What is Octant? DeFi Protocol Guide

Octant v2 is a blockchain-based funding platform that channels investment yield into project funding streams while preserving the depositor’s original capital. Depositors place assets into standardized vaults, and the system routes only the generated returns to recipients, keeping principal untouched.

Overview

Octant v2 operates by having users deposit assets into standardized vaults, select yield-generating strategies, and specify how resulting returns should be allocated to predefined recipients or funding mechanisms. Rather than crediting yield to the depositor, the architecture automatically directs those returns to designated addresses or allocation models. The implementation is composed of smart contract components, including vaults for managing assets, routing contracts for splitting distributions, and optional mechanisms for community-driven allocation (e.g., voting-based models). By separating principal from yield, only generated returns are distributed, enabling continuous, automated funding without eroding the original capital. The system uses interoperable DeFi standards and programmable distribution rules to implement these behaviors.

Features

Funding Vaults

Funding Vaults are smart contracts that deploy deposited assets into DeFi strategies to produce yield and then automatically direct that yield toward funding purposes. The capital put into the vaults remains intact; distributions draw only from the returns according to preset rules. Vaults manage strategy selection, collect yield, and execute distributions so assets can generate ongoing funding streams without diminishing the underlying balance.

Multi-user vaults permit contributions from multiple participants and can be set up for various asset types and strategies. Variants include vaults for non-rebasing tokens (where yield is realized externally), rebasing tokens (where yield accrues within the token), and vaults that operate multiple strategies at once. Some configurations add optional lock-up periods and shared participation in funding. Each variant is intended to capture yield effectively and distribute it while maintaining the security of deposited capital.

“Dragon” vaults are tailored for deployment alongside multi-signature treasury wallets. Assets remain controlled by the wallet owners as they are put into yield-generating strategies, with any generated returns automatically routed to funding destinations while preserving the original holdings. Protective controls are included to constrain risk exposure during strategy execution.

Contribution Types

Strategies

YDS

Yield Donating Strategies are smart-contract vaults that accept a single token and allocate it into an external yield source, such as lending or staking. Instead of passing profits back to users, gains are converted into new shares that are assigned to a predefined recipient address. When losses occur, the shares held by that recipient are reduced first, serving as a buffer that protects user balances unless losses exceed that reserve. This model keeps user deposits distinct from yield outcomes: users receive shares that reflect their principal rather than accumulating returns, while all generated yield is redirected for funding purposes. A periodic reporting process harvests rewards, values positions, and decides whether to mint or burn shares for the recipient address, ensuring profits are consistently redirected and losses are absorbed in a defined order. The design relies on standard tokenized vault interfaces and preserves straightforward deposit and withdrawal flows. Roles such as managers and automated operators handle configuration and reporting, enabling yield to be systematically diverted into funding streams while maintaining transparent accounting and protecting deposited capital.

YSS

Yield Skimming Strategies are smart-contract vaults intended for yield-bearing assets whose value changes via an internal exchange rate (e.g., staking derivatives). Instead of allowing that appreciation to increase users’ holdings, increases in value are converted into shares that are assigned to a designated recipient address. If the asset’s value declines, the recipient-held shares are reduced first, creating a buffer that protects user balances unless losses exceed that reserve. Depositors receive shares that track a stable reference value (such as an equivalent ETH value) rather than rising with the underlying asset’s appreciation. The vault keeps the yield-bearing asset directly, and a periodic reporting process updates the exchange rate and determines whether to mint or burn shares for the recipient address. This mechanism ensures gains are consistently redirected while losses are handled in a predefined sequence.

Partnerships

• Shutter
• Morpho
• KPK
• Ethereum Foundation
• Protocol Guild
• Yearn
• Sky.Money
• Lido DAO