Yield strategies
How PWRD & Vault yields are generated
Gro Protocol generates yield using a fork of Yearn v2 Vaults and Convex strategies. Each of the three major stablecoins (USDT, USDC, DAI) is assigned a yVault. All of these strategies and yVaults ladder up and aggregate into the same user level products: Vault and PWRD.
You can see the individual vaults in this Contract Addresses section.
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.

Whitelisted protocol strategies

Gro DAO voted (find all votes here) on 20th May 2022 on protocol strategies and whitelisted six Convex strategies that the Risk Balancer could use to allocate funds based on yield and risks.
  1. 1.
    MUSD-3CRV
  2. 2.
    FRAX-3CRV
  3. 3.
  4. 4.
  5. 6.
    FEI-3CRV

Understanding yield strategies

Protocol strategies are examined through a range of factors in our Strategy Framework. This framework is now used partly 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 protocol has been live on mainnet: the longer a protocol has been around the more time for its code to be examined by hackers
  • Audits: more audits decrease the likelihood of flaws in smart contract code
  • Bug bounty: a higher bug bounty incentivises more ‘white hat’ hackers to have reviewed code
  • DeFi safety score provides a third party and quantifiable way to measure risk and security
  • Protocol TVL: higher protocol TVL increases the potential gain for hackers, and therefore incentivises more code examination
Stablecoin evaluation also covers:
  • Collateral type: this explains how a stablecoin keeps to peg, whether backed by fiat or crypto assets, and whether overcollateralised or fractionally backed
  • 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
  • Curve 3CRV pool depth: high pool depth shows further market confidence, and also deeper liquidity implies lower volatility
  • Daily Volatility and Max 1 day volatility in the past 6 months is a measure of deviation from peg based on daily trading prices (currently from CoinGecko) which indicates price stability for an asset

Data for whitelisted strategies

See below for data on the whitelisted strategies as at 10th May 2022. These data points are primarily relevant for security and therefore for the whitelisting.
For strategy selection, further factors (such as Curve pool depth and yield) are taken into account. See the next section for more details.
Stablecoins
Length of time
Protocol TVL
DeFi Safety Score
Max 1 day volatility vs USDC
Overall Ratings
USDC
43 months (5)
N/A
N/A
N/A
5 - Very High
DAI
30 months (5)
$9.7b (5)
81% (4.2)
0.7
5 - Very High
USDT
87 months (5)
N/A
N/A
0.6
5 - Very High
FRAX
17 months (2)
$17.3b (1)
81% (4.1)
2.7 (4)
4 - High
LUSD
13 months (2)
$622.9m (4)
97% (4.9)
2.2 (4)
4 - High
OUSD
43 months (5)
$63.7m (2)
86% (4.3)
6 (3)
4 - High
ALUSD
15 months (2)
$179.1m (3)
44% (2.2)
3.4 (4)
3 - OK
FEI
14 months (2)
$264.7m (3)
N/A
4.9 (4)
3 - OK
mUSD
23 months (4)
$63.0m (2)
93% (4.7)
6.9 (3)
3 - OK

Latest strategy change

  • The latest strategy change was completed on 20th June 2022.
  • Implementing all six whitelisted strategies at once creates very high gas costs as a share of yield (high double-digit %). For an optimal risk vs yield profile, five whitelisted strategies are currently used to generate yield.
  • Having five strategies can keep Vault exposure to any stablecoin at or below 50%* even after Vault leverage was applied to achieve diversification, while also not spreading liquidity too thin. Iterations such as setting an automated stop-loss and including more of the whitelisted strategies can be viewed on Vote 17.
  • At a higher protocol TVL then there would need to be a DAO vote to increase this to more strategies.
  • Within the whitelisted strategies and parameters, strategies are prioritised based on two factors: pool depth and yield. This optimises the total protocol returns net of gas costs and slippage, so to deliver higher returns to users.
  • The following initial strategy allocation has been implemented based on the prioritisation (see data of pool depth and yield below as at 20th June 2022).
    1. 1.
      FRAX-3CRV
    2. 2.
      alUSD-3CRV
    3. 3.
      mUSD-3CRV
    4. 4.
      OUSD-3CRV
    5. 5.
      LUSD-3CRV
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)
Vault exposure is calculated as System Exposure * Vault Leverage (read more inVault exposure to individual strategies).
You can see each of the system level exposure on the Gro dapp dashboard (screenshot below as at 21st June 2022). FRAX-3CRV exposure after leverage is currently above 50% as funds rebalancing is still in progress.
as at 21st June 2022

Previous protocol strategy selection

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.
Strategy selection framework
Medium

Reminder about Risk

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.