Any thoughts about creating an Annuity Product?

General Chat
1

Hi all. I was just thinking about the possibility of some form of annuity product where I could utilize a pool of capital (Address A) which invests itself and possibly pays a consistent income stream to Address B (say for example controlled by my kids). However, I don’t want the Address B to have access to withdraw the capital.

I envisage that this could be a modification to the existing vault system, but with the ability to withdraw limited to Address A, and a weekly/monthly portion delegated to Address B to withdraw.

Any thoughts? I just wanted to gather some feedback rather than create a proposal at this stage.

  • Interested in Annuity Product
  • Not Interested in Annuity Product

0 voters

1 Like
2

This is interesting. Curious to know if this is possible.

1 Like
5

Wow I like the idea of wrapping the right to the earnings in a NFT and then re-selling to the market. Very clever. That will make it easy to transfer the annuity to another address (if the need arises) and enables trading.

6

While I think this is interesting in theory, to me it’s not interesting enough to warrant preference over all of the other many things the team is currently working on.

3 Likes
7

You might be interested in the Gelato Network. It’s a protocol that automatically executes SC’s based on preset conditions. Maybe someone can code something that takes out excess DAI from your yUSD every few days.

But I agree with @dudesahn that there’s more urgent matters to focus on atm.

8

I really like this idea and would be interesting in thinking of a solution/coding it. I think what you’re describing is a fixed annuity. Those traditionally are only invested in bonds and are guaranteed USD payouts based on a future date until the contract expires (death).

A crypto annuity I assume would function in a similar way with a fixed accumulation period followed by a fixed distribution period. Have you thought at all about these lengths? @ETH_Maximalist

1 Like
9

Thanks! Yes, it would be similar to a fixed annuity.

I’ll admit, I haven’t spent too much time thinking about implementation as I’m not a coder, but I imagine it might be a separate function that can be bolted onto an existing vault strategy.

10

For an annuity to work, it would have to be something that’s guaranteed, which a vault is not. The other issue is the length of time of the accumulation period. Typically annuities require contribution thresholds hit by a certain amount of time. It you pause on contributing to the annuity, the principal could be refunded.

It would be hard to convince most in the crypto community to invest in one asset that had a pay out 10, 15, 30 years in the future. Things are changing too quickly.

Perhaps a hybrid is possible. Imagine this:

  1. First layer of vault works like normal for most users, normal withdrawal rates. But APY on this is set to always receive 65% of return from the vault strategy.

  2. Another layer would be users that lock their contracts in for at least a year. They get the higher rate for having pledged to the vault strategy for the full year.

I couldn’t think of a way that this could work with recurring payments. But interested in your thoughts.

11

I think one of the biggest issues with this is the “guaranteed” higher rate for locking up. Essentially, what you’d have to do here is take profits from those who don’t lock up and feed them into those who do.

While this is theoretically possible, unless this was a very high-yielding strategy that was much better than anything else around, I’m not sure why anyone would use it without locking up– you’re literally just giving some of your profits to someone else.