Design Goals

The goal of Meteora Dynamic vaults is to solve the key challenges of optimizing funds for yield generation while keeping funds safe and accessible for users and protocols alike. In this section, we will discuss the design goals of our vaults.

1. Security and safety of principals

Principals are safe at any given point in time; they can only be deposited into trusted and decentralized protocols for yield generation. The keeper program only stores the logic to find optimal yield allocations and limits the fund flows from the vaults to the protocols, it is unable to access the funds or claim principals. We seek to upgrade the authority for decisions around lending protocols integration and allocations to the decentralized Autonomous Organization (DAO).

2. Full liquidity at all times

Deposited assets must be liquid and accessible at all times, where users can withdraw funds at will. The vault’s total deposit amount is always checked against the amount of reserves left in the lending platform; if the liquidity reserve in the pool is less than the predetermined threshold, the vault will proceed to withdraw from the pool to ensure that there will be sufficient liquidity for user withdrawals.

3. Most optimized yield returns

Vault program must be able to monitor and calculate yield variations across all connected lending platforms, and dynamically allocate and rebalance assets to the one with the highest returns. Annual percentage rate (APR) of a lending pool depends on various factors - borrowing amount, depositing amount and the interest rate model. Deposit APR decreases when we deposit in a lending pool because the borrowing interest is shared with other depositors. The algorithm to find optimal yield allocation must be able to compare and find the best APR amongst the platforms for a given deposit sum.

4. Ease of integration and usage

The vaults and SDK needs to be straightforward and easy for any users or protocols, to utilize and build a range of applications on our system. This includes full guides, code examples and an API to help anyone connect to the vaults and gain access to all integrated lending reserves easily. We want to make the vaults the yield infrastructure for all of Solana.

5. Event monitoring and tracking

Lending pool APY, utilization rates, reserve levels are monitored continuously for better yield opportunities and risk management. Solana’s composability, speed and low transaction fees provide on-chain event monitoring benefits that exceed any other blockchain, and allows us to achieve the design principles set out above.