Technical Documentation
Last updated
Last updated
StratEx is an advanced decentralised finance (DeFi) protocol designed to revolutionise yield optimisation and risk management in the DeFi ecosystem. Built to cater to the needs of investors, StratEx addresses the critical challenges that currently hinder DeFi participation and capital efficiency.
At the heart of StratEx is a DeFi strategy marketplace, where users can access a wide array of investment strategies tailored to different market conditions and risk profiles. Beyond its pioneering restaking strategies, StratEx enables investors to engage in a broad spectrum of financial activities, including index tracking, trading, leverage, options, and Automated Liquidity Management (ALM). This versatility allows users to construct diversified portfolios that can adapt to the dynamic nature of the DeFi landscape.
StratEx integrates a decentralised network of expert DeFi strategists and cutting-edge smart contracts, including ERC4626 vaults and Safe{Wallet} mechanisms, to deliver automated and optimised asset allocation. These components work in harmony to ensure that strategies are not only secure but also capable of dynamically responding to market fluctuations in real-time.
The rapid expansion of DeFi ecosystems has created a pressing need for more sophisticated tools to manage staking, yield generation, and other complex financial strategies while reducing complexity for users.
Many existing solutions fall short, often lacking the flexibility, transparency, and user-friendly controls necessary to optimise returns effectively. Users are frequently overwhelmed by the complexity of active investment management, which requires navigating numerous platforms and understanding intricate strategies – especially daunting tasks for those new to DeFi. Meanwhile, both LLMs and on-chain AI tech have advanced considerably since Chat-GPT’s 2022 launch. With LLMs now playing integral roles in mainstream web platforms, AI has been effectively integrated into the fabric of the modern Web2 internet experience. Now, a new generation of AI agents has arrived with a host of specialised Web3-native use cases. The leading AI agents that have scored the majority of the mindshare in the on-chain domain are those that offer users exclusive access to unprecedented data analysis, curated news feeds, and real-time market insights.
As a pioneer operating at the nexus of AI and modern DeFi ecosystems, StratEx leverages the latest in on-chain AI tech to resolve DeFi’s longstanding challenges and up-level the entire sector’s user experience. The StratEx platform is a one-stop shop for users that streamlines the investment process into a seamless and intuitive click-and-go process. The platform integrates multiple DeFi protocols, allowing users to effortlessly maximise their yields while enjoying a wide array of investment options tailored to different risk profiles and market conditions. To enhance safety and build trust, StratEx provides built-in insurance mechanisms that protect user funds, along with comprehensive transparency measures that ensure every strategy is clear and understandable.
By breaking down complex strategies into more accessible formats, StratEx empowers all users, from beginners to experienced investors, to participate confidently in the DeFi space. The result is a robust, user-centric platform that not only simplifies DeFi investing, but also offers the security and flexibility needed to optimise returns in an ever-evolving financial landscape.
StratEx is currently deployed on Polygon, and will be subsequently deployed on other EVM-compatible blockchains, leveraging ERC4626 vaults and Safe{Wallet} for secure asset management. The deployment process involves:
Smart Contract Deployment: Deploying the core contracts that manage vaults, strategies, and governance.
Adapter Integration: Setting up adapters for supported DeFi protocols to ensure seamless strategy execution.
Testing and Audits: Conducting thorough testing and audits to ensure the protocol's security and reliability.
In addition to supporting seamless deployment on an array of EVM-compatible blockchains, the StratEx platform is designed for efficient and effective integration into existing DeFi protocols. Integrations with established DeFi protocols serve to build a stronger presence for StratEx within the broader DeFi sector, form strong relationships with industry leaders, and expand the StratEx community. StratEx follows a strategic approach to maximise the effects of its integrations for both its own growth and that of its partners.
White-Label Solutions: StratEx provides white-label integration solutions in order to allow existing DeFi protocols to remain true to their respective brands while offering innovative investment options and clean, intuitive interfaces to their existing user bases.
Tapping Established Communities: By connecting with robust DeFi communities, StratEx builds relationships with various segments of the DeFi user body from which it is able to better understand and cater to market demand.
Integration Synergies: In conjunction with integrations, StratEx explores all available synergies with its DeFi partners, including public co-marketing campaigns, joint liquidity incentives, and other unique reward models.
