Ajna ARK - Ajna Auto Rebalancing Kit

Ajna ARK - Ajna Auto Rebalancing Kit

Request

Receiving Address: (0x9A22889a2Bb9712E3401de26985d66Aa776791cF)
AJNA Amount: (1,500,000)

Applicant and Team Information

Applicant Name: @Prototech_Labs
Email: info@prototechlabs.dev
About the team: A team of ex-MakerDAO engineers closely familiar with the Ajna codebase. We have provided two security reviews and conducted comprehensive invariant testing for the Ajna team already.
Additional Links: www.prototechlabs.dev

Project Information

1. What is it?
An automation solution for end users to gain the best rate from Ajna pools.

The ARK is a non-custodial, permissionless vault that automatically rebalances the user’s quote tokens across selected pools with the highest yield. This drastically simplifies the user experience for Ajna liquidity providers and ensures that the user automatically earns the optimal yield.

The ARK will be provided as a set of smart contracts that end users and interface providers such as SummerFi can integrate with. Because the ARK is itself a protocol, it will include a small fee component that can be split between the technical back end, and the interface provider to incentivize integration and usage.

2. What problem is being solved, how?
Ajna’s complexity has long been a high barrier to entry for increased user adoption. The ARK abstracts away Ajna protocol complexity by automatically moving user funds into the pool with the highest yield. This means that the user can now have a vault product programmatically and permissionlessly allocate their quote tokens without them having to actively manage their position or manually move it from pool to pool.

It is worth mentioning that as with any form of lending, the risk of the underlying pool remains on the lender who receives a risk premium in the form of yield. This underlying risk of using the ARK is no different to using Ajna directly today.

3. How will this project be a source of growth or success for Ajna?
The ability for users to move their liquidity across pools automatically and cheaply will be a source of success for Ajna. Users struggle to do this today because such actions are too complex and expensive.

Similarly, the ARK enables any 3rd party front end interface to integrate with it and offer rebalancing to their users. This will help attract and retain users to a protocol which is otherwise struggling due to protocol complexity. Users will therefore be able to more easily interact with Ajna and contribute to a growing and successful ecosystem. Additional quote token supply will lead to a more robust marketplace and will promote additional collateral deposits and borrowing.

This necessary addition to Ajna will also incentivize and promote a new keeper ecosystem to participate in ensuring consistent update-interest calls are done at regular intervals.

4. What is/are the objective(s)?
By automating and simplifying user access to higher yield it is expected that there will be an increase in user adoption and participation. Similarly, an increase in quote token liquidity will promote increased participation from borrowers, thereby helping the protocol’s overall health.

5. What is/are the deliverable(s)?
A completed Ajna ARK - Ajna Auto Rebalancing Kit, that front ends will be able to integrate with to give their users access to automated rebalancing. All code will be open sourced under a BSL license and will include complete unit, fuzz and integration test suites. The team will also provide interface and integration documentation to help 3rd party’s integrate with the smart contracts.

6. What is the timeline for completing the deliverables?
The team has been working on this software since January, and plans to have a solution deployed on mainnet by Q4 2024. We expect independent frontends will then integrate.

7. What level of support do you anticipate needing through the duration of the project?
Grant support for past and future work supporting the ARK. This will also help cover an external audit to support this deployment.

8. How often will progress reports be published to the forum?
During development, progress reports will be provided monthly. Once the vault is deployed, its usage will be visible through standard onchain analytics platforms.

9. What are the estimated costs associated with the full completion of this project?
Although not possible to cover the full expense of 4 engineers for 9 months, the proposed grant request will go towards this as well as covering an audit.

10. If applicable, How will the project be maintained after completion of the grant?
As fully permissionless and immutable software this software will not require any ongoing maintenance. Subsequent versions may also be developed to identify niches and/or improvements in solution offerings.

11. How will you handle a delay in your project timeline?
Now that an architectural schema is well defined, we do not envisage any delays to our roadmap. In the event there are unforeseen delays these will be reported to Ajna governance as part of our monthly update and an optimal path forward identified.

12. How will you handle a scenario where the original scope can’t be completed due to insufficient funding or other factors?
Governance shall be informed and an optimal path forward outlined.

In summary, this is a much needed enhancement to Ajna and will abstract away the underlying protocol’s complexity. Thank you for considering our proposal, we look forward to completing the smart contracts and their accompanying documentation.

2 Likes

Initial Thoughts

  • Ajna needs an automated lender position management tool pretty badly. I’m glad to see work being done in this direction.
  • I am a little disappointed this doesn’t enable a lender to automate their lender position in a single pool. Could it?

Questions

  • Will the end user be able to blacklist/whitelist pools or does the protocol look at all available pools without filter?
  • Could this product result in a lender deposit being used in a pool that is in an unhealthy state that would be very difficult to exit from; ie very high rate but fully utilized, possibly with bad debt, possibly against a collateral that is broken or suddenly value-less?
  • Will the vault deposit into one pool at a time or multiple pools?

Hi David, great questions, to give a bit more color;

  • Automation within a single pool is possible if the ARK is only made up of one pool.
  • When an ARK is deployed, it can be configured to select which pools and collaterals will be included. The user can then select which ARK best suits their risk preferences. It will further be up to the front ends to determine which ARKs they wish to show - much in the same way as they do today with the various pools.
  • Users will need to select collateral types that they are willing to pair with - again, they need to consider their risk preferences because if any one collateral becomes valueless it will soak up all the quote token deposits within that particular ARK. This is the same risk that a user would face today in a pool paired with a collateral that were to go to zero.
    • It may also be possible to extend functionality to consider certain guardrails such as limiting the maximum deposit amounts in a pool.
  • Typically the ARK would deposit into a single pool because it favours the highest rate, although multiple pools could also be technically possible with additional criteria.

As we get closer to code complete, we’ll make sure to have plenty of documentation supporting these and other user scenarios and interactions.

2 Likes