Why yield-bearing assets need active liquidity
Two problems are specific to assets that accrue value over time. Each is addressed by active management tuned to the yield curve.Yield accrual pushes passive liquidity out of range.
A yield-bearing token appreciates against its quote asset as yield accrues, so the pool price drifts steadily upward and a static concentrated position falls out of range. The LP either widens the range and loses capital efficiency, or rebalances by hand, repeatedly. The Yield-Bearing Asset Strategy reads the asset’s exchange rate from its ERC-4626 vault and repositions automatically as the rate drifts.
Collateral utility depends on reliable exit liquidity.
For a yield-bearing asset to function as DeFi collateral, holders have to convert it back to the quote on demand: to repay debt, unwind a loop, or exit during stress. Lending markets list assets on the strength of that exit liquidity, and thin or out-of-range depth limits how far the asset can scale. Inventory is skewed heavily toward the quote asset to prioritize sell-side depth, so the asset stays convertible at scale.
Which assets this fits
The strategy fits any token whose value accrues through yield and is exposed through an ERC-4626 vault. The common categories:| Asset class | Typical yield source | Liquidity need |
|---|---|---|
| Yield-bearing stablecoins | Interest-bearing reserves, private credit | Deep sell-side depth so the asset converts to its quote with low slippage on demand |
| Liquid staking tokens | Staking rewards via exchange-rate growth | In-range depth that tracks the upward drift |
| Tokenized treasuries | Short-term government debt | Reliable exit liquidity for an RWA-backed instrument |
| Tokenized private credit | Institutional loan interest | Sell-side depth for a less liquid underlying |
| Yield tokenization | Split principal and yield tokens | Concentrated depth for two thin order books per asset |
How Arrakis fits a yield-bearing asset issuer
The yield-bearing asset itself runs on the Yield-Bearing Asset Strategy. Issuers often have a second token to manage as well: a governance or utility token that launches and trades like any other project token. That token uses the standard lifecycle. For the governance token, Bootstrap handles the launch and Flagship handles ongoing management. Both tokens sit in self-custodial Arrakis vaults under the issuer’s control.Supported infrastructure
| Layer | Supported |
|---|---|
| Chains | Ethereum, Base, Arbitrum, Optimism, BNB Chain, Unichain, Ink, Hyperliquid, Solana |
| DEXs | Uniswap v3 and v4, Aerodrome Slipstream, Velodrome Slipstream, PancakeSwap v3 and v4 (Infinity), Hyperliquid, Hadron PropAMM serving Jupiter and Titan (Solana) |
| Asset interface | ERC-4626 vault for the yield-bearing token (required for the strategy’s mint and redeem path) |
Integration path
Onboarding requires confirming the ERC-4626 vault interface and configuring the inventory skew for the asset’s expected sell-side demand.Discovery
Conversation with the Arrakis team about the asset, its yield mechanism, the ERC-4626 vault, and the target sell-side depth. Arrakis can analyze the asset’s current onchain liquidity and simulate the improvement.
Configuration
Vault parameters confirmed: pair, inventory skew (up to 99% quote), the ERC-4626 vault used for mint and redeem, exchange-rate deviation guardrails.
Deployment
Arrakis deploys the vault on the chosen DEX and chain. The vault NFT transfers to the issuer’s multisig.
FAQ
Our asset earns yield by rebasing, not by an exchange rate. Does this work?
Our asset earns yield by rebasing, not by an exchange rate. Does this work?
The Yield-Bearing Asset Strategy is built around an ERC-4626 exchange rate that drifts upward as yield accrues. Tokens that rebase (where balances change rather than the exchange rate) follow a different mechanism and must be wrapped before they can use the Yield-Bearing Asset Strategy. The Arrakis team can advise on the right setup during discovery.
Why does it make sense to skew inventory heavily toward the quote asset?
Why does it make sense to skew inventory heavily toward the quote asset?
Yield-bearing assets are often used as collateral, so the liquidity that matters is sell-side: holders converting the asset back to its quote on demand. Buyers can usually mint the asset directly from its ERC-4626 vault, so the pool does not need deep buy-side inventory. Skewing the inventory toward the quote (up to 99%) puts capital where it is actually used. The Yield-Bearing Asset Strategy page covers this in full.
Do we have to provide all the quote-side capital ourselves?
Do we have to provide all the quote-side capital ourselves?
The issuer provides the quote reserves that back sell-side depth, sized to the target depth for the asset. The inventory skew concentrates capital on the sell side, so more of every dollar contributes to the exit depth that matters. Sizing is set during discovery against the asset’s expected exit volume.
What happens to sell-side depth during a depeg or stress event?
What happens to sell-side depth during a depeg or stress event?
The strategy stops repositioning when the pool price diverges far from the vault’s exchange rate, so it does not rebalance through a manipulated or stressed price. The position can sit out of range until the gap closes. The Yield-Bearing Asset Strategy page covers the guardrail behavior.