Gravitational Wave Release

New Dynamic Vaults on Polygon - Leverage and Market Neutral Yield

0:00
/

Update since Escape Velocity

The last Toros release was only 6 weeks ago, when Toros announced Escape Velocity, which included two new Optimism based Dynamic Vaults: dSNX Synthetix Debt Hedging Index and Stablecoin Yield.

Since June 6, Toros has attracted over $2.5m TVL to Optimism bringing the total Toros TVL to over $5m.

Toros TVL growth since June 6 - via defillama

Now today we can announce three new Dynamic Vaults to the Polygon arsenal….


Announcing New Toros Strategies

The Toros dev team have been hard at work building new Dynamic Vaults to unlock new yield opportunities.

Within the Toros Gravitational Wave release, Toros is launching

  • USD Market Neutral Yield ($USDmny) Dynamic Vault on Polygon, which enables an automated Delta Neutral strategy earning yield in USD, and
  • New Leveraged MATIC strategies

USD Market Neutral Yield

A hedged yield vault can earn yield in a number of ways, the key point is being market neutral, i.e. it's indifferent to market movements up or down.

A delta neutral strategy involves holding equivalent assets both long and short to net out exposure to that asset, and taking advantage of potential yield opportunities from one side.

This hedged yield vault earns by LPing volatile assets like MATIC and simultaneously taking a short position on those assets (borrowing on Aave). This means that the vault has almost no exposure to MATIC price volatility (delta neutral), while earning trading fees from the LP.

As the price of MATIC moves, the vault rebalances both the hedge and the Aave position. It rebalances the hedge by either increasing the Aave position, or increasing the LP position when a threshold is reached to rebalance the hedge. It rebalances the Aave debt position also to keep the Aave Health Factor within a threshold (target Health Factor of 1.4).

With low price volatility, the vault will have little rebalancing and can earn trading fees with minimal cost. This is how the yield is generated for the strategy.

Below simplifies the strategy output once the hedged position cancels out the LP position. Periods of lower volatility result in decreased strategy costs.

Aave+Rebalancing Costs represent the costs of Lending and Rebalancing

Given this is a Dynamic Vault like other Toros services, the strategy will actively hunt pairs it can delta hedge with those that are either highly incentivized or demonstrate low volatility to minimise volatility decay.

As Toros launches USD Market Neutral Yield, the Dynamic Vault is commencing LPed into a stMATIC:MATIC pair, and has demonstrated an APY of 11.8% over the first two weeks of live testing.

Capped TVL

Note - For strategy effectiveness this Dynamic Vault is initially capped at $1M TVL.


Leverage on MATIC

Launching today is the ability for Toros users on Polygon to swap into MATIC leveraged tokens, either:

- MATICBULL2x: 2x long leverage, or
- MATICBEAR: 1x short

These strategies automatically manage and monitor leveraged loans to achieve a consistent target leverage ratio.

As an example, the MATICBULL2x target leverage ratio is in the range 1.8x - 2.2x, and at launch the ratio was 1.99x

These tokens are immediately available to Polygon Toros users and also available to dHEDGE Polygon managers.

More about Toros Leveraged Tokens here: https://docs.toros.finance/leveraged-tokens/leveraged-tokens


Sunsetting 1x Bear Tokens

In addition to launching the new Dynamic Vault, Toros will be sunsetting the 1x short tokens ETHBEAR1x and BTCBEAR1x.

The automation running these strategies will be turned off this week, so if you have a position in these strategies please withdraw your position. The ability to withdraw from within the Toros app will be maintained.


About Gravitational Wave

Gravitational Wave continues the Toros convention of naming product releases after scientific achievements.

About Toros Finance

Toros Finance is a dHEDGE incubated protocol integrating Aave and 1inch. Toros Finance aims to simplify access to complex derivative strategies, safely, via offering these strategies through a single token.
Toros Finance offers a suite of on-chain tokenized derivatives products. Currently Toros is deployed on Polygon and Optimism.