Summary
Allocate 150k CVP Boost budget to bootstrapping YLA/USDC Sushiswap pair based on 0.025 CVP min / 0.50 CVP max stake for 1Sushi LP token = 1YLA + 1 USDC
Rationale
Guys, I will be brief here. It seems that the launch of a brand new product (YLA = Yearn Lazy APE) has to be supported by the CVP Boost program. As a result of Proposal 22 approval, we have a 150k CVP Boost budget that can be used for bootstrapping the launch of our products.
YLA is not a generic index, it is a complex financial product aimed at diversifying yield from Yearn
v1 stablecoins Vaults. It allows getting more from funds that are already in Vaults. The Total Addressable Market for this product is ~$200M. It is $200m that generates 15-25% APY and it is comfortable for them (taking into account low risks of volatility).
If YLA will offer them +20% APY or more it will be a huge incentive to deposit Vault LP tokens into YLA. True competitive advantage.
So, I propose to use the already approved 150k CVP boost on YLA in order to bootstrap this product. I think that since (1) this already was approved by the community (2) we don’t have any other products to apply this boost we can launch it even tomorrow, get $1m TVL in YLA, open single-side liquidity provision, and finally boost the product.
So, we need to create YLA-USDC liquidity pair at Sushi and enable CVP boost for this pair based on numbers presented above (150k CVP total reward program, from 0.025 to 0.50 CVP per LP token - 1 YLA + 1 USDC)
I want to point out that this program should be temporary since I prefer the Curve YLA-USDC pair to be the main source of YLA secondary market liquidity in the future. As I know, the team discusses it.
Mixed feelings about this since I was a fan of the original proposal of yla that said no cvp farming. But I see that cvp mining program can be useful here too so sure, i am on board with it.
However instead of 150k for yla, I say something like 80k.
Reasons: 1. Because of seperate nft index that could launch within a month. The other rest of 150k could be for nft index if it launches this month.
Also I think that from past experience of other 3 indexes, after the first few days of launch there are much fewer deposits coming. Like i assume after a week or so rate of new deposits dies of relatively quickly but rewards continue to be unnecessarily high even though no newcomers. So 150k seems like from past indexes not justified since we see big increase for a week or so from launch only.
So I think that the rewards could be for a month? (If we see continuous stream of deposits throughout the first 25 days say, then sure why not keep it going but if not, sensibly remove rewards after a month also since this is supposed to be just a bootstrap)…if we remove it after a month, move cvp rewards to xCVP even??? so people dont lose earning
Also another note is I think that this cvp mining program for yla should not be implemented until atleast single side liquidity is enabled. Team says they will enable it when tvl hits 1 million. Not sure how that will happen unless yearn gets us there.
If we enable cvp mining right now for yla, then all the rewards will go to the few people that deposited already. Since there is like 3 people that used multi asset already but no one else in the coommunity can have the ability to deposit using multi asset coz it is a big obstacle, that means the rewards go to like 3 people so then what’s the point.
It seems to me that the biggest problem with YLA is the lack of a single asset option for entering the index. Minting new YLA tokens is thus hard - a potential minter needs to own (or acquire) 5 separate tokens to enter the index. Acquiring the composite tokens and then minting entails huge gas fees. Even if somebody already owns the 5 tokens there is little incentive to enter the index because the additional gains would have to outweigh the gas fees.
Improved liquidity for YLA/USDC doesn’t solve the minting problem.
I think we need the single asset option first before considering further boost rewards. Against this proposal, for now.
I think this is a lesson for all future indices we launch.
btw 150k CVP boost per month on YLA is 176% APY for $1m, and 17.6% APY for $10m what is pretty attractive for stablecoin diversified product with 15-20% APY itself.
But, to get these “high” 17.6% APY at $10m LPs should lock at least 0.025 CVP per sushi LP (1 YLA + 1 USDC), so if for example, $10m YLA will be on Sushi, it will be 10m LP tokens or 250k CVP locked (At least, it can be 500k, 1m, etc)
so this 150k CVP will require to lock the much bigger amount of CVP
What if we enabled the boost now (before TVL hits $1M and before single-sided deposits) but scaled it so that the boost would grow along with TVL and then only be the 150K CVP amount when we got to a target TVL ($1M for example). For example, if TVL is $250K, the boost would only be the equivalent of 37.5K CVP, at $500K boost would go to 75K CVP, etc. This way we incentivize liquidity without giving outsized rewards to the few who are in today. The boost would still be great for a stablecoin pool but we wouldn’t be “wasting.” The problem with waiting till $1M, as others have pointed out is that there is such a high hurdle right now for people to join the index.
The problem is pretty much no one can actually join the index regardless coz multi asset is such a big barrier no one will join, they will stick to the index they are currently in now.
Offering like u say small cvp amounts right now for like the 3 people that have put liquidity (besides yearn team) is pointless. Only they are being rewarded while no one else can join seems to defeat the purpose of bootstrapping when no one else can join easily.
Why would people want to go into all the trouble of doing multi asset when they can join assy right now and get rewards easier.
Either yearn team will get us to 1 million liquidity right now, or powerpool team allows single side right now. Coz we are wasting time and competitiveness with this index it will never reach 1 million otherwise.
Yeap I was responding to @JaLa’s comment. We need yearn to get us to 1 million or PowerPool enable single side right now. Or we could be waiting an eternity.
I think that the cvp boost program for YLA should be 75k since we have at least one more index launching this month (NFT) index. If we use it all on YLA we won’t have anything for the boost program of nft index.
And I think that having too large of cvp mining programs just makes existing community members switch from their current index to the new index which harms other indexes for the wrong reasons. Giving the illusion of powerpool gaining more tvl.
And in my view large cvp mining programs don’t seem to bring enough new investors anyway to justify the inflation?
That’s true the apy has dropped now I agree its wise to add cvp to increase tvl hopefully. I originally said 75k for yla (other 75k to nft index if they decide its needed).
Entire 150k for yla seems too much for one month. 75k cvp for the first month, in addition to existing sushi apy and yearn apy should spur some more tvl. Are they also earning swap fees on top of this?
But i’m not sure if tvl will increase proportionally to increasing the cvp rewards. Will we gain sufficiently necessary new tvl for releasing 150k cvp vs if we release 75k cvp. Perhaps.