Our premier product, Aastra V1 was launched a month ago as a shot in the dark. A research-backed experiment that reassigned the mechanism of concentrated liquidity to put selling payoff structures, built as a layer on top of UniV3.

Seems like the investverse has been verified with your blue tick of validation.

A big thank you to the early-stage Brahma community; here’s celebrating Aastra V1’s vault closure and here’s to making improvements in leaps and bounds for Aastra V2.

This blog puts Aastra back in the spotlight and introduces V2. Aastra V2 has been co-created implementing ideas and knitting community plus team feedback. V2 has been initialised to improve the yield generated while supporting multiple LP positions for short-put vaults.

The two major upgrades that we are planning for our V2 put vaults:

1. Improving the yield of the current put selling vaults.
2. Introduction of multi-pool deposits.

Current Aastra V1 results:

Total Depositors - 53

TVL (Capped)- 107K

NET ROI- 1.384%

ETH price movement since we opened the vault:

Since we opened up the vault the price of ETH has been on a parabolic movement leading to a long stagnation period in our V1 strategy.

Keeping this in mind we would like to propose a set of improvements on the existing strategy using multiple LP positions, set to be upcoming in V2.

Optimising yield, for the long-term

Aastra V2 is centered around the aspect of capturing yield through multiple LP positions.

Backtest assumption: ETH as an underlying asset steers positively in a yield-generation on a long-term scale.

Reality: Taking a telescopic view and basing ETH’s market price on real-time movement, it's a preeminent observation that ETH suffers polarized surges and plunges periodically.

Brahma leverages the polarised movement by taking a new LP position to maximize the yield generated despite the downward trend. To gain better insight let's take an example by comparing the new variation of strategies we are exploring for v2 with the existing V1 strategy.

In the current V1 vaults:

Every 14 days:

1. We select a price range with x% and deposit all the users funds into this price range.
2. We compound the fees collected in the duration of this position.
3. We rebalance the LP position into a new price range at the end of 14 days.

In first variation of strategy for Aastra V2,

Every 14 days:

1. We select a price range with x% and deposit only 50% of the users' funds in it.
2. When the price of ETH dips by x% we deposit the rest of the funds into the upper range to create a second LP position.
3. We compound the fees collected during this duration into their respective positions.
4. We rebalance the LP position into a new price range at the end of 14 days.

The main advantage of this version is the purchase of ETH at a discount of y% from its initial price. Having a second LP position allows for the better allocation of liquidity while decreasing the risk in the event of an untoward price movement. This also allows additional yield to be generated over our swap fees earned from the LP positions.

To test this improved strategy we used data through the past 5 months to analyze how our strategy works with respect to real-time data. The results of both our observations for a tight range of ETH prices are displayed below.

V2 Backtest Results:

V1 Backtest Results:

An important point that we observe here is that if the price of ETH dumps in price between rebalances we will still have similar impermanent losses as that of V1. We can infer this from the graphs above where similar drawdowns are observed when the same parameters are taken into consideration for both versions.

We are currently exploring another version of the strategy for Aastra V2,

Every 7 days:

1. We select a price range with x% and deposit 50% of the user's funds in it.
2. After 7 days from the first position, the second position will be deposited with the rest of the funds in the same x% range on the new current price.
3. We compound the fees collected during these durations once a certain threshold is crossed.
4. We rebalance the LP position into a new price range at end of 14 days.

The main idea behind this version of strategy is to prevent the stagnation period we are currently facing on the 14-day time frame. Which will be reduced leading to a more active strategy while maintaining the similar risk profile

Diversifying with Multi-Asset (pool) support for V2

With the single vault in V1, users are susceptible to huge drawdowns due to the polarised fluctuation of ETH’s price. These drawdowns can be minimized to a certain extent through the diversification of liquidity via multiple pools. When the user deposits their USDC, the tokens will be deposited into a new USDC pool which is connected to USDC-ETH, USDC-WBTC, etc. Having a multi-pool structure will minimise the overall drawdown on the LP position. Refer to the diagram below to help gain better insight into the architecture of this new feature:

With this new multi-pool architecture we plan to support more TVL and reduce the overall risk faced by single put selling payoff structure to a certain extent.

While our team is extensively researching and full-proofing Aastra V2, we aim to publish our results and reverberations simultaneously. Watch this space to stay tuned about upcoming details.

Find the source code used for the above analysis: here

Conclusion

We will address how the drawdown's of the current strategies can be reduced in multipool version in our next blog along with optimized version for single pool strategies discussed in current blog.

Legal Disclaimers

The aforementioned contents in this blog are based on numerous assumptions and uncertainties which are subject to change periodically. The effect of such changes may result in alterations in premise, risks and uncertainties and may cause actual results or developments to differ from the results and progressions anticipated by brahma.fi

Even if our anticipated results and progressions are materialised, such results and developments may yet still fail to achieve any or all of the anticipated benefits anticipated by this statement. Brahma reserves the right to alter the plans, and intentions recorded any time and for any reason or no reason, in sole discretion. Brahma undertakes no obligation to update the decision publicly or revise any forward-looking statement as future developments or otherwise.

All contents and graphics used in the material intend no religious impairment and do not superintend its interpretation. This blog is not aiming to provide legal, financial or investment or other advice. We recommend users to stack their information sources basis their own personal research and not draw tangents from the materials or contents mentioned.