Summary
This proposal is to approve the budget for Leagues M3-2023 (July to September 2023) contributors and operations, and a brief outline of the achieved milestones for M2-2023 (more details will be released in the upcoming M2-2023 Performance Report).
Background
While M2-2023 with the Euler incident was undoubtedly a slowdown for us, thanks to our Leagues’ combined efforts, we overcame this hurdle successfully, and the TVL has been put back on track toward Jan/Feb levels.
As we navigate the ever-evolving landscape of DeFi, we proudly noticed the growing interest in tranching applications, particularly within the realm of RWA-based loans and the credit securitization market as a whole. It is an exciting time for the DeFi market, as more participants recognize the potential of these new asset classes and the potential growth related to them.
At Idle DAO, we have been closely monitoring this market trend and positioning ourselves to play a key role in the next iteration of the DeFi credit market. We firmly believe that for DeFi to mature and onboard a greater user base, solid risk mitigation, and hedging instruments are vital. By providing these critical tools with Yield Tranches, we aim to contribute to advancing the DeFi ecosystem and drive its mission to make the world’s financial fabric more equitable and accessible to everyone.
As always, we would like to thank our community and partners for their unwavering support throughout this journey. We remain optimistic about the future and excited to embark on this new chapter of growth and innovation for the DeFi industry.
M2-2023 Retrospective
As reported and planned in the M2-2023 milestones, we have been proud to announce significant integration partners, and have been evolving our product suite and DAO structure.
Below is a closer look at some of the key achievements of the past quarter.
Collabs:
- Clearpool UI integration
- Enso integration
- Timeless integration
- zkEVM expansion grant
- Harvest bb-i-USD integration
- Popcorn integration
Product:
- Euler 100% recovery
- Clearpool Portofino YTs
- Clearpool Fasanara YTs
- Clearpool default policies
- Risk framework for BY listing
DAO:
IIPs:
- IIP-33: Portofino Sr YTs DAI integration into BY
- IIP-34: update DAI BY
- IIP-35: LM update, Fasanara Sr USDT and Portofino Sr USDC integration into BY
- IIP-36: Fasanara Sr USDC integration into BY, staking rewards pause
M2-2023 DAO Metrics
In anticipation of a more comprehensive analysis of the performance and metrics with the upcoming M2-2023 Performance Report, below is an overlook of the TVL and fees for Idle DAO for the past quarter:
TVL
Average TVL has been $33.5M (-38% wrt M1-2023) with a +43.7% growth through M2-23, with $41.4M peak.
(Source)
BY & PYTs Fees
Overall, $52.2k has been accrued by the product suite. Of the aggregated fees, 87.5% is coming from YTs and 12.5% from BY strategies.
(Source)
Budget vs. actual
The performance report for the current period will be released in the coming days, providing a more detailed look at the balance sheet and income statement for Idle DAO. This report will give our tokenholders a better understanding of the financial health and performance of the DAO and its product suite.
Leagues M3-2023 Quarterly Goals
1) Expand yield spectrum for stablecoins-based vaults, with focus on DeFi credit securitization markets
As mentioned above, we see a notable market fit for Yield Tranches based on credit markets, as the diversified risk are more tangible from a user perspective. For this reason, we are going to research and implement yield sources based on new lending mechanisms and credit markets while exploring the possibility of creating a backstop yield for Best Yield vaults using instruments like MakerDAO’s DSR or tokenized t-bills.
2) Release new Yield Tranches offering for ETH-based LST vaults
While our stablecoin offering is growing by the day, and getting traction on the credit market side, we want to parallelly enrich our ETH-based offering – the underlying strategies and yield sources we currently have under our radar are Instadapp Lite YTs (a risk-adjusted leveraged product for stETH) and Origin oETH YTs (a tiered and diversified ETH staking product to gain exposure to multiple LSTs).
