Feeder Finance – Vault Update July 29,2021

Products:

  • BUSD DOP 2Pool Compound
  • USDT DOP 2Pool Compound
  • BUSD Auto Diversify 
  • USDT Auto Diversify

Summary:

  • Dopple Finance’s APY estimates, which are pulled over to Feeder Finance’s UI, can be misinterpreted to assume a higher than expected up-to-date APY.
  • In the investigation process, the team has also identified changes in liquidity conditions that affect the swapping of DOP native tokens.
  • We’ve worked with Dopple to clarify the problem. We have also taken measures to update the DOP 2Pool vaults and USDT/BUSD Auto Diversify vaults; including resolving swapping liquidity issues.
  • Users’ balances have been updated and compensated to match perceived APY.
  • Going forward Feeder Finance 1) will not rely on target platform data and create custom API for APY data to display standardized APY figures that reflects a fair estimation of APY, and 2) create internal API data panels to monitor harvest results of all vaults which will allow for a swift reaction to any changes in market conditions.

Detailed Information

The Issue

  • Dopple’s platform APY shows a 1-year historical APY, which highly overestimates recent APY from the swap pool; we use target platform API to feed into our data; therefore, our APY shows the same overestimation. While not wrong, it could create inaccurate expectations that Feeder Finance disagrees with.
  • By investigating the APY, we’ve also realized that between the time of smart contract development, audit process, and today, liquidity in the pool used for compounding DOP harvest is no longer liquid, causing reward compounding to be done at less than ideal swap rates.

Resolution

  • All DOP included contracts have been updated over the past two days to
    1. Compensate investors fully for lower than “expected” APY; investors with balance should have at least 24% APY had they invested in any of the affected vaults and in most cases more than 24% APY, and
    2. Retarget our compounding to a liquid pair.
  • We are working on the APY APIs at this moment and will provide an update when they are complete.  Our APY figures will likely show 7-day past returns as a standard that reflects recent performance and account for day-to-day volatility.

Process Implementation Going Forward

  • As different platforms use different APY standards, we feel it is necessary to develop our API for showing expected APY. This is a major step to create a consistent standard, holds platforms accountable for the choice of APY display, and avoids any misleading investment information.
  • Implementing this will add ~2-3 days of development time per new platform getting listed, but it is necessary to provide the most accurate information for our users over the long run.
  • We will create APIs of harvest results for all products launched to observe and quickly react to changing market conditions. This will monitor results in case there are liquidity issues at any of the pools we compound rewards in going forward.

Final note

  • Most vault platforms have regular vault updates and may or may not inform users. We chose to inform as we value transparency, especially when it comes to the product related to users’ funds.
  • We aim to protect our investors and make sure investors have the correct understanding of all investment options before making deposits. While Dopple’s calculation is not technically wrong, it fails to account for “recent” returns generation, which is significantly different from past returns. We would also like to thank Dopple Finance for a quick turnaround on providing clarity and working with us to clarify how their calculations are done and their thinking on the issue.