MDP24.2 - Strategy for Incentivized Liquidity Provision on Convex Finance

Summary

In line with MDP24.1, the mStableDAO wants to gather feedback and decide on the preferred strategy from Meta Governors on the liquidity position they would like the Asset Management subDAO to use for the DAI tokens in question.

The mStableDAO is proposing to begin accruing CRV and CVX rewards from one or more of the following pools on Convex Finance:

Stablecoins

susdv2

alusd

lusd

frax

other (voting option)

Specification

This proposal assumes the successful passing of MDP24.1, and now seeks to decide on how to put the DAI tokens in question to use.

Once a decision on the strategy has been made, it is proposed to have the current Cat Herder liason with the lead signer from the subDAO (@jwpe) on a bi-weekly basis to determine the right schedule on harvesting and compounding rewards, keep a curated transaction history of all events relating to this venture, and inform the wider mStable community and it’s stakeholders on the results on a quarterly basis in form of a Transparency Report designed for this purpose.

In its current form, it is proposed to harvest and compound 100% of all CRV and CVX rewards from the position back into Convex Finance in order to maximize opportunity and exposure to both protocols and rewards, as well as compound all resulting cvxCRV and 3Crv rewards once this becomes economically feasible.

Rationale

This proposal aims to:

  1. Find consensus on which farm(s) to utilize on successful passing of MDP24.1
  2. Outline the strategy the Asset Management subDAO is going to use for this particular farm
  3. Generate a transparent process that has had the historic input of all Meta Governors prior to deployment of this strategy
  4. Include the best opportunity in the DeFi space to utilize our DAI token allocation

Further discussion points

  • A strategy with deployment of DAI on several different liquidity positions is feasible and should be discussed, to an extent of not more than a maximum of 3 pools to remain mindful of gas usage
  • To streamline the process, it should be agreed upon to split the positions equally amongst all chosen pools, if a split be chosen for a strategy
  • As this marks the first round of hopefully many such proposals, we also encourage feedback on the process itself, and how it is received and how it can be improved upon.
  • It is assumed that this strategy will be utilized until either:
    1. The current opportunity runs dry
    2. A more lucrative opportunity appears on the Convex Finance platform or elsewhere
    3. Economic feasibility to maintain this position is no longer given
    4. A proposal be passed to change the current strategy

This proposal should be seen as a direct follow-up to a successful passing of MDP24.1, and will only be considered should the first part of the MDP close in favour.

We’re very excited to finally kick off with our first round of incentivised liquidity provision venture, and are looking forward to hearing what Meta Governors have to say in the coming days around this idea and utilization of our treasury assets.

The option with the most votes will be executed, even if it doesn’t reach a majority.

Given the complex nature and myriad of viable options for this opportunity, the initial discussion in the forum will be held for two weeks.

Pending no significant objections, this proposal will be taken to a public Snapshot vote on the 13th of September 2021 and will remain open for 5 days to give adequate time for a concurrent discussion here on the forum.

Personally, I would prefer susdv2 deposit or even better: deposit aDAI to Aave CRV Pool

Thanks a lot for the feedback, much appreciated!

The Aave pool is very interesting, although the gas price to interact with aTokens is very high, and the yield on Convex seems significantly less than that of the proposed alternatives, so maybe better as an option once we got the engine rolling?

Due to me being a silly cat, I’ve actually forgotten to add it as a voting option on the Snapshot before posting it just now, so please forgive me this mishap @Dimsome and anyone else interested in the Aave Stablecoin option.

You can simply chose “Different Pool/Strategy” if this was your favorite outcome, and should this be the winning option, we’ll have another vote on the alternatives in a follow-up vote.

I also reduced the proposed DAI amount in the Snapshot to 322,467 (100k less than originally proposed) due to this suggestion from @alsco77 as it seemed Immunefi was going to have a proposal for us on the forums very soon that would require some DAI, and we’ll ratify the remaining 100k there to avoid additional overhead.

The proposal is now live, and you all have until Saturday to cast your :ballot_box: