The Yearn team hosted an AMA on Feb. 3, 2021 with two-time special guest, Tascha, from Alpha Finance Lab. Questions were asked in the yearn.finance Discord.
virtuosity, AMA host:
Tascha, thank you for joining us, please take the floor and tell us about the new YFI/ETH pool and the upcoming ibYFI product for YFI holders.
Alpha Homora V1 has already supported leveraged ETH/YFI pool on Uniswap and ETH/YFI on SushiSwap farming SUSHI.
We’re going to migrate these pools to Alpha Homora v2. When these pools are on Alpha Homora V2, there are more things you can do with it. Let me clarify below:
1. (same as v1) users can supply any of the 2 tokens in any proportion (e.g. ETH and/or YFI in this case)
2. Yield farmers will be able to take leverage on ETH and/or YFI. This means you can decide which asset(s) among the 2 you want to borrow and in what proportion
3. Farmed tokens (e.g. SUSHI) will not be reinvested, but claimable on Alpha Homora V2 frontend.
4. Lenders will be able to lend YFI and get ibYFIv2! ibYFIv2 is an interest-bearing token received upon lending YFI on Alpha Homora v2.
This is Alpha Homora v2’s site: https://homora-v2.alphafinance.io/
Do you have any estimates on the amount of interest YFI holders may receive? I know it’s based on supply and demand, but any estimates you can share?
Tascha: Hmm if we assume a similar borrow interest rate (and lean a bit towards safer side) than ETH, then at around 80% utilization rate (which is where we think it will go), then the APY should be around 8–9%.
Apart from the awesome ETH/YFI pools that will migrate soon (will make sure to update Yearn community here when the pools have been migrated), currently there are 4 pools on Alpha Homora v2 now
1. ETH/SUSHI (farming SUSHI, can take leverage on ETH)
2. ETH/UNI (no farming, can take leverage on ETH)
3. USDC/PERP on Balancer (farming PERP, can take leverage on USDC)
4. Curve’s 3pool (USDT, USDC, DAI) (farming CRV, can take leverage on any of the 3 stablecoins, so USDT, USDC, and or DAI!)
Is Alpha Homora v2 using Iron Bank?
Tascha: Yes the assets lent on Alpha Homora v2 are then lent on Cream V2 (the Iron Bank). Leveraged users on Alpha Homora v2 are borrowing from the Iron Bank.
“Farmed tokens (e.g. SUSHI) will not be reinvested, but claimable on Alpha Homora V2 frontend.” Instead of doing this, does it make sense to use the farmed tokens to buy back the original asset deposited in the pool?
Tascha: We did that in V1, but now that Alpha Homora has got pretty big, this impact can be huge (lots of sell pressure) for other tokens, and we don’t want that. Want to help the other partners and communities grow as we grow as well.
Do you have any boost to farm CRV for users?
Tascha: The APY comes from 3 parts:
1. Yield farming APY (from CRV) + you would get more if you were to open with more than 1x leveraged position
2. Trading fees + would get more with more than 1x leveraged position
3. ALPHA liquidity mining incentives (currently distributing to those who open more than 1x leveraged positions)
Any plans on more usage for the ALPHA token?
Tascha: Yes, ALPHA tokenomics will be added on Alpha Homora V2 and more Alpha products as we continue to launch them. Can’t share much details yet, but on a high level, there will be ALPHA tokenomics baked in on both lenders and yield farmers side — making sure both types of users benefit from the tokenomics.
Do you view Yearn more as a competitor or collaborator?
Tascha: Definitely collaborator! we are working/integrating with a lot of the Yearn ecosystem already (e.g. SushiSwap and Cream V2 (Iron Bank)) + working closely with some in the Yearn community for strategies that would benefit both Yearn vaults and Alpha Homora v2.
What’s the collaboration like between protocols, are there weekly/monthly syncs? Do you share dev resources?
Tascha: No set schedule, but more of making sure what we do benefit each other. No dev sharing at the moment.
Can we have a dashboard (by cream or alpha or yearn) indicating how much has been borrowed via iron bank?
Tascha: Not sure if Cream v2 has a dashboard yet or not, but on Alpha Homora v2 (Earn page), we will add Total Supply and Total Borrow for the assets supported on Alpha Homora V2.
Can you explain liquidators role and process in V2? Do they require to cover overdrafts of borrowers? Ty
Tascha: Liquidators will choose which asset they want to repay → pay that asset → get LP tokens back. Liquidators get roughly 5% of the position value.
How much of the lending / borrowing is from Iron Bank?
Tascha: All the borrowing on Alpha Homora v2 is from Iron Bank. All the lending on Alpha Homora v2 also goes to Iron Bank. However, Iron Bank may have additional lending / borrowing activities through Yearn, as Yearn is also another contract that can use Iron Bank.
I’ve read that Andre has taken Alpha Homora as inspiration for the Yearn IL solution (sil v2?) — could you share more light on that? Where exactly he got this inspiration from and when Alpha Finance will launch their IL hedge solution and how does it look like on a high level?
Tascha: Good catch. Would probably say it’s the Minimize Trading feature on Alpha Homora, which is similar to what Andre talks about as a part of IL solution (sil).
The IL hedge solution that Alpha is working on is in an early development process. Can’t share much details on the product timeline yet. The solution is quite novel in my opinion, so i’m excited to see how the DeFi market reacts as well. Not similar to other IL protection solutions in the market now.
In general, how do you view/mitigate the risk of DeFi legos? That is, if for example, an exploit were to happen on pool collateral, it would cause a large chain of liquidations and/or depegging.
Tascha: We mitigate that by doing several things:
1. only work with liquidity pools to not complicate the contract/strategies too much. E.g. we won’t allocate some portion to other types of staking etc.
