in exchange for stable coin collateral
- Yield Reserve: serves as an intermediary cash flow buffer between yield generating strategies and USDF interest accrual. Yield from underlying strategies is deposited into this smart contract, which in turns accrues the USDF price
- Bridge Routers (in upcoming partnership with Li.Finance): determine the best path from ETH to any given chain
- Strategy Manager Vaults: located on each individual chain. They receive bridge funds from the Yield reserve and allocate capital between all active strategies on that chain.
- Strategies: deploy capital to generate yield. The harvested yield is then bridged back to the Yield Reserve.
- Off-chain yield monitoring system & keepers: a set of scripts tracking yield, entry & exit fees, impermanent loss and cross-chain liquidity arbitrage opportunities. These keeper scripts call rebalance functions to allocate capital where it is most rewarded.
How does it work
- USDF is minted by depositing USDC into the Fractal master vault. For now, Fractal's master vault is available only on Ethereum Mainnet. Soon, an instance of the vault will be deployed on all chains, giving users the flexibility to mint, bridge and redeem in a completely chain-agnostic manner.
- USDF is redeemable for the initial deposit along with accrued interest at all times.
- In Fractal v2, USDF depositors will have the ability to make deposits in any stable coin. A small zap fee might be charged to cover the deposit swapping costs. This fee will be a function of the deposit token's liquidity.W
What is USDF
- USDF is Fractal’s receipt token. It is minted by depositing USDC into the Fractal master vault. USDF is redeemable for the initial deposit along with accrued interest at all times.
Core Fractal Components
The Fractal architecture is composed of 6 core pieces:
- USDF Master Vault
- Yield Reserve
- Bridge Routers
- Strategy Manager Vaults
Strategy Manager Vaults
- Strategy manager vaults are deployed on each chain and are responsible for the allocation between strategies. They receive assets from the Yield Reserve and allocate them to 1,….,N active strategies on their respective chain. Strategy Manager Vaults are also responsible for internal accounting. They keep track of the balance deployed and the interest earned.
- Strategy contracts are the money-makers of the system. Experience has shown that all chains need the same core DeFi primitives: money markets, AMMs, option protocols and perpetual swap protocols. Fractal contributors have developed abstract strategies to deploy capital to any Uniswap, Compound or Aave fork, and are constantly developing more adapters. Example strategies include optimizing folded yields between money markets, customized decentralized option vaults and many more.
- While DeFi ambitions to be fully permissionless, non-custodial, and decentralized, some strategies require a strategy manager to run centralized scripts. Examples include being a liquidity relayer for a bridge or cross-chain arbitrage. These strategies are implemented using institutional grade security. Funds are always secured on MPC Vaults on Fireblocks with independent signers. There is always a trade-off between speed of execution and decentralization. We are choosing to favor rapid execution in the short term for the benefit of Fractal Users and will be progressively working towards decentralization in the coming months.