Best Yield revamp: Junior BY vaults wind down
The following is an extract of the proposal posted on the Idle governance forum.
Summary
A proposal to decommission the Junior Best Yield vaults on DAI, USDC, USDT and WETH.
Background
In January 2023, we expanded the risk-adjusted approach introduced with the Yield Tranches to the Best Yield vaults
As reported and planned in the M1-2023 milestones, we have been proud to announce significant integration partners, and have been evolving our product suite, capped off by the release of the brand new Senior & Junior Best Yield vaults.
the OG Best Yield, launched in 2019 ❤️, became the Senior Best Yield and a new Junior Best Yield was released targeting more risk-seeking LPs.
[…]
Since the January 2023 inception, the vaults have shown the following metrics on Ethereum
| Vault | Average TVL | Average APY |
|---|---|---|
| BY DAI Senior | $6,775,965 | 4.73% |
| BY USDC Senior | $3,423,316 | 4.68% |
| BY USDT Senior | $3,357,874 | 5.56% |
| BY WETH Senior | $2,751,119 | 1.41% |
| BY DAI Junior | $180,228 | 13.40% |
| BY USDC Junior | $312,225 | 11.57% |
| BY USDT Junior | $199,013 | 14.35% |
| BY WETH Junior | $11,103 | 2.79% |
Despite offering double-digit returns, besides the WETH market, the Junior vaults have performed worse than the Senior ones. On the liquidity side, for example, they accounted for less than 5% of the total value locked into the Best Yield vaults. This could be partially explained by the fact that risk-seeking users seem to prefer picking precisely their yield sources and depositing instead in the Junior Yield Tranches.
Fee-wise, the Junior BY vaults generated ~$12,000 in fees in the face of ~$8,000 spent in rebalancing costs. If we add to the equation, the costs of the security monitoring tools and maintenance, all the vaults would show a negative profit margin.
| Vault | Fees generated | Rebalance costs |
|---|---|---|
| BY DAI Junior | $3,471 | $2,413 |
| BY USDC Junior | $4,924 | $4,311 |
| BY USDT Junior | $2,955 | $1,769 |
| BY WETH Junior | - | $64 |
| Total | $11,350 | $8,287 |
Rationale
Given the low liquidity and the low fees generated by the Junior BY vaults, we suggest decommissioning the DAI, USDC, USDT and WETH markets.
[…]
The Best Yield strategy is the cornerstone of Idle and this proposal doesn’t want to put an end to its development. Based on data and community feedback we think that having Senior and Junior profiles on BY is unnecessary. We would then suggest keeping only the Senior (OG) strategies. We are anyway already working on new integrations and a revamped BY type and we will soon update the DAO about it.
| Voter | Cast Power | Vote & Rationale |
|---|---|---|
 0x500D...D4a2De | 216,938 | For |
 0x0E6C...7923DC | 150,000 | For |
 0xe0e6...03060F | 115,324 | For |
 0xb373...AE7bF7 | 17 | For |
 0xdbc4...f73e4C | 15 | For |
VOTE POWER
Proposal Status
- Mon January 29 2024, 05:00 pmVoting Period Starts
- Thu February 01 2024, 05:00 pmEnd Voting Period
Current Results
1-For
482,294.151