[GIP-134]: Bootstrap liquidity in Gearbox’s Yield Tranches

Author: Biaf from Idle (Posted by amplice on behalf of Idle)

Summary

A proposal to discuss and approve a Gearbox DAO treasury deployment in Idle's Yield Tranches on top of the USDC and WETH passive yield markets.

Motivation

Idle has deployed two Yield Tranches (YTs) on top of the Gearbox’s USDC and WETH markets. The Yield Tranche primitive offers a risk-adjusted lending experience with its Senior and Junior mechanisms:

• Senior LPs can benefit from funds coverage by withholding and routing part of the base yield to the Junior counterparty
• Junior LPs can enjoy boosted yield, but give exit priority to Senior LPs in case any loss affects the lending pool

This solution lets users pick their preferred side based on their risk appetite and offers a more risk-tailored investment.

Gearbox and Idle have been in discussions about ways to collaborate and get the most out of this product launch. One idea that has emerged is to give liquidity support to Idle during the liquidity formation phase (LFP).

By depositing part of its treasury on the Senior side, Gearbox DAO can earn a covered yield as well as create room to onboard new Junior liquidity.

Additionally, this liquidity will be counted as part of the Integrators program and generate extra yield for the DAO to reinvest in other activities or increase its reserve fund.

Specification

• USDC Yield Tranches contract 0xdd4D030A4337CE492B55bc5169F6A9568242C0Bc
• WETH Yield Tranches contract 0xbc48967C34d129a2ef25DD4dc693Cc7364d02eb9
• The treasury deployment should last for at least 3 months and can later be extended or ended based on Gearbox DAO preferences.
• This liquidity deployment would generate an extra 3% yield for the DAO as part of the Integrators program. Depending on the size of the referred TVL, the fee rebate can double up to 6%.
• Senior USDC tranche referral link
  app.idle.finance/#/earn/0x450C055a00226F1Eba09E8D9627034565b7C4C8A?_referral=0x7b065Fcb0760dF0CEA8CFd144e08554F3CeA73D1
• Senior WETH tranche referral link
  app.idle.finance/#/earn/0x0f09A04AD551Dd941b589625BD2360FC962FF9f7?_referral=0x7b065Fcb0760dF0CEA8CFd144e08554F3CeA73D1

From a security perspective, the Yield Tranche codebase has been live on mainnet since September 2021 and never suffered any hack or unexpected loss for LPs. It was audited 4 times. Most recently in October 2023.

Gearbox token holders can use this file to simulate the yield generated on Junior by a Senior deposit.

Note that this proposal uses approval voting (in order to make reaching quorum on at least one option more likely).

DAO participants should vote for all options that are acceptable (if you are OK with Gearbox depositing 100k and/or 150k into both Idle pools, vote for both 100k and 150k.)