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DeFi, simplified: Introducing MetaVaults
Recorded: March 17, 2026 Duration: 0:37:02Space Recording
Full Transcription
Introducing MetaVaults webinar, held by LIDAR and Mello.
And I'm here with Jakob, who is head of ETH products from LIDAR, EARN and Etienne,
who is head of ecosystem at Mello.
And we have around 30 minutes, no slides, just a conversation about what MetaVaults are and why they matter.
So let's go get right into it.
So let's go get right into it.
And let's start with a big one.
And let's start with a big one.
Lino has been known for, it's taken for years,
and now we have a big shift with that earned USD bot.
So what has changed?
Why stable cons, why Lino?
Yeah, thanks for the question.
Let me give you a little bit of history
and explain why USD and why USD only now and not before.
So, like it's really important to take a look back in the past and remember the term called
DeFi Lego, if anybody remembers that. So in the beginning, most of the things were centered around ETH.
And then of course we got staking and liquid staking.
We started developing DeFi around ETH more and more,
because suddenly you can start doing more complex strategies like leveraging,
using RepStat and ETH and stuff like that.
But some other things also started appearing.
We had different ways of different implementations of stablecoins.
Of course, we have more simplistic stablecoins that are backed with USD based backing.
But we were seeing many different types of stablecoins that were backed with ETH and
many different flavors of ETH.
And most recently, there is a strong push for delta neutral strategies.
And obviously you cannot just build a delta neutral based stablecoin if you don't have supporting
infrastructure and liquidity on the market. So over time we were following what is happening
with the ecosystem, with Ethereum ecosystem, with USD ecosystem in Ethereum and outside of Ethereum
and now we figured okay is the time to make a strong push into USD. Why USD specifically? Again, maybe on first it doesn't
look that close to staked IT itself, but in reality if you take a look behind the scenes,
a lot of stablecoins are actually run by IT and staked IT in the background. Plus, if you take a
look at the market activity and liquidity on-chain and off-chain you will see that actually
what makes the most sense to pursue right now is ETH asset class and USD
asset class. So that's basically it. We just seen it was a good opportunity,
we've seen that it's beneficial to the broader LidoDAO and Lido community
and that's where we put an effort to do a research and spin up a new earned usd vault.
Yeah well that sounds like a pretty big decision from the Lido side. Etienne,
something from the other side? I mean I think it's a grounded decision from Lido.
Like if you're looking at the space over the past few years, like five years,
there is just one chart that is going up and to the right.
It's the stablecoin chart.
And I think like right now we have like 300 BL in AUM.
I mean, stablecoins flowing on chain, which is huge, but it's still very tiny, right?
But if you're looking at like the DeFi protocols today, if you're looking at the vaults, there
isn't much that is captured at this point, right?
Like most of these stablecoins, they are just like used as like a payment, as a medium of
payment, medium of trading.
I think we're, I think there is like close to 10 trillion of exchanges per
month, which is huge. But very few of that is actually captured by, you know, like put to work
on chain to generate yield and be productive. And so you know, having a partner like Lido, which
is like a long standing, as a strong track record in the space building such products is a very good sign that
a lot we i mean i'm personally expecting a lot of inflows for this world but like any stable
converted product you know like everybody's going there tradfys and and defy are converging
and stablecoin is the you know the first entry point i would say, okay. Thank you for these answers. So we're here where Lido is expanding
the product line. And let's get a little bit back to basics. Why seems like these days,
every protocol is launching vaults. So what's driving this trend? Why does it end up like this?
What do you think? I think i mean i can start uh like if
you don't mind like the so at melo we're building volts for five years so we've seen the space
evolving quite a lot um i think like five years ago when defy was still very very nascent not that
it's still nascent but it's a bit bigger and institutionalized. But back in the days, like everybody was, you know,
at the time I was building indices for DeFi Pulse
and it was a bit early, like everybody was willing,
everybody was DeFi native.
So doing its own stuff, right?
Which was fine.
Now we are entering a phase where people are not necessarily
interacting with the chain themselves.
