Mercurial Beta Dynamic Yield Layer Update: Quantstamp audit completed, SDK v0.1 released and more!
Our goal for our dynamic vaults is to build the most secure, reliable and optimized yield infra for users, dapps and programs — and doing so is a combination of having a tight development process where we incrementally open up the vaults based on key milestones, selecting the right platforms to integrate with, and making it as accessible as possible to both users and developers.
With this focus in mind, we are delighted to share that we have reached a major development milestone where we completed a thorough audit with one of the top auditing firms in the space, Quantstamp. With this milestone, we are also opening up the deposit limit from 10K to 100K USD.
We are now commencing our second major audit, and we expect the full launch after that. In addition, we are announcing the first version of our SDK — including TypeScript SDK, API and CPI, designed to allow developers to easily build a range of applications on our system, including wallets, AMMs and treasuries etc.
In this post, we will share details about the above initiatives and elaborate on two key parts of our system — the yield optimizer and the criteria for which platforms to integrate.
We see this layer as an essential piece in Solana — doing all the crucial work for users while facilitating a healthy flow of capital throughout the ecosystem.
1. Quantstamp Audit Completed
As mentioned above, we have just completed our first major audit with Quantstamp and resolved several key issues. Check out the Quantstamp audit final report here: Quantstamp Audit Final Report
We’ve learnt much from the audit process and applied several lessons to our coding method.
Not to rest on our laurels, we are starting another round of audit with another top audit firm, Halborn. We are confident that our dynamic yield layer will be even more secure for our users and partners by the end of the audit process. We cannot wait to share the audit report and our learnings from this new round of audit!
2. Deposit Limit for Vaults Increased to 100k.
After completing our audit with Quantstamp and exhaustive testing on our end, we are ready to increase the deposit limit of our Dynamic vaults to 100K USD per token! You can deposit into our vaults here: https://vaults.mercurial.finance/
We believe the best approach to launching products is to follow a tight development process with rigorous testing as we open our vaults up incrementally. This way, we can continue building momentum and resolving issues while managing potential risks.
Once we have completed our second audit with Halborn and extensive testing across our system’s key modules, we will be ready to remove all deposit limits. May the apeing begin!
3. SDK v0.1-beta released
We are pleased to share that we are releasing Mercurial dynamic yield SDK v0.1-beta, the most easy-to-use yield SDK available on Solana.
Guide Links:
We have integrated Mercurial’s dynamic AMM pools with the dynamic yield layer using the SDK, and the pools were able to generate between 2–6% of APY without needing liquidity mining rewards. The SDK will allow any AMMs, wallets and protocols with passive liquidity to replicate this and generate yield for their users.
You can check out the beta version of our dynamic AMM pools here: https://vaults.mercurial.finance/pools
We are incredibly grateful to our early partners, Juiced and Slope Wallet, for their commitment and patience in helping us improve the SDK and working through the kinks. A great example of the integration done is by Juiced, a one-stop shop for on-chain delta-neutral yield farming. In the JUBTCm pool, 25% of the liquidity will be kept as a reserve, while 75% will be deposited into the Mercurial USDC vault to generate yield.
4. Dynamic Yield Optimizer for Safe, Reliable Yield
To achieve optimal yield for the users, we have developed a yield optimizer system that will dynamically adjust the liquidity allocation across the lending platforms for optimal yield. Here’s how the mechanism works:
- Monitor the APYs across the integrated lending platforms every minute.
- Simulate the liquidity distribution to all the lending platforms and calculate the supply APY of each platform. The calculation will take into account the current deposits in the platform and if there are any deposit limits.
- After comparing various configurations and permutations, we can determine the final liquidity allocation that will give us the optimal APY.
- Check if the current and new allocation delta is more than 0.1%. If yes, the optimizer will trigger a rebalance crank to get the vault to re-adjust the liquidity allocations across the lending platforms.
Accessibility to Deposited Funds
One of the significant risks of depositing funds in a lending platform is the inability to withdraw the funds when the reserves are low due to the high utilization rate. This poses a risk to the users who might not be able to access their funds when in need.
We plan to mitigate this issue by doing frequent checks between the vault’s total deposit amount and the amount of reserves left in the lending platform. Suppose the difference between the vault’s deposited amount and the lending reserve falls below a predetermined threshold; the vault will proceed to withdraw some liquidity from the reserve to ensure that there will be sufficient liquidity for user withdrawals.
This can also mitigate the impact of hacks on a particular lending platform. For example, if a pool in the lending platform gets hacked, the attacker will be able to mint an infinite amount of the token and borrow all the reserve liquidity over time. Our system will be able to alleviate the loss of funds by withdrawing the funds from the reserve once it detects that the lending reserves have dropped below a certain threshold.
Providing Consistent, Reliable Yield
Despite keeping 10% of all vault liquidity as reserves and taking a 5% commission of the interest as a performance fee, our vaults have generated optimal and consistent APYs for the past two months. This is especially so in volatile markets, as reflected in the performance of our SOL vault.
As you can see from the graph below, Mercurial’s SOL vault performed the best in terms of the 1 month average APY compared to the other lending platforms.
5. Criteria for Platforms To Integrate With
To bring safe and reliable yield for our users, we have taken extra steps to ensure that the lending platforms we are integrating with are safe and secure. Some factors include whether they are audited, open-sourced and have insurance coverage for their user’s funds. We will rather forgo a potentially higher APY if we are uncomfortable with the integration.
We are happy to have Solend, Port Finance and Mango as our early lending platform partners. We are incredibly grateful for their support during the integration process and for helping us refine our yield optimization process. We look forward to more collaborations moving forward!
Summary
Our goal has always been to build the most secure, reliable and optimized yield infrastructure for users, dapps and protocols. We believe that a tight development process where we incrementally open up the vaults based on key milestones is key to solid progress toward our goal. We are also grateful to our community members and partners for their support in helping innovate and improve the product.
A large part of being able to do what we do is because of Solana’s infrastructure and low transaction fees; technically, we are able to carry out complex actions in a single transaction that executes on-chain algorithms based on off-chain logic. Our team believes in the growth potential of the Solana ecosystem to eventually become a DeFi ecosystem on the scale of the other prominent blockchains. We look forward to getting there together.
In the upcoming weeks, we will be working towards our Meteora Launch, where we will officially launch our Dynamic AMM pools and the long-awaited MER staking and LP farming! Stick around our Twitter and Discord for all the updates leading up to the launch.
Twitter: https://twitter.com/MercurialFi
Discord: discord.gg/WwFwsVtvpH
