YIP-101: Pause Rari Fuse Pool Implementation

Link to Forum Post here: https://forum.yam.finance/t/yip-101-pause-rari-fuse-pool-implementation/1598

Basic Summary

A proposal to create and add treasury funds to a new Rari Fuse pool that allows lending and borrowing YAM was approved with YIP-77. This proposal was never implemented due to other more pressing issues. After further discussion, @THEVDM1, @Snake, and I, as well as other contributors, now believe that creating and providing treasury liquidity to this Fuse pool is a risk for the treasury. This is due to a lack of liquidity in our Sushiswap YAM/ETH pool, which would serve as the price oracle for the pool. Abstract - What am I proposing?

Abstract - What am I proposing?

Before deploying funds to a YAM Fuse pool, we should work to shore up the liquidity in the YAM/ETH sushiswap pool.

Motivation - Why am I proposing it?

Important bits from this section in the forum post:

"It is clear that the YAM/ETH Sushiswap pool has been suffering declining liquidity over the past few months and as such it provides a much weaker oracle pricing point, which is acutely relevant to the proposed Fuse pool."

"With declining liquidity, price impact of trading has greatly increased and this is what attackers would use to their advantage: they have the ability to greatly influence price if they are reasonably well capitalised."

"Money markets such as Fuse are gas intensive. This prices out smaller users. Gas analysis is done below to prove the point that even if we were to deploy this pool, the user base would be limited to sizable borrowers/lenders only. If the liquidity issue is to be addressed above it is recommended that a whitelisted Fuse fork: Markets.xyz is used on Polygon/Fantom (current deployments) to recreate the pool and its parameters in the future."

"Conclusion:

Do not launch the YAM Fuse Pools initially planned as the low liquidity of the YAM/ETH pool imposes too much risk for the utility the pool would have given users.

• Risk of attack through price manipulation causing a loss in treasury assets and user funds
• Risk of poor liquidation bot coverage due to high price impact on liquidating large borrowers
• Utility constrained by gas intensive functions required to use the pool"

Specification

There is little that needs to be done to implement this proposal. No further work will be done on the Fuse Pools and no funds will be transferred until a new snapshot vote supercedes this one. In the mean time, contributors and community members should continue to consider ways to improve the liquidity in our YAM/ETH pool.