Business News Report
February 14, 2024

Sommelier Expands Multichain Presence with Axelar Network, Debuts Adaptive DeFi Vaults on Arbitrum

In Brief

Sommelier’s first L2 DeFi vault enabled by Axelar’s General Message Passing will aid optimized yields on ETH assets in Arbitrum ecosystem.

Sommelier Expands Multichain Presence with Axelar Network, Debuts Adaptive DeFi Vaults on Arbitrum

Market-adaptive DeFi vault platform Sommelier announced its expansion to Ethereum layer 2s utilizing Axelar’s General Message Passing (GMP). The launch includes the Real Yield ETH vault on Arbitrum One, marking a significant step in Sommelier’s goal to democratize access to DeFi opportunities.

General Message Passing (GMP) is a feature that enables developers to construct interchain-native applications, facilitating cross-chain function calls and state synchronization in a user-friendly manner. In essence, Axelar GMP allows developers to integrate functions such as smart contracts, from different connected chains, like assembling Lego bricks to build applications.

Sommelier asserts that with over $60 million already deposited into its vaults on Ethereum mainnet, the expansion to layer 2s presents an opportunity to reach a broader audience and tap into new yield-generation avenues.

“The fast-growing DeFi ecosystems on L2s like Arbitrum are full of yield opportunities. Sommelier vaults serve as the yield optimization layer and offer users non-custodial access to sophisticated strategies that adaptively deploy assets as these opportunities arise. On L2s, users also get the benefit of low gas fees, which further democratizes access to Sommelier,” Kristi Põldsam, co-founder of Sommelier told Metaverse Post.

“All of this is made possible through a unique architecture that makes use of Sommelier’s Cosmos appchain and Axelar’s GMP to send rebalancing signals to vaults on any of these chains.”

The Real Yield ETH vault on Arbitrum One represents Sommelier’s first vault beyond the Ethereum mainnet. Building on the success of its Ethereum counterpart, which has consistently outperformed holding stETH, Real Yield ETH vault on Arbitrum will dynamically pursue similar strategies.

These include providing liquidity on decentralized exchanges and taking risk-mitigated leveraged positions on staked ETH.

“Sommelier’s expansion onto Layer 2s with Axelar GMP is a showcase in composable multichain architectures, enabling one of the most visionary applications in DeFi,” said Sergey Gorbunov, Co-Founder of Axelar protocol and CEO of Interop Labs. “The combined infrastructure provides users on any chain with non-custodial access to sophisticated DeFi strategies.”

The Real Yield ETH vault on Arbitrum will pursue leveraged staking and concentrated LP positions on ETH LST / ETH DEX trading pairs. Sommelier’s Põldsam said these scalable strategies have made the Real Yield ETH vault on mainnet the highest-performing ETH product in DeFi even as it’s grown to $10s of millions in TVL.

Bolsters User Capabilities in DeFi Landscape

Sommelier’s expansion onto Arbitrum aims to enhance users’ capabilities in navigating and capitalizing on the evolving landscape of decentralized finance. In contrast to vaults with hard-coded strategies, Sommelier enables vaults to rebalance assets as market conditions shift and new opportunities arise. Likewise, new strategies can even be added to vaults over time.

“L2 solutions also bring lower transaction costs, making Sommelier vaults more accessible to a wider range of users and enabling the deployment of a broader spectrum of strategies. For instance, we anticipate vaults running trading strategies that require frequent rebalances, which would not be cost-effective on Ethereum,” Sommelier’s Põldsam told Metaverse Post.

Põldsam said the most significant challenges to this expansion have been developing the technical infrastructure that enables the unmatched capabilities of Sommelier vaults. In the coming weeks and months, Sommelier plans to leverage Axelar GMP network to launch vaults on various Layer 2 chains, promising further innovation and accessibility in the DeFi space.

“Integrating Axelar GMP has been extremely beneficial in making the multichain expansion,” she added. “We see Sommelier as more than just an infrastructure for compelling DeFi yields. It’s democratizing participation in crucial market functions that in traditional finance are dominated by a select few.”

Already on Ethereum Mainnet Sommelier’s flagship Real Yield ETH vault has become the largest liquidity provider for ETH liquid staking tokens, facilitating over $5B in swap volumes in the last 6 months alone. Sommelier vaults are also deeply involved in liquid staking and leveraged staking.

“Because of this, lending protocols, DEXes, and liquid staking/restaking protocols are eager to integrate with Sommelier. We’re working closely with L2 protocol builders and teams building DeFi applications and the wider DeFi community to understand the needs and opportunities across the space. On Mainnet, several Sommelier vaults are specifically built for certain protocols/assets, such as Lido, Stader, Swell, Ether.fi, FraxLend and Aave’s GHO stablecoin,” explained Põldsam. “A significant focus in our multichain expansion is on collaborating with and supporting DeFi protocols in similar ways.”

She said that Real Yield ETH vault on Arbitrum is just the beginning of the L2 expansion. There continue to be market inefficiencies across this landscape that Sommelier vaults are uniquely positioned to capitalize on to generate yields and make liquidity in L2 DeFi more efficient.

Expect a variety of additional vaults across the major L2s in the coming weeks and months. 

Disclaimer

In line with the Trust Project guidelines, please note that the information provided on this page is not intended to be and should not be interpreted as legal, tax, investment, financial, or any other form of advice. It is important to only invest what you can afford to lose and to seek independent financial advice if you have any doubts. For further information, we suggest referring to the terms and conditions as well as the help and support pages provided by the issuer or advertiser. MetaversePost is committed to accurate, unbiased reporting, but market conditions are subject to change without notice.

About The Author

Victor is a Managing Tech Editor/Writer at Metaverse Post and covers artificial intelligence, crypto, data science, metaverse and cybersecurity within the enterprise realm. He boasts half a decade of media and AI experience working at well-known media outlets such as VentureBeat, DatatechVibe and Analytics India Magazine. Being a Media Mentor at prestigious universities including the Oxford and USC and with a Master's degree in data science and analytics, Victor is deeply committed to staying abreast of emerging trends. He offers readers the latest and most insightful narratives from the Tech and Web3 landscape.

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Victor Dey
Victor Dey

Victor is a Managing Tech Editor/Writer at Metaverse Post and covers artificial intelligence, crypto, data science, metaverse and cybersecurity within the enterprise realm. He boasts half a decade of media and AI experience working at well-known media outlets such as VentureBeat, DatatechVibe and Analytics India Magazine. Being a Media Mentor at prestigious universities including the Oxford and USC and with a Master's degree in data science and analytics, Victor is deeply committed to staying abreast of emerging trends. He offers readers the latest and most insightful narratives from the Tech and Web3 landscape.

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