We’ve been building a new index of yield farming tokens at PieDAO this week.
Named DeFi+D (for degenerate) the pie aims to minimise risk, sharing the load across the ecosystem.
It’s been fun weighing up the projects in our discord channel, coming to an informal early consensus as a community. I’ve learned a lot.
There’s a ‘Goldilocks effect’ when building new indices: too many projects and it becomes expensive for users to mint, too few and the percentage allocations can risk hitting an upper limit, stifling future growth.
Each project’s liquidity and market cap also constrain how large a percentage we can allocate. The consequence has been having to broaden our horizons and propose allocations out of our comfort zone.
As such, the first potential design we tweeted out included a 12.9% allocation to CREAM.
Creamed
That design lasted just a few hours, so what happened?
My favourite part of building DeFi+D has been reaching out across the space, working with other projects that share our values. With Mike’s news and reports that moderators were banning all attempts at discussion in the project’s Discord channel it was clear CREAM weren’t on the same page.
We went back to the drawing board:
The new pie felt like a happy compromise. We managed to squeeze in DOUGH, which is currently giving 170%APR, and I went to bed content.
That feeling of satisfaction hasn’t lasted long.
Storms Over Harvest’s Season of Bounty?
Harvest have been going from strength to strength. With over a billion dollars of assets under management ‘Farmer Chad’ and friends have been living through a season of bounty. The community voted to share $50,000 of the spoils earlier this week, demonstrating their coordination and generosity.
So it was a bummer to wake up to to this tweet from well-known DeFi sceptic Chris Blec in our Discord this morning:
An unsubstantiated claim, but troubling nonetheless. It’s made worse by the fact that the timelock can easily be circumvented by pausing all transactions, preventing investors from withdrawing their funds.
Rug-pull has to be my least favourite term from DeFi, but that’s not the only risk here. With just one anonymous developer in control of all users funds anything could go wrong.
Chris’s claim was followed by further accusations of misleading APRs, with calculations showing the stated 390% APR was actually just 89% in reality.
I’m not going to comment on the accuracy of these accusations. I’d like to see the claims substantiated fully and also give Harvest some time to properly respond beyond this:
Managing Risk
The last 48 hours building DeFi+D have gone to show just how badly a diversified yield farming pie is needed. I can’t help but be reminded that both Sushi and Yam have also had unfortunate incidents, although their communities bounced back with resilience.
Risk is ever-present in these emerging systems.
DeFi+D will minimise the risk of investing in any one project’s protocol, giving yield farmers a little more peace of mind.
For me at least, it can’t come soon enough.
If you’re interested in this topic, come say hi over at our Discord.