Thanks for your comments Pete. However, I just don’t see a way forward with including OETH in the dgnETH basket with it’s current yield profile. While i’m not sure why we have two different mandates, the one you linked from the ‘Introducing Degen ETH’ RFC on the forums and the one displayed in the app, I don’t think including OETH in the collateral basket actively work towards either. As I stated previously I’d be much more open if you incorporated another DeFi lego. Governors can find OETH DeFi integrations here. At the very minimum we should hold off making a final decision on this for a month or two until after the new Curve pool emissions have started streaming.
With regard to the holder breakdown, the two-token model makes it a little more complicated than looking only at dgnETH holders. The two smart contracts contain the two type of holders dgnETH accommodates for. The first type of holder we have is actively seeking DeFi yields, given dgnETH isn’t that composable across DeFi the only place you can do this currently is in the dgnETH/ETHplus LP on Curve which is the smaller of the two smart contracts you’ve mentioned. Currently we only have one holder and they can be found holding the LP token here.
Alternately holders can passively accrue yield as a sdgnETH holder, we have 30 right now (which makes sense since the yield is 15% atm) and they can be found here. While these number are small they control over 50% of the $7.7m of capital that is held in dgnETH. If one of these large LP decides to exit due to the drop in yield this will likely lead to a significant portion of TVL being lost. Last week we saw yield drop to 0% after some auctions weren’t ran, this led to many exiting their positions showing that this cohort are actively managing their holdings.
I understand your position on autoETH but still find it untenable. Maybe it will drop the bsdETH APY slightly but still only marginally compared to the drop that adding OETH to the collateral basket will give us. I still think products such as ynETHx and autoETH are viable alternatives, you’ve commented on the average 30d APY of autoETH being only 4.29% but this is still competitive against the LST market and is still 80% higher than OETHs 30d APY.
If you are keen on getting OETH included in the dgnETH collateral basket I suggest we do two things;
- Wait a few months until the new Curve pool is live and has stabilised to see where the new equilibrium of OETH has landed and evaluate the possibility of it being included in the collateral basket again then. However, I feel this won’t change my stance significantly.
- Consider developing a plug-in that incorporates another DeFi lego, such as an DEX LP or Money Market position. While this will increase the risk profile and requires more work from your team I feel by taking more risks to capture high DeFi yields we are able to maintain a high-yield diversified ETH LST index that is more in line with the mandate.