This is more of an invitation for discussion than a concrete strategy. I hope that if I am on to something here to have the help of the community in furthering this thought process, and if I am wrong, to be shown why I am wrong and to learn.
That being said…
as a traditional developer trying to learn solidity, SC, and ETH everyday
being someone captivated with everything crypto for several years
being even more captivated with YFI and Andre
I have been following the community on here, discord, twitter, podcasts etc w much fervor.
Recently I have been obsessively watching Banteg’s twitter account like a hawk. Seeing how these new v2 strategies are being iterated and evolving. The whole yearn->pickle->uni cycle… all of it.
I have also been in several of the v1 and delegated vaults for a couple months with my personal capital. The idea of automated and gas efficient yield generation, backed by the best and most passionate devs in the space, is a no brainer. This opinion is furthered by the fact that I dont want to trade or lose exposure to the assets I hold the most of, which would be sitting idly as they have for years…
SO if you are still with me after that pre-amble. The coolest and biggest selling point of the vaults is that you get back the same assets that you deposit, increasing your exposure to the same assets you would otherwise be sitting on.
I have seen some of the vaults I am in do fantastic in the short term and do relatively nothing in the short term…
What about the idea of this… for example, we have a BTC vault… the strategy it uses is irrelevant to my point so just say it returns X amount of ‘farmed’ asset that will be dumped to buy X amount of BTC to then be put back in the vault. What if, based in variables like currentPriceOfUnderlying or currentPriceOfUnderlyingComparedToSMA or currentPriceOfFarmedAsset or whatever… if conditions permitted, what if some of that farmed return, before being sold for BTC was instead sold for DAI and funneled into to the DAI vault and the rest sold for BTC and returned to the BTC vault.
Maybe that wasn’t very clear. What I am saying is encoding logic to allow vaults to make decisions on how to allocate their currentReturn based on market variables. If BTC is ripping at the time harvest() is called, it would be more often than not be better to take that harvested value and park it in the DAI vault than buy more BTC at a price that is high relative to the SMA, and then when it invariably comes down to take that out of the DAI vault and buy it then. While we are waiting for that to happen, the value is compounding in the DAI vault, and the DAI vault is temporarily more powerful, and if I understand how things work, those deposits and withdrawals would be potentially triggering more harvest() calls in the DAI vault and thus creating a positive feedback loop.
This could be applied to any (non stable coin vault) / (stable coin vault) combination.
This could result in lowering the ceiling on gains in some cases, but none the less raising the floor in most cases. Once tuned properly, I think that it would consistently provide a better return to all vaults and result in a positive feedback loop for the whole protocol. Mechanics like this would certainly set Yearn apart from anything in existence.
Like I stated in the beginning, I am only now starting to learn solidity and the deeper end of ETH, but as I do, I start to see beyond the UI and know that these type of things are possible. ‘smart-vaults’ or some sort of ‘meta-wrapper’ logic that could read the trajectory of the underlying assets prices and make the most profitable decision at the time. (dump all farmed token to buy underlying vault token if vault token is <= SMA price, or if underlying token is outperforming SMA, dump farmed token and park it in an interest bearing stable vault and wait until underlying vault token is back closer to SMA to buy it and return to original vault)
Perhaps this would require more sophisticated oracles or oracle infrastructure… Like I said, im spitballin here and would love to get feedback to either further the idea or a lesson in why this wouldn’t work or be a good idea.