How to Invest in Vesper Finance on Notum

In 2024, investing in cryptocurrency became one of the most popular ways to generate passive income. Moreover, DeFi market is offering more and more options for maximizing profits, which is increasing people's interest in crypto assets. Yield aggregation is exactly the type of investment that has gained popularity as it allows investors to receive the highest income from deposited crypto.

Yield aggregators are a set of smart contracts and DeFi protocols that combine cryptocurrency deposited by users and move it to profitable projects using automatically executed strategies. Many investors choose yield aggregation as a type of investment because it does not require active management and is mostly automated.

Using yield aggregators, investors put their cryptocurrency into DeFi vaults, and the smart contracts of these vaults automatically allocate these assets into various profitable strategies. Thus, smart contracts take responsibility for strategies adjustment, gas fees and other complexities, while the investor earns a share of the profits generated by the vault.

Notum leads you through a yield aggregator as Vesper Finance, drawing attention to its main features, advantages and risks. We will also look at Vesper investment strategies that offer investors decent rewards for providing liquidity.

Vesper Finance: the Essentials

• TVL: $28,26M
• Risk Level: Low-Medium
• Average APY: 6,6%
• Blockchains: Ethereum, Optimism, Avalanche, Polygon
• Foundation Date: 2020

Vesper Finance describes itself as a platform for easy-to-use DeFi products. Apart from this, Vesper is also a popular yield aggregation protocol for generating passive income. The platform has three main components - products, token and community, each of which is necessary for creating DeFi environment that’s easy to use and navigate.

Interesting fact: Vesper is one of the top 10 most popular yield aggregators in the DeFi space. In addition, the protocol is the third most popular on Optimism network.

At launch, Vesper offered a large number of so-called interest-yielding "Grow Pools", which were aimed at increasing the crypto assets deposited by users. Thus, Grow Pools were the very first product offered by Vesper. However, as the platform developed, it began to offer more features such as Earn Pools, Vesper Orbit and others.

The main aim of the project is to provide sustainable real yield for its users. All investors need to do is launch the app, select one of the 16 pools offered and deposit their assets, after which Vesper will take care of the rest.

The unique feature of Vesper lies in its design, created to aggregate across various strategies. While many yield farmers spend time moving their assets into different pools in order to make more profit, Vesper deploys new and improved strategies and integrates them into the existing set. Thus, less competitive and profitable strategies will gradually be replaced by improved options, which leads to maximizing income.

Modular Pool Architecture

The protocol has a modular, multi-pool design, allowing smart contract administrators not only adapt but also transition strategies. Thus, Vesper’s software architecture allows running programs to change approaches depending on the state of the DeFi market, as well as continuously update the products offered.

«This approach makes it possible to swap strategies, combine product components in innumerable ways, and separates smart-contract logic into those parts that are platform-dependent» - Vesper Docs.

This adaptability of Vesper makes it easy to transfer platform products from one blockchain to another. Now Vesper supports four networks - Ethereum, Optimism, Avalanche and Polygon. Although migrating from EVM-compatible blockchains to other networks is not an easy thing to do, Vesper's composability makes it possible.

In addition, Vesper claims that “modularity enables sustainability”. Thus, new high-yield strategies can be gradually integrated into the pools. However, for the safety reasons, only a percentage of investors' funds will be involved in the new alternative. If the new strategy turns out to be successful and more profitable than previous one, it may completely replace the old option.

Important! Instead of constantly searching for new profitable pools, Vesper investors can be confident that the platform's pools will find the most suitable and profitable option without their management and control. 

Vesper Pools

All platform DeFi pools have two main components - the frontend, which is responsible for deposits and withdrawals, and the backend, which manages deposits’ profitability. Thanks to the modular multi-pool approach, developers can create an unlimited number of strategies such as lending, yield farming, liquidity-providing and trading, and combine them.

Important! Vesper pools have its own deposit asset type, yield asset type, deployment approach and risk level, so investors can explore and choose the option that suits them. Assets, deposited to the pools, are used to borrow, lend, and farm yield across various DeFi projects and platforms.

