Unwind yyJOE for JOE at 1:1 Ratio

High-Level Summary

• Trader Joe is sunsetting veJOE

• This is a proposal to allow users to claim JOE for yyJOE at a 1:1 ratio

• Unwinding provides the best forward-looking solution for yyJOE and YAK holders by minimizing resources spent pivoting to a new yyJOE product as well as allowing the Treasury to benefit as yyJOE’s largest holder.

Context

Trader Joe has announced the sunsetting of veJOE and the end of emissions to v1 yield farms by or before January 2024. You can read the full announcement here: https://joecontent.substack.com/p/tokenomics-update-vejoe?utm_source=substack&utm_medium=email

In April 2022 Yield Yak launched yyJOE, a JOE derivative where JOE was converted at a 1:1 ratio for yyJOE. The ‘sunk’ JOE was in turn staked to accumulate veJOE in order to boost yields for veJOE eligible farms. At the time of conversion, users were aware this conversion may be irreversible. As part of this launch, a marketing campaign was run spending 150 YAK from YY’s Treasury to incentivize JOE conversions.

https://yieldyak.medium.com/yield-yak-launches-yak-rush-for-yyjoe-alongside-vejoe-strategies-to-boost-trader-joe-farming-yields-d3c612672a44

veJOE farms were very successful initially, however Trader Joe’s focus in recent months has changed to their concentrated liquidity (and zero emissions) Liquidity Book product, and have been steadily decreasing JOE emissions to veJOE eligible farms.

Considerations

• Treasury holds 425K yyJOE out of a total of 1.3M yyJOE circulating

• Treasury pulled yyJOE - JOE liquidity ahead of the announcement as a precautionary measure to limit arbitraging this vote

• Users converted JOE to yyJOE in what most would have considered to be an irreversible transaction

• 150 YAK were spent on a marketing campaign to sink yyJOE.

• veJOE farms currently account for <$1.5M TVL APYs between 1 - 6% APY, which will continue to decrease as emissions are reduced

Case for Unwinding

• The assessment of the upside (including fee projections) of converting yyJOE into an sJOE wrapper given resources required to maintain have not been compelling

• Treasury would be one of the main beneficiary of the 1:1 unwinding by reclaiming 425K JOE

• Given current veJOE farm APRs, there isn’t a strong case to wait for all emissions to stop to make this decision (boosted yields are negligible) The Treasury’s 150 YAK to sink yyJOE should be viewed as marketing spend and was cautious in comparison with other protocols (Vector, Steakhut)