I have been thinking about various ways we might generate additional value for ren nodes. Certainly our integration strategy must be central to increasing volume, and being plugged into the growing multichain ecosystem. However, another possibility might be to allow darknode operators the option to deposit and invest in various yield generating vaults prior to withdrawing them.
There are many reasons why some node operators may not want to claim, withdraw and then reinvest their node rewards. Some jurisdictions, for example, may tax node owners only when their rewards have been withdrawn to an address they directly control. Other operators simply may not want to incur the gas fees to make multiple transactions if they have an option to auto invest in various yield-generating opportunities.
Would it be possible for the Ren team to enable these opportunities with some of our strategic partners? Examples might be KeeperDAO which offers decent returns on renBTC. Other partners might be Rari Capital, Curve or Badger … and this list is growing rapidly as more well-run DeFi players emerge.
On top of this idea, it may also be advantageous for the ren team to take a very small fee to actively support these yield-generating opportunities. Support in terms of integrations, updates, testing/vetting, etc… The idea is to keep this sustainable and current with the latest yield opportunities and perhaps also support the team’s treasury to better position Ren more generally.
Would love to hear thoughts around this, and if this idea has potential.
This is an interesting idea, however, I think there are a few catches with such an approach:
By depositing the fees in a vault you invariably take on more risk, not everyone in the community might be comfortable with this
There are many different yield opportunities, and which one is the best changes all the time. It will be impossible to satisfy everyone’s risk/reward preferences so people would still want to withdraw to chase their respective optimal strategy
Withdrawing rewards might actually become more expensive as they will now have to be withdrawn from some vault (and some fees were lost when it was deposited to the vault in the first place) making this a net-negative for operators that want to withdraw rewards after each epoch
It seems to me that there will never be a quorum amongst the community on a particular approach to this, but I could be wrong, maybe its worth putting up a poll with some concrete examples to gauge sentiment.
Lastly I think this should be opt-in, as we don’t want to make it more difficult/expensive for users that do not want to participate to withdraw their rewards, though I’m not sure if that is even technically feasible in an economic way when we go to gas-less fee claiming.
I have been a big proponent of this idea for a while. Most of the DN operators probably just withdraw the funds and go stake them somewhere anyways incurring gas costs twice. It would have to be an opt in strategy for sure and likely have to go to a very stable fund but I would be fully on board with this. We have a few changes coming to the way withdraws are going to be handled but after those are implemented I’d love to see something like along these lines.
I agree our partnerships with KeeperDao, Curve, and Badger would be perfect options.
I agree with this take that coordinating around that risk would be very difficult unless it was some kind of yield opportunity that was built into RenVM somehow.
In general though one thing that will make @Khattab concern about the inefficient use of Darknode rewards less of a worry, is that epochs will be daily, meaning operators will be earning rewards in a streaming fashion instead of every 28 days, so one can withdraw whenever one wants to if one doesn’t want idle funds. This would also be economical when one could withdraw on chains with lower gas fees.
I agree with users Thomm and Squints on this being opt-in, perhaps with different weights among various options. I get that it may not suit all risk preferences and pulling this off may be more difficult to implement than it would appear.
There are so many emerging opportunities in DeFi, and an idea long these lines may also help feed liquidity into some of our strategic partners, so this could be more of a win-win ecosystem play if we end up being more closely integrated with other projects.
The way the yearn ecosystem has evolved in recent months is an interesting model where projects with high synergy have coalesced (maybe merged is too strong of a term?). If Solana x Alameda x Ren and others can coalesce in more strategic ways, this idea may get more traction. Perhaps it is a bit early to seriously consider right now.
@MaxRoszko I do think that risk can be mitigated with emerging (and decentralized) insurance offerings, by the way, although it also implies more ‘moving parts’ which can present other risks. I do look forward to streaming rewards functionality, and the gasless claiming of earnings which I think has also gained support from the Ren community.
For now, I just wanted to throw the idea out there… at some point down the road, this may be a logical extension of the various legos being built around Ren and the broader ecosystem.
Agree, wonderful idea that can grow into its own project like time (this is kinda how yearn started). Also agree slightly premature, many changes coming and I think the community needs to organize itself a bit more before deep diving into more complex solutions/ideas.
P.S. love the brainstorming initiative and the ideas you guys have!
My only contribution to the discussion is that it might be a good strategy to take the opted-in RenBtc and port them over to a different chain through RenVM to yieldfarm there. Alternatively if RenVM could eventually provide Renbtc directly on the selected chain that of course would be even better.
This would help keep the fees down associated with yield farming on Ethereum (albeit we would suffer the RenVM fees, unless they could be forfeited for this transaction). It would also have the added benefit of helping to bootstrap liquidity on new chains.
If this did become a thing it would be important to use a vault without a deposit/withdrawal fee imo. Harvest is really a better option than yfi or badger for this reason.