The main types of pools on Vesper are:

• Vesper Grow Pools. Such pools collect specific assets and distribute them to other platforms. The protocol uses the returns of these strategies to buy back more of the deposited asset, which goes to the pool investors.
• Vesper Earn Pools. Similar to Grow Pools, Earn Pools use invested crypto assets according to a specific strategy. However, the difference is that the income from the deposit will be a different asset, and not the cryptocurrency that the user originally invested.
• VSP/vVSP Governance Pool. Users holding VSP tokens can deposit them into a special pool and receive VSP interest equal to the size of their deposit.
• Vesper Lend Pools. The protocol also allows users to lend out their assets in order to obtain maximum and at the same time safe income.
• Vesper Orbit Pools. The last type of pool on Vesper strives to generate the highest returns due to working with new assets. Because they are riskier, they also offer higher rewards to users.

VSP Token

Vesper Finance has its own native crypto VSP with a total supply of 10,000,000. As of April 2024, Vesper Finance price is $0.50.

Users can earn VSP by participating in Vesper pools, or locking VSP. By blocking VSP, users receive esVSP tokens (ERC-721).

Each platform pool has a certain amount of VSP tokens, which are distributed among participants in proportion to the size of their share in the pool. Thus, these tokens are extra VSP rewards in addition to those generated by the pool for providing liquidity.

More information about the VSP token and its tokenomics can be found here.

Why Invest in Yield Aggregation with Vesper?

Pros

Non-custodial nature

Assets deposited by users are automatically deployed using Vesper smart contracts. Thus, investors still fully own their assets and can withdraw them whenever they want.

Sustainability

As new strategies introduced may offer higher returns, they will gradually replace older alternatives. Thus, the protocol will independently integrate new options into the pools.

Censorship and fraud resistance

With Vesper, investors can directly interact with smart contracts that cannot be tampered with or hacked.

Easy-to-use interface

The protocol was designed to be as accessible and easy to use as possible. Vesper offers one-click deposits and withdrawals, as well as mechanisms for portfolio tracking.

Permissionless environment

Vesper does not require signup, account verification or other checks to participate in the ecosystem.

Safety level

Vesper has undergone more than 50 different audits to ensure that users' funds are safe.

Vesper Finance: Investment Strategies

https://app.notum.ai/investments/0xc14900dFB1Aa54e7674e1eCf9ce02b3b35157ba5?protocol=Vesper&chainId=1 

Notum invites users to invest in FRAX on Ethereum to receive pretty decent passive rewards. This high-liquidity pool has a TVL of over $ 6.3M, which indicates its proper level of security. By investing in FRAX, investors receive a total APY of 17.1%.

https://app.notum.ai/investments/0xa8b607Aa09B6A2E306F93e74c282Fb13f6A80452?protocol=Vesper&chainId=1 

Another popular DeFi investment strategy on Vesper is the USDC staking pool, which offers fairly high rewards without active management. This pool on Ethereum has a total value locked of $2.1M, and the rewards for providing liquidity are 12.76% of total APY.

If you want to take a look at other investment strategies on Vesper, you can explore them here. Besides, you can pay attention to Vesper’s strategies on Notum.

Vesper: Risks and Disadvantages

Cons

Liquidation risk

There is always some risk that the underlying asset of the pool suffers a rapid collapse. In this case, if the user does not manage to change the loan in a short time, he may face liquidation.

Exploit or hack risk

Even though the protocol has undergone a huge number of audits from the leading security firms, there is a possible risk of hacking or attack, which could potentially lead to loss of funds.

Smart contract bugs

Vesper, like many other yield aggregators, operates on smart contracts. Thus, if the smart contracts of the protocol have bugs or vulnerabilities, this may lead to partial loss of funds.

Pool's complexity

Vesper offers a large number of pools on three different networks, so it can be a little difficult for an inexperienced investor to navigate and find the right option for themselves.

Notum’s Verdict

Vesper Finance is a popular medium-risk yield aggregation platform that allows users to earn fairly high rewards across four networks. The advantage of the protocol is that it does not require active asset management, which means investors can earn maximum rewards without having to constantly move assets between different pools.

The protocol has gained significant popularity due to its modular pool architecture, which makes it possible to automatically integrate new strategies into smart contracts. Thus, Vesper has made every effort to allow users to maximize their profitability without active participation. The distinctive features of the platform include its non-custodial and sustainable nature, fraud resistance, decent safety level and multiple pool options for any risk level.

So, if you are looking for a yield aggregator platform with a good reputation, high security and fairly large rewards - Vesper Finance could be a good option in 2024.

Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.