[Proposal] FixedForex vault

Summary
Create a FixedForex vault auto rebalancing between the existing 6 ib* (ibEUR, ibGBP, ibCHF, ibJPY, ibKRW, ibAUD) vaults to make capital more efficient for users thus attract more capital deposits.

Background
FixedForex.fi is one of portofolio projects of keep3r.network founded by Andre Cronje, focusing on forex stablecoins.

Currently there are 7 ib* assets (ibEUR, ibGBP, ibCHF, ibJPY, ibKRW, ibAUD, ibZAR) with the former 6 of them already have yearn vaults.

The vaults are farming on 6 Curve pools through Convex respectively.
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There are three sources of farming rewards for each pool, CRV from Curve, CVX from Convex and rKP3R from Keep3r. Each source of reward is subject to a weekly vote to distribute rewards between the pools.
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Motivation
Since 6 pools are voted each week to share rewards, each will have different farming APY.
The APY is subject to change week by week. The rKP3R APY of current week is 54.42%/2.34% for ibEUR/ibJPY. For the next weeks this may change dramatically.

A user may want to deposit in ibEUR vault because of the high APY. But he may find it not best choice the next week if ibEUR APY drops dramatically relative to ibJPY vault.

Since ibEUR & ibJPY both have similar risks. (They both from the same project and are major currencies.), it’s natural to think that some users may want to balance between the two pools. This can also be observed on chain by this account in screenshot as below:

  1. Unstake ibJPY from Convex, $326 in gas cost
  2. Withdraw ibJPY from Curve pool, $56 in gas cost
  3. Repay ibJPY to Iron Bank, $75 in gas cost
  4. Borrow ibEUR from Iron Bank, $463 in gas cost
  5. Deposit ibEUR to Curve pool, $75 in gas cost
  6. Stake ibEUR on Convex, $375 in gas cost

This is a total cost of $1370 (0.274%) for moving $500k. If moving once a month, it costs 3.3% annually.
For smaller farmers putting $50k farming, it will be 33% annually.

Because of the high fees moving between pools, farmers will simply don’t move.
So capital will be inefficient for both farmers and the FixedForex project.

As for Yearn vaults, users are less likely to deposit because capital is not efficient.

Specification
To increase user base of the 6 ib* vaults, Yearn needs to make users’ capital more efficient, thus earning more on the same capital.

Creating a new vault named FixedForex may solve the problem. The new vault should rebalance users’ funds between different ib* vaults.
Users who don’t care which of the 6 ib* they are farming will simply deposit in the new vault to enjoy high APY.
(Users who love a particular ib* vault can still deposit in their favorate one.)

This will attract more capital (from those who are reluctant to deposit because they don’t know if they will earn best APY from a single vault) and increase TVL of Yearn.

For:
Create a FixedForex vault to rebalance between the existing 6 ib* vaults

Against:
Do nothing

Poll:

  • For
  • Against

0 voters

3 Likes

Sounds like a really good vault, I would be interested in using it!

1 Like

great vault for a deposit and forget stables approach. Also provides diversification away from USD which is an overlooked fact for stable farmers as USD is going to zero. COmbine that with a reduction of the performance fees per a parallel proposal - this could bring a lot of TVL imo.

1 Like

Yes the other benefit of this vault is users would be holding a basket of currencies, and being further diversified.

Thank you for putting this together.
I would love to hear any arguments against this proposal. Seems like a no-brainer to me.

Popsicle Finance is going to do similar to what I suggested in this proposal. I see ib* related liquidity most likely to go to there if Yearn doesn’t take some action.

Refer to tweet from Daniele.

2 Likes

This benefits vault users & Yearn & Keep3r. @banteg @andre.cronje

1 Like

Correct.

  1. Deposit & forget. Existing ib* vaults bears APY fluctuation so one can not really forget it.
  2. Users can hold a basket of currencies. This diversifies them away from specific currency risk.

Would love to further discuss this proposal.

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