Set the weights to vote for Curve gauges going forward
Abstract:
YFI holders can vote every 10 days with regards to gauge distribution for curve.fi, this is based on the gauge weights found here https://dao.curve.fi/gaugeweight, instead of doing a vote every 10 days, I propose we set base settings to vote, and only if another proposal comes up to change them, do we do so.
Motivation:
Setup gauge weights to provide fair returns while attracting new liquidity.
Poll:
No poll, as we need to discuss weight potentials. There are currently 7 pools, all of which can be supported by yearn.finance and all of which have different trade offs. My initial instinct is 50% y, and the remainder distributed evenly between the remaining 6 pools.
As of writing this is appears Y pool currently holds 69% of the total reserves. I think if we were to only vote 50% for Y pool we would lose weight over time as other voters would most likely just vote for the pool they provide liquidity in. I do believe it would be beneficial to split up the votes, to support the overall health of Curve and as good faith to other communities involved in Curve.
I would propose we take a look at the liquidity distribution between all the pools and vote that percentage for each pool i.e. 69% Y pool, 12% sUSD pool, 5% compound pool, and so on.
One thing we could think about is what % we want to allocate towards btc. And maybe split evenly between ren/sbtc pools to put less pressure on the synthetix peg.
Also, I don’t think we should allocate towards the current compound pool that can’t receive $COMP.
Why would we vote for pools that we don’t currently have vaults for? I say set the weights proportional to the aum in each vault with respect to the vaults we have for the 6 curve pools.
To me it makes sense to focus on the y and BTC pools - perhaps at a ratio that keeps an equal return on y, ren, and sBTC. Incentivizing BTC will draw massive new funds into the yEarn/curve ecosystems, to an extent the other pools would not.
Thought experiment #1: What if our strategy is to weight vote for the smallest pool available (and move all Vault funds into that pool)?
Probably a lot of reasons why this would fail (any predictable pattern is likely to be frontrun somehow right?)… but are there any reasons why this would be beneficial? Economies of scale being a whale in a small pond?
Thought experiment #2: Apply a randomizer to our gauge weight vote. Apply the resulting numbers to move our Vault funds to the correct pools to take advantage of it. Impossible to predict or maneuver against. Vaults always “win” because we always are in the right pool right at the first block when nobody else can react to it. We maintain a few days? hours? minutes? advantage.
Long-term, Vaults will become the #2 biggest voter behind the Founder voting, so the logic must be different. This isn’t normal game theory when we’re the biggest player with the most chips. So…I’m curious if anyone has any other radical ideas?
The interest rates on any wrapped BTC isn’t as competitive as the others. Not sure to what extent it would draw attention and drag liquidity in. But we should test.
50% of my crypto portfolio is BTC, and I would deposit a sizeable chunk of it in the vault if returns remain comparable to the y pool. I’m sure there are many more like myself.
I would probably be in favor of implementing some of the additional pools (3 are already implemented within the vaults), maybe adding the SUSD and/or PAX pool to the vaults and then you could assign 50-60% to the yVault and split the remaining 40-50% across the other implemented vaults.
I don’t think it would be in Curves interest if we increase the weight of only 2 specific pools, making it less attractive for liquidity providers in the other pools.
I support a more concentrated allocation myself but I’m also mindful of the wider good and supporting Curve more generally which is to Liquidator’s point.
I see the latest gauge voting is now reopen for this next week.
Is there a specific approach through which the vote is currently allocated? Is it essentially at Andre’s discretion? Or is it agreed between the multi-sigs? Apologies if I’ve missed something more mechanistic having been agreed via a YIP?
So the earliest vote on the gauge weights will be next week. But the allocation has not been decided on, as far as I know.
Even if we allocate all veCRV into the yPool we will not be able to achieve a 2.5x boost.
My suggestion would therefore be to create a “splitted” pool across all curves stable coin pools. If you look at the calculator for the gauge weigths, you would need less veCRV for the maximum boost, since the boost is dependent on the overall liquidity per pool that is provided.
If you split the assets across the different pools, you would be able to achieve 2.5x on all of them, with the same liquidity and the same amount of veCRV. Of course you would have to split the gauge weight vote accordingly.
This would benefit both yearn (2.5x boost on all pools) and curve (distributed liquidity across all pools).