Risk management

Each aggregator on Sturdy has an aggregator manager. Aggregator managers are responsible for risk management within the aggregator, and have a number of different roles and responsibilities.

Whitelisting silos

When aggregator managers first create the aggregator, they select which silos will initially be whitelisted. This list is not fixed. Managers can remove silos from the aggregator at any time at their discretion. They can also whitelist new silos; if the silo has not been whitelisted by governance, they must create a governance proposal to do so. If it has already been whitelisted by governance, aggregator managers do not need to create a governance proposal, however the transaction to add a new silo carries a timelock with a minimum of 24 hours.

Lending caps

Aggregator managers can also set lending caps for each silo they've whitelisted. This puts a ceiling on the maximum amount that can be deployed to a given silo in order to limit risk. Lending caps can be changed at any time at the aggregator manager's discretion.

Allocating assets

Aggregator managers are responsible for determining the allocation of assets among silos. They can do so in two different ways:

1. Automated. Managers can whitelist an algorithm that automatically determines the allocation of assets. The aggregator smart contracts provide an interface for the algorithm to be run off-chain and then verified on-chain using zero-knowledge proofs. Note that the whitelisted silos and lending caps are enforced at the smart contract level, meaning the algorithm cannot override them. For example, if the algorithm attempts to allocate assets to a silo beyond its lending cap, the allocation transaction will revert.

2. Manual. Managers can manually set the allocation of assets among silos. The allocation can only be among whitelisted silos and within lending caps, or else the allocation transaction will revert.

Setting fees

Aggregator managers can set fees for their aggregator. There are two kinds of fees: management fees (which collect a percent of AUM per year) and performance fees (which collect a percent of yield earned. Both fees are assessed at harvest.

Harvesting

In order for yield to accrue to the aggregators, managers run harvests. Harvests collect the yield from each silo individually and increase the value of the aggregator receipt token accordingly, growing the balances of all users who have deposited to it.