[IIP-36] - Update Best Yield USDC, WETH yield sources and pause the staking rewards for IDLE stakers

The following is an extract of the proposal posted on the Idle governance forum.

Authors

Treasury League and Development League

Summary

The IIP aims to update the USDC and WETH Senior Best Yield's underlying markets by adding Clearpool's Fasanara (USDC) Yield Tranches and removing the Euler (WETH) Yield Tranches. It also includes the pause of the staking reward program for stkIDLE holders as part of the recent discussion about IDLE staking.

References

• Update Best Yield USDC, USDT, WETH yield sources post
• Clearpool YTs as a new yield source for USDC BY - Fasanara post
• IDLE staking update summary post

Rationale

1. Update Best Yield WETH yield source

This action will complete the process of removal of the Euler Yield Tranches as the underlying markets for the DAI, USDC, USDT and WETH vaults.

The DAO recently voted to update the BY DAI pool yield sources. Now we want to discuss an update of the underlying markets for the Best Yield strategies on USDC, USDT and WETH.

Based on internal risk assessment, we suggest to remove Euler from the basket of yield sources of the strategy at least until a new audit check is run. This market could be added again to Best Yield after a re-assessment of the newly audited Euler protocol and via an Idle DAO vote.

Together with the on-chain changes, we will also remove the strategies from the Idle's dApp. Depositors have successfully completed their redeems. The agEUR still deposited were burnt by Angle Money.

From a security perspective, it's worth mentioning that up-today the WETH Best Yield vault couldn't anyway deposit funds in the Euler underlying market, being all the Euler's strategies deactivated.

2. Clearpool YTs as a new yield source for USDC BY - Fasanara

This proposal aims to add new Clearpool Yield Tranches to the Senior Best Yield vaults on USDC:

• Clearpool USDC (Fasanara) YTs, with specs available on GitHub here

The Fasanara Yield Tranches will join Aave, Compound and Portofino YTs as underlying markets for the USDC pool.

Fasanara details

Fasanara Digital is a quantitative investment fund applying a scientific approach to investing in cryptoassets with the aim to achieve exceptional risk-adjusted returns for its investors.

Fasanara Digital was started in 2019 as part of Fasanara Capital, a 200 people London-based hedge fund founded in 2011 that specializes in alternative credit and fintech strategies. Overall, Fasanara Capital manages more than $4 billion across different funds.

With a team of 15 people fully dedicated to investments and development in digital assets, Fasanara Digital manages a delta-neutral high turnover fund specialized in market-making and arbitrage strategies. The fund trades approximately $10 billion per month in volume on both spot and derivatives on all major trading venues and has approximately $75 million in equity.

Clearpool (Fasanara) pool is live since the beginning of June. The Fasanara pool has a size of ~$550k and a maximum borrowing capacity of up to $40m. Credora rates the borrower with an AA.

Protocol	Borrower	Capacity	Pool size	Credora’s rating
Clearpool	Portofino	$40,390,683	$545,235	AA

At the time of writing, the Fasanara pool provides 21.73% APR with an 85% utilization rate (source).

Risk rating

The borrower has been already analysed internally following the risk rating framework. The Clearpool (Fasanara) Yield Tranches can be considered as a valid market to become a new yield source of the Best Yield strategies.

In order to trigger any BY deployment, the Yield Tranches will need to have at least a 24% coverage on Senior funds coming from the Junior counterparty.

3. Pause the staking reward program for stkIDLE holders

Multiple proposals are being discussed on how to revamp the IDLE staking use cases. One of them has already been voted and can continue the on-chain voting process:

• Pause the staking reward program for stkIDLE holders

Currently, stakers are rewarded with a mechanism that distributes half of the fees generated (in IDLE) by the Senior Best Yield strategy. This mechanism has given a value-capturing feature to IDLE tokens, but on the other hand, it has fallen short of sustaining the token price through the buyback mechanism setup. [...] We should also note that the fee-sharing contract is immutable and based on Sushiswap v2, which has no liquidity, hence buying IDLE there, is sub-optimal due to high slippage costs.

Additionally, due to regulatory uncertainty, the current staking rewards do not align with the not-for-profit structure of the soon-to-be Idle DAO LLC, thereby increasing the complexity.

For the above reasons, Leagues suggest pausing the current staking rewards and instead, introducing new use cases for IDLE stakers.

Specifications

The code for the IIP-36 can be found on GitHub here and consists of nine actions.

IIP-36 actions:

• 1 action to remove Euler Yield Tranches from the Senior WETH Best Yield strategy
• 1 action to add Clearpool (Fasanara) Yield Tranches to the Senior USDC Best Yield strategy
• 4 actions to change the fees recipient addresses of the Senior BY strategies to the feeTreasury
• 3 actions to transfer the DAI, USDC and USDT fees from the feeCollector to the feeTreasury

Where the Clearpool wrapper contract address is:

• Clearpool Fasanara USDC YTs 0x3E9A5c91eC8b5022E88d1C2599fE3CD98406D898