I don’t think we should force out the governance staking vault in favor of one requires the usage of a CDP. Others mentioned above people may not be comfortable with such debt-based strategies.
Why can we not have this new vault exist alongside the existing staking contract/yYFI vault? That way depositors can choose the level of risk they want to take.
yAcademy only needs $150-200k for seed funding for the year. Treasury has more than enough to fund this as we are generating roughly $1m+ in revenue each month. Bug bounties are also set aside to cover this funding, I struggle to understand how this would be needed to pay for those things, when Treasury already has more than enough to cover them.
Right now $500k each month is set aside to Treasury before anything is even flowing to governance staking. That has proven to be sufficient to pay for audits, salaries, contributors, bug bounties, and miscellaneous initiatives such as design work or videos, and would also be sufficient to fund yAcademy.
Another thing to note is that the DAI debt ceiling is 20m and already almost full. This would be contingent on the ceiling being increased further. I’m not sure Maker is comfortable setting the YFI debt ceiling to 100m+ DAI?
This is music to my ears and simplifies matters greatly.
It’s not that this isn’t possible, all I am saying is that as an Architect and Strategist, to offer such options will divide the community now and into the future. What I am suggesting is that we find ways to bring everyone together under a single governance vault. The missing puzzle piece tbh in my mind that ought to be enough for everyone is insurance.
If the new YFI Governance vault (ygYFI) were to:
Deposit YFI in Maker;
Mint DAI and earn yield on that DAI and;
Pay for insurance from that yield to cover any loss of actual deposited YFI and;
As a bonus, earn any remaining share of the protocol fees after all above mentioned deductions,
This should cover ALL basis AND will unite all YFI holders under a single banner.
With DAI strategy yield + excess protocol fee distributions - insurance, I still expect yield to be > 20% APY. Why is this not a just cause and direction for all?
Next level of this game are in play to resolve this. MakerDao community will decide if they will whitelist YFI among other things that will resolve this concern.
I am a MKR holder and I follow the community, I will be voting for this because supporting Yearn is to support our (Maker’s) number one goal - maintaining the DAI peg. The two projects are perfect counterweights for each other imo. With more risk adjusted DAI creation via Yearn automation, this is far more favourable than opening up the spigot to individual players managing their own CDP.
My guess is the YFI ceiling to be maintained and a separate structure for ygYFI or for the ceiling to be rise but more dynamically as the YFI bots require. (This is all speculation on my part)
Thanks for the great feedback, both you @Franklin and @iTo as well.
It’s definitely true that we could offer these products side-by-side, with YFI governance staking staying as-is, and then creating this product that deposits our YFI into Maker and also receives gov fees as a higher-risk but higher-yield option, that also has the benefit of providing some more fees for Yearn.
With the integration of Cover with Yearn, this option becomes even more appealing, and is something I would love to explore further to help ease the concerns of those who may not want to deposit with Maker.
And ultimately, I think this proposal is more of a referendum on what we, as YFI holders, can do to support the Yearn protocol and to a certain extent, the Maker protocol.
It’s saying “we shouldn’t receive protocol fees unless we take on some additional risk for the benefit of the protocol.”
By agreeing to deposit in Maker, we take on an extra degree of risk (that perhaps can be mitigated by purchasing cover), but are providing the protocol with additional fees, and are receiving additional yield in return. Importantly, we now have skin in the game, and are no longer passive beneficiaries of Yearn’s growth and success.
Perhaps the most reasonable thing to do would be to create a Snapshot signaling poll with three options, since ultimately it is YFI holders who need to approve this. The options would be as follows:
Merge governance staking into a new Governance Vault. YFI is deposited to Maker to yield-farm with DAI. Insure the Maker vault using Cover. All protocol fees flow to depositors in this vault.
Create the Governance Vault, but normal staking remains an option. Protocol fees flow to both YFI staked in governance and YFI in the Governance Vault.
Keep things as is. No Governance Vault is created, and the YFI yVault must choose between utilizing YFI for staking or for yield farming.
Main post has been updated with the link to the active Snapshot sentiment poll, which can also be found here. If you’re a YFI holder, go signal your opinion!
The governance staking is where you stake your YFI to get fees (yUSD) , right ?
I’m just confused because at the moment we have 2 options. One to receive more YFI and one to receive yUSD.
So 1 is to have only the Vault using Maker
2 is to only keep the option to receive more YFI, and create the Vault using Maker. So we stop the option to receive yUSD
3 nothing change
is it right ? Because i’m surprised that the majority of users (based on the snapshot) are voting for option 1. So typically if you want to stake your YFI you have to take more risks (for more profit of course), but you don’t have the choice…
No, in option 2 you keep the option to stake in governance and receive yCRV, and then we effectively eliminate the yYFI vault in favor of this governance vault, because there’s almost no way that any yield-farming strategy would produce higher returns than governance fees + DAI farming (at least for now).
I agree with most things stated in this original proposal. I like the idea of more earnings, especially since I only hold .02 YFI and I got burnt cause I bought some at the very 32,000$ top. I’m new here, but I don’t think people have really stopped to ponder the inherent risk of creating a CDP with staked governance YFI. Particularly, I point to the events unfolded on ‘black Thursday’ as an example of the risks I’m referring to, where a ‘flash crash’ of the price of ETH caused the CDP holders to either immediately fund their positions with more assets (In our case YFI) or lose their position (aka staked assets). What happens if the Yearn Community stakes ALL staked governance YFI and the price of YFI crashes? Where would we get resources to fund the position even further if we spend the DAI on yAcademy initiatives (an initiative I’m not entirely familiar with, maybe it produces gains)? Would we risk losing all that stakes YFI in the pursuit of higher earning? I honestly think the risks outweighs the benefit of the original topic. However some people have proposed some tweaks here and there that seem to fix some issues including offering options regarding the amount of risk a certain YFI governance staker wishes to engage in.
Like someone said above, perhaps we should break up the original proposal and work on them individually. That is my two cents.
From Mkr the forum source , Yfi Yield in safety. 220% is the most giant collateralization bucket.
The largest vault, more than half of YFI debt, is at 220%, which likely skews the distribution.
YFI Vault Options vote currently in progress lead to a throttle mechanism
A Debt Ceiling increase from 20 million DAI to 30 million DAI for the YFI-A vault type
A Stability Fee increase from 4% to 10% for the YFI-A
.
You forget the DAI that is minted is used in DAI based strategies and is not converted. Hence it can be recalled in part or entirely if necessary. As to how long these positions may take to unwind, that risk remains. However, on this note, I would highlight that risk to YFI is at its highest early in the deployment of the strategy and at each instance of YFI deposit. This risk is not with reference to protocol or SC risk, it is with respect to retrievable profits.
As the vault ages and more strategies are deployed and used, risk in the effect of a flash crash diminishes over time as profit reserves build.
It would be quite sensible to build profit reserves that IF re-deployed are deployed with the lowest risk. I would imagine these reserves would not need to be much more that 30% of all outstanding debts. Allowing immediate repayment of debts if such events occur. Side note: insurance (cover) can also be implemented here. But a reserve would imo be preferable.
10% is ridiculous, a slap in the face of yearns community.
This stinks of pure manipulation to force people into yearn vaults so the process is automated, bringing the risk down for Maker.
With automation comes less human risk and would justify a reduction in rates. Raise the rates beforehand to keep them the same after a discount is applied.
Disgusting behaviour imo that is not becoming of a decentralised project. Very disappointing.