According to a previous forum proposal idea, the strategy of allowing users to move FEI to yvaults (yExitFei) seems worth pursuing (75% yes), so data collection & analysis may be wanted before using up dev time with it.
Two research questions that should be answered are:
- whether & how much FEI would exit, if given the opportunity?
- how long would it stay in yearn as FEI or ETH?
Quantity of FEI that will make use of the vault
Currently there are $570M user controlled FEI (716M). At the last repeg cycle, around $200m worth of FEI exited. Recently, $TRIBE governance voted with a clear majority to allow the protocol to work as it is, instead of allowing claims of FEI for ETH at $0.90 or $1.00 per FEI. Their team estimates that there will be some more time (possibly weeks) needed to safely restore the burn, rewards & peg mechanism.
Some user controlled FEI is currently stagnating, not yield farming due to costs & postponing sales in hopes of future repegging for exits.
If around $10M (~1.75%) of current user controlled FEI would exit through the vault, that would net the protocol for each week spent in vaults 0.026(FEI+ETH) + 0.2(ETH) yields. With WETH v2 at around 6.6% at the time of writing, that would net around $5k+$2.5k per week. This is assuming no FEI yield strategies implemented.
If the proposal would pass as voted on in the forum, the extra third of management fees would eventually be used for ABBY.
Time spent using vaults
Currently, pickle jars, rari’s fuse & stabilize finance have strategies that integrate FEI. A part of the total FEI in the vault could be used for yield strategies while it is indefinitely held waiting for repeg.
If yield farming strategies with FEI from the yvault would be implemented, a user could then choose the accepted max % deviation from FEI price at pre-scheduled repeg sale and the % of FEI to use for yield farming.
Time spent within the vaults would perhaps be proportional to the yield integrations. So if one or two of them would get offered up front, such as pickle & rari, yearn’s value proposition would be perhaps higher due to being both an exit, as well as an aggregated farming opportunity for FEI.
- Strengths & opportunities:
- relatively straight-forward implementation for the exit
- brings volume to yearn vaults
- while under peg, yearn strategists may use up FEI volume for yields from other protocols - could farm in available integrations like pickle jars, rari’s fuse or stabilize finance’s wrapper
- if Tribe team would choose to allow FEI users to exit at dollar peg, the exit work for the strategy will have been made partly redundant
- could prolong under peg duration for users
What I did was simulate some data, assuming a somewhat conservative (?) 1.75% total exit of the user controlled FEI. If you have knowledge of an empirical way of collecting data related to the scale of the potential exit size of FEI, feel free to add as a comment.
- Yes, add it to the queue of strategy ideas for review by devs
- No, gather more data of potential exit size to see if it is worth the time
- No, write strategy & test files prior to review of strategy by devs