Alpha Homora v2 uses the concept of collateral credit and borrowing credit to determine how much leverage a user can get given the asset(s) supplied as collateral and the asset(s) borrowed.
Note: Collateral credit and borrowing credit in Alpha Homora V2 are not the same concept as collateral value and borrowing value used in other lending protocols.
Collateral credit: Each asset has its own collateral credit value. A collateral credit value determines how much credit is gained from collateralizing an asset.
Borrowing credit: Each asset also has its own borrowing credit value. A borrowing credit value determines how much credit is consumed from borrowing an asset.
The collateral credit and borrowing credit of an asset depend on the volatility of the asset price. If an asset is volatile, the collateral credit will be low and the borrowing credit will be high. For instance, if a user supply ETH in step 1 to borrow DAI in step 2, he would be able to borrow more DAI than if he were to otherwise supply ETH in step 1 to borrow a less stable asset in step 2.
With this mechanism, Alpha Homora v2 can set parameters according to the volatility of each asset and set different buffer parameters for different assets to ensure the security of the protocol.
3. Only support pools with assets that are safe (e.g. no rebasing, have high liquidity in liquidity pools, etc.)
Do you plan on adding additional farms?
Tascha: Yes more farms will be added + migrated to v1, please hang tight!
virtuosity, AMA host:
Thank you Tascha for speaking about these new YFI focused products, and for holders you will be able to deposit idle YFI into their v2 app and earn interest on your YFI, that is supplied to Yearn’s ecosystem partner C.R.E.A.M in their Iron Bank. Now we are going to transition to the Yearn focused AMA, there’s been a lot of changes in the ecosystem so we are happy to discuss any of your questions.
Could you please make clearer the APY and perhaps include the APY provided by CRV as liquidity provider?
dudesahn: Yes, improvements on APY calculations are something we’re working on (today, actually!) and displaying them more clearly are a focus for v2.1 of the website.
Do you expect DAI vault v2 to have better performance than v1?
dudesahn: V2 (leveraged Comp strat) has great yield (~20%), but as CRV price goes up v1 DAI will also have good yield as well.
Any timeline for WETH v2 and will the WETH v1 move to the same fee structure as v2 vaults?
virtuosity: The fee structure for the v1 vaults are planned to remain the same, but for the WETH v1 vault withdrawals fees have been temporarily waived until further notice. We do recommend users deposit into our v2 vaults, however, as they are more advanced.
What happened to the Yearn Academy (smart contracts audit…)?
virtuosity: Yearn Academy is still planned to open, but no additional details to share about its progress at the moment.
Is Yearn working on any layer 2 implementations?
dudesahn: L2 is complicated for someone like Yearn — it doesn’t offer us a huge benefit, but more importantly since we rely on so many different protocols for our vaults moving to one L2 would be problematic.
When will there be governance staking?
virtuosity: A recent YIP passed that is transitioning governance staking rewards back towards Yearn Treasury in order to grow and expand the ecosystem and align long-term incentives among developers and partners.
How will Pickle be used in the Yearn ecosystem?
dudesahn: While I don’t think this is completely finalized, I do know that Pickle’s DILL token (similar to veCRV for CRV) will be integrated soon and allow PICKLE emissions on top of Yearn vaults (or at least that was discussed in the past).
How does Yearn collaborate with other protocols in it’s ecosystem?
virtuosity: Yearn developers are in close contact with developers and contributors of all ecosystem partners and the shared vision of all partners is to expand the Yearn ecosystem, make it more robust, more collaborative, and improve composability in DeFi.
dudesahn: We have a super-secret underground lair where andre reveals his newest ideas to us.
Still confused about the relationship between the different protocols, is there any full explanation?
dudesahn: Bringing us into one ecosystem formalizes the collaboration we were already doing, but also reduces redundant work (yearn doesn’t need to worry about swaps, and focuses our swaps with sushi, pickle doesn’t build duplicate vaults as yearn, yearn and sushi can use cream for liquidity and leverage, etc).
Any idea on when Dill/Pickle rewards and integration will be expected?
dudesahn: I think Andre recently tweeted that the DILL audit was finished, so that’s definitely a step in the right direction, but no current ETA as far as I know.
If I am in the aLink vault, and a 2.0 LINK vault comes out, will it automatically roll over into the v2?
virtuosity: At the moment there’s no automatic migration planned between v1 and v2 yVaults.
Hey guys, any plan on merging v1 and v2 websites? For instance, /lending is a fairly new product but only accessible via v1 website.
dudesahn: We’ll maintain v1 website for a while, but CREAM/lending functionality will be coming to the new website very soon as a part of v2.1.
I’m curious about these BTC vaults. I remember back when there was about 4 vaults. I had the impression that each vault would be the best way a particular asset could be used. So to that end, why are there 6 BTC vaults and not 1 that aggregates the best place to put BTC at any given time. Like the DAI vault, I put DAI great. Theres a bunch of different curve stable vaults. Why isn’t there just the underlying stable vaults, USDC and TUSD etc.
dudesahn: We actually just discussed this idea this morning — short answer is that many people already have the LP tokens and would like to simplify earning yield on them, but allowing deposits of vanilla tokens (DAI, USDC, WBTC, etc) and zapping them into the optimal vault is something that is coming in the future. Definitely a bit more complicated but certainly on our roadmap.
virtuosity: These newly launched BTC vaults are v1 yVaults and accept specific curve LP pool tokens. In the future we anticipate functionality that will enable users to deposit different types of wrapped BTC into a vault that is routed to appropriate strategies. This hasn’t been launched yet, but we will inform the community when it does.
virtuosity, AMA host:
That wraps up our AMA we appreciate everyone asking their questions, we are all always happy to do so. Special thanks to Tascha for joining us to discuss their upcoming ibYFI product.