Overview of Vesper Pools

Important: Although contracts are accessible to all, you should not send assets directly to any Vesper contract address. Instead, you should always use the Vesper App. This is because, as explained in Vesper's Modular Architecture, Vesper pools (and other contracts) are designed to be upgradeable at any time. Sending funds directly to a contract may result in a total loss of user funds.

Vesper Pools combine tokens of the same kind from many depositors to generate yields for its participants. Assets in Vesper pools are used to borrow, lend, and farm yield across various DeFi projects. Each pool has its own deposit asset type, yield asset type, deployment approach (employing one or more "strategies"), and risk level.

Users select the pool or pools that let them employ the asset or assets they wish to use and that fit their risk tolerance.

Using Vesper Pools

Vesper pools are designed for accessibility. Connect your wallet (for example, MetaMask) with any of the available deposit assets, and make your deposit through the Vesper web interface (that is, the Vesper App).

When you deposit, you’ll receive a vToken that represents your weight in the pool. For example, deposit ETH and get vETH.

To exit the pool, simply use the Vesper App and the withdraw function in the 'manage' section of pool you're participating in, and you will receive the underlying asset. The app is designed to be self-documenting, and many users find that it answers basically all of their questions about using Vesper products. Below, a representative view of the Vesper App.

A typical view of the Vesper App

Types of Vesper Pools

• Vesper Grow: Grow Pools collect a particular asset (ETH, WBTC, USDC, others) via user deposits and deploy the capital to other DeFi platforms as outlined by the Grow pool's active strategies. Yield accrued by these strategies are used to buy back more of the deposited asset, which is delivered to pool participants.

Understanding vTokens

As explained above, each vToken functions as a claim ticket representing your share of the assets in the pool. While your funds are in the pool, you are free to move your tokenized stake to other wallets you control.

The calculation of the correspondence between the deposited token and the vToken differs according to the type of pool.

In the case of Grow Pools, as the pool accrues yield and purchases more of its asset, that tokenized stake will grant more of the underlying asset. Say, for example that you deposit one DAI into the Vesper Grow DAI pool, for which you receive one vDAI token in exchange. Let's say that over the course of a year, that pool's earning rate is 10%. At the end of that year, your 1 vDAI token would now be worth 1.1 DAI.

Note that when you deposit your crypto into a pool, your the amount of the vTOKEN you receive depends on whatever the current rate of the vToken is. The pool started at a ratio 1:1 and the vToken increases overtime. So unless you deposit on day 0 of the pool, you are going to receive less than one 1 vDAI per 1 DAI. That vDAI will continue to appreciate in value as explained above.

Fees

During Vesper's first year of operation, there were two types of fees associated with Vesper pools: withdrawal fees and platform fees. These fees were allocated to the Vesper Treasury and to the pool's architect.

As of April, 2022, these fees were phased out in favor of a Universal Fee. The Universal Fee will charge a 2% annual fee on the assets deposited (principal) at the time of rebalance. If this fee is greater than 50% of the yield earned, then the fee will only equate to 50% of the yield earned. The fee is assessed as part of the rebalancing process, as explained below.

VSP Rewards

In addition to their crypto yield, certain activities additionally generate VSP rewards, such as locking up your VSP tokens for esVSP to earn revenue share.

Understanding Earning Rates (Yield)

Vesper pool depositors accrue yield in the original asset they deposited.

The field labeled "My Deposits" shows your current balance in the pool, including any yield that has already accrued.

To withdraw your deposited cryptocurrency from the pool (incurring the withdrawal fee) you click on “Withdraw”.

Note that the displayed APY is after the performance fee has been subtracted.

Rebalancing

Rebalancing is the process by which pool strategies are adjusted and yield is compounded back into the underlying asset.

For lending and farming strategies, rebalancing typically means harvesting rewards, swapping them into the deposit asset, and redeploying them to generate additional yield. For borrow-based strategies, it ensures that collateral ratios remain within safe parameters by either reducing or increasing loan exposure as needed.

Rebalancing is handled by designated keepers. It occurs on a scheduled basis, roughly every two days on Base and Optimism, and every ten days on Ethereum mainnet, or in response to market conditions when required, particularly in borrow strategies.