Formalize a Framework For yVault Controllers

Summary:
Create a procedural framework that dictates what a Controller can and cannot do with yVault funds in order to mitigate risk.

Abstract:
Delegated yVaults will enable Controllers to utilize capital and pursue various speculative strategies in the crypto market. Initially only USDC and yCrv was enabled as assets in yVaults, but with the introduction of LINK and in the future other volatile assets a framework should be established that will dictate activities a Controller can and cannot pursue, or other financial metrics he/she must adhere to.

Motivation:
Without a procedural framework the Controller may engage in unnecessarily risky behavior or activities that put the entire yVault at risk for liquidation. This could have long-lasting and drastic effects on market trust and the future of this product offering and possibly other yearn products.

Specification:
Formalize a procedural framework that the Controller must adhere to while conducting yield farming strategies. I will keep this part intentionally vague for now as to allow discussion below. The discussion would then formalize the framework, and can be updated here. But initially, I propose a minimum initial health factor of 4 for any volatile assets that are deposited on AAVE and used to draw stablecoins. This gives the yVault lots of downside protection for adverse price movements of the underlying collateral.

For: Implement a procedural framework each Controller must adhere to.

Against: Do nothing.

  • For a Framework
  • Against a Framework

0 voters

Few initial ideas of things that should be required of Controllers

  • Minimum of 4 Health Factor when drawing stablecoins
  • No deposits in unaudited smart contracts
  • Strategies should be peer-reviewed by other Controllers before implemented
  • Funds cannot be used to short-sell any other cryptoassets
  • Funds cannot be used to engage in naked option strategies
  • Other

0 voters

5 Likes

Meant to be more a discussion thread to formalize a plan. Looks like the yearn twitter account has already acknowledged a process needs to be put in place to mitigate risk.

1 Like

tip: put up a vote to gauge engagement and sentiment

Bump added a poll to gauge sentiment and a few initial ideas.

1 Like