Increase the OUSD performance fee to boost future yield?

Abstract

Higher long-term OUSD APYs benefit both OUSD holders and OGV holders. By purchasing CVX tokens with a portion of OUSD yield, the yield on the OUSD pool should increase.

Background

Currently, 10% of the yield that is generated by OUSD is used to purchase OGV on the open market to provide incentives for long-term OGV stakers. These rewards are disproportionately distributed to those who are locked up the longest. These incentives play an important role in aligning the interests between OUSD holders and OGV stakers. The more OUSD grows, the greater the rewards for those who are staking their OGV and participating in governance.

Motivation

Curve and Convex continue to be a top source of rewards for OUSD. However, those rewards are currently dependent on the benevolence of CRV and CVX holders who vote on behalf of the OUSD pool. OUSD needs a better long-term strategy for accumulating protocol-owned CVX. We’re currently falling behind in the Curve wars as other protocols are constantly growing their CVX position and we’re not. I propose we increase OUSD’s performance fee from 10% to 20% in order to fund ongoing purchases of CVX.

Yearn are currently charging 20% performance fees on their USDT, USDC, and DAI vaults, so this adjustment will bring us in line with current market rates.

With our current 30-day trailing APY over 13%, this is a good time to make the change.

Implementation

In order to move fast and reduce the complexity of the smart contract changes, we should ask the OUSD Strategists to take care of regularly vote-locking the CVX and voting on behalf of the OUSD pool on Curve/Convex. The funds will be sent as OUSD to the Strategist multisig, which will allow for greater flexibility in their use. For example, the Strategists may switch to bribing instead of purchasing CVX or start accumulating another governance token like CRV instead. The purchased tokens will belong to the protocol and should be transferred back to the smart contracts at a later date.

Update the Origin Vault to change the trusteeFeeBips from 1000 (10%) to 2000 (20%).

Update the Buyback contract to send half of the funds to the Strategist multisig before swapping the remaining half to OGV as a reward for stakers.

The percentage split between funds sent to the treasury vs stakers should start at 50/50 but should be made easily configurable for future voting purposes.

Risks

The smart contract risk from implementing this change should be minimal since we only need to update the buyback contract which only ever touches a small percentage of the funds.