Can we create a Vault Strategy for Balancer?

Is it possible to create the following Strategy in Vault ?

  1. Provide liquidity to the Balancer Stable Pools that provide $BAL (that has to be claim every Tuesday)
  2. The Vault claim the $BAL token and keep it and it can also stake it later in another pool

This is strategy should be for people who want to provide liquidity and earn the $BAL token. Currently the gas transactions are too high and we do it together the Vault con save a lot of money plus you don’t have to do it every week.

Update:

  1. yVault: you will deposit a stable coins; maybe DAI and we can called it yBAL
  2. Controller: not much to do since this should be in the same pool (or only changing between pools in Balancer)
  3. Strategy: this is they key part. The $BAL Vault can have two sub version:
    a) Reinvestment: the strategy is for LP who would like to deposit in $BAL and continue growing their stake in $BAL
    b) Claiming tokens: the Vault will be selling the $BAL tokens that received from providing liquidity and LP will always have assets in their stable coin

Feedback?

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Interesting idea. The fully stable pools in Balancer have really low returns though, or do you mean stable + $Bal token pool (e.g. USDC/BAL)? It may be worth looking into if there are enough people who want to accumulate BAL.

Correct @1A1zP1eP5 I know that Balancer pools are not super attractive in terms of yields, but I think there people interested in providing liquidity in order to get the $BAL token which btw has been having an outstanding performance.

Maybe USDC/BAL or DAI/BAL ? Or ETH/BAL?

Open to where we could have more demand. This will be a “low” vault yield compare to the others but it will be a great strategy for long term investors in $BAL

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I like this idea not only because I hold BAL personally for the above mentioned reasons but also because it increases Yearn’s total AUM(assets under management) while also gaining governance share (possible future revenue) further solidifying Yearn’s moat (to protect us and add cash flow). @malbec would you be able to formalize this proposal with a vote so that it can then be moved to a YIP?

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thanks @Arcturus
unfortunately I can’t create a topic in the Proposals forum (not sure why, maybe I need to spend more time).

Yep, I love the idea of increasing Year AUM!

maybe an admin can move this thread to that forum category? do you know anyone that can help us doing it?
maybe @banteg or @milkyklim can guide me how to do it
I know that it should start with the auto-generated template

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following up here, anyone knows if BAL vault is coming?

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I was just thinking about this today! Amazing to see it on top of the yearn forum when I logged in :slight_smile:

I think this could be a blockbuster v1 vault, and could also potentially allow yearn to test out using token governance power.

As an example, yearn could create a v1 vault for the 80% BAL / 20% WETH Balancer LP token. While this LP token does have impermanent loss, this is not an issue as long as the yVault makes the LP token itself the unit of account for deposits and withdrawals.

This LP token is currently earning around 200% APY in BAL rewards. Each time a weekly BAL airdrop is received, it could be reinvested into the BAL/ETH 80/20 pool, effectively selling 20% of the BAL for ETH while maintaining mostly long BAL exposure.

There may be some perverse incentives to deposit into the yVault right before the weekly BAL airdrop and then withdraw afterwards. With 200% APY returns, this could be profitable up to a withdraw fee of around ~2%. This vault almost necessitates higher withdraw fees, which is a potential advantage for the yearn ecosystem.

Balancer also counts any BAL deposited in Balancer pools towards vote snapshots, so yearn could act as a proxy advisor and vote on behalf of yVault investors.

3 Likes

Great! How can we submit a proposal? I can’t submit a topic in the proposal category :frowning:

no need to submit a proposal unless @andre.cronje or someone else is willing/able to make the strategy

but, just for kicks:

If a vault strategy based on the 80% BAL/20% ETH Balancer Pool token was available, would you be interested in investing?

  • Yes
  • Maybe
  • No

0 voters

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thanks @monet-supply

The 80/20 ANT/ETH Balancer pool could also be a good vault candidate: in addition to BAL yields (~35% APY), Aragon is offering a liquidity incentive program through Sept 22, 3pm UTC which is currently yielding ~40% APY in ANT. Both of these could be reinvested into the 80/20 ANT/ETH LP token. Targeting AMM liquidity incentive programs could be a big win for yearn and for the sponsoring projects, because the rewards would be reinvested into deeper liquidity.

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I thought that we don’t use strategies that incur on impermanent loss, and balancer pools do.

I see it as being similar to the yyCRV/yUSD asset - if USDT were to drop by 10%, that pool would experience significant impermanent loss unless/until USDT came back up to par value. But the yUSD vault wouldn’t be insolvent because it is a promise to repay an ever increasing amount of yCRV, and the yCRV internalizes the impermanent loss. Creating a yVault targeting the 80/20 BAL/ETH LP token would work the same way.

On the other hand, if yearn made a yBAL vault, it wouldn’t be able to invest the proceeds into an 80/20 LP token because the vault would be promising repayment in BAL, and an increase in the BAL/ETH price would make the vault insolvent.

I don’t like USDT but you can’t compare a 10% drop in a stable coin with a 10% in a regular coin (very common). Tether moved from peg like 2-3% the black Thursday for reference.

Consider a LINK yVault. If LINK drops 20% (not that uncommon), vault investors aren’t going to be upset because that is the risk they signed up for. Same with yUSD investor and a USDT issue - this is an intrinsic risk of the base asset, not an additional risk from the vault.

I see Balancer impermanent loss the same, as long as the yVault investor is expecting Balancer LP tokens back when they withdraw.

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Even if LINK drops 20%, the vault still will give you back more LINK in any case (more LINK that will worth less because the price drop, but always MORE coins), It will never lose any funds. It won’t happen with a strategy that incur in impermanent loss.

Yes, Correct. yvault is used to collect small money into a large money, and invest together. Any strategy has it’s own risk. If you deposit to a vault, that means you choose the potential earn and risk.
BAL/ETH pool`s APY looks like pretty, so I would vote FOR if a proposal has been issued.

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Here is the comment of Andre related to this (ARCHIVED) Add 5 New Vaults With Ready Code

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Re Andre’s comment there, it is specifically referring to investing proceeds from a (BAL COMP CRV LEND or LINK) vault into a Balancer liquidity pool. Agree 100% that this can’t work. By the same logic, the DAI yVault does not invest in yCRV, because it could suffer impermanent loss. But the yUSD vault IS able to invest in yCRV because that is it’s unit of account, what it owes investors.

I submitted an application to onboard the 80% BAL 20% WETH Balancer token as collateral to MakerDAO. It could be a really awesome hack to earn 200% BAL yield and then earn additional money farming stablecoins on top.

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:clap: :clap: :clap:
this is great. and I agree I think Andre comments was before and not refering to what we are trying to do here.
or @Juanma please help me to understand what I am missing

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