Add fresh collateral assets to Anchor, increase CF for DOLA
In light of recent events, it is important to re-enable borrowing on Anchor as quickly and as prudently as possible. While our efforts to effect a make good for users affected by the April 2 price manipulation are well underway, it is urgent that we restart the revenue streams that Anchor provides us.
Beyond re-starting borrowing on Anchor, we propose a more aggressive portfolio of collateral assets and, ultimately, a richer feature set for Anchor that will drive TVL of at least $1 billion 2022.
In light of Inverse’s new partnership with Yearn and our emerging partnership with Convex, we propose adding derivative assets from those protocols as collateral on Anchor. This allows users to deposit assets in those protocols in order to earn yield, then deposit them in Anchor in order to earn additional yield in the form of INV rewards. Additionally, it provides the opportunity to borrow against those yield bearing assets and construct compelling DeFi strategies not previously available on Anchor.
The new collateral assets will be introduced as deposit-only and not available to be borrowed. To be clear, deposited (staked) assets may be used as collateral for DOLA borrowing.
Specifically, we propose adding the following collateral assets to Anchor:
In order to promote new deposits of the above collateral to Anchor, we propose monthly rewards of 50 INV for each asset for three months, to be re-evaluated on a regular basis by GWG and TWG team members in order to optimize adoption/TVL for each asset. E.g. monthly rewards for poorly performing assets may be reduced while more successful assets may merit higher reward rates.
We see opportunities to strengthen our partnership positions with Yearn and Convex. Moreover, a successful integration of these new assets could bring about the onboarding of a new audience and demand for more collaterals to be added, potentially leading to additional benefits such as deepening liquidity, direct treasury buys, new DOLA feds, joint marketing, etc. This integration stands to bring new visibility to DOLA and Inverse Finance and lead us into other treasury diversification and lending protocol opportunities.
Price feeds for y-vaults are dependent on the underlying asset and rely on the strategies deployed. As an example, the oracle source for yvWETH price (underlying asset wETH), updates continuously depending on what the last called-upon strategy was. This means, yvWETH price is being derived from curve virtual price oracle (when using the Curve Seeker strategy), Maker DAO (when using the Maker Delegate strategy), Lido DAO (when using the Lido Eth 2.0 Staking strategy), etc.
To simplify this, RWG proposes the Stable and DeFi y-vaults utilize the chainlink oracle tied to the underlying asset as their sole source for price feed. Curve Pool y-Vaults instead will utilize the curve virtual price oracle. Below we list out each collateral asset under consideration with along with their price feed source:
- yvUSDT - USDT/USD Chainlink Price Oracle
- yvUSDC - USDC/USD Chainlink Price Oracle
- yvDAI - DAI/USD Chainlink Price Oracle
- yvWETH - ETH/USD Chainlink Price Oracle
- yvYFI - YFI/USD Chainlink Price Oracle
- yvcrvDOLA - Fix the Price to 1 USD
- yvcrvSTETH - stETH Chainlink oracle
- yvcrvIB - IronBank Curve Pool Virtual Price
- yvcrvCVXETH - CVXETH Curve Pool Virtual Price
- yvcrv3crypto - tricrypto2 Curve Pool Virtual Price
The likelihood of smart contract-risks increases with the number of strategies and protocols involved. The y-vaults under consideration interact with numerous strategies and protocols.
It’s the RWG job to not underplay risks associated with providing liquidity on Yearn or DeFi in general. Still, it’s worth noting that most of the protocols studied during our assessment have existed for a while meaning they have likely experienced numerous exploit attempts and are time tested.
For the purpose of our assessment, we were required to come up with a scoring system for the individual y-vaults that take into account both their deployed strategies and the protocols interacted with. Every strategy deployed by the y-Vaults was assessed and categorized based on their complexity. Protocols these strategies interacted with were also assessed per the Safety Score (SS), a metric developed by the RWG which scores protocols using variables developed to account for specific areas of risk. The RWG was satisfied with the findings.
The Yearn Team has thoroughly reviewed their smart contracts, and have also pursued external auditors to identify potential vulnerabilities in the platform prior to launch.
Yearn-vaults have been audited by multiple independent third-party firms: MixBytes, ChainSecurity, and Trail of Bits.
Per Inverse’s RWG assessment, Yearn Finance is a healthy protocol and integrations and onboardings of Yearn products should be sought out by our Growth team.
A detailed writeup of our assessment can be found here:
Other Changes to Anchor
- Raise the collateral factor for DOLA deposits used as borrowing collateral from the current 70% to a more industry-standard 85%.
- Update Anchor comptroller to incorporate a new feature that allows borrowing against specific collaterals to be temporarily paused without needing to lower the collateral factor, meaning current borrowers do not get liquidated. This will enable the DAO to pause borrows against assets affected by the April 2nd price manipulation incident, protecting the DAO from accruing additional bad DOLA debt if there is negative price action on ETH, WBTC and YFI.
Add yvUSDT, yvUSDC, yvDAI, yvWETH, yvYFI, yvcrvDOLA, yvcrvSTETH, yvcrvIB, yvcrvCVXETH, yvcrv3crypto as collateral assets on Anchor.
Set INV rewards of 50 INV per month for three months for each of yvUSDT, yvUSDC, yvDAI, yvWETH, yvYFI, yvcrvDOLA, yvcrvSTETH, yvcrvIB, yvcrvCVXETH, yvcrv3crypto.
Raise DOLA collateral factor to 85%
Update Anchor comptroller to incorporate a new feature that allows borrowing against specific collaterals to be temporarily paused without needing to lower the collateral factor, meaning current borrowers do not get liquidated. This will enable the DAO to pause borrows against assets affected by the April 2nd price manipulation incident, protecting the DAO from accruing additional bad DOLA debt if there is negative price action on ETH, WBTC and YFI.
Original Google Doc proposal listed on Discord here: Let’s Add New Anchor Collateral Assets v0.2 - Google Docs