AI Agent Based Automatic DeFi Yield Rebalancer

(concept project to demonstrate tokensource agent design, do not try on mainnet)

Overview

This project is a Solidity-based smart contract for automated yield rebalancing across different DeFi protocols. It focuses on Aave v3 integration and compatibility with Safe smart accounts. The contract optimizes yield by automatically shifting funds between liquidity pools based on predefined parameters while considering tax implications through adjustable rebalancing thresholds.

Key Features

• Automated Yield Optimization: Monitors and rebalances funds between liquidity pools based on APY differences.
• Aave v3 Integration: Seamlessly supports deposits, withdrawals, borrowing, and repaying within Aave v3.
• Safe Smart Account Compatibility: Executes transactions via a Safe multisig wallet for enhanced security.
• Configurable Rebalancing: Allows setting thresholds for minimum APY differences and safety margins to control frequency and risk.
• Tax-Aware Design: Includes mechanisms to adjust rebalancing triggers to mitigate tax impacts.
• Oracle-Based APY: Utilizes Chainlink oracles for real-time APY data.
• Modular Architecture: Features clean interfaces for easy expansion and customization.

Agent Elements in the System

The system contains several components that can be considered "agents," performing distinct roles:

1. Smart Contract Acting as an Agent:

   • The YieldRebalancer contract itself acts as an “agent,” automating yield optimization by monitoring and shifting funds across liquidity pools based on predefined logic.

2. Chainlink Oracle as an Information Agent:

   • The oracle-based APY retrieval serves as an information agent, fetching real-time data from external sources for decision-making (getPoolApyFromOracle).

3. Safe Smart Account:

   • The Safe multisig wallet functions as a governance agent, ensuring secure and approved execution of critical transactions.

4. Rebalancing Logic:

   • The rebalancing mechanism in the contract (triggered by functions like executeRebalance) acts as an operational agent, dynamically managing liquidity between pools based on APY differences and defined thresholds.

Technical Architecture

The core of the project is a Solidity smart contract named YieldRebalancer, designed with the following structure:

1. Liquidity Pool Management: Manages pool information using a LiquidityPool struct.
2. APY Tracking: Retrieves APY data via Chainlink oracles using the AggregatorV3Interface.
3. Rebalancing Logic: Triggers rebalancing based on APY differences and predefined thresholds.
4. Aave Integration: Interfaces with Aave v3 using ILendingPool and IDataProvider.
5. Safe Compatibility: Executes transactions through Safe.sol for multisig approval.
6. Configurable Parameters: Offers adjustable settings such as minRebalanceThreshold, safetyMarginApplied, and pool configurations.

Smart Contract Details

Key Functions

• registerLiquidityPool: Registers a liquidity pool with its details (ID, name, token address, oracle, and type).
• updatePoolBalance: Updates the balance of a liquidity pool.
• updatePoolApyOracle: Updates the oracle address for a specific liquidity pool.
• setMinRebalanceThreshold: Sets the minimum APY difference to trigger rebalancing.
• setSafetyMarginApplied: Configures the safety margin to account for slippage.
• depositToAave: Deposits a specified amount into Aave.
• withdrawFromAave: Withdraws a specified amount from Aave.
• borrowFromAave: Borrows a specified amount from Aave.
• repayToAave: Repays a specified amount to Aave.
• executeRebalance: Rebalances funds between two liquidity pools.
• getPoolApyFromOracle: Fetches APY data from a Chainlink oracle.
• getPoolDetails: Retrieves details of a specific pool.
• getAllPoolIds: Lists all registered pool IDs.
• getMinRebalanceThreshold: Returns the minimum APY threshold.
• getSafetyMarginApplied: Retrieves the configured safety margin.
• getLastRebalanceTime: Gets the timestamp of the last rebalance.

Dependencies

• Solidity Compiler: Version 0.8.0 or higher.
• Safe Contracts: @safe-global/safe-contracts for Safe account integration.
• Chainlink Contracts: @chainlink/contracts for oracle integration.

Getting Started

Prerequisites

• Node.js and npm/yarn: For dependency installation.
• Hardhat or Foundry: For development, testing, and deployment.
• Wallet: Metamask or similar for contract interaction.
• Safe Account: Required for multisig control.
• Testnet ETH: For testing on test networks.

Installation

1. Clone the repository:

   git clone https://github.com/tokensource/yield-rebalancer-agent
   cd yield-rebalancer-agent
   
   

Steps to Set Up and Deploy

1. Fill .env: Fill in the .env file with your actual values.

2. Install Dependencies: Run npm install or yarn install to install the required packages.

3. Compile: Compile the smart contracts using the command npx hardhat compile.

4. Deploy: Run the deploy.js script to deploy to a test network like Goerli or Sepolia:

   • npx hardhat run scripts/deploy.js --network goerli
   • npx hardhat run scripts/deploy.js --network sepolia

5. Test: Run the tests using npx hardhat test.