TeaVault
As strategies may be off-chain (to avoid front-running), the vaults have to be on-chain (as custodians) to deter fund managers from rug-pulling. Teahouse provides a smart contract for fund managers to accept liquidity from investors and operate the smart contract to adjust positions in a Uniswap v3 pool.
Because the strategy is controlled from an off-chain backend, it can be adjusted at any time, have complex computations, and reference more data. In addition, an off-chain backend can only adjust positions but cannot retrieve liquidity from the smart contract, so fund managers cannot arbitrarily withdraw the investors’ funds.
A FIM is a fund with a fixed total investment amount. It has an “ICO” period, where funds are collected, with corresponding amounts of ERC20 fund coins delivered to the investors. The fund is then managed using the TeaVault (strategy vault). After a predetermined period of time (e.g. 6 months), the fund is concluded, and the fund coins can be used to redeem the investments and profits. Fund coins can be freely exchanged so that the ownership of the investment can easily be transferred.
- 1.ICO period: (receiving investments based on a stablecoin such as USDT): Fund coins are initially pegged to the stablecoin.
- 2.TeaVault custody: Stablecoins received in the fund are exchanged into the underlying Uniswap v3 tokens (e.g. to BTC and ETH for BTC/ETH pool). Fund coin values are calculated as the current total fund value (value of all positions combined) divided by the total number of fund coins. Fund coins may also have a separate market value depending on how the market views the future of the fund.
- 3.Fund conclusion: All positions are liquidated and exchanged back to the original stablecoin. Investors use the fund coins to redeem their investments proportionally.
- 4.Fund restart (optional): Investors may opt to join another round of the fund using their fund coins in exchange for new fund coins of the next round. They may be charged a smaller fee as an incentive. Investment timing is arranged so that investors opting to join the new round will not have their shares of positions exchanged back to the original stablecoin, resulting in lower fees.
While similar to the fixed model, VIM puts TeaVault to work perpetually, with no time limitations. Anyone can deposit funds into the TeaVault and receive the corresponding amount of ERC20 fund coins ($TEA). The fund coins can be redeemed at any time (with a small fee attached if within a specified time range). This model is more convenient for investors, but higher gas fees may occur if all positions must be evenly increased after a new investment, and decreased after a withdrawal.