Yield strategies
How PWRD & Vault yields are generated
Protocol strategies are subject to change based on DAO governance whitelisting and changes in whitelisted strategies' pool depth & yield. To stay on top of these changes, join our discord or telegram, or subscribe to our EPNS channel.
Gro DAO voted (find all votes here) on protocol strategies and whitelisted the following strategies that the Risk Balancer could use to allocate funds based on yield and risks.
Protocol strategies are examined through a range of factors in our Strategy Framework. This framework is now used as a way to systematically provide data to DAO members and protocol users for your evaluation of the strategies' risks.
Note that the framework takes the data at a particular point in time; as such the outcome may not be applicable if the factors considered materially changed.
Across this framework we cover:
- Length of time a stablecoin has been live on mainnet: the longer a stablecoin has been around the more time for its code to be examined by hackers
- Stablecoin market cap: this is a measure of the market’s view of safety (as higher market cap implies more participants trust the coin) and available liquidity
- Collateral type: this explains how a stablecoin keeps to peg, whether backed by fiat or crypto assets, and whether overcollateralised or fractionally backed
- Audits & bug bounty: more audits and a higher bug bounty decrease the likelihood of flaws in smart contract code that have not been discovered
See below for data on the whitelisted strategies as at 16th Aug 2022. These data points are primarily relevant for security and therefore for the whitelisting.
Stablecoins | Length of time | Market cap | Collateral type |
|---|---|---|---|
USDT | 90 months | $67.58b | fiat-backed |
USDC | 46 months | $52.73b | fiat-backed |
DAI | 33 months | $6.8b | crypto-backed |
FRAX | 20 months | $1.43b | algorithmic |
GUSD | 47 months | $329.05m | fiat-backed |
LUSD | 16 months | $196.85m | crypto-backed |
FEI | 17 months | $190.16m | algorithmic |
ALUSD | 18 months | $185.2m | crypto-backed |
OUSD | 46 months | $48.37m | crypto-backed |
mUSD | 26 months | $44.35m | crypto-backed |
BUSD | 36 months | $18.05b | fiat-backed |
TUSD | 54 months | $1.26b | fiat-backed |
Implementing all whitelisted strategies at once creates very high gas costs as a share of yield (high double-digit %). For an optimal risk vs yield profile, the below whitelisted strategies are currently used to generate yield. This keeps Vault exposure to any stablecoin at or below 50% even after applying Vault leverage; in doing so, Gro protocol can achieve diversification without spreading liquidity too thin. At a higher protocol TVL then there would need to be a DAO vote to increase this to more strategies.
Prioritisation of whitelisted strategies for deployment is based on Curve pool depth and projected Convex yield. Yield takes a higher weighting; in case of an equal resulted score, the strategy with the higher yield would be prioritised over the other.
- Pool depth is >5x PWRD and Vault combined TVL = 1
- Pool depth is >3x PWRD and Vault combined TVL = 2
- Pool depth is >1x PWRD and Vault combined TVL = 3
- Pool depth is <1x PWRD and Vault combined TVL should be deprioritised (as it results in a higher liquidity risk at low pool depth relative to Gro protocol TVL)
- Force-ranked across all whitelisted strategies
- Funds that were deployed to LUSD-3CRV strategy is now deployed in TUSD-3CRV pool. For details about withdrawal from the LUSD-3CRV strategy, please see the section here.
As at 22nd August 2022
Strategy | Curve pool depth (22/8/2022) | Convex yield (22/8/2022) | Score and rank (22/8/2022) |
|---|---|---|---|
alUSD | $96.4m (1) | 4.72% (1) | 4 |
mUSD | $38.9m (3) | 4.56% (2) | 9 |
FRAX | $993.1mn (1) | 3.43% (4) | 13 |
TUSD | $88.0m (1) | 2.97% (5) | 16 |
GUSD | $32.8m (3) | 2.84% (6) | 21 |
BUSD | $48.9m (2) | 2.6% (7) | 23 |
3pool | $974.9m (1) | 1.11% (9) | 28 |
LUSD | $54.7m (2) | 0.08%* (10) | 32 |
FEI | $1.6m (-) | 1.27% (8) | - |
OUSD | $11.2m (-) | 4.24% (3) | - |
*Note: This is due to LUSD -3CRV pool being highly imbalanced, resulting in a sustainably high exchange rate for LUSD against 3CRV that reached close to 1.0307; if and when LUSD returns to peg, it would result in a 2.95% downside which is netted out of the expected yield of 3.03% (based on Convex figures on 22nd August 2022.
LUSD-3CRV pool is highly imbalanced with >90% of the pool in 3CRV, resulting in a high exchange rate of LUSD against 3CRV that reached close to 1.05 yesterday.
This means that if and when LUSD returns to peg, there would be 4.5% downside. Netting out this impact from the projected yield shown on Convex (5.4%) leads to a lower expected yield. This results in de-prioritisation of the LUSD-3CRV strategy among the strategies whitelisted by the DAO.
Funds withdrawn from that strategy are temporarily parked in reserves. More whitelisting options will be proposed; funds was then deployed in w/c 22nd August following DAO decisions on additional strategies.
As at 9th August 2022
Strategy | Curve pool depth (9/8/2022) | Convex yield (9/8/2022) | Score and rank (9/8/2022) |
|---|---|---|---|
alUSD | $96.8m (1) | 7.82% (1) | 4 |
mUSD | $48.4m (3) | 5.76% (2) | 9 |
FRAX | $1.1bn (1) | 5.18% (3) | 10 |
GUSD | $31.8m (4) | 4.16% (4) | 16 |
3pool | $990.3m (1) | 1.51% (5) | 16 |
LUSD | $56.1m (3) | 0.22%* (7=) | 24 |
FEI | $2.0m (8) | 1.09% (6) | 26 |
OUSD | $9.1m (8) | 0.22% (7=) | 29 |
Gro Vault & PWRD strategies have now replaced OUSD with GUSD following a recent removal of incentives by Origin from the OUSD-3CRV Curve pool.
This resulted in both lower pool depth and lower yield for that strategy, meaning it was automatically de-prioritised vs GUSD-3CRV which scores better on both.
As at 29th July 2022
Gro Vault & PWRD strategies have now expanded to include OUSD to further diversify from 4 strategies to 5 strategies given the market turbulence earlier this week.
Strategy | Curve pool depth (20/6/2022) | Convex yield (20/6/2022) | Score and rank (20/6/2022) |
|---|---|---|---|
FRAX | $1.2bn (1) | 5.16% (3) | 4 (1=) |
alUSD | $69.1m (2) | 6.90% (2) | 4 (1=) |
mUSD | $39.6m (3) | 8.52% (1) | 4 (1=) |
OUSD | $38.3m (4) | 3.76% (5) | 9 (4=) |
LUSD | $30.5m (5) | 4.05% (4) | 9 (4=) |
FEI | $1.3m (6) | 1.28% (6) | 10 (5) |
As at 21st June 2022
Before May 2022, the framework was used for benchmarking strategies for selection purposes. Please see the last version of data used according to this framework before the DAO whitelisting process was put in place.
as at 3rd March 2022
For more data on strategies before the above iteration, please see the Medium article below.
DeFi is still a very new space, and while that's exciting, it comes with risk. Gro Protocol's software helps you access this world, but make sure you do your own research and only supply assets you can afford to lose.
Last modified 8mo ago