YAM Investment Portfolio Update #2
Renamed from Yam Investment Portfolio to Yam Dao Set (YDS)
Update from previous thread where there is a poll to decide on initial strategy for YDS
General consensus from the community found that a moderate 3 was appropriate for our initial strategy:
A moderate strategy would target a Beta (vs. ETH) of 1.5 and a correlation of 0.8
- In a real world terms, when ETH is heads up or down, the entire portfolio should follow at maximum of 1.5x ETH’s movement. If it goes up, the gains are magnified by up to 1.5x and vice versa.
- With correlation of 0.8 the assets inside the set will move in the same direction as ETH 80% of the time and would be a counter trend 20% of the time.
- All this is in efforts to minimize systemic risk while being fairly aggressive and target higher gains.
For our initial strategy our underlying assets would be similar to this:
- 25% Defi Pulse Index
- 25% ETH
- 25% wBTC
- 25% Yielding Stablecoin or Stablecoin
In addition the Set Manager would pair up some of these assets to yield farm to gain additional yield. Ie. DPI/ETH Indexcoop Farming Pool. For additional information there are multiple previous posts that explain how we got here: YAM Investment Portfolio - Description and Current Road Map
Outline of the functional and technical requirements of the Yam Dao Set
- A token set will be created for each individual strategy and then the Yam Dao Set will be created which holds the strategy set tokens and other ERC-20 tokens (WETH, USDC, wBTC, etc.). The structure will look like the following
Yam Dao Set
- Set Token A (e.g. DPI)
- Set Token B (e.g. Uniswap ETH/WBTC Farming)
- Set Token C (e.g. SushiSwap xSushi Staking)
- Set Token D (Opyn Hedging)
- Yam Dao Set
- The Yam Dao Set Manager will have permissions to perform trading functions within YDS and subsets. The PM will not have any other permissions outside of trading/allocation adjustments.
- Yam Governance will need to have control over two primary functions 1) setting the set manager address and 2) adding/removing tokens from the token whitelist.
- Yam Governance is able to replace the Set Manager at will.
- The token whitelist will put guardrails around the set to prevent malicious or accidental swaps into unapproved tokens.
- YDS will use the standard streaming fee module, where a % of AUM is streamed to Yam treasury as a fee.
- The issuance model should be whatever model offers the least complex approach. To start, YDS will only be investable by Yam Treasury. In the future we can iterate a more robust issuance module to allow public investment into YDS.
Treasury allocation % for Yam Dao Set
@Designer’s Yam Brand Pillar – Yam is committed to decentralized protocol ownership. It seeks to leverage its powerful and forward-looking community to both build and guide the protocol. Community decides how best to invest treasury funds to ensure the success of the project. Governance of the protocol and management of the treasury can only be performed with approval from YAM token holders.
We as the community need to decide how we should allocate the treasury to maximize utility but allowing flexibility to access funds when needed.
Currently there are multiple Yam products that are in development and will require the use of the Treasury Funds (Yam Umbrella Protection, The Great Yam Wall). These two products will require a fixed or increasing usage of the treasury and should take priority in allocation.
The advantage of Yam Dao Set is that it works in a similar way as Defi Pulse Index. The treasury will invest in Yam Dao Set, and the set will in return mint YDS tokens for the treasury that represents the value invested into the Set. The YDS tokens are fungible and can be traded on the secondary market. This allows us to be flexible in the amount invested into the set. After we get an idea of what will be required for Yam Umbrella Protection and the Great Yam Wall protocols, we will decide the allocation for YDS.
Yam Dao Set Manager
The wealth management mantra: “Most people don’t plan to fail; they just fail to plan.”
YDS Manager will be directly in charge of investing the assets inside the set according to the overall strategy Yam governance decides. His goal will be to maximize returns and minimize risk while following the guardrails set in place by Yam governance.
YDS Manager will be elected by Yam governance. YDS manager should fit the following criteria:
- Expert knowledge of cryptocurrency assets and more specifically Ethereum based Decentralized Finance.
- Expert knowledge of tokenset contracts and how to effectively use the system to trade and manage.
- Expert knowledge of risk management techniques and methods.
- Undying love for all things Yam.
I nominate @Krugman for the position of YDS Manager.
- He is working with Tokensets to build out the functional and technical requirements noted above.
- He will be directly involved in building the smart contracts needed.
- He’s one of the first social set traders on tokensets and is #2 ranked in assets under management.
- Trading since 2013, experience in cryptocurrency, FX, futures, options and equities.
- Been a core contributor with Yam since the beginning.