Summary:
Deploy a small portion of YieldBasis YB bribe emission allotment towards a series of high fee rate Curve Liquidity Pools composed primarily of YB Vault Tokens in order to generate significant Curve DAO revenue and YB liquidity providers returns while also making YB tokens much easily tradeable even when YB Vault capacity is filled or when YB Vault withdrawal/deposit fees become too high.
Author:
Astral Protocol: Increasing liquidity provider returns through layered yield strategies, liquidity pools and yield bearing vault tokens.
Abstract:
Deploy and obtain Gauges for four new Curve liquidity pools on Ethereum Mainnet.
Then allocate a budget of YB tokens to put towards bribing the four new YB Token Curve Pools for the next 3+ months.
Motivation:
Since inception, Yield Basis Pools have been almost constantly at full Capacity while also having high (3-15%+) deposit and withdrawal fees most of the time. Due to this, many users have been unable to profitably participate in Yield Basis.
Deploying and incentivizing Curve Liquidity for YB Vault tokens will;
1. Generate top-tier swap fees (1%-3%) on YB Vault token trade volume.
2. Make YB Vault tokens tradeable for everyone at a reasonable cost.
3. Create additional productive liquidity sinks for scrvUSD and YB, which would support crvUSD peg stability and the long-term value growth and liquidity depth of YB.
4. Optionally, propose to the Curve DAO to adjust the fee distribution of YieldBasis sponsored liquidity pools to 25% of swap fees to Curve DAO, 25% to YieldBasis DAO, and 50% to liquidity providers, which is the same deal that Spectra was approved for.
Suggested Specification Parameters:
Deploy Curve Volatile Tri-Pool: Mid-Fee of 0.5%, Out-Fee of 3%, A between 10000000 - 100000000, Fee-Gamma between 0.01 - 0.1, composed of WBTC/YB-WBTC/YB-cbBTC.
Deploy Curve Volatile Pool: Mid-Fee of 0.5%, Out-Fee of 3%, A between 10000000 - 100000000, Fee-Gamma between 0.01 - 0.1, composed of wstETH/YB-WETH.
Deploy Curve Volatile Pool: Mid-Fee of 1%, Out-Fee of 3%, A between 100000 - 10000000, Fee-Gamma between 0.01 - 0.1, composed of scrvUSD/YB-WBTC/YB-WETH.
Deploy Curve Volatile Pool: Mid-Fee of 1%, Out-Fee of 3%, A between 100000 - 10000000, Fee-Gamma between 0.002 - 0.1, composed of scrvUSD/YB-cbBTC/YB or yvyYB.
(Using YB carries the advantage of providing a direct YB liquidity sink, while using yvyYB carries the advantage of greatly increasing Liquidity Provider returns through yvyYB’s embedded yield (over 100% APY at time of writing, which is not sustainable).
For:
- Increase YB Vault Token Trade-Ability.
- Increase crvUSD Peg Stability
- Allow YB users to exit YB Vaults without paying heavy fees.
- Make YB Vault tokens liquid and easily tradeable after being deployed by any user into any liquidity pool on Ethereum. (Like how wstETH, asdCRV and other liquid yield bearing wrappers work).
Against:
Loss of a small portion of YieldBasis’s YB bribe allotment that could potentially be more effectively utilized elsewhere.
To mitigate this loss, YB distributions could be initially limited to 30-90 days. After which the effectiveness of spending YB emissions on Curve Pools composed of YB Vault tokens would be clear.