The current implementation of the v2 yTokens is severely under-optimized for the size of the pool now. It cannot split the token to multiple lending protocols. While this was okay when there were only $8m in tokens, this isn’t acceptable as moving $150m into a single protocol can crash rates since they are based on supply and demand (termed “interest rate slippage”). Additionally, it doesn’t take into account COMP, BAL, etc. earnings. The APR oracle is basically just ran by Andre right now.
I was a cofounder of topo.finance. We were going to do rate optimization (both lending and borrowing optimization), built the product, then pivoted. We were the only team that accounted for interest rate slippage accurately by doing off-chain non-linear optimization.
I want to open up a conversation of how to proceed to improve the UX via increasing the APR for participants.
To move us into this next generation, we would need an entirely new yToken contract and APR oracle. My suggestion is to have the APR oracle be governance controlled, and for there to be a new pool. In the short term, we could have the oracle not take any fee, in the long term, we could charge some sort of fee to cover the upkeep of the oracle and increase YFI holder APR.
I am a great candidate to spearhead this, and contribute our off-chain optimizer that is built in rust. However, I am not a YFI whale (though I wish I were), I don’t know that I would see enough economic benefit to splitting my time to working on it consistently.
That being said, where does this fall on peoples’ priorities? Would people be open to incentivizing protocol work (if not for this, anything people would be open to incentivizing)?