Nearly everyone here is somewhat bullish on Ethereum overall, and maintaining exposure to Ethereum while using yearn.finance can only be done through the Ethvault that is now closed. The Ethvault also takes on a somewhat riskier strategy by taking on debt in order to perform the strategy. My strategy drastically simplifies the process, while taking on zero debt.
Step 1.) allow Eth deposit on vault user interface
2.) eth is converted to ycrv and then staked using ycrv strategy all in a single zap on the vault page (too many steps right now for the conventional user)
3.) On harvest function, all ycrv profits are converted to eth. The vault interface may show something like (ycrv initial investment) + (eth profit generated)
4.) Upon withdrawal from vault, initial investment ycrv is converted back into eth and also batched with whatever percentage of the eth profit the strategy had generated.
In this strategy, no debt is taken on, and clearly the user does not get “total exposure” to eth with their initial investment, but they generate all profits in eth. This hourly buying in eth will generate significant buying pressure on the ethereum market. I would guess a large portion of those in the ycrv vault would possibly prefer this strategy, and also the user interface ease of just depositing eth in a single zap and withdrawing in eth in a single zap. It is not perfect but it avoids the debt process.
It’s true if people are bullish on ETH, they most likely want to earn in ETH.
However, I a few problems with this strategy.
If the deposits are converted to yCRV, there’s no need of converting yCRV profits to ETH if they’re just going to be converted back to yCRV in the vault (gas).
If ETH price rises faster than the ~80% APY yUSD offers as ETH often does, deposits suffer a loss in ETH terms. (Hodl’ing beating the vault).
the ycrv profits would not be converted back into eth in the vault, they would just remain allocated separately so the vault page would show xx ycrv xx eth.
deposits absolutely could suffer a loss in eth terms but this gives people an option to generate a large yield in eth. This is a “risk”, though I would say everyone going from eth to ycrv right now is taking on the same risk where HODL beats the vault. In this strategy HODL would not beat the vault by nearly the same margin.
I see, the profit is separate from the principal. I just assumed it pools back in because current strategies all pool the two together.
However, I still disagree that the vault will beat hodl’ing if ETH is bullish according to past performance.
Let’s compare the two with an example:
ETH goes from $100 to $340 in a year, based on 2016-present performance averaging 240%/yr.
- User deposits $100 worth of ETH at $100/ETH
- Vault generates 80% APY on $100, buys ETH with profits constantly, effectively DCA’s the profit into ETH
- User ends up with $100 + $80 of ETH bought at an average price of $220. Which becomes $100/$340+$80/$220=0.66ETH<1ETH
if eth goes 240% a year there is no point in any of these strategies lol that is a very rich assumption (while i hope it is true)
Risk vs reward. It’s riskier to hold ETH compared to stable coins. That 240% is just the average from 2016 to today, which includes both the 2017 bull run and the subsequent crash.
Edit: However, I will agree that a yCRV-ETH vault will outperform a plain yCRV vault. I just don’t see it as safer than the current yETH vault in a bull market.
My only concern would be determining how exactly the vault token (we’ll call it yCRVETH) corresponds to the holdings in the vault. This would make this the first vault that grows the vault in something other than the underlying asset. From a design standpoint, I think this vault could make sense for those who want to protect their underlying principle but be exposed to the upside of a volatile asset like ETH– I’m just not sure how difficult it will be to calculate what someone’s holdings are now that two separate assets are being held (for instance, how many ETH your yCRVETH entitles you to upon withdrawal).
Right, i am happy getting a 80-100% yield on ycrv but i would feel even better if all Of that yield was going straight into eth.
Nothing a little code could take care of. comparing risks to current ethvault: no interaction with maker, no chance of liquidation, no debt etc. less exposure to dai if it loses peg (considering eth vault goes thru dai vault). comparing risks to current ycrv vault: exposure to eth, if major bug occurs with curve you would have managed downside by holding funds partially in eth. if eth pumps 500% you would benefit some rather than 0 if you just had all funds in ycrv vault
waiting for andre to comment and trash my idea lmao. Also feasibly could do the exact same strategy but make it the ycrv-YFI exposure vault where you would take profits and buy YFI and hold YFI instead.
I don’t see how this is significantly different from exchanging ETH to yCRV and then putting it into yUSD vault. You don’t seem to maintain ETH exposure with this strategy. When ETH surges, user may end up with less ETH than they originally deposited, which goes against the promise of yearn vaults.
Yep, I would agree. I consider ETH “safer” than most stable coins and yCRV. If I’d want that strategy I’d just swap ETH to yCRV a long time ago and chase that higher yield.
This is the same thing as selling ETH. What you can do is put your ETH in a MakerDAO vault, mint DAI, buy yCRV and deposit them into the Y vault. Similar process that the ETH vault does, but manually done. You will be long in ETH and investing in Yearn at the same time.
When I first read the strategy, I thought the same thing.
But what this is proposing is to essentially create a separate yCRV vault that swaps the farmed CRV for ETH instead of for more yCRV. That’s the only difference between this and the current yCRV vault.
Realistically, I think the vault should probably just accept deposits in yCRV– or let you zap in with ETH, USDC, or DAI, just like the yCRV vault.
Exactly what I was trying to communicate to the OP.
Yeah, I think maybe this vault is being framed in the wrong way.
What it should really be sold as is this– earn high yield on your dollars (yCRV), but instead of having those dollars compound into more dollars, we’ll stick them into ETH and hold them for you. That way, if ETH goes down, your principal isn’t decreasing, but you’re exposed to the upside of accumulating ETH with your interest as well. And the OP seemed to want to have a strategy that didn’t take on debt, hence not using the yWETH vault
well said dudesahn! That is what I was going for
The strategy is simply “Sell ETH to USD stablecoins, yield farm CRV, and market buy ETHs”.
If you believe in ETH price growth, you will NOT want to sell ETH to USD stablecoins as the first step . As an ETH holder, you only want to sell ETH if you believe price is too high / you are at the end of bull run, not at beginning.
This is in fact a USD Stablecoin vault that dollar-cost-average its earnings into ETH.