The Yearn team hosted an AMA on Nov. 27, 2020 with special guest, Tascha, from Alpha Finance Lab. Questions were asked in the yearn.finance Discord.
Tascha, Alpha Finance Lab:
Will take a few minutes of the Yearn AMA to share with YFI community how you can benefit from the ETH/YFI leveraged liquidity providing pool on Alpha Homora!
Alpha Homora is a leveraged yield-farming and liquidity providing protocol, in which yield farmers and liquidity providers can earn higher yields through taking leveraged positions. On the other hand, ETH holders can also lend their ETH and earn very high lending interest rates (approx. 20% APY) Alpha Homora also enables single-sided liquidity provisioning with their products. This benefits YFI holders as they can act as liquidity providers (LPs) without having ETH. The platform lends the ETH required to the user in order to participate in pools on Uniswap. The infographic below is helpful to understand how liquidity provisioning works on Alpha Homora.
Note that acting as a liquidity provider exposes you to impermanent loss risks, and Alpha Homora’s pool magnifies those risks with leverage (the higher the leverage, the more risk). To learn more about the risks, see here: https://app.gitbook.com/@alphafinancelab/s/alpha-homora/risk I’ll give a pause for the community to read a bit before I go into the 2nd part on how what do YFI token holders gain exactly and how do you open a leveraged liquidity providing position on Alpha Homora
So what do YFI token holders gain exactly and how do you open a leveraged liquidity providing position on Alpha Homora?
YFI token holders benefit in a way that with YFI token alone (no need to have ETH), you can now use it to provide liquidity on leverage to earn 1) trading fees on leverage
2) ALPHA as a part of liquidity mining program that we are running, giving ALPHA to those who open leveraged positions of more than 1x. In order to open a position, you can simply follow the 3 steps: 1. First select the ETH/YFI pool on Alpha Homora; 2. Enter how many YFI (and/or ETH you want to use); and 3. Enter how much leverage you want to utilize.
Will Alpha and Yearn “Merge”?
Yearn team: At the moment there are no plans for a merger.
Do you sell the YFI for ETH?
Tascha: Yes, so if you don’t want to sell YFI then you would need to have both YFI and ETH.
Hey Tascha, how likely are people to get liquidated? Is the risk increase linear or not depending on the “boost”?
Tascha: When users open a position, the maximum debt ratio (debt / position value) can be maximum of 42.86%. Once users have the position open, we allow the debt ratio to go up as high as 60% (this is a buffer when position value goes down from prices swing) . Once the debt ratio hits 60%, liquidation kicks in. So far there have been only a number of liquidations that took place More details on the parameters are here: https://app.gitbook.com/@alphafinancelab/s/alpha-homora/key-parameters
Tascha, What do you have in mind with Yearn? How can you help yearn with Alpha knowledge or products and how will it benefit AlphaFinance?
Tascha: I think we can bring synergy to each other on multiple levels. Leveraged yield farming for ETH/YFI pool is just the beginning, and we will continue to bring more benefits to YFI community and Yearn products in the future. We will update both our communities of those opportunities again when things are finalized.
What are the plans for Cream Finance?
Yearn team: CREAM v2 will be the launchpad for StableCredit and Yearn will use it to gain access to leverage. Let’s give Tascha a few minutes to discuss her products and we can go over more specific Yearn equestions after. Here are more details https://medium.com/iearn/yearn-cream-v2-merger-e9fa6c6989b4?source=social.tw&_branch_match_id=855267175611009335
Given ALPHA LP mining has significant Impermanent Loss risks and liquidation risks, how will Yearn help mitigate those risks since YFI vaults are more risk adverse?
Yearn team: At the moment we do not have any vaults utilize the leveraged LP pools, but we are exploring all avenues. The Alpha products currently are more aimed at individual YFI holders.
Tbh I am really surprised that Andre approves something that involves leverage. Both ETH and YFI are quite volatile assets. Appreciate any elucidation on this :)
Yearn team: We are exploring ways to mitigate risks from leverage, while also expanding Yearn’s product offering to satisfy demand in the market. More details will be shared when available.
Are you in regular contact with Andre or the Yearn Core team and how do you feel about Yearn’s success so far + getting a huge amount of ETH from the Yearn deployer (kp3r treasury) deposited into homora? Proud getting this much recognition at such an early phase?
Tascha: Our team has been bouncing various ideas with Andre, as we respect him as a builder in the space. This is not limited to Andre, but other amazing builders in the space as well.
