1. Overview:
As per [RFC] Launch DAO Risk-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 ETH DAO Risk-Managed Vault (DRMV) on the ethereum network, with 13 supported markets (arks) covering 4 different protocols (Morpho, Origin, Lagoon 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 (minus the days already passed since the last extension).
3. Specification:
This SIP proposes to add the first DAO Managed Vault, adding ETH 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: 10,000 WETH
- Fee: 0.3%
- TipStreams;
– Block Analitica → 5% (0xeaef8fb615a7d5ab6a356dec0549fd749460e970)
– Guardian Multisig → 15% (0x91E4482CF58aC14d8DC25290d828b2A4D9492BA4)
– Summer.fi (via Foundation) → 30% (0x6e7aE26175F9972e266B0e39288108597C152604)
The following markets are being proposed;
| Market | Category |
|---|---|
| Morpho AlphaPing ETH | Category C |
| Morpho Steakhouse Prime Instant | Category B |
| Morpho Steakhouse ETH | Category B |
| Lagoon 9Summits flagship WETH | Category C |
| Morpho Yearn OG WETH | Category C |
| Morpho Yearn OG WETH V2 | Category C |
| Morpho Gauntlet WETH Prime | Category C |
| Morpho Gauntlet WETH Prime v2 | Category C |
| Morpho kpk ETH Prime v2 | Category C |
| Morpho kpk ETH Yield v2 | Category C |
| Morpho Singular WETH | Category C |
| Origin OETH | Category C |
| ETH Fluidlite | Category C |
Full details of the risk assessment can be seen here: ETH 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 Seven ‘over-ridden’ categories;
- Morpho Steakhouse Prime Instant - A proven curator on a proven protocol, that has been well used by the Lazy Summer Vaults to date already. And should be allocated to Cat B, up from the proposed Cat C, because a lot of the backing collateral are used for looping.
- Morpho Steakhouse ETH - A proven curator on a proven protocol, that has been well used by the Lazy Summer Vaults to date already. And should be allocated to Cat B, up from the proposed Cat C, because a lot of the backing collateral are used for looping.
- Morpho Yearn OG WETH V2 - It fails due to TVL being below 250k USD, however, this is a V2 Vault that currently only deploys into V1 Vaults which has 5M TVL. Proposed Cat C
- Morpho Gauntlet WETH Prime v2 - It fails due to TVL being below 250k USD, however, this is a V2 Vault that currently only deploys into V1 Vaults which has 50M TVL. Proposed Cat C
- Morpho kpk ETH Yield v2 - This market initially fails due to having >60% backing of savETH which has a 1 day delay, which could lead to some liquidations being delayed in a worst case scenario. However KPK are a reputable curator, and we propose this is Cat C.
- Morpho Singular WETH - This market initially fails due to having >60% backing of hgETH which has a delay in unwinding, which could lead to some liquidations being delayed in a worst case scenario. We propose this is Cat 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 ETH Vault onto Ethereum, along with 13 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