Update Best Yield USDC, USDT, WETH yield sources

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

Authors

Treasury League

Summary

This proposal focuses on multiple initiatives: remove Euler Yield Tranches as yield sources of Senior and Junior Best Yield strategies on USDC, USDT and WETH pools.

Rationale

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.

The primary goals in relation to the affected strategies, i.e. Senior and Junior BY on USDC, USDT and WETH and the Euler YTs, are as follows:

• Ensure a secure recovery process for users of Senior and Junior Yield Tranches. The current Euler Senior/Junior Yield Tranches will be deprecated upon allowing all depositors to redeem their funds. […]
• Ensure continuity of Best Yield vaults. Despite the recent challenges with Euler, Senior and Junior Best Yield vaults will continue to operate as usual. The funds recovered from Euler and sent to Senior/Junior Best Yield vaults will be rebalanced across Compound/Aave/Morpho/Clearpool (accordingly to the underlying yield sources of each Best Yield vault) to maintain optimal performance.

This proposal is at the foundation of the process to go back to normal activity and re-open the paused products. Recovered amounts will be redistributed across all the respective strategies, allowing users to regain access to standard deposit and redeem operations and reboot all strategies’ functionalities.