[RFC] Introduce deposit and/or withdrawal fees for Yearn affiliate jars

My thread about the yearn affiliate jars got some traction and I’m now requesting further comment before we take this to the next step which would be a snapshot vote.

My thread: Introduce deposit and/or withdrawal fees for Yearn affiliate jars

There’s been some further discussion on how to handle this. I’d like to get consensus on what the fee (if any) should be before we take it to snapshot (that way we’d have a binary snapshot vote).

We could extend this further to any low yield no IL steth, wbtc, stables, etc. jars so we can offer a wide range of products while making it at the same time attractive to the protocol.

Since these low yield but native jars are different to wrapped yearn vaults, we should consider different (lower) deposit and/or withdrawal fees.

Then there are the IL farms (yvboost/eth, alcx/eth, cvx/eth ect) which don’t need an overhaul to the fee structure in my opinion.

In short, a comment by Wunderbernd in DILLDAO sums it up nicely: “I just like to structure it, group yearn wrapper jars, group single based farms (stETH, renBTC etc.), group normal LP farms.”

I propose:

  • 1% deposit/withdrawal fees for yearn wrapped vaults
  • 0.5% deposit/withdrawal fees for native low yield no IL farms ie: stEthCrv, p3CRV
  • 0% deposit/withdrawal fees for mid to high yield IL farms ie: alcx/eth, yvboost/eth

This could also set the fee structure for jars to come in the future, it’s quite clear in my opinion where future jars will fall into as the categories are distinct enough.


[RFC] Introduce deposit and/or withdrawal fees for Yearn affiliate jars et al.
  • Proceed to proposal
  • Do nothing

0 voters

4 Likes

did anyone calculate how this would affect the potential revenue for the protocol in the case of the yearn v2 USDC farm?

especially curious about multi year scenarios where the entry fee would get diluted over time, and the withdrawal fee only be a future income that may never come (or at least feel that way)

1 Like

Assuming that we have a 1% deposit fee for USDC and nobody withdrew so far (ie: somebody could’ve withdrawn 100k USDC while another user deposits 100k, which would amount to more deposit fees while TVL stays the same.) at $6.8m TVL the wrapped yearn vault would’ve made pickle $68k, right now it has done less than $1k in fees from yearn I think.

2 Likes

I think if you’re going to implement such fees, it should be on the withdrawal side. You don’t want friction to deposit and most people would be willing to cop a fee on withdrawal if they’ve earned juicy Pickle yield along the way

3 Likes

How about having a dynamic fee structure on withdrawals? Say for the first 3 months of the jar, we have a withdrawal fee of 2% for the first month, 1% for the second month, and .5% for the third month. This could also be implemented for stake time per address also, to incentivize longer locking.

2 Likes

I think this is interesting, but I’m in favor of a baseline fee for jars that generate almost no profit (ie yearn vaults). We could maybe implement this on top of my suggestions, but that’d amount to a lot of fees in the first month of a jar/user deposit. I’m interested in what the rest of the community thinks of your suggested structure

Do what sevenz thinks is best that guy is cool as fuck

2 Likes

I think everyone in the community likes the idea of wrapped Yearn vaults and wants the partnership between the two protocols to grow. Nonetheless there are problems with the current fee structure and Pickle/DILL holders are subsidizing the farm at a huge loss. Napa did a general breakdown in the Pickle discord: https://discord.com/channels/750784472697405646/756691672414421156/858965244449128458
In simpel words: We are giving out too many pickles for these farms.
The introduction of the new fee model would limit the losses of the protocol and the DILL holders who are not in these farms.

In the actual vote we should also differentiate and split up the different proposals, right now people can only agree with everything or disagree. The priority is with the yearn jars.

On the actual fee structure itself: I like the dynamic fee structure idea, this would incentivize longer commitment to the protocol, but I think this might be too confusing for the average user (at least with the current UI). If we have better possibilities to explain it and make it clear with the new UI, this could be implemented in the future.
Right now I favor the 1% withdrawal fee.

I have spoken.

Good proposal, thanks for writing this up.

Curious about the economics and insight into how much we are losing by spending more $PICKLE than we’re receiving in fees.

I think .5% on stable pools is too much and don’t think that’s customarily done by our competitors, who just charge performance fees: Convex charges 16% on CRV rewards. Beefy 4.5% on harvests, Harvest 30% performance fee.

Can’t we begin with simply charging a withdrawal fee on the non-profitable jars?

Napa broke this down a bit: PICKLE farming proposal that will make PICKLE go up. | Voters | Pickle Finance

He assumed here however that the yearn wrapped vault works like any other native jar (charging a 20% perf fee) it’s actually even less than that, you can view the yearn partner program here: yearn-devdocs/introduction.md at master · yearn/yearn-devdocs · GitHub

Right now we are discussing more options, aside from deposit and/or withdrawal fees. That’s why I haven’t been pushing this topic that hard anymore.