USD++ Yield Options

Background
Currently TLV for USD++ is $38K. While I expect this to grow as yields are captured, this does affect the flexibility of the strategy.

At present, PieVaults are still new, and Dev time is better utilized implementing the more direct strategies that can be broadly applied. To that aim, I would like to target single asset farms. These fall into two categories.

  • Yield Farming (Internal Yield, same peg)
  • Liquidity Mining (External Yield, distinct peg)

Opportunities:

For single asset Yield Farming opportunities we have AAVE, Compound, or Cream for collateralized lending. We also have alpha homora v2* for with leveraged LPs as collateral.

  • AAVE supports: DAI, USDC, TUSD, sUSD
  • Compound supports: DAI, USDC
  • Cream supports: DAI, USDC, sUSD (sUSD has currently 0% rate)
  • Alpha supports: DAI, USDC

Due to this, I think adding support for AAVE lending makes sense as a base farming opportunity. Yields are internalized and instantly realized. There are no harvest costs. All assets are supported.

For single asset Liquidity Mining opportunities we have KeeperDAO with lending fees and Rook rewards.

  • KeeperDAO supports: DAI, USDC

Liquidity mining programs do tend to have larger revenues, but rewards are not continuous. Some do not have a representative token, such as BarnBridge, which can make them harder to integrate.

Rebalancing
Even with purely continuous returns, each asset will grow at a different rate. We will need to determine a point to return to target ratios. Rebalances, like harvests, should not occur too frequently. I believe we should set a minimum divergence to trigger a rebalance event.

The cost of a rebalance scales with the number of assets being rebalanced to. Perhaps a cyclical rebalance where assets growing too fast alternate using returns to bump up the most lagging asset. For instance if TUSD is earning 4% and DAI is earning 30%, then occasionally use DAI return to add to TUSD. However the next cycle, maybe use that to fund sUSD if its now the most behind. This doesn’t perfectly hit target, but keeps us within a threshold, and can be more affordable to do more frequently.

Restrictions:

The issue here is frequency of harvesting returns. At current locked value and interest rates it we would earn near $700 a month in external rewards. It would not be worth the gas price price to harvest and sell back into underlying assets.

At $300k locked value, monthly revenue at 30% external rewards for the USDC and DAI portions hits $5k. I feel this would be a fair size to compound at monthly epochs. As we grow we can compress those harvest cycles, but I believe USD++ makes sense as a long term asset

We can host more frequent harvests if we allow that to supply to a single asset in the pool. If we need to supply to each asset to balance distribution, it could increase costs, and raise the floor return needed to trigger.

Framework For External Reward Viability
I think we should determine a framework for assessing when an external reward becomes viable.

We have four assets, of which two tend to have the broadest reward opportunities. Anything external is volatile. This is a stable Pie. What kind of rewards tempt us to hold volatile exposure for an epoch?

Hope the below polls will help us determine what kind of thresholds we should target.

Cool with AAVE as base farm
  • Yay (more ghosts)
  • Nay (find other haunt)

0 voters

Second Integration?
  • Compound
  • Cream
  • Alpha
  • Keeper
  • Other

0 voters

Max Epoch Lenght Acceptable Between Harvests (weeks)

Max Epoch Length Acceptable between harvests (weeks)
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8

0 voters

Minimum harvest target per epoch ($1000)

Minimum harvest target per epoch ($1000)
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10

0 voters

Minimum Yield to consider external rewards (APR %)

Minimum Yield to consider external rewards (APR %)
  • 10
  • 20
  • 30
  • 40
  • 50
  • 60
  • 70
  • 80
  • 90
  • 100

0 voters

For information on recent resolution between Cream and Alpha on hack see here

6 Likes

I voted Yay for AAVE and Alpha as a second integration, I personally find 4 weeks epochs only reasonable and a minimum of 50% yield to consider any additional dev work.

3 Likes

I think we also should consider APY.finance for the liquidity mining part, as it offers DAI / USDC / USDT for deposits and currently rewards the native APY token, but will also generate yield once launched.

Since returns are equal or better to Keeper, it should provide a superior middle- to long-term solution for holders.

When is it closing the poll?

Oh I didn’t realize I have to manually close. Will close tomorrow.

and what about Yearn ?

Yearn has exposure to Curve LPs under the hood which would expose us to USDT risk. I believe at present we are trying to avoid that exposure.

It also makes it harder to segment specific asset weights if depositing into yearn then splits that into yCRV or what have you which are multi asset.

ha ok. Sorry I missed that point . So yes, makes sense.