This is second of the “Gro Renewed” series on how Gro protocol upgraded to offer an updated tokenomics, higher yield stablecoin products, and user interface improvement. Read on to find out what’s changed!
Gro has updated our very first stablecoin offering, Vault & PWRD, following Vote 009 where Gro DAO decided to rebalance their yields and risks. In summary, Vault and PWRD both achieve higher yields than before as we’ve adjusted the yield strategies and how the risk-tranching mechanism works.
Start with the basics: what are Vault and PWRD?
You can acquire Vault and PWRD by depositing USDC, USDT, or DAI. They are stablecoin products with variable yields generated through automated market making (AMM) trading fees or lending gains. The difference between Vault and PWRD is the risk their users take on respectively — Vault users protect PWRD users from low-probability high-impact “exotic risks” such as protocol failure or severe depegging of stablecoins; in return, Vault users share the yields generated from PWRD deposits. This is made possible by risk-tranching, meaning loss of funds as a result of “exotic risks” materialising would first be absorbed by Vault rather than evenly distributed to both Vault and PWRD users.
In other words, PWRD is designed for those who are more risk-averse and happy “buy” protection offered by Vault by sharing yields. That is not to say PWRD faces absolutely no risk — it is possible that PWRD would suffer losses when Vault is completely wiped out in extreme, unlikely scenarios like a complete failure of USDC. Barring such scenarios, other risks such as impermanent loss are limited. That is because Gro’s underlying yield strategies are based on AMM liquidity provisions from stablecoin pairs that should carry the same value (close to $1) in the long run.
So far so good — what are the upgrades?
Gro community has shared that while it appreciates the high protection built into PWRD, it is getting to a stage where there is too much protection. Instead of being protected from the highly unlikely scenario of USDC’s complete failure, users told us they’d prefer higher yields as we surveyed their preferences in a conjoint analysis with 1000minds.
Preference in having higher base yields far exceeded other aspects as shown in the above summary chart. We heard the demand to raise yields loud and clear — that’s why we’ve upped the yield for both Vault and PWRD.
How is it possible? The higher yield is achieved through changing to a smaller set of higher stablecoin yield strategies. Specifically, Gro has increased fund allocation to Curve pools that pair stablecoins with 3CRV tokens (made of USDC, USDT, and DAI) that facilitate stablecoin trading.
PWRD users are shielded from significant depegging of the major stablecoins and limited protocol exploitation. This is because Vault would still be the first port to call if there is a loss of funds. If USDC depegs to be only worth 0.8 $USD, the resulting loss would still be absorbed entirely by Vault rather than cascading to PWRD holders as Vault’s total value is always higher than PWRD’s. What’s more is that PWRD would still be 100% shielded from a complete failure of the less prevalent stablecoins such as FRAX, mUSD, or UST i.e. what is paired with 3CRV in the Curve pools.
It is worth noting that a complete failure of the three major stablecoins i.e. USDC, USDT, and DAI would still cause loss of funds to PWRD users. That is because the now higher exposure to Curve and 3CRV tokens is beyond what Vault could completely absorb.
You don’t have to take our word for it. Users can track the latest yield strategies used for PWRD and Vault anytime on our dApp dashboard. You cna monitor how much funds are allocated to which yield strategies in real time. We will continue to optimise the yield strategies used to bring you the best yields available with the given risk profile described above.
Got other ideas where we can generate higher yield? Let’s explore what’s possible on our Discord!
Sounds good — what do existing users have to do?
Nothing. There is no change in token or contract address, so there is no migration required to start enjoying the upgraded Vault and PWRD if you have already deposited and staked your Vault and PWRD.
If you haven’t already dipped your toes in our stablecoin products, now would be the perfect time! Once you’ve deposited, you’ll be prompted to also stake into our single-asset staking pools with more GRO rewards and no impermanent loss. And if you have PWRD in your wallet, you can also provide liquidity in the now incentivizied Curve PWRD-3CRV metapool for juicy yields.
It doesn’t stop there! All users can help improve how Vault and PWRD work –after all, this product upgrade was co-authored with dedicated Gro DAO members like Slacking and mjohanm4 (thank you!). It is your input as users and community members that make Gro protocol better every day.
Got some other ideas you’d like to make happen for Vault and PWRD? Don’t hesitate to hop over to our Discord and Community Forum and share your thoughts!
