Sommelier, the automated DeFi portfolio management platform, announced the launch of the first Cellar, or “community-governed,” dynamic investment strategy vehicle, on the platform.
This Cellar is “active on Aave and leverages machine learning to dynamically move assets between several stablecoin lending positions.” Users need “only add liquidity to the Cellar, and it will handle the rest.”
Sommelier is reportedly one of “the most advanced DeFi investment protocol built to date, and anyone with financial or crypto markets experience can propose new Cellar strategies to the Sommelier governance community for inclusion on the platform.” As more Cellars launch on Sommelier, the platform has “the potential to offer a broad array of strategies competing against each other to attract capital.”
Zaki Manian, Co-Founder of Sommelier, said:
“The launch of Cellars is a landmark moment in the evolution of DeFi. Even the most sophisticated investors may be overwhelmed by the DeFi investment terrain, and the ability to allocate their funds to automated investment strategies gives them an exciting opportunity to pursue DeFi investments in a new, more powerful way.”
The team behind Sommelier has “designed the debut Cellar on the platform, which optimizes a lending position on Aave to earn interest.” The strategy “factors in the best performing stablecoin, the highest interest rates, highest liquidity mining incentives, and more, with data provided by Flipside Crypto.”
Sommelier makes investor safety “a priority.” The debut Aave Cellar has “completed multiple audits and will continue to receive audits over the longer term.” The Cellar is also “restricted to only be able to move assets among a defined list of stablecoins on Aave, giving users peace of mind that their funds can only be withdrawn by the users themselves to their own wallets.”
Crucially, Sommelier is “designed to be non-custodial.” When users add assets to a Cellar they’re “routed directly to the DeFi protocols where the Cellar operates.” This means that users’ ability “to add or remove the capital they’ve deployed in Cellars is not dependent on the Sommelier blockchain or any bridge.”
Sommelier is “natively interchain, and future Cellars will be able to enact any variety of investment strategies across a wide variety of DeFi applications.” The debut Aave Cellar “makes use of Sommelier’s dedicated bi-directional Ethereum bridge to pass strategy instructions.”
Sommelier levels the playing field by “enabling retail users to participate in highly sophisticated DeFi investment strategies that have until now only been available to large institutional investors.”
Retail investors in DeFi have, for instance, “gotten burned with impermanent losses and transaction fees in trying to compete with whales when providing liquidity in various DeFi protocols.”
Now with Cellars, they can “access the most cutting-edge DeFi investment strategies.”
Cellars are “powered by off-chain computation, which may take the form of machine learning algorithms, and can be built to execute strategies based on a wide variety of inputs.” This is a dramatic improvement “over platforms like Yearn whose static vaults are unable to adapt to changing conditions.”
This kind of off-chain computation is “similar to the approach that quant traders take in traditional finance, and it maximizes optionality for designing strategies while also enabling them to be proprietary.”
Through governance, the Sommelier community “entirely controls the launch of Cellars as well as major modifications to Cellars such as the addition of new investment positions or the replacement of a data provider that a Cellar is using to feed its computations.”
The door is “now open for any DeFi investment strategists to submit Cellar proposals to the Sommelier community for approval to deploy on the platform.” As the Sommelier community develops and launches more Cellars, these “strategy legos” may even be “put together so that users have the opportunity to invest in a collection of Cellars that are tailored to their investment goals in a single step.”
Cellars are “a long-anticipated step towards realizing the vision of a one-stop-shop for investors to deploy capital across the DeFi space through easy-access automated portfolio managers.” DeFi strategists are invited “to develop and submit new Cellar proposals to governance and bring this vision to life.”