The yETH v2.0 Strategy proposal

The yETH v2.0

Strategy:

  • open community CDP by providing ETH to Maker and Minting DAI:
  • Provide DAI to 4 pools:
    *25% of DAI minted should be provided to Curve yPool as it is right now (Trading fees + CRV harvested)
    *25% to a stable pool USDC/DAI with 0.04% swap fees (Trading fees + BAL harvested)
    *25% to a stable pool TUSD/DAI with 0.04% (Trading fees + BAL harvested)
    *25% to mint mUSD and Save it in their pool.
  • Profit assessments should be once a week.
  • CDP ratio starts at 300% and can be lowered after.
  • potential emergency protocols to repay the debt if CDP ration go under 200%

Risk Mitigation algorithm: .

  • First: DAI interest accrued should be paid once a week (it’s at 0% right now but it can change in the future)

  • Profits buys back ETH and Repeat for the next week.

  • If Profits<DAI interest accrued over the week: Minting new DAI is paused.

  • If Profits<DAI interest accrued for the second week straight: Start repaying some of DAI outstanding and returning to 300% CDP ratio:.

  • We start with a 300% CDP ratio as a ‘test in prod’

  • Liquidator triggered: when at any time CDP ratio go under 200% -> start repaying DAI debt.

  • limited exposure to USDT because of the biggest rug pull of rug pulls risk.

  • for those worrying about BAL price throughout the week, we can hedge its price by buying BAL puts on opyn for the week, although I don’t think we will need that for now.

  • the 4 pools allocations can be optimized further based on transaction volume and rewards harvested, this can happen on a weekly basis.

  • Potential of adding/removing/reallocating to new pools in the future.

Read more: https://twitter.com/Kaldes9000/status/1302272244660555783

10 Likes

This seems almost too risk-averse, but I guess it would be pretty safe.

3 Likes

Great proposal. The only part that tickles me is if we have to hedge on opyn. Not fan of adding another layer but I am not 100% against it.

2 Likes

Estimated APY range for BAL harvesting?

I’m not against this, but I’m not for yet either.

Why are we not going after COMP in the above? I’m no real fan oF compound but it’s an option.

Why not allocate some capital to higher risk ventures like swerve?

Or are we not to participate in these types of ventures? For security reasons or ethical ones? I’m hesitant on both fronts tbh.

I posted this too which I feel might be relevant here: Proposal: the yETH-YFI-BULL strategy

1 Like

Why not allocate some capital to higher risk ventures like swerve?

and what happens when that capital is poof ? :smile:

1 Like

This proposal has suboptimal rewards.

Let’s take the Balancer part:
A 50-50 pool with two stablecoins, at 0.04% swap fee currently earns about 16% APY. Not taking into account any tx costs for setting up the pool, adding/withdrawing liquidity, and claiming of BAL (which will have to be done manually soon). If going this route, I would increase the swap fee to at least 0.5% and restrict ourselves to one pool.
For context: a non-stablecoin 50-50 pool earns about 64% to 160% APY, depending on the chosen assets.

Also, mUSD (mStable) has some strange dynamics due to their 1:1 stablecoin pricing mechanism and caps that are in place. Most often, mUSD can only be redeemed into two out of four stablecoins. This poses additional risks and challenges. Although, I must say their APY is tempting.

3 Likes

I didn’t say we should. I’m provoking conversation because I want to understand both risk appetite and ethical standing.

There are two wide reaching ideas when I listen to the community.

The desire for high yield and
The loyalty and drive to push forward based on sound, ethical foundations.

We need to balance both.
I am not sure this proposal satisfies either just yet. Note I did not say I didn’t like the direction. Just my honest opinion.

Hi Guys, I’m new to the forum.
Has the option of using the Defisaver MakerDAO automated liquidation prevention been explored?
I’ve seen a proposal where we’d use a 50/50 balancer pool to do this, there must be different methods too.

Hi, this sounds reasonable, but also complex as we basically need to implement 4 sub-strategies. Wouldn’t it be easier to just provide to DAI yVault as it is now, and let the yDAI choose the best and minimally-influencing strategies?

I propose to move the three additional sub-strategies that you are proposing to the yDAI vault.

2 Likes

I don’t think we’re looking for more risk. Especially not for something less than a week old.