Snow Optimizer
The Snow Optimizer continuously evaluates yield across all supported protocols and allocates your USDC to maximize your blended APY within safe boundaries.
How the Algorithm Works
The optimizer ranks all healthy protocols by their effective TWAP APY and allocates capital starting from the highest-yielding protocol down:
1. Rank all healthy protocols by effective TWAP APY (highest first)
2. For each protocol in ranked order:
- Check if it beats the base layer by the required margin
- Allocate capital up to the protocol's TVL cap (7.5% of its TVL)
- Respect any user-specified allocation limits
3. Park any remainder in the base allocation layer
4. If remaining > 0 after all protocols: hold idle in smart accountWorked Example
With a $10,000 deposit and the following current rates:
| Protocol | APY | vs Baseline | Decision |
|---|---|---|---|
| Protocol A | 4.2% | +1.2% | Accept (above 0.1% margin) |
| Base Layer | 3.8% | base layer | Accept (base layer) |
| Protocol B | 3.3% | -0.5% | Skip (below margin) |
| Protocol C | 3.0% | -0.8% | Skip (below margin) |
Result:
- Protocol A: $5,000
- Base Layer: $5,000 (base layer receives the remainder)
Why the 0.1% margin?
Moving money costs gas. If a protocol is only 0.05% better, the gas and additional risk exposure is not worth it. The margin prevents unnecessary rebalancing.
Allocation Limits
- User-specified limits: You can set your own maximum allocation per protocol, or leave it uncapped for full flexibility
- 7.5% TVL cap: Never deposits more than 7.5% of a protocol's total TVL to avoid impacting rates
- $100K minimum TVL: Protocols below this threshold are excluded
Rate Sources
| Protocol | On-Chain Source | Units |
|---|---|---|
| Pool-based lending market | Pool.getReserveData(asset).currentLiquidityRate | RAY (÷ 1e27) |
| Interest-bearing token market | qiToken.supplyRatePerTimestamp() | Per-second rate |
| Vault-style market | ERC-4626 vault share price growth | Share price delta |
All rates are TWAP-smoothed over a 15-minute window and cross-validated against DefiLlama's yield API before being used in allocation decisions.
Diversification Preferences
Users can choose a diversification preference that affects how the optimizer distributes funds:
- Max Yield: Concentrate in the highest-yielding protocols
- Balanced: Moderate spread across qualifying protocols
- Diversified: Maximize the number of protocols used, reducing single-protocol exposure