[Signal Request] Adjust YFI-A DC-IAM-line

Overview

Yearn Protocol is about to launch a new Strategy which will mint DAI from YFI-A. It is not connected yet, but it is going to mint up to 33 MM DAI using this vault. Sourcecode can be found here

image

Currently we have set the line for YFI-A to 45MM while as of now 27 MM DAI are minted from YFI-A. The 33 MM expected DAI will not be fitting into the current maximum debt ceiling.

The new strategy does work well even if the DC is hit, but I guess we don’t want to miss on this opportunity for too long

Changing the line for YFI-A

Pros:

  • more fees collected
  • more DAI in circulation

Cons:

  • we might need to increase the SF for YFI-A at some point

Please vote for all options you would support in an onchain poll

  • 45 MM (no change)
  • 75 MM (+30 MM)
  • 100 MM (+55 MM)
  • 150 MM (+105 MM)
  • Abstain

0 voters

Next Steps

The Poll will run until 2021-03-25T14:00:00Z; its outcome will either result in a on-chain-poll assuming the outcome of the poll deems it necessary or its intermediate results are going to be taken to another initiative - another signal, onchain-poll or urgency executive.

4 Likes

This is a tough one. If you provided an option for 55MM I would have polled for such–but since not–I’ll stay close with “No Change.”

Reason: I was just reading the Gauntlet Risk Primer for AAVE and came across this statement:

when analyzing just accounts holding YFI, there was substantial insolvency risk at extremely high volatility settings. This guided suggestions in lowering the liquidation threshold for YFI in Aave V2

Maybe I’m overthinking it and Maker YFI Vaults are Risk-Averse compared to AAVE.

1 Like

since we are running on DC-IAM I think we should get used to having a bit more headroom so we avoid hitting the ceiling so often.

I am pretty confident about the native integration of yearn since they rebalance automatically and keep their desired CR

2 Likes

Great work on all these signal requests schuppi.

Would it be possible to include a ‘Defer to risk’ option as a matter of course for rate and DC polls?

1 Like

Risk usually chimes into these threads to add some colour for voters to use. I’m sure @Primoz will add his 2 cents at some point.

1 Like
  • Based on the latest measured YFI trading volume, we can increase the DC; we can go up to ~100m dai at which RP would be at 13.7% (RP is based on conservative CR distribution in the vault type, as current one despite being much healthier can change at any time) - we can increase the ceiling in steps instead of one large increase, which would also allow us to increase the rates slower and basically offer lower rates which are more accurate.
  • The average collateralization ratio of YFI-A vaults is at a healthy 466%, largely dependent on the dominant vault #20775, operated by Yearn which is at 520% CR. Other YFI-A vaults are mostly collateralized at above ~240% CR.
  • The mentioned Ychad vault represents 78% of dai minted from YFI-A and even higher collateral share since its CR is higher than others. The high dominance by a singular account in the vault type is not specific to YFI-A.
  • There is currently about ~10% of all YFI deposited in Maker, after the increase of the DC and if we assume new dai will be minted at average CR, we can expect to potentially be exposed to 20-25% of YFI supply; given the very high Ychad individual CR and also average vault type CR, we are not concerned by this metric.
4 Likes

Imo this report is outdated, they also say that market conditions changed substentialy in January in second to last paragraph. In Aave v1 YFI Liquidation Threshold (condition for position to be liquidated) was set to 65% (~154% LR in Maker terms), in v2 it was lowered to 55% (~181%).

Our initial parameters were set at 175%, and therefore we do not have low CR vaults in our system, which is not the case for Aave.

1 Like

thanks everybody for participating in this Signal Request - the corresponding on-chain poll is live, please vote until 2021-04-01T16:00:00Z

3 Likes

DC reached :confused:

3 Likes

Final Update: the exec containing the raise got scheduled - we are going to have a 75 MM line for YFI-A on 2021-04-11T00:00:00Z

2 Likes

16% of total YFI in circulation locked in MakerDao would it not increases systemic risk.

We also have 11% of all wbtc in the vaults…

1 Like

Well, it’s debt to marketcap metric that matters, or potentially also debt * LR to marketcap and this ratio is lower. YFI vaults are very well colateralized, also on-chain slippage is one of the lowest. So collateral to marketcap metric could show you Maker holds too much YFI, but in reality it tells you Maker is very well collateralized and liquidations risks are lower.

4 Likes

the marketcap is around 1.6B and for less than 100M of debt we can sell 16% of YFI.
Which is actually very good.

3 Likes

This topic was automatically closed 30 days after the last reply. New replies are no longer allowed.