They are like using a
middleware, I'm calling it a middleware, but could be like a vault, which is plugged to an exchange, which is plugged to for a retail user, an exchange, a neobank, a wallet provider like Rabi,
Revolut, Binance, Coinbase, anyone. And then like on the institutional side, which is scaling a lot,
I mean, few of them are actually using the chain themselves, right? They're usually going through custodians because of regulatory
constraints. And so today, if you want to do it in a clean way, if you want to enforce compliance
rules on chain, you need a vault. And so today, one of our big focus at Melo is building vaults
for these like large distribution platforms, whether they are like
ecosystems protocols or platforms for retail and large clients, large capital locators.
As a, you know, like it's to me, like it's the only way to grow DeFi.
I mean, not the only way, but the biggest growth path in the coming months and years.
And we're, and it makes sense because, you you know like finance is complicated. I don't expect
people to manage everything on their own. I think like managed products, it makes a lot
of sense. It's one of the biggest products in TradFi with ETFs and you know like managed
funds. So I don't see why it should be different in an on-chain world. Actually it makes a
lot of sense because it's made better.
I can double down. I just want to double down on what Etienne said back in the days. Like a majority, first of all, user base was smaller and majority of the users were
definitive and technical. Distribution pretty much didn't exist because wallets were not that complex.
So these access points that users would be using to access Web3 were very primitive.
It was basically just sending different assets, transferring assets and signing transactions
on the actual debt.
So distribution was basically how popular is your debt.
And you would go there and do everything manually and you would have to know which protocols are living in which bubble and if we want to reach out more people
and more capital that's definitely not the way we need to hit distribution hard we need to abstract
a lot of complexities but still we need to provide some difference compared to TreadFi
in terms of transparency and in terms of different technology that is providing this this yield so I
think that's that's the way to go yeah okay and both of you have mentioned TreadFi during
discussion of this question and well we all know that during the last year a lot of those folks
started to look into crypto and the question for you what do you think
what does it take for a trade by allocator to look at defiable today and what is still missing for them
i mean i think i can start like the from what i see i we discuss with more traditional entities like every week at Mello
and it depends on the location mainly, but usually the first blocker is the regulation.
Like that's just the number one topic that everybody talks about.
The good news is that it's moving forward everywhere, like most, I mean, mainly in the
US but also like in Switzerland, like we discussed with like entities based there,
they are like a few months away from launching our programs. But then like once you've figured
out the regulation topic, there is like the more like, I mean, it's also a regulatory
topic, but also technical. How do you interact with the ancient world? And for like large
capital allocators, they need to go through custodians. And so there is a race right now happening in the vault space and in the DeFi space
to integrate within custodians, the BitGo, the Anchorage, the Coinbase custodian of the world,
you know, and because these like venues will be potentially the biggest distribution platforms
for large capital locators.
So I would say these are like the
two missing pieces that are in the process of being resolved as we speak. So expect a lot of like news and inflows in DeFi through these mediums by the end of the year.
Okay, good. And well, one last thing I wanted to cover before we go to actually talking about meta-volts.
What is a good vault? What's actually hard for you to, for a protocol to build an
infrastructure for a vault? What are the problems that people don't see from the outside?
the outside.
I can start like you when we talk about vaults like people tend to put them all into
like one bucket but the reality is that there are like many different platforms, many, many
different providers and architectures.
And if you I mean like we you could like split them into three categories, you have
like the first OG category which is kind of static,
you know, the boring vault, the ERC4626,
vaults that are very robust designs, you know,
they work well and you know what's happening on chain,
that's really good, but they are not really flexible.
And I think that it's a problem in a space
that is getting more and more competitive every day.
So you need to change that.
I mean, and we change it like if you're looking at the past few years,
a lot of new generation of vaults came out,
which were a bit more flexible, like way more flexible, a bit too much, actually,
like MPC wallets, you know, wrapped under what they call the vaults
with a lot of obfuscation in terms of like what was happening behind the scene.
And it was a bit obscure.
And this is the type of situation that led to like
the stream finance issues, you know,
which we don't want to see anymore, right?
