Proposal: Create a mixed vault across all Curve.fi stable coin pools

Summary:

This proposal suggests the creation of a mixed vault across all curves stable coin pools. Considering the calculator for the gauge weights at Curve.fi (https://dao.curve.fi/minter/calc) the boost is dependent on the overall liquidity per pool that is provided. The yearn yVault is currently too large regarding the overall liquidity, to be able to achieve the maximum boost of 2.5x and this is exaggerated by the addition of the yETH vault.

Abstract:

The boost for receiving CRV tokens is is dependent on the overall liquidity per pool that is provided (https://dao.curve.fi/minter/calc). The yearn yVault is too large, to be able to achieve the maximum boost of 2.5x and this is exaggerated by the addition of the yETH vault. Locking up CRV to generate veCRV automatically applies a boost to all curve pools, but of course you need to add liquidity to the other pools in order to receive this boost.

Splitting the vault funds of either the yVault or/and the yETH vault across the different stable coin pools would reduce the provided overall liquidity to a single pool and enable the ability to achieve the maximum boost of 2.5x for multiple pools.

The weekly gauge weight vote at curve.fi (https://dao.curve.fi/gaugeweight) suggests that there will always be competing interests in more or less evenly distributing the rewards (regarding the overall liquidity, though the BUSD pool is clearly underperforming at the moment). With only the yVault, to achieve the maximum amount of CRV from the distribution, we would need to vote only for the y pool, this would incentivise other people of joining the curve y pool, which might result in less liquidity in the other curve pools (which might not be in the best interest of curve). Splitting the funds and the gauge weight votes would enable a higher boost (2.5x) and lead to an even distribution of liquidity within the curve pools.

Motivation:

Increase efficiency of the current liquidity via distributing it across the multiple stable coin pools of curve to receive a 2.5x boost on each of them. This effect will be more pronounced once the yETH vault reopens.

Specification:

Currently yVault liquidity providers are rewarded with yCRV, splitting the liquidity across different pools will lead to a higher amount of generated CRV, this can in exchange be sold to increase the overall liquidity. LPs of the mixed vault might be rewarded in either a mix of the curve LP tokens (yCRV, ySUSD, yPAX, yCOMP) or a new combined token could be created which represents a mix of these LP tokens.

Gauge vote weight would be distributed across the different pools as well. Currently, external voters, who are not invested in the yVaults might vote against the y pool, which would cancel out some of our voting power. Splitting across multiple pools can increase the efficiency of our gauge weight voting power at the same time as increasing the boost to 2.5x. In the weekly gauge weight votes, we could wait until the majority of votes have been submitted and then distribute our voting power in a way that reflects our distributed liquidity.

For:

  • Enabling the maximum 2.5x boost on Curve for the yCRV and yETH vaults
  • Distributing the vaults liquidity evenly across the Curve pools (can still be biased to one specific pool, e.g. y pool, depending on the overall liquidity), which will also be in the interest of Curve
  • Gauge vote weight can be distributed across the different pools as well (external voters, who are not invested in the yVaults might vote against the y pool, which would cancel out some of our voting power, splitting across multiple pools can increase the efficiency of our gauge weight voting power at the same time.)
  • Future proofing the rewards of the vault if the overall liquidity increases

Against:

  • Might add complexity to the current system
  • LPs of the mixed vault might need to be rewarded in either a mix of the curve LP tokens (yCRV, ySUSD, yPAX, yCOMP) or a new combined token would need to be created which represents a mix of these LP tokens.

Poll:

  • For
  • Against

0 voters

There are some suggestions at Curve.fi to add additional pools which may include additional rewards (not only in terms of CRV tokens, but also other tokens):

  1. This CIP would add a new COMP enabled pool and the majority of people would like to apply the veCRV boost to these tokens as well (basically meaning, you would earn 2.5x CRV and 2.5x COMP in this new stable coin pool):
    https://gov.curve.fi/t/cip-feedback-new-compound-comp-enabled-pool-request-for-feedback/23

  2. Another CIP suggests the addition of a DForce stable coin pool which would reward CRV and additional DF tokens (https://www.coingecko.com/en/coins/dforce-token). The Curve team suggested to apply the 2.5x boost here as well: https://gov.curve.fi/t/cip-8-proposal-to-add-dtoken-pool-with-liquidity-gauge/264/5 The DForce strategy is already applied for USDC and USDT by yearn: https://stats.finance/yearn

So taken together, a mixed vault across the stable coin pools would not only increase the overall boost of the vault (2.5x cannot be reached via yPool only), it would create the ability to receive additional sources of yield and apply the same boost (which is already applied from the vaults veCRV) to these new types of income.

Once we established a mixed vault for multiple stable coin pools, we could even create a new strategy, which I would call “Adaptive liquidity adjustment”. This strategy would rebalance the overall liquidity distribution between the different stable coin pools according to the overall yield of each of the individual pools.

Factors that would influence this adaptive strategy would be:

  • CRV gauge weight vote (https://dao.curve.fi/gaugeweight), which is also influenceable by us via veCRV
  • Overall liquidity and our relative liquidity in the individual stable coin pools, this is dynamic and changes all the, as can be seen in the different Curve pools.
  • Additional incentives in form of additional distributed tokens (e.g. COMP or DF tokens)
  • Achievable Boost factor of the individual pools. If you claim CRV tokens, your boost gets updated and based on the overall amount of veCRV and our amount of veCRV, a boost that was 2.5x could be reduced to a lower number. Now this could require locking up additional CRV for more veCRV or an adapted liquidity distribution to rebalance all pools back to a 2.5x boost.

Now these different steps would require some additional work but would significantly boost the overall performance of the vault, while also generating headroom for an increase of future liquidity within the vault.

Currently, the vote sits at 4 votes for implementing and 2 votes against. I would be happy to hear some additonal opinions/suggestions :slight_smile: