Overview
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How does Best Yield work?

Best Yield strategy constantly monitors interest rates on various DeFi yield sources to ensure the current allocation is yielding the best aggregate interest rate available on the market.
Users' funds are pooled together and programmatically deposited into one or more of the available lending protocols.
By analyzing supply rate functions across integrated platforms and total funds in the pool, the strategy is able to constantly rebalance capital across any number of protocols to earn the highest interest rate possible with very high precision.
When a user deposits funds, an equivalent amount (value-wise) of strategy tokens (idleTokens) is minted to his or her account. When a user withdraws funds from the strategy, the equivalent amount of value in the strategy token is burned from his or her account.
As soon as the user deposits, he or she starts earning yield. Essentially, idleTokens holdings and yield are split up across the pool token holders proportionally to their balances. For example, users will get IdleDAI if they deposit into the DAI BY pool.

Allocation model

Best Yield strategy maximises the current aggregated interest rate, this can be modelled as follows:
maxΒ q(x)=βˆ‘i=0nxitotβˆ—nextRatei(xi)max\ q(x)= \sum_{i=0}^{n} \frac{x_i}{tot} * nextRate_i(x_i)
where n is the number of lending protocols used, x_i is the amount (in underlying) allocated in protocol i , nextRate(x_i) is a function that returns the new APR for protocol i after supplying x_i amount of underlying and is tot the total
tot=βˆ‘i=0nxitot=\sum_{i=0}^{n} x_i

Protocols and assets

Currently, the Best Yield strategy is available on Ethereum and Polygon blockchains. For each network, there is a different basket of assets available in the pools.

Integrated protocols

Currently, there are three protocols integrated into Idle:
Idle DAO has established a series of Integration Standard Requirements required to implement a new yield source or an asset in the Best Yield strategy.

Integrated assets

Ethereum network
Polygon network

Benefits of using Best Yield

  • A superior optimisation algorithm for automatic management of users funds;
  • Gas fees savings for funds rebalance (which the user would have to pay to deposit funds/interact from one platform to another);
  • Participating in $IDLE liquidity mining program and leveraging all the advantages linked to its multiple use-cases;
  • By depositing into BY pools users can get several other underlying governance tokens (e.g. COMP or AAVE);
  • For integrators, no need to stitch together disparate protocols or spend months integrating and updating yield functionality.