Mellow Finance offers an investment protocol that pools investors funds and manages these funds according to an investment strategy smart contract.
The overall system has certain parameters managed by The ProtocolGovernance smart contract. Different vaults are responsible to keep the funds and/or invest them in other DeFi protocols like AAVE, YEARN or Uniswap. A root vault is the overarching connector for all vaults. The root vault is the entry point for a user to invest funds. Strategy contracts balance the ratios of tokens held in the vaults and between the vaults.
A user who wants to invest funds will send the funds to the root vault. The root vault will in return issue a corresponding amount of liquidity provider tokens to track the user’s investment to the user. The funds will end up in a special vault which acts as a cash position. As soon as a strategy manager invokes the vault rebalancing in the connected strategy, the strategy will distribute the funds from the cash vault to the investment/integration vaults. These vaults will use the funds to invest into the third party DeFi protocols like Aave. When a user decides to redeem/withdraw their liquidity provider tokens for the corresponding share of tokens, the root vault will drain the cash vault and if needed take more money from the investment/integration vaults.