More discussion on how to better monetize the wrapped yearn vaults and/or low yield jars has led me to abandon my proposal in my last thread, I will no longer pursue implementing any withdrawal/deposit fees, and will try to look for ways which are both beneficial to pickle and the broader ecosystem that pickle is and should remain part of.
One avenue which is being explored is depositing the USDC, lusdCRV, and fraxCRV jars on abracadabra.money to boost the yield by minting MIM and fold it into more of the underlying collateral. Going this route users could safely (we would still need to monitor liquidation levels, as abracadabra has liquidatable vaults) earn up to around 6x the yield they would otherwise earn.
As this would only increase TVL (by a considerable amount) it’d still generate lackluster fees. Assuming we fold our current TVL in yearn vaults (around $11.5m at time of writing) by the max amount, so 6x times, we’d go from fee tier 3 to fee tier 4, which would increase our profit share from 20% to 25%.
We could however in addition charge 20% performance fees over the now levered vaults, assuming that the yvUSDC vault returns 5.5% unleveraged for end users, it would return about ~33% fully folded. Taking 20% off that as a performance fee would bring the net APY to around ~26% for the end user. Alchemix has a similar strat where they harvest profits off of the yearn DAI vault and take 10% off of that for the protocol.
We would need abracadabra to increase their borrowable limit for us to maximize our yearn vaults, as of right now their yvUSDC vault is saturated.
Assuming we can however fold, and keep on folding new depositors I’d want to propose an additional strat for the yearn vaults:
We wrap the yearn vault + PICKLE emissions and harvest the PICKLE on the depositors behalf, we then deposit those harvested PICKLE on cream and draw USDC or any other stablecoin off that, take a fee (say 10 to 20%) and reinvest the remainder (at a manageable collateral factor). We make it so depositors can’t harvest the PICKLE themselves. By only depositing the emitted PICKLE on cream, only the PICKLE is at risk of being liquidated (and not the yield earning principal of the user). The borrowed asset (a stablecoin) is then redeposited into the users position and levered up again through abracadabra.
If the 20% cut off of the leveraged profits is a route we want to go down, then we could leave out wrapping the PICKLE rewards.
My once again amended proposal would not incur any additional fees upon deposit or withdrawal, and it would mute the PICKLE gains a user would get over the vaults, the end user would enjoy a much higher yield on their principal however.