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Introduction

Octant v2 is open public infrastructure for sustainable growth.

It utilizes a set of smart contracts and tooling for routing on-chain yield to projects and funding mechanisms. Users allocate assets to Funding Vaults, select DeFi protocols for yield strategies, define a donation address, and optionally run allocation rounds where a group of users or a community can help direct distributions. The donation address can be defined as a split (percentage allocations to operations, community, ecosystem growth, etc.). The aim is to grow flexibility and effectiveness for capital providers in how they grow and allocate their capital.

Core components:​

  • Funding Vaults: ERC-4626-compliant vaults that deploy capital into DeFi yield strategies.
  • Routing & Splitting Contracts: Infrastructure for programmatic yield distribution to multiple recipients.
  • Allocation Mechanisms: Smart contracts implementing various fund allocation models (e.g. quadratic funding, quadratic voting).
  • Community Staking Contracts (optional): Token-staking mechanisms for governance participation and reward distribution.

Treasury managers determine capital allocation to Funding Vaults, select yield-generating strategies in line with their risk profiles, and configure automatic yield splits between predefined recipients. Optionally, they can enable community participation where eligible participants have an influence on the allocation of an earmarked portion of the yield using a selected model (e.g., quadratic voting). Participation can be token-gated and token-weighted.

Key Properties and Design Principles​

  • Capital Preservation: Octant v2 separates principal management from yield routing. The principal is not distributed; only generated returns flow to funding mechanisms, preserving the treasury.
  • Credible Neutrality: The protocol does not prescribe what to fund; it standardizes how to fund via configurable splits and allocation mechanisms.
  • Sustainability: Yield-based funding enables continuous streams without depleting reserves.
  • Standards and Composability: Uses ERC-4626; supports Safe multisig treasuries; interoperates with common DeFi primitives (e.g., Aave, Morpho, Sky Compounder).
  • Capital-efficiency: The system is optimized to maximize the utility of capital by capturing otherwise idle or wasted value and redirecting it toward funding pools.
  • Cost-efficiency and Automation: The system is designed to reduce the cost of capital provision, accumulation, and allocation compared to traditional systems. Wherever possible, execution is automated to reduce manual intervention, errors, and trust requirements - improving cost efficiency and lowering operational risks.
  • Security: Vaults follow Yearn v3-style patterns and have undergone additional security audits. Strategies have configurable exposure limits.
  • Trust minimized: All parties should be able to use the system and reach consensus without relying on a trusted third party, except when admin functionality is necessary and controlled by a trusted team for upgrades or parameter setup.

How it works​

Octant v2 acts as a decentralized funding network that transforms deployed assets into sustainable funding streams for projects, communities, and operational needs. At its core, it works as a pipeline: users deploy assets in Octant vaults, select a strategy, and the chosen strategy generates yield. Instead of returning this yield to the vault, Octant redirects it into a funding stream that supports various initiatives. This approach allows users to keep their principal fully intact while contributing only the yield their assets generate, enabling long-term impact without sacrificing capital. The nodes in this pipeline eventually form a network, where each node represents a smart contract that either generates a funding stream or transforms/divides it among multiple recipients.

The system's core building blocks are its vaults, which handle deployed tokens, strategies, and that connect with yield generation sources. Octant funding vaults support different kinds of assets, including base tokens (non-yield-bearing tokens), as well as yield-bearing tokens (both rebasing and non-rebasing ones). Using yield-bearing tokens can be thought of as token restaking for funding purposes, but without exposing the tokens to extra counterparty risks. After the tokens got deployed, a user receives back yield-donating tokens that represent the principal that is used in the funding vault. When a strategy generates profit, the system mints new shares that represent the yield and sends them to a designated donation address rather than to the user. The donation address can be a payment splitter that distributes these funds to a range of recipients. This distribution can be direct - sending funds straight to a project or routed through allocation mechanisms such as quadratic funding (QF), quadratic voting (QV), or other customizable funding rounds.

A key difference between Octant and traditional ERC-4626 vaults lies in how yield is treated. In most vaults, yield accrues to the depositor's balance. Octant instead diverts the yield to funding purposes, effectively turning yield into a public good. This creates something akin to a "Kickstarter powered by yield", where users retain their principal and use the generated yield to back initiatives they care about. For example, a USDC funding vault may run multiple strategies to generate yield; whenever profit is realized, a network participant called a keeper triggers a report, and the newly created shares are directed to the donation address for further distribution to designated recipients.

By separating principal from yield, Octant v2 enables a sustainable, long-term funding model that empowers communities to support open-source development, public goods, and other impactful initiatives. Its design allows for flexible allocation methods and priotizes that the share-to-asset ratio generally remains one-to-one. This architecture creates a robust, transparent funding network that aligns incentives between capital providers and projects, making it possible to channel the power of yield toward meaningful collective impact.

Security & Risk for Users​

  • Smart Contract Risk: While Octant built contracts based on the audited Yearn v3 patterns and ERC-4626 standards, new contracts may have undiscovered vulnerabilities. Always verify contract addresses on official channels.
  • Strategy Risk: Direct strategies (e.g., ETH staking, Aave) may face protocol risks, liquidation events, or unexpected governance changes.
  • Impermanent Loss: If a strategy involves LP tokens (e.g., Uniswap pools), price fluctuations may lead to impermanent loss.

Read the full disclaimer here.