Summary:
Expand the current vault offering to create four new vaults that would farm UNI. One for each liquidity pool eligible to farm UNI.
Abstract:
Vaults currently are primarily focused on Curve and farming CRV. This proposal would diversify the yield-generating vaults/strategies to farm UNI. Four new vaults would be created:
ETH / USDC;
ETH / USDT;
ETH / DAI;
ETH / WBTC
Motivation:
There is a large reliance on Curve for yield generation and this proposal would help shift reliance from one protocol.
Specification:
Users would deposit UNI-v2 liquidity tokens into new vaults. These vaults would farm UNI. The UNI would be sold to purchase more of the underlying assets and ultimately more UNI-v2 tokens that would be deposited into the pool. Depositors have a claim on the excess amount.
If we proceed, we should make it absolutely obvious about the IL (or divergent loss as I’ve seen it mentioned now) so that the user understands the risk. Also consider that these vaults will only have a purpose through November 17, 2020 per the announcement post, but we can use the same strategy to pivot to any future UNI incentivized LP pools.
Interesting proposal, would have to see how the proposed strategy intends on handling this. There are problems with IL/debt-based strategies security-wise where this may not work for v1 yVaults without excessive risk. Curve strategies are currently in heavy use because they avoid IL issues which can lead to excessive losses for the Vault.
I was actually thinking the opposite might be a good strategy, selling UNI for more of the underlying, but definitely open to this approach instead.
I am in favor of these, though @dudesahn in another thread considered calling them yPools. In my opinion, anything that relies on IL should be branded as such.
This is similar to my yETH v2 strategy that I shared here, by the way - which you also commented on.
I’d be interesting in here your perspective more as developer. Pickle has copied the Yearn Vault overall concept and used it to launch their platform. This is in direct competition to the yield-generation space Yearn is the market leader in. We need to adjust in order to stay competitive while also generating value for end-users.
The intention was compete with the Pickle Jars, that basically stole the concept from Yearn. If you think it is more appropriate to sell for the underlying perhaps that is appropriate. I believe the Jars selling for the underlying the deposit back into UNI. How would your revised proposal work exactly?
And regarding IL, yes I think all users will should be made aware and could be given a disclaimer. The Pickle Jars seem to be working fine from a security and loss standpoint. The ETH/USD pairs and the ETH/BTC are among the least susceptible to large IL in relation to other farms in the market. That is because these pairs are not nearly as volatile. There is still a risk, but it is not substantial in my opinion.
This makes sense to me. If users are just depositing the UNI-V2 tokens then they’re not technically exposed to IL– they will always leave the vault with as many or more of the UNI-V2 tokens as they entered. The tokens themselves may be worth less, but that’s always the case with any vault.
Seems like we would then dump UNI for equal amounts of ETH/stable or ETH/wBTC to generate more uni-v2 tokens. Simple.
I’m using the Pickle jars. The LP token from Dai/Eth etc is used to farm more Pickle and then action in the jar is to dump the uni and add more LP tokens, only been running a couple of weeks and had some issues but Banteg stepped in to help out. Obviously not seeing rewards as it’s compounding but happy to let it ride in the background for now
Recently YFI has been seen as “slow” and this has given room for competitors like Pickle and Farm to pop up with hundreds of millions in TVL, this one strategy can end that and position ourselves as a leader again
This is NOT a IL strategy, you’re staking LP tokens and getting more LP tokens, that’s it
There are more opportunities for LP token growth outside of Uniswap. For instance we could take advantage of our competitors and offer a Pickle strategy which feeds fees into YFI vaults. Deposit Pickle LP tokens, we farm and dump pickles and get more pickle LP (same with FARM)
It’s time to have a winners mindset, we’re ready to compete and won’t let anyone out innovate
This is 100% an IL strategy. Yes, it’s lossless w.r.t. LP tokens, but those tokens expose you to IL. You guys are trying to play strange semantic games.
But my understanding is the spirit of vaults is to never get back less tokens than you deposited. Thus in this case, the IL risk is not in the vault, it’s with the individual that purchases the UNI LP token.
They will always get back an equal amount of more UNI LP tokens from this vault.
Although I’m keen on new vaults. This idea will not be sustainable. Farming UNI may only continue for about the next 30 days, based on my understanding. I remember reading that the farming was live only for 60days or something. That might have meant new pairs were coming after that time, or that the uni farm will stop producing, I’m not sure. If they are stopping, I don’t think the coders want to do the work for such a short term strategy.
if IL or non-IL strategy, the vault is optimizing the yield of a chosen strategy. This is exactly what vaults are for, right?
However, I kind of agree with Ceazor, the UNI incentives are probably short lived. On the other hand, there is no guarantee, that the liquidity incentives will be shut down. Maybe there will be incentives for other/more liquidity pools.
I believe after building 1 of these vaults all following vaults are mere adaptions and therefore not very time consuming to set up. So if we have the groundwork done, we should be able to react super fast for future UNI LP incentive strategies. Needless to say this would give us a good hand against competition.
Nice, I like the idea of incorporating derivatives in a creative way. In a way you´d build a structured financial product. This can quickly become very complex but also it will become easier to accomplish because of structured tokens. We could integrate them in our vaults wheen it makes sense, going forward.
I think it is necessary for Yearn too explore other sources of revenue. I see a lot of people saying UNI farming is already implemented by Pickle or Tokensets… but imo it’s not because it exists somewhere else that we should not offer it also. Being able to offer a wide variety of products to our users will help us keep our market share.
