Introduction

Aera, incubated by Gauntlet, offers a cutting-edge decentralized treasury management protocol designed to optimize and secure your digital assets. This document describes the Stable Coin vault strategy, with Gauntlet serving as the guardian for the vault’s objectives and controls. The stable coin strategy is tailored to effectively manage protocol teams or DAO treasuries' stable coin allocations, ensuring a maximum yield in a safe and effective manner.

Key Objectives

1. Maximize Yield: Optimize returns on stable coin allocations through strategic distributions.
2. Safety: Ensure the security of assets through rigorous monitoring of select risk management protocols.
3. Efficiency: Implement strategies that provide high liquidity and operational efficiency.

Strategy Description:

• The vault balances supplying stables between Compound, Aave, and Morpho (protocol choice is configurable) with the goal of maximizing risk-adjusted yield.
• To do this, an optimizer is used to simulate various levels of supply to determine the optimal allocation to maximize yield while considering the potential of losses due to insolvency, leveraging the years of research Gauntlet has from managing risk for these same lending protocols.
• Gauntlet runs our risk system every 5 minutes to ameliorate insolvency risk by monitoring market volatility, non-Aera positions in these markets, and the quality of collateral being used to borrow our supplied USDC.
• Gauntlet runs our portfolio optimizer once a day and rebalances supplied positions with the goal of ensuring that your capital is always earning the highest possible risk-adjusted return. Not specific to the stablecoin strategy, is a configurable Aera maximum loss parameter, which prevents any guardian action from resulting in a loss of more than a maximum amount as configured by the vault owner (Immutable in this case). Through this, we remove the risk of a fat finger causing a significant loss of TVL, as these transactions will be reverted at the smart contract level.

Core Strategy Components

1. Asset and Protocol Allocation
   • Asset Deposit: Deposit USDC into a non-custodial Aera Vault with an active stablecoin strategy.
   • Periodic Rebalancing: Regularly rebalance the portfolio to maintain desired allocation ratios and adapt to market conditions.
2. Yield Optimization
   • Staking and Lending: Utilize staking and lending platforms to generate interest on stable coin holdings.
   • Automated Yield Strategies: Employ automated strategies that maximize yield while minimizing exposure to risk.
3. Risk Management
   • Counterparty Risk Assessment: Perform comprehensive assessments of all platforms and protocols used for vault allocations.
   • Smart Contract Audits: Ensure all smart contracts are thoroughly audited to safeguard against vulnerabilities.
   • Real-time risk system: We monitor market conditions in real-time to protect against insolvency risk and take action if necessary to protect funds.