Overview

StakeKit’s Allocator Vaults enable clients to collect both Performance Fees and Management Fees, offering a flexible mechanism for monetizing DeFi yield opportunities. These vaults act as intermediaries, enabling clients to generate revenue from user deposits and the rewards they accrue while maintaining a minimally trusted and secure management of user funds.

Allocator Vaults are ERC-4626 compliant, support single or multi-strategy setups, and integrate seamlessly with DeFi protocols through Adapter contracts, which handle strategy-specific logic for deposits, withdrawals, and reward harvesting. However, as the vaults hold the receipt tokens of the underlying protocols, they break DeFi composability.

Terminology

Term	Definition
Allocator Vault	An ERC-4626 compliant smart contract that manages user deposits and distributes them across one or more DeFi strategies while enabling performance fee collection.
Strategy	A specific yield-generating protocol or mechanism where the vault deploys user funds (e.g., lending protocols, liquidity pools).
Adapter	A specialized contract that interfaces between the Allocator Vault and a specific DeFi protocol, handling protocol-specific interactions.
Update Allocation	The process of managing fund allocations within a vault to optimize yields, applicable to both single and multi-strategy configurations.
Allocation Manager	A designated role authorized to adjust fund distributions across whitelisted strategies within the vault.
Harvest	The process of harvesting rewards generated by the underlying strategies, updating the vault’s price per share to reflect profits, and applying performance fees by minting new vault tokens for fee recipients.
Price Per Share	The current value of one vault token, which increases as strategies generate yields.
OAV	An operating mode for Allocator Vaults to dynamically allocate funds across multiple strategies based on performance metrics and market conditions.

🎛️ Allocator Vault Interactions

Deposits

User Interaction: Users deposit ERC-20 tokens into the vault. The vault allocates these assets to one or more underlying strategies via Adapters and mints vault-specific tokens to the user, representing their share of the vault.
Ownership Representation: Vault tokens comply with ERC-20 standards, providing compatibility with wallets and dApps while tracking user ownership.

Withdrawals and Redeems

Withdrawals: Users can withdraw a specific amount of assets. The vault burns the corresponding amount of their vault tokens and transfers the requested assets back.
Redeems: Users can fully exit their position by redeeming all their vault tokens. The vault calculates the equivalent value in underlying assets and transfers it to the user.
The vault adjusts the price per share dynamically, ensuring users’ withdrawals and redemptions reflect the performance of the underlying strategies.

Updating Allocations

The primary feature of Allocator Vaults is their ability to allocate funds to underlying strategies. This process is managed by an account with the dedicated Allocation Manager role, which is authorized to reallocate funds between the vault and its whitelisted strategies. The allocation workflow ensures:

Secure and Minimally Trusted Reallocation: Funds can only be moved between approved strategies, adhering to the vault’s minimally trusted architecture. The Allocation Manager cannot directly access or withdraw user funds.
Optimized Allocator Vault (OAV): An operation mode that allows the Allocation Manager to adjust allocations across specific strategies based on market conditions, performance, or risk considerations, ensuring efficient use of deposited assets.
Integration with Adapters: Fund movements are executed through Adapters, which abstract the interaction with underlying protocols, ensuring strategy-specific logic is adhered to during reallocations.

Reward Harvesting

Rewards generated by the underlying strategies are periodically harvested via a harvest function.

During harvesting:

The vault retrieves allocation and share positions from the underlying protocol through Adapter contracts. Realized profits or losses are calculated based on the increase in the protocol’s balance or share value since the last harvest.
Realized profits are reflected in an updated price per share, directly benefiting all vault token holders by increasing the value of their holdings.
A percentage of realized profits is allocated as Performance Fees by minting new vault tokens and transferring them to designated fee recipients.
Accrued Management Fees are calculated based on an annualized percentage of the total assets under management (AUM), including both principal and rewards, and the time elapsed since the last harvest. New vault tokens are minted and distributed to fee recipients, proportionally diluting all token holders.

🔨 Features

Multi-Strategy and Single-Strategy Configurations

Allocator Vaults can operate in a single-strategy mode or manage allocations across multiple strategies. Multi-strategy configurations allow diversification of user deposits while leveraging the Optimized Allocator Vault Mode (OAV) to dynamically adjust allocations based on performance metrics and market conditions.

Minimally Trusted Management

Funds are strictly limited to whitelisted strategies, ensuring no direct access to user assets. The self-custodial design preserves user control while enabling transparent interactions with approved strategies.

Fee Mechanism

Allocator Vaults support both performance and management fees, allowing clients to configure their preferred fee structure, typically following a 2/20 model:

Performance Fees: Charged on realized profits generated by underlying strategies. During the harvesting process, the vault calculates the profits earned since the last harvest, deducts the configured fee percentage, and mints new vault tokens to allocate to predefined fee recipients. This ensures users are only charged on realized yield, preserving their initial deposits.
Management Fees: Applied periodically as a flat annualized rate on the total assets under management (AUM), including both user deposits and accrued rewards. The vault calculates the fees based on the elapsed time since the previous harvest and mints new vault tokens to represent the fee amount. These tokens are allocated to fee recipients, slightly diluting all participants proportionally.

Clients can choose to implement either fee type or a combination, tailoring the fee model to align with their operational and revenue objectives.

Incentive Rewards

Additional tokens or rewards provided by underlying protocols can be claimed and reinvested or distributed to enhance overall returns.

🔌 Adapters

Adapters act as the integration layer between Allocator Vaults and underlying DeFi protocols. They implement a standardized interface that ensures consistent functionality across strategies.

Adapter Responsibilities

Asset Operations: Facilitate deposits, withdrawals, and redemptions between the vault and the protocol.
Allocation Tracking: Provide allocation and share positions for accurate reward harvesting.
Incentive Management: Claim and manage protocol-specific rewards.

Scoped Adapters

ERC-4626 Adapter: Supports protocols adhering to the ERC-4626 standard.
Aave V3 Adapter: Integrates with Aave's lending pools.
Spark Adapter: Manages interactions with Spark's DeFi ecosystem.