VIP 6: Pools restructuring

SUMMARY

VIP 5 voting concluded with 99.87% agreement on the restructuring plan, meaning YFValue will move forward with the proposed plan described here.

As a result, all pools will stop issuing YFV at the end of the current epoch. Most of these pools will restart and then begin issuing VALUE. However, there are certain pools that have not attracted much interest or TVL (e.g. BAL, BAT). Aside from those, there are other tokens that deserve to have a place in YFV ecosystem (e.g. LEND, SNX, stablecoins)

This proposal is our attempt to restructure pool availability, which we believe will have a great effect on the future of the Value Liquid and YFV ecosystem. The following items will be put to vote:

1. Current Seed Pool Reward Adjustment

MOTIVATION

The seed pool was designed as a fair distribution method for farmers. At this point, the current 70mil$ locked in the pool no longer meaningfully contributes to the YFV ecosystem, yet continues to receive YFV rewards. Furthermore, current YFV incentive design with 98/2 risk-ratio provides enough impermanent loss for farmers. We believe this “dead liquidity” could be used for better purposes.

MECHANICS

The seed pool uses the old design of YFI’s smart contract, meaning its emission cannot be stopped. (aside from a brute force method that we have chosen not to explore as it may put user funds at risk). With community support, we would like to hold a vote on two options to address this:

1. We propose to double the inflation rate of the current seed pool so that it will end in 3 weeks. As a result, that capital will free up as soon as possible and can be put to better use (such as vaults or providing liquidity in Value Liquid; see below proposal for stablecoin balancer pool incentives)
2. On the other side of the coin, we could halve the inflation rate, continuing seed pool emissions for 12 weeks instead of 6 weeks. As a result, yield will lower significantly, making the pool far less attractive to seed pool farmers, who will be incentivized to deploy their capital elsewhere. This method would also achieve our goal (disincentivizing capital in the seed pool). We would like to thank the community for the suggestion and look forward to the vote.

FOR (1): Double seed pool emission rate

FOR (2): Halve seed pool emission rate

AGAINST: No action

2. Balancer Pool Restructure:

MECHANICS

The community will choose which tokens will be included in asset/YFV 98/2 Balancer pools. These pools will receive VALUE rewards.

Top 4 tokens will be chosen from this list of candidates:

Candidates: BAL, BAT, SRM, OMG, LEND, COMP, SNX, MKR, USDC, USDT, DAI, TUSD

(Notice: if BAL and BAT tokens are not in top 4 after the voting ends, the current BAL and BAT pools will not receive any VALUE rewards, effectively being removed from the current liquidity program)

3. vUSD Incentive Pool

MOTIVATION

We will be able to provide more details on our rebase code soon (likely even a beta website that will demonstrate the use of vUSD). We are still working with an oracle provider to complete development. In the meantime, we propose to increase the incentive of trading vUSD by adding a Balancer pool with a 90/10 ratio for YFV/vUSD. LPs for this pool will get a small percentage of VALUE as incentive rewards.

MECHANICS

FOR: Open vUSD incentive pool

AGAINST: No action

VIP 6 Voting will start from Tuesday, Sep 15, 2020 8:00:00 GMT+0 and end by Wednesday, Sep 16, 2020 8:00:00 GMT+0. The implementation will be planned and announced after voting ends.

VIP 6 Voting will not cost gas. All YFV holders and YFV stakers in stake pool v2 will be able to vote. Voting will be based on the number of YFV that each voter holds/stakes and not on voting power. You may also re-vote before voting ends. To avoid spam, each voter can only re-vote after a 1 hour cooldown period.