From APY Data to vaults.fyi: Ryan Rodenbaugh on How DeFi Vaults Work

0:00Kinsa Durst Welcome to Panoramic Content Suite Singapore Edition alongside Token2049 with a backdrop of MBS behind us. I think haze has cleared up a little bit. So it's a perfect day to kickstart some podcasts. And we have a special guest today who took time out of the day to join us, Ryan, co-founder, CEO of vaults.fyi. So thank you for joining.

0:24Ryan Rodenbaugh Thanks very much for having me. Beautiful suite, great production team. And yeah, very happy to chat.

0:29Kinsa Durst Amazing. To kick things off, wanted to basically get a basic intro about yourself, how you ended up building vaults.fyi.

0:37Ryan Rodenbaugh Sure. So, you know, the kind of back story of the company is myself, my co-founder and a lot of our team, we’ve all worked at different DeFi protocols, worked on stablecoins. And we initially started this company doing something different. And, you know, I'll save that whole backstory, but the problem that we stumbled upon at first was that on-chain APY data is very inconsistent. So, you know, we're winding the clock three years or so. Say you were trying to compare the APY data from Compound versus Aave versus Yearn versus Maker. You might have slightly different APY calculations from each of those protocols, front ends and official APIs. So the problem that we initially set out to solve was how do we create, you know, an API and a front end that can give users and customers standardized APY data across all of these different different protocols.

1:30Ryan Rodenbaugh Since then we've expanded and we now have about 80 protocols across almost 25 networks. And yeah, so, you know, customers like Kraken and a lot of the curators, teams building AI agents and really a whole sort of diverse set of use cases there. And, you know, today those APIs span everything from the data to the actual transactions and then really granular and advanced position and P&L tracking the data.

1:56Kinsa Durst Amazing, amazing. I think abstraction of complications of on-chain, you know, smart contracts is definitely helpful. I think FOMO has seen their success from making trading across multiple chains on any assets really easy. Sounds like you guys are providing that for APY across different chains.

2:13Ryan Rodenbaugh Exactly. And, you know, there's kind of two things I would say in there. One is on the data side. I think crypto data is one of these, you know, still very difficult and kind of unsolved challenges. And if you talk to many of the companies, like companies larger than us certainly, but like the Dunes of the world and Nansen and people like that, I think there is a very underappreciation from users Of just how difficult it is to actually fetch and standardize APY data, or data generally, no matter what the category is. We just kind of focus on our thing. And then the second bucket that actually still is something we’re working hard to solve is the cross-chain sort of, if you have a position on one chain, you want to move to a position on another chain, how do you do that in the cheapest way possible?

3:01Ryan Rodenbaugh It is still relatively expensive today, but we're working on that.

3:05Kinsa Durst Gotcha. So does the user flow look like they just deposit into your product and then they can tap into APY yield across these different chains and different products? Is it that simple for the users?

3:20Ryan Rodenbaugh It is. So we have two kind of B2B use case and a B2C use case. I'll touch on the B2C one though. If you go to our website today, it's just app.vaults.fyi. You don't even need to deposit into our product, right? You just connect a wallet and it is entirely, maximally non-custodial. So we don't have any smart contract wrappers, no added smart contract risk, but from our interface, you can say deposit into Morpho, redeem from Morpho, move to Aave, redeem from Aave, move to Apyx or Upshift or Midas Or whatever it is. And we handle all of the complexity that can happen at the edge of these protocols. So some of them, for example, have delayed redemptions. Maybe there's a three day withdrawal queue or something of that nature. We make the user aware of that and then also give them the handling so that they can see when that is available to be claimed.

4:12Kinsa Durst Wow, that's incredible. I think there's a lot of, we've had some founders of different types of vaults that came on the show, as well as founders of AI agent protocols that help people figure out how to tap into These different yield sources. But it sounds like you guys have all the data information in one place for them to maximize their yield.

