[strategy] wNXM Vault and strategy

Summary:

[strategy] Capitalize on the stagnant wNXM supply that is sitting on the sidelines. This is a unique situation that lends itself to the main advantages that YFI vaults provide

Abstract:

YFI vaults will become the premier parking spot for all wNXM. Currently (10/28) there is a market cap of ~48M$ in wNXM that is idle. YFI could pool these funds in a gas efficient manner, un-wrap into NXM and then be exposed to a plethora of yield generating opportunities. Many holders of wNXM cannot unwrap and participate in the yield opportunities available and they are purely anticipating price appreciation of the asset. In the same way YFI traditionally leverages automation and gas efficiency to provide value to users, this goes one step further by enabling wNXM holders to gain access to unwrapped yields and benefits.

Motivation:

YFI is looking for innovative new vaults and strategies. The DeFi landscape is changing constantly and we have many very smart people here who are always innovating on the yield aggregation front. Personally I have bought wNXM for the long haul and will continue to do so, but was surprised with the lack of yield generating opportunities. If you KYC there is actually quite a lot of yield generating activities with in the mutual and outside of it. These opportunities appear unique in the sense that they dont require an ETH pairing and seem to be asymmetric when contrasted against traditional DeFi yield opportunities. The risk profile is different due to the nature of the product. If we could pool a bunch of this and then have the vault contract KYC’d it would provide a one of a kind opportunity for non-KYC people to earn KYC enabled yields in a gas and time efficient manner.

Specification:

Start wNXM v2 vault.
Issue ywNXM pool token
Have the vault contract or YFI as a whole perform KYC and become a member of Nexus Mutual
Unwrap all wNXM into NXM
Stake the NXM in the Nexus Mutual pools (many ~30% apy pools there) or outside of the Nexus Mutual pools ( Keep network shield mining)
Sell the farmed tokens for more wNXM
Rinse and repeat

For:

Against:

Poll:

3 Likes

Can you elaborate on the “plethora” of opportunities available?
Compliance is hard–that’s why most projects don’t fuck with it, and why I’d very leery of trying to engage in KYC requirements.

List of staking opps in the mutual are here

Info on shield mining here

I agree that KYC is difficult, or at least more difficult than no-KYC. I can personally KYC in about 5 mins. I almost did the other day but gas was high and I am cheap lol. When you look at the economies of scale that vaults provide though it is very attractive… for both wNXM holders, the yearn community, and honestly the Nexus community… that is potentially a lot of coverage coming into play from a source (xNXM) that currently sits outside of that wall.

Thanks for the links.

I’m still not sure how the KYC part of this would work.
Would the vault piggyback on the mutual’s membership list, and anyone who wanted to deposit would have to have been vetted by Nexus first and gotten approved? Thus, all investors in the Yearn vault were vetted (by Nexus) prior to entry to staking.

If we assume that we can solve that hurdle (which could be as simple as a Nexus-provided whitelist for depositors, but could get a lot hairier depending)–

How does that work with a pooled smart contract handling the staking process? How would the vault decide which contracts presented an appropriate risk/reward ratio? Finally, can rewards scale with Yearn’s potentially immense volume?

I think you have a potentially compelling idea here, but we need to flesh it out substantially. Look forward to hearing your thoughts!

Thanks Bro,

The real advantage here would be if contributors to the vault were anon and the contract / entity that actually interfaced with Nexus to unwrap was yearn/YFI/or someone or some entity associated with and bound to yearn. I know yearn has a relationship with Nexus as they have a front end to provide anon cover through yInsure… I have listened to every Andre interview that I can find, but this is what I know as of now.

If they or we wanted, we could implement a feature to disallow people from countries that violate the nexus restrictions from participating in the vault… which honestly yearn should be doing anyways for all vaults and products. I am the last person that wants to exclude anyone and a firm believer in the core tenants of DeFi… but as we trend towards mainstream acceptance in the world and all want to avoid scrutiny by regulatory bodies, usually getting out in front of problems like that are viewed favorably.

Flat out risky biz to allow deposits from rouge and nefarious states.

the sticking point here is the kyc part more so the vault strategy.

Solve the kyc problem first otherwise the strategy is dead in the water.

Not sure how you would do that considering yearn is a permissionless system. Adding a kyc layer makes it permissioned

1 Like

Ya, this would hinge on them ‘whitelisting’ the yearn contract that would make the deposit… I am not sure how that would work, but given the existing relationship, I feel that there is a possibility… IF that could be solved, I think this would be big given the stagnant wNXM in the ecoSystem.

How does yinsure get insurance without kyc? Or you don’t need kyc for buying insurance from nexus mutual?

Ya, so to get NXM (unwrapped) that can be exposed to many yield opportunities you have to get KYC’d…

The wNXM is the wrapped version that can be obtained from the broad market, but has practically no yield opportunities.

I have been reading up on yInsure and from the docs, it seems that it does not have much to do with Nexus, which is sort of contradictory to the 10 podcast interviews w Andre that I have listened to.

This was the whole crux of my idea, IF there is a relationship there OR a way to have the Yearn contract whitelisted, this would be a no brainer slam dunk… without either or both of those things, this doesnt really work.

But if we could get it to work it may be one of the biggest opportunities in a long time given the captive market that would be addressed

I’m not a compliance guy… BUT the idea that Nexus would be able to whitelist Yearn seems unlikely. Now, could we build a secondary derivative market that obviated the need to unwrap NXM? Idk, maybe there’s something there. ie, if we can’t stake NXM and scoop those rewards, let’s create the opportunities to use wNXM.

EXACTLY! No matter how it is done, targeting the wNXM community is a major move. It is something that no one is really addressing. I know we have a lot of smart people here. IF a KYC ‘bridge’ for a yearn vault can be implemented, that is the most optimal route, but if not, figuring out a way to get yield on wNXM would also be huge.

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I saw bZx offering 30% APY. I’m gonna have to pass on that one…

LOL, ya I wouldn’t think offering coverage to bZx would be a good idea. There are many others too, and surely many more to come. tBTC also has a program right now where you earn keep tokens… IF KYC can be solved, we would capture a shit load of stagnant wNXM as well as have a chokehold on the emerging yield opportunities w Nexus. We could essentially have the ability to profit switch in and out of the mutual