1. Overview:
As per [RFC] Launch DAO Managed "Indexed" Vaults on the Lazy Summer Protocol and the recently published Risk Framework, BA Labs Risk Framework for SummerFi DAO-Managed Fleets by @BlockAnalitica this is a cross-chain proposal to activate a USDC DAO Managed Vault (DMV) on the ethereum network, with 18 supported markets (arks) covering 4 different protocols (Morpho, Sky, Syrup and Fluid) with risk categories assigned based on the Risk Framework by Block Analitica.
2. Motivation:
As laid out in the RFC linked above, it is felt that Summer offer these new categories of Vaults to users who may be seeking a slightly higher yield, further out on the risk curve compared to the actively managed vaults. They will offer a broad competitive set of DeFi Yield sources, using a transparent, rules-based framework to assign risk parameters and aim to make the risk/return tradeoff clear through dedicated sections in the Summer.fi UI.
As part of the RFC and onboarding process, it was proposed that these Vaults should not be onboarded until the Guardian Role was added to the protocol, which was completed on Feb 10th on Base, and 11th on this proposed network (Lazy Summer DAO (Official) - V2 | SIP0.2: Grant Guardian Roles)
As part of this proposal, and as part of the [RFC] Extend and Adjust Vault Reward Emissions a separate SIP will also be brought to add SUMR rewards to this Vault. Specifically, it will recommend adding 5,000 SUMR per day to this Vault for 90 days.
3. Specification:
This SIP proposes to add the first DAO Managed Vault, adding USDC onto Ethereum Mainnet.
As per the Risk Framework laid out by BA Labs, there will be 3 categories of Risk assigned (should they pass), and these will have risk parameters that should be enforced both onchain (the Max TVL of Vault Share) and then offchain by the keepers (incl. Max Deposit Caps and Rebalancing in/out flows)
For the onchain validation, the following will be set (as per the framework) for the arks;
- Category A → Max TVL of Vault Share: 100%
- Category B → Max TVL of Vault Share: 70%
- Category C → Max TVL of Vault Share: 30%
At the Vault (Fleet) level, the following caps are proposed (as per the RFC);
- Deposit Cap: 20M USDC
- Fee: 1%
- TipStreams;
– Block Analitica → 5% (0xeaef8fb615a7d5ab6a356dec0549fd749460e970)
– Guardian Multisig → 15% (0x91E4482CF58aC14d8DC25290d828b2A4D9492BA4)
– Summer.fi (via Foundation) → 30% (0x6e7aE26175F9972e266B0e39288108597C152604)
The following markets are being proposed;
| Market | Category |
|---|---|
| Morpho Clearstar USDC Core | Category C |
| Morpho Re Ecosystem Vault USDC | Category C |
| Morpho v2 Alpha USDC Enhanced | Category C |
| Sky rewards (SPK) | Category A |
| Morpho SteakhouseReservoir USDC | Category C |
| Morpho Gaunlet USDC RWA | Category C |
| Morpho Hyperithm USDC Degen | Category C |
| Morpho Gauntlet USDC Frontier | Category C |
| Morpho kpk USDC Yield V2 | Category C |
| Morpho 3Fx Steakhouse USDC | Category A |
| Morpho Gaunlet USDC Prime | Category A |
| Fluid USDC | Category A |
| Steakhouse High yield Instant | Category C |
| Morpho Smokehouse USDC | Category C |
| Syrup USDC | Category C |
| Morpho Steakhouse Prime Instant | Category A |
| Morpho August USDC V2 | Category C |
| Morpho Yearn OG V2 | Category C |
Full details of the risk assessment can be seen here: USDC Ethereum DAO Risk Managed Vault (please note this also contains some markets that are not ready to be included on the Engineering side).
Note on two ‘over-ridden’ categories;
- Sky Rewards (SPK) → This has come out on the framework as Category C because it contains backing collateral not on the market chain. Given the reputation, and awareness of Sky (formally Maker) though, it is proposed to add Sky Rewards as Category A.
- Morpho Gauntlet RWA → This market is fully backed currently by AA_FalconXUSDC. This is private 30 day credit facility, and means that it may only be redeemable every 30 days. As such, it failed the initial criteria as 60% of the backing collateral was needed to be not locked - but given it’s operating on Morpho, and is pegged to USDC, it is felt that it would be satisfactory to add it as Category C.
4. Risk Assessment:
This new Vault does introduce some new risks to the protocol, given these vaults will not be actively managed by a curator/risk manager.
Some steps have been taken to mitigate these, including;
- Adding the Guardian role to the Protocol to allow Vaults to be Paused
- Adding an additional function that allows Guardians to set Ark Deposit Caps to 0 (effectivly instructing the keepers to remove all liquidity from the market as soon as it can) and stopping all new deposits into that market.
- Utilising a transparent risk framework from BA Labs, the current Risk Manager to the Lazy Summer Protocol.
These Vaults however are based on the currently live actively risk managed Lazy Vaults, so we do not believe any extra technical risk is being introduced.
5. Voting:
Voting YES to this proposal will onboard the DAO Risk Managed USDC Vault onto Ethereum, along with 14 markets, setting their parameters as defined in the specification above. This will activate this market and allow it to start accepting deposits.
Voting NO will not add any new Vaults to the Lazy Summer Protocol.
Tagging @Recognized_Delegates
