👨🌾 The Current State of Yield Farming 🍠
It’s farming season and finding for highest APY has become more complex than ever. Yearn.finance’s popularity has exploded largely due to its vault products, which automatically deploy yield farming strategies to the underlying asset to maximize profits.
This “robo-advisor” also reduces fees by pooling gas costs. Vaults have made it easier than ever for investors to farm yield while not worrying about soaring gas prices. Users deposit their underlying asset (uA) and receive a y-asset (yA) in return. The yA represents the user’s share of the vault, which appreciates in value over time.
🖖 yVault Limitations 🤔
Despite the revolution in yield farming that is YFI, the yAxis team believes that it’s possible to make improvements in automation, efficiency, and user experience while using yearn’s vault strategies as a backbone.
Currently there exist vaults for several different uA’s, some with drastically different strategies and APYs and some with capped deposits (yETH). Yields are subject to large swings based on the volatility of governance tokens farmed by the vault strategy (i.e. price volatility of CRV token). The strategies of each vault are also subject to change, which introduces additional volatility. The decision on whether to switch vaults (and switch uA) is a complicated one and involves understanding the vault strategy, influence of the 0.5% vault withdrawal fee, price slippage and fees when converting from one uA to another uA, along with overall market sentiment.
Using yield aggregators will only become more complex over time. More vaults will go online. Existing vaults will implement strategy changes at a quicker pace. Additional yield aggregators will launch. Cross-chain strategies and aggregators will surface.
👑 yAxis 👾
yAxis a meta yield-aggregator designed to deploy capital to the best yield strategy available. Unlike other simple yield aggregators, yAxis will be able to switch underlying assets when deploying strategy. At its core, yAxis is an experiment in DAO-directed yield farming where YAX holders vote regularly on which yVault/aggregator strategy to implement for user funds.
This DAO would be the advisor for using “robo-advisors”, and would vote for the best yield while pooling gas fees. Governance IS the yAxis product. YAX governance would factor in vault withdrawal fees and price-slippage/fees when converting from one uA to another, as well as DeFi market sentiment. Governance could vote to have YAX holders receive a percentage of user profits.
We envision a product where users can deposit stablecoins and could be reasonably sure that their money will be taking advantage of the most sensible yield strategy. This project is not only limited to yVault strategies. Governance may also vote to use other strategies on upcoming platforms such as idle.finance and apy.finance, or implement cross-chain strategies.
💸 Incentives 💰
yAxis will initially be incentivized by fairly distributing the YAX token to users who provide liquidity with uA/yA pairs. These incentivized pools will also be used by yAxis to arbitrage vault pairs and to access capped vaults. In the spirit of YFI this will be a fair launch. The YAX token is intended to have NO value. There will be NO pre-mine and NO developer fund. We can accomplish this in 3 phases:
Phase 1: Token distribution and yA/uA liquidity incentives (subject to change by YAX governance)
- Total supply: 1,000,000 YAX
- Emission schedule:
- Weeks 1-2: 400,000 YAX
- Weeks 3-4: 300,000 YAX
- Weeks 5-6: 200,000 YAX
- Weeks 7-8: 100,000 YAX
- Tokens will initially be distributed evenly to LPs for the following uniswap pools
- yCRV/yyCRV (yCRV/yUSD)
- Staking LP tokens will reward YAX, the yAxis governance token
- Additional pools can be added based on community feedback
- To avoid incentivizing high risk behavior, APYs will not initially be published
- YAX/ETH pool will be added after launch (more details to follow)
- 10% of YAX rewards will be saved in a community fund/treasury. This is NOT a creator/dev fund. It will be deployed by yAxis governance
- Launch time currently TBD, more info to follow
Phase 2 (executed during phase 1): Creation of the YAX DAO to direct development of the YAX protocol and additional tools. Governance may also alter YAX emission and could choose to reward early users of yAxis (stable coin depositors)
Phase 3: Launch of the yAxis DAO-directed “vault.” Users will deposit stablecoin and receive a yAxis share token which will accrue value based on the best yVault strategies or strategies on another yield aggregator. Governance may vote for fees to be distributed to YAX holders
🔬 Future Development 🧪
yAxis governance may choose to expand its reach to include strategies found on upcoming yield aggregators like apy.finance and idle.finance, as well as cross-chain solutions. Governance can also develop additional tools to facilitate efficient yield farming.
In the same way that y-Axis simplifies and automates the yearn vault experience, we envision the creation of other interesting yAxis projects such as simplified insurance. We also see potential for a yA/uA lending protocol and an unique AMM protocol. More on this later!
📣 Community 📱