50% funds to Yearn vaults

It’s very sad to see all these funds sitting idle in Swerve contracts.

It would be a really good idea to put 50% of the stablecoins to Yearn’s vaults which are currently earning double digit annualised yields.

That way there will be enough liquidity to fund swaps and swaps of higher value go through swapping through yToken contracts.

Also, a buffer can be maintained so that if eg. if let’s say 50% Dai is put in yDai contracts but after swaps, if non-yearn-Dai portion falls below 25%, then yDai are dynamically redeemed for Dai to bring the proportion back to 50%.

50% or any other % can be decided by Swerve governance.

Thoughts?

1 Like

I like this idea, it’s definitely in the interest of Swerve community to come up with a use for dormant assets considering our volume/TVL ratios at present.

2 Likes

Can this be implemented? :slight_smile:

The idea is right, but this implementation wouldn’t work. yEarn has a 0.5% withdrawal fee so every time Swerve needed to pull from the vaults it would have to pay that. That does not make sense economically if we are talking about an APY of 50%. LPs make 0.137%/day at that rate and it would be almost 4 days worth of yield.

But utilizing idle assets and increasing the utilization rate to 80%+ would be an innovation. No-fee money markets would be a good idea, such as Aave, Compound, or Cream. The yield would not be big but it’s where these big stablecoin pools are heading so we should at least be first and start with some thing basic. Then we can utilize assets in more complex ways.

I would like to see a version of this idea implemented. Maybe not now as we focus on core proposals, but certainly in the medium term future.

1 Like