[Strategy for yETH Vault V2] Stake DAI in Barndbridge for BOND rewards, increase DAI holding

By @ramaruro and @Estebank

Summary

Add a low risk, easy to implement strategy to stake DAI to receive BOND rewards from the new Barnbridge Protocol. BOND would be sold weekly for additional DAI which will be reinvested in staking.
BOND rewards are released weekly for a 25 week period, as of October 28 we are in the second week of this Liquidity Mining Program.

Abstract

This strategy can be used for the yETH Vault, which mints DAI; it could also be used with a Vault that accepts DAI directly.

Barnbridge is a new protocol that aims to package tranches of different risk assets for facilitate access to investors based on a risk profile. They launched their Liquidity Mining Program on October 18, 2020. 800,000 of the 10 Million Total BOND’s tokens will be used as rewards for StableCoins staking (DAI, USDC, sUSD). An additional 2 Million BOND will be used as rewards for the ETH-BOND pool.

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Motivation

This is a very simple strategy, which runs for a limited time, and could be very profitable for Yearn Users.
There is no apparent risk as the staking is in DAI. Currently there are about 340 Million staking in the StableCoin Pools. It is anticipated that the strategy will have diminishing returns as more BOND supply hits the market in the coming 25 weeks.

Specification

There would be a weekly action to harvest the BOND rewards, sell for DAI and stake those DAI back.

For
Implement the strategy

Against
No action

4 Likes

Interesting idea.
Barnbridge is fairly new, and I am not familiar with their product.

  • Can you provide ROI estimates (conservative, optimistic)?
  • How secure is their Product?
  • Do you need to unstake/stake after each epoch, or can funds remain in the pool?
  • Are funds accessible at all times?
  • It seems that you can harvest only once a week. How will you prevent frontrunners to “steal” the harvest by joining the pool right before the rewards become available?
3 Likes

Good questions!:
ROI for first week: 10K in DAI yielded 1.7 BOND. Price of BOND has fluctuated between ~ $60-$180, so weekly ROI was ~1% to 3%.
The second week will see the BOND supply doubled, so I expect prices to fall.
Also, total Pool Staked was ~ $184 Million last week (epoch), now it is ~ $346 Million, so less rewards for this week.
How secure is their Product?: They are developing the product. So I don’t know the answer to this.
Do you need to unstake/stake after each epoch, or can funds remain in the pool? No need to unstake, just harvest. Funds can remain in the pool
Are funds accessible at all times? You can unstake any time. However, if you unstake before the epoch is finished, you get no rewards
It seems that you can harvest only once a week. How will you prevent frontrunners to “steal” the harvest by joining the pool right before the rewards become available? Rewards are proportional to the time staked. If you joined at the start of the epoch, you get 100% of the eligible reward for your stake. If you join midway, you get 50% and so on. So no frontrunners.

1 Like

Thanks!

  • How are used the funds staked in the pool by the platform? I assume they don’t remain idle, just for getting an airdrop…
  • The ROI is indeed likely not sustainable. It is not an issue though for V2 vaults.
  • I was mentioning the yDAI vault frontrunners: people who would enter the pool right before the reward.

I guess this is just a Liquidity Mining Program to introduce BOND to the DeFi market. Funds staked are not used for anything as far as I am aware. In the future a variation of that may happen, but right now, no use.
yDAI vault frontrunners. I wasn’t aware of this… so I don’t know.
I actually think this is a good strategy for yETH Vault, because if you own DAI, it is very straightforward to do yourself. For a yETH vault it would be one of several strategies to participate in.
But I hope we can find a Dev to take a look at this :slight_smile: and we could discuss these questions. Right now they seem too busy!

They are busy providing the shell of yearn.
If you think of a strategy, build it yourself / convince a non-yearn dev to work on this.
I am sure a Yearn dev would help on the code review/testing of the strat, but the first step likely has to be community-driven :wink:

Given the infancy project, current rates of dilution, lack of data, I see this as a pretty short-term, if not risky strategy. The project is solid, and it has some great and noteworthy people behind it, but I think these kind of strategies would be better working in tandem with other strategies - v2 functionality could assist in this, where risk/reward for each strategy could be measured in an optimized vault for allocation.

As a stand-alone, risky. As a calculated allotment for multi strategic vaults that optimize apy but also add a function for risk sizing… send it.

It depends on v2 framework- if each strategy would be assessed for length and risk from some scale - similar to insurance minimums for protection - and the vault would only allocate a reduced sizing to these as a nice function of Σ(Δδ/θ)/implied risk scale… Basically targeting a distribution to strategies with a target balance in mind for interest power and risk per vault,

These kinds of riskier, higher apy, and potentially shorter term strategies have a place.

Im not saying barnbridge is untrustworthy - it’s a great project with some huge names supporting it, but given how new it is, there’s a lot of unreliables or unknowns.

2 Likes

Agree, idea looks good, but considering that the project at a fairly early stage it can be risky and not worth time to implement such strategy.

It takes some time to make sure it’s not on the short-term and can be useful for Yearn (like Pickle, for example).