Update the yUSDC and yUSDT vaults together to liquidity mine on mstable
Should this proposal be implemented, the yUSDC and yUSDT vaults would work to supply liquidity to the 50:50 USDC/mUSD balancer pool. The USDC would be directly deposited, and the USDT would be used to mint mUSD to complete the other side of the deposit. This would then be staked on mstable for MTA and BAL rewards, which would be sold for USDC or USDT to compound the returns.
Currently the USDC and USDT vaults utilize DFORCE, and have had lower returns as of late. By updating to this new strategy, we can harvest greater yields.
Should this proposal be enacted, the strategy would be updated so that the USDC and USDT vaults would deposit their funds as opposing sides of the 50:50 USDC/mUSD balancer pool. This strategy works best when they are applied in tandem. First, USDT will be used to mint mUSD. The mUSD pool is primarily full of USDT and TUSD, so there would be plenty of exit liquidity if needed (the DAI and USDC are nearly empty). The vaults would then deposit the USDC and the mUSD into Balancer, and would then stake the BPT on the mstable website. Harvested BAL and MTA would be sold to compound the vaults.
As the current market cap of this pool is only $3mm on each side, these vaults would need to work together to ensure appropriate exposure. There are two paths that could be taken. The first is that if one vault is larger than the other, the excess funds would sit idle (e.g. if there is $5mm yUSDC and $10mm yUSDT, only $5mm of the yUSDT would be minted into mUSD). The other path would be to use Uniswap to swap between these two tokens to ensure adequate 50:50 exposure at all times.
At current market rates, the yield of this strategy would be approximately 38% APY.
Placeholder graphic. Will update later.
For: Use the above strategy for the yUSDC and yUSDT vaults.
Against: No change.