And that's a big problem because we don't know
what's happening in the vault,
but also because it was used as a composable asset,
as collateral in Morpho markets.
And that's like, to me,
like one of the biggest strengths of DeFi. And I think you told it at the beginning is the
composability of what we build. And if you build Trust Me Bro products, and you make them composable,
then it's the worst recipe. It's a recipe for disaster, right? So I think it works well because it's flexible, but it's not like a DeFi product per se.
And so that's why we at Melo decided to build a new generation of vaults, which is complicated.
I mean, it took us five years, which is bringing the best of like fully-enchained vaults and
the flexibility of what you would have with an MPC wallet or a multi-CV.
That's what we call core vaults.
And it's a bit complicated to onboard
because it's fully on-chain.
And it's also flexible.
So you need to understand what you do as a curator.
But it's fine because once you learned,
and once you use the curation UI, you get used to it.
And I think you get the best of both worlds.
So yes, it's complicated to build volts.
And the worst part is once you build it, you need to build distribution, which is even
harder.
So that's why we rely on partners like Lido.
Okay, thanks.
I would like to add on that because I was following, I mean, not only me, I think a lot of people that are
contributing to Lido were following development of different walls
application over time from the very first ones like Yearn Finance to the most
recent ones like Mellow Core Walls and vaults did start like on-chain focused, but they were really not
flexible. But that's also understandable because when you take a look at the ecosystem, how it
looked like back in the days, there was no big need for a very flexible system. The system was mainly centered around Ethereum mainnet, so for example,
things like having a vault that can allocate assets into strategies on different chains,
L2s and even other L1s. There was no really need for that. And even when these L2 started appearing,
the risk and the reward factor was still not clarifying the need to move to a different vault architecture that can enable things like that.
But nowadays the situation is a little bit different and there are needs to do that.
There are needs not only for having flexibility to expand strategies on different networks,
strategies on different networks but also to enable users to access these opportunities and also
potentially to deposit their assets from other networks because again distribution now is much
different than distribution a few years ago. So for example if you have a wallet that's centered
around a certain network and if you want to use the opportunity and have them as
your distribution partner well you will need to have more flexible architecture that can adapt to
this specific access point needs and stuff like that and then obviously what you mentioned that like factor that you need to take in consideration. Do you want to go like
full flexible super fast decisions, super fast expansions into new
strategies, new networks and very low security? Or do you want to go like very
very strong security but but super, super
slow choices, super slow expansions. And like, that's
kind of the reason why we didn't go earlier with the Lido
urn and with this vault because we didn't want to make this
choice yet. There wasn't a good option. But finally, with
with Mellow Core Vaults, this choice became much easier.
Again, there is a lot of configuration that you can set up.
So every vault and every protocol, you can set it up more secure and less secure,
because I like to believe that your protocol or vault is secure as the weakest link,
the security of your weakest link in the system.
So you need to be really careful because these projects and these protocols can be really
robust and complex to understand.
So that's why we put a lot of effort to make sure that all of the strategies are vetted.
We did due diligence on them and all of the roles and permissions are in line of LIDO
practices.
We like to call ourselves obsessed with security and we like to collaborate only with protocols that are also obsessed with security.
Okay, yes, that sounds good. And now we have the landscape. Let's get back to what meta-volts actually are.
to what meta vaults actually are. What did we shift today? What meta vaults are and what makes them
different from other vaults? I can start if you want with like just like a high level overview
of what is a meta vault without going into the details of these LiDO vaults. Like so Mello is
building core vaults. Core vaults is the core of the architecture, okay? It's what
gives a vault a full-enchain component so you know what's happening all the time. In
the vault you can enforce things on-chain like you would expect from a DeFi vault, so
to make it composable. But that's not enough because like, you know, you can have a lot
of complexity in financial products and so what we built is this like meta level on top of it.
And so like the best way to see, to think about it from a TradFi point of view is a
fund of fund.
Okay.
So you have like a meta fund, which is in taking all the money, which is owned by the
distribution platform.
So in that case, Lido.
