YFX protocol proposal #1: strategic investment in Gains Network.

Background: YFX fund has begun its venture by depositing into some stable yield farms. To diversify our strategy, we also aim to invest in blue chip protocols, those we find to have upside potential. Successful investments will increase the value of our treasury and the rfv of YFX holders.

Proposal: Gradual deployment of 50k$ into $GNS, the token of Gains Network.

What is Gains Network?

To quote from Delphi Capital: Gains borrows some concepts from the MakerDAO model to offer synthetic leverage trading in a similar fashion to Synthetix but with greater capital efficiency.

Users can stake $GNS to receive platform fees paid in DAI to deliver real yield without relying on token emissions.

Gains can undercut GMX on fees partly due to the simple nature of the relationship between traders and LPs.

Gains Network delivers real yield without relying on token emissions. An emphasis on sustainable token economics has helped fuel Gains Network’s growth. Gains has the 4th highest protocol earnings in all of crypto over the past 6 months.

Why are we buying now?

$GNS token has corrected from a high 13$ after Binance listing back to ~~7$. We have found this valuation to be a suitable one to start accumulating $GNS for upside potential.

$GMX corrected from 60$ to 30$ after Binance Listing and went on another run to 80$ afterwards. We hypothesize that this might repeat with $GNS.

With funding fees, $GNS has been consistently making money from trader losses as they don’t suffer from skewed OI.

With consistent overcollateralization of their gDAI vault, $GNS has recently increased their burn rate from 3% to 5%, they have burned over 43000 $GNS so far and now increasing.

Governance vote settlement:

To prevent others from front running YFX treasury and buying up tokens when proposals like this become likely to pass, we have purchased 25k worth of $GNS at ~~7.3$. We will be dca-ing the remaining 25k ONLY at reasonable prices if this proposal passes. The team is free to exit this position at any time too if our investment thesis changes or if $GNS goes up to a price that we feel is overvalued.

If it does not pass, we will exit our position and cover all the loss(if price goes down) with some of our farming revenue.