This discussion is fantastic. It’s bit of a doozy as it touches on a few major points ( SAVE’s philosophical purpose,  how to efficiently handle our COMP faucet given its timeline, and  if we do decide on changes where and how those funds will be put to use), so it might be worth considering breaking these out into separate discussions, but either way, this is some great conversation.
On the note of , I think if we’re leaning deeper into the idea of having the premier, risk-adjusted savings account in all of DeFi, then I would be of the opinion that we prioritize longevity over immediate, higher yield. There are lots other protocols and projects that folks can place their money in to receive a higher yield than SAVE, but individuals that choose SAVE over others do so (IMO) because its the safest, most reliable, and most consistent return. Arguably, it’s the same reason people use Anchor on Terra. I think positioning SAVE in this way makes the mindset switch from a traditional savings account with a bank or centralized entity to SAVE on mStable an easy one. We’re not offering your latest and greatest (and riskiest) yield you can find, we’re offering safe, long-term, passive growth on your stable assets.
All that being said, I think there’s a balance that can be achieved between being more capital efficient with our assets that generate yield for our SAVErs, and ensuring its long life-span, which leads me to .
I really like the ideas presented by both @Cold_Summer and @shubidoobi to more efficiently handle our COMP liquidation funds. I would hope to see that at the very least we do perform some % alterations to where and how the funds are being used (something along the lines of Shubi’s idea) to help extend our COMP saving’s lifeline. And within that % allocation, I think it also makes sense to allocate some amount to a more yield-focused approach, building upon those funds further and using them to generate additional yield via other protocols in the ecosystem (Cold’s idea). What jumps out at me between both approaches however, is that there is some room to be more efficient with our COMP liquidations without stepping on the existing yield provided to SAVErs today.
I do want to touch very briefly on point , however, I think this could really be a whole discussion in it of itself. Ultimately I’m not opposed to the Convex idea, but as I was reading through this I had the thought that perhaps by providing liquidity to Curve, we could be taking away potential swap volume if aggregators start selecting the Curve mUSD pool due to the increased liquidity. Granted, we’ve decreased the swap fee as of PDP22, but I wanted to raise it in-case its something worth considering (it very well may be moot point).
In the spirit of contribution, I also wanted to throw out another idea for that yield-focused % allocation: which would be to swap the funds for LUSD and then supply that LUSD in a Liquity LUSD Stability Pool. I think this approach has a couple of interesting dynamics:
First and foremost, this gives the SAVE product a hedge against the market taking a downturn. Most yield generating opportunities bloom with the market’s growth, but not all of them will generate good return when the market cools down. Supplying to the stability pool will earn the “sub-treasury” LQTY tokens (at current APR of ~35%) but more importantly, it will receive in proportion to the % of the pool supplied, its share of ETH that’s liquidated across the protocol. If the market experiences an unfortunate cool-off period, we’ll actually be able to take advantage of that time and start growing a sub-treasury of ETH, which in turn could be liquidated further to keep a stable yield during a bear market.
If we end up continuing with the feeder pools and implement an LUSD/MUSD fpool, then we can actually perform the swaps from mUSD to LUSD using our own liquidity contracts! This of course generates fees for those that LP to that fpool, which I think adds a nice reflexive touch to this strategy.
(Full disclosure, I own both LQTY and LUSD, but as I hope you’re aware this is not me shilling my bags here, this is a suggestion that I think holds water as a potential option for the benefit of the protocol)
Regardless of the route we choose going forward, I completely agree that there’s opportunity to use the assets and COMP liquidation funds in a way that both can increase SAVE yields longevity, while not entirely consuming one of our major faucets for the yield itself.