Fractal Protocol

Protocol Overview

The protocol is composed of the following components:
  1. 1.
    Master Vault: this is the only user facing component. It allows users to mint USDF in exchange for stable coin collateral
  2. 2.
    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
  3. 3.
    Bridge Routers (in upcoming partnership with Li.Finance): determine the best path from ETH to any given chain
  4. 4.
    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.
  5. 5.
    Strategies: deploy capital to generate yield. The harvested yield is then bridged back to the Yield Reserve.
  6. 6.
    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.

Cash Flows

  1. 1.
    Deposit USDC in Master Vault and receive the USDF receipt token
  2. 2.
    Master Vault sends 90% of the collateral to the Yield Reserve, the remaining 10% are left as buffer for user redemptions
  3. 3.
    Yield reserve deploys capital to alternative chain Strategy manager vaults based on chain specific weights (e.g. {AVAX: 25%, FTM: 25%, MATIC: 25%, ETH: 25%})
  4. 4.
    Each strategy manager vault receives bridged assets and deploys capital amongst active strategies [s1, ..., sN]