SIP-27: Remove Stargate-USDС strategy as “default strategy”

Title: Remove Stargate-USDС strategy as “default strategy” Author: Core Team Reference: SIP-4, SIP-12 Created: January, 6th, 2023 Labels: #Governance, #YieldStrategy,

Simple Summary

Proposed change will remove Stargate-USDС strategy as “default strategy” with 80% allocation target of USDC collateral. This makes USDC collateral less dependent on Stargate's withdrawal illiquidity and mitigates Auto-yield's binding to the declining APY of Stratgate strategy.

Abstract

Withdrawable liquidity of USDC on Stargate is low, often close to zero and this creates delays in withdrawing USDC collateral from Stargate. Also, Stargate strategy’s APY percentage on Arbitrum went down more than two-fold. In this situation, keeping USDC collateral 80% dependent on Stargate is not optimal, hence the proposal to remove Stargate-USDС as the default strategy.

Motivation

Allocating a major part of USDC collateral (80%) to Stargate-USDC strategy makes Sperax dependent on Stagtate’s low withdrawal liquidity and decreasing APY.

Overview

Stargate's strategy has been implemented with SIP-4 as one of the tools to diversify the overall strategy portfolio - taking into account that the Stargate strategy had a relatively high APY of 6+%.

Then, with the purpose of increasing auto-yield, SIP-12 stated that the allocation of USDC to Stargate will target 80%.

From today’s perspective, this needs to be reviewed:

First, there is a liquidity issue when there is a need to withdraw USDC collateral from Stargate. Despite Stargate’s Arbitrum USDC pool reported liquidity looking appropriate ($15.3M), from Sperax's perspective, to mobilize collateral from Stargate quickly back to the Core Vault for use in other yield strategies or for redemptions by users, Sperax needs another type of liquidity - withdrawable balance liquidity, that in Stargate case is low or often zero.

Second, Stargate strategy’s APY percentage on Arbitrum went down more than two-fold from initial figures - reaching only 2.8%, Stargate-USDC farm on Arbitrum is not listed by Stargate in their “Top Farms” anymore.

The alternative to this proposal is keeping Stargate as the default strategy with the targeted allocation of 80% USDC This will keep Sperax bound to the illiquidity of withdrawal and to declining Auto-yield derived from declining Stargate pool APY.

Technical Specification

Remove the Stargate strategy as the default strategy with 80% allocation target for USDC.

Voting

Yes: Remove Stargate-USDС strategy as default strategy No: Keep Stargate-USDC strategy as default strategy