Treasury Farming with DPI / ETH on Indexcoop.com

Link to forum: https://forum.yam.finance/t/yip-proposal-treasury-investment-strategy-dpi-eth-indexcoop-farming/873/24

Basic Summary/Abstract This proposal is the final part of the YIP linked above to use DPI/ETH to yield farm on Indexcoop.com for the Yam Investment Portfolio.

If your just catching up, here’s our current progress: We purchase the Defi Pulse Index (DPI) using the first trustless DAO OTC contract: https://twitter.com/YamFinance/status/1320812699245228035 We passed and are working on completing the ETH purchase using the same DAO OTC format: https://snapshot.page/#/yam/proposal/QmYDGKFG6hSVjA4tUg61sQv6CgaomGjJdJCoQhyb4oDE2v

Now as the community we have to vote to determine if we want to:

1. Submit both ETH/DPI to Uniswap Liquidity Pool.
2. Take Uniswap LP Tokens and stake those on Indexcoop.com which will farm Index tokens at a ~55% APY (unstable).

Motivation Our goal is to increase the value of the Yam Treasury. The larger the Yam Treasury they more we can utilize to funds to develop the Yam ecosystem. Using assets already in the treasury (DPI and ETH) to gain additional yield is advantageous but we must evaluate the risks.

Risks and mitigating factors:

1. (Minimal Risk / High Value Loss) Indexcoop farming contract bug or exploit. a. Indexcoop developers are the same people who created tokenset.com b. Farming contract is a fork of Uniswap
2. (Minimal Risk / High Value Loss) Uniswap Liquidity Pool bug or exploit. a. Lindy effect – Uniswap has been battle tested since 2018.
3. (Minimal Risk / Low Value Loss) Providing Liquidity in a Uniswap Pool is subject to Impermanent Loss (IL). a. Explained here: https://finematics.com/impermanent-loss-explained/ b. As an LP we do collect trading fees from the pool, which can easily offset Impermanent Loss. c. DPI and ETH are highly correlated, which mitigates the risk of IL.

Risks overall are minimal but possible.

Specifications

1. Informal review of Indexcoop’s contracts.
2. Provide Liquidity on DPI/ETH pool at Uniswap
3. Stake Uniswap LP tokens on Indexcoop.
4. Claim INDEX tokens every 2 weeks (or whatever timeframe devs think is best) and Hold tokens in treasury