Improve and optimize the currently deployed COMP liquidator contract to maximize yields over the long-term, rather than a consistent dollar-based stream.
I propose that we optimize the recently deployed COMP contract to not simply sell 5000$ worth of COMP every week and distribute them to the SAVE contract. Currently, we’re seeing a major sell-off of DeFi tokens, and we’re being caught in the middle of it with MTA, but also with this COMP liquidator contract.
I feel we should look ahead to the long-term earning benefit to savers and consider streaming the liquidated COMP rewards proprotionally to current market flucations in the COMP/WETH market.
We could achieve this quite simply by NOT liquidating $5000 worth of COMP in the contract whenever COMP is below a treshold, and accumulating the saved COMP for the week after this.
When this occurs, we could also automatically reduce the mUSD stream of the previous weeks liquidation, to bridge the gap to the next liquidation event. We can also tweak this further to minimize consecutive dry spells and have more complex logic added to the contract as necessary.
Right now, we are simply liquidating $5000 worth of COMP every week to stream the revenue to the SAVE contract, and this can be very ineffective if the market is bearish and the sold token is undervalued. If we start developing a sound algorithm, we not only counteract the problem for the COMP liquidator, but also set a great framework for future liquidator contracts in different protocols and assets.
While this might take more initial work and auditing, it will ensure higher returns in the medium to long-term, benefitting all savers, and setting us apart from competitors with the highest possible returns. The COMP distribution will continue for a few more years, so dealing with this issue right now should scale well into the future, and allow us to leverage the upside of a more intelligent and economically viable selling of accrued tokens.
- Higher long-term yields, therefore more incentive to put mUSD into the SAVE contract
- Framework for future liquidator contracts, saving time, energy, and money
- Building block for future buyback contracts, perhaps enabling MTA buybacks and similar initiatives
- Could be a lego piece for future DAO treasury interaction, making more intelligent and timed sell/buy/store logic feasible
- Additional development time and costs
- Additional audits needed, as complexity of contract grows
- Might not be in the best interest for short-term savers
Interested to hear your thoughts and opinions on this :))
Just something that randomly came when I saw the recent transaction and felt sorry for the poor COMP tokens being sold at such a bargain to the market for an APY boost that could’ve given so much more to everyone.
Happy Friday everyone and enjoy the weekend!