The problem Vaultedge solves

The current users in the DeFi space hold yield-bearing assets like LSTs, LRTs, LP tokens, veTokens, and RWAs which generate future income but remain fundamentally illiquid.

Unlocking immediate capital from these assets typically requires unstaking, giving up ownership, or taking on high-interest debt.

Without Vaultedge:

• Capital remains locked while yield accrues slowly over time, there is no mechanism in DeFi to get a pay advancement over the future cashflow of the assets.

• Users can’t access upfront liquidity from their productive assets without disrupting their yield strategy.

• There’s no efficient way to borrow against complex or exotic assets like LPs or veTokens.

Borrowing options are often capital-inefficient, interest-bearing, or limited to only bluechip collateral.

The result: users are rich on paper, but poor in usable liquidity, unable to deploy capital, seize opportunities, or optimize their portfolios.

How we solve it?

Vaultedge is a CDP protocol that lets users borrow zero-interest, self-repaying loans against their DeFi portfolios, unlocking idle and locked liquidity.

Users can mint an overcollateralized stablecoin (veUSD) using a wide range of collateral, including stablecoins, blue-chip tokens, LSTs, LRTs, LP tokens, and veTokens. By borrowing against the future yield of these assets, Vaultedge enables pay advancements and capital-efficient leverage without interest or scheduled repayments.

The protocol supports flexible strategies: yield from the deposited collateral can either be used to automatically repay the debt or compound back into the position.

Example:

A user deposits $10,000 worth of veAERO and mints $5,000 of veUSD. Vaultedge optimizes the veAERO voting to maximize its yield, which is then used to gradually repay the loan, giving the user early access to liquidity while their collateral continues generating rewards.

Vaultedge expands the design space of CDPs by supporting exotic and yield-bearing assets that are underserved by traditional money markets.

Challenges I ran into

Building Vaultedge wasn’t just about enabling borrowing against exotic assets, it required deep architectural innovation to support the complexity, flexibility, and security needed at scale.

One of the biggest challenges we faced was the smart contract size limitation on EVM compatible chains.
The protocol needed to support:

• Dozens of collateral types (LSTs, LPs, veTokens, RWAs)

• Custom liquidation logic for different asset classes

• Stability pools, repayment flows, and automated yield redirection

• Fine-grained access control and upgradeability

The result?
A large, modular protocol that simply couldn’t fit within the EVM's 24KB contract size limit using traditional monolithic contracts.

To solve this, we implemented the Diamond Pattern (EIP-2535), a smart contract architecture that enables:

• Modularization: Breaking the protocol into smaller functional “facets” (vaults, oracles, liquidation, fee logic, etc.)

• Upgradeable logic: Upgrades can be made to individual facets without touching the entire system

• Scalability: We can add new features or support new collateral types without exceeding contract size limits

• Gas optimization: Function selectors are efficiently routed, maintaining strong performance despite high modularity

This architectural decision was critical to enabling Vaultedge’s composability, extensibility, and long-term upgradeability, especially as we onboard more asset types and strategies.