Create a FixedForex vault auto rebalancing between the existing 6 ib* (ibEUR, ibGBP, ibCHF, ibJPY, ibKRW, ibAUD) vaults to make capital more efficient for users thus attract more capital deposits.
Currently there are 7 ib* assets (ibEUR, ibGBP, ibCHF, ibJPY, ibKRW, ibAUD, ibZAR) with the former 6 of them already have yearn vaults.
The vaults are farming on 6 Curve pools through Convex respectively.
There are three sources of farming rewards for each pool, CRV from Curve, CVX from Convex and rKP3R from Keep3r. Each source of reward is subject to a weekly vote to distribute rewards between the pools.
Since 6 pools are voted each week to share rewards, each will have different farming APY.
The APY is subject to change week by week. The rKP3R APY of current week is 54.42%/2.34% for ibEUR/ibJPY. For the next weeks this may change dramatically.
A user may want to deposit in ibEUR vault because of the high APY. But he may find it not best choice the next week if ibEUR APY drops dramatically relative to ibJPY vault.
Since ibEUR & ibJPY both have similar risks. (They both from the same project and are major currencies.), it’s natural to think that some users may want to balance between the two pools. This can also be observed on chain by this account in screenshot as below:
- Unstake ibJPY from Convex, $326 in gas cost
- Withdraw ibJPY from Curve pool, $56 in gas cost
- Repay ibJPY to Iron Bank, $75 in gas cost
- Borrow ibEUR from Iron Bank, $463 in gas cost
- Deposit ibEUR to Curve pool, $75 in gas cost
- Stake ibEUR on Convex, $375 in gas cost
This is a total cost of $1370 (0.274%) for moving $500k. If moving once a month, it costs 3.3% annually.
For smaller farmers putting $50k farming, it will be 33% annually.
Because of the high fees moving between pools, farmers will simply don’t move.
So capital will be inefficient for both farmers and the FixedForex project.
As for Yearn vaults, users are less likely to deposit because capital is not efficient.
To increase user base of the 6 ib* vaults, Yearn needs to make users’ capital more efficient, thus earning more on the same capital.
Creating a new vault named FixedForex may solve the problem. The new vault should rebalance users’ funds between different ib* vaults.
Users who don’t care which of the 6 ib* they are farming will simply deposit in the new vault to enjoy high APY.
(Users who love a particular ib* vault can still deposit in their favorate one.)
This will attract more capital (from those who are reluctant to deposit because they don’t know if they will earn best APY from a single vault) and increase TVL of Yearn.
Create a FixedForex vault to rebalance between the existing 6 ib* vaults