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Yearn Finance Newsletter #3
Week Ending September 20th
Welcome to the 3rd edition of the Yearn Finance Newsletter. We will cover upcoming product launches, governance, and ecosystem updates.
The Rise, Fall, and Rebirth of SAFE
Governance Updates (YIPs)
Recent yVault Updates
SyntheticRebaseDollar is a recently announced product currently under research and development. SyntheticRebaseDollar is an auto-rebasing index that tracks the dollar value of the collateral that creates it. For example, if a user deposits $100 worth of LINK into the platform he or she will mint 100 srUSD (worth $100). If the value of the LINK collateral increases 50% to $150 the balance of the user’s srUSD will automatically rebase to 150 srUSD. Unlike other rebase coins there is no need to call the rebase() function, it will happen automatically with each new block.
srUSD can be used to create an index composed of the underlying collateral components. As the dollar value of the underlying assets increases or decreases the amount of srUSD will increase or decrease (rebase functionality).
Collateral assets are planned to include:
ETH, renBTC, wBTC;
LINK, MKR, REN, SNX, YFI;
DAI, sUSD, TUSD, USDC, USDT
If the collateral is entirely DAI, sUSD, TUSD, USDC, USDT, then srUSD will essentially be a stablecoin index. Conversely, if the collateral is LINK, MKR, SNX, YFI it will represent a DeFi index.
Users can withdraw their collateral at any time by burning their srUSD. SyntheticRebaseDollar was conceived while working for another upcoming product: SyntheticTrader, a permissionless USD settled leveraged long/short synthetic derivative protocol built on top of StableCredit. At the moment, we are not entirely sure of the most elegant use of SyntheticRebaseDollar, but we have conceived its idea and are presenting it to the community for suggestions on how to further develop it. If you have suggestions you can share them on the governance forum here.
We are pleased to announce that the yCRV vault token (formerly known as yyDAI+yUSDC+ yUSDT+yTUSD, or yyCRV) has been rebranded to yUSD. yUSD is the token you receive when you deposit yCRV into the yUSD vault, which can be found here. The yUSD vault is yield farming and using the profits to purchase additional yCRV. Depositors in this vault have claims over the excess yCRV in the pool. Holders of yUSD are able to benefit from optimized interest accruals, AMM LP fees, and yield farming returns. At the time of this publication, over 231m yUSD has been minted and has a market capitalization of approximately $270m.
Launch of SnowSwap
SnowSwap has launched this week and is offering a new platform where users can swap between various Yearn yVault tokens. Yearn currently has yVaults for four major stablecoins: DAI, USDC, TUSD, and USDT. Users can deposit these stablecoins in their respective vaults, which will be used to yield farm based on current opportunities in the market. Profits from these activities are used to buy more of the underlying stablecoin (e.g., yDAI vault buys more DAI). However, withdrawals from yVaults result in a 0.5% fee, and there is no large, liquid secondary market to trade between these tokens. SnowSwap is creating a secondary market where users can swap between yVault tokens without exiting the vault and incurring withdrawal fees. As of September 20th, only trades between yDAI, yUSDC, yUSDT, and yTUSD vault tokens can be made, but support for the yUSD token is planned in the near future.
Curve has proposed a new pool that will facilitate seamless trading between yVault tokens (yDAI, yUSDC, yUSDT, yTUSD) in response to the SnowSwap launch. We will be monitoring the progress of this proposal.
The Rise, Fall, and Rebirth of SAFE
There has been a tremendous amount of confusion regarding SAFE, so we want to be clear and state that SAFE is not an official Yearn product. However, members of the Yearn community have provided assistance to the SAFE development team, including a $25k grant. The SAFE UI is forked from Yearn’s voting/staking UI, which can be found here. Therefore, despite the UI similarities and financial assistance, SAFE is not an official Yearn product.
SAFE’s liquidity incentive program launched this week and users are able to earn SAFE governance tokens by staking either yNFT (ETH), yNFT (DAI), or wNXM. yNFT (ETH) and yNFT (DAI) are Yearn insurance covers that can be purchased at yInsure. yNFT (ETH) vs. yNFT (DAI) specifies whether the claimant would receive either ETH or DAI in the event of a payout. wNXM is the wrapped Nexus Mutual token, which underwrites the yInsure capital pool. A fourth pool also receives SAFE rewards was added shortly after the first three to create liquidity for the SAFE token, and this pool is a 98/2 DAI/SAFE balancer pool.
New Stats Page Added To Yearn Finance
The Yearn Finance homepage has been updated to include a snapshot of current stats for various Yearn products. Users can see information for yVaults, including current strategy, vault holdings, amount of vault holdings actively yield farming, individual holdings (in underlying tokens and USD), and ROI metrics. We have excluded 1 day ROI data and want to emphasize that 1 day annualized APYs are very misleading metrics. Certain vaults do not call the harvest() function daily, which represents the majority of Vault profits. Therefore, annualizing a 1 day ROI on a day in which the harvest() function has not been called will result in an inaccurate and misleading APY. We suggest users reference the 1 month ROI or ROI since inception instead.
Governance Updates (YIPs)
No YIPs were formally approved in the last seven days.
Proposals Currently Under Voting
No YIPs are currently under formal voting at this date.
Key Ongoing Discussions
Governance Overhaul and Future Rewards
Discussions are still ongoing at the governance forum. But to summarize, this multifaceted proposal would
Revamp governance voting to be fully off-chain, hosted by Snapshot.
Enable YFI located anywhere to be used in governance voting (e.g., aYFI, yYFI, YFI on Uniswap, etc.)
Distribute rewards to YFI stakeholders as yUSD instead of yCRV
Implement a time-locked vote weighting mechanism with gYFI.
Burn YFI Minting Ability Permanently
A preliminary non-binding vote was conducted off-chain using Snapshot regarding permanently restricting the ability to mint additional YFI. It received overwhelming support and a formal on-chain vote will be conducted in the near future after a new governance voting contract is deployed.
Adopt Snapshot + Aragon for Binding Governance
Introduced by Jorge Izquierdo, Founder of Aragon, this proposal would incorporate Snapshot’s off chain voting tool with Aragon’s Court. Currently, Yearn governance votes made on Snapshot are non-binding and merely informational polls. Formal YIPs are voted on-chain here and implemented by the multi-sig following if passed. This proposal would enable votes on Snapshot to be binding and arbitration/implementation overseen by the Aragon Court. In the event of a dispute, the Aragon Court would act as Arbitrator.
Creation of the Yearn Auditing Academy
This proposal would form a security auditor academy led by samczsun, a prominent whitehat hacker in the Ethereum developer community. Formation specifics and incentive structure are currently under discussion.
Recent yVault Updates
CRV was locked in voting escrow to enable Curve boost for the ycrvBUSD vault on September 18th. The yUSD and ycrvBTC vaults will be receiving this boost soon as well. yETH vault is in the process of a strategy change and is undergoing testing. Additional details will be announced in the near future.
We invite developers to conceive and propose any new yVault strategies or potential product offerings to the governance forum (https://gov.yearn.finance). Introduce strategies and get paid for your work! We are also always looking for security auditors to help us identify vulnerabilities and exploits. Please reach out to us if you are interested in assisting our security efforts or would like to discuss any business collaborations at email@example.com or firstname.lastname@example.org