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Protocol Architecture

Technical design of HedgeCore smart contract system and modular infrastructure

Protocol Architecture

HedgeCore implements a modular smart contract infrastructure engineered to optimize yield generation while preserving security and operational clarity. The protocol issues and administers soul-bound, yield-accruing tokens (sUSD) that generate returns via Venus Protocol integration.

Foundation Principles

  • Modular Design: Distinct contracts governing staking mechanics, yield distribution, and strategy execution.
  • Chain-Enforced Rules: All essential constraints—including transfer limitations and temporal locks—execute on-chain.
  • Access Control: Critical operations mandate owner or operator privileges (preferably multisignature).
  • Observable State: Complete protocol and participant states accessible through public view functions.
  • Yield Maximization: Automated deposit routing to revenue-generating strategies.

Smart Contract System

The infrastructure comprises three primary contracts:

1. StakeableAssetImpl (sUSD Token)

Inherits OpenZeppelin components:

  • ERC20Upgradeable: Conventional token interface supporting upgrades.
  • ERC20PermitUpgradeable: EIP-2612 gasless authorization.
  • Ownable2StepUpgradeable: Protected two-phase ownership migration.
  • ReentrancyGuardUpgradeable: Reentrancy attack prevention.
  • PausableUpgradeable: Circuit breaker for emergency scenarios.

2. StrategyRouter

  • Directs USDC deposits toward yield strategies
  • Governs strategy weighting and capital allocation
  • Processes strategy withdrawals
  • Owner-managed strategy configuration

3. VenusUSDVault

  • ERC-4626 standard vault for Venus Protocol connectivity
  • Channels USDC into Venus for yield accumulation
  • Administers vUSDC positions and interest accrual
  • Delivers standardized router interface

Operational Components

Primary Token Operations

  • Deposit & Generation: Transforms USDC → sUSD at 1:1 ratio with participant-specified lock duration.
  • Yield Distribution: Generates supplementary sUSD from accumulated returns.
  • Position Release: Manual unlock procedure post-expiration.
  • Accelerated Redemption: Operator-authorized sUSD burn for USDC recovery.
  • Mobility Constraints: Locked positions prohibit transfers and approvals.

Revenue Generation

  • Automatic Allocation: Deposits flow directly to Venus Protocol.
  • Yield Harvesting: Generated returns collected and allocated to participants.
  • Performance Fee: 7% of Venus yields captured as protocol revenue.
  • Clear APY: Participants receive 93% of Venus Protocol yields.

Protection Mechanisms

  • Privilege Hierarchy: Owner and operator roles for function segregation.
  • Emergency Halt: Pausable operations for critical scenarios.
  • Rate Limiting: Configurable thresholds on deposits and minting.
  • Secure Transitions: Two-phase ownership migration process.

Capital Flow Architecture

Participant USDC → StakeableAsset → StrategyRouter → VenusUSDVault → Venus Protocol
                                                                            ↓
Participant sUSD ← Yield Allocation ← Protocol (93%) ← Returns Generation

Design Constraints

HedgeCore maintains security through exclusions:

  • Auto-compounding mechanisms within token contracts.
  • Default mobility for locked positions.
  • Inflationary yield generation.
  • Direct oracle dependencies.

hUSDC Wrapper Layer

For liquidity requirements, HedgeCore provides hUSDC—a tradeable wrapper encapsulating sUSD:

  • Enables DEX participation while preserving yield generation
  • Maintains soul-bound properties for underlying sUSD
  • Provides market access without compromising security model

Architectural Summary

The protocol architecture deliberately embraces constraints: minimizing complexity reduces vulnerability surface and enhances auditability. Through a consolidated contract structure and rigorous lock/transfer enforcement, HedgeCore targets sustained reliability in adversarial environments.

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