Stablecoins have become a fundamental component in the DeFi ecosystem, providing a stable store of value crucial to various financial activities. If properly managed, they can also be a source of yield.

Onchain treasuries can significantly enhance their long-term financial health and growth potential by deploying stablecoin reserves across lending platforms. Maximizing that yield, however, requires monitoring and rebalancing those stables on an ongoing basis, which is no easy task.

Aera can simplify the process for onchain treasuries. A treasury management protocol incubated by Gauntlet, Aera can automate and optimize a stablecoin-rebalancing strategy, allowing onchain treasuries to enjoy passive yield without the logistical headache that comes with constant manual rebalancing — and, importantly, without giving up custody of their tokens.

Aera Vaults Enable Set-it-and-Forget-it Treasury Strategies

Aera offers a DeFi-native treasury solution that helps vault owners reach their objectives while being non-custodial and highly responsive to real-time market conditions. For a deep dive into how Aera works, check out our docs.

Beyond optimizing for stablecoin yield — the subject of this post — Aera vault owners have the option to configure their vaults with several additional treasury management strategies, mixing and matching as they see fit to achieve their strategic goals, including levered ETH staking, dynamic liquidity provisioning, volatility targeting, and low-liquidity asset diversification.

Breaking Down Aera’s Stablecoin Vault Strategy

Aera vaults using the stablecoin strategy are designed to optimize returns and enhance asset security while maintaining high liquidity (i.e., funds are readily accessible when needed) and operational efficiency.

To achieve these objectives, Aera’s stablecoin strategy can be broken down into three buckets:

• Asset and Protocol Allocation

• Yield Optimization

• Risk Management

Asset and Protocol Allocation

To get started, onchain treasuries can deploy USDC — the first stablecoin supported for this strategy — into a non-custodial Aera vault. The Guardian regularly makes parameter recommendations for each vault based on current rates to maintain desired allocation ratios and adapt to market conditions.

Yield Optimization

To optimize risk-adjusted yield, Aera monitors the supply APYs across Compound, Aave, and Morpho, seeking to maximize risk-adjusted yields in its strategic allocations.

The recommendations deployed by Aera aim to achieve yield optimization by simulating various levels of supply to determine the optimal allocation that maximizes yield while minimizing potential losses due to insolvency. The configuration is flexible and can be adjusted based on the vault owner's specific needs and risk appetite.

Risk Management

In addition to portfolio simulation, Gauntlet (as the Guardian) runs a risk assessment every five minutes to evaluate various risk exposures of a vault’s assets. The assessment monitors market volatility, non-Aera positions that are large enough to move the market, and the quality of collateral being used to borrow supplied USDC.

Each Aera vault has configurable maximum-loss parameters, which are vault-transaction limits that prevent any Guardian transaction recommendation from resulting in a loss of more than a predetermined amount. Such limits are immutably configured by the vault owner. Any limit-breaching transaction recommendation would be automatically reverted by the smart contracts that interact with the vault.

Getting Started with Aera's Stablecoin Vault Strategy

To spin up a vault and begin using the Aera stablecoin strategy, or other available treasury management strategies, please reach out to us on X or explore our website.