A proposal to allow yBOOST holders to vote on how Yearn allocates its Curve vote.
Status
This proposal is currently in the discussion phase.
Abstract
This proposal will facilitate discussion on potential changes to yvBOOST holder voting, which will continuously provide interest in active ownership and usage of Yearns underlying products. The yvBOOST yVault is a fully automated and compounding version of the yveCRV yVault. We propose allowing yBOOST holders to be able to decide on how Yearn allocates its CRV vote by creating a locked version of yvBOOST, vlyvBOOST, whose voting power increases with lockup terms. Yearn can determine what percentage of its voting power is allocated for vlyvBOOST proposals, so as to maintain alignment of the protocol priorities.
Motivation
The motivation stems from the current race on Curve Gauge voting, which is largely in the spotlight on account of their “Bribing” system. This allows new protocols to utilize vlCVX to determine how Convex votes on CRV governance proposals and gauge calibrations.
The yvBOOST yVault is a fully automated and compounding version of the yveCRV yVault. When a user deposits CRV into the vault, that CRV is locked on the Curve.fi platform as veCRV and the user is returned a tokenized version of veCRV, known as yveCRV. This vault earns you a continuous share of Curve’s trading fees. Every week, these rewards can be claimed as 3CRV (Curve’s 3pool LP token).
In order to incentivize the growth of the yvBOOST vault and therefore Yearn’s CRV voting power, we propose allowing yBOOST holders to be able to decide on how Yearn allocates its CRV vote. This would create a new use case for yvBOOST. Consequently, this would allow a fresh range of interest in yvBOOST from protocols exploring the CRV gauge route for improvements.
Specification
Create a locked version of yBOOST, vlyvBOOST that can be used to determine Yearn’s vote in CRV governance.
vlyvBOOST voting power increases with lockup terms. Yearn can determine what percentage of its voting power is allocated for vlyvBOOST proposals.
The original agreement created back when yvecrv came out was this: User donates their CRV to Yearn in exchange all of the fees earned on vecrv via donated crv and yearns keepcrv go to yvecrv holders. Once vecrv started getting airdrops and bribes those were forwarded to yvecrv/yvBOOST holders (Yearn didn’t keep any share of these). So currently yvecrv/yvBOOST holders get all of the financial gain from their donated crv and keepcrv while Yearn gets control over the vecrv voting power.
This proposal is requesting Yearn relinquish the only benefit it gained in the original yvecrv agreement. Why not just bribe Yearn directly (if that is open for discussion). This would be much more straight forward instead of another complex layer on top of an already complex layer.
The idea is to bootstrap the amount of CRV in yearn’s control. The proposal acknowledges that ultimately yearn’s vote should further yearn’s vaults and products. However, governance does include things like adding new gauges where Yearn wouldn’t vote otherwise but could be swayed to vote by yvBOOST holders.
The ideal setup would be to have a time-locked version of yvBOOST to procure more CRV into the pool and make it trade closer to the underlying token’s value. It could also add some granularity in the way Yearn votes in its own products by allowing yvBOOST to determine the “last x %” of yearn’s vote.
Some context I’d like to add to the conversation is that Yearn often uses gauge weight votes to support vault users by protecting strategy LP positions.
For example, if a strategy makes a single sided deposit of token A into some Curve pool, it is very possible that the strategy must take a loss on the way out when it eventually withdraws (due to pool imbalance).
To reduce this risk, Yearn may choose to boost that pool for a couple weeks to encourage more user deposits and increase APY (withdraw loss and yield will offset each other on harvest), both of which make it easier to withdraw from.
This advantage is lost when gauge weight voting gets delegated to yvBOOST holders.
Again, The proposal is not asking to take away yearn’s control of the CRV vote but rather allowing for “surplus” votes to be used for specific proposals. The ultimate decision regarding how many votes are delegated at any point for yvBOOST governance is down to yearn itself.
The selection of pools available for voting could also be determined by the protocol whitelisting potential vote recipients. This is all in order to increase the number of votes available to yearn, making the strategies more efficient and getting even more slrupus votes for yvBOOST
eloquently said, the proposal does state that this would have to be looked at and calculated so as to not interfere with already established products/vaults. (last sentence of the Abstract)