Surplus Management

Making Monies

Surplus Management involves the strategic utilization of funds that are idle within the Coupon Finance ecosystem. Specifically, it refers to the allocation of deposits not actively being lent out, as well as collateral assets, to external yield-generating opportunities. The primary aim is to optimize the return on all assets under the protocol's control.

Currently, Coupon Finance employs Aave for such investments to earn additional interest. However, this practice introduces an element of external contract risk. Should Aave face insolvency or any significant operational issues, the assets placed in Aave by Coupon Finance could be adversely affected, potentially impacting the protocol's surplus funds.

The yield generated from Surplus Management is directed back into the Coupon Finance treasury. This inflow of profits serves a dual purpose: it adds to the protocol’s reserves and acts as a financial buffer. For users, this buffer enhances the security of their deposits, providing additional protection in scenarios where the protocol might face liquidity issues. By having this surplus from external yield-generating activities, Coupon Finance effectively strengthens its solvency, which is a direct benefit to its users, as it can help maintain the protocol's operations and user confidence even in adverse market conditions.