There are two parts to this proposal:
Passive yVault Strategies
We should think big for yVaults when considering what their future entails. Whilst current short term strategies can generate high yield, they can also disrupt other projects and not scale well. yVaults should strive to be DeFi’s solution the Vanguard/Black Rock. The goal could be to capture assets under management and actively manage through more scalable long term passive strategies that may or may not also leverage opportunities to generate yield on assets.
Management Fees for Strategies
In my experience, Investors are very ok paying management fees for someone else to run a strategy on their behalf, but they always argue over performance fees (they want all their gains!). If we assume the goal of the above being to maximize assets in the yVaults, we should consider charging a management fee (industry standard of 2%) that is split between strategy designers and YFI holders. This will be very stomachable for investors, potentially hugely profitable for YFI holders and incentivize strategy designers to create long term value capture for yearn. This fee would be charged along side the 0.5% vault exit fee.
YIP would introduce a 2% annualized fee on assets under management taken from vaults daily (i.e. 2%/365 daily rate).
Current Yearn Vaults are mostly designed around short term yield optimization that: (1) does not capture long term value for yearn since turnover is high, (2) is likely unsustainable since yields will reduce as more entrants enter defi, (3) does not scale fantastically as experience with some existing vaults, (4) can cause harm to other projects as the strategies are largely designed to farm and dump tokens rather than farm to become community members (not implying this is not what most farmers do…)
Yearn should dream big and try to capture significant long term value on the platform through creating long term yield strategies where investors can ‘set and forget’, trusting that the strategy will follow a rules-based investment process. Whilst probably not appealing to DeFi Chads, it is how the big investor $$ traditionally allocate capital. Think Vanguard, Blackrock, Fidelity, etc. This will help create Yearn’s already growing moat and hopefully attract different types of investors to the platform.
For example: Imagine just a simple BTC/ETH vault that maintained passive long exposure to BTC and ETH, but also returned 10-20% (or more!) above spot just from using a ETH yVault and sBTC or renBTC Curve strategy. For a simple, non-DeFi Chad that is a great return on a long term investment
This YIP would modify the harvest() function to charge on assets under management daily
Introduce a 2% Management
Leave fees as is for now