Easily optimize your AAVE yields

Strategies are algorithms that decide where to position the liquidity pooled in each Cellar with objectives that can include maximizing yield and mitigating risk.

Sommelier enables a wide variety of possibilites for designing these strategies. Strategy algorithms can take into account a variety of inputs:

• Base case: simple APY signals about each token from the connected protocols
• Highly sophisticated case: External signals including both on-chain signals from DeFi protocols as well as off-chain signals like equity index changes or even aggregated social media sentiment. The strategy provider has the freedom to leverage any type of off-chain computation to arrive at these strategy recommendations. The only constraint is that the recommended actions are within the parameters of what the cellar contract allows.

The debut Aave Cellar supports fund allocation only to the single best performing position.

The Sommelier stablecoin cellar's first release is a showcase of how off-chain strategies (algorithms) can redistribute your funds for maximum performance. It is designed with safety in mind and has been thoroughly tested internally and externally audited.

The next version of the strategies will support multiple protocols.

These strategies will be able to invest in defined positions across multiple protocols.

Strategies will also allocate to multiple positions with different weights.

Before submitting the strategy for the validators, each strategy's performance is backtested to prove its potential. Backtesting results tell us how the automated strategy would have performed based on historical data. The automated strategy, on the other hand, is an iterative process. We can use our simulators to refine the strategy to yield the best results on historical data.

Sommelier also deposits our own funds to prove the validity of each strategy and kick-off the initial liquidity so users could see strategy's immediate performance.

Scenario #1:

• Strategy providers - Initial idea how strategy could work
• Sommelier - Helps put the strategy in a mathematical model
• Sommelier - Sommelier data team helps backtest the strategy performance.

Scenario #2:

• Strategy providers - Have already defined strategy model and generated backtested strategy performance.
• The Sommelier cellar team will help strategy get live on the platform where it can allow interested parties to deposit in the cellars attractive to them.

In an ideal world, a strategist could run a strategy on Sommelier with minimal (if any) programming experience. Even with programming experience, building backtesting infrastructure is non-trivial. To lower this barrier, we are working on developing generic and flexible tools to support backtesting and deploying new Cellar strategies on Sommelier.

Strategy backtesting results are submitted for validators.

Validators hold the voting power to approve the strategy.

If the validators accept the strategy, Steward (endpoint which later will take in the strategy signals and distribute them across validators) can start accepting the signals from the strategy.

A Cellar is a smart contract that executes trades among a selected set of tokens (positions) based on instructions dictated by off-chain computation.

The Sommelier development team helps each strategy creator set up the Cellar to which their strategy is connected.

Although strategy providers can change the strategy logic (algorithm which sends position signals to the Cellar), they must submit position additions to Sommelier Governance. This adds a layer of safety for users who have allocated funds to Cellars. They can rest easy knowing that their assets can only be in the prescribed positions that each Cellar manages.

No, for the same strategy provider to add new DeFi protocols new Cellar should be created.

You can deposit only the tokens supported by a particular Cellar strategy.

When changing positions, Sommelier swaps your deposited token to other tokens supported by the strategy.

Before a strategy goes live on the platform, Sommelier governance accepts or declines the strategy based on backtesting data results for ROI, risk management, or other metrics which the strategy provider and governance community deem important.

Sommelier also deposits our own funds to prove the validity of each strategy and kick off the initial liquidity so users can see the strategy's immediate performance.

Strategy performance will be visible in real-time.

You can redeem your funds at any time. No questions asked.

Strategies will update every hour.

Sommelier is a non-custodial platform. Your funds are stored directly on the AAVE Ethereum smart contracts or, if positions are currently liquidated, exited as an illiquid supply on the Sommelier Cellar Smart Contract.

All transactions are managed by the Sommelier validator set with decentralized governance. Sommelier cannot steal user funds.

All Cellar Smart Contracts undergo extensive internal reviews by our highly sophisticated solidity engineers, as well as multiple external security audits. This slows down the process of launching a new Cellar, but this way, maximum security is guaranteed.

You hold your Ethereum wallet private keys. You can interact directly with each Cellar smart contract to redeem your funds from the Aave contracts.

No, the Gravity bridge is used to send only the position change instructions. No actual funds are moved between Sommelier validators and strategy providers and Cellar Smart Contracts on Ethereum.