We have one goal: give you the best yield. This talks a little bit about how we do that and what we gain from it.
View technical version here.
View Youtube explainer here.
RFT : Rari Fund Token
Each user's share of the fund is determined by their RFT balance. When you deposit funds to Rari, an equivalent amount of RFT (Rari Fund Token) is minted to your account. When you withdraw funds to Rari, the equivalent amount of RFT is burned from your account. As soon as you deposit, you start earning yield. Essentially, fund holdings and yield are split up proportionally across RFT holders by their USD balances. RFT's value is equivalent to stablecoins + the yield accrued on them.
Currently, Rari generates yield by depositing a combination of DAI and USDC to the lending protocol dYdX as well as DAI, USDC, and USDT to the lending protocol Compound. In the near future, we will be generating yield from more currencies across more lending protocols, among other strategies.
Deposits and Withdrawals
Only certain stablecoins are accepted for direct deposits (direct meaning without exchange to an accepted currency). When depositing one of these stablecoins, the Rari web client approves tokens When you deposit another currency, the Rari web client approves tokens to exchange your tokens via 0x and then deposits them (please be aware that 0x charges an ETH protocol fee).
Just like only certain stablecoins are accepted for direct deposits, only stablecoins held by the fund are available for direct withdrawals. When withdrawing one of these stablecoins, the Rari web client supports simple withdrawals. When you withdraw another currency, similar to deposits, the Rari web client allows you to withdraw your tokens and then exchange them via 0x (please be aware that 0x charges an ETH protocol fee).
Rari's Ethereum-based smart contracts are written in Solidity and reviewed by multiple partners for security. Rari does not have control over your funds: instead, the Ethereum blockchain executes all secure code across its entire decentralized network (making it very difficult and extremely costly to rewrite history), and your funds are only withdrawable by you (or an upgrade of RariFundManager). However, upgrades will become decentralized in the future via a governance protocol based on a potential token. Please note that using our web client online at app.rari.capital is not nearly as trustworthy as downloading, verifying, and using it offline. Lastly, the rebalancer is centralized, but it can only rebalance funds to different currencies and pools. In the near future, we will be implementing a smart-contract-based (and therefore decentralized) slippage limit. You can view more about risk and our security here.
A 20% performance fee is deducted from all yield earned (interest and earnings like $COMP) by RFT holders. This fee is liable to change in the future, but fees on past interest cannot be changed.
Slippage / Bonus
When you deposit any asset, the fund will automatically exchange it for the fund's current allocations. This exchange incurs slippage that may work in your favor (returns a bonus) or negatively (negative slippage). The slippage is based on how liquid 0x's partner orderbooks are.
All COMP (Compound's governance token) earned by the fund is liquidated into additional interest for RFT holders every 3 days.
You can learn more about the risk of investing in Rari here.