4:35Ryan Rodenbaugh Absolutely. And on the B2B side, we also love those use cases that you're talking about. So I'll highlight one of our customers. They are, you know, I describe them as almost like a Wealthfront type of product experience for DeFi yield. It's called Otis.io. They have a really smooth mobile app. And the product experience is built on top of our APIs where a user just deposits dollars or stablecoins, obviously gets converted into stablecoins, they deposit dollars, and then it is auto allocated across a set Of underlying strategies that they've selected and they've deemed to be safe for their users. And through their own agentic infrastructure, it handles all of the auto rebalancing, the chain switching, but calling our APIs and you know, standardizing everything across that as well.

5:20Kinsa Durst Gotcha. Given that you guys provide all the data and tooling for users to tap into these different APY opportunities, I was curious what these users look like Or maybe more specifically, where do you see the most growth? We've also had institutional guests on the podcast and we see a lot of, obviously given the Token2049 context, there's a lot of institutions in town, suits, ties, that are looking to come on chain as well. What vertical are you most focusing on or where do you see the most demand? Here's how you see the trends going on here.

5:59Ryan Rodenbaugh Well, I might break it up into two buckets. So on one end, you have the firms that are asset management firms and they view on chain rails as a new way to attract and source capital. So take for example, someone like Galaxy launching their curation business or Bitwise, which has their sort of, I think it's Ethena co-branded product on Jupiter. And they also have vaults on Morpho and another thing called Glider. They have kind of separately managed accounts there. I think for all of them, they look at on chain rails and they say, okay, we have this traditional business, we go out to investors, we source capital, we can do the same thing in an on chain perspective and there's probably some cost efficiency there as well. I think those institutions are really gung ho. You also see BlackRock BUIDL, Fidelity, WisdomTree, all of these companies, they are all in on this.

6:51Ryan Rodenbaugh The place that everyone is very excited about, but I think if you catch people talking honestly, we'll admit has been very slow, is people allocating capital, like institutions allocating capital to these things as well. It of course happens today, but just given where some crypto rates are today, I do think it's tough for larger institutional firms to still get over the hurdle of saying, we want to onboard and Allocate to crypto in the first place and then a 4.5% yield is probably not worth the risk profile of smart contract risks and hiring people to do this and getting custody and MPC set up. So that has been the honestly like perpetual challenge that I think the industry has faced from getting capital allocated, but everyone is making the investments today so that when I think rates Are at a better perspective, those firms are going to be very, very ready.

7:45Kinsa Durst Right, I think it sounds great and I've done a lot of yield farming or looping or whatever on-chain as well. I think some of the tough part is the data, figuring out where to go and it sounds like a great product for me to navigate the on-chain space. I think it sounds like— I know nothing is risk-free, but in terms of the opportunities provided that through your platform is a sort of created set list of protocols and vaults.

8:19Ryan Rodenbaugh To a minor extent.

8:19Kinsa Durst To a minor extent, okay.

8:20Ryan Rodenbaugh To a minor extent. We, today we have probably on the order of a thousand individual strategies that have at least 100K and TVL and if you go even smaller, so sub 100K, Honestly there's probably another 2,000.

8:36Kinsa Durst Gotcha.

8:37Ryan Rodenbaugh So a lot of those are actually quite risky and part of that is we've really moved in crypto from an environment of Compound and Aave being these sort of dominant structures Where they're very curated in and of themselves to the kind of more Morpho and Euler type of infrastructure where they are by definition very permissionless. And so if we're indexing all of the Morpho and Euler vaults that get launched, a lot of those will be from managers that are taking on much riskier collateral as well. So in the past year alone, right, we've seen Stream Finance, we've seen Resolv, we've seen Kelp, I'm probably forgetting one or two other major things in there. All of those were, or generally speaking, all of those were collateral on places like Euler and Morpho.

9:26Ryan Rodenbaugh And so the downstream effect on those vaults is that in hindsight, they were quite risky.

9:31Kinsa Durst Yeah. And that's the cycle that I think we're gonna keep going through where rates are kind of boring and so people try to push out on the risk curve to have higher APYs attract more capital.

