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When you deposit into a vault, the contract transfers your assets to a strategy that dynamically optimizes your liquidity position and continuously adjusts + compounds rewards to maximize your APY while minimizing unnecessary swaps and gas costs. In return, you receive Vault Tokens, which represent your claim on the original deposit plus any yield earned. When you’re ready to withdraw, simply return your Vault Token, and the vault sends back your underlying assets with all accumulated rewards. Vaults

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YieldIQ Strategy

YieldIQ is powered by on-chain algorithms that dynamically adjust your positions to optimize yield and mitigate risk — all without manual intervention or external scripts. Below is a detailed look at how it works.

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1. Single-Token Deposits

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1.1 Why Single-Token Deposits?

Traditional liquidity pools require two assets in a fixed ratio (e.g., 50/50), often leading to swap costs and exposure to volatility. YieldIQ simplifies this by allowing single-token deposits, so you can:
  • Deposit just one token (e.g., your project’s native token or a stablecoin).
  • Receive a Vault Token representing your share of the underlying liquidity pool.
  • Avoid unnecessary swaps that might dilute your position in volatile markets.

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1.2 Directional Liquidity

Depositing a single token also tells the strategy which asset you prefer to hold in greater quantity. YieldIQ’s algorithm automatically avoids over-selling that asset, maintaining a higher inventory of your preferred token.

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2. Inventory-Based Rebalancing

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2.1 Core Concept

Instead of reacting to every price movement, YieldIQ tracks your inventory ratio — how much of each token you hold within the pool. Rebalancing only occurs when the pool’s composition deviates from a predefined target range. This reduces unnecessary swaps and gas fees while maintaining optimal liquidity exposure. Key States:
  • Healthy: Liquidity is well-balanced and earning fees efficiently.
  • Over-Inventory: You hold too much of your deposited token; the strategy may sell a portion to rebalance.
  • Under-Inventory: You hold too little; the strategy buys more to restore target levels.
  • High Volatility: The strategy broadens price ranges to mitigate risk.
  • Extreme Volatility: The vault may lock temporarily or require manual review for safety.

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2.2 No Swap Costs in Rebalancing

Because YieldIQ tracks deposits natively, it often repositions liquidity without performing swaps. This reduces gas usage and avoids unnecessary selling or buying of your core token unless absolutely necessary.

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3. On-Chain Autonomy

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3.1 100% Smart Contract Logic

All YieldIQ functions operate entirely on-chain — without any privileged controller or off-chain script. This ensures:
  • Transparency: Every rebalance is verifiable on the blockchain.
  • Fairness: No entity can adjust positions for their own benefit.
  • Security: Funds remain under your control; no private keys or custodial access are required.

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3.2 Automated Triggering

Rebalances happen automatically based on inventory thresholds, price triggers, or time intervals defined in each vault’s parameters. You never need to pay extra gas fees or manually babysit the vault.

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4. Yield Generation

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4.1 Trading Fees

As traders interact within your liquidity range, you earn a proportional share of trading fees. YieldIQ’s concentrated liquidity strategy keeps your position “in-range” as much as possible, maximizing fee collection and auto-compounding yield back into your position. (In VE33’s, trading fees are routed to voting gauges.)