KIP-6: Yield generation on Maple Finance

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This is an apparent consensus vote.

• Vote 'No objection' if you agree with the proposal.
• Vote 'Object' if you disagree with the proposal.

Discussion

• Github
• Forum discussion
• Discord

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NOTE: This is an abbreviated form of the KIP suitable for Snapshot. Please read the full proposal using the GitHub link above.

Proposal

The proposal is for KeeperDAO to invest 3,500,000 USDC in the liquidity pool where Maven 11 is a Pool Delegate. This amount of USDC would represent 3.1% of the value of KeeperDAO treasury’s assets, or ~12% of the total stablecoin assets in KeeperDAOs treasury. Providing this amount of USDC to the liquidity pool would maintain risk at an appropriate level with negligible risk for the overall financial health of the DAO.

The main purpose of utilizing a portion of stablecoins held by the KeeperDAO treasury to provide liquidity on Maple Finance is to generate an additional yield on now-idle assets . This will enhance the capital efficiency of the treasury, the value of which will ultimately find its way back to the members of the DAO.

Rewards

Lenders receive 80% of the interest payments from the borrowers in USDC, while the remaining 20% is distributed in a 50:50 split to the Maple Finance treasury and the PD. On top of that, Maple Finance provides incentives to the lenders in their native governance token MPL which can be used for staking (i.e. providing capital of last resort in case of defaults) and for governance of the protocol and the treasury.

To summarize , depositing USDC in the Maven 11 liquidity pool on Maple Finance will generate two different flavors of yield: yield in USDC, and yield in the MPL governance token.

• USDC yield, which currently hovers around 10% APY. This yield is subject to a 90 day lock up.
• MPL reward token yield, which currently hovers around 25% APY. These reward tokens are released on a block by block basis.

This means that at time of writing, the total APY on USDC deposits is roughly 35% .

The APY itself is dependent on 3 factors:

1. Interest rates - when the interest rates among the borrowers in the pool are increasing, the USDC part of yield is increasing as well (and vice versa).
2. Amount of liquidity in the pool - when the pool increases in size, the rewards in MPL are decreasing proportionally as the number of MPL tokens needs to be distributed among a larger number of participants (and vice versa).
3. MPL price - when the price of MPL is increasing, the rewards in MPL are higher in $ terms, effectively increasing the APY (and vice versa).

Risks

For a full risk statement, please see the full proposal text on GitHub: https://github.com/keeperdao/kips/blob/master/KIP-6/KIP-6.md

Additional links

KeeperDAO treasury address

Maple Finance app

Guide to lending on Maple

Maple Finance Dune Dashboard

Maple Finance AML KYC procedure

Master Loan Agreement (MLA)

Maple Finance API docs

Credit Memo

Specification

1. On Maple Finance, approve USDC to spend 2. Deposit 3,500,000 USDC to the Maven 11 liquidity pool and receive Maple Pool Tokens (MPT), to be eligible for receiving USDC rewards 3. Approve MPT to spend 4. Stake MPT in Maple Finance, to be eligible for receiving MPL governance token rewards