Summary
This RFC would like to see feedback regarding the current workflow of regularly liquidating 100% of all earned COMP and stkAAVE rewards from platform deposits for Save users and changing this process to stop this current routine and instead reroute rewards to the TreasuryDAO for Asset Management and diversification purposes.
Abstract
In line with the current overhaul of protocol sustainability for 2022 and beyond, we ought to now look at the current process & efficiency of continuously liquidating accrued COMP & stkAAVE from the contracts in order to boost the yield of save users.
We’re often spending more than 10% of the total value of these tokens in gas fees to complete the operation, which is not sustainable in the long-term, and yields only marginal improvements for Save users, which is neither efficient nor retaining value in the DAO moving forward.
The entire token liquidation process currently happens manually, so changing this workflow is extremely simple, and further down the line could be automated completely, as it will no longer involve the queuing up of transactions via Flashbots to protect from Sandwich Attacks.
It is suggested to retain all stkAAVE in the Asset Management subDAO for the time being, and accumulate COMP until it is economically feasible to deposit them into Compound Finance or use otherwise as the Meta Governors see fit.
In regards to the claiming operation, this can be done once per quarter to minimize transaction and fee overhead.
Motivation
Since the inception of Save, we’re continually liquidating all platform rewards from Compound & Aave to boost Save users’ returns. Over time, this has continuously given less and less additional yield to savers, while increasing gas costs for the protocol, as can be seen in the provided links.
Additional discussions around this very topic have already happened twice in the forums, and I believe the time is ripe to take actionable steps and instead reroute all platform rewards to the TreasuryDAO in order to secure a long-term stake in the protocols mStable utilizes for their own product, all the while saving the Treasury thousands of mUSD worth of gas in the process.
Once the treasury starts accumulating these tokens, we can use the additional yield generated to benefit the mStable ecosystem via compounding or other means of increasing value for all MTA holders sustainably in the long run, as well as ensure that we have a say in the platforms we ourselves depend upon.
This will increase the value of the protocol and consequently for MTA holders. We are in a sense exchanging platform rewards for MTA. Savers get MTA and we get COMP and stkAAVE. Both win, since savers receive a portion of these earned rewards as a share of the MTA supply, while the treasury isn’t left with nothing.
Pros
- The protocol stops liquidating yield-bearing assets and the opportunities coming with them
- Big gas savings in perpetuity (The protocol currently burns around 1 ETH weekly)
- Look at the long-term success of mStable instead of short-term gains
- Retain governance rights for the protocols mStable directly uses for Save
- Take advantage of the huge upside of owning a part of Compound & Aave moving forward
Cons
- Marginally dilute Save users
Next Steps
It is suggested that the community comment on this RFC in the coming days, and bearing no significant opposition or change in ideation, we would move ahead with this RFC in the coming weeks and create a formal draft proposal on Github to be used for review.
Meta Governors are encouraged to provide as much feedback as possible until then, so we can create the best possible outcome for mStable and its users.
