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What are Dynamic Vaults?

Dynamic Vaults operate as a lending aggregator that allocates capital across multiple lending protocols on Solana. We utilize an off-chain keeper called Hermes which constantly monitors all lending pools every minute and rebalances allocations to optimize yields and reduce risk. While there is risk in lending, our Dynamic Vaults mitigate that risk by constantly monitoring lending pool utilization rates and automatically withdrawing funds whenever risk thresholds are hit. Additionally, only a maximum of 30% is ever allocated to any single protocol. And our Dynamic Vaults have already been battle-tested with several real-life events: The USDC depeg in early March and the USDH exploit late last year. In both cases, Hermes was able to automatically detect and withdraw all funds safely.

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Additional Yield

For DAMM v1 Pools paired with USDC/SOL/USDT, a portion of unused USDC/SOL/USDT liquidity gets dynamically loaned out to external lending platforms (e.g. Kamino, Marginfi, Save (Solend)) to generate extra yield for LPs, via our Dynamic Vaults. This benefit applies to all Dynamic AMM Pools on Meteora that have USDC/SOL/USDT in the pair.
  • As such, a portion of USDC/SOL/USDT liquidity may be utilized in external lending platforms, while the rest remain in the Dynamic Vault Reserve to support sudden withdrawals by LPs. This can be viewed in the “Shared Vault Balance” of the pool account.
  • In an event where LPs have a liquidity position that is much larger than what is in the Dynamic Vault Reserve, and want to immediately withdraw all liquidity (that has USDC/SOL/USDT), they can withdraw liquidity in smaller sizes a few times or reach out to the team.
  • Yield earned from Dynamic Vaults is shown on the Dynamic AMM Pool UI as “24h Yield”.