9:43Ryan Rodenbaugh Unfortunately, many of those people get washed out, those curators get washed out when things go bad. From there then, we repeat the cycle, things get low risk again and it just kind of keeps going and going and going. But at least now in that landscape, I think we're in a, dare I say relatively okay place, but who knows, there's always some unseen risk.

10:05Kinsa Durst Yeah, yeah. I mean, do you have the insight as you're always scanning the industry, this vertical in terms of what's happening, what's going on, very on top of things. That said, I didn't wanna ask in terms of new opportunities that are coming up. Obviously the meta for these vaults are changing as well. We're seeing a lot of security tokenization coming on chain that provides dividends or yields. What are some of the trends or strategies that you're seeing or you're excited about that people can tap into through your platform?

10:41Ryan Rodenbaugh Ooh, well, I guess if I were to think about what's the things that are maybe at the frontier of DeFi yield or something. A lot of what I see there are what I call more discretionary vaults. So there's kind of this rough spectrum I have in my head of on one end you have things like Aave and Compound, which there's really not a lot of discretion that those protocols and Their governance can take in terms of what gets accepted as collateral and what the manager can ultimately do. On the other end, you have protocols, I would say like Accountable, Midas, Upshift, things like that, where when you're allocating to one of those vaults, you're really, really choosing the manager to, And giving them a lot of discretion over what they can do with those funds.

11:31Ryan Rodenbaugh As a result, some of those yields are 10, 15, 20% without any kind of token incentives. The underlying strategies though, may be consumer off-chain credit with 90 day lockups, or they may be option vaults, where under the hood the manager is doing over the counter options. They may be some sort of carry trade or looping. I think you guys have had Axis on as well. Axis is kind of a perfect example of that. Obviously they are their own protocol, and I forgot what their APY is today, but certainly 15% or so plus, I believe, and they're doing that by taking all of these kind of stock and more complex carry trades. So that to me is kind of the frontier, taking stuff that in TradFi are high yield products today, and kind of giving them this token wrapper around that.

12:18Ryan Rodenbaugh I think to the credit of something like Axis, even Ethena has come out recently and said that they're going to start including those types of strategies into their underlying backing as well, I hope I'm right on that if I read that announcement correctly, but yeah, we see more and more of that. Apyx is another perfect example. Gotcha.

12:34Kinsa Durst In terms of type of asset that users use, are you guys very flexible in that as well? Is it mostly stablecoins or is it Ethereum? Do you guys do Bitcoin? Curious on this aspect as well.

12:45Ryan Rodenbaugh Yeah, we have no judgment on that. We support hundreds of assets for deposit and management today. Certainly far and away, USDC is the DeFi asset.

12:56Kinsa Durst Right. Tether. Really, not Tether.

13:00Ryan Rodenbaugh No. And obviously Tether is larger by multiples and in the exchange business, in the remittance business, is much larger of an asset, but within DeFi, USDC is very, very dominant there. I think that likely comes just from better on and off ramps, like it is so much more accessible to mint and redeem USDC at parity. And then I do think that Coinbase and these organizations were quite intentional in trying to get themselves integrated into DeFi very successfully. Tether increasingly does have some pretty high yield products out there. I don't know that it's an intentional push versus I think a lot of teams are interested in tapping into the larger Tether universe out there.

13:46Kinsa Durst And outside of that, I mean-- There's a couple of Tether blockchains that have launched past year or so. Of course. Let's see how that plays out.

13:52Ryan Rodenbaugh Yeah.

13:53Kinsa Durst Yeah, yeah, Axis is also on these Tether chains as well.

13:57Ryan Rodenbaugh Absolutely. Yeah, yeah.

13:58Kinsa Durst But yeah, USDC I didn't realize, but I guess also US based firms or institutions might be more interested in using USDC versus Tether as well.

14:07Ryan Rodenbaugh I agree and if I think about many of the largest kind of DeFi orgs there, either American, kind of European where USDC is very accessible Or people wanna be aligned with Coinbase as well. I think of Morpho for example, right? Morpho, yes, they're European team, but very kind of Coinbase aligned. Aave actually has a very large USDT deposit base, probably in the order of 4 billion. Probably the largest in terms of DeFi protocol with Tether, maybe Spark is up there too. And then outside of that, there's really not much for Bitcoin unfortunately. CbBTC has some yields out there, but it's not particularly prevalent. Very large as a collateral asset of course, but not for something to really earn a yield on.

