Proposal 12: Yearn Ecosystem Token Index (YETI)

Summary
Launch an index in the PowerPool ecosystem consisting of Yearn ecosystem projects: YFI, SUSHI, CREAM, AKRO, COVER, KP3R, CVP, PICKLE. The proposed weights of tokens will be: YFI 35%, SUSHI 17%, other tokens 8% each. The name of the new index is proposed to be “Yearn Ecosystem Token Index", with the ticker “YETI”.

The index will serve two purposes. For investors it would create a passive vehicle for broad exposure to the Yearn ecosystem - like an index on the Yearn conglomerate of protocols. For Yearn it would be a way of formalizing its recent mergers, aligning the treasuries and governance systems of the protocols in its ecosystem.

The index will allow Defi users to invest into the Yearn ecosystem using a single token, receive cash flows from Vault strategies applied to composite tokens, and vote on proposals in the Yearn ecosystem governance using PowerPool’s meta-governance approach.

We propose supporting the index launch with the following CVP liquidity mining program: 250k CVP for 1st month with 10 weeks vesting and YETI/ETH Balancer 80-20 pair with 200k CVP for 1st month with 10 weeks vesting. Re-define LM incentives at the end of the first month via the additional follow-up proposal.

Motivation
PowerPool’s team recently launched the first ETF-like Defi index - PowerIndex with 8 Defi governance tokens. It attracted almost $6m TVL in less than 24hrs of operation, and offers investors both passive investment exposure to a basket of assets in a single token, and meta-governance and Vault strategies for composite tokens. In short it’s both passive investment exposure and passive participation exposure (let PowerPool make productive use of your tokens).

The Yearn ecosystem recently expanded through a series of mergers and partnerships, and now contains 8 tokens: YFI, SUSHI, CREAM, AKRO, COVER, KP3R, CVP, PICKLE. They all now share developer resources and community. However despite development and community resources being merged, currently governance among these protocols remains separate.

We believe there is a significant opportunity to create one simple instrument to invest in this ecosystem as a whole, while also more formally aligning incentives among Yearn ecosystem protocols through coordinated meta-governance.

The meta-governance layer implemented in PowerPool indexes offers a governance end-point for all index holders (YETI holders), allowing them to participate in Yearn ecosystem governance via a single interface. Not only will this align governance of the underlying protocols, but it will also help address some voter apathy issues apparent in some of the smaller projects within Yearn’s ecosystem.*

Referring to the Yearn ecosystem we are talking about governance in protocols besides YFI, SUSHI, and CVP, which have pretty active governance (these projects don’t experience voter apathy issues as we can see checking the community engagement in the latest votings).

Specification
Launch Yearn Ecosystem PowerIndex with 8 tokens: YFI, SUSHI, CREAM, AKRO, COVER, KP3R, CVP, PICKLE. The weights of tokens: YFI 35%, SUSHI 17% other tokens 8%. Ticker of the new index is proposed to be defined as YETI. Note, that token weights and token set can be changed in the future via community proposals.

Allocate CVP rewards for the first month of index operation: 250k CVP for 1st month with 10 weeks vesting and YETI/ETH Balancer 80-20 pair with 200k CVP for 1st month with 10 weeks vesting. Re-define LM incentives at the end of the first month via the additional follow-up proposal.

Special thanks to the PowerPool team and Delphi Digital for collaborating on this proposal.

9 Likes

I wouldn’t mind, as long as it’s a totally different index from PIPT and it’s communicated that these are extremely risky, possibly even removing YFI.

Does anyone have an analysis on the correlations of these assets as well? I think adding ETH and removing YFI would be extremely helpful since it feels like there’s cycles of accumulation and consolidation between DeFi and hard ETH/BTC. Just a thought.

I like the attitude itself and yeah we need to move quickly and probably for this reason would vote FOR this, but have some concerns related to

  1. composition of the index (e.g what are cross-correlations, or is this story just based on Andre’s name, if so what if he does two more M&As with more attractive assets over the course of next 3 days…).
  2. how the weights have been set? please provide the calcs (if you have 35% and 17% for YFI and Sushi you probably have the calcs off the shelf)

P.S. Yeti is a nice naming

The idea is really great at the first glimpse on it. But…
Imagine the situation:
Andre has just announced new project in Yearn ecosystem. Let’s call it #Lemon. It starts to grow very high in its price. Then there is a new proposal to add new token #LMN in YETI index. While It’s being accepted there are three problems I see:

  1. Community will have to redefine shares of each token in the index which will lead to time lag.

  2. Liquidity. Will there be enough liquidity on LMN-ETH pair on Uniswap to cover all demand coming from rebalancing and buying that token which can lead to pump and dump schemes?

  3. Possibility of failure. We know that projects from the first PIPT index are well recommended ones which have been working for years in DeFi space. What will there be if a new YETI token would just exit scammed.

How can we solve all of this to make YETI go live? Happy to discuss it.

3 Likes

Thank you for great proposal. Really love naming.

Agree with @Dynch about questionable composition of index.

I think it’s more reasonable to make 2 separate indexes due large difference in market caps, active users, etc.

  1. First index composition - giants. Yfi, Sushi, Cream. Products that here for a while, have big market caps, etc
    This index is less risky.

