Summary
As part of a large collection of ideas, user @Tree mentioned the following:
I wanted to elaborate on this further with a proposal on how we could earn low-risk, steady income from the tokens stacked in our index pools.
Motivation
Earning passive income is an essential part of DeFi. I believe it is a “must-have” for a project which accumulates large amounts of value and another great incentive for people to invest in our indices.
We don’t want to be the project which saves a bit of gas fees while missing out on a two-digit APY.
Implementation
A nice way of generating passive income would be to leverage the capabilities of yaxis.io. YAX is a meta yield farming protocol which automatically chooses the most profitable yielding strategies for their vaults (pools). By distributing assets into multiple farming protocols, they minimize risk. These are two fundamentals that index users would welcome.
It gets better: Their metavault currently holds a combination of stablecoins. I know we have been chatting about a stablecoin index in Discord. Imagine how simple it would be: Our pool holds a combination of USDT, DAI, USDC, 3CRV which fits 1:1 into their vault. BAM here is your 33% low-risk APY.
Does it get even better? It does. They are going to implement a bunch of other metavaults in the near future. Whenever the assets in YAX and Index pools match, it should be very simple to make the connection.
TDLR: YAX metavaults could be an easy to implement, low-risk yield generation approach which guarantees most profitable farming on the tokens in our pools at all times.
Details and Limitations
- The 33% APY currently hold for the stablecoin metavault only. One can expect much higher yield from future metavaults due to the more-profitable tokens they will hold and the optimized farming strategies.
- we cannot give away 100% of pool assets in order to remain flexible to rebalancing and withdraw requests.
- GAS fees would be payed from a tiny % of farming profit.
- what to do if an asset would need to be swapped out of an index but is required in the YAX metavault we are staking in? We could have pools with a fixed choice of assets (for a limited time) I guess, but this issue needs to be further discussed.
- stacking in metavaults owns $YAX rewards in addition to token fees. $YAX could either be swapped to the assets of the index or directly distributed to the index community.
- alternatively, we could implement meta-governance to YAX the same way we do for UNI, COMP etc.
