It was during the great DeFi bull run of 2020, that the anointed philosophizer Mike Saylor once said of yield aggregators, "There is no second best" when discussing Yearn.

Since that time many new yield aggregators have come and gone, a new vault standard has been born, big Unc Powell threw a Miley Cyrus sized wrecking ball through the whole business model and yield farming has been transitioning more into off chain point accumulating.

Yet here we stand at the cusp, the end, a moment, in a new bull market. The 4626 standard has over $8B of TVL, and Yearn is far from the only yield protocol out there any more.

In the world of yield aggregators there is a wide range of choices protocols can make when determining what kind of product the are going to offer. You can do simple LP compounders, single strategy vaults, isolated lending market optimizers, fixed rate vaults, multi strategy single asset vaults and many more. Each of these categories could be implemented countless different ways each with its own tradeoffs and benefits.

For most of its life Yearn has been focused mainly on the LP compounders and the low risk multi strategy single asset vaults (i.e. yvDAI). But with V3 the guard rails have officially come off and the world of possibilities has opened up for not only Yearn but DeFi as a whole to build and experiment with any and all new types of vaults.

Yearn V3 gives developers a secure and stable base core code that can be built on top of in any way to bring someones vision to life without having to worry about the most high risk and mundane parts of vault development.

In a previous article I covered the major updates to our strategies that allow for any one to easily build and deploy their own single strategy vaults. Today's class lesson is focused on the multi strategy, or "allocator" vaults, and what Yearn and others are already doing with their new found freedom.

I'm Aaallllllllooooccccaaatttiinnnnggg

Once upon a time, not that long ago, the mighty little yield aggregator who could created DeFi's very first multi-strategy, single asset vaults. Simply deposit your token, DAI, WETH etc., and sit back and enjoy all the benefits of the yield farmer lifestyle without any of that pesky "work" or gas fees.

Deposited tokens are divided up amongst an array of strategies based on the current market in order to generate yield for depositors while still assuring that funds were always safe and liquid at any time for withdraws. Dubbed "up only", these vaults allowed depositors to sleep well at night.

As DeFi has matured grown, the complexity and optionality has grown with it. And while many DeFi users are just as redacted risk-on as ever, the demand for higher yields has drawn many people out on the risk curve exploring the exciting and trustless world of new ideas such as "Points".

Suddenly these up only vaults seemed less and less exciting to DeFi gamblers users, preferring to get their fix elsewhere.

So what’s a boring old yield aggregator to do?

Introducing Yearn Points!!!!!!

Just kidding.

However, with the launch of V3, Yearn now has the ability to offer many new types of vaults not seen before.

If you have visited the V3 home page recently https://yearn.fi/v3 you may have seen some confusing new nomenclature appended to some of the single asset vaults.

Da Fuq does -2 mean?

Well my friends, this is an example of the first ever not Up-Only Yearn vault. These vaults are a first iteration to satisfy the degen in all of us. They will allocate funds to strategies/protocols that would previously have been deemed to risky, illiquid or novel to make it into the traditional Yearn vaults. But what that means for the user is also the potential for much higher yield.

Given the composable nature of V3 as best explained by our furry Koala friend in this twitter thread these "2" vaults are using the corresponding "1" vault as a strategy in order to provide a buffer of safe liquidity for quitters withdrawer’s.

This setup allows Yearn to not only begin to offer some of the higher yielding strategies and vaults people have been craving for years, but also allow us to keep the Up-Only/"-1" vaults even safer and Up-Onlyer.

These categorizations can be extended even further to fulfill any thing desired.

Perhaps "3" could be cross chain vaults.

"4" could only use RWA's to generate yield.

And "5" could finally fulfill crypto's long stated goal of cutting out the middleman by simply sending deposited funds directly to the DPRK.

If you can dream it, you can build it

Since the launch of V3 we have already seen multiple novel applications of the multi strategy allocator vaults along side the "2" vaults with even more exciting versions to come.

One of the most prominent use cases that has popped up is pooling depositor liquidity for use in many of the new isolated lending markets.

One of the very first partners that started using V3 was Sturdy Finance, who are using the V3 vaults this way, to simplify the use of their new isolated lending markets.

The Juiced vaults are another great of example of this same concept built on top of Ajna (with more to come) but with the added benefit of having the option to auto compound the Ajna rewards for depositors.

And of course the WETH-2 vault is using both of these separate allocator vaults as strategies within its own allocation in order to give users an even simpler and diversified exposure to both options.

The full revamp of the yCRV and yPrisma system will use V3 vaults in order to give users the ultimate optionality with their liquid locker tokens.

In conjunction with Gnosis Pay Yearn chads have been using V3 vaults to power an on chain savings account that auto-rebalances for you as well as providing credit to your Gnosis card. Who said crypto doesn't have real world use cases!

One of the most exciting new vault types just announced is in conjunction with Polygon that will use V3 vaults on mainnet to allow any of their AggLayer rollups a native way to earn yield on any funds bridged to their L2.

And many many more yet to come.

Un-Opinionatednessess

While I am certain that the people who know me well would certainly never use the term "un-opinionated" to describe me personally, that was the main goal when developing the core underlying contracts for V3.

Building efficient, secure, 4626 compatible contracts that are flexible enough to allow anyone to bring their own specific vision to life. The allocator vaults entire purpose is to be secure where it matters but still malleable enough on the edges to fit the needs of multiple different visions and users both within Yearn and outside.

The modular approach to design certainly adds complexity in some places but, is what allows so many different use cases to re-use the same trusted base code with their own specific implementation.

And while we have already spent a lot of time and effort building, testing and deploying some generic periphery contracts that anyone can use to run their own allocator vault we also hope people will continue to build novel contracts for their own use that pushes development forward.

The core vaults can be extended through custom debt allocators, accountants, dynamic deposit modules or even simply new governance patterns.

The Allocator

DeFi is an ever expanding environment of new protocols, lending markets and an insurmountable amount of ways to deploy capital.

While it is outlandish to think that Yearn could serve all of these different needs and markets, it should be an expectation that anyone wishing to deploy capital, for just themselves or for others, be able to use secure, efficient and composable code to do so.

It no longer takes months, tens of thousands of dollars and incredibly niche knowledge of horrifyingly boring topics such as float precision and rounding attacks to launch your own multi strategy vaults.

All it takes is

vault_factory.deploy_new_vault(...)

Wanna be allocators, can now spend their time on customizations for their own specific use case while remaining confident in the security of the base code.

So you have to ask yourself one question...

Do you wanna be an Allocator?

Well then check out the V3 docs here https://docs.yearn.fi/developers/v3/overview

And don't hesitate to reach out on Telegram or Discord with any questions/ideas. Our band of furry, mostly coherent and chronically online team would be happy to help you build the next great yield aggregator implementation.