And then Lido with the help of the, is going to redirect the flows into various
side pockets.
Each side pocket is a sub-volt with a dedicated strategies, a dedicated set of specific assets,
chains, protocols, smart contracts, methods, and limits that are defined to fit within a specific risk
profile managed by a distinct third party, like a dedicated curator. And this way you can build
like an ecosystem of subvolts that is going to roll over over time. So that from the LP point
of view, which is essentially just like doing a one-click deposit, it's completely abstracted away.
essentially just like doing a one-click deposit, it's completely abstracted away, right? And I think
one of the key selling points for this type of architecture is that it's not a product that is
going to die with a new, you know, wave of protocols or chains that will go live. It's a
product that could last 10 years, 20 years, because it's made to evolve over time in a secure way and we can go a bit more in depth
into this topic a bit later let's Jakob feel free to jump in yeah i think the the main point is this
we want to build long-term products and if you take a look most of the DeFi opportunities were
or are short-term short-term because a lot of the opportunities come from certain
incentive programs, programs that focus on growth of a specific protocol. And then
if you actually want to optimize your rewards, you see this opportunity or
somebody tells you about it, you deposit your assets there, but if you're not
really somebody who is 24-7 looking at different opportunities, rebalancing
your positions, you will not have optimal reward distribution.
And also all of the due diligence and risk management falls on your back.
With these funds of funds, there is multiple stakeholders that are responsible for all of this.
So we are building vaults with different layers.
On the meta-vault layer, it's Lido that is also curating.
But this is a very, on the surface, simple curation.
It's essentially just distribution of inflow assets to underlying strategies,
underlying managed vaults, and then we
have those managed vaults that are directly depositing into more primitive
strategies. So this system is super flexible and super long term because no
matter how these opportunities in DeFi change, with different networks, with
different protocols, you as a user you
have a similar experience as with LIDA staking with LIDA staking if you want
to earn on top of your ETH you deposit to LIDA and you don't need to go back
every month or every week to check how are the rewards you know that the
rewards are consistent and the protocol is battle-tested so we wanted to
replicate the similar user experience with more complex product and this is what these MetaWall or Funds of Funds are achieving.
Yeah and just like to double down on that, like I think with the new generation of LPs that are
coming on chain through custodians and exchanges and so on, they are looking for like real saving
systems and investment, you know, protocols in a, like long-term opportunities.
And so this is the ideal product that will, I believe, find its customers there when they
manage to get on-chain in the next coming weeks and months.
Yeah, that's it.
Okay, so we were talking about that fund of funds vault or vault that manage vaults so let's talk a little
bit about what actually happens inside that vault we have already talked about
that there are multiple strategies over there so who runs these strategies and
how would these strategies are selected but what happens when some kind of a new
strong strategy appears what does it take for it to get inside that vault?
Sure. So, okay, I can give a concrete example about that. We can talk about EarnEat vault
specifically that receives multiple different EAT based assets. When those assets are received,
LIDA as a curator can deposit
these assets into underlying strategy vault. Strategy vault is a vault that's
curated by Mellow curation and inside of it it's containing blue chip DeFi
strategies. So this is really important all of the protocols where funds will be allocated are considered blue chip, they are battle tested.
So most of the assets will be allocated to protocols like Aave, Spark, Morpho and similar.
Right now, majority of the assets inside of it is looped.
It is looped, not only RepStack, RepStack, Eat pairs, but also using some of the best LRTs also for looping.
I want to double click on this idea and concept that is very important and is new in Defiant Volts,
which is this like segregation of like a meta curator, which is Lido and Melo,
which is acting as a strategist curator within the vaults
operating things on a daily basis.
It's very interesting because there is like a much better
balance of power between the distribution platform
and the curator.
If you, without meta vaults,
you create like a vault where the ownership is, I mean, like everything is
managed by a single entity, which is the curator. And so if you're like a big centralized exchange
or custodian and people start helping into the vault, but then at some point you're not satisfied
with the services of this curator for some reason, and we all know that curators, they come and go
really easily in DeFi.