StratEx focuses on developing a yield optimiser that leverages ERC4626 vaults, Safe{Wallet} mechanisms, and DeFi protocols to maximise returns in decentralised finance. The core functionality revolves around the interaction between vaults, strategies, and secure management of user assets.
Vaults (ERC4626)
Definition: ERC4626 is a tokenised vault standard that standardises how vaults operate in DeFi. These vaults are smart contracts where users deposit tokens, and in return the users get shares. The vaults employ strategies to optimise yield.
Functionality: StratEx vaults are designed to securely manage user deposits, utilizing advanced strategies to allocate funds across various DeFi protocols. The use of ERC4626 ensures interoperability with other DeFi applications and simplifies integrations.
Safe{Wallet}
Definition: Safe{Wallet} is an account abstraction solution used within StratEx to store all funds from the vaults securely.
Functionality: This component is crucial for ensuring the security of user assets. Safe{Wallet} integrates with vaults to provide a robust layer of protection, minimising the risk of unauthorized access or loss of funds.
Protocol Adapters
Definition: Adapters are modular components that interact with different DeFi protocols, allowing the optimiser to adjust strategies dynamically based on market conditions and protocol performance.
Functionality: StratEx supports a wide range of adapters for popular DeFi protocols, including Uniswap, Balancer, Aave, Compound, and Lido. These adapters enable seamless integration and real-time optimisation of asset allocations.
Strategies
Definition: Strategies are predefined algorithms or rules that dictate how assets within a vault should be allocated to generate yield.
Functionality: StratEx allows for the development and deployment of custom strategies by both internal and third-party strategists. These strategies are integrated with the vaults and can be dynamically adjusted based on performance metrics and risk assessments.
StratEx provides an ideal workflow for developing and integrating new strategies. The process involves:
Designing Strategies: Strategists can design strategies tailored to specific market conditions or risk profiles.
Integration: Strategies are integrated into the StratEx vaults through adapters, allowing them to interact with the broader DeFi ecosystem.
Testing and Validation: Before deployment, strategies undergo rigorous testing to ensure they meet the required performance and security standards.
StratEx supports a wide range of strategies, each catering to different market conditions, risk profiles, and asset classes. Below are some key types of strategies that can be designed and deployed within the StratEx ecosystem:
Yield Farming and Liquidity Provisioning
Description: These strategies focus on providing liquidity to decentralised exchanges (DEXs) like Uniswap, QuickSwap, and Balancer. By staking assets in liquidity pools, users can earn trading fees and additional rewards in the form of native tokens.
Leverage and Borrowing Strategies
Description: Leverage strategies involve borrowing assets against collateral to increase exposure to certain markets or to participate in yield-generating opportunities. These strategies are particularly useful for experienced users looking to amplify returns.
Delta-Neutral Strategies
Description: Delta-neutral strategies are designed to hedge against market volatility by maintaining a balanced position in both long and short assets. This type of strategy is ideal for users looking to minimise risk while earning steady returns.
Arbitrage Strategies
Description: Arbitrage strategies exploit price discrepancies between different markets or platforms to generate profit. These strategies typically require quick execution and efficient capital management.
Automated Rebalancing Strategies
Description: Rebalancing strategies automatically adjust the composition of an asset portfolio based on predefined criteria, such as asset performance, market conditions, or risk tolerance. These strategies help maintain a target asset allocation and reduce exposure to unwanted risks.
Perpetual Trading Strategies
Description: Perpetual trading strategies focus on trading perpetual futures contracts, which allow for leveraged exposure to various assets without an expiration date. These strategies are popular among traders who seek to profit from short-term market movements.
Cross-Chain Strategies
Description: Cross-chain strategies leverage assets and opportunities across multiple blockchains. These strategies take advantage of different yield opportunities and market conditions on various chains to maximise returns.
Copy Trading Strategies
Description: Copy trading strategies allow users to replicate the trades and strategies of successful traders (Key Opinion Leaders - KOLs) on the platform. This is particularly appealing for users who want to benefit from expert trading strategies without having to manage trades themselves.
Users
Role: Deposit assets into vaults and select strategies to optimise yield.
Interaction: Users interact with the protocol primarily through the user interface, where they can view available strategies, manage their investments, and track performance.
Strategists
Role: Develop and deploy strategies within the StratEx ecosystem.
