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Arrakis Pro’s Yield-Bearing Asset Strategy allows issuers of yield-accruing tokens, for example syrupUSDC or USD.ai, to maintain consistent sell-side liquidity as the asset’s price drifts upward with yield, avoiding the standard problem where passive LP positions fall out of range as yield accrues. The strategy is designed for tokens whose value rises predictably over time, such as yield-bearing stablecoins, liquid staking tokens, and tokenized treasury or private credit products. The vault holds inventory heavily skewed toward the quote asset (up to 99%, depending on expected sell-side demand). Rebalances trigger automatically as the asset’s exchange rate drifts.

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How it works

The team configures:
  1. The asset pair (yield-bearing token paired with a quote asset such as ETH or a stablecoin).
  2. The inventory skew (heavily weighted toward the quote asset, up to 99%, depending on expected sell-side demand).
  3. The ERC-4626 vault the yield-bearing token mints and redeems against, used to rebalance the Arrakis vault’s inventory as it accumulates one side of the asset.
The strategy deploys the inventory as concentrated liquidity around the spot price, using narrow tick spacing for tight spreads. Most of the quote asset sits at and slightly above the current price, ready to fill sell flow from the yield-bearing asset back to the quote. On Uniswap v4, the pool can run dynamic fees through the Arrakis v4 hook, adjusting to the pair’s volatility. As yield accrues to the underlying, the yield-bearing token appreciates against the quote asset, and the pool price drifts upward in tandem. The vault monitors the ERC-4626 vault’s reported exchange rate and triggers a rebalance once the position has drifted past a configured tick threshold. A cooldown between rebalances and a minimum-size threshold keep the strategy from churning on small moves or noise. On rebalance, the vault works through three steps, all in a single atomic transaction:
1

Withdraw

The vault withdraws the full position.
2

Mint or redeem

It calls the ERC-4626 vault to mint or redeem, matching the new inventory target.
3

Redeploy

It redeploys liquidity around the updated spot price, preserving the configured skew.
Exchange-rate deviation check. If the pool price diverges from the ERC-4626 vault’s reported NAV beyond a configured threshold (a signal of depeg, oracle drift, or manipulation), the rebalance is blocked.
Buy-side liquidity in the pool can be configured to be intentionally thin if buyers typically obtain the yield-bearing asset by minting through the ERC-4626 vault directly. The strategy then optimizes for the redemption side the vault does not serve efficiently: converting the yield-bearing asset back into the quote on demand. The team can freely configure how much of the deposited liquidity is dedicated to the buy versus sell side, depending on the token’s minting and redemption procedures. The team can pause, reconfigure, or withdraw at any time.

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Considerations

The strategy assumes value drifts predictably upward.

Built for assets that accrue value over time through yield. Assets whose exchange rate is volatile rather than monotonically increasing, or whose value drifts downward, require a different strategy.

Sell-side depth, buy-side thin by design.

The strategy concentrates liquidity on the sell side. Pool trades that buy the yield-bearing asset will see thinner liquidity and wider effective spreads than trades that sell it. The expectation is that buyers route through the ERC-4626 vault directly.

Dependency on the ERC-4626 vault.

Rebalances depend on the yield-bearing asset’s native vault for mint and redeem. If the vault pauses redemptions, the strategy cannot rebalance through the direct path until the vault resumes.

Requires atomic mint/redeem on the deployment chain.

The strategy depends on calling the ERC-4626 vault’s mint and redeem functions within the same transaction as the rebalance. Chains or deployments where the underlying vault does not support that pattern rely on other mechanisms to rebalance the inventory. Talk to the Arrakis team to find a solution that suits the token’s requirements.

Depeg events pause rebalancing.

If the pool price diverges far enough from the vault’s reported exchange rate, rebalancing is paused to protect against manipulation. Liquidity may sit out of range during the event until the gap closes.

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FAQ

The strategy is built for tokens whose value accrues over time through yield, exposed through an ERC-4626 or equivalent smart-contract vault architecture. This includes yield-bearing stablecoins backed by interest-bearing reserves, liquid staking tokens that accrue staking rewards via exchange-rate increases, and tokenized treasury or credit products where yield compounds into the token’s redemption value. Tokens that rebase to track yield (rather than appreciating via exchange rate) follow a different mechanism and have to be wrapped to work with this strategy.
A static concentrated liquidity position falls out of range as the yield-bearing token appreciates against its quote asset. The LP must either widen the range, losing capital efficiency, or rebalance manually, subject to gas costs, timing risk, and operational overhead. The Yield-Bearing Asset Strategy automates the rebalance through the ERC-4626 vault, keeping liquidity at the current price continuously and converting inventory through mint and redeem rather than market swaps.
The vault monitors the pool price against the ERC-4626 vault’s reported exchange rate. If divergence crosses the configured threshold, rebalancing pauses and the position holds its current state. This prevents the strategy from rebalancing through a manipulated or stressed pool. The position may sit out of range during the event. Rebalancing resumes once the divergence closes or the team intervenes.
Yes. Teams typically migrate existing manual yield-bearing LP positions into an Arrakis vault. The vault consolidates the team’s inventory under one strategy and removes the manual rebalancing the team would otherwise run.