[Proposal] Create stablecoin vaults that farms YFI clones for governance tokens then sell for yield

Summary:

Create new vaults for high risk takers that likes to farm the hottest and latest yield generating protocols.

Abstract:

Many developers are creating their new yield farming strategies as new governance tokens. Many of our community will “ape” into these new farms to farm protocol tokens. I am proposing a new vault that takes advantage of these new opportunities.

Motivation:

The current state of YFI vaults utilizes “basic” money legos such as compound and curve. After being inspired by thinking about the issues raised recently about talented devs starting their own protocols, I believe this is an untapped service YFI can uniquely provide. YFI originally was a yield farming tool to find the best yield amongst competiting yields. After YFI started, many other farming protocols also began to provide same service but with different yield. YFI can and should also consider these protocols for determining how to best deploy stablecoins for yield.

Specification:

Generally, YFI should take the stablecoins and split them between farming protocols.

Since these protocols are new, there is a rule on only 10% of the funds can be used to farm any single one protocol to reduce risk. Any left over funds can be deposited into a standard yVault. The associated goverance tokens generated will be sold for yield when harvest() is called. This vault needs to take advantage of v2 vaults so when a new protocol is announced, a strategy can be developed for it quickly to farm the goverance token during the limited distribution phase.

These vaults would generate a new token called yyDAI (y squared DAI). The vault would go after high level protocols for yield. Which ones are decided by strategies voted by the governance. Ideally, there would be many of these and so the risk is diversified for cases of major bugs and/or rugpulls.

For: Create a stablecoin vault for other farming protocols for the most yield period

Against: Do nothing

Poll:

  • Create a stablecoin vault for other farming protocols for the most yield period
  • Do Nothing

0 voters

Strongly opposed.

I think there are several issues with this proposal.

First, there are no mention of specific protocols. Farming is definitely not what it used to be, and there are no longer new protocols popping up every day with farming opportunities. Ones that are popping up, I would guess are largely blatant scams/cash-grabs (such as the many YFI forks that people still fall prey to every day).

Secondly, and maybe most importantly—this would be a huge time-suck. To create this Vault, we would basically need to turn into auditors as well, and try and audit these new protocols in what is typically a very short time period (a few weeks at most) for high-APY gains. Each new opportunity would need to be thoroughly vetted to make sure that it was safe, and as we have recently seen with Harvest, even established protocols are not immune to issues—so it’s almost certain that brand-new, farmable protocols would have potential problems.

Finally, I think this proposal goes against what I see as the main ethos of Yearn. Yearn is about aggregating the highest, risk-adjusted yield that we can. Honestly, I’m not sure if there’s a good way that we can farm these protocols to where they are sufficiently risk-adjusted. We either need to spend enough time verifying them before deploying funds, or basically gamble millions of dollars after a cursory review.

Importantly, there are plenty of opportunities available for sustainable yield. Between borrowing/lending on Maker, Aave, CREAM, Compound, and other building blocks such as flash loans, there is plenty of yield to be had without taking risky bets.

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