Yam Treasury Quarterly Update

We’ll be doing quarterly updates for the Yam Treasury where we review the previous period and take a peak at what’s coming next! Since this is our first quarterly update, there may be some repeated information from the last couple monthly updates.

It’s been an eventful few months since we migrated to YAMv3 on September 18th. Let’s break down all the happenings around the Treasury since the YAMv3 launch!

In this report you’ll find details on:

• Current State of the Treasury
• Yam Treasury Investments
• The Great Yam Wall
• Yam DAO Set (YDS)
• Yam Hires Portfolio Manager
• Next Steps For The Treasury

Current State of the Treasury

One of the core features of Yam is our community governed treasury. The Yam treasury was initially funded through positive rebases: a portion of each supply expansion was used to purchase yUSD for our community governed treasury. This has led to the Yam Treasury accumulating 2,500,000 yUSD (valued at ~$2.9M USD) within 45 days of the YAMv3 launch.

During this process, the Yam community has decided to:

• Direct 1% of all Treasury Inflow to Gitcoin Grants
• Purchase ETH + DPI to farm INDEX
• Allocate YAM/ETH LP Tokens to farm SUSHI

Our current YAM Treasury is now divided accordingly:

The Yam Treasury currently has a value of ~$3.5M USD and can be viewed on Etherscan here (please note the Etherscan link doesn’t display funds in our Incentivizer (Sushi Gains) or in the Index Coop LP.)

On December 29th, 2020, the Yam community voted to disable the treasury funding and rebasing / elastic supply function of YAM. The Yam treasury will no longer receive infusions of ETH from positive rebases.

Gitcoin Grants

Our Yam community voted to direct 1% of all treasury inflow to Gitcoin Grants and support public goods and services in the Ethereum ecosystem. All funding from the Yam Treasury to Gitcoin Grants will be 100% used for projects in Gitcoin’s Tech Grant category.

In the 3 months months since the launch of YAMv3, the Yam Treasury has directed a total of ~$31,300 USD to Gitcoin Grants.

DeFi Pulse Index

We started to diversify the Yam Treasury by acquiring DPI through the first trustless DAO OTC Deal ever executed on chain. This OTC Deal saw Yam purchase of $250k USD worth of DeFi Pulse Index (DPI) and saw less than 0.5% slippage on the trade.

DPI, powered by Set Protocol, is an index of DeFi Projects and include YFI, AAVE, SNX, COMP, MKR, LRC, REN, KNC, BAL, and UNI. The index isn’t synthetic or a derivative - Yam owns the underlying tokens that comprise the index by holding DPI.

In order to LP the DPI and farm Index, Yam also purchased $250K worth of ETH (at the time, 554 ETH.)

SUSHI Farming

The Yam community voted to change from our main liquidity pool from Uniswap YAM/yUSD to Sushiswap YAM/ETH. Yam moved away from yUSD due to two main reasons:

• Order routing on Uniswap did not recognize yUSD automatically. Orders were needlessly routed through YAM/ETH instead of YAM/yUSD.
• Tail risk of having all treasury assets inside yUSD (both smart contract risk as well as underlying stablecoin risk through yDAI, yUSDC, yTUSD and yUSDT.)

Yam Protocol, through its Incentivizer Contract, currently distributes YAM to LP Stakers (5k BoU YAMs per week) and uses the deposited LP Tokens to stake on Sushiswap to earn SUSHI for the Treasury.

Here is a list of projects Yam Protocol is currently developing related to the treasury:

Great Yam Wall

Yam is building the “Great Yam Wall,” which will allocate funds to execute buybacks if Yam’s marketcap is ever less than the treasury value.

For more information: the original proposal and some modeling of the effectiveness of Yam Wall sizes.

Yam Governance voted to approve the Great Yam Wall with an allocation of 11.5% of the treasury.

Overview of how the Great Yam Wall works

When the GYW function is called:

• If Yam Market Cap > Yam Treasury Value there is no action
• If Yam Market Cap < Yam Treasury Value the necessary purchase as calculated by the function will be executed on the YAM pair with highest liquidity.
• YAM procured by this function will be used in the most productive way possible as determined by the community. This might be burning, selling, using for incentives, providing liquidity, lending, etc.
• The value of funds allocated to this function will be re-evaluated on a quarterly basis.

The Great Yam Wall is currently under development.

Yam DAO Set (YDS)

We are collaborating with Set Protocol to build our own Yam Dao Set on TokenSets.com. This is planned for launch in Jan 2021.

By utilizing Set Protocol, our treasury can retain full custody of our funds and continue operating in a decentralized manner, while also allowing for more active management via an elected Portfolio Manager, with guardrails that remove the necessity to trust these individuals to always act in good faith.

In addition, our goal is to offer investment in YDS to the public or other DAOs and stream revenue from this product to the Yam treasury.

Yam Dao Set Investment Thesis

The Yam Investment Portfolio will be determined by an investment strategy on a scale from 1 to 5 (from conservative to aggressive.) The community voted to target a scale of 3. For more insight into this methodology, please visit this forum post.

YDS Portfolio Manager @Krugman

The community voted to elect Core Strategist Krugman as YDS Portfolio Manager.

Krugman is a full stack software developer by profession and has spent the last decade as a retail trader and has experience with Forex, futures, options, options on futures, equities and crypto. He entered the crypto space in 2019 and joined TokenSets as a premiere trader. He quickly rose to the top of the leaderboards in total buyers, ranked #2 AUM and performance. He has been a core contributor with Yam since launch.

Krugman is currently working with TokenSets to develop the functional and technical requirements of YDS.

Next Steps

Treasury Management

1. A snapshot proposal was approved to purchase up to $250,000 wBTC to be used for yield farming purposes. The purchase will be made within YDS after Launch.
2. Snapshot proposal to use ETH in treasury to mint uGasFeb and uGasMar on Degenerative.Finance has been approved.
3. A snapshot to determine the amount of assets to be transferred into YDS will come after testing.

New Ways to Fund the Treasury?

Now that Yam’s rebasing mechanism has been removed, the Yam treasury will no longer receive semi-regular infusions of ETH from positive rebases.

The community will need to decide if the funds that we have in the treasury are sufficient and our goals can be met relying only on existing revenue sources, or whether a new funding mechanism should be created. This will be an ongoing discussion over the next few months.

This is an exciting time at Yam Protocol and our Treasury. We advise that you keep up with these updates as we push towards the full launch of this wave of Yam Products. Be sure to follow us on Medium, Twitter, or Reddit for news. Also, please join our discord and participate!