Where do you see the being sponsored by a big bank in Asia taking you?
Tascha: Siam Commercial Bank is one of the largest banks in Thailand, and having SCB10X (the venture arm of the bank which invested in Ripple and BlockFi) as our partner shows our long-term commitment in the space. While it will take multiple years for traditional banking and DeFi to slowly merge, having this partnership early on gives us an edge to take a head start in many ways. So we will continue to work hard and hold the long-term mindset on this front.
When will Yearn v2 launch and what role will Alpha have in it?
Yearn team: At the moment, there are not strategies using Alpha. Anyway we are looking into some ways to collaborate.
So if you have 2x the booster you have 2x the risk?
Tascha: 2x the risk of impermanent loss correct.
What are the differences between Yearn vaults 2.0 + Cream vs Alpha?
Yearn team: Yean 2.0 yVaults incorporate new fees, enable multiple strategies. CREAM v2 will be the launchpad for StableCredit, and Alpha is another protocol in DeFi that Yearn is aware of and analyzing their products for synergies. A few differences among the three.
To mitigate risks of leveraged yield farming are there any plans to let people hedge it on alpha homora itself or via a partnership with another protocol?
Tascha: In addition to Alpha Homora, we are also building Alpha perpetual swap product (no name yet). While Alpha perpetual swap product will have its own users, Alpha Homora users can also benefit from this and pretty much hedge their risks through this Alpha perpetual swap product. We will share more details on the product offering and how to hedge specifically.
Yearn team: Everyone, we will shift now to Yearn specific questions. Tascha will still be around, and if there is still significant interest, at the end of the AMA she can cover additional questions.
If Alpha sells provided YFI for ETH, won’t that lower the price of YFI? And how is this different from providing liquidity to Aave?
AAVE is a lending platform, so “providing liquidity” there means supplying assets. It’s different than acting as a liquidity provider on a DEX.
Hey, given these volatile and busy time, how’s the team been feeling these past few weeks? Is sleep on the table?
No one sleeps in crypto.
Would be any relationship between v2 and Deriswap? Some of their functions are similar as described.
All info regarding Deriswap can be found in Andre’s medium post, but it is definitely an interesting product that will likely be utilized by Yearn Vaults in the future.
Do you plan to implement charts which would show APY over time for each of the vaults? Would be helpful to have a wider picture before deciding in which vault to invest?
Charts will surely come in time. It requires aggregating historical vault share price data, Work has been done on our Graph, for this but i think it is being re-implemented, and perhaps a lower priority at the moment.
What is ETA on Vaults 2.0?
No ETA yet.
Hi guys, thanks for doing these AMAs. Can you provide a little more background on how the $PICKLE and $CREAM announcements came about? What went into the discussions? Who initially started the discussions about these collaborations? Etc.
Yearn at is core is built upon composability, which translates to a development culture built on mutual respect and collaboration. With the new fee structure coming with Yearn 2.0 yVaults it created a mutually beneficial opportunity for PICKLE Strategists to create strategies for Yearn. They would potentially get more fees, and Yearn would also increase its TVL. That relationship as far as I know was initiated by Andre himself. CREAM has been apart of the Yearn ecosystem since launch and we have been examining lending platforms to serve as the launchpad for StableCredit. AAVE was initially considered, but ultimately it was decided that CREAM would be suitable. Andre was involved in that as well.
I‘m interested whether Yearn has any plans for the $PICKLE token, it looks like the token has lost its purpose after the Yearn-Pickle merger.
PICKLE is basically going to end up very similar to CRV, with DILL corresponding to veCRV. Distribution of PICKLE to LPs, vote on gauge weights weekly, boosting, etc.
Are there any updates on the new UI development?
Yes, v2 UI work has been ongoing behind the scenes — check out this tweet for a teaser: https://twitter.com/x48_crypto/status/1328222992585945088?s=2. v2 utilizes a custom rewritten version of drizzle with batched requests with built in tx notifications. This allows me (x48) to quickly add/integrate contracts. core infrastructure is done, adding the rest will be quick.
Would like some clarity on price oracles, defi oracle exploits has caused loss of user funds, how does yearn plan to address this attack vector?
Several tokens on CREAM use Chainlink price feeds. You can view more here. https://docs.cream.finance/lending/price-oracle For Curve pools, Yearn vaults obtain prices by calling the built-in get_virtual_price() function.