Add Kyber Network Crystal (KNC) as one of the volatile assets to be used as collateral in delegated yVaults.
Abstract:
Add Kyber Network Crystal (KNC) as one of the volatile assets to be used as collateral in delegated yVaults.
Motivation:
While KNC has it’s own staking programme in place, the yield can be increased through locking KNC on Aave and using borrowed stablecoins to farm with other protocols. The KNC staking currently yields 1-3% annualised. KNC holders who stake hence will be able to benefit more from yVaults as the returns are high here at yearn. This will also likely reduce no. of stakers at KyberDAO and hence the stakers there would be able to enjoy a bit higher returns as some shift here.
Rationale:
KNC is a well known asset in DeFi space. KNC can also be used in MakerDAO to mint Dai and is also listed on Coinbase Pro. Also, it’s there on Aave with max LTV of 60%.
For: Add KNC as a volatile asset to be used in delegated yVaults.
Great idea. I think in general, opening up YFI to as many other DeFi communities as possible is a positive. Don’t personally hold KNC, but can easily see why KNC bulls would love this
My 5000 KNC bag on Binance yielded me only 1.4 KNC for the month of July. I held for the entire month. And this 1.4 is including the promotional rewards sponsored by Kyber team.
Michael from xToken here. If Aave adds xKNCa (the xKNC instance with much higher AUM), it could be a powerful entry point for a KNC vault. There’s a KNC/ETH Chainlink feed and the NAV/valuation calculation for xKNC is trivial.
For those unfamiliar, xKNC is an ERC20 wrapper for Kyber staking. ETH rewards are reinvested in KNC, compounding Kyber staking rewards. Using xKNC instead of raw KNC for the vault would add a little juice to the return profile
IMO there’s no need to use xKNC for this vault. yearn is uniquely well positioned to make it’s own governance decisions on behalf of vaults as a whole (sort of like Vanguard voting on behalf of their funds). This governance power is a key element of what makes yearn exciting, I think it should be kept in house.
A yKNC vault could potentially use an Aave credit delegation contract to obtain leverage and stablecoins for farming and pledge tokens representing a right to withdraw KNC from the vault in the event of default. By keeping the KNC itself in house, yearn could maintain control over the KNC votes while still earning KNC voting rewards and leveraging the asset for farming.
Looks like KNC vaults will attract a good deal of TVL to the protocol.
The best would be (imo) Deposit KNC to yVaults > get xKNC > deposit xKNC to Aave > Yield farming
(but that would need support from Aave first. Cc @Stani). In this, we get benefit from staking as well as yield farming.
I think that’s the only way I can see. Also, if we had Kyber Network team onboard this, that would fasten things a bit more. I’m not aware of them being here, sadly.
