Gro protocol strategies updated following DAO vote

ALUSD and LUSD added; MIM and UST removed

Summary

Gro DAO voted on Friday May 17 2022 to whitelist six Convex strategies, each with max Vault exposures of 50% (set out below):

1. MUSD-3CRV
2. FRAX-3CRV
3. LUSD-3CRV
4. OUSD-3CRV
5. ALUSD-3CRV
6. FEI-3CRV

We have now added these to the Gro protocol safety scoring system set out in our docs.

Implementation of strategy migration

• Implementing all six strategies at once creates very high gas costs as a share of yield (high double-digit %)
• For optimal risk vs yield profile then four strategies are ideal: this makes sure Vault is never above 50% exposure (even after Vault leverage applied) while also not spreading liquidity too thinly
• Note: Vault exposure is calculated as System Exposure * Vault Leverage; you can see each of these on the Gro dapp dashboard
• Within the whitelisted strategies and parameters, strategies will be prioritised for selection based on two things: (1) pool depth and (2) yield; this is to optimise the total protocol returns net of gas costs and slippage

Based on this then initial strategy allocations of MUSD-3CRV, FRAX-3CRV, LUSD-3CRV and ALUSD-3CRV have been implemented today.

Important note: the current protocol design does not allow a ‘forced rebalance’ to the target state of 25% for each of ALUSD and LUSD. Instead, the system will gradually move towards the target state as deposits and withdrawals occur. If this does not happen naturally in the coming days we can consider ways to force this through.

Potential future iterations of DAO strategy selection process

This was v1 of this process, in order to quickly make sure the DAO was comfortable with protocol exposures following the UST de-peg.

Future iterations are suggested to include:

• Specific Vault exposures per strategy
• Specific stop-loss parameters per strategy
• De-prioritise votes with very high “abstain” (as these may not be fully representative of DAO view)

The team’s current priority is implementing stop-loss parameters and we will share a suggested approach on this in the coming days.

As always, we ask the DAO to share any further inputs about how we can add in additional safety checks or detail for what Convex strategies should be put up for voting.

Gro protocol strategies updated following DAO vote was originally published in Gro Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.