Hey, we at Block Analitica want to share our views and thinking regarding the proposal above to introduce medium and higher risk vaults as we think this can be a start of the potentially very important discussion about how the Lazy Summer protocol evolves as a yield product.
In general, we do support the proposal for listing other tiers of fleets (based on risk), and while we believe this will capture wider DeFi audiance/user spectrum we wanted to address the proposed ways/strategies of introducing higher risk (aka “key properties” from the proposal) individually.
1. Higher deposit caps / more aggressive parameters
- So far we’ve been computing parameters based on the model we’ve shared in this forum thread to accomodate both risk-adjusted returns (based on multiple factors, as can be seen in the model overview) and the flexilibity of the Keepers.
While we don’t believe setting more aggressive parameters on the Fleet and ARK levels is going to bring a non-marginal APY increase, if the community agrees on this, we would strongly advise on making it clear on the official SummerFi UI that supplying into those kind of yield strategies impose higher risk than the current (low risk) vaults. Based on the discussed parameters in this proposal, we’re concluding that main focus here would be on setting higher caps and max % TVL.
2. Inclusion of new networks and protocols.
- Similarly to (1), while computing and proposing risk parameters for the (current) low risk fleets and ARKs we’ve tried to avoid exposure to certain protocols (e.g. Usual protocol, as already stated on the forum) and curators (based on their historical performance and collateral/oracle choices) completely. Therefore, we’d want to put emphasize on the risks involved if the governance decides to introduce some of the proposed networks and ARKS, and on the importance of the transparency/accessibility of those risks to the end user.
- Furthermore, additional technical note, this can require some time to gather all the necessary data into the model to compute the needed parameters.
3. 100% allocation to the highest-yielding strategy among supported protocols
- While we already have examples of high max % TVL (e.g. 95% for Aave v3 on USDC - Mainnet), those can be justified by the model (reliability, lindyness, TVL, audits, etc of the underlying yield source). With that being said, we’d advise against making the %TVL parameter completely irrelevant for specific ARKs (which is what would setting it to 100% for the higher risk yield sources effectively do), although it’s important to note that this parameter also falls in the scope of params that can potentially be set to a more aggressive value to address the higher yield/risk proposal (see (1)).
- Additionally to the %TVL onchain parameter, we wanted to propose implementing a threshold (e.g. 70%) for a max supplier pool share (this is not available as an onchain parameters on the protocol level, it’d need to be implemented offchain as an additional threshold for the keepers) as an additional risk measure.
4. Small % allocation for speculative point or token farming.
- We believe we can share more details/comments on this when specific points programs are proposed as ARKs.
Furthermore, the proposal also mentions hiding higher risk fleets behind a toggle on the UI. Here, considering this is more of a UX/product type of decision rather than risk, we’d feel free to leave a suggestion (again, from risk perspective) of having a solution to easily differentiate risk tiers (e.g. Lower, Medium, Higher) ideally with previews of APY/underlying yield sources.
Speaking of UI layout, we’re also like to remind and put emphasize again on the importance of the parameters transparency to users (for each and every fleet/ark), especially now when one of the proposed ways of increasing APY (and risk) is computing more aggressive parameters.
Our thinking is that if the governance is in favour of attracting more DeFi-native users by listing higher risk yield strategies, those users would appreciate the ability to check all related params to the strategy they’re considering putting their capital in.
Additionally, we believe it’s very important that the governance acknowledges the possibility of capital loss which is significantly higher in the fleets that’d be labeled as “Higher risk”, and its impact on the protocol overall reputation in the long run.