add new yVaults with Credit Delegation to maximize ROI and expand utilization of capital.
Abstract:
The new yVault proposed aREN, aMANA, awBTC, aETH, aKNC, aBAT, aENJ, aSNX with all Credit Delegation enabled with up to 50% LTV (loan-to-value ratio), which is same as yaLINK.
Motivation:
Currently yaLINK is the only vault with Credit Delegation turned on. Credit Delegation increases the yield of a yVault and new vaults increases the capital utilization by introducing new users into yearn from other communities by bringing them yield on their tokens.
Specification:
Each deposit into Aave mints interest-bearing aTokens, such as aLINK. Upon depositing to Aave, a credit line is available for exercise. Most depositors are not exercising they credit lines and would be happy to delegate their credit line to others for additional yield. Currently yaLINK has high ROI partly due to credit delegation. Upon passing this proposal, above new yVaults would be added with Credit Delegation of 50% of the locked aToken value. This means that any stablecoin could be borrowed up to 50% of the locked yVault value from Aave and used for strategies to increase ROI.
For: Add new yVault proposed aREN, aMANA, awBTC, aETH, aKNC, aBAT, aENJ, aSNX with all Credit Delegation enabled with up to 50% LTV (loan-to-value ratio)
It’s good to see this form of collaboration from app-devs, seeking support from Yearn.
I am generally in favor of adding more “a”-assets for use as collateral, but would like to understand the potential risks (or at least ensure they are being properly evaluated by someone).
In particular:
Ensuring each of the proposed assets has sufficient demand to warrant a Vault. I would be in favor of adding vaults for smaller assets, too, but I’d like to hear from Andre or someone knowledgeable how much overhead adding new assets creates for up-front dev and on-going operation. If it is meaningful, then as a compromise, we could start with the more highly-deposited assets on Aave first, and add more over time if the collaboration proves successful.
Ensuring that appropriate max-LTVs would be used to minimize risk for each yVault, based on the degree of volatility each asset has demonstrated in the past against USD. I’m actually not sure how much credit the existing yaLINK vault actually taps, or what the threshold is for reducing borrow amount / risk within Yearn. I just wonder if there is materially more risk to using a yVault strategy for lower-cap, more volatile assets (though maybe their isn’t).
I’m all for adding vaults and I do want to see these, but I don’t want to kill Andre from overwork. Maybe we can approve it and put it on the to do list until we get more devs? I think Andre is managing all the vaults by himself so I think he need helps or a dao for this to implement strategies quickly and efficiently?
For, I believe that He is working on the bCRV vault and the mess with the locked CRV in curve for the boost after 28/08, in addition to the changes in governance. Too much.
I think what makes the most sense here is if a community wants their token added as a vault, their team should do the majority of work, where they can, with having andre and yfi community doing final touches, review, etc.