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Rari Stable Pool: How it Works

This document explains how the Rari Stable Pool works under the hood. This content is also available on our website.

Generating Yield

Currently, the Rari Stable Pool generates yield by depositing a combination of:

  • DAI and USDC to the lending protocol dYdX
  • DAI, USDC, and USDT to the lending protocol Compound
  • DAI, USDC, USDT, TUSD, BUSD, and sUSD to the lending protocol Aave
  • mUSD to the savings protocol from mStable

Rari optimizes yield not only by allocating assets to the pools with the highest interest rates, but also by exchanging assets to the stablecoins with the highest interest rates via a combination of:

  • the 0x exchange
  • swapping via mUSD from mStable

In the near future, we will be generating yield from more currencies across more lending protocols, among other strategies.

RSPT (Rari Stable Pool Token)

Each user's share of the Rari Stable Pool is represented by their RSPT (Rari Stable Pool Token) balance. When you deposit funds to the Stable Pool, an equivalent amount of RSPT is minted to your account. When you withdraw funds from the Stable Pool, the equivalent amount of RSPT is burned from your account. As soon as you deposit, you start earning yield. Essentially, Rari Stable Pool holdings and yield are split up across RSPT holders proportionally to their balances.

Deposits

Only certain stablecoins are accepted for direct deposits (direct meaning without exchange to an accepted currency). To deposit another currency, you must exchange your funds before depositing. Fortunately, Rari can exchange and deposit your funds in the same transaction via 0x and/or mStable (please be aware that exchanges via 0x are subject to slippage due to price spread as well as an ETH protocol fee, and exchanges via mStable are subject to a small denominational percentage fee, but can avoid slippage and even get you a bonus).

See USAGE.md for more information on how to deposit via the smart contracts and API.md for a detailed reference on the smart contract methods involved. See the Rari SDK for easy implementation and the web client for easy usage.

Withdrawals

Only the stablecoins currently held by the Rari Stable Pool are available for direct withdrawals. To withdraw another currency, you must exchange your funds after withdrawing. Fortunately, Rari can withdraw and exchange your funds in the same transaction via 0x and/or mStable (please be aware that exchanges via 0x are subject to slippage due to price spread as well as an ETH protocol fee, and exchanges via mStable are subject to a small denominational percentage fee, but can avoid slippage and even get you a bonus).

See USAGE.md for more information on how to withdraw via the smart contracts and API.md for a detailed reference on the smart contract methods involved. See the Rari SDK for easy implementation and the web client for easy usage.

Structure

The Rari Stable Pool is composed of 5 user-facing smart contracts in total (see DEPLOYED.md for deployed addresses):

  • RariFundManager is the Rari Stable Pool's main contract, handling deposits, withdrawals, USD balances, interest, fees, etc.
  • RariFundController holds supplied funds and is used by the rebalancer to deposit and withdraw from pools and make exchanges.
  • RariFundToken is the contract behind the Rari Stable Pool Token (RSPT), an ERC20 token used to internally account for the ownership of funds supplied to the Rari Stable Pool.
  • RariFundPriceConsumer retrieves stablecoin prices from Chainlink's public price feeds (used by RariFundManager and RariFundController).
  • RariFundProxy includes wrapper functions built on top of RariFundManager: exchange and deposit, withdraw and exchange, and deposit without paying gas via the Gas Station Network (GSN).

A centralized (but soon to be decentralized) rebalancer controls which pools hold which currencies at any given time but only has permission to move funds between pools and exchange currencies, not withdraw funds elsewhere.

Security

Rari's Ethereum-based smart contracts are written in Solidity and audited by Quantstamp (as well as various other partners) for security. Rari does not have control over your funds: instead, the Ethereum blockchain executes all secure code across its entire decentralized network (making it very difficult and extremely costly to rewrite history), and your funds are only withdrawable by you.

The rebalancer only has permission to move funds between pools and exchange currencies, not withdraw funds elsewhere. Losses due to exchange slippage in a 24-hour period are limited proportionally to the total supply for security since 0x orders can come from anywhere. However, the rebalancer can approve any amount of funds to the pools and exchanges integrated.

Please note that at the moment, smart contract upgrades are approved via a multisig federation controlled by various trusted parties. Each of the upgrades need to be voted on by governance at: vote.rari.capital for them to go live.

Please note that using our web client online at app.rari.capital is not nearly as trustworthy as downloading, verifying, and using it offline. Lastly, the rebalancer can only rebalance funds to different pools and currencies (with limits on slippage).

Risk

We have covered security above, but see our website for more information on the risks associated with supplying funds to Rari.

Fees

See this Notion article for more information about fees and where they go.

COMP

All COMP (Compound's governance token) earned by the fund is liquidated into additional interest for RSPT holders approximately every 3 days.