Stablecoin Products Explained
What are DeFi strategies, vaults and how can you use them to build products to serve stablecoin-based customers?
In this section, Steakhouse Financial breaks down how stablecoin yield products work. The goal is to simplify two concepts that are often presented as more complex than they need to be: strategies that generate yield (Repo, Term, Carry, and Looping) and vaults that aggregate deposits and execute those strategies onchain.
Traditional, or legacy, financial products, even when designed well, are generally opaque to their execution, difficult to combine or compose and rely on legal mechanisms to enforce rules and regulations.
Stablecoin-based products, when designed well, can offer transparent and fast execution, easy composability with other strategies and combine rule definition and enforcement in the same program.
Stablecoin-based finance broadly consists of two parts:
Strategies
Vaults
Strategies
We take a simplified view of strategies that are possible in crypto and reduce them to
Repo
Term
Carry
Looping
Vaults
Vaults are tools that simplify the user experience for the user looking to get exposure to one or more of the above strategies. The infrastructure these strategies can be executed in can be either
Modular
Integrated
The key features that will make a compelling product relative to traditional (or legacy) financial products are vaults that offer:
Onchain net asset value (NAV) accounting
Automated portfolio strategy
Strict noncustodiality
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