Eliminate Senior Yield Minting Ceiling

Summary

Currently Smart Yield senior yields are capped at 65%/75% for Compound/Aave respectively. This proposal suggests we eliminate these limits.

Description

At the initial launch of Compound Smart Yield there were no minting limits on senior yields. It was actually the third DAO proposal, PID-3, that imposed these restrictions on the Compound pool. The Aave pools were deployed with this restrictions at launch.

Motivation

FiatDao will be launching soon. This product will ultimately directly compare fixed yields available from many protocols. It is goal of this proposal to showcase the yield offerings available from Smart Yield at their highest available.

Technical details

The minting limits are in place for a good reason, to protect junior depositors from being adversely minted against. If we need to increase the senior rate ramp to 4-5 days to protect juniors, so be it. Placing an artificial limit is unnecessary and could be detrimental when comparing rates across competition.

Useful Links

Element Finance

Notional Finance

Argumentation

for

  • Increases available yields for seniors.
  • Better comparative position between competition.
  • More attractive to FIAT minters.

against

  • Juniors could be adversely minted against.
  • Negative yields possible for juniors.

DAO Vote

N/A

3 Likes

I actually feel this will be an advantage to junior depositors seeking variable yield as FIAT users are more interested in the senior fixed rate product. Should the opposite be the case then this can be internally monitored and an alternative proposal made. I support the proposal to optimize use of smart yield. Thanks!

1 Like

I’d support this. Would this likely be detrimental to juniors or just introduce a little risk to their side?

Also, don’t juniors get more yield if a lot of people are invested in the senior tranche?