14:54Ryan Rodenbaugh And then on the flip side, Ethereum and all kinds of ETH, LSTs and derivatives has lots of adoption. Right, right.

15:03Kinsa Durst Super cool. I think that's exciting. Given the Token2049 context, I did wanna ask in terms of this coming week, this coming, these coming years, months, years, what do you hope to achieve with vaults.fyi? And yeah, what are you trying to get the most out of these few weeks here in Asia?

15:25Ryan Rodenbaugh Yeah, so, you know, I was in Korea last week, I'm here this week and it's a mix of things. Half of it is the meme of coming here to meet with people who also live in New York. The other half, yes, has been trying to meet with a lot more, I'd say Asian-based or even really European-based firms that are out here for the week. Our big focus is really kind of twofold. Part of it is actually just telling the story to firms around why when they are thinking about using DeFi or integrating DeFi into their products, they should be thinking about integrating many protocols and many different yields. There's a lot of trends that I think support that. The thing that we see from firms kind of dipping their toes in today is that they tend to integrate one protocol, one pool, one vault.

16:12Ryan Rodenbaugh And there's good reason for that too. If you really want a very simplified product experience, I understand it completely. On the flip side, I don't know that this is a perfect analogy, but it would be like, if you had a stock trading platform and you only chose to integrate 10 or 20 stocks, that would be kind of strange, right? You want to give your users access to that whole universe. And as I look out at the DeFi landscape today, of course, you have the Aaves, you have the Morphos, you have the Sparks, the very large things out there. But at any given time, a new protocol, maybe it's Apyx, maybe it's AXIS, maybe it's Midas, has a very exciting product that users want access to, is growing fast. And by working with someone like us, you're able to, on day one, have access to all of those and choose to show as many or as few at any given moment as you like.

17:00Ryan Rodenbaugh So kind of positioning us as this future-proofed option for firms that are thinking about how they enter DeFi.

17:06Kinsa Durst Yeah, I mean, even given the context of fundamental risk management, it just makes so much sense to diversify your pools.

17:14Ryan Rodenbaugh And that's a big piece of the tools that we're starting to build out now as well. So more advanced sort of alerting and notification around, hey, maybe the largest LP just left this vault. Or if you're a borrower, you're getting close to your liquidation point. And then actually one of the things that we're rolling out hopefully this week is a new tool called xray.vaults.fyi. Starting with Morpho, but expanding to Veda, Euler, Upshift, and Mellow as well, where a user can put in their address and see all of the vaults that they're allocated to, and then see all of The underlying market exposure underneath that. I think it's one of the things that gets lost in this conversation. You look at a vault and it's like, what is a vault? A vault is just a composition of markets and other strategies underneath it.

18:00Ryan Rodenbaugh And so our goal there is to give users more insight into what they're actually lending against.

18:07Kinsa Durst Something more than just a number with a percentage next to it. Yes. Amazing.

18:10Ryan Rodenbaugh Yeah, that is very much where we're going. We've done a lot, I think, in trying to give users breadth to date. And we're refocusing a lot on giving users much more depth into where they're going.

18:23Kinsa Durst Incredible. I can't wait to use it myself. And if our audience wants to learn more or try the product out themselves, where can they-- Yep. Yeah, access it.

18:33Ryan Rodenbaugh Twitter is always a great place to jump off to all of our other links. So on Twitter it is just v-a-u-l-t-s-f-y-i. You can find me as well. My handle is my full name, Ryan Rodenbaugh. And please get in touch. Got my Telegram handle in my bio, so very accessible.

18:49Kinsa Durst We will also add the link under the podcast.

18:52Ryan Rodenbaugh Links in the show notes. Yep. Awesome. Yeah, thanks so much for having me. And yeah, talk soon.