I’m in favor of this change but it presents some issues.
- 0.5% fee + gas fee to exit to yCRV (if wanting fiat, for example)
- Increased systemic risk with yUSD vs yCRV
- Underlying strategies of yUSD can change introducing an attack vector with governance rewards
The last two aren’t as big of a concern in the short-term, but should still be considered.
However for the first point, since there are now markets with yUSD on Uniswap and other places, people can freely exchange yUSD for ETH or other tokens, so the exit fee isn’t presently a huge concern unless you want to unwrap to get the underlying yCRV.
But I would feel better about this change if we had our own community incentivized yUSD/yCRV liquidity pools to facilitate this, perhaps YFI holders could opt-in to this trading pool if they intend to keep their funds parked (maybe because of tax implications or high gas fees). This has the side-effect of adding trading fees on top of the protocol fees. The swap fees would need to be below 0.5% to make sense, and would effectively be subsidizing the vault exit fees by reducing the total earnings generated by YFI governance participants that exit yCRV vaults, but it would allow for less friction in claiming rewards for governance participants as a trade off. The challenge would lie in limiting the pool to only YFI holders.
This could potentially be achieved with a private balancer pool and a smart contract acting as a smart pool. YFI holders could then claim a BPT token representing their share in the index of pooled governance funds, choosing to liquidate it into the token of their choice, use it as collateral to fund protocol initiatives, or a myriad of other potential use cases.
This approach adds even more platform risk than just switching the rewards to yUSD but I believe it could be a better solution, given the vault exit fees and the cost of claiming governance rewards. If the trading pool is opt-in, then that could cause a chicken or the egg problem, so the pool would need to be incentivized by additional governance rewards for participation.
Any interest in exploring this option further?