3) Develop Yield Tranches V2
We are preparing the development of Yield Tranches V2, an updated and improved tranching system equipped with automated on-chain default/loss management capabilities. This advanced feature will empower users and builders to effectively handle strategies that frequently incur losses, such as leveraged/folding strategies that result in liquidation. Additionally, we aim to integrate a seamless rollout process for new Yield Tranches following a default event.
This means that Senior and Junior LPs will no longer need to migrate their funds to new tranches after the distribution of funds based on Senior/Junior priority. With YTs V2, we will enhance their adaptability to different edge cases, significantly improve their on-chain user experience, and establish a robust foundation for integrating more complex underlying strategies. Moreover, it will pave the way for integrating yield derivatives on top of the existing Yield Tranches framework, unlocking new opportunities for further risk mitigation and hedging instrument.
Furthermore, in light of this update, which will enable the adaptation of YTs to a broader range of yield sources, we are contemplating the potential development of a Yield Tranches Factory. This facility would allow users, partners, and integrators to integrate their preferred yield sources and effortlessly create their own risk-adjusted Senior and Junior Tranches.
4) Grow multichain product suite and kick-off ecosystem flywheel for zkEVM
As likely one of the first releases of this M3, we will have the deployment of Yield Tranches based on Clearpool (USDC/USDT) in Polygon zkEVM – this will be followed by the entire chain of ecosystem partners that will allow to bootstrap and grow liquidity across our product suite and zkEVM as a whole.
For the next few months, we want to focus and enjoy the zkEVM flywheel kicking off, but it’s worth saying that we believe in a multichain rollup-based future for DeFi, powered by a simplified UX via account abstraction. Thus, we will monitor opportunities and possible synergies with the entire L2 ecosystem.
5) Push for incremental utility for Yield Tranches for DeFi
Senior Yield Tranches are yield-generating risk-adjusted wrappers around underlying yield sources. Ideally, they are a great way to hold collateral because they are secure and grow in value over time rather than remaining as unproductive capital.
While there are some risks to consider with some implementations of Senior YTs before onboarding them as a collateral type in lending markets (particularly functions related to YTs pricing, as they’re important in computing the YTs token’s value.), we are planning to work with our partners to take any preventive measure to ensure a secure collateral onboarding.
This would unlock a new layer of capital efficiency for Yield Tranches liquidity providers, while allowing lending protocols to onboard secure collaterals. Some possible integrations that we would be seeking in M3-2023 are with Teller, Gearbox or Alchemix.
6) Strengthen IDLE liquidity and use cases
Starting from the recent update of stkIDLE utility, we will be rolling out new features for stkIDLE holders: from fee discount programs to priority access to limited Yield Tranches (“limited” since based on yield sources with an intrinsic max capacity).
The goal is to create a synergetic relationship between users of our product suite and stkIDLE holders.
In addition to that, we are researching possible staking models or liquidity incentives programs in order to strengthen the liquidity layer for IDLE tokens. This could be achieved via multiple isolated liquidity programs over different DEXs, or by embedding an LP token into the staking module itself.
Leagues M3-2023 Expected Budget
The expected budget for M2-2023 is $180’308 in stablecoin and 120’104 IDLE (using a 20-day rolling price at the time of writing).
The Treasury League multisig stablecoin holdings currently stand at $36,805 and 31’353 IDLE so if the Temperature Check for IDLE tokenholders is positive, $143’504 will be transferred from the Idle DAO Fee Treasury, and 88’750 IDLE (see here) will be transferred from the Ecosystem Fund via the next IIP and after completion of Fasanara Strategic Agreement.
Next Steps
All Idle DAO stakeholders and the Ethereum community are invited to weigh in on the proposal. This proposal will be followed by a Temperature Check vote with the published here, when ready.
If positive, the M3-2023 mandate will be officially approved, and the budget transfer will be included in the upcoming IIP.
Poll for $IDLE holders: 
Polls will close on 
