[Campaigning] Vote YES on Investigate Implementation of a YFI-C Vault Type with a Higher Liquidation Ratio - June 7, 2021

For reasons outlined here and here, I urge MKR holders to vote YES to a simple greenlighting of a YFI ilk with higher liquidation ratio.

The existing YFI ilk — and Yearn in particular — have proven both profitable and less likely to experience liquidations than most other ilks. Allowing for an ilk that serves even more conservative users will steady both our profits and lower our risk. Note that ~65% of stability fee revenue is derived from ETH-A alone, and diversification of both collateral and user risk profile is essential for Maker to grow.

On a more strategic note, these large users — of which Yearn is not in the top 5 — provide most of our revenue and most of our business. Their needs are our needs, as they provide steady revenue based on an underlying business rather than “degen” market speculation. This makes the entire crypto ecosystem more stable, while the DAI they mint pushes our product in front of more users.

These customers want to do business with us, have deep needs we can serve, advertise our product by their very usage of it, and experience tells us they are far less likely to be liquidated than smaller vault users because of sophisticated management techniques and more skin in the game.

If you have not already done so, join me in voting YES to simply explore how to offer this product to our waiting customers.

This is the way forward for Maker’s financial empire to both grow profits and grow the user base we serve.

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I support this motion!

I like democracy and campaigns whatever they are, here in venezuela everything is almost a show :confused:

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I agree without a doubt YFI for their tokeconomics and community deserve a good deal.

I see that the current poll is leaning towards the no outcome. Without starting another thread, I think it’s worth discussing what the arguments against this implementation might be.

Let’s list a few here.

  1. In the event of a market crash, there might insufficient YFI liquidity to sell the collateral leading to losses on our end. This was discussed in the signal request thread and reading it again, it doesn’t appear to have been resolved fully.
  2. Yearn’s leverage on its own token was also raised in the same thread. In other words, when YFI crashes, it might crash too fast for us to liquidate vaults.
  3. Many members of the @Risk-Core-Unit were against the signal request.

While I cannot claim I know the issues deeply enough to comment further, there are quite a few red flags here. I’m not sure if this is as cut and dried as your post makes it out to be @PaperImperium.

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One of the main benefits would have been to move yfi users across from a 175% to an higher CF and allows more room to increase parameters. But as far as risk is comfortable to raise the DC with a 175% (as they have already done) that is fine.

I wouldn’t see it as a negative outcome. The DC has been raise and the rate has been lowered on the normal vault.

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All good points. This is simply a green light poll, however. I’m certain we can make the actual numbers on size, rate, and LR such that we can offer this large customer something

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Just want to mention that Parameter Proposal Group has proposed to increase YFI-A Debt Ceiling from 90m to 130m and lower rate from 5.5% to 4.0%, specifically because of YFI-A is already more than 90% utilized by Yearn team and yearn vaults, and both vaults have been historically very healthy in terms of collateralization and unwinding process.

Put it simply, YFI-A is mostly utilized by Yearn alone and their risk parameters are being relaxed because of that. Which means that YFI-A vault is essentially becoming what Maker wanted to offer through YFI-C.

Also YFI-C may force us to limit DC on YFI-A and upcoming YFI-ETH Sushi LP, because there is a limit on aggregate exposure through YFI leverage. Market cap of YFI is $1.4bn and I’d say maximum debt exposure through YFI is 10-15% of market cap to keep it safe.

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