Build a spiderweb(contract) and recruit spiders(keepers?) for moving would be liquidated leveraged positions of C.R.E.A.M. users and vault strategies into it for additional grace period. There is a spider queen and has bigbrain and an abacus, and she will ensure revenue is gained for the peace of mind and security her nest provides.
Spider Web --> Contract to receive leveraged collateral & governance tokens
Spiders --> Moves at risk collateral and vault tokens to spiderweb (could be keepers?)
Keeper --> Keep3r.network “an external person/team who executes a job”
Spider Queen --> keeps track of interest rate accrual for collateral inside spiderweb and delegates at risk positions to be moved by spiders.
What is going on here?
yearn~Cream adds a Spider Queen(some kind of code required here no doubt ) who keeps an eye out for at risk positions on Cream that hit the liquidation loan to value ratio. Rather than liquidating the positions though, the Queen queries the vaults of the various governance tokens of the yearn~x ecosystem(Sushi, YFI, AKRO, Cream, (cover?), etc.) for available tokens and their yield. The Queen then makes a work order for spiders(Keepers? Paid by treasury?) to collect the at risk position and bring it back to the spider web with enough governance tokens from the vaults for the position to reach a second tier of at risk(85-90% LTV of the initial at risk position, but 65~75% of (collateral+supplemental governance tokens). The Queen then applies a debt owed to buy back the collected position. The debt could be equivalent to a flat cost for the spider’s work and a variable interest rate based on the yield the governance tokens are receiving in their vaults. The owner of the collateral then has a safety net in place(additional grace period) to buy back the position from the spider queen. If the second tier of at risk is reached, the position is then buyable by anyone or is auctioned off at a discount or liquidated on the open market. When bought or liquidated, the spider fee is paid and returned to the treasury and accrued interest is paid to the governance token vaults as yield.
Lots of thumbs to twiddle and palms to face when you’ve got eight legs.
How are the governance tokens used to provide healthfactor?
- An equal amount of tokens are brought from each vault and their yields are averaged and applied as the interest rate.
- When the governance token vaults are queried, the ones with the lowest yield are brought over and applied as the interest rate.
- Could the spiders be paid by credit mining? (this is more agreeable right?)
So… like, why? (Motivation)
The spiders, their queen, and her web would be another level of protection, providing peace of mind for users to appreciate and feel comfortable. yearn has recently displayed a commendable level of concern for the wellbeing of users and their funds across the Ethereum ecosystem as whole. I believe these additional assets to be another layer of security yet to be offered elsewhere, and that would be in line with what yearn has shown recently to be an ethos.
Typically, governance tokens lie about in abundance, pleading for a use case. On other occasions owners desire a source of yield and lend them out, putting the ecosystem at risk of various attacks. Below is the largely untapped potential market cap for ease of reference:
Not all of this is available naturally, but it is considerable. If conditions call for it (unreasonable interest rates, or scarcity of governance tokens), the spider web could be supplemented by other vaults to provide further safety for leveraged positions. Collecting governance tokens inside their ecosystems is a high priority, as it provides security for everyone involved (think flash loan attacks, have these been handled? Yes-ish, did we know it was an issue before these happened? No. Think about what we don’t know about yet.) As such, it would make sense for spiders to collect from other vaults only as a last resort, helping to ensure it is an agreeable incentive to put governance tokens in the vaults. Perhaps to safeguard leveraged vaults, spiders could collect from any vault.
Having this additional safetynet should allow for what would have previously been termed “too risky” vault strategies to be entertained as there is more room for wild market swings. There could be whitelisting with the spider Queen, where certain addresses are exempt from liquidations (vault addresses.) Under extreme conditions if vault strategies do become at risk, these debts could be paid by the treasury, adding more necessity for the performance fee allocated to YFI holders.
A user of Cream deposits $500 worth of Curve.fi (CRV) token and borrows $150 against it producing a 30% loan to value ratio, and risk of liquidation if CRV depreciates 40% down to $300.
This optimistic Chad didn’t know the market was at the absolute top, and CRV plummets by 60% down to $200 producing a 75% loan to value ratio. Ordinarily Chad’s position would have liquidated and YFI holders, Cream holders, Sushi holders and Akro holders would be watching on the sidelines with a burning desire to intervene and see to it that Chad had a little more leeway, a little more room to learn before such a harsh outcome was realized. Chad might voice displeasure, and be met with a brand of tough love only bred by the harsh reality of crypto in the days of old. However those days can be behind us now, enter the Spider Queen and her brood.
Chad’s now $200 position of CRV is removed from his possession but not liquidated. Instead it is held in the spider web contract and supplemented by governance tokens from yearn vaults. The supplemental tokens bring up the loan to value ratio from Cream’s perspective to not needing to be liquidated. Chad is able to buy back his collateral for the fee of $15 for a keeper moving it plus $10 interest accrued for however long it has been protected from liquidation and the initial loan of $150. $150 + $15 + $10 = $175 on $200 collateral equates to a loan to value ratio of 87.5%. Chad pays $175 gets his CRV back and it appreciates back to $500. yearn, Sushi, etc. governance isn’t left on the sidelines wishing they could provide a better product for Chad, they also got $10 off him for their contribution to seeing Chad whole.
Say Chad is preoccupied and his collateral goes up to 90% loan to value ratio. It can be sold at a discount of 10% or market sold and the leftovers distributed as additional yield for the governance token vaults.
For further consideration:
If a collateral position or vault returns to initial value or even surpasses previous value, the owner need only pay the fee for the spider’s work, accrued interest and to remove from the spider web. Interest would stop accruing once the position no longer needs additional collateral from governance vaults to not be liquidated. The tokens can then be reallocated according to the vault strategies.
For: Yes, a Spider Queen and her brood add value to the yearn~Cream ecosystem a lair that meets their specifications will be constructed.
Against: No, a Spider Queen and her brood do not add sufficient value to the yearn~Cream ecosystem to expend time and capital on constructing a lair of any specification for them.
Against: No, this area needs to be dusted for cobwebs and brought back for consideration once sufficiently de-spidered.
Poll I don’t know how to make one, I read the whole bot dialogue and at the point to make a poll I couldn’t find the Gears button it mentioned.
Thanks for consideration.