CreamFinance

Authors

@qosmonot, @dudesahn, @lehnberg

Summary

This is a proposal to list Yearn Finance’s yvYFI, yvDAI, yvUSDC, yvWETH, yvCurve-IronBank, yvCurve-sETH, and yvCurve-stETH v2 yVault tokens as collateral assets. Starts with 0% collateral factor (C1).

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Background

Yearn Finance is an aggregator service for decentralized finance (DeFi) investors, using automation to allow them to maximize profits from yield farming.

Yearn is currently the largest yield protocol (in TVL ranking - source: Defi Llama) and the 13th largest DeFi protocol overall (in TVL ranking - source: Defi Llama).

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Motivation

In continuation of the previously announced merger between C.R.E.A.M. and Yearn and the milestones that were outlined, we are proposing the addition of the improved v2 yVault tokens as collateral on C.R.E.A.M.

This would allow users to earn interest on their assets via Yearn’s vaults, but still access the borrowing potential of these assets as collateral on C.R.E.A.M. Looking forward, the supplying of yTokens on C.R.E.A.M upon deposit of funds in a vault could be integrated natively on the yearn.finance UI.

Users:

Yearn Finance is: over 30k YFI token holders over 100k Twitter subscribers over 15k Telegram members over 10k Discord members waiting to further deploy their combined $1.5 billion locked in Yearn products.

Update:

yUSD and yWETH v1 yVault tokens are already supported assets as collateral on C.R.E.A.M. At the time, these were some of the largest vaults on Yearn. However, we are in the process of replacing all v1 vaults with v2 versions for both improved security and profitability.

On Yearn, the yWETH vault (v1 WETH yVault) has been replaced by yvWETH (v2 WETH yVault) and a migration to the new version is ongoing, with $71 million in our v2 WETH vault compared to only $16 million in our v1 WETH vault. Thus, it makes sense for C.R.E.A.M. to undertake a similar migration toward v2 yvWETH as well.

Liquidity:

Although deposits in Yearn’s vaults earn considerable interest income, there are still relatively few ways to further collateralize these yield-bearing assets. This proposal would allow the Yearn community to borrow other assets against they yVault tokens, while expanding the C.R.E.A.M. TVL and driving borrowing demand.

Total Value Locked in Yearn Vaults = over $1.2 billion split between 40 different vaults (as of April 2021, source: yearn.vision) Total Value Locked in proposed tokens to be listed = around $750 million (as of April 2021, source: yearn.vision)

Current vaults:

1. yvYFI (v2 YFI yVault) This vault holds YFI, and utilizes several different strategies to earn yield. Current TVL = $161 million (as of April 2021)

2. yvDAI (v2 DAI yVault) This vault holds DAI, and utilizes several different strategies to earn yield. Current TVL = $121 million (as of April 2021)

3. yvCurve-sETH (v2 Curve sETH Pool yvault) This vault holds tokens from Curve’s sETH (Synthetix ETH) Pool, and locks in the gauge to earn CRV emissions. Current TVL = $122 million (as of April 2021)

4. yvCurve-stETH (v2 Curve stETH Pool yVault) This vault holds tokens from Curve’s stETH (Lido staked ETH) Pool, and locks in the gauge to earn CRV emissions. Current TVL = $145 million (as of April 2021)

5. yvUSDC (v2 USDC yVault) This vault holds USDC, and utilizes several different strategies to earn yield. Current TVL = $74 million (as of April 2021)

6. yvWETH (v2 WETH yVault) This vault holds WETH, and utilizes several different strategies to earn yield. Current TVL = $71 million (as of April 2021)

7. yvCurve-IronBank (v2 Iron Bank Curve yVault) This vault holds tokens from Curve’s Iron Bank Pool, and locks in the gauge to earn CRV emissions. Current TVL = $62 million (as of April 2021)

Future additions:

8. yvBOOST This vault holds Yearn’s yveCRV, and compounds harvested 3Crv rewards weekly for more yveCRV.

9. yvWBTC This vault holds WBTC, and utilizes several different strategies to earn yield.

10. yvUSDT This vault holds USDT, and utilizes several different strategies to earn yield.

Risk:

As a result of the value accrual nature of the Yearn yVault tokens, the collateral provided grows in value with time. This means the liquidation ratio / health factor grows over time, independently of the token volatility.

Yearn’s v2 vaults have been live for several months now, and have implemented various security improvements, including improved vault/strategy shutdown procedures and removal of public earn functions.

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Benefits

C.R.E.A.M. benefits:

• Allowing users to deposit the yield-generating version of assets (yVault tokens) rather than the base assets makes the total yield of deposits more attractive (ie. depositing USDT on C.R.E.A.M. or a competitior vs. depositing yield-generating yvUSDT on C.R.E.A.M.).
• Yearn currently has a Total Value Locked (TVL) of $1.2 billion across all vaults. Listing the yVault tokens will provide a significant TVL increase locked into C.R.E.A.M. v1, as Yearn has the potential to 7x the C.R.E.A.M. v1’s current TVL of $240 million. This will translate in a significant increase in fees collected by C.R.E.A.M., as users seek to borrow against these assets.

Yearn benefits:

• Allowing Yearn yVaults to be used as collateral would give an extra incentive for users to deposit funds on Yearn, increase Total Value Locked (TVL) and fees, and dramatically increase capital efficiency & composability.

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Notes

• Collateral Factor will start at 0% (C1) as per C.R.E.A.M.'s token listing requirements. A subsequent proposal to raise the Collateral Factor will be drafted following the tokens approval and listing.

• Before listing on C.R.E.A.M., Yearn’s yvYFI, yvDAI, yvUSDC, and yvWETH will be migrated to an updated v2 version. yvUSDT, yvWBTC, and yvBOOST are upcoming vaults that are in testing and will be released in the coming weeks. yvCurve-IronBank, yvCurve-sETH, and yvCurve-stETH are existing v2 vaults that are ready to be added to C.R.E.A.M. as-is, and thus would be the first batch to go live.

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Links

yearn.finance - Yearn Finance yearn.vision - for all Total Value Locked data Defi Llama - for DeFi protocol evaluation / comparison Forum Discussion - for proposal discussion in C.R.E.A.M. Finance

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For

List Yearn Finance v2 yVault tokens yvYFI, yvDAI, yvUSDC, yvWETH, yvCurve-IronBank, yvCurve-sETH, and yvCurve-stETH as collateral assets.

Against

Do nothing.