Create Child Vaults Based Off Which Strategies User Approves Of

Proposals Vaults
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Summary:

I hope I’m understanding everything enough that this is a valuable contribution. I apologize in advance if not.

As more strategies become available for vaults, users should have the ability to opt in or out of specific strategies.

Vaults should have child vaults composed of users willing to participate in certain strategies. This would allow for people with different levels of risk tolerance to participate in the vaults, without the worry of strategies that are less proven or more risky than others.

Abstract:

A strategy page where people can read an overview of the strategies, the potential outcomes, and risk level quantified in some way. From there, they can opt-in or out of the various strategies, which would put them in child vaults with users who made the same choices.

Motivation:

There have begun to emerge leaders in the DeFi space. More trusted systems and platforms which have been audited, and stress tested in the wild. People feel more confident investing in these platforms.

There are lots of fringe high risk un-audited contracts and opportunities in the space. People might not be willing to put their money on the line in this way, especially when the target (huge vault value) is such a high reward for someone to try and exploit.

Certain strategies dissuade investors from contributing. These people would otherwise contribute when they knew the strategy was more sound, and involving well established platforms and systems.

Specification:

It will let people look into the strategies, and platforms/systems involved, as well as the potential return, and decide whether it was worth the risk. This would increase investors confidence in the more basic strategies, and the vaults overall. It would also allow them to feel like they are mitigating their risks.

For: I want people to feel more confident in giving me their money.

Against: I want less money in the YFI ecosystem.

Poll:

3 Likes
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this proposal seems like it needs to be discussed a bit more. The idea is good, but it seems like a UI roll up to include the written out strategies somewhere on the yVaults page, am I correct?
Are you a front-end developer or have web dev experience? if so i would suggest discussing this in the yEarn discord server https://discord.gg/uZ5dUT under #frontend-development. If your not a dev you would still be best off to discuss this idea there all the same.

1 Like
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A few things:

  1. At least currently, I don’t think the strategies really change often enough for this to be an issue. We’re not rapidly jumping back and forth between strategies in the vaults, it takes time to unwind and upgrade them to the newer version– which we’re currently seeing happen with both yYFI and yETH. It’s been days-weeks to do this and they’re still not done, so it’s definitely not rapidly changing.

  2. This also seems to make the assumption that Yearn is choosing “risky” strategies. I really don’t think that is the case at all. Yearn opts for the highest-yielding risk-adjusted strategies they can find, and tests/audits them for weeks before deployment. That’s the whole idea behind the vaults– optimizing yield while still taking minimally acceptable risk.

  3. Please, when writing the For and Against– don’t insert personal opinions about the proposal. It feels like you’re saying people who disagree with your ideas are dumb or don’t care about Yearn– and that’s a bad place to be starting from if you’re trying to win them over.

Honestly, I think what this will likely end up looking like is multiple vaults for the same asset, or perhaps a “high risk” and a “low risk” version of some vaults. Borrowing stablecoins against volatile assets is always probably going to be relatively low risk, as long as the health of the borrow can be maintained. But at this point, I’m not sure that we would ever see more than two viable strategies for a single asset.

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Agreed wholeheartedly. Another aspect that was missed is that for most of these strategies, the main reason they’re profitable over doing things on your own is the gas subsidy. It costs the same to send 5 eth as it does 5,000 in terms of gas. The larger the pool, the less the costs are comparatively, and therefore the yields are higher.

Splitting strategies like this may be an idea in the future, but I don’t think the protocol is anywhere near the size currently where it’d be advisable.

Even then, once vaults reach a certain size I agree with @banteg about having tiered strategies: eg up to $1mm goes into Strategy A at higher risk, the rest goes into Strategy B at lower risk (something he posted on Twitter, unsure if it’s been discussed here).

1 Like