Stylus HedgeFund

Welcome to Genesis HedgeFund! Our project implements a simplified hedge fund smart contract on the Stylus environment, allowing users to deposit ETH, tokenize them into shares, then allocate funds into different assets and lending protocols. Below is a detailed overview of the project.

What is GenesisHF?

This project is a proof-of-concept DeFi hedge fund, implemented in Rust for the Stylus execution environment. It demonstrates how a DeFi protocol can be built to manage user deposits in ETH, split them into different risk-based asset classes i.e. High, medium and low risk (like LINK, WBTC, or lending platforms), then provide a redemption process by withdrawing proportional assets.

What does it do?

We:

• Collect ETH from users.
• Tokenize deposits by issuing shares corresponding to their ownership.
• Allocate a percentage of the ETH deposit to:
  • A high risk investment category consisiting of utility tokens like LINK.
  • A medium risk category consisting of assets like WBTC, ETH, and other crypto assets.
  • A low risk category consisting of stablecoin lending yields like depositing USDC into a lending pool.
• Allow withdraws of proportionate ETH, depending on the user's share balance.
• Enable rebalancing of leftover ETH in the contract to maintain target allocations.

How does genesisHF do it?

1. A user first starts the CLI and logs in using their private key.
2. The user then calls the deposit function, sending ETH.
3. This contract mints new shares, which track the user’s ownership stake.
4. The contract then automatically splits the ETH into several parts, which are decided by the agents in the backend. For example:
   • 30% swaps to high risk investment category.
   • 30% gets half swapped to medium risk investment category, half remains as ETH.
   • 40% gets deposited into the low risk investment category.
5. Upon withdraw, the user redeems shares for a fraction of the ETH that the contract currently holds.
6. The rebalance function can reorganize leftover ETH in the same ratio (30/30/40) if for some reason there is leftover ETH.

What changes did we make due to the gas error when deploying on mainnet?

During deployment on mainnet, we ran into gas limit issues which are present in the current version of the Stylus environment. As a result:

1. Testnet Deployment – We switched to a testnet environment to ensure our contract worked as intended.
2. Placeholder Addresses – Actual mainnet pool addresses and lending pool addresses weren’t available for our testing environment. We used our own test addresses as placeholders for the swap (Uniswap-like) pools and the lending pool.
3. Contract Deployment – We deployed our own pool and lending contracts on arbitrum sepolia environment to ensure it worked as intended.

How did we use AI agents in here?

We employed AI agents via the cdp kit to:

1. Generating the distribution – To generate the distribution of the ETH into the different risk-based asset classes.
2. Generate class weights – To generate the weights of the different risk-based asset classes.

Project Files and CLI Explanation

Files

• src/lib.rs
  The main logic of the HedgeFund contract. It defines:

  • Storage for user shares.
  • The deposit, withdraw, and rebalance functionalities.
  • The references to swap interfaces (for LINK and WBTC).
  • The references to a lending pool interface.

• Additional Contracts (Test Contracts)
  In the test environment, we have placeholder addresses for the swap and lending pools. These are simplified test versions to simulate swaps and lending operations.

• CLI

  • We are using the standard CLI tooling for deploying or interacting with this contract on Stylus-compatible networks.
  • Typical commands include deposit, withdraw, get balance, and rebalance.

Future Goals

1. Integrate with Real DeFi Protocols

   • Connect to established DeFi protocols on test networks and eventually on mainnet once the gas-related issues are resolved.

2. Expand Token Support

   • Allow more diverse allocation strategies, including stablecoins and additional tokens.

3. Automated Harvesting & Rebalancing

   • Introduce periodic harvest of lending interest and rebalancing of the entire portfolio to maintain the desired asset split.

4. DAO Governance

   • Migrate to a governance model where token holders vote on the ratio of allotments and distribution strategies.

Feel free to contribute, open issues, or suggest improvements. We hope you find GenesisHF a helpful demonstration of how a DeFi hedge fund might be implemented on a chain with the new Stylus environment.

Happy hacking!