Interaction: Strategists design strategies, which are then integrated into the vaults through adapters. They are responsible for monitoring and adjusting strategies based on performance.
StratEx Team
Role: Develop and deploy internal strategies. Validate and oversee strategies and transactions execution
Interaction: Strategists design strategies. Responsible for the onboarding of new strategies and overseeing the SAFE transactions execution.
Workflow for Strategists
Initial Engagement and Onboarding
Outreach and Engagement: Engage with potential strategists interested in developing strategies within the StratEx ecosystem through partnerships or community engagement.
Access to SDK and Documentation: Provide the strategist with access to the StratEx SDK, comprehensive documentation, and any necessary support materials to understand the platform's technical requirements and capabilities.
Strategy Design and Development
Strategy Proposal: The strategist submits a detailed proposal outlining the strategy they intend to develop, including objectives, expected returns, and risk management approach.
Technical Feasibility Review: The StratEx technical team reviews the proposal to ensure it is feasible within the existing infrastructure. If necessary, the team works with the strategist to refine the proposal.
Development and Integration: The strategist begins developing the strategy using the provided SDK and integrates it with existing StratEx vaults and protocols through adapters.
Testing and Validation
Internal Testing: Once the strategy is developed, it undergoes rigorous internal testing, including backtesting against historical data and simulations to ensure it performs as expected.
Security Audit: The strategy is audited by a third-party security firm to identify and address any vulnerabilities.
Performance Validation: The strategy’s performance metrics, such as yield and risk profile, are validated. This may involve running the strategy in a live but limited environment to gather real-world data.
Deployment and Monitoring
Deployment to the Marketplace: After successful testing and validation, the strategy is deployed to the StratEx marketplace, where users can allocate funds to it through StratEx vaults.
Ongoing Monitoring: The performance of the strategy is continuously monitored by both the strategist and the StratEx team, with adjustments made as needed based on real-time market conditions.
User Feedback and Iteration: Collect feedback from users to identify areas for improvement, allowing the strategist to iterate on the strategy for enhanced performance.
Revenue Sharing and Incentives
Revenue Model: Strategists earn a share of the fees generated by their strategies, such as performance fees or management fees.
Incentives and Bonuses: StratEx may offer additional incentives for top-performing strategies or for attracting significant user funds.
Long-term Collaboration and Support
Ongoing Support: StratEx provides ongoing technical and operational support to strategists, helping them maintain and optimise their strategies.
Collaboration Opportunities: Strategists can collaborate on new features, participate in beta testing, or help shape the future direction of the protocol.
Exit Strategy and Decommissioning
Decommissioning Process: If a strategist decides to retire a strategy, there is a process for safely unwinding positions and returning user funds.
Exit Agreements: Formal agreements outline the exit process, including how the strategist’s intellectual property is handled and any ongoing obligations.
Third-party Integrators
Role: Integrate external strategies and DeFi protocols with StratEx.
Interaction: Third-party developers use the StratEx SDK and adapters to connect their strategies with the protocol, expanding the ecosystem's capabilities.
StratEx is designed to be highly flexible, allowing strategists to create, customise, and deploy a wide range of strategies. The platform supports:
Custom Adapters: Strategists can develop new adapters for integrating with additional DeFi protocols, expanding the range of possible strategies.
Dynamic Adjustments: Strategies can be adjusted in real-time based on market conditions, performance metrics, and user preferences.
Modular Architecture: The modular design of StratEx enables the seamless integration of new strategies and components without disrupting the existing ecosystem.
The StratEx protocol applies fees to cover the costs associated with using a strategy. These fees ensure the sustainability of the platform while maintaining a competitive edge in the DeFi landscape. The primary fee structures include performance fees and management fees, both of which are designed to align the interests of users, strategists, and token holders.
Performance Fee
A 10% performance fee is charged on the net profits generated by each strategy, so that fees are only incurred when a strategy delivers measurable returns.
Formula:
Performance Fee: Typically calculated as a percentage of the profits generated by the Vault and strategies.
Management Fee
A 1% annualised management fee (APY-based on TVL) is applied from the start.
This management fee is accrued continuously and deducted every 4 hours to prevent gaming of the system.
The entire management fee is distributed to StratEx token holders, ensuring they benefit directly from the platform's growth.
