You can find the forum discussion post here.
In line with this proposal, liquidity pool weights have been updated and RLY rewards for YDVs have stopped. The last harvests were executed on February 24, 2021 and those will be the last RLY rewards emitted by the YDVs. The vaults.rally.io UI has been updated to prevent additional deposits. Existing depositors can withdraw/claim at their convenience.
3pool LP users should unstake first from the LP, and then from the vault.
There is no rush to withdraw. Remaining stakes will simply earn the yield generated by the underlying yearn vault instead of it being transferred to the community treasury (rewarding $RLY). In other words, you'll earn the typical Yearn rewards, instead of $RLY.
One of the first ways we’ll be getting RLY into the hands of the community is through a new construct we’re calling Yield Delegating Vaults. These Yield Delegating Vaults build on top of pioneering work from yearn.finance on Vaults. While Yearn Vaults run unique strategies designed to maximize yield of a deposited asset, Yield Delegating Vaults provide proxies into these strategies that redirect a portion of the yield earned to a designated treasury. As the treasury grows, the Yield Delegating Vault emits RLY rewards claimable by contributors. In short, supporters of a project are able to contribute their potential future returns while earning governance token rewards and knowing that their principal is not subject to substantial incremental risks.
Proxying yearn.finance vaults
There have been countless strategies deployed over the past several months attempting to help users maximize returns on otherwise idle assets. While our Yield Delegating Vaults could proxy any of these strategies, we see Yearn Vaults as best in class options. Their deployed strategies appropriately balance the risk and return and their community of developers and users continuously demonstrate what is possible when a DeFi project builds a vibrant community.
To ensure these Yield Delegating Vaults are easy to use for both new and existing depositors, users will be able to execute deposits and withdrawals in either yTokens (i.e. yUSDC, yDAI, etc…) or the standard deposited asset (i.e. USDC, DAI, etc…). For those of you familiar with Yearn vaults, the deposit and withdraw functions on YieldDelegatingVault should look pretty familiar; and we’ve augmented these with deposityToken and withdrawyToken to allow this behavior.
2. Distributing 500MM RLY
At launch, 50MM RLY will be in our Yield Delegating Vaults, and an additional 450MM (for a total of 500MM) will be deposited in the coming weeks, for the purpose of seeding the rewards distribution pool. Unlike some other distribution mechanisms, these rewards accumulate in proportion to the yield earned and delegated to a treasury, as opposed to on a per block basis, so it’s hard to predict how long these rewards will last. To help ensure these rewards are distributed effectively, we’ll be monitoring contributor behavior with respect to these vaults and will allow community governance to approve modifications to emissions until all 500MM have been distributed.
You can see how this works in the harvest method. When this is called, YieldDelegatingVault calculates how much earned yield is available for transfer to the treasury and allocates RLY rewards in proportion to the amount transferred. We’ll initially set this proportion to target an RLY reward amount that is approximately double the APY depositors would otherwise receive by depositing into Yearn Vaults directly and enable our community to update this value as they see fit. Note that similar to Yearn’s earn functionality, this method is publicly available and must be called periodically in order to transfer yield to the treasury and allocate RLY rewards. During any period that harvest is not called, the Yield Delegating Vault operates as a pure pass through to the underlying Yearn Vault.
One important note here is that YieldDelegatingVault is not capable of minting new RLY token. To make rewards available for distribution, they must first be made available in YDVRewardsDistributor which acts as a coordinator and registry of available Yield Delegating Vaults. We believe this pattern will provide some added flexibility in ensuring RLY rewards are distributed appropriately. As a safeguard, you can see that the harvest method is designed to fail if sufficient reward tokens are unavailable. In this error case, the Yield Delegating Vault would act as a pure pass through to the underlying Yearn Vault; no yield would be redirected to the treasury and no reward tokens would be issued.
3. Creating a community owned treasury of yTokens
As yield is redirected from the Yield Delegating Vault to the treasury, we’ve made two important choices. The value transferred to the treasury will remain in yTokens and the treasury will be controlled by a multisig whose signers are community members expected to act in accordance with community governance. The idea of accumulating a treasury in yTokens is something we hope to see more of from other Ethereum projects. As opposed to holding funds in fiat or stable coins, it seems to make more sense for a project’s idle capital to be put to productive use in industry leading yield generation strategies. And turning control of this treasury over to a community governed multisig ensures that it will only be used in ways that the RLY community supports.
We believe Yield Delegating Vaults present a novel way to provide support for and get involved with new projects. You can begin delegating yield and earning RLY rewards on October 15th. While we’ve tested this system to the best of our abilities and engaged PeckShield for a 3rd party audit, interacting with smart contracts always carries risk so please exercise appropriate caution before doing so.