YIP Proposal: Treasury Investment Strategy - DPI / ETH Indexcoop Farming

YIP Proposal: Treasury Investment Strategy - DPI / ETH Indexcoop Farming

Basic Summary
There has been ongoing discussion about how we utilize the treasury to allocate assets that can generate a return. Previous threads:



This is only the asset allocation portion of the portfolio, which I expect to be only a % of the treasury. We can still start brainstorming and parallel processing this piece without knowing the % yet.

Abstract
TL/DR
This proposal would have the treasury purchase approximately $250k of ETH to be paired with the $250k DPI into a Uniswap Liquidity Pool to be staked with Indexcoop.com DPI/ETH Farm. Periodically the Index tokens that are farmed will be harvested and sold via Uniswap thru a smart contract.

As a volunteer community member contributing strategist with a background in financial planning and history in business and crypto. I’ve come to realize how difficult a task that current Yam Team is working on. Many members on discord constantly complain about how slow progress is (I know I was one) fail to realize that significance of the development work that the Yam team is doing. They are laying the foundation brick by brick for a decentralized finance system. It’s important to measure twice and cut once because this is the foundation. Once it’s ready watchout!

Since this is the first step to utilizing the treasury to farm yields, let’s make sure we do this carefully and not rush. The team will do an informal audit of the DPI/ETH Farming contract.

Research
We’ve narrowed down our investment options to a few quality yield farms with known devs and or audits. Current list:

We’ve also narrowed down our list of assets that the treasury would hodl mid to long term:

  1. Stablecoins
  2. ETH
  3. DPI - Defi Pulse Index: https://www.tokensets.com/portfolio/dpi
  4. wBTC

Right now the treasury holds:

  1. yUSD
  2. Currently purchasing DPI - $250k

Motivation
We should put the DPI to good use by farming on Indexcoop.com. The team is part of the setprotocol.com team that has been audited.

Specifications
When this proposal gets approved, it is only the beginning. The difficult work lies ahead. We can use this as template for our future purchases, which is why it needs to be done carefully.

My non-developer thoughts on the steps that need to be done (Feel free to chime in):

  1. Contact needs to be written on how to acquire $250k in ETH, due diligence needs to be done on how much to purchase and timing. We could just market buy $250k in ETH on Uniswap by clicking on a button, but that’s not how a decentralized governed structure works.
  2. Indexcoop farming contract needs to be informally audited by Yam team or community assisted.
  3. Contract needs to be written to deposit DPI/ETH on to Uniswap’s Liquidity Pool.
  4. Contract needs to be written to deposit Uniswap LP Tokens to Indexcoop’s Yield Farming contract
  5. Contract needs to be written to harvest Index tokens and sell.

Additional decisions

  1. A fast exit (a timelock governance bypass) “button” to unwind stake from both indexcoop.com and uniswap to retrieve DPI and ETH assets?
  2. A fast exit to sell DPI asset?
  3. Sell index tokens to which base treasury asset? ETH?
  4. Should we hedge the ETH investment $250k with OPYN put options to limit downside in investment?

Poll to Measure Sentiment

  • Let’s do this!
  • Let’s discuss this more!
  • Not a good idea. :frowning:

0 voters

2 Likes

I’m a fan! Farming DPI/ETH seems like a no-brainer.

Unless we want a stake in INDEX, I’m thinking we should reinvest the farmed tokens directly back into ETH and DPI and added to the pool. We will need to come to consensus about whether the tokens are dumped or held.

Either way, this all will need to happen fast as the mining rewards are only for 60 days.

With that said though, I think keeping the DPI and ETH in the uniswap pool is a good long term strategy. I expect that there will be significant correlation between both tokens, and an opportunity to pick up trading fees as well as maintain a constant proportion of the 2 tokens is a plus.

1 Like

We should execute this part of the strategy ASAP. As rossgalloway has mentioned, there isn’t a lot of time. You have a very strong “YES” from me!

Actually I do like the idea of holding Index tokens, they aren’t in the inflate supply until death camp.

Let’s run this for a day or two to see if there are any good suggestions that come out of it.

Let’s do it. It is a good plan.

2 Likes

I commend your dedication towards YAM Treasury investment strategy, @feddas! I’m torn between let’s discuss even more so we can deploy this ASAP. Tho, I voted for ‘Let’s do this!’.

Time is of the essence in this yield farming strategy. I reckon that’s also true with farming $UNI. For $UNI, let’s just wait for their community if they’re going to continue the 4 pools running atm or open a new one. By then, we can assess and see to it should we farm and dump or hold $UNI as well. Rn there’s too much whales farming $UNI and the returns of YAM Treasury farming one of those 4 pool is I think not that lucrative.

The million-dollar yam question now is… will the community vote for buying ETH in the market or wait till YAM Treasury sell yams once we hover again in positive rebase? If we want to maximise YAM Treasury’s revenue, then the former is the simple answer.

1 Like

wo can’t lost time anymore. let’s do it quickly

I especially like the way you framed this around the team needing to lay the bricks correctly and build the right foundation. Plus it put’s part of the treasury to work and serves as a progressive step forward. Looking forward to more on your farming ideas.

1 Like

The farming rewards may be gone if we wait on rebases. We could always sell some ETH for yUSD in the future when we get some from positive rebases.

1 Like

i think farming with Index Coop is an innovative idea! strong team with similar community-lead values as YAM. great call @feddas

generally speaking, i would like to see YAM align with innovative DeFi projects with strong teams and similar ideas. Index Coop checks a lot of boxes and seems like the natural next step given our interest in DPI.

and just in case, here are some Index Coop resources for community members who want to learn more:

Introducing the Index Cooperative - Medium Article
Index Coop Community Handbook

Great will make a formal proposal to team to put this up on snapshot Tuesday 10/21.
Please if there are any other comments / suggestions please speak up.

Also the current on-chain hedging using options are fairly limited with limited liquidity. At the current moment I think it’s prudent if we decide on how to hedge to another proposal in the near future. This will give the market some time to mature a bit. Since we will be 70+% in yUSD even if this proposal passes to buy ETH, I think the overall risk is manageable.

1 Like

Nice. Like this idea. Agree, lets get this to snapshot asap, so we can get it included in our OTC purchase of DPI. Maybe separate out each proposal, one being purchase 250k ETH (for diversification purposes), the other being if ETH purchase vote is successful, stake DPI/ETH on Index

4 Likes

我们的节奏太慢了,说了两次了,这样的节奏我们将错过国库投资抄底区间底部!

我想问您一下,你持有yamv3吗?当然可以不回答 :joy:

why i can’t see it on snapshot? today is 10/22!

Sorry, I asked the core team to put it up on snapshot, it’ll be up shortly.

Assets held in the treasury will likely be held for long term, things need to be carefully considered as we are currently doing. No point in rushing, markets move up and down but getting the community on board is ultimately more important than a day or two of losses or gains.

金库是不是考虑投资部分fil,既然是长期投资,市场潜力应该很大。
考虑分析一下。

We can consider FIL, but at this point we are primarily focused on larger cap items. The investment objective of the Yam Treasury Fund is to achieve long term capital appreciation and minimize risk in order to have liquidity and capital for the growth and development of the Yam Ecosystem.

开启投票通道吧,我们该一步步实施计划,既然已经这样了,只能慢慢来让市场接受。

what would YAM holders profit from treasury?