Formula:
This calculation ensures that fees are gradually accrued rather than deducted all at once.
It should be noted that DeFi protocols that integrate StratEx into their UIs will be able make minor modifications to fee structuring, either charging a slight premium or a discounted fee. In addition, different strategies may require or charge ancillary fees, such as those for deposit functions and general management. Highly complex strategies may also charge elevated performance fees, pending various metrics related to their execution. Performance fees play an integral role in distributing value among relevant contributors to the StratEx ecosystem. Performance are to be distributed as follows:
1/3 – Protocol Integrating StratEx
1/3 – Strategy Builder
1/3 – StratEx Foundation
The above fee model and utilisation breakdown align with StratEx's commitment to prioritizing user value while maintaining the platform's operational sustainability. Future iterations may include additional fee structures as the protocol evolves to support more complex strategies and features.
To evaluate and optimise the performance of strategies within the StratEx protocol, the following key metrics are tracked:
Definition: TVL represents the total value of assets that are currently locked in a strategy or vault. It is a key indicator of the strategy’s popularity and the amount of capital it controls.
Formula:
Where n is the number of different assets in the strategy, Asseti is the amount of the i-th asset, and Price_i ​ is the current price of that asset.
Definition: APY reflects the annualised return on investment, including the effects of compounding. It is a key metric for users to understand the potential growth of their investment over time.
Formula:
Where r is the periodic interest rate, and n is the number of compounding periods per year.
Definition: APR indicates the annualised return on investment without considering compounding. It is often used to compare the returns of different strategies or financial products.
Formula:
Where r is the periodic interest rate, and n is the number of periods per year.
Definition: Deposits refer to the total amount of assets that users have deposited into a strategy or vault. This metric shows the level of user engagement and trust in the strategy.
Formula:
Where Deposit_i is the amount of the i-th asset deposited by users, and Price_i​ is the current price of that asset.
Definition: Withdrawals represent the total value of assets that have been withdrawn from a strategy or vault by users. This metric can indicate user behavior and confidence in the strategy over time.
Formula:
Where Withdrawal_i is the amount of the i-th asset withdrawn by users, and Price_i is the current price of that asset.
Definition: NAV is the total value of all assets in a strategy, minus any liabilities. It provides a clear picture of the strategy’s overall value.
Formula:
Where Liabilities include any debts or obligations the strategy might have.
Definition: Profit/Loss is the net financial result of a strategy over a specified period. It indicates whether the strategy is generating positive returns or losses.
Formula:
Where Current Value_i is the current value of the i-th asset, and Initial Value_i Value_i is the initial value of the i-th asset when it was invested in the strategy.
Definition: Rewards represent additional earnings provided to users as incentives, such as liquidity mining rewards or bonus tokens. These are often paid out in native tokens or other assets.
Formula:
Where Reward_Token_i is the amount of reward tokens earned, and PriceiPrice_iPricei​ is the current price of the reward token.
Definition: Utilisation Rate measures the proportion of deposited assets that are actively used within a strategy. A high utilisation rate indicates that most of the assets are being put to work.
Formula:
Definition: ROI measures the gain or loss generated by a strategy relative to the initial investment. It’s a direct measure of the strategy’s profitability.
Formula:
Where Net Profit is the profit after all fees and costs, and Initial Investment is the original amount invested in the strategy.
Security is a top priority for StratEx. The protocol employs a comprehensive risk management framework that includes:
Smart Contract Audits: Regular audits by reputable third parties to identify and address vulnerabilities.
Operational Security: Funds are protected by a proof-of-authority consensus, where known parties stake their reputation and legal freedom to ensure the integrity of transactions.
Bug Bounty Programs: To further enhance security, StratEx runs a bug bounty program that incentivises external security testing.
StratEx is designed to serve a wide range of users, from individual investors to institutional participants. Key use cases include:
Yield Optimisation: Users can deposit their assets into StratEx vaults to automatically participate in optimized yield-generating strategies.
Strategy Marketplace: A decentralised marketplace where third-party strategies can be accessed and utilized by users.
Insurance Coverage: StratEx provides native insurance coverage for up to 100% of user deposits, catering to traditional institutions and investors with conservative risk profiles.
