What does Yearn hang its hat on? Products (which one?), Research (on what?), or something else?
My answer to this: The yVaults product is our flagship and Yearn sinks or swims with it. yLockers, yPools, veYFI, and other products should work to support this as the main product. If we want research to be a key part of the DAO and funded by the treasury then it should either be directly focused on improving vaults or focused on public goods that improve Yearn’s image.
V3 vaults are flexible and composable and seem to work very well. We are just starting to hit the ground running with different strategies and products built on top of them. They are good infrastructure and a solid base to build a business on.
Unfortunately the UX to use the V3 vaults has not kept up. The main website is overwhelming for many users, with too many undifferentiated options. This is mostly a UX issue, but decisions to make the yearn.fi un-opinionated is a contributing factor. The choice between -1 and -2 vaults is almost impossible to make as the risk differences are hard to determine. Advanced users may be able to determine which one they prefer, but general users have little context to do so.
Recommendation 1: Simplify offerings. Limit single asset vault selection to 1 vault per asset per chain, with other options hidden behind an “advanced mode” toggle. As a DAO, our goal should be to curate the best risk/reward trade-off for these vaults for what we determine is the “average user”.
Rationale: What is the “average user” you may ask? Right now it is someone brave enough to venture on-chain. This may seem ridiculous to those of us who have been here a while, but getting to Yearn requires a voyage into the unknown for many. We want adventurous souls who have left the safe shores of Coinbase, making 4% on their USDC, to come get 8% in Yearn. If we are only offering a marginal improvement over Coinbase, or Aave, then our margin for error is going to be thin.
The best tool we have for this is a Vault that is a little big degen and supported by the risk analysis that we already do. The structuring of the -2 vaults where they maintain a minimum amount of -1 vaults also benefits us as they should maintain good liquidity while gaining an edge from the small amounts of leverage and risk taken by the -2 strategies.
At the same time, all the underlying vaults are still available to advanced users who want to either deposit directly into a -1 vault or tokenized strategy, or create their own vault with Kalani. Different levels of complexity for different levels of users.
Recommendation 2: To complement this simplicity, the way APYs are shown needs to be changed. For single asset vaults, the focus should be on longer term APYs (3, 6, 12mo., etc.) to highlight consistent gains. emphasis should be placed on the fact that holding yVaults for short periods of time is often ineffective, and with the debt allocator in effect, should be un-necessary.
Rationale: We want sticky TVL. Savings should be sticky, and we want people to set and forget their vaults. We do the hard work for them! If users see 40% APY they may flock to deposit, but if that means we are also showing 1% APR then they may also flock to the exits. If a vault is earning 40% for a short period of time that is great and will reflect in the backward looking APY. It is ok that our vaults are boring as long as the APYs are consistently at or above market average.
Recommendation 3: Stop being so neutral about Liquid Lockers. I would love if we could just push for 1up to be the default option for liquid lockers when depositing, but this may not be feasible politically. Another option would be to RNG which locker shows up to use for any new deposit, with an option to choose another one. We then get an easy and pretty neutral flow.
Rationale: dYFI rewards are a useful tool to offer better APYs for core vaults. But expecting users to lock their own YFI for veYFI is DOA. This is what liquid lockers are for. But because we want to be neutral and support all of them, we create a condition where users are again presented with a choice that they have no context to choose between. More decision fatigue and a higher chance the user breaks the deposit flow.
Supporting Products: