Diversified Yield for gOHMies

Summary
TokenLogic and Yearn propose creating a sustainable yield stream for gOHMies using Yearn v3 vaults. gOHM deposits will be used to access the Cooler loan facility, with the borrowed DAI deployed across various yield-generating strategies selected by a committee of strategists. Yearn's advanced security and optimization features ensure gOHM holders enjoy a convenient, set-and-forget yield stream.
The vault will maintain a strategic buffer to ensure cost-efficient withdrawals, utilizing keepers and Maker's flashmint. The goal is to provide gOHM holders with a user-friendly solution for earning yield on their holdings, combining the Yearn V3 framework, a Cooler loan facility, and carefully curated yield-bearing strategies. Whilst the strategies can utilise several stablecoins, the initial strategies feature GHO.
The vault will be actively managed to optimize risk-adjusted returns for depositors. The vault aims to achieve a competitive yield while minimizing risk through strategic allocation across carefully selected yield-generating strategies. The portfolio will be continually assessed and rebalanced based on prevailing market conditions to deliver the best possible yield to gOHMies. We value community input and welcome feedback to enhance the vault's offering further and ensure it provides an attractive risk-reward balance.
gOHM allocator vault

We propose creating a gOHM allocator vault based on Yearn V3 4626 tokenized strategy infrastructure. The vault will do the following:
- Accept gOHM deposits from users.
- Use the deposited gOHM as collateral to take out a Cooler loan at a fixed interest rate of 0.5% per annum.
- Manage the loan, extending it when necessary to maintain the borrowed DAI.
- Allocate the borrowed DAI to different yield-bearing strategies, as determined by a committee of strategists.
- Collect the earned yield and distribute it to the gOHM depositors.
- Maintain a strategic buffer to ensure cost-efficient withdrawals and optimal use of keepers and Maker's flashmint functionality.
- The option to swap DAI to other stables depending on farming opportunities.
The Yearn community will provide a frontend to support users entering and exiting the vault. We have prepared a mock up below and other examples already live can be found here.

Smart Contract considerations
We propose a solution for managing cooler loans efficiently using a strategy that involves frequent deposits and withdrawals. The key components of this solution are:
- Buffer: Instead of immediately depositing gOHM and creating new loans, the vault will accumulate deposits in a buffer.
- Consolidation Trigger: A consolidateTrigger function will be introduced, which keepers can call. It will be triggered based on different conditions:
- Amount Idle: If the amount of idle funds in the buffer exceeds a predefined minimum threshold (parameterized).
- Gas Costs: A gas cost oracle will be used to optimize operational costs.
- Time to Expiry: If the number of days remaining until the expiration of the existing loans falls below a certain threshold (x days).
- Consolidation Process: When the consolidateTrigger function is called, it will initiate the consolidation process using a DAI flash loan. The steps involved in the consolidation process are:
- Borrow the necessary amount of DAI using a flash loan to repay the existing Cooler Loan.
- Repay the loan fully, including the outstanding interest and principal.
- Unlock all the collateral from the previous loans.
- Withdraw any excess DAI from the unlocked collateral and send it to the buffer (parameterized).
- Take out a new consolidated loan with the remaining collateral and the accumulated funds from the buffer.
- Repay the flash loan using the borrowed DAI.
Fee structure
The allocator vault will have a 10% performance fee, with underlying strategies typically having similar fee tiers, resulting in total net fees of < 20% on the primary yield source.
Potential Strategies
- Passive Earn on Gearbox
- Provide liquidity on Curve and Convex Finance
- Provide liquidity on Balancer and Aura Finance
- Provide liquidity on Pendle Finance
Path Forward
- Olympus Improvement Proposal vote (Olympus Community)
- Strategy writing (Yearn + TokenLogic)
- Peer and Security review (Yearn + TokenLogic)
- Bootstrapping phase (Est. $2.5m from gOHMies)
References
Disclosure
TokenLogic receives no payment for this proposal. TokenLogic is a Financial Service Provider to Aave DAO and is collaborating with Yearn on the design of various strategies beneficial to gOHMies. These strategies will likely feature and support the adoption of GHO. TokenLogic is a member of the Aave Liquidity Committee overseeing GHO liquidity across DeFi.
Copyright
Copyright and related rights waived via CC0.