The meta-governance approach applied to the Yearn ecosystem: YETI is launched!
In this article, we will describe the foundations of the YETI index and options for liquidity providers
YETI contract address: https://etherscan.io/address/0xb4bebD34f6DaaFd808f73De0d10235a92Fbb6c3D#code
YETI 80–20 Balancer pool:
https://pools.balancer.exchange/#/pool/0x4cfa6c06b29a5d3e802b99ea747bc52d79f30942
Supply liquidity and mint YETI: https://powerindex.io/#/mainnet/0xb4bebd34f6daafd808f73de0d10235a92fbb6c3d/supply
PowerIndex launch: first results
The first index in the PowerPool ecosystem was launched 9 days ago and attracted almost $9m TVL up to date. The meta-governance function was recently tested as well — pooled COMP tokens were used in Compound voting, the transaction was signed using the team’s multis-sig:
Note please, that this meta-governance voting was a technical one and PowerIndex COMP stake didn’t influence the outcome
Currently, the PowerIndex contract takes 33 place in Compound governance leaderboard. Uniswap (UNI) votes based on the index contract stake were created as well. The meta-governance integration for YFI and AAVE is already developed. YFI meta-governance will be implemented after the Yearn finance protocol governance update.
YETI: the Yearn ecosystem united into Smart index
The idea of launching an index focused on the Yearn ecosystem (YETI: Yearn Ecosystem Token Index) was published on Power Forum by Ryan Watkins. It was proposed to create the index for Yearn ecosystem tokens: YFI, SUSHI, CREAM, AKRO, COVER, K3PR, CVP, PICKLE. The proposed weights of tokens were: YFI 35%, SUSHI 17%, other tokens 8% each.
The new index idea led to community discussion on weights and token set, followed by an article from Ryan, describing the mechanism design behind CVP addition: Understanding CVP’s Role in PowerPool Indices. Initial index weights were also verified by CVP community member Sergey: YETI index weights assumption. Finally, Proposal 12: Yearn Ecosystem Token Index (YETI) was approved with 1,670,589 CVP votes and no one against it.
YETI index value proposition for Yearn ecosystem community
YETI index is the first index on the market focused on tokens, united into one ecosystem. The majority of projects presented in the index were recently merged with Yearn Finance. Despite the fact that all of them are Yearn ecosystem projects, each of them has its own native digital asset (a token) and independent governance systems.
Note, that PowerPool wasn’t merged with the Yearn ecosystem. It is the Yearn ecosystem partner.
The roles and ecosystem functions of each index protocol:
- YFI: web3.0 fund-management protocol
- SUSHI: AMM-based liquidity provider
- CREAM: lending market
- AKRO: business development, institutional players engagement
- COVER: insurance protocol
- K3PR: ecosystem maintenance protocol & incentivization layer for devs
- CVP: meta-governance protocol & Smart indexes provider
- PICKLE: yield farming robots provider
Yearn ecosystem united different Defi tools adding value to each other and offering the majority of “must-have” Defi services to its users. YETI index provides several types of value to the Yearn ecosystem community:
Investing in the Yearn ecosystem and holding a stake in the Yearn ecosystem using a single token (YETI).
This service is a basic index product offering a diversified portfolio for its users, saving gas costs, and providing an opportunity to the buying/selling/holding stake Yearn ecosystem using a single token.
Governance endpoint based on YETI meta-governance.
The governance systems of Yearn ecosystem products are independent ones and users need to be aware of all ongoing/upcoming voting and vote using different interfaces and tokens. All proposals issued in YETI composite protocols will be added into PowerPool governance, allowing users to vote in YFI/SUSHI/PICKLE, etc using the PowerPool governance layout. Holding YETI, users will be able to vote in all Yearn ecosystem protocols using a single token and interface. From our point of view, it simplifies user experience and provides an opportunity to save gas costs (after L2 voting implementation).
Yield farming from Yearn ecosystem protocols
YETI index generates cashflows for YETI token holders using pooled tokens in Vault strategies. It means that holding YETI users not only have exposure to Yearn ecosystem tokens, but also receive additional cashflows based on their usage. Also, YETI holders receive a 0.2% swap fee from token swaps occurring in the YETI pool.
Also, YETI is an entirely community governed index. It means that users can change the token set, weights of tokens, and index fees. So, it is a completely flexible product that seamlessly adapts to changes in the Yearn ecosystem (addition/removal projects from the Yearn ecosystem, significant changes in market caps, and farming opportunities).
Holding YETI vs holding Yearn ecosystem tokens:
YETI users hold all Yearn ecosystem tokens in one asset, have an opportunity to participate in the governance of all Yearn ecosystem protocols, and receive cashflows.
Holding Yearn ecosystem tokens in the same proportions users just hold these tokens and don’t receive any additional value from that.
From our point of view, YETI is a good example of a value-adding product focused on providing financial service, improving protocols’ governance, and yield farming at the same time.
YETI liquidity mining program
The liquidity mining program was approved by the community via Proposal 12. It offers two options for LPs:
- Supply liquidity into the YETI index. To use this option users need to provide liquidity and stake YETI in the mining contract (similarly to PowerIndex PIPT staking). For this option, 250k CVP/month with 10-week linear vesting is allocated.
- Supply liquidity into YETI/ETH 80–20 Balancer Pool and stake BPT token of this pool in the mining contract (similarly to BPT token of PIPT-ETH Balancer pool). For this option, 200k CVP/month with 10-week linear vesting is allocated.
You can use all 8 tokens at the same time or any single token from the index (YFI, SUSHI, CREAM, AKRO, COVER, K3PR, CVP, PICKLE) to provide liquidity.
YETI value for PowerPool users and CVP community
YETI provides value to the CVP community and adds value to the CVP token via value capturing mechanisms. The basic value creation patterns for CVP token is the meta-governance value creation pattern, internal product governance, and future cashflows. Read an in-depth analysis of CVP value creation patterns.
CVP community will benefit from YETI implementation and adoption based on the growth of the following metrics:
Permanent Voting Power treasury growth. As it was stated before, PowerPool indexes charge the entry fee, exit fee, and swap fee from their users. This treasury will be used for rewarding active CVP token holders.
The Permanent Voting Power treasury collected $21k at the moment. The amount can be tracked on the treasury contract.
Eligibility for rewards will be based on locking CVP into VoteLock and voting on governance proposals (including indexes composite protocols).
In a nutshell: new index -> new liquidity -> more fees collected -> bigger future rewards for active CVP token holders.
Growth of total accumulated voting power. By the addition of a new index CVP token holders (as well as PIPT/YETI and UniV2 LPs/BPT of CVP pools) accumulate governance power not only in YFI, SNX, AAVE, wNXM, UNI, COMP, MKR, but also SUSHI, CREAM, AKRO, COVER, K3PR, and PICKLE.
In a nutshell: new index -> accumulation of voting power in new tokens -> accumulated voting power in hands of CVP grows and become diversified across Defi ecosystem
Bigger ecosystem power based on index governance.By the addition of a new index CVP, token holders govern two indexes and can influence markets of more assets and associated TVL than before, which also adds value to CVP token.
In a nutshell: new index -> bigger TVL and protocol variety -> bigger accumulated Defi ecosystem power in hands of CVP token holders
PowerIndex PIPT and YETI: https://powerindex.io/