  2. Second - smaller partners. Cvp, Acro, Cover, K3PR and Pickle.
    Higher risk, smaller market caps, etc.

I think due to proposed wights (YFI+SUSHI=52% of total composition) it’s either way giants who will rule the price of index, but with higher risks.
Just don’t feel right about it.

Also every time adding new YFI products in YETI sounds like pain in the ass.
Remember that K3PR has 3 failed iterations (famous Andre’s test in prod) before fully launched.
EMN was exploited in test in prod phase and we still didn’t hear anything about it.

What if community add something like this and after week or two need to erase it? My point is - it would be better to add fresh projects to more risky composition, while main composition stays permanent or close to permanent.

Also would love to read explanations about wights in YETI.

  1. Why this wights?

  2. What do you think about changes in composition? How wights rebalance?
    YFI - fast-growing ecosystem. Definitely there will be plenty of projects in nearest future.

4 Likes

Exciting … YETI as in INDEX COOP :))) amazing concept ! I support.

Can you please clarify this section? Confused 250K CVP Rewards in 1st month goes to whom? It also says 80-20 Balancer Pool gets 200K CVP. I also think a Uniswap Pool should be available to help adoption.

Allocate CVP rewards for the first month of index operation: 250k CVP for 1st month with 10 weeks vesting and yPIPT/ETH Balancer 80-20 pair with 200k CVP for 1st month with 10 weeks vesting. Re-define LM incentives at the end of the first month via the additional follow-up proposal.

Otherwise, I like your Proposal…well written…

1 Like

Damn I love the name) Just awesome)
But I think that there is no way to launch an index of YFI ecosystem till the moment this ecosystem becomes stable. Remember that Andre dont ask community about projects he wants to merge with: there are no proposals, no formal structure etc. So either this index has to be very flexible and change its composition couple times per week, either launched later when YFI will devour last project needed for Andre`s great plan.

3 Likes

Well, on second thought, due to a number of reasons I would vote FOR and prioritize quick delivery over the best index design

Despite I think it would be better to focus on more fundamental work with new indexes composition and launch (to demostrate a clear strategic vision of what and why we are doing to the market), I believe there is a request from the DeFi community for such products as YETI. and there is nothing bad if we deliver it.

Please just specify how you guys selected the weights for index composites

Hi guys, I appreciate the proposal and the activity of this great project, however I am a bit worried about some of the project (coins) included in the index. Such project as sushi, cream, pickle and other are often perceived as vampire clones of Uniswap or YFI and could be also seen as (nearly) scam project with high risk. I am not sure, if it is a good idea to include those in the YETI index and incorporated in such a great project as power index seems to be, and if so, maybe it should be explicitly mentioned that this index is a risky one. I would be much happier, if there would be other serious defi projects included instead. I would also like to see some comments or explanation on this from powerpool devs or active community members. Thanks in advance.

1 Like

While i am fully agree with your comments, I believe that there is a request from the market for such a product.

Yes, the Mcaps, and ADTVs and other metrics differ a lot, but this is like having an ETF on Tencent supperapp business
Yes you have (i) WeChat, (ii) ticket booking service inside, (iii) taxi and (iiii) tinder-like service (?) inside - very different business models, but you are betting on how this works as an ecosystem

So I think we should give it a chance and then see how we can amend the index.

2 Likes

Reasonable, but Sushi is not a scam anymore. please check out its metrics (FDV/MCap, volumes, FDV/TVL) they are very strong.

Yes the background is sketchy - noone argues, but damn this is crypto scpace:)

Pretty much the same can be said about CREAM’s metrics.

PIckle - I dont like, but it will probably have a nice synergy effect with YFI ecosystem

1 Like

Fair point.

But still curious about updates in composition and how it will work.

1 Like

For the index weightings we went with a modified market cap weighted index using the two largest projects (YFI and SUSHI) as the anchor assets and then equal weighting the rest. The goal was to ensure 1) that the index has the potential has the potential to attract enough liquidity (hence the larger allocations for YFI and SUSHI) 2) the index still provides meaningful exposure to the smaller tokens in the Yearn ecosystem (rather than just being extremely lopsided with YFI and SUSHI).

As far as weighs rebalancing. That will work similarly to the existing Power Index. You can read more here: https://medium.com/powerpool/dynamic-weights-changing-model-for-powerindex-the-amm-pool-of-8-tokens-6213f24f56f1

Typo in the original post, thanks for catching that. Should be YETI/ETH Balancer 80-20 pair. Ideally want to keep liquidity consolidated into one pool rather than fragmented across Balancer and Uniswap

Thanks mate, but this is not the answer we expected:)

  1. Please advise what is “modified market cap”?
  2. Maybe a link please so we could cross check what is the math behind it?

This sounds good. You got my Vote.
YETI

Hi Sergy, it will be really great if you can join us on telegram t.me/yearnecosystemtokenindex lets deliberate YETI and form a functional use case for YETI.

Thanks, waiting for you on telegram :pray:t2:

1 Like

There’s some degree of acceptance through @iearnfinance retweet of YETI proposal.

I believe this is great proposal.
Everyone should join telegram channel we will work on Fundamentals like Sergey said and working market structures till then community should keep pondering on YETI proposal

Everyone, below is my address. Could you delegate some votes? I need 10k to issue a proposal and currently have ~9,000 votes vested. Thank you:

0x7111cBd16AE9ECc1910BB478c73cD98818217734