That's something that will happen often and often.
Like it's the same in TradFi, right?
People make mistakes.
And so with these two designs, what is possible is that Lido can actually,
you know, like all over the curators as well without losing the LPs.
So it's increasing a lot the stickiness of the capital, which is going to stick into the MetaVault and rely on Lido as a steering committee to make sure that things are going well as they should be.
And I think it's a very novel design in the space, which is going to bring a lot of benefits for LPs.
And not only that, you can have scenarios where one curator is very good in managing certain
type of strategies, for example, leveraging, looping. And then another curator is expert in,
I don't know, rebalancing decks liquidity. So you can just have a best of both worlds without
selecting just and sticking with one curator and making the
compromise in some aspects you can literally have the best setup that you want okay and since we
have started talking about curators uh there's always a kind of a trade-off when we talk about vaults between giving curators enough flexibility to do what
they need to generate yield and about locking them to not allow them to do things which are
not allowed. So how do MetaVaults handle that? It's very simple like we are fully on
train so we have like the ability to waitlist
and manage permissions in a very granular way.
I think we have close to 150 permissions
to set up at the vault level and meta-volt level.
So very granular way to manage that.
And then once you've set up this universe of possibility
for the curator to play with the assets
that you've sent to the sub-vault, you know, for the curator to play with the assets that you've sent
to the sub vault, you can update that, right? And so usually what we use is like a time lock system,
which is a good way to say, look, if there is a new opportunity, a new chain, a new bridge,
a new asset that you want to intake, you can do it, but you won't be able to do it like instantly.
Technically speaking, it's possible,
but there is like a delay that you need to wait.
And I think it's the best, it's the sweet spot in DeFi
because it gives you as an LP enough confidence
that things are not gonna move.
But if you want to bring in like composability built on top
of this vault, you can build things that won't break
because if you build things in
a way that you have the time to unwind before the time locks is over, then it's completely fine.
You're managing your risk. But you know, like risk in finance is not just a matter of like losing
money or making mistakes. It's also a matter of like an opportunity cost, right? And so you're making mistakes it's also a matter of like an opportunity cost right and so you're taking
risk when you're putting money into like a rigid bolt with this new system you're you have the
best of both worlds and again like you're fully on chain which is new i think this is a part where
we mentioned the weakest link that i mentioned before Obviously even with a fully on-chain
approach you can make a system risky but that's where we ensure that on all
layers we agree before supporting a new strategy. So for example there is a new
opportunity, there is a protocol on some network,
it looks very attractive to go and deposit there. So what do we do? Both curator of the
sub vault goes and does a due diligence and also curator of metal vault, which in this case is Lido does due diligence. And if both curators give a green light, then we can proceed with enabling on-chain
to accept deposits in this strategy.
And with this approach, we also obviously ensure that there are no arbitrary function calls allowed,
because that would be very weak link essentially it creates it creates a way
for a curator or for somebody who is malicious to allocate funds anywhere else and even on top
of that there are like as at the end mentioned there is around 150 roles that you can set up to very,
to have very, very granular permission system,
you can set up limits for certain strategies.
So for example, if there is maybe a strategy
that you would like to explore
that has maybe a little bit higher risk profile,
you can just test with a smaller amount
and that can
also be guaranteed on chain by putting these limits.
Yeah. And also, you know, like the, just to double down on that, like the, having the
ability to spin out like new sub vaults and so on is a way to segregate the funds in like
side pockets that are not going to impact each other's when there is
like a, you know, like a side, there is no side effects happening in the vault if it's
well managed, at least like from a technical point of view.
And it's also a good way to, you know, fine tune the way you manage your positions on
lending markets, for instance, because, you know, you can activate E-mode on Aave on one
pocket and not activate it on the other one.
And just like making sure that these two pockets
are not going to be related to each other
because they don't have the same risk profiles.
Maybe you want to send transactions at the same time in parallel,
but you won't be able to do it with one single volt.
So it's a very granular way.
Obviously, you can make mistakes when you're designing it,
like any financial product.
There is no free lunch in finance,
but it's the ideal setup to build the product of your dream.
