ShardVaults are insrt’s first product - they pay yield to users for becoming partial owners of Bluechip NFTs. The Vaults democratize Bluechip NFT ownership by offering users a low entry price to their favorite, coveted, collections. Additionally, the bluechips are deployed into NFT Financial infrastructure to generate yield for Vault participants.
Spot exposure - you obtain exposure to the price movement of the underlying bluechip NFT collection
Steady yield - the underlying NFTs are automagically financialized to earn interest, providing you with a consistent stream of NFT-backed income
Unique art - you become the proud owner of a unique piece of artwork that reflects your ownership and participation within a ShardVault
Liquidity - you can exit your position at any time by selling your Vault share on NFT marketplaces
How does it work?
Users deposit ETH into the ShardVault until it reaches the required funding amount.
In exchange for ETH, users are given a unique NFT (Shard). The Shard represents a user’s participation in the ShardVault and ownership of the Vault’s underlying assets. It also functions as a user’s claim to yield accrued by the Vault.
Once the Vault reaches capacity, it acquires an NFT from a predetermined bluechip collection.
The underlying NFT is then collateralized on a lending protocol and the borrowed funds are deposited into high yield strategies, capturing the difference between the borrow interest rate and investment yield.
The ShardVault automatically manages the loan position by monitoring risk, making loan payments and borrowing more when needed to prevent liquidation but also maximize returns for users.
Users can claim their farmed yield periodically from the ShardVault as it accumulates over time.
Shard owners can propose a vote to close the Vault and sell the NFT if, for example, the price of the bluechip NFT appreciates significantly. If the vote passes, the Vault sells the NFT and distributes all returns to the Shard holders.
ShardVaults can be created for any collection or even a basket of collections. Each vault can be represented by any number of Shards. Later, ShardVaults will be eligible to be reinitialized and have the ability to acquire more assets into them over time. Multiple yield generating strategies can be used and adjusted over time. As insrt creates more Wrappers for primitives, expect many new flavors of ShardVault.