StratEx offers an opt-in insurance mechanism that provides additional security for user funds. This insurance is provided by third-party providers such as Atomica and covers potential losses due to smart contract failures or other risks.
Onboarding a strategy into the StratEx protocol is a structured process designed to ensure that each strategy is thoroughly vetted, securely integrated, and effectively managed. This comprehensive approach leverages both documented procedures and visual workflows to guide strategists and the StratEx team through each critical step. The following steps outline the complete onboarding process, ensuring alignment with the platform’s objectives and maintaining high standards of security and performance.
1. Strategy Onboarding Initiation
Open Strategy Onboarding Form:
The strategist begins by accessing and completing the strategy onboarding form.
Information Required:
Contact information.
0x address for claiming rewards.
0x address for transactions.
Detailed strategy description.
Selection of the appropriate StratEx vault for the strategy.
2. Validation by StratEx Team
Validate Information:
The StratEx team reviews the submitted onboarding form to ensure all information is accurate and complete.
Is it Valid?
No: If the information is incomplete or incorrect, the process is halted, and the strategist is prompted to provide the necessary corrections.
Yes: If the information is valid, the team proceeds to schedule the onboarding session.
3. Onboarding Session
Schedule Onboarding Session:
A session is arranged between the strategist and the StratEx team to facilitate the onboarding process.
Recording in Real-Time Allocation Transactions:
During the session, real-time transactions are executed and recorded. This includes both depositing and withdrawing assets, which is essential for setting up the strategy’s automation.
4. Transaction Fingerprinting
Get Transactions Fingerprint:
The StratEx team obtains a fingerprint or proof of the transactions conducted during the onboarding session. This serves as a verification that the strategy functions correctly.
5. Strategy Addition to Vault
Add Strategy to Selected Vault:
The validated strategy is added to the chosen vault within the StratEx system.
Strategy Listed on Website:
Once added, the strategy is listed on the StratEx website, making it accessible for user investments.
6. User Deposit Funds
User Picks the Strategy and Invests Tokens:
Users visit the StratEx platform, select the desired strategy, and invest their tokens accordingly.
Confirm Deposit:
The user’s deposit is confirmed, and the invested tokens are allocated to the selected vault.
Mint Shares (stratUSD Token):
Shares in the form of stratUSD tokens are minted and transferred to the user’s wallet, representing their stake in the strategy.
7. Strategy Execution
Strategist Proposes Transactions:
The strategist can propose the transactions based on the parameters and the allocation percentage validated.
SAFE (Multisig Wallet) Interaction:
Proposed transactions are submitted to the SAFE multisig wallet that holds the strategy’s funds.
Team Validates Transactions:
The StratEx team reviews the proposed transactions to ensure they align with the strategy’s goals and protocol guidelines.
Is it Valid?
No: If the transaction is invalid, it is rejected, and the strategist may need to propose alternatives.
Yes: If valid, the transaction is approved and executed.
8. Strategy Database Update
Add Strategy Information in the Database:
After successful validation, the strategy’s details are entered into the StratEx database for record-keeping and future reference.
Create Adapters (If Required):
If the strategy requires specific adapters or integration points, these are developed and integrated into the system.
Whitelist Wallet and Smart Contract Addresses:
The wallet and smart contract addresses associated with the new strategy are whitelisted to ensure seamless interaction with the platform.
9. Ongoing Strategy Management
Continuous Monitoring and Adjustment:
The strategist continuously monitors the strategy’s performance, making necessary adjustments to optimise yields and manage risks.
Regular Calls and Strategy Reviews:
Periodic meetings or calls are held between the strategist and the StratEx team to discuss performance, review metrics, and implement any required changes.
Performance Fee Management:
Implement a system to automatically claim and distribute performance fees, such as taking a percentage of rewards (e.g., Stargate tokens) while allowing users to retain their earnings.
Ensure compatibility with distribution channels to prevent issues like token dumping by users.
User Interface Integration:
Provide users with options to claim rewards in a way that aligns with their preferences, such as retaining native tokens or converting them to base assets like USDC.
Security and Compliance:
Maintain high-security standards throughout the onboarding process, including thorough validation and whitelisting of addresses.
Ensure all transactions and integrations comply with relevant protocols and best practices.
This comprehensive onboarding process ensures that each strategy is securely and efficiently integrated into the StratEx platform.
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