Morpho-Aave Yield Tranches decommission

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

Summary

A proposal to decommission the Morpho-Aave Yield Tranches DAI, USDC, USDT and WETH pools on mainnet.

Background

Idle DAO recently voted to decommission the Junior Best Yield vaults on the DAI, USDC, USDT and WETH markets. This decision was driven by multiple reasons such as the low profit margin and traction achieved in the market.

Other than the Clearpool Yield Tranches, the Morpho-Aave tranches were part of the underlying yield sources of the Junior BY vaults. As a direct consequence, now missing the Best Yield showcase, it is time to discuss the future of the Morpho Aave pools.

Since January 2023, the Morpho-Aave tranches have shown the following metrics on Ethereum

Yield Tranche	Average TVL	Average APY
YTs DAI Senior	$2,019	1.92%
YTs USDC Senior	$2,287	4.21%
YTs USDT Senior	$2,535	2.80%
YTs WETH Senior	$3,021	1.30%
YTs DAI Junior	$5,541	5.53%
YTs USDC Junior	$4,782	12.41%
YTs USDT Junior	$3,722	9.07%
YTs WETH Junior	$8,588	3.31%

The Morpho tranches showed a very low level of liquidity partially driven by the yields offered and also due to the low perceived risk.

Fee-wise, the Morpho-Aave tranches did not generate any significant fee in the face of $1,000 spent for harvest. If we add to the equation, the costs of the security monitoring tools and maintenance, all the vaults would show a negative profit margin.

Rationale

Given the low liquidity and fees generated by the Morpho Aave tranches and the recent closure of the Junior BY vaults, we suggest decommissioning the DAI, USDC, USDT and WETH Morpho pools.

This action will decrease the monitoring and updating effort of the Development League and also reduce the cost incurred by the DAO to pay for the harvesting activities.

[...]

Together with the Morpho-Aave delisting, we also advise delisting the Senior BY WETH vault. The vault has low liquidity and currently supports only the Aave and Compound markets. After its delisting, we will relaunch the pool with an improved codebase and new yield sources.