All right, so yeah, that since we're in this risk and trust area, and talking about that vault desolation, you mean that
isolation, you mean that living under the same vault, right? And what happens if one of the
strategies, something goes wrong with it? How do you make sure that everything else works fine?
It's fully segregated. So it's, you can think of it as like two different vaults. So as long as the
strategies are not tied to each other
from, you know, because they are like operating on the same protocol or chain, then there
is no ties between them. And so you can just like keep running the volts. So let's say
there is like a big, there is an exploit on one chain, which is outing or like a protocol
getting hacked, then only the side pocket impacted by this exploit will be potentially drained.
This way you have like a max loss that we are accepting and that we're designing together with LIDO,
which is something that is acceptable and you know that allows to build like the most risk adjusted returns for LPs.
One important thing that's less technical, but very important feature that we are seeing for
the first time in this industry when it comes to vaults is first loss protection that's provided
by Lido. So even if something bad happens for a certain strategy and the funds actually get lost,
it's not going to be user's depositor who is going to eat the first lost, it's not going to be users depositor who is going to
eat the first loss, it's going to be Lido. So with this, we actually have skin in the game
with these products and we are trying to make users more comfortable depositing there because
obviously aside of all of the technical risks, there is also economic risks. Markets are unpredictable.
But as I mentioned before, there's a lot of things that we are trying to do to make these
products as secure as possible.
Okay, that sounds good. Great. Thank you. And now let's have a couple of words about
the future, about what comes next.
Now, EARN, ETH and EARTH in USD are alive.
So what can we expect in the near future?
So I think we can always expect expanding to new opportunities and new strategies.
That I cannot really predict because it's just going to depend on other projects in the ecosystem,
how they're moving forward. But I think everybody knows that LIDO is present in almost every single
protocol in Ethereum ecosystem. So we are very well connected and we are always looking for
new opportunities. I think the most important thing for the existing vaults is distributional.
So we'll be pushing hard to make sure that all of Lido Earn vaults are available in your favorite
wallet. We don't want to push users to go and use a new wallet just to access these Lido vaults. We
want to reduce the friction and we want to enable these vaults
essentially at your fingertips or on your desktop if you're using desktop wallets.
Aside of that, as I was mentioning, first loss protection, currently first loss protected
is USD vault, but very soon, this is an alpha alpha EAT vault will also be first loss protected
so you can expect an announcement very soon and what is what is going to happen after that well
we are not stopping just with EAT and USD we are looking also for new opportunities that will not
really be able to reveal right now what's going to the next uh earn vault but there will be more of them
very soon okay and uh one more thing i want to talk about uh about the earlier deposits uh it's
been over 150 mils already deposited into lighter earn before metavolt uh in that line so what are the changes for those users what do
they have to do now uh thank you for this question i think it's really important to address it and
make sure that none of the users are gonna be left stranded essentially uh previous vaults
previous vaults like GGV, Strategy and DVV, they are put into upgrade mode.
So if you're a holder of the shared tokens of these existing vaults, once you connect to LIDARN UI,
you will be shown an upgrade flow. With upgrade flow, you can seamlessly migrate your shared tokens into LIDARN ETH
and from there onwards you are a depositor to LIDAR EARNIT.
If for some reason you don't want to do that, you can obviously also withdraw your assets back to
Repstat. But from now onwards direct deposits for users to these upgrade-only vaults are disabled. So you can only withdraw funds or upgrade to earn it.
There is no harm.
What is really important, there is no harm in not migrating
and just staying there.
It's just that you will not be experiencing this flexibility
of a fund-of-fund system, and you will have less optimal returns
over time.
All right. thank you. So that was a kind of deep dive into what MetaBalls actually are.
I think we have ran through all questions we've had for today. It was Jakob from Lido's side
and Etienne from Etienne's side with us.
Thank you, guys.
Thank you for your answers.
Thank you for your time.
Thanks a lot.
Thank you for coming.
And Jakob.
Words to go live.
Ciao, ciao